WASHINGTON-A Republican majority in Congress means a host of opportunities for business and industry in 1995, according to Washington representatives for rubber manufacturers, tire dealers, retreaders and auto repairers. What those opportunities are, however, is a matter of some disagreement, although everyone agrees that tax cuts, Superfund reauthorization and product liability reform will be both prominent on Congress' agenda and favorable to business interests.
Health care-the No. 1 issue a year ago-will be back again this year, but in a form much less alarming to business, the pundits agreed.
Not all the changes in Congress were necessarily for the better, some said. ``We lost some good friends in Congress,'' said Robert L. Redding, Washington representative of the Automotive Service Association.
But he hastened to add that there is no reason to believe the new members won't be sympathetic to the automotive aftermarket.
``I think the 104th Congress will be more sympathetic to business, as to both economics and politics,'' said Roy E. Littlefield III, government relations director of the American Retreaders' Association.
Major issues of concern in 1995 include:
A reduction of the capital gains tax, one of the GOP's pet initiatives, is virtually a given in 1995. The various proposals by the Clinton administration and the Republicans to cut taxes for the middle class also are seen by business as enhancing consumer confidence and purchasing power.
Tire dealers and retreaders also hope for establishment of a 100-percent deduction for health insurance premiums for the self-employed, as well as reinstatement of the Targeted Jobs Tax Credit, which offers a partial deduction for the first-year wages of newly hired workers from various handicapped or underprivileged groups.
The National Tire Dealers & Retreaders Association wants to see the write-off for plant and equipment expenditures reinstated, said Donald T. Wilson, NTDRA government affairs director.
``A lot of small businesses didn't get to take advantage of that deduction, since they don't have the capital to make those purchases,'' he said. ``But if that deduction goes in, a lot of our people might be encouraged to buy new equipment or increase the purchases they already planned to make.''
Some in the industry would like to see even more sweeping changes in the tax code. ``We have a golden opportunity-which may be wasted-to really overhaul tax policy in this city,'' said Thomas E. Cole, president of the Rubber Manufacturers Association.
A flat tax on income (i.e. no deductions), combined with some sort of national value-added tax, is what Mr. Cole believes would create true fairness and simplicity in taxation. ``But the tax lawyers and the housing industry would never stand for it,'' he said.
At the beginning of 1994, industry was lining up to oppose the Clinton health-care package, which would have forced businesses to pay 80 percent of employees' health insurance premiums.
Now, thanks to the election, the employer mandate has gone the way of the dodo and the passenger pigeon. The Republicans want to revisit health care, but no one expects the sort of sweeping legislation proposed by Mr. Clinton and several members of Congress.
There will be a new bill, Mr. Cole predicted, but one that likely will focus on insurance reform.
Although tire manufacturers, dealers and retreaders remain vitally interested in scrap tire issues, they believe there is much less chance for federal scrap tire legislation in 1995 than in the last few years.
For one thing, the Resource Conservation and Recovery Act may not be reauthorized in the 104th Congress. Of all those questioned, only Mr. Littlefield thought RCRA was likely to be seriously considered. The others thought Superfund and perhaps a new Clean Water Act would take precedence, with RCRA being acted on only if time remains.
``RCRA is not in the cards, and without RCRA there is no vehicle for scrap tire legislation,'' said Peter J. Pantuso, RMA vice president of public affairs. Most of the congressmen who backed scrap tire bills-James Slattery of Kansas, George Hochbrueckner of New York and Alex McMillan of North Carolina-either retired or were defeated in November.
Furthermore, Mr. Pantuso said, scrap tire legislation generally is regarded as an unfunded mandate, and as such is almost certain to be opposed by new House Speaker Newt Gingrich.
This, however, is not necessarily bad, Mr. Pantuso added. State scrap tire laws, combined with free-market efforts to make scrap tires a commercially viable product, already are stemming the tide of new scrap tires and beginning to make inroads in stockpiles.
``Oregon and Minnesota have almost cleaned up their stockpiles,'' he said. ``Other state laws are being reauthorized, and the legislatures are taking a second look at these laws to see what worked and what didn't.''
