The Design Builder's Blog

Get Ready, Complying With the RRP Rule Will Get Much More Expensive

EPA to raise RRP fees

Businesses complying with the EPA RRP Rule should plan ahead for increased costs.  Because of EPA's mismanagement and lack of accountability regarding the RRP Rule, the actual costs to administer and enforce the rule have so far dramatically exceeded the fees collected from complying firms.   To address the shortfall of funds EPA plans to raise the fees related to the rule.  This will likely mean that the cost of firm certification and firm re-certifications will dramatically increase.  And, because the RRP rule is required to be self funding, it looks like EPA will need to raise the fees high enough to offset their losses since the program began, as well as their ongoing costs going forward.

The increased costs will definitely add to the advantages non-complying firms have been enjoying so far, further punishing legitimate businesses for complying.  I also predict the increased fees will promote more illegal work, therefore more kid will be needlessly poisoned because many in our our government are incompetent.

The amount of the EPA RRP fee increases is not yet known

Because EPA did not do an accurate estimate of program costs and revenues when they set their original fees, money coming in to support rule administration is not coming anywhere close to the actual costs.   If EPA were a for profit business they would already have gone out of business when it comes to RRP.   But, because the EPA and its leadership are not held to the same standards as for-profit businesses and business leaders, not only will they be allowed to continue operations, those at EPA who are responsible for the RRP rule get to keep their jobs and paychecks, despite such dismal performance.   And, rather than concentrate on fixing their business plan to create financial health, EPA can simply charge their customers more money.   The problem is that their customers, those who must comply with the rule, do not have any other options they can choose from to do business with.  

Here is a summary of information to help you understand what has happened and what to expect going forward

Note: Info below is from an EPA Office of Inspector General Report dated 2/20/13 titled "EPA Is Not Recovering All Its Costs of the Lead-Based Paint Fees Program”

• EPA had not conducted a formal cost study to determine its actual program costs before establishing fees.
• According to the report, EPA is losing money on the RRP program.
• Based on the agency’s estimates since the RRP rule went into effect in 2010, the total loss will amount to around $16.4 million by 2014.
• Fiscal year 2010, the first year of the rule, actually netted a profit of $8.9 million, but costs are exceeding fee collections by $25.3 million for 2011 through 2014.
• The report pointed out three issues contributing to the EPA’s unrecovered costs.

1. The agency has not conducted recommended biennial cost reviews to ensure that fees are in line with costs.  (Think WAG: "Wild Ass Guess")
2. The fee structure also does not take into account all the indirect costs needed to recover the cost of administering the RRP program.
3. RRP firm participation is lower than the EPA projected.

• The report says that by not recovering all of its program costs, “the federal government did not collect funds that otherwise could have been available to offset the federal budget deficit.” (In business speak this means they contributed to the deficit by operating beyond their means.) 
• The OIG recommends that the March 2009 fee schedule for the lead-based paint program be adjusted “to reflect the amount of fees necessary for the program to recover the costs of implementing and enforcing the program.”
• The report indicated that the EPA agrees with the recommendation and "intends" to take “corrective actions".  
• According to the report EPA agreed and plans to conduct a biennial cost review of the RRP program in Fiscal Year 2013.

Wrapping this up!

Here is what the EPA Inspector General had to say:

“The President’s Budget Message for FY 2012 states that reducing the long-term federal deficit must be a priority. The federal government is looking for ways to save money and cut unnecessary costs. We believe that EPA could help the federal government in this endeavor by collecting more lead fees to recover more of its costs"

So to save money and cut unnecessary costs, does your business raise its prices too?

Contractors, Will Your Use Of Subcontractors Land You In Jail too?

Being a contractor is no longer an amateur sport.  Due to government regulations and laws a contractor can get into serious trouble if he or she is not following the rules of law.   Even if you were ignorant of those rules, the government will still hold you accountable to the legal responsibilities you must accept if you run a residential construction or remodeling business.  A few weeks back I shared how a GC and his subcontractor both got fined for not following the EPA’s RRP rule on the same job due to an anonymous tip.   Between the two businesses they could end up paying about $120,000.00 in fines.   In this blog article I want to make you aware of a contractor who may just go to jail for purposely cheating regarding workers compensation.

