Dealers from across the country will join legislators in Washington March 18-20 for the National Lumber and Building Material Dealers Association’s (NLBMDA) annual spring meeting and legislative conference. Dealers can expect three issues to top the agenda: restoring an opt-out clause to the Environmental Protection Agency’s Lead: Renovation, Repair, and Painting Rule (LRRP); maintaining the mortgage interest deduction; and supporting legislation that allows states to collect sales tax from online retailers that do business within its borders.
The association’s call for dealers to support legislation that restores the opt-out clause and mandates the availability of qualified lead-level test kits represents a tactical shift by the NLBMDA and other industry organizations. In July 2010, the NLBMDA joined the National Association of Home Builders, the Hearth, Patio and Barbecue Association, and the Window and Door Manufacturers Association in suing the EPA in the District of Columbia appeals court after the agency removed from the LRRP rule a clause that exempts contractors whose project exposes lead paint but does not affect pregnant women or children under the age of 6. The lawsuit was unsuccessful.
“At this point, going through the legislature is our best option,” said Ben Gann, the NLBMDA’s director of legislative affairs and grassroots activities. “We want to make the rule more like what we initially expected it to be.” In its pre-conference report, the NLBMDA said removing the opt-out provision adds $226 million to the cost of complying with the rule while bringing 41 million homes without pregnant women and children under the rule’s jurisdiction. The proposed legislation asks Congress to restore the opt-out provision, requires the EPA to develop a test kit that produces no more than 10% false positives, and asks that a timeline be established for implementing the new legislation.
Dealers will also discuss proposed legislation that gives states the option to collect state taxes on online-only businesses as well as out-of-state retailers with an online component that sell in the state. Introduced in November 2011, The Marketplace Fairness Act did not make it onto the 112th Congress’ agenda but was reintroduced in the House of Representatives and the Senate Feb. 14. Still, online retailers remain a potent threat to dealers as Web-based rivals such as Amazon Supply expand their market reach among product categories that offer a high gross-margin-to-weight ratio, including fasteners, power- and hand tools, lighting, and plumbing fixtures. “It’s not just lumberyards, it’s not just local retail,” Gann says. “It’s also the 'Amazons' of the world. EBay is really the one that’s pushing back."
L.E.K. Consulting’s Robert Rourke last month discussed with ProSales online retailers’ competitive threat. Amazon Supply’s parent firm made headlines recently after a succession of announcements that it would set up distribution centers in key markets—forcing the company to pay taxes in those states—while openly backing the Marketplace Fairness Act. “We believe they would not make this move lightly,” Rourke told ProSales, noting a key advantage. “These [distribution centers] can reach nearly 70% of the U.S. GDP with same-day shipping.” Since Jan. 1, 2012, Amazon announced the construction of distribution centers in Delaware, South Carolina, Indiana, Washington, New Jersey, and California. The New York Timesexplains Amazon’s progress in setting up distribution centers nationwide and the markets it is targeting.
Expect dealers to support keeping the mortgage interest deduction—of up to $1 million in acquisition mortgage debt and up to $100,000 in home-equity loan debt—in the tax code. “Since the federal tax code was enacted in 1913, the tax credit was the cornerstone of American housing policy,” Gann said. “That needs to continue.”
This story was updated March 19 to correct the value of the additional costs associated with the removal of the EPA's Lead: Renovation, Repair, and Painting Rule. The compliance costs are $336 million, not $226 million as previously reported. We regret the error.