Regulations and Regulators Cause Industry Struggles

September 10, 2012
The latest regulatory merry-go-round with the Department of Energy (DOE) could be considered a prime example of what is wrong with Washington. It’s not the conservatives, the progressives, the gridlock in Congress, or the lack of bi-partisanship. It is the endless expansion of regulatory agencies and their misguided attempts to save energy, save the environment, or save the world from the calamity of climate change.

Here is what happened to bring my blood to a boil. The DOE suddenly announced it will prohibit any residential furnaces performing below 90-percent AFUE from being installed in the Northern region any later than May 1, 2013; regardless of when the units were manufactured. NEWS editor Herb Woerpel reported the ruling could lead to millions of dollars worth of stranded inventory across the Northern region as well as the entire United States.

How could this happen? The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) worked for over a year to try and guide the issue and come to a consensus with energy efficiency and environmental groups on a reasonable agreement to present to the DOE when it came to the topic of implementing regional efficiency standards for furnaces and air conditioners. Using the date of manufacture as the standards’ effective date was the traditional approach to avoid market disruptions and economic losses caused by potential stranded inventory. Tell that to the regulators at DOE, who instead went with an installation cutoff date to implement the regulation. Their world is not typically influenced by the costs and business disruptions to manufacturers, distributors, or contractors. They are not driven by the financial burden that this regulation may ultimately place on a homeowner. It seems that regulators are driven primarily by the need to create and implement new rules and regulations, without much regard to real-world consequence.

This current regulatory problem is not an isolated incident. The HVAC industry has been the victim of unintended consequences of regulations and rule making on a regular basis. Remember the dry-charge loophole created by the EPA that allowed for the rebirth of R-22 condensing units? The goal was to move towards a more environmentally friendly refrigerant — R-410A. Hundreds of millions of dollars were invested to develop, manufacture, and market entirely new product lines and most of the work and investment went out the window because of the interpretation of the wording, as opposed to the intent of the regulation and the refusal of EPA to close the loophole.

What’s more, who can forget the crisis caused by the EPA’s lack of clarification on the allocation levels of R-22 refrigerant? That incident occurred in the first half of 2011 and the rumors and speculation helped lead to a huge price hike in the cost of R-22. The DOE was at it again about a year ago when The NEWS reported that AHRI was urging the agency to abandon its proposal to regulate commercial fans, blowers, and fume hoods. Why? Because there already was a test procedure or energy conservation procedure for these products. AHRI also argued these components were already subject to DOE energy conservation standards.

I searched our archives and there are several other instances where DOE, EPA, National Labor Relations Board, or Occupational Safety and Health Administration (OSHA) regulations and regulators caused businesses in our industry to focus more on regulations than on providing a better product or service. One Newsline article from Feb. 3, 2011 caught my eye in particular. It was about a new OSHA General Industry Regulations Book that included the 1903 regulations about inspections, citations, and proposed penalties; the 1904 regulations about recording and reporting occupational injuries and illnesses; and the 1910 regulations, which apply to all general industry operations. I could go on but I’m starting to get sick.

Every new regulation that gets written into law likely starts with good intentions, but far too often the industry ends up with rules that cause more damage than good. Not only does this regulation problem apply to the HVACR industry, but it also applies to hundreds of other industries that have to deal with regulations and the agenda of the regulators that create and enforce them. This same scenario is being played out again in the national political scene with Obamacare and its 2,000 pages of rules, regulations, and thousands of new regulators. The new Dodd-Frank Wall Street Reform and Consumer Protection Act was supposed to create a sound economic foundation to grow jobs, protect consumers, and reign in Wall Street, but according to a recent story in the Wall Street Journal, “A year after Obama signed the legislation, the overhaul remains under heavy attack as regulators struggle to enact its complex pieces.” Many financial experts believe this bill is actually hurting jobs because of all its restrictions on business.

This is a critical election year. Consider what your vote for representative, senator, and president could mean for HVACR industry regulations. Will it mean more regulations and regulators, or will it mean less?

Publication date: 9/10/2012

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