The facts

The owners of Triple Star Roofing in Wood County Ohio were recently found guilty of fraud for failing to report their payroll to the Ohio Bureau of Workers' Compensation.  Like the RRP violations mentioned above, their business was investigated after an anonymous tip.   During the investigation bank records were analyzed for the 2004 to 2008 time period.  The investigation found that checks were issued to the same individuals on a weekly basis with many of them indicating “payroll” in the memo section.  As a result the company owners now face possible prison terms of one to five years and fines of up to $10,000.  Additional charges are still pending for the 2009 to 2012 time periods.  I am sure you would agree, they are feeling a world of hurt and are probably scared as hell.

“Schemes like this to avoid paying premium undermine the purpose of workers’ comp insurance – to protect workers who are injured on the job – and will result in unwanted attention from our investigators.”

Steve Buehrer, Administrator/CEO, Ohio Bureau of Workers’ Compensation (BWC)

What about you and your business? 

Are you operating illegally to save money and or to be the lowest bidder?  How would you answer the list of questions I pose below?  I don’t know the laws in your location, but remember, if you were in Ohio, and answered yes to any of them, you too might be facing jail time if you get caught.

• Are you paying employees “under the table” to avoid paying payroll taxes or workers compensation premiums?
• Are you treating employees as subs to avoid paying payroll taxes or workers compensation premiums by giving them 1099’s?
• Are you misclassifying workers to put their payroll into a lower cost workers compensation rate?
• Are other legal and legitimate contractors frustrated that you are stealing work away from them?

These are some of the reasons the owners of Triple Star Roofing are facing potential jail time.   I wonder how their families are doing while they all wait to see what will happen.

So let’s just say you get caught, have to pay fines, but don’t actually have to go to jail.  

How would you look at that?   I know one contractor who had that happen to him.  When I asked him about it he told me he was definitely scared about going to prison so he spent big money to hire a good lawyer to try to keep him out of prison.  He said the lawyer was successful but he was definitely sweating it right up until the final verdict.  He didn’t get any jail time but did have to pay a lot of money in fines.  He also told me that when everything was said and done, and based on all the money he saved over the years by cheating, the fine and lawyer fees were far less than the money he saved.  He told me he felt it was worth the risk.

I then asked him if I asked his wife and kids if they thought it was worth it what their response would be.  He told me he had never thought about that…

Read More Here

Is It Time For A New Way To Professionalize The Remodeling Industry?

Trade associations and even individual remodelers have been trying for years to improve the professionalism of the remodeling industry.  I’ve been involved in this effort myself now for over 20 years.  I definitely think all the effort has been worth it.  Not because I think all the effort has made significant improvements, I really don’t think they have.  Rather I think all the effort has been helpful in preventing the situation from becoming worse.   That’s my opinion from my perspective.  Your opinion may be different.  If it is please feel free to respectfully express it below in the comments area of this blog post.

Unfortunately I think our industry has become excellent at being mediocre.    

And, it appears, the majority of remodeling consumers have even settled on the fact that they will need to accept mediocre performance from their remodeler if they want to get work done on their homes.  Let’s face it; there is even a majority of home owners who literally care about nothing more than total price when they go about selecting a remodeler.  In my opinion most consumers spend more time researching options about the purchase of a television before they choose one than they do before choosing a remodeler.

Maybe we need to think about why consumers spend so little time and effort choosing the right remodeler.  

Has our industry not offered to educated consumers properly so they know how to differentiate between remodelers?  I think it has.  Let’s face it many good remodelers and the trade associations they belong to have been trying to do so for years and although all the effort may have been successful with some consumers, there are still plenty of illegally operating and poor quality contractors working on homes every day.  If consumers were not willing to hire them they wouldn’t be working.

I think it’s time for some radical tactics to change the situation. 

I’ll through a few out here to get the conversation going.  Feel free to offer your opinion on them or to offer your own.

Strategy #1

Unless there is skin in the game for the consumer on this issue why would they change their attitudes and behaviors?   Maybe we should make it mandatory that consumers only hire legal and legitimately licensed contractors for home improvements.  Also, why not make them responsible for the due diligence required to make sure their contractor meets these requirements.  And, if they choose to work with an illegal contractor, leave them on their own.   For example leave them no ability to take the contractor to court.  In fact, why not arrest and fine the home owner for hiring an illegal contractor?

