Top Regulatory Issues of 2016
Industry leaders discuss this year’s most relevant regulatory concerns
In just the past few months, the U.S. Department of Energy (DOE) has released final rules setting new energy conservation standards for commercial rooftop units, residential boilers, walk-in coolers and freezers, and several other industry-related products. Between the DOE and the U.S. Environmental Protection Agency (EPA), the regulatory bodies have issued dozens of new rules directly impacting the HVACR industry in just the past couple of years.
This year will likely be no different, especially with President Barack Obama tying up loose regulatory ends as his final year winds down. To get a sense of what HVACR industry leaders will be watching closely, The NEWS asked several manufacturers and organizations to share their most important regulatory issues of 2016. Here is what they had to say.
Charlie McCrudden, senior vice president, government relations:
“The Obama administration has less than a year left, and you typically see in the last year of a president’s term the release of a lot of pent-up regulations. They’re tricky because it’s hard to undo them — sometimes it takes legislative action. Everyone expects a number of them to come out in the next seven to nine months. Some have been lingering for a long time, mostly from OSHA [Occupational Safety and Health Administration], the U.S. Department of Labor, and other agencies. So, I fully expect to see a number of what may be controversial rules released.
“You’re not going to see this avalanche of rules that are going to leapfrog parts of the process, but you’ll see rules that have been delayed and delayed — and where the final step is the next step — come out. Recently there were 19 rules that were pending in various stages. Look at the confined spaces rule that just came out — that was pending for eight or nine years, and it was always about to come out, and then it finally did. And we’re still waiting for clarity on the confined space rule; we’d love to have that fact sheet come out for attics and crawlspaces. We need more clarity and guidance for residential construction.
“We’re also still waiting for the conclusion of the [regional standards] enforcement standard; the DOE published the NOPR [notice of proposed rulemaking], and now we need the final rule. We are also waiting on publication of the walk-in coolers and freezers [WICF] final rule and the rooftop unit [RTU] rule, which was published as a proposed rule in December, so it just has to be finalized. Finally, there’s the central air conditioner and heat pump negotiated rulemaking that we just did. It will take DOE some time to take our term sheets and put it into regulatory language and publish them.”
Karim Amrane, senior vice president of regulatory and international policy:
“The big ones that must be completed are the central air conditioners and heat pump standards final rule, and we will also probably have a rule on residential furnaces. Residential boiler standards were just completed a few weeks ago, too.
“On Jan. 20, stakeholders reached an agreement to increase the energy efficiency of central cooling systems, which the Appliance Standards and Rulemaking Federal Advisory Committee [ASRAC] approved. The agreement is the latest in a string of successfully negotiated energy-efficiency standards completed by a diverse group of stakeholders, including manufacturers, utility companies, efficiency advocates, state government representatives, contractors, distributors, and the DOE.
“Once approved by the DOE, the energy-efficiency levels agreed to in the negotiations will go into effect Jan. 1, 2023, but will be adjusted based on changes to product test procedures. Under the agreement, and using current test procedures, the efficiency level for residential central air conditioners under 45,000 Btuh would be 14 SEER in the North and 15 SEER in the Southeast and Southwest; and for products over 45,000 Btuh, the levels would be 14.5 SEER in the Southeast and Southwest and 14 SEER in the North. Heat pump efficiency levels would be set at 15 SEER for all regions.”
David Underwood, president:
“Refrigerant management, the Clean Power Plan, and several regulations referencing ASHRAE standards are all issues we’ve covered in 2015 and will be active on this year. The EPA’s proposed rule for Section 608 of the Clean Air Act and the implementation of the Clean Power Plan are among the top regulatory issues ASHRAE will be engaged with in 2016.
“As ever, relationships and education are key. A major goal of ours is to encourage our members to connect with their government representatives and officials to spur productive dialogue that will result in a more informed public policy. The best starting point for contracotrs is to contact Mark Ames and Jim Scarborough in ASHRAE’s Government Affairs Office at firstname.lastname@example.org. They can help connect our members with their government officials and provide them with many resources to get them engaged in government affairs with ASHRAE.
“ASHRAE includes information on regulations, legislation, and other government actions of interest to ASHRAE members in our biweekly Government Affairs Update, which is available at www.ashrae.org/government-affairs.”
Jon Melchi, vice president of government affairs and business development:
What HARDI’s Watching: “The top regulatory issue for our members is not necessarily HVAC-related but has to do with the U.S. Department of Labor’s [DOL’s] wage and hour rule, which will change the way overtime-exempt employees are compensated. That ends up being about $24,000 as the minimum someone can pay an overtime-exempt employee.
