Why all the fuss?

Residents in two California air districts will be breathing easier thanks to rules recently adopted by the South Coast Air Quality Management District (SCAQMD) and the San Joaquin Valley Air Pollution Control District. Rules 1151 and 4612 are designed to drastically reduce volatile organic compound (VOC) levels by compelling shops and PBE suppliers to replace solvent-based refinish coatings with waterborne varieties by Jan. 1, 2009. Despite the wholesale nature of this change and the financial burden it could place on collision industry members, shops and suppliers remain relatively quiet. That silence could speak volumes about their survival prospects and the consequences many more shops might be confronting as similar rules become instituted nationwide.

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CARB moved forward on the measure in part due to (1) the existence of waterborne alternatives and (2) the successful implementation of a similar measure across the Atlantic. For several years, paint companies have been delivering waterborne coatings to countries in the European Union (EU), which adopted similar strict VOC-reducing rules. Over 5,000 shops made the switch.

Most automotive coating manufacturers then reported to CARB (as well as some air district staffs) their beliefs that proposed VOC limits were feasible, provided sufficient time was given to prepare for the implementation of waterborne technology in California.

VOC levels: Rules divide refinishing coatings into different categories, each with a unique maximum VOC level. For example, VOC content in clearcoats may not exceed 250 grams per liter (2.1 lb. per gal.), while VOC content for color coats may not exceed 450 grams per liter (3.5 lb. per gal.).

This definition notably includes private vehicle owners and hobbyists working on a limited basis in their own garages. Tina Cherry, a spokesperson for SCAQMD, says this language was added at the behest of the collision industry.

On the "supply" side, the rules apply "to any person who supplies, sells, offers for sale, manufactures or distributes any automotive coating or associated solvent for use within the district, as well as any person who uses, applies or solicits, the use or application of any automotive coating or associated solvent within the district."

Violators of the air quality rules generally can be given notices of compliance or be turned over to civil court where they are fined based on the severity of the violation. Cherry says the air district prosecutor's office has the power to turn serious violations over to other authorities as criminal cases. A dedicated prosecutor's office solely for an air district shows just how seriously California takes air quality management.

Parting ways

In South Coast, the district executive officer has this duty. In San Joaquin, the Air Pollution Control Officer (APCO) does. In both cases, approved systems must be maintained and used at all times during coating operations. Cherry says her district has approved five large systems. Costs are significant, however. Cherry says the systems in her district average around $200,000. Of course, both rules allow shops with such systems to possess solvent-based coatings.

Two other notable areas where the rules depart are in coating categories and implementation dates. South Coast combines the primer, primer surfacer and primer sealer categories into a single primer category with a single VOC limit. South Coast then uses a more aggressive implementation schedule. Both districts use Jan. 1, 2009 as the implementation date for most categories, with Jan. 1, 2010 serving as the implementation date for any remaining coatings (namely, adhesion promoters, primer sealers and single stage coatings). However, South Coast requires initial implementation of limits on clearcoats and basecoats on July 1, 2008 — almost one year from now. To help affected parties cope with that schedule, South Coast added to its rule a sell-through provision that adds a six-month adjustment period for the new waterborne technology before full implementation takes place on Jan. 1, 2009.

As California goes, so goes the nation

Generally speaking, progressive legislation, especially the environmental kind, moves across the nation from the West Coast to the East. There are a number of reasons for this: history, political traditions and concentrations and severe environmental concerns unique to the region. Consider the South Coast district. In square miles, it's one of the smaller California air districts. However, in concentration of people and industry, South Coast is mammoth with some giant-sized air quality problems.

San Joaquin fairs slightly better. Located north of South Coast and situated in the middle of the state, San Joaquin suffers from a choking air quality problem that sickens residents and the economic well-being of the area. On average, the San Joaquin Valley exceeds the federal health-based standards for ground-level ozone 35-40 days annually with more than 100 days spent over the state ozone standards. The bowl-shaped Valley, which is bordered by mountain ranges on its sides and southern boundary, collects and holds emissions from the Valley's three million residents, their two million vehicles, and the heavy traffic from other areas traveling on Highway 99 and Interstate 5. Pollutants also are transported in from the Bay Area and the Sacramento Valley.

According to Craig Scharton, CEO of the Central Valley Business Incubator, pollution costs San Joaquin families on average $4,000 per year in lost wages, health care bills and missed school days. Pollution levels sway businesses from moving into the district.

Little wonder that South Coast and San Joaquin would be first to adopt the CARB measure. Both districts expect significant results from the new rules. South Coast alone estimates VOC emissions will fall by a count of 3.7 tons per day, a reduction of approximately 36 percent from the VOC source category.

Results like that have other districts closely watching South Coast and San Joaquin. Dave McClune, executive director of the California Autobody Association (CAA), says the Sacramento Bay Area District and several others have the CARB measure on their agendas. He fully expects most air districts in the state to eventually adopt it or something similar. "Right now, they're going to wait and see and watch how South Coast and San Joaquin implement their rules," says McClune.