Strategy #2

How about before any real-estate is sold why not require a comprehensive inspection and inventory of the home be done?   By doing so we could document the condition and configuration of that property.  The next time that property is sold, the same inspection should happen again; plus any changes in status should be identified and listed.  Then the property owner should have to provide proof that any work done that required a building permit and final inspection sign-off was actually obtained.  If it’s a pre 1978 home all required RRP paperwork must be provided as well.   If any of this can’t be provided by the seller, the property can’t be sold.  And, if such information cannot be provided the entire property must be brought up to current building code standards and be dust wipe tested for lead paint contamination before it can be sold.

The likelihood of implementation of the two scenarios I offer above is slim to none

I’m sure everyone reading this would have their own reasons why.  Current politicians would never support such strategies because if they did they would never get reelected.   If all home owners had to pay the full legal price of home improvements the majority of Americans could never afford to own a home and homes would probably never become an investment.   I all contractors had to be legal the majority of current contractors wouldn’t do it, many probably couldn’t dfo it.

Reasons or excuses?

To me it seems that all the reasons why we can’t professionalize and legalize the remodeling industry are really just excuses. Because our industry doesn’t have the guts to do it, often for selfish reasons, it will likely never happen.  

If we don’t do it ourselves we may be at the risk that the government will try to do it and force it upon us.   Just think about the RRP rule if you don’t agree. 

And, if this home buyer who bought a flip gone wrong gets his way we might all regret our industry didn’t take our destiny into our own hands…

What say you?

Guest Blogger: D.S. Berenson is the Washington, D.C. managing partner of  Berenson LLP (www.homeimprovementlaw.com), a national law firm specializing in the representation of contractors and the remodeling industry. He may be reached at info@berensonllp.com.

Equal Employment Opportunity Commission to Contractors:  Start Hiring Convicted Felons!

Our friends at the Equal Employment Opportunity Commission (EEOC) have recently decided that “equal opportunity” should include convicted felons.  That is according to a bizarre and confusing “guidance report” recently issued by the EEOC directing employers to hire more felons and other ex-offenders .  And if you refuse?  Well, then you risk committing a federal crime.

The EEOC was originally established to enforce Title VII of the 1964 Civil Rights Act – allowing workers to bring suits and claims against employers for illegal hiring practices against minorities.  But like a number of federal agencies, the EEOC seems to be reinterpreting and expanding their mandate to fall into a more “politically correct” frame of mind these days. 

Some History

In the late 1980’s the EEOC sued a Florida trucking company because the company refused to hire a Hispanic man applying for an open truck driver position.  The company, Carolina Freight Carrier Corp., showed the EEOC that the man had multiple arrests and had served 18 months in prison for larceny.  “So what?” said the EEOC, that has nothing to do with his qualifications to be a truck driver.  The EEOC stated that company’s hiring practices created a disparate or unequal impact on minorities - and as a result was illegal.

The case went to court and was heard by U.S. District Judge Jose Alejandro Gonzalez Jr. (and, yes, he was Hispanic).  The judge, in ruling against the EEOC, summed the situation up nicely: "EEOC's position that minorities should be held to lower standards is an insult to millions of honest Hispanics. Obviously a rule refusing honest employment to convicted applicants is going to have a disparate impact upon thieves."

Not surprisingly, the EEOC ignored the ruling and moved ahead anyway. In 2012, the agency formally declared that that "criminal record exclusions have a disparate impact based on race and national origin."  (In plain English, that means that refusing to hire convicted criminals results in discrimination against minorities).

Catch 22?

With the most recent guidelines, the EEOC is now warning employers that refusal to hire job applicants due to a criminal past will be seen as a violation of the Civil Rights Act.  Sadly, the EEOC doesn’t tell us what to do when we hire a convicted felon, but then get sued when the convicted felon commits crimes against our customers and office workers.

For those who believe in the domino effect, stay tuned:  President Obama has just nominated Tom Perez to head up the Department of Labor. Mr. Perez currently sues banks for discriminatory lending practices in his role as head of the Department of Justice’s civil rights division.  His legal theory in these suits?   That employers are liable if their lending practices result in a “disparate impact” to minorities – the same theory now pushed by the EEOC in regard to employers refusing to hire convicted felons!

RRP Amendment Introduced in the Senate, Will Opt-Out Provision Return?