“The Obama administration has made proposals to move that number to $50,000, but a salaried person making $40,000 won’t be raised to $50,000 — the individual will be made an hourly employee and have overtime restrictions. It’s particularly challenging for those who travel. There has been some talk about moving that dollar figure down to maybe $40,000, but we’ll see what happens. This will make waves throughout the entire business community.
“For distributors, it could potentially impact a lot of inside sales people, some branch managers, and some other employees,” he continued. “It doesn’t mean everybody is getting a raise, though — it means people will be reallocated and, in some instances, won’t be eligible to do some things, like travel, due to the overtime involved.
“The other two actions that will have an immediate impact are the central air conditioner and heat pump standards and the EPA 608 regulations, which have the potential to change how people are doing business, even though that won’t be implemented until 2018. That will be an eye-opener for people this year. The end of the sell-through period [for central a/c units] at the end of June is going to be interesting to watch, too, and making sure all contractors and distributors are meeting their recordkeeping requirements is going to take a lot of effort.”
Joseph Eaves, director of government relations:
“There are several rulemakings involving the lighting and motor industries that have been ongoing and will continue into 2016. Furthermore, we are interested in exploring ways to get Congress to understand the impact all of these rulemakings are having on manufacturers, and we hope they will consider looking further into the issue in 2016.
“We will be watching the small-motors rule, the general service lamps, and the florescent ballast rule, to name just a few. The small-motor rule would be important to the HVACR community, considering small motors are found in HVACR equipment. As well as working within your industry associations and their regulatory staffs, the DOE has websites and email alerts you can sign up for.”
Chuck White, vice president of technical and code services:
“PHCC members have been watching the process involving the DOE’s residential boiler standards, residential gas furnace standards, regional enforcement of the central air conditioner and heat pump regional standards, and the central air conditioner and heat pump standards, to name a few. Other issues include the ‘Waters of the U.S.’ rule, the revisions to overtime rules, construction in confined spaces, and the expansion of lead paint rules to commercial work.
“Central air conditioner and heat pump standards and gas furnace standards are still in development. PHCC will be closely monitoring these processes to promote realistic and achievable product requirements. Commercial lead paint regulation activity has been low key. We expect increased movement on this, as well.
“While no one can tell the future, we do know change is inevitable. PHCC strives to keep pace with developing issues, provide input when possible, and help craft practical solutions to the challenges our contractor members and industry may face.”
John Gibbons, director of regulatory affairs:
“In 2015, there were several residential and commercial regulatory activities in process that will carry over into 2016. In the residential market, some of the pending rulemakings are related to nonweatherized gas furnaces, central air conditioners and heat pumps, a regional standards enforcement rule, and the EPA’s Clean Air Act 608 Rule on hydrofluorocarbons [HFCs] and associated test procedures. Commercial HVAC recently completed a negotiated efficiency rulemaking on unitary large products and commercial warm-air furnaces, which will provide manufacturers some certainty for many years out.
“For Carrier, we will pay close attention to the rulemakings related to central air conditioners and gas furnaces. Specifically, the gas furnace rule is critical from the standpoint that the DOE’s NOPR [notice of proposed rulemaking] came out with a 92 percent minimum standard policy. Carrier, through its industry association, AHRI, is proactively working with energy conservationists and other interested parties to resolve potential issues, such as impractical installations, safety concerns, and the number of consumers negatively impacted. Also, there are some refrigerant policies the industry is focused on in the U.S. and Canada.
“The regulatory landscape is approaching the maximum capabilities of technology in many product areas. The next rounds of rulemaking will be difficult and will likely move energy conservation into different product areas, such as ductwork, alternative power, and more.”
David B. Calabrese, vice president of government affairs:
What Daikin’s Watching: “In 2015, we made it a priority to consider the next steps in the climate debate: Moving from high-GWP [global warming potential] refrigerants to low-GWP solutions. Last year, Daikin announced it was offering free access worldwide to 93 patents to encourage companies to develop and commercialize air conditioning, cooling, and heat pump equipment that use HFC-32 as a single-component refrigerant. In 2016, we expect to help continue shaping and leading the next steps of transitioning refrigerants to next-generation solutions.
“This year, our team will continue monitoring and providing input on the DOE energy-efficiency rulemakings and the EPA, which is evaluating aspects of the Significant New Alternatives Policy [SNAP] program. Both of these could have a significant impact on our businesses and the industry. With the EPA SNAP process, we’re working with the EPA on a decision about the future use of R-134a, R410A, and R407C; our team is working with a broad industry and environmental group to create a solution. There is also activity surrounding incentive programs, and we have a number of ideas that we’ve been suggesting to ensure industry-friendly solutions are enacted.