One ill-starred federal law involving scrap tires is Section 1038 of the Intermodal Surface Transportation Efficiency Act of 1991. Section 1038 requires the states to use an increasing percentage of crumb-rubber-modified asphalt in federally funded highway projects.
At the behest of state highway officials and conventional asphalt manufacturers, Rep. Bob Carr, D-Mich., successfully sponsored an amendment to Transportation Department appropriations, forbidding the Federal Highway Administration from using any of its funds to promote or enforce Section 1038.
The Clinton administration renewed the Carr amendment in DOT appropriations for fiscal year 1995, and efforts to pass a compromise measure failed in 1994. The outlook for getting asphalt rubber on U.S. roads in 1995 is iffy, according to Mr. Wilson.
Since Mr. Carr is no longer in Congress, supporters of Section 1038 may have a better chance of getting his amendment overturned. However, many state governors-particularly George Voinovich of Ohio-have complained Section 1038 is an unfunded mandate, and Mr. Gingrich is likely to heed them.
If rubberized asphalt use is to increase, the states must lead the way, Mr. Wilson said. ``Some state highway departments, such as California, Arizona and Florida, are convinced the stuff works, no matter what Washington, D.C., says.''
Superfund reauthorization had bipartisan backing in the 103rd Congress, but time ran out before it could be passed.
The funds on hand could keep Superfund going for the next few years, according to Mr. Littlefield, but widespread dissatisfaction over the current law will make Superfund perhaps the only real environmental mandate next year.
``Clinton refused to consider repealing retroactive liability last year,'' he said. ``We're not sure we can get total repeal, but if we can get an exemption for used oil and scrap tires, that would be a significant improvement.''
Obtaining the revenue and legal tradeoffs to justify rescinding retroactive liability will be tricky, according to Mr. Wilson.
``We can't just go to Congress and say, `Relieve us of retroactive liability and just leave that waste out there,'*'' he said. ``That's not responsible.'' Business might or might not support a broad-based tax to clean up Superfund sites closed before 1986, he added.
The chances of passing a comprehensive product liability reform bill look better now than at any time since the first tort reform bill was introduced in 1981.
House Republicans are backing their ``Common Sense Legal Reform Act,'' which would place limits on punitive damages, reduce the liability of retailers who unknowingly sell defective products, and force unsuccessful plaintiffs in some cases to pay defendants' legal fees.
A bipartisan group of senators, led by Jay Rockefeller, D-W.Va., and Slade Gorton, R-Wash., support a less sweeping bill that would not cap punitive damages.
While everyone in the industry is pleased at the prospect of uniform federal product liability rules, those on the retail side hope for a bill that will specifically protect their interests.
The Rockefeller-Gorton bill, Mr. Wilson noted, retains joint-and-several liability for retailers. ``While they relieve retailers of liability for selling defective products in good faith, they still allow them to be sued if the manufacturer cannot be sued.'' Bankrupt firms and many foreign manufacturers are untouchable in U.S. courts, he said.
Tire rolling resistance
President Clinton, at Michelin North America's urging, included a rolling-resistance/fuel-economy rating system for tires in his Global Climate Action Plan, and the Transportation Department appropriations for fiscal 1995 contain a provision demanding a fuel economy labeling rule by June.
Besides Michelin, however, tire makers and dealers are far from enthusiastic about a rolling resistance grade. But congressional Republicans could slow the path of such a regulation. ``It depends on whether Congress insists on legislative oversight,'' Mr. Cole said.
Everyone in the industry is jubilant over Republican plans for regulatory reform.
``The next thing scheduled for business in Congress is comprehensive regulatory reform, mandating the use of cost-benefit analyses and sound science,'' Mr. Cole said. ``There will be no regulations coming out of this Congress like those we had coming out of the Carter administration.''
``We have a better opportunity overall to put some curbs on the regulatory process as practiced during Clinton's first two years,'' added Philip P. Friedlander Jr., executive vice president of the NTDRA.
