Taxes, Tariffs, and Refrigerants Lead the 2020 Legislative Agenda
Issues include cybersecurity, electrification, and installation requirements for renewed tax credits
“We have a whole laundry list of things that we want to see Congress take action on,” acknowledged Todd Washam, ACCA’s vice president for public policy and industry relations. “But we also have to deal with the reality of a hyperpartisan congressional and presidential election year.”
Months of political ads and campaign rhetoric do indeed loom on the horizon to test the sanity of the average citizen. However, Washam and his government affairs counterparts at AHRI identify a few legislative items that might make a difference for the better for contractors and manufacturers this year.
Late last year, Congress restored residential energy efficiency tax credits for 2018-2019 retroactively and enacted them for 2020. These Section 25C credits offer credits up to 10 percent of the installed credits, according to ACCA, with a maximum credit of $500.
“We would like to see those restored even longer,” Washam said. “And equally important, we want them to recognize when the systems are installed correctly,” so the credits would be contingent on that verification.
That adds a step, the particulars of which have yet to be finalized, but Washam commented that “we think that there’s a good chance for some movement on this.”
As of the first week in March, the Home Energy Savings Act has been introduced in both chambers. ACCA reports that the bill would increase the credit from 10 percent to 15 percent, raise the lifetime cap from $500 to $1,200, and extend these tax credits through 2026. It would also establish ACCA Quality Installation Standards as the benchmark for homeowners verifying quality installation to receive the credit.
ACCA also has its eye on legislation to protect contractors from predatory lenders. The Small Business Lending Fairness Act, reintroduced this session by Sens. Marco Rubio (R-Fla.) and Sherrod Brown (D-Ohio) in the Senate and Rep. Nydia Velazquez (D-NY) in the House, targets deceptive practices and controversial asset seizures.
“They’ve not done a good job of working with quality contractors who will help consumers with quality installation practices,” Washam explained.
Asked for her legislative priorities on behalf of manufacturers, Allison Maginot — AHRI’s director for government relations — cited cybersecurity as one issue that has moved up the list.
“That’s a topic we monitor really closely,” she said. “Beyond the HFC regulations at the state level, cybersecurity is where we’re seeing a lot of action.”
She mentioned recent legislation from California and Oregon, and keeps tabs on state legislatures who may do likewise.
For example, Oregon’s House Bill 2395 would require anyone that “manufactures, sells, or offers to sell connected device to equip connected device with reasonable security features that protect information that connected device collects, contains, stores, or transmits” from unauthorized uses.
In an increasingly interconnected world and HVAC environment, the devil could be in the details of any such law when it comes to a manufacturer’s designs and regulatory burdens.
AHRI predicted that U.S. trade conflicts with China (among others) may be ongoing.
“I don’t know that we could say we expect or hope for anything in particular,” said Francis Dietz, AHRI vice president, public affairs. “It’s been a very fluid situation from the beginning.”
A recent partial agreement between the Trump administration and Chinese government walks back some of the more recent strictures, and that includes some relief for a number of AHRI member products. However, many products remain. The “phase one” deal also addresses neither the tariffs on HVAC-relevant raw materials like steel nor significant policy concerns that the administration originally cited as the justification for extra tariffs in 2018.
AHRI’s agenda on this front comprises working with members to pursue specific exemptions and continuing to take an anti-tariff message to those in office.
THE PROCESS RULE
The DOE’s update for the “process rule” resolved in a much more satisfactory way for AHRI. Dietz noted that “‘significant energy savings’ is actually defined instead of being more in the eye of the beholder,” bringing some added structure for the protocol surrounding efficiency testing and standards creation.
“And we’re particularly happy that the rule is now binding on the department, whereas before, it was just kind of guidance they could use as they saw fit,” he explained.
Another step on behalf of a consistent process will require the DOE to develop test procedures prior to issuing an updated energy efficiency standard.
When it comes to the electrification movement (or decarbonization), “we tend to stay neutral on this issue, since we have members who manufacture both gas and electric appliances,” said AHRI’s Maginot.
Still, she tracks a host of local initiatives and updates members accordingly. Maginot noted five state-level bills already this year that delve into electrification (two in Virginia, one in Washington, two in New Hampshire). These bills tend to vary in scope and ambition.
“You have somewhat aggressive bills,” she said, “and then you have ones that are more limited in scope, maybe only apply to public buildings, simply prioritize electrification.”
Maginot said that AHRI encourages policy makers “to consider market-based approaches to electrification,” emphasizing consumer choice, costs, comfort, and safety.
While that leaves considerable latitude for one legislative approach or another, Maginot does say that “AHRI opposes strictly electric-only policies.”
THE SHOWSTOPPER: HFC PHASEDOWN
The Rubio/Brown lending bill may represent one sort of legislative kumbaya moment across the aisle, but the AIM Act’s HFC phasedown proposal remains the biggest performance going these days in terms of bipartisan harmony and industry relevance.
“We want to see the AIM Act make its way to the president’s desk,” Washam said without reservation.
“Within that, we want to make sure that the EPA has proper authority to regulate the sale of refrigerants to only certified individuals,” he continued.
That, Washam reinforced, will be a key as the industry moves further from HFCs and toward mildly flammable A2L refrigerants.
“There’s a lot of support for the bills in both houses of Congress,” AHRI’s Dietz reported.
The challenge, he noted, is figuring out how to “maneuver it through the various committees and personalities and priorities of folks up there.”
One variable is federal preemption language that would prevent states from exceeding the AIM Act’s parameters with their own regulations. The bills’ current language does not include preemption, which could hypothetically undercut the goal of avoiding an HFC regulatory landscape that changes from state to state.
“In the past when we’ve done different transitions, states have fallen in line with the federal government,” Dietz recalled. “But I’m not certain that would be the case this time. I wouldn’t tell people to bet on that.”
That possibility became a high profile in early March, when original co-sponsors Sen. John R. Kennedy (R-La.) and Sen. Tom Carper (D-Del.) attached the AIM Act’s language as an amendment to the American Energy Innovation Act (AEIA) in hopes of securing its passage that way. The AEIA represents the most significant, multifaceted energy legislation in years.
Reports suggested Sen. Kennedy might go as far as slowing down the AEIA to make sure the AIM wording stayed intact. However, garnering more attention in this high-profile setting, AIM’s lack of preemption language has drawn criticism from Sen. John Barrasso (R-Wyo.), who sits on the Senate’s Energy & Natural Resources committee.
Since the AIM Act was introduced last November, the White House has not publicly tipped its hand regarding if or under what conditions it would support the phasedown plan. However, The Hill obtained a memo from White House staff indicating that the administration has serious reservations about the AIM amendment as it stands, for reasons including but not limited to the lack of preemption.
Sen. Kennedy would like the Energy and Natural Resources committee to leave the AIM amendment’s wording as it is, keep the larger AEIA moving to the Senate floor for a full vote, and then iron out any wrinkles at a later time, such as during reconciliation of House and Senate versions of AEIA.
It remains to be seen when and how either chamber will hash out the potentially critical preemption issue. However, the recent gambit of packaging AIM language as the AEIA’s Kennedy/Carper amendment ensures a brighter spotlight on both AIM’s primary goals and its sticking points. Having earned a role in a major election-year energy bill, the federal HFC phasedown proposal may find that the time for its close-up has finally arrived.
See more articles from this issue here!