When I traded in my Rodeo, they knocked off the trade in value because my Mickey T's stuck out an inch from the wells. Said they would have to swap out the wheels and tires in order to pass it through inspection and sell it. Ya, total BS, but unfortunately, old, rich, white men make our laws, and their Cadillacs don't look as good as our VX's.
In all honesty, the reason for this law is road debris. Especially in rain. With tires that stick out, you create a rooster tail with the rain, and that washes onto following cars. In areas like DC and other cities, automobile population that ranks high means that the area will have even stricter automobile laws. Goes with the territory I guess.
I remember back when I first got my liscence, I had a truck that had no mudflaps. To pass inspection, I had to put mudflaps on it for this very reason. The mudflap law has since changed with the popularity of SUVs.
Tomorrow, it will be something different.