On March 6, 2013, Senator James Inhofe (R-Okla.) and six cosponsors reintroduced a bill in the Senate titled “The Lead Exposure Reduction Amendments Act of 2013 “  to help ease the burden of the LRRP Rule on Contractors and home owners, while at the same time would also protect pregnant women and small children from lead hazards. (See Senate bill sent to Congress here)

 These Videos About The EPA RRP Rule Offer Good Refresher Info

According to Inhofe’s web site The Lead Exposure Reduction Amendments Act of 2013 would accomplish the following:

• Restore the “opt-out provision” which would allow homeowners without small children or pregnant women residing in them to decide whether to require LRRP.
• Suspend the LRRP for homes without small children or pregnant women residing in them, if EPA cannot approve one or more commercially available test kits that meet the regulation's requirements.
• Prohibit EPA from expanding the LRRP to commercial and public buildings until EPA conducts a study demonstrating the need for such an action.
• Provide a de minimus exemption for first-time paperwork violations and provides for an exemption for renovations after a natural disaster.
• Eliminate the requirement that recertification training be "hands on," preventing remodelers having to travel to training facilities out of their region.

Good or Bad?

Many contractors have been looking to have the Opt-out Provision restored after it was removed in July 2010.  Under the original RRP Rule, the Opt-out Provision granted homeowners the right to forego the use of the required RRP work practices if pregnant women or children under six did not live in the home.  According to the EPA’s own math, removing the Opt-Out more than doubled the number of homes subject to the LRRP Rule, and is estimated to add more than $336 million per year in compliance costs to the regulated community, which includes homeowners.  Also, without a test kit that can accurately test for the amount of lead present on a surface, many homes are assumed to have lead paint and homeowners are unnecessarily paying for RRP compliance because EPA assumed a test kit would magically appear by September of 2012.   We are all still waiting and may be waiting for quite some time.  Scientists I spoke with about this say creation of such a test kit is not impossible, just not achievable at an affordable price with current knowledge and technology.

Here are a few pull quotes regarding the amendment:

“Currently, the EPA requires contractors to follow extensive safety practices in a one-size fits all approach. Even if the home does not have lead paint or there is not an individual of the at-risk population residing in the home, contractors are required by the EPA to follow the LRRP safety measures which in turn dramatically increase the costs of renovation work.  My bill would allow homeowners to opt out of the rule if the home does not place those in the at-risk population in direct harm of lead exposure. It would also require the EPA to develop working test kits to ensure that contractors have the ability to determine whether lead paint actually exists in project homes.”  

U.S. Sen. Jim Inhofe (R-Okla.)

"While we support the goal of protecting pregnant women and small children from lead hazards, EPA's effort to expand the Lead Rule beyond its original intent, its aggressive pursuit of paperwork violations, and its failure to approve a lead test kit meeting its own rule has been an extreme burden on a residential market that is just starting to recover from the recession. We commend Senator Inhofe for his continuing leadership on this issue and will make the legislation a focus of our upcoming Legislative Conference in Washington."

NLBMDA chairman Chuck Bankston, president of Bankston Lumber in Barnesville, Ga

"The Inhofe bill is a common-sense response which will refocus efforts on protecting pregnant woman and small children and we applaud Senator Inhofe for his leadership on this issue."

WDMA President Michael O'Brien

(Read this RRPedia post for clarification regarding the legal definition of Lead paint and why the test kits currently recognized by EPA cannot be used to accurately determine if lead paint is present; based on how lead paint is defined by EPA)

In addition to Senator Inhofe, the cosponsors of the amendment include Senators Roy Blunt (R-Mo.), Tom Coburn (R-Okla.), Mike Enzi (R-Wyo.), Deb Fischer (R-Neb.), Charles Grassley (R-Iowa), and David Vitter (R-La.).

RRP Conundrum: To Test or Not to Test for Lead Paint.

Since the EPA RRP rule came into effect in April of 2010 renovation contractors have debated and bantered the topic of doing lead testing before they offer to sell and or perform renovations at pre 1978 properties. Due to lead testing disclosure requirements many contractors and properly owners have concerns about doing the testing.  Once a property is identified as containing lead many other laws, legal considerations (page of related articles) and potential liabilities kick in for both.   The catch 22 on this subject is that, under the RRP rule and the OSHA lead in construction regulations, if testing is not done before work begins, contractors must assume there is lead present.   It’s only natural under this scenario then that renovation workers, property owners and tenants at those properties are also left to assume, and worry, that there is lead and conducting renovations may leave them exposed.

