Small Businesses Hit Harder by VOC Regulations

Many retailers who carry paint and coatings, whether they’re small or large, national or local, are sifting through an ever-increasing library of regulations on volatile organic compounds (VOCs).

One of the key problems among stores, especially small retailers, is keeping current with new regulations, explained Harry Ching, a project manager with the New York Small Business Environmental Assistance Program, a non-governmental entity that helps small businesses comply with, among other initiatives, regulation of VOC levels in coatings.

“One of the tough things for [small business owners] is just to be well-informed,” Ching said. “I’d probably have to say that the majority of people who are cited, if they knew, they would comply. The most common thing we hear from businesses is that they just didn’t hear about it.”

In New York, regulation of VOCs was the issue of hot debate this spring, when the New York Department of Environmental Conservation, faced with pressure to reduce its VOC output, changed the sell-through date on products with high levels of VOCs to May 15.

After lobbying by retailers and groups such as the Northeastern Retail Lumber Association (NRLA), that date was pushed back to July 15.

But the time period was still not enough for many retailers to move or sell off their inventory—if they were aware of the new regulations at all. That’s left some store owners with fines that can reach up to $15,000 per violation, per day, for noncompliance with the state’s Architectural and Industrial Maintenance regulations.

Aisha Tator, director of legislative and regulatory affairs for the NRLA, said none of the group’s members had been fined as of this writing, but financial pressures have come in other forms.

“We took a major financial hit with this issue—the independent lumberyards, our small guys, really…absorbed all the cost,” she said. “It’s a struggling economy right now, and some members have lost as much as $80,000 [from lost inventory].”

Ching said a small number of stores had been cited since the new sell-through date went into effect, and many retailers were struggling with the issue of what to do with excess inventory.

“One of the first questions we get is, ‘What can I do with the products?’ ” Ching said. “It’s not illegal to have the coatings on-site, but we tell them that you can’t sell it. The first thing they have to do is pull the coatings off the shelves and put them in the back. They ask, ‘Can I give it away?’ But they can’t even give it away, not to charity, not to Habitat for Humanity—at least not within New York State.”

Some of the NRLA’s members were able to donate their excess inventory prior to the July 16 start date for the new regulations, Tator said. Others sold the product on eBay, and the NRLA is continuing to work with enforcement officials on a comprehensive disposal strategy, she said.

The VOC regulations in New York and several other Northeastern and Mid-Atlantic states have been informed by the Federal Clean Air Act’s Ozone Transport Region legislation. States that comprise the Ozone Transport Region are Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland and the Washington, D.C., metropolitan area, including suburbs of northern Virginia. New York was unique, however, in creating such an immediate deadline, Ching said—other states have allowed retailers to sell off inventory before having to comply or set further-flung sell-through dates.

The region is named as such because VOCs contribute to ozone in the atmosphere, leading to the need to control VOCs particularly in those regions where earlier ozone control measures failed—specifically, in the Northeast. The purpose, according to the EPA, is to address ozone problems in the entire region rather than only in large cities.

Small businesses can be at a big disadvantage, Ching explained, when it comes to selling down high VOC inventory. While larger companies with national operations can move product around when it becomes outlawed in one state, but remains legal in others, small businesses often find themselves stuck with unsold—and unsellable—inventory.

“We see if there are other stores they can contact in other states, whether there is something like a hardware store association where they can sell off the inventory,” Ching said.

Similar regulations were put in place in California several years ago—those regulations have served as the backbone of legislation in the Ozone Transport Region states.

Like New York, several other states in the transport region have recently put in place stricter VOC laws—New Hampshire and Maine adopted Architectural and Industrial Maintenance regulations of their own in 2006 and 2007, respectively. Rhode Island, Massachusetts and Connecticut have decided to adopt the regulations as well, to be implemented in late 2008 to early 2009. Vermont has opted not to adopt Architectural and Industrial Maintenance rules.