“We would like to see changes to U.S. tax law related to the depreciation of HVAC products. Today, our installed HVAC products are depreciated across 31 years — the lifetime of a building. Many, including us, don’t believe this is a realistic period for those building owners or those who install the equipment. We are talking with allies on Capitol Hill to change and align more with the lifetime of the HVAC equipment and incentivize building owners based on a more realistic view of depreciation.
“The fact is, this year’s landscape is going to depend mainly on President Obama — it’s unlikely we will see much movement from Congress. The next stage after the elections could vary even within each party, depending on which candidate emerges from the caucus-primary process. Regardless of the outcome of the election, we expect there to be a strong push on standards between now and the end of the year, and then a slowdown or halt until the new administration evaluates and sets its course for the next four years.”
Mark Menzer, Director of public affairs, Danfoss:
"This year promises to be a busy one as the Obama Administration tries to meet its legal obligations to issue new minimum efficiency regulations. Fourteen efficiency rules and test procedures affecting HVACR products are expected to be issued in the first 13 weeks alone. Already, negotiators have reached an agreement — contingent on a few details — for new air conditioning and heat pump efficiencies that will go into effect in 2023. We expect to see efficiency rules for fans, furnaces, boilers and commercial water heaters this year as well. Although we don’t think of ASHRAE Standards as regulatory, when adopted into code they have the force of law. This year, we will be watching the work of the ASHRAE Standard 15 committee to see what the requirements for A2L refrigerants will be in future systems.
"Contractors will most immediately be impacted by the change to the EPA requirements to extend to HFCs the servicing requirements that currently govern CFCs and HCFCs. This rule will also require recordkeeping for systems containing as little as five pounds of refrigerants, and will also strengthen the leak repair requirements by lowering the leak rate threshold that dictates necessary repairs to the system. EPA will be modifying the technician certification requirements by updating the test and requiring an online database of certified technicians.Refrigeration contractors will be seeing more new refrigerants introduced, including hydrocarbons. They will need to be able to identify hydrocarbon systems and know how to service them safely.
"We encourage the industry to get involved; everyone’s opinion counts. DOE rulemaking meetings are open to the public and many are broadcast online. In addition, DOE welcomes comments at various times during the development of a rule. EPA’s process is a little different, but they too welcome and consider the comments from stakeholders—including contractors. Our industry associations such as AHRI, HARDI, ACCA and GCCA do a great job of keeping their members current on impending legislation and regulations.
"While EPA and DOE regulations have the most near-term impact on our industry, the global agreements under the Climate Change Convention and the Montreal Protocol will have the most profound long-term impact on how we build and operate our buildings and homes. In 2016, the COP21 agreement will be signed and the parties to the Montreal Protocol will try to reach an agreement on the phase down of HFCs globally. Also this year, most states will be determining how expanded energy efficiency programs will help them to meet their obligations under the Clean Power Plan. In the years to come, I expect we will look back on 2015 and 2016 as a turning point in our move to more sustainable practices.
"Danfoss has a series of podcasts and webinars on issues of interest posted on our website, www.danfoss.us."
Rajan Rajendran, vice president, system innovation center and sustainability:
“In addition to the DOE regulations on efficiency in residential and commercial air conditioning and heating, we had refrigeration equipment efficiency regulations that the industry was coming to grips with in 2015. On the refrigerant side, the EPA’s listing of new refrigerants and delisting of existing refrigerants in certain applications were all top issues for us in 2015. We expect that, in 2016, there will be more along the same lines.
“There are several regulations that are important, but two that we are watching closely are the EPA’s proposed delisting of refrigerants in additional applications — like chillers, for example — as well as the proposed changes to Section 608 of the Clean Air Act that regulates refrigerant leak rates, handling, etc. Any refrigerant listing or delisting will impact the HVACR contractors in terms of what they can use as a refrigerant, but the changes to how refrigerants should be managed and handled will be important for the equipment owner and the contractor.
“The regulatory landscape in our industry, as it is in many others, is always in a state of change. It’s important for all of the stakeholders to stay well-informed and be prepared to meet these changes and provide value to our customers. We encourage our customers to be a part of this process and engage with us at every opportunity.”
Paul Doppel, senior director, industry and government relations:
“There were several important regulatory issues in 2015 regarding test procedures and the next level of efficiency requirements. The most important was, and actually continues to be, the DOE’s supplemental notice of proposed rulemaking [SNOPR] regarding test procedures for central air conditioners and heat pumps. This is a two-part proposed rulemaking with the first part being implemented around the end of 2016 or the beginning of 2017, and the second part happening in 2023. ASRAC formed a working group to negotiate the issues in the standard, combining manufacturers, advocacy groups, trade associations, and other interested parties.
