This Is Not Your Grandfather’s Washington

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Back in the old days Congress adjourned for long stretches of time because of the unbearable Washington summers. All the Representatives and Senators retreated to their home districts to handle the work there. With a wink and a nod many commentators like to point out that the beauty of this work calendar was that no one was around to pass any laws. It wasn’t until the development of air conditioning that Washington could become a year round town. So the big joke is that air conditioning is at the root of many of our nation’s problems.

These days Congress never stops working. Even though they may not have votes each day, modern technology and a large staff see to it that bills are written, speeches are delivered, and potholes get filled. They don’t call the summer break August Recess anymore; the proper term is August District Work Period. Most members of Congress speak to their key staff several times a day, regardless of whether they are in session or not.

The “other” part of the government in Washington never stops working either. Regulatory agencies like the Environmental Protection Agency (EPA), Department of Energy (DOE), Occupational Safety and Health Administration, and National Labor Relations Board don’t follow the congressional calendar. They keep proposing new rules and regulations year-round.

As a stakeholder in so many matters that concern our unique industry, ACCA and its contractors cannot ignore 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 the coming months.

DOE & EPA Activity
First, the DOE’s Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC) voted recently this summer to convene a working group to draft an enforcement scheme for regional standards on residential split system and single package central air conditioners. New standards are set to go into effect January 1, 2015, although there is an 18 month grace period allowing for the continued installation of any unsold inventory manufactured before the compliance date.

Regional standards have never been tried and pose a number of questions for contractors, distributors, and manufacturers. 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.

Sometime soon the EPA is expected to issue a Final Rule on the 2015-2019 HCFC Allocation, the final installment of the multi-year phase-out in the production of virgin R-22. The EPA has proposed to allocate 13,700 MT in 2015 and then reduce that amount by about 2,700 MT per year until 2020 when phase out is complete.

Congress Is Still Working
Finally, congressional staff are working behind the scenes on finalizing an “extenders package” to reinstate dozens of expired tax incentives used by small businesses when they make capital investments. This year, 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 found that less 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.

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.

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Posted In: ACCA Now, Government