Standards & Legislation

Contractors Endure Regulatory Burden

Changing Regulations, Health Care Act Top List of Worries

February 10, 2014
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While the economy appears to be picking up for much of the country, some HVAC business owners are concerned that ever-increasing government regulation is threatening the market. For example, when Denise Fano, operations manager for The Weather Busters, Paramus, N.J., explains what’s worrying her this year, the first thing she mentions is government.

Specifically, Fano is concerned about the “constant growth of both local and federal governments’ rules and regulations governing our businesses.”

Others also share apprehensions about the growth of regulations affecting the HVAC industry. Richard Lantz, general manager of Air Duct Cleaners of Virginia, Chesapeake, Va., said that while he’s optimistic about the local economy, he is “concerned about too much government intervention into the public sector.”

Putting it bluntly, Dave Yates, president, F.W. Behler Inc., York, Pa., said, “Overbearing regulations hamper growth, increase overhead, and generate uncertainty that causes businesses and homeowners to pull back from moving forward with projects.”

Unsettled Uncertainty

When government regulators change the rules too frequently, contractors say they remove stability from the marketplace.

According to Fred Kobie, president of Kobie Kooling, Fort Myers, Fla., the worst part of government regulation isn’t the rules themselves, but how frequently they change.

He pointed to the equipment efficiency standards as an example, “not because of the regulation, but because of the constant change and idiocy in some applications.”

Kobie explained, “For instance, [look at the] 13 SEER federal minimum standards. The actual SEER rating of any system depends on its application, but there is no measurement of actual operating SEER to meet the standard. Why? We are required to buy more-efficient machines that are mostly installed in a fashion as to not reach the desired efficiency. New construction aside, most replacements do not achieve rated efficiency and thus the regulation is a wasted effort.”

Overall, Kobie said, “I believe the constant change is hurting consumers. The failure to reach efficiency is already rampant and it will only get worse. The changes should be less frequent.”

As another example of uncertain and changing regulations, Martin Hoover, president of Empire Heating and Air, Decatur, Ga., referred to “the whole debacle with R-22.”

He said the EPA’s changing allocations on R-22, as well as the loophole that allowed dry-shipping of R-22 units, “make you sound like a crazy person explaining the situation.”

Health Care Effects Still Unknown

Another government-caused worry for many contractors is the effect of the Affordable Care Act (ACA), commonly referred to as Obamacare, as it continues to be implemented. Ken Misiewicz, president and CEO of Pleune Service, Grand Rapids, Mich., said the Affordable Care Act is putting heavy administrative costs on his business “that have to be passed on to the consumers if we are going to stay in business, and yet the consumer receives no benefits for these expenses.”

He added, “When prices go up, they want to know why. The current answer is: government.”

Similarly, Jim Miller, president and CEO of Murphy & Miller Inc., Chicago, said, “We are concerned about the cost reduction push-through from the negative impact of the ACA.”

Yates referred to it as the “Unaffordable Care Act,” and he and many other contractors are worried about how it will impact their companies further down the road.

Douglas Lindstrom, co-owner of Lindstrom Air Conditioning & Plumbing, Pompano Beach, Fla., said, “My concerns are interest rates going up when the Fed stops buying bonds, and the effect of Obamacare in 2015, when I believe the rates will spike significantly in the high 20-30 percent range.”

While Hank Bloom, president of ECS, Mentor, Ohio, believes everything is stable for now, he added, “My concerns are rising overhead costs like health care taxes and tax incentives being taken away that are difficult to budget.”

Overbearing Agencies Increase Burden

In addition to the hot-button issues like DOE standards, EPA phaseouts, and health care, there are other areas where contractors feel that government intrudes too much into their business.

For example, Karl Roth Jr., CEO of A.N. Roth Co., Louisville, Ky., said the Occupational Safety and Health Administration (OSHA) is his biggest pet peeve, since he has always considered safety to be job No. 1.

“Many of the training requirements are overdone,” he said. “You have to be a certified forklift driver and certified to operate a scissors lift,” he said. “Yearly hazard communication and many of the other requirements are extremely difficult for small business to deal with.”

For Brian McDonald, general manager of Outer Banks Heating & Cooling, Kill Devil Hills, N.C., it’s his state’s Department of Environment and Natural Resources that causes him headaches.

“They have such restrictive regulations on closed-loop ground bores; it’s crazy,” he said. “They treat them like water wells for some reason. For example, the vertical bores are supposed to be 15 feet from any structure attached to a house. When we met with them before the rules went into effect, I asked them why and they said the hammer drill action causes basement walls to crack. My first question to them was: When did you start regulating the actual house structure? That’s an issue between the driller and the property owner. The second thing I told them was we don’t have basements here. Our houses are almost all on pilings a minimum of 8-feet above ground, and we live on a sandbar so we mud rotary drill, which has no hammer action at all.

“They then decided they needed to add a form so HVAC and loop contractors can request a variance. If they already knew they needed variances, why not just fix the rules?” McDonald asked.

Licensing Laws Lack Teeth

For those striving to stay compliant with the complex and ever-changing regulations that impact their businesses, one of the most frustrating aspects of such diligence is when repercussions aren’t inflicted on those who don’t follow the rules.

“Labor laws, OSHA, mandatory certifications, and qualifications are a burden and added expense to the contractor doing it right. Here, the guys that just ignore the rules seldom, if ever, get punished,” Hoover said. “If we could just get our local guys to actually deal with unlicensed contractors, it would be a huge help.”

Kobie agreed, stating, “The penalty for unlicensed activity lacks any real teeth, and the lack of enforcement for unpermitted work is a disgrace.”

SIDEBAR: Contractors Buck the Trend

While it’s easy to complain about government, two Texas contractors have adopted a different attitude. Pat Rucker, president of Entech Sales & Service, Dallas, said he’s looking forward to the future, despite his concerns.

“At my age there is no point in worrying about it,” Rucker said. “I just want to stick around and see what’s going to happen next.”

And the ultimate symbol of a positive attitude about government regulations is exhibited by Steve Saunders, CEO of Tempo Mechanical, Dallas.

“We waste no time at Tempo by being frustrated with or trying to determine which regulations are good and which are bad. We don’t frustrate ourselves with the government because they don’t make some things easy or because they are making other things too expensive. This is simply wasted effort and wasted brainpower,” he said. “Our time is spent trying to figure out how best to be above the baseline for performance and ahead of the curve of regulatory change. If we are in front of what the government is doing, then their changes do not impact our business, nor our customers’ problems.”

Publication date: 2/10/2014
 

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