There’s an old saw about air conditioning being at the root of all the problems coming out of Washington. I don’t know who was the first political or social commentator to suggest this or when it happened, but the gist of it is that “back in the old days” all the congressmen and senators retreated to their districts to avoid the muggy and uncomfortable summer. Thus, no one was around to pass any laws. The development of air conditioning made the swamp on the Potomac far more bearable and kept Congress in session to pass laws throughout the year.
The truth is Congress never stops working even though they may adjourn for the month of August. They don’t call it “recess” anymore; the proper term is August District Work Period. Most members of Congress split the time between working in their district, taking a well-deserved vacation with their families and if it’s an election year, firing up their re-election campaigns. But their primary staff remain back in Washington answering the mail, researching and writing bills and drafting policy statements and speeches. Most members of Congress speak to their key staff several times a day, regardless of whether they are in session or not.
Washington itself never stops working either. As I have written in this column before, regulatory agencies like the Environmental Protection Agency, Department of Energy, Occupational Safety and Health Administration or National Labor Relations Board don’t follow the congressional calendar. They keep proposing new rules and regulations yearround. And the lobbyists and special interests keep promoting their issues.
So don’t take a break from paying attention to Washington just because the media is reporting that Congress is on a five-week break. There are some very critical issues to keep your eyes on in the coming months.
First, the Department of Energy’s Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC) voted recently to convene a working group to engage in negotiations to draft an enforcement scheme for regional standards on residential split system and single package central air conditioners. The new standards are set to go into effect Jan. 1, 2015, although there is a grace period allowing for the continued installation of unsold inventory for 18 months. Regional standards have never been tried and pose unique questions for contractors and distributors. There are a lot of open questions about what new obligations or responsibilities any entities may face as part of the regional standards scheme. The DOE would like to finalize a rule by the end of the year.
In the next few weeks, the EPA is expected to issue a Final Rule on the 2015- 2019 HCFC Allocation, the last part of the phaseout of R-22. This year the EPA proposed to allocate 13,700 MT in 2015 and then reduce that amount by about 2,700 MT per year until 2019. In 2020 the full phaseout takes effect. Several stakeholders filed comments urging the EPA to allocate zero HCFCs, essentially phasing out the production five years early.
Finally, congressional staff are working behind the scenes on finalizing an “extenders package” to reinstate dozens of expired tax incentives used by small businesses. The House has taken a piecemeal approach by passing several small bills to address individual incentives like bonus depreciation and the research and development tax credit. The Senate is looking to tackle extenders all at once. At some point, the two chambers will have to agree on a compromise package to approve.
One of the bills passed by the House has the potential to dramatically reduce the energy use of America’s existing commercial buildings while creating new job opportunities for HVACR contractors.
H.R. 4457, America’s Small Business Tax Relief Act of 2014, would permanently extend the expanded Section 179 expensing rules small businesses use to write off capital investments. This rule prohibits a commercial building owner from expensing any investments in new HVACR equipment. Instead, the building owner is forced to use an unrealistic 39-year depreciation schedule in order to recover these costs.
Significantly, H.R. 4457 strikes language in Section 179 that specifically excludes “air conditioning or heating units” as an eligible investment.
There is tremendous pent-up demand for commercial HVACR system replacement. The 2003 Commercial Building Energy Consumption Survey (the most recent available) found that fewer than 20 percent of buildings constructed before 1980 have upgraded HVAC equipment. According to the U.S. Energy Information Administration, 57 percent of the energy consumed in commercial buildings is for HVACR-related activities.
Thanks to increased federal energy conservation standards and the efforts of HVACR equipment manufacturers, today’s equipment uses significantly less energy and is cheaper to operate on an annual basis than equipment purchased even 10 years ago. These improvements translate to shorter payback periods and long-term cost savings as well as lower emissions at the energy source. In addition, older equipment contains previous generations of refrigeration chemicals that, if leaked into the atmosphere, represent a much greater environmental risk than today’s modern, efficient, more environmentally friendly systems.
I would say it’s easy to argue that air conditioning has not been the cause of all the problems related to Washington. In fact, air conditioning may be part of the solution.
Charlie McCrudden is vice president of government affairs for the Air Conditioning Contactors of America. Contact him at [email protected]