It’s a new year, and there’s a crowd of newly sworn-in representatives and senators working on Capitol Hill. What Congress does this year will probably have an impact on HVAC businesses, so the industry will keep close tabs on the legislators.
SETTING THE STAGE FOR 2011With the Republicans gaining control of the House of Representatives in the midterm elections, John Boehner, R-Ohio, became Speaker of the House.
According to Jonathan Melchi, manager of government affairs at Heating, Airconditioning & Refrigeration Distributors International (HARDI), “The big question is going to be: Can John Boehner control Republican members of the House of Representatives as effectively as he did when they were in the minority? Can they stay on message? Can they consistently produce legislation that resonates with the public and members of both parties?” He added, “The GOP will come up with a series of bills designed to put the Senate in difficult votes and put pressure on the White House.”
Senate Majority Leader Harry Reid, D-Nev., retained his position because the Democrats still hold a slight majority in the Senate. However, Melchi noted that 33 senators will be up for reelection in 2014 - and 23 of those are Democrats or independents who caucus with Democrats. “Those folks are going to be under tremendous pressure to watch their vote,” Melchi said.
In addition, Melchi said that the GOP plans to roll out a weekly or biweekly spending cut. And he said, “It’s going to be extremely difficult for folks in the Senate to vote against a lot of it.”
CLIMATE AND ENERGY POLICYThe focus on the national deficit and how to cut spending is expected to factor into many legislative actions this year, including climate change and energy policies. This is one of the reasons why last year’s Home Star legislation, which passed the House but not the Senate, is not expected to be successful in 2011.
“Any type of program with rebates is going to have a difficult path with the budget situation the way it is,” Melchi noted. “It’s going to be interesting to see what type of energy policy will come out of the House.”
“It’s a new dynamic in Congress,” agreed David Calabrese, senior vice president of policy at the Air-Conditioning, Heating and Refrigeration Institute (AHRI). “The issue this year with tax and incentives legislation, frankly, is the deficit. Since everything always has a cost, it’s always going to be the big issue that they’ll be looking at.”
However, climate change policy may move ahead through other channels, according to Calabrese. He said there may be an opportunity for climate change legislation to be enacted through more specific, sectoral-based bills. On the issue of energy policy, Calabrese noted, “I think there could still be energy legislation, especially the type we do where there’s consensus and everybody agrees to do it.”
He added that AHRI would like to see tax incentives for commercial equipment, not just residential. But he also noted that any tax credit bills that benefit the industry will be in competition with those proposed by other, unrelated industries.
“The thing we always have to consider [with tax incentive legislation] is there’s a cost to it. Ours may not be that expensive by itself, but there are other incentives being proposed, as well.” In addition to the competition, Calabrese pointed out that the general focus on the deficit and the overall mood on the Hill will play large roles in the success of this type of legislation.
In the absence of energy legislation, Charles McCrudden, vice president of government relations for the Air Conditioning Contractors of America (ACCA), said, “Regulatory agencies may look at new and innovative ways to promote whole-house incentives.”
He added that the Department of Energy (DOE), along with state governments and utilities, will probably look at alternative ways to promote energy efficiency.
Two DOE initiatives currently being tracked by ACCA include the department’s new Workforce Guidelines (a draft to provide standards for federally funded efficiency improvements) and Home Energy Score (a pilot program offering energy audits for homeowners).
REGULATIONS AND OVERSIGHTWhile many pundits have predicted that the Obama administration will continue to push its agenda forward through regulatory actions, this approach is expected to come under fire from the Republican-controlled House of Representatives.
“What we’ve seen in the past two years with the Obama administration is, when you can’t pass your agenda through legislation, you work through agencies,” McCrudden said.
With the Republican-controlled House now poised to block passage of Democratic-inspired legislation, McCrudden said the industry should expect to see “more energized federal agencies in 2011,” including the DOE, Environmental Protection Agency (EPA), Occupational Safety and Health Administration (OSHA), and Internal Revenue Service (IRS), among others. He said that these agencies may continue to implement the Obama agenda through regulatory fiats and new rulings.
Others, however, believe that the administration may not be as aggressive as anticipated. “I personally don’t think there’s going to be a huge move by the EPA and DOE to do anything that would be construed as antibusiness,” Melchi said. He added, though, that “it’s hard to tell right now whether they’ll bunker down or maintain a proactive stance.”
House Republicans are already garnering attention for their goals to rein in the regulatory agencies. Rep. Darrell Issa, R-Calif., the new chairman of the House Oversight and Government Reform Committee, has announced plans to hold hundreds of oversight hearings. Issa also recently announced that the oversight hearings conducted by his committee will be recorded and posted to YouTube.
McCrudden noted that these hearings will probably cover items as diverse as health care and climate change. He added that as the oversight hearings progress, members of the House may look into “any number of pending regulations that will have an impact on the small businesses of the HVACR industry.”
Sidebar: Constituents Still CountNo matter who’s in power in Washington, D.C., the basics remain unchanged for those back home. If you want a say in what happens in Washington, you have to voice your concerns and opinions to your representatives.
“The most important thing is the need to be actively engaged with officeholders,” said Jonathan Melchi, manager of government affairs at Heating, Airconditioning and Refrigeration Distributors International (HARDI), Plus, he noted that small business owners carry a lot of weight with their representatives and senators. “With jobs so scarce in this economy, more than ever officeholders want to hear from who’s creating jobs in the local economy.”
He continued, “As a collective, if manufacturers, distributors, and contractors work together, we can make a difference.”