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Lube law & legislation

October 11, 2010
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For more than 15 years, Joanna Johnson has trudged between Dallas and Capitol Hill fighting for the rights of lube shop owners and operators across America. Johnson, the policy advisor for the Automotive Oil Change Association (AOCA), said while past efforts are now coming to fruition on many issues, it is by no means a downhill battle.

“We’ve had a lot of success over the years,” Johnson said. “But we still have a couple issues that are very tough. For instance, getting relief from the anti-competitive effects of proprietary products.”

Proprietary products came under scrutiny a few years ago when Volkswagen began requiring the use of a specific motor oil that only they produced (otherwise known as a proprietary product.) The AOCA wrote a formal complaint to the Federal Trade Commission, but it fell on deaf ears. Today, the Volkswagen and Audi 2004 model vehicles with 1.9 L TDI engines remain a problem for some independent repair shops and Johnson said the issue continues to grow.

The spotlight is on your rights
Over the past two years, one issue has prevailed among others to become the hot legal topic for not only quick lubes and the AOCA, but for all car care business owners, suppliers and associations. The Right to Repair Act, introduced in 2005, has become the pivotal cause of the car care industry. However, because of the groups involved, mainly the OEMs (Original Equipment Manufacturers) and independent shop owners, getting legislation passed is a slow process. According to Aaron Lowe, vice president of Government Affairs for the Automotive Aftermarket Industry Association (AAIA), it is unlikely to pass this year.

The AAIA has become a major player in the battle to make the bill a law. Earlier this year, the organization commissioned a study by Opinion Research, which serves the public and private sectors. More than 1,000 small independent shops around the country were surveyed to gain a good understanding of the industry.

The results revealed what everyone on that side of the fight already knew: independent shops are losing time and money trying to keep up with the OEMs and the dealerships they favor. Important repair information is being denied to fast lubes, including simple filter applications and fluid capacities so fundamental to their survival. The study also made it clear the problem is much worse in foreign makes and models than in domestics, with General Motors (GM) coming out on top.

What the bill says
The Motor Vehicle Owners’ Right to Repair Act of 2005 would require the vehicle manufacturer to disclose to the vehicle owner or to a repair facility of the owner’s choosing the information necessary to diagnose, service, or repair the vehicle.

Doug Kline, an independent fast lube operator in Tallmadge, OH, put it succinctly: “We’re not asking for much. We’re just asking for the basic necessities.”

The bill names the Federal Trade Commission as enforcement agency of the law. Manufacturers would be required to disclose repair and service information in writing and on the Internet.

Some lawmakers, usually those tied up with OEMs or the Detroit powerhouse, are opposed to the act. One such opponent is Rep. John Dingell, D-Michigan. According to Lowe, if the Democrats take over the full-committee in this year’s election, Congressman Dingell could become chairman of the committee where the Right to Repair bill is currently sitting, and that could present a problem, as Dingell is no friend of the aftermarket industry.

As for now, the bill is waiting a vote in Congress.

“We’re still trying to put pressure to put this bill through the full committee,” Lowe said. “What we want is a good result this year, which we’re going for right now, and that should push us into 2007.”

In need of a healthy bill
In 2005, Sen. Olympia Snowe, R-Maine, introduced a bill to revolutionize health care for small businesses.

Commonly referred to as the Small Business Health Fairness Act of 2005 (S. 406), the bill amends Title I of the Employee Retirement Security Act of 1974 to improve access and choice for small business owners and their employees.

It allows business associations to band together and purchase more economical group health care packages. The bill restricts the types of groups allowed to take advantage of this law — associations must not form solely for the purpose of buying health insurance, they must hold annual meetings and require annual dues for membership, and must not restrict membership based upon the health care plan.

To allow these national and regional associations to purchase health care together, the bill overrides many state regulations. Unfortunately, the language did not sit well with many politicians. To appease those lawmakers uncomfortable with dismantling states’ rights to regulate health insurance, Sen. Michael B. Enzi, R-Wyoming, introduced a new bill, S. 1955. Many small business owners felt the bill paid little heed to their needs.

According to Steve Christie, executive director of the AOCA, the Enzi bill would disband the state regulations which currently exist, a movement the association favors, but would not call for strong federal regulations to replace them.

“To be perfectly honest, it was a giveaway to the health insurance companies,” Christie said.

Christie, who accompanied Johnson and the entire AOCA board to Washington in September, said the goal now is to let S. 1955 die a “natural death” and urge lawmakers to pick up back where they started with S. 406.