Often discussions on these topics get passionate when contractors express their concerns about the liability they feel the rule exposes them and their businesses to even if they follow the rule and comply with all of its lead safe work practices and documentation requirements. Many contractors feel the EPA should have written some level of protection from liability into the rule for those renovators who abide by it. 

Recently I discussed these considerations with John MacIssac of ASAP Environmental.  John is MA State Certified Lead Inspector and Risk Inspector and an expert in renovation and construction.  During that conversation John and I assembled a list of the considerations that seem to rise to the top during those discussions.  

Who pays for RRP lead testing?

If a certified renovator will not be the one doing lead testing for RRP purposes, the testing must be done by a licensed lead testing professional.  Licensed lead inspectors in Massachusetts and other states cannot accept money for lead testing from contractors under contract with a property owner.  Therefore the homeowner is responsible for payment of all services relative to the lead testing.

Are you removed from liability if RRP lead testing is done?

Depending on the contractor liability insurance that you have you may be removed from liability if you do the testing, cleaning and cleaning verification yourself.  If you do not have insurance you are not removed from liability.  If you have a licensed lead inspector do the testing and clearance you are removed from liability if the company you hire to do the testing has their own coverage.

Considerations related to doing testing yourself using test kits vs. using a licensed lead Inspector

• Time it takes to do the testing and fill out the paperwork
• Cost of test kits depending on number of components to test
• Damage to components
• The EPA recognized lead test kits are qualitative where as a XRF test is quantitative.   Under the EPA RRP rule’s legal definition of lead paint, the amount of lead present may be below RRP definition, but, if using test kits, any positive result triggers need for compliance even if below definition.

Pretesting to establish a point of reference when clearance testing will be a requirement at completion

A pretest for lead dust could establish whether the site is already contaminated or not.   If it is, who will perform and pay the related costs to get it cleaned up before the contractor starts renovation work so the contractor is only then responsible to clean up affected work areas and pass dust wipe clearance testingat completion?

Education will be key in preventing liability

There are typically no easy answers to these considerations or guaranteed ways contractors can sell and do their work to prevent the possibility of liability.  That said education about the considerations and available options is probably the best way for contractors to protect themselves and their business.

If you’re in Massachusetts and want to learn more about the RRP rule, lead testing considerations and lead testing options John will be hosting a free Lunch and Learn Session at National Lumber in Mansfield MA on March 3^rd, 2013 from noon to 1PM.   The Lunch and Learn Session will be held before the start of a workshop presented by RRP Instructor and RRP Rule expert Mark Paskell titled “RRP and OSHA Workshop for Contractors and Remodelers” that will also include a discussion about the differences between the EPA RRP rule and the Massachusetts RRP regulations.

Unhappy With Government Policies and Regulations Affecting Remodeling Business?

On February 5, 2013, the nonpartisan Congressional Budget Office released a projection that the economy will remain slow this year. Unemployment is expected to remain above 7.5% through 2014 for a sixth consecutive year, the longest stretch in the past 70 years. While the CBO forecasts that the nation’s yearly deficit will dip below the trillion dollar threshold, it is projected to rise again later in the decade. Responsible spending reductions are needed to change that trajectory. By 2023, the national debt is projected to equal an unsustainable 77% of the nation’s economy (Gross Domestic Product), and still be going up.

Recently, the House Small Business Committee launched a new resource to help small businesses help shape federal regulations and add some real world common sense to the process. This initiative, “Small Biz Reg Watch,” will highlight proposed regulations that will likely affect small firms, and inform business owners of how to make comments to the appropriate federal agency.

Chairman Sam Graves Discusses Small Business and the Economy

Make Your Opinion Known

Most small businesses do not have lawyers or lobbyists to help them with regulatory compliance, like some larger corporations do. Not all regulations are bad, but many can be unnecessarily burdensome, so it is important that small companies get to express their concerns before rules become final. Small businesses bear a regulatory cost that is much higher than the cost of compliance for large businesses. This initiative will help small companies make their voices heard. 

On select proposed rules that impact a large number of small businesses, the Committee will communicate about the regulatory comment period via email, social media, and even district events around America. Small businesses are also encouraged to join the hundreds of small firms that share insights with the committee at their interactive web platform, “Small Biz Open Mic.”

Note:  Most of the content of this blog post comes from the Weekly Update email newsletter published by Sam Graves, Chairman of the House Committee on Small Business.  Click here to sign up for the weekly e-mail newsletter and other e-mail alerts.