Following California's lead, there's a good chance similar rules will pop up elsewhere in the nation — in large part because California is a bellwether state for environmental and health legislation.

Paint manufacturers appear to believe the rules are far more than a local phenomenon. Press releases carry language stating that waterborne coats eventually will be the norm everywhere. Likely early candidates for low VOC rules include urban areas troubled by air quality problems and the Northeast section of the United States.

For now, talk of the rules moving beyond South Coast and San Joaquin is pure speculation. The Environmental Protection Agency (EPA) reports it has no plans to push the measure nationwide. The South Coast and San Joaquin rules won't take full effect for almost three years. The rest of the nation, like California, could very well take the kind of "wait and see" approach McClune describes before implementing similar regulations.

However, should low VOC regulations eventually extend beyond California, Lester Young, a consultant for Applied Automotive Strategies, says it's a good bet the resulting rules will be similar to those in California. "Some of their air districts have more experts than the entire EPA's of many states," says Young. There's a great chance those states will defer to the experts in California as they develop their own regulations.

Paying the price: Shops and suppliers respond

Before experts institute sweeping new rules in their districts, they pour over a great deal of information, including business and economic impact analyses. South Coast put together just such a paper to describe how the amendments to Rule 1151 would impact the collision repair community.

South Coast calculates 1,726 automotive refinishing facilities and 17 coating manufacturers occupy the district. (McClune says there are roughly 1,000 shops in South Coast and another 700 in San Joaquin). South Coast projects the total average annual cost of Rule 1151 to be $3.58 million between 2006 and 2020, and district authorities believe shops will bear the majority of the costs (74 percent).

South Coast further projects those costs will result in the loss of 33 collision repair jobs annually between 2006 and 2020. The district predicts relative production costs will rise "at most 0.018 percent in 2008 relative to its counterpart in the U. S." The analysis adds, "Changes in the relative product cost in other industries are insignificant."

On paper, those numbers sound rather optimistic. According to industry members, the transition to waterborne coatings should be one most shops make successfully. McClune says two types of shops will feel the most significant effects — very small shops and large shops with high production levels. He explains that the slower-drying waterborne coatings could force small shops to invest as much as $70,000 in downdraft spray booths. At high-production shops, increased drying times could disrupt production schedules.

Young says this is particularly true with shops that schedule the majority of their painting at the end of the workweek. Shop geography also will affect drying times. Shops will need to adjust their schedules to cope with factors like temperature and humidity levels.

Regardless of their size, most shops will have to absorb some new costs, particularly for new spray equipment. Waterborne paints require equipment resistant to corrosion. Shops also will need to allocate time for employees to come up to speed using that equipment and picking up experience learning how to mix and utilize the new coatings. McClune and Young both suggest shops turn to vendors for help with training, the sooner the better.

The good news for shops is that some of these initial costs can be absorbed by the cost savings realized through the use of waterborne coatings. Waterborne paints have shorter flash times and longer pot lives. They often require less product to do the same job as solvent-based coatings. Waterborne spraying equipment is cheaper to clean. Because they are less toxic and not flammable, waterborne products pose fewer health risks and are safer to use and store. McClune and Young both note that ultimately waterborne products will make shops more productive.

These factors are helping soothe early reaction to the new rules. Indeed, most shops and PBE suppliers appear to be taking the rules in stride — even in South Coast where businesses are working on a reduced timetable. McClune says his office has taken very few calls from shops concerning the rules (although he expects that to change as the implementation date grows nearer). Cherry says her office similarly has received little feedback.

Shops say early "gloom and doom" predictions have faded. "What a lot of us know about the effects of the rule we heard from other people. What we heard at first seems like a lot of hype," says Vatche Derian, owner of Johnnies Paint and Body Shop in Pasadena. "We're going to see some additional expenses. And we're going to have to do some things differently like keep our spraying equipment separate. It's not going to affect us a lot, though."

Steve Burroughs, manager of the collision repair shop at Norwalk Toyota in Norwalk, says he too heard dire claims when the amendments to Rule 1151 were first discussed. "Two years ago we heard all sorts of things like shops were going to have to invest $100,000 for the right kind of spray booth," he says. "Now we know that nothing drastic is going to happen."

Burroughs believes shops instead will be dealing with other more manageable issues surrounding the new rules. He says real challenges will involve addressing issues such as the cleaner shop environment needed for proper use of the new coatings. Burroughs notes that the new waterborne products require a contaminant-free drying environment.

"Painters are going to have to take extra steps to make sure their uniforms are clean. They'll have to check the vehicle and clean out any dirt or debris on the underside or in tough-to-spot areas like the wheel wells," he says.

Burroughs adds that shops similarly will have to handle challenges that probably won't appear until the rules are fully implemented and use of waterborne coatings becomes a daily affair. This element of the unknown has some shops concerned.

Jesse Machena, a 30-year industry veteran and co-owner of Gardena-based Top Gun Paint and Supply Inc., says some of his customers worry about their future. Machena believes the financial impact on shops actually could average $15,000. Still, Machena tells his customers not to panic. "I tell them, 'We're not going to know what the real effect is until we get there,' " he says.