“That plan is much better,” Christie said. “Unless we can get something that’s better than what’s available right now, we don’t want them to destroy the health care system as it exists just to create association health plans.”

An urgent need
Meanwhile, small business owners across the country are growing impatient with rising health care costs. Kline, owner of Ohio’s Ultra 10 Minute Lube, said his shop employs a meager staff of four, yet his health insurance costs have skyrocketed over the past decade and he now pays more than $9,000 per year for his small shop.

“Those of us in the industry realize that to keep our turnout risks down, we have to pay better and offer them better options and benefits,” Kline said. “I’ve been in business for 23 years now, and I can tell you — the costs of retaining good employees is astronomical.”

But for Kline, the big issue remains the Right to Repair Act. “Because it’s only going to get worse. And we’re losing money every day,” he said.

Unlike some independent shops struggling to remain competitive, Kline does not purchase repair or service information.

According to Johnson, the costs for those bulletins hovers around $20,000 a year.

Kline instead relies on other methods of researching these vehicles. Mainly, he uses the AOCA Talk feature on the association’s website.

In less than one year, information found on the website has already paid back his membership dues twice over, he said.

H.R. 2211:
A Superfund refresher

On December 11, 1980, Congress passed a law in response to the Love Canal disaster near Buffalo, NY. Commonly known as Superfund, the Comprehensive Environmental Re-sponse, Compensation, and Liability Act (CERCLA), created a tax on the petroleum and chemical industries. It also gave the government overwhelming authority to respond to the discharge or threatened discharge of hazardous substances.

In its early stages, the tax seemed effective. Over $1.6 billion was collected within five years and CERCLA was amended to increase the amount of the fund to $8.5 billion.

That amount, however, is not enough. Today, the “Superfund” is grossly under-funded and the government cannot afford to clean most sites. Instead, “potentially responsible parties” are often ordered to clean up the sites.

Under CERCLA, four classes of parties, termed “potential responsible parties,” may be liable for contamination at a Superfund site:

  • The current owner or operator of the site;
  • The owner or operator of a site at the time disposal of a hazardous substance, pollutant or contaminant occurred;
  • A person who arranged for the disposal of a hazardous substance, pollutant or contaminant at a site; and
  • A person who transported a hazardous substance to a site.

In 1993, Section 114(c) of CERCLA was amended to encourage service station dealers to accept used motor oil from do-it-yourselfer (DIY) car owners for recycling. The amendment stated those businesses were exempt from CERCLA if such recycled oil was not mixed with any other hazardous substance and was stored, treated, transported or otherwise managed in compliance with regulations in the Solid Waste Disposal Act.

The effective date of the regulations was March 8, 1993. All stations accepting used oil before that date were still liable.

However, the bill originally promised an effective date of Nov. 8, 1986.

The AOCA and other groups are seeking a bill in the House of Representatives, H.R. 2211 which establishes that date.

As of May 2005, when H.R. 2211 was introduced to the House by Rep. Michael Capuano, D-Massachusetts, the EPA had designated 1,604 sites as Superfund locations. Currently, the bill is before the Subcommittee on Environment and Hazardous Materials. Johnson said she is hopeful legislation picks up next year.

Proprietary product problems
Back to the Audi/Volkswagen issue, Johnson says the AOCA had a similar problem with Chrysler on transmission fluids, where independent shops were forced to purchase the fluid from Chrysler — if they could get their hands on it. So far, these issues have been resolved by eventual competition from other vendors, but Johnson said that’s a shaky resolution to a staggering problem.

“It’s access and cost for the service station,” Johnson said. “If you were dealing with 200 proprietary products instead of bulk motor oil, first of all, where are you going to put it? And second, how much is it going to cost you?”

The lack of competition for proprietary products has forced independent shop owners to purchase these products from dealerships, competitors who are certainly not going to give a break on price. Even still, Johnson doesn’t even feel the dealerships have it easy.

“A lot of dealers don’t even have their hands on these products. When the manufacturers do proprietary products, they don’t seem to think it through in terms of the life of the vehicle.”

The AOCA has seen enough problems regarding proprietary products to consider them a looming issue for the future. All it may take, Johnson said, is for one popular vehicle to come out with a proprietary oil or filter. In the meantime, the AOCA will seek out lawmakers who will pressure FTC on the subject, and hope their work with the Right to Repair Act will make consumers hungry for change.

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