``Congress may not be able to stop regulation, but it controls funds for the process,'' Mr. Friedlander said. ``This is one of the most important things for our members; I'm hearing complaints similar to what I heard during the Johnson administration.''
Vehicle I/M programs
With various states rebelling against expensive new testing equipment and centralized testing facilities, the Environmental Protection Agency is now willing to back down from those requirements for enhanced vehicle inspection/maintenance programs.
The auto aftermarket, while wanting to ensure I/M programsstay in place, applauds the retreat on the issue of centralization.
``We have always supported letting the states design their own I/M programs,'' the ASA's Mr. Redding said. ``Some will choose centralized testing; some, decentralized or a mix of the two. We don't claim to know what's best for a state.''
The ASA met with air quality officials at the EPA some weeks ago to support Virginia's plan for a hybrid testing program allowing some auto repairers to continue testing, according to Mr. Redding.
The ARA also actively supports the right of states to make their own I/M plans.
The association helped write legislation introduced by Rep. Ron Klink, D-Pa., that directs the Office of Technology Assessment to perform a cost-benefit study of I/M programs and recommend methods of allowing flexibility to the states in devising I/M plans.
Last year, legislation to reform the Occupational Safety and Health Administration, which included harsh new penalties for employer non-compliance, was a concern, especially for small businesses.
Now, draconian OSHA reform is less of a concern. Its chief sponsor has retired, Mr. Friedlander noted, and the new Republican chairs of the relevant committees are unlikely to move very quickly on any similar bill, he added.
One OSHA initiative that greatly bothers the auto aftermarket, is the agency's final rule on asbestos exposure.
In its proposed rule, the agency listed aerosol cleaning of brake drums as a preferred method of asbestos containment.
The final rule, however, gave ``preferred'' status only to mechanical-type cleaning, using equipment that completely encloses the brake mechanism.
Aerosol sprays are still allowed under the final rule, but only if the shop owner can prove he meets an even more stringent asbestos exposure limit using aerosols than the agency allows with mechanical cleaning.
``OSHA officials said some aerosols cause an environmental problem,'' Mr. Wilson said. ``We asked, `Do they all?' They said no. We then asked, `Then why are you, in effect, banning all of them?' They couldn't answer us.
``They may have overstepped their bounds with this one,'' he said. Aerosol manufacturers have brought suit against OSHA, he added, and the effective date of the final rule has been delayed until April.
Mr. Redding expects the issues of auto safety and state safety inspections to be important in 1995-in particular, persuading states with no safety inspection laws to establish them, and those with existing laws to retain them.
``I see some kind of national effort dealing with auto safety,'' he said. ``It will deal with very basic issues-brakes, doors, safety belts, air bags.''
Legislation designating the National Highway System will be revisited in 1995, and the process to reauthorize the Intermodal Surface Transportation Efficiency Act may also begin this year as well.
For some in the auto aftermarket, reopening any highway legislation brings concern that Congress and the DOT might consider establishing a weight-distance tax for highway users.
Such a tax would greatly increase the trucking industry's tax burden; this, some fear, would decrease the number and mileage of trucks on the road, not to mention the number of garages servicing and repairing these trucks and the number of new and retreaded tires truck fleets buy.
``We would be concerned if anybody proposed a weight-distance tax,'' Mr. Wilson said, ``but no one can even identify a legislator who has.''
Passage of the new General Agreement on Tariffs and Trade pleased tire makers, although they don't expect a sweeping impact from the new World Trade Organization in its first year.
They do, however, appreciate the lowering or removal of tariffs on rubber products worldwide, especially the new duty-free status of nine rubber accelerators important to the U.S. industry but made only in Europe.
The tire industry remains confident the North American Free Trade Agreement will substantially benefit the U.S. in the long run, but the pact has produced one immediate problem: a proposed rule from SECOFI, the Mexican department of commerce, that all U.S. products-including tires-be labeled permanently in Spanish and be tested for quality and safety in Mexican facilities.
This proposal is ``a burr in our side,'' Mr. Pantuso said, adding that talks continue with SECOFI and with U.S. agencies.