[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
PROMOTING AMERICAN INNOVATION AND JOBS: LEGISLATION TO PHASE DOWN
HYDROFLUOROCARBONS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENVIRONMENT AND CLIMATE CHANGE
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
TUESDAY, JANUARY 14, 2020
__________
Serial No. 116-88
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
govinfo.gov/committee/house-energy
energycommerce.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
47-911PDF WASHINGTON : 2022
COMMITTEE ON ENERGY AND COMMERCE
FRANK PALLONE, Jr., New Jersey
Chairman
BOBBY L. RUSH, Illinois GREG WALDEN, Oregon
ANNA G. ESHOO, California Ranking Member
ELIOT L. ENGEL, New York FRED UPTON, Michigan
DIANA DeGETTE, Colorado JOHN SHIMKUS, Illinois
MIKE DOYLE, Pennsylvania MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois STEVE SCALISE, Louisiana
G. K. BUTTERFIELD, North Carolina ROBERT E. LATTA, Ohio
DORIS O. MATSUI, California CATHY McMORRIS RODGERS, Washington
KATHY CASTOR, Florida BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland PETE OLSON, Texas
JERRY McNERNEY, California DAVID B. McKINLEY, West Virginia
PETER WELCH, Vermont ADAM KINZINGER, Illinois
BEN RAY LUJAN, New Mexico H. MORGAN GRIFFITH, Virginia
PAUL TONKO, New York GUS M. BILIRAKIS, Florida
YVETTE D. CLARKE, New York, Vice BILL JOHNSON, Ohio
Chair BILLY LONG, Missouri
DAVID LOEBSACK, Iowa LARRY BUCSHON, Indiana
KURT SCHRADER, Oregon BILL FLORES, Texas
JOSEPH P. KENNEDY III, SUSAN W. BROOKS, Indiana
Massachusetts MARKWAYNE MULLIN, Oklahoma
TONY CARDENAS, California RICHARD HUDSON, North Carolina
RAUL RUIZ, California TIM WALBERG, Michigan
SCOTT H. PETERS, California EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan JEFF DUNCAN, South Carolina
MARC A. VEASEY, Texas GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
A. DONALD McEACHIN, Virginia
LISA BLUNT ROCHESTER, Delaware
DARREN SOTO, Florida
TOM O'HALLERAN, Arizona
------
Professional Staff
JEFFREY C. CARROLL, Staff Director
TIFFANY GUARASCIO, Deputy Staff Director
MIKE BLOOMQUIST, Minority Staff Director
Subcommittee on Environment and Climate Change
PAUL TONKO, New York
Chairman
YVETTE D. CLARKE, New York JOHN SHIMKUS, Illinois
SCOTT H. PETERS, California Ranking Member
NANETTE DIAZ BARRAGAN, California CATHY McMORRIS RODGERS, Washington
A. DONALD McEACHIN, Virginia DAVID B. McKINLEY, West Virginia
LISA BLUNT ROCHESTER, Delaware BILL JOHNSON, Ohio
DARREN SOTO, Florida BILLY LONG, Missouri
DIANA DeGETTE, Colorado BILL FLORES, Texas
JAN SCHAKOWSKY, Illinois MARKWAYNE MULLIN, Oklahoma
DORIS O. MATSUI, California EARL L. ``BUDDY'' CARTER, Georgia
JERRY McNERNEY, California JEFF DUNCAN, South Carolina
RAUL RUIZ, California, Vice Chair GREG WALDEN, Oregon (ex officio)
DEBBIE DINGELL, Michigan
FRANK PALLONE, Jr., New Jersey (ex
officio)
C O N T E N T S
----------
Page
Hon. Paul Tonko, a Representative in Congress from the State of
New York, opening statement.................................... 1
Prepared statement........................................... 3
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 4
Prepared statement........................................... 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 7
Prepared statement........................................... 8
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 9
Prepared statement........................................... 11
Witnesses Statement
Cynthia Newberg, Director, Stratospheric Protection Division,
Office of Atmospheric Programs, U.S. Environmental Protection
Agency, Office of Air and Radiation............................ 12
Prepared statement........................................... 15
Answers to submitted questions \1\
John Galyen, President, Danfoss North America, on Behalf of the
Air-Conditioning, Heating, and Refrigeration Institute......... 38
Prepared statement........................................... 41
Ben Lieberman, Senior Fellow, Competitive Enterprise Institute... 51
Prepared statement........................................... 53
Answers to submitted questions............................... 139
David D. Doniger, Senior Strategic Director, Natural Resources
Defense Council................................................ 55
Prepared statement........................................... 57
Gary Bedard, President and Chief Operating Officer, Lennox
International, Inc., on Behalf of the Alliance for Responsible
Atmospheric Policy............................................. 60
Prepared statement........................................... 62
Answers to submitted questions............................... 148
Submitted Material
H.R. 5544, The American Innovation and Manufacturing Leadership
Act of 2020 \2\
A presentation by the University of Maryland, entitled ``Economic
and Consumer Impacts of HFC Phasedown'' December 12, 2019,
submitted by Mr. Tonko......................................... 87
Letter of January 14, 2020, from Senator John Kennedy, et al., to
Mr. Tonko and Mr. Shimkus, submitted by Mr. Tonko.............. 106
Letter of January 8, 2020, the Association of Home Appliance
Manufacturers, from Kevin Messner, Senior Vice President,
Policy and Government Relations, to Mr. Tonko and Mr. Shimkus,
submitted by Mr. Tonko......................................... 108
----------
\1\Ms. Newberg did not answer submitted questions for the record
by the time of publication.