Machena recalls an attempt several years ago by some paint manufacturers to bring waterborne coatings to the U.S. market. He says those products had some serious issues, especially with mixing and color creation. The color a painter created typically looked nothing like the color that was sprayed on a vehicle. He expects that to change thanks to improved products. He also expects them to take dedicated steps to help shops meet compliance.

As far as his own business, Machena doesn't think the rule will have much impact on PBE suppliers — a view shared by other suppliers ABRN contacted. He and others plan to make good use of the transition period as they gradually remove solvent-based coatings. "We're going to sell them until they tell us we can't any longer," he says. A Los Angeles PBE supplier notes. "Paint is paint. Our customers are still going to need it. We'll sell them what the law lets us."

Unfortunately, some suppliers might end up doing more than that, at their own peril. If there's one large issue the air district and collision industry members might be facing, it's ignorance of the new rules. ABRN contacted shops and suppliers in both South Coast and San Joaquin and in each case found workers who knew nothing about the rules. A painter at one Los Angeles shop simply exclaimed, "I don't know what you're talking about. We don't use waterborne paints here!" Clerks at some PBE stores had heard nothing about the coming changes.

Cherry says air districts could put together outreach programs to inform shops and suppliers, if it becomes necessary. South Coast did so recently to help service stations meet a new rule. Nothing is currently planned for amended Rule 1151. That could change quickly as July 1, 2008 approaches.

Even with this potential hiccup, Burroughs expects most shops to make the transition. "We've seen a lot worse before. Years ago, when Rule 1151 first came up, we weren't prepared. It seemed to come out of nowhere. This is a lot different. You'll see that most shops will deal with it," he says.

Final word: Too much burden for the industry to shoulder alone?

One of the more popular reactions to any type of government legislation is the retort, "They're regulating me out of business." Legislatures, agencies and the numerous bureaucracies created by government operate with one main goal: to create new laws that in some way affect citizens and/or businesses. Despite the blustering of politicians who claim to want to limit government and return businesses to "the free market," regulation continues in one form or another. Government intervention has become a fact of life, and part of the price one pays for running a business.

There are good and bad aspects to this fact. If you're looking for the good, go no further than the residents of South Coast and San Joaquin who simply want to breathe fresh, healthy air. You think they appreciate having government officials looking out for their well-being?

On the other side, consider the stress environmental rules put on shops — small businesses that must finance expensive outlays in equipment and materials, then too often scrape for every dollar just to get by. Because they use a host of hazardous materials, shops are constant targets for regulation and monitoring. When a new rule or law impacts their busi- nesses, shops typically must shoulder the burden alone.

As with Rules 1151 and 4216, governments don't rush financial aid or tax relief proposals to help them out. Young says shops in California typically share an even more difficult burden due to a culture that (1) puts them at ground zero for new environmental rules and (2) isn't always concerned about survival. Young says, "The people in government here take the attitude that if you don't like the rules maybe you shouldn't be in business here. If you don't like it, maybe you should move out of the state."

On the tails of the new rules, shops in California and nationwide can now look forward to greater regulation by the EPA. As part of the Clean Air Act, the EPA has to identify and regulate the major sources of urban pollution that pose the greatest potential health threats. Termed "area sources," these are individually small (emitting less than 10 tons annually of a single hazardous air pollutant or less than 25 tons or more annually of a combination of hazardous air pollutants), but large in number and collectively may pose health risks.

Autobody refinishing has been identified as one of the 55 source categories that still need to be regulated. It is on the EPA agenda however. The EPA is likely to publish a proposed rule in 2007, followed by a 60-day public comment period, and publish a final rule in 2008. After the final rule is published, shops would have a specified period of time (not to exceed three years) to comply.

This rule will have nothing to do with VOCs, which form ground-level ozone. Instead, the rule will limit emissions of, and exposure to, toxic chemicals that have other adverse health effects.

Rule makers have listed several potential measures, including requirements on:

• Enclosed spray booths
• HVLP application equipment
• Enclosed gun cleaners
• Training for painters

Perhaps lost in this discussion are two points. One, being a responsible business — one that cares for its neighbors, the community and its resources — is part of being in business. Two, shops benefit from environmental rules. Employees breathe cleaner air, work around fewer toxins and reap the benefits of a safer, healthier workplace. Environmental efforts ultimately may be responsible for driving the technology upgrades that produce toxin-free shops, or the next closest thing. That outcome is good for everyone.

Shops understand all this and want to do the right thing. But that's not going to stop industry members from wondering if they're being asked to do a bit too much on their own.

In the meantime, shops like those in South Coast and San Joaquin plan to keep on keepin' on. Burroughs may have summed up their attitude best: "Body shops have a great record adapting quickly to change. We're in this business to stay in business. We're in this business to survive."

Tim Sramcik is a freelance writer who has covered the collision industry for more than seven years. He has received national and regional awards for feature writing from the American Society of Business Publication Editors (ASBPE). He also has 17 years of experience in the technical writing industry.