“There are four primary issues we will be watching in 2016. The first two are associated with the central air conditioner and heat pump SNOPR mentioned above, since that will determine both the changes to the testing requirements and the new efficiency standards. One is the finalization of the furnace rule, which will potentially impact the heat pump market, and the last is developments related to refrigerants. There is conversation about replacing R-410A with R-32 or some other A2L- [slightly flammable] classified refrigerant because of R-410A’s GWP status.
“Anytime the DOE launches the rulemaking process, there are provisions for public comment. Since this will be the last year of the current administration, one can probably anticipate a push to finalize as much as possible.”
Karen Meyers, vice president, government affairs:
“Top regulatory issues during the past two years include efficiency standards for both commercial and residential air conditioning units and heat pumps and new test procedures and efficiency standards for residential water heaters. We have effectively developed implementation and planning timelines that incorporate the needs of energy advocates, manufacturers, policy drivers, and utility providers while taking into account future low-GWP refrigerants and the new fan efficiency rating [FER] for residential furnaces. Additionally, the DOE issued a final rule regarding energy conservation standards for residential boilers and successfully concluded a negotiated rulemaking on energy efficiency standards for WICFs [walk-in coolers and freezers].
“For 2016, the regulatory agenda will include continued dialogue and ultimately decisions finalizing residential water heater energy conversion factors and developing new efficiency standards for pool heaters, commercial water heaters, and residential gas furnaces. Other new areas of discussion include communication port requirements for grid-enabled water heaters as well as working with the DOE and other stakeholders to consider and rank alternatives — including both technical and policy items — to explore routes to improve installations of HVAC products for all consumers using multiple processes and approaches ranging from policies, such as tax incentives or inspections to improved training and consumer information.
“Members of the Rheem regulatory team will continue to participate with the DOE and other federal and state groups as well as our trade associations to assist with the development of new common-sense energy-efficiency standards and rulemaking conclusions.”
Jeff Moe, applied portfolio business leader, commercial:
“Greenhouse gas [GHG] emission-reduction targets and HVAC system efficiency requirements will remain top regulatory issues in 2016, especially given the world’s attention to climate change and organizations, like our parent company Ingersoll Rand, making commitments to reduce GHG emissions and offering building owners choices.
“EPA regulations that could eliminate the future use of refrigerants, like R134a and R410A in chillers; DOE regulations that set energy-efficiency standards for unitary equipment and components; and a Montreal Protocol amendment that will phase down HFCs are all on our radar.
“In 2014, Ingersoll Rand announced the company’s Climate Commitment, which pledged to significantly reduce GHG emissions from its products and operations by 2030. To date, the company’s Climate Commitment has supported the avoidance of approximately 1.5 million metric tons of CO2e globally, which is the equivalent of avoiding annual CO2 emissions from energy used in more than 200,000 homes and more than 1.6 billion pounds of coal burned. By 2030, the company expects to reduce its carbon footprint by 50 million metric tons. As the company continues to execute upon its Climate Commitment, it will advance high-performance, low-GWP, safe solutions for its customers, and will continue to measure and reduce the carbon footprint of its facilities and fleet. These solutions will continue to match the Ingersoll Rand legacy of efficient, reliable, and sustainable innovations that delight the marketplace and exceed expectations.” For more information on the Ingersoll Rand Climate Commitment, visit
Mark Handzel, vice president of product regulatory affairs:
“Two rules recently came out. One defines how centrifugal pumps are tested, and the other is the energy conservation standards.
“This standard focuses on six different styles of clean-water 100-200 hp pumps. Many of us sell pumps around the world, so we didn’t want the DOE to go off on a tangent and have two different sets of rules, and that was something the DOE was in agreement with. They insisted on their own different terms, but, in actuality, the energy conservation standards are similar.
“So, now we know the rule, and we’re waiting for it to be published in the Federal Register, which sets the date for when manufacturers have to be in compliance — four years from that date. There’s an extended opportunity for manufacturers to be in compliance. With Bell & Gossett’s product line, we haven’t waited for the rule to come out — we’ve already designed new products that exceed compliance.
“Clearly, one thing that is going to change is that the new rule allows the DOE to audit our products at any time, so every manufacturer is going to have to be on their toes to make sure any product coming off their lines can meet those standards. And, in two to three years, they will review the standards again.
“Another pump category we know they’re interested in is circulators. Europe is the largest market for circulators, and the market is enormous, so circulators were the first pump type regulated in Europe. Through the working group, we shared with the DOE that we’re a far smaller market, and we felt it was better to pursue the bigger pumps first, so that’s what we’ve done, but circulators are next.”
To view a list of current DOE rulemakings, visit http://bit.ly/DOErulemakings.
Publication date: 2/8/2016