Congress kicked off the 116th Congress, and with a shift in party in the House, this led to a focus on administrative items such as setting new rules and changing committee roles and assignments, as well as setting a new agenda. But the behind-the-scenes work of Committee’s hiring and training staff prevented Congress from really hitting the ground running legislatively, and led to a slower first quarter in Congress.
Efforts to reform the Energy Policy and Conservation Act have been delayed due to the House Energy and Commerce Committee’s early focus on oversight. AHRI has been working closely with the Committee and participated in its first oversight hearing. We continue to work with the Committee staff and individual members of the Committee to work through a bipartisan process and negotiate on legislative text amenable to manufacturers and efficiency advocates.
AHRI and the Alliance for Responsible Atmospheric Policy worked with members and other industry stakeholders to draft proposed legislative text outlining a federal approach to phase down HFCs. AHRI is currently working closely with both the Senate and House Committees of jurisdiction to secure introduction and consideration of HFC phase down legislation.
Tax incentives, known as "extenders," failed to make it into the end- of-year budget negotiations due to the number of contentious issues in Congress. The government shutdown at the beginning of the year delayed a number of important tax conversations, including tax extenders. As the House Ways and Means Committee focuses on other tax issues, such as how to restructure the IRS and whether to revisit the recently changed corporate tax rate, tax extenders has fallen to the Senate first. The Senate Finance Committee introduced a placeholder bill, and we continue to work with the Committee to ensure our priorities are included. AHRI also completed work on a proposal to update the 25C and 45L Sections of the tax code. While the proposal does not contain everything we would like, it represents a negotiated position with the energy advocates.
The Qualified Improvement Property Coalition continues to grow, and momentum for the 168 bonus depreciation issue was built through stand-alone legislative fixes in both the House and Senate earlier this year. Fixes to the tax Cuts and Jobs Act continue to be politically difficult in this Congress, but we remain optimistic that the provision could be attached to other must-pass legislation this year.
After lobbying both Treasury and the IRS for a year, HVACR expensing (179) guidance was finally released last December. The guidance makes it clear that HVACR property “adjacent to” is included, so for manufacturers concerned about rooftop units or equipment placed on the exterior of a building, this equipment now falls well within the covered property. However, though there is some mention of plumbing, water heaters are not specifically named and remain in a bit of a grey area. AHRI is scheduling a meeting with the Treasury Department, which is preparing more specific instructions for other areas of the tax code through example language.
This year we’ve been actively monitoring 157 bills across 28 states, and have determined that state legislatures appear to be focusing heavily on the following issues: energy supply, energy sourcing and buildings, right-to-repair, energy standards and programs, efficiency program funding, and the phase-down of hydrofluorocarbons (HFCs). In terms of HFC legislation, we’ve seen bills in three states:
- A Vermont bill directs the Secretary of Natural Resources to create rules that establish a schedule to phase down the use of HFCs to meet the goal of a 40 percent reduction from the 2013 level of use by 2030.
- A Washington bill creates a statewide HFC phase out plan. The bill tasks the Department of Ecology with managing the restrictions on HFCs and gives the department the authority to adopt rules and set deadlines to restrict the use of substitutes the department deems pose a risk to human health or the environment.
- A New Jersey bill establishes a statewide HFC emissions limit and would require the New Jersey Department of Environmental Protection to promulgate regulations establishing an HFC emission monitoring and reporting program to achieve the HFC limit. The legislation would set a statewide goal of achieving a 40 percent reduction in HFC emissions below the 2018 level by 2035.
We’ve also been tracking important legislation related to cybersecurity in Oregon, water heaters in Washington and Illinois, a ban on trichloroethylene in Minnesota, and right-to-repair legislation in 12 states. We’ve held meetings with the sponsors of all of these pieces of legislation and voiced the concerns of our members. We continue to engage across the states to shape the direction of priority legislation.