AHRI Federal Priorities
AHRI is active on Capitol Hill and in the federal agencies, advocating for HVACR and water heating manufacturers on issues that will help improve regulatory certainty and grow business.
Modernize EPCA to Update Framework for Energy Efficiency Regulations
The Energy Policy Conservation Act (EPCA) was enacted over 40 years ago in response to the 1975 energy crisis. Few would deny its success in reducing energy consumption and dependence on foreign energy sources.
This statute must be modernized to address consumer and market needs. The benefits of the law as currently constructed are declining while the costs of continued serial rulemaking increase. To continue on the path of energy independence and sustainability, it is time for all stakeholders, including DOE, to explore a new regulatory framework that reflects current information and future needs, rather than the continued reliance on a 40-year-old regulatory framework.
AHRI supports Congressional efforts to modernize EPCA to meet future needs of all stakeholders.
The rulemaking schedule must be adjusted to meet practical realities. Current statute provides only one year between enforcement of a new standard and when DOE may begin the process of setting a new standard, never allowing industry time to absorb costs or provide real market data to DOE on the current standard.
Product efficiency standards must be based on a final test procedure; currently, DOE has been able to propose new conservation standards before the test procedures have even been finalized. Often, these test procedures differ from industry consensus test procedures that are used for certification processes, creating a duplicative process.
Rulemaking processes must ensure full stakeholder input. In order to ensure this overly burdensome process provides certainty and transparency to manufacturers, technical and economic analyses and assumptions should be made available for public review, and DOE should be required to consider the cumulative effects of federal regulations.
Tax Reform to Promote Corporate Growth and Jobs
Congress should lower the corporate income tax, as well as a reduced pass-through rate. AHRI supports efforts to update the tax code to promote a positive business climate and enhance the global competitiveness of American manufacturers. The United States has the highest corporate tax rate of developed countries, which significantly disadvantages domestic manufacturers in a global marketplace, and discourages foreign direct investment that could help grow jobs.
Tax Reform must allow for expensing HVACR equipment as a capital expense. Tax reform should allow for full expensing of HVACR products under Section 179D of the tax code. This would create investment opportunities, generate cost savings for businesses, and reduce energy consumption and costs through replacing older products with newer, more efficient products. Any tax reform legislation or package should include a practical and realistic financial incentive for businesses to switch to more energy efficient products.
The current tax depreciation schedule must be shortened from a 39-year schedule to 15-20 years. This change is long overdue and will better reflect the modern useful life of HVACR equipment. AHRI fully supports expensing; however, if depreciation remains an alternative option, in its current form the 39-year depreciation period for HVACR equipment is misaligned with the expected life of properly designed, installed, and maintained products. Section 168 of the Internal Revenue Code is woefully overdue for an update that will allow residential multi-family and commercial building owners to upgrade their air conditioning and heating equipment.
Ratification of the Kigali Amendment to the Montreal Protocol
Ratification of the Kigali Amendment to the Montreal Protocol is critical for the continued growth of U.S. jobs, manufacturing, and consumer choice.
In October of 2016, nearly 200 countries, with the strong support of the HVACR industry and other stakeholders, came to a landmark agreement in Kigali, Rwanda to reduce emissions from hydrofluorocarbons (HFCs), which are currently used as refrigerants. This agreement, known as the Kigali Amendment, updates the original Montreal Protocol treaty to require developed countries to begin the phase down of HFCs by 2019. The majority of developing countries will follow by reducing their HFC consumption levels in 2024, while others will not begin their reduction on consumption until 2028. By the late 2040s, all countries will be expected to consume no more than 15-20 percent of their respective HFC baselines.
As our members produce 70 percent of refrigerants used in the marketplace, AHRI strongly supports the Senate’s ratification of the Kigali Amendment. Without the Senate’s approval of the amendment, products that are currently designed here and sold overseas would have to be manufactured elsewhere, or would have to be manufactured by non-U.S. entities.
Create a positive business climate for U.S. refrigerant producers and HVACR manufacturers, and will save American jobs by ensuring that goods manufactured in the U.S. may still be sold in countries that have adopted the Kigali Amendment.
Align U.S. policy with the direction that U.S. manufacturers are already heading toward regarding HFCs, and will continue to allow for consumer choice in the marketplace as new products are developed, manufactured, and sold in the U.S.
Reducing the Unnecessary Regulatory Burden
The HVACR industry has been burdened by overregulation in recent years, which creates uncertainty in the marketplace, stifles growth, and reduces choices for consumers. 90 rules have been issued by the Department of Energy (DOE) regulating the HVACR and water heating industry in the past 13 years,1 44 of which were issued in just the past three years alone.2 This sort of quick pace for new rules barely allows manufacturers time to breathe between new test procedures and standards, forcing industry to constantly absorb costs for newly implemented rules, while at the same time facing yet another rulemaking process. This burden only accounts for the DOE regulations specific to our products, and not the overall 297,696 regulations manufacturers face as employers who operate in the United States.3
Comprehensive Regulatory Reform, like H.R. 5, the Regulatory Accountability Act of 2017, would help the HVACR industry through making the Information Quality Act judicially reviewable. This bill would require the Office of Information and Regulatory Affairs (OIRA) to issue guidelines for conducting cost benefit analyses and to ensure rules are consistent and compatible with other federal agency regulations.
However, industry would greatly benefit from further flexibility in the rulemaking requirements if an agency is engaged in a Negotiated Rulemaking or a Direct Final Rule. Regulatory reform proposals could also be improved by requiring agencies to, when available and appropriate, defer to industry consensus standards rather than create unnecessary or duplicative standards or procedures. For over 50 years, AHRI’s certification program for residential and commercial HVACR equipment has successfully ensured that the efficiency rating claims of manufacturers are accurate and that products comply with applicable federal minimum efficiency standards, obviating the need for duplicative and burdensome government programs.
AHRI urges Congress to direct DOE to support the role of recognized and successful certification programs, such as the AHRI Certified program, which reduces the regulatory burden on manufacturers, as well as testing costs for both the federal government and businesses alike.
1 Federal Register
2 Federal Register
3 NAM and Pareto Policy Solutions, LLC Regulation of the Manufacturing Sector study, January 18, 2017