\2\The information has been retained in committee files and also
is available at https://docs.house.gov/meetings/IF/IF18/
20200114/110388/BILLS-116HR5544ih-U2.pdf.
Letter of October 7, 2019, Air-Conditioning, Heating, and
Refrigeration Institute and the Alliance for Responsible
Atmospheric Policy, from Mike Armstrong, President, A-Gas in
the Americas, et al., to Mr. Pallone, et al., submitted by Mr.
Tonko.......................................................... 109
Letter of January 13, 2020, from a coalition of HVACR industry
associations, by Bart James, President and CEO, ACCA, et al.,
to Mr. Pallone and et al., submitted by Mr. Tonko.............. 113
Letter of January 8, 2020, from ASHRAE, the American Society of
Heating, Refrigerating and Air-Conditioning Engineers, by
Darryl Boyce, President, ASHRAE, to Mr. Pallone, et al.,
submitted by Mr. Tonko......................................... 116
Letter of January 14, 2020, from the Ceres BICEP Network, by Anne
L. Kelly, Vice President of Government Relations, Ceres, to Mr.
Pallone et. al., submitted by Mr. Tonko........................ 118
Letter of January 10, 2020, from Environmental Investigation
Agency, by Alexander von Bismarck, Executive Director, to Mr.
Pallone and Mr. Walden, submitted by Mr. Tonko................. 120
Letter of January 13, 2020, from Environmental Defense Fund, et
al., to Committee, submitted by Mr. Tonko...................... 122
Letter of January 13, 2020, from the National Association of
Manufacturers and the U.S. Chamber of Commerce, by Ross
Eisenberg, Vice President of Energy and Resources Policy, and
Chuck Chaitovitz, Vice President for Environmental Affairs and
Sustainability, submitted by Mr. Tonko......................... 124
Letter of January 13, 2020, from the National Marine
Manufacturers Association, by T. Nicole Vasilaros, Esq., Senior
Vice President, Government and Legal Affairs, submitted by Mr.
Tonko.......................................................... 125
Letter of June 20, 2018, from Conservative Groups, by Alex
Hendrie, Director of Tax Policy, et al., to President Trump,
submitted by Mr. Tonko......................................... 127
Report on July 23, 2018, the Economic Impact of Kigali Amendment
Ratification, by David T. Stevenson, Caesar Rodney Institute,
submitted by Mr. Tonko......................................... 128
PROMOTING AMERICAN INNOVATION AND JOBS: LEGISLATION TO PHASE DOWN
HYDROFLUOROCARBONS
----------
TUESDAY, JANUARY 14, 2020
House of Representatives,
Subcommittee on Environment and Climate Change,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:32 a.m., in
room 2322, Rayburn House Office Building, Hon. Paul Tonko
(chairman of the subcommittee) presiding.
Present: Representatives Tonko, Clarke, Peters, Barragan,
Blunt Rochester, Soto, Matsui, McNerney, Ruiz, Dingell, Pallone
(ex officio), Shimkus (subcommittee ranking member), Rodgers,
McKinley, Johnson, Long, Flores, Mullin, Carter, and Walden (ex
officio).
Also Present: Representative Olson.
Staff Present: Jacqueline Cohen, Chief Environmental
Counsel; Adam Fischer, Policy Analyst; Jean Fruci, Energy and
Environmental Policy Advisor; Caitlin Haberman, Professional
Staff Member; Rick Kessler, Senior Advisor and Staff Director,
Energy and Environment; Brendan Larkin, Policy Coordinator;
Dustin Maghamfar, Air and Climate Counsel; Mike Bloomquist,
Minority Staff Director; William Clutterbuck, Minority Staff
Assistant; Jerry Couri, Minority Deputy Chief Counsel,
Environment and Climate Change; Tyler Greenberg, Minority Staff
Assistant; Ryan Long, Minority Deputy Staff Director; Mary
Martin, Minority Chief Counsel, Energy and Environment and
Climate Change; Brandon Mooney, Minority Deputy Chief Counsel,
Energy; Brannon Rains, Minority Legislative Clerk; and Peter
Spencer, Minority Senior Professional Staff Member, Environment
and Climate Change.
Mr. Tonko. The Subcommittee on Environment and Climate
Change will now come to order. I recognize myself for 5 minutes
for the purposes of an opening statement.
OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW YORK
Today the subcommittee will examine H.R. 5544, the American
Innovation and Manufacturing Leadership Act of 2020, which was
introduced last week by Representatives Olson, Peters,
Stefanik, and myself.
Hydrofluorocarbons, commonly known as HFCs, are a class of
chemicals primarily used as refrigerants in heating,
ventilation, air conditioning, and refrigeration. HFCs gained
widespread use in the 1990s as replacements for ozone-depleting
substances, such as CFCs and HCFCs. But HFCs have their own
challenges, which is why a global transition to the next
generation of refrigerant technologies is currently underway.
United States manufacturers are already investing billions
of dollars in the research and development of new products and
equipment to maintain their competitiveness. In fact, American
companies are global leaders in the development of HFC
substitutes.
One such class of substitutes are known as HFOs. HFOs are
more environmentally friendly. But even more importantly,
American manufacturers stand to gain the most in the global
marketplace by leaning into this transition.
According to a study by the Interindustry Forecasting at
the University of Maryland, the HFC phase-down will drive the
creation of some 33,000 new United States manufacturing jobs,
$12.5 billion more in direct manufacturing output annually, a
significant trade balance improvement in equipment and
chemicals, and a 25 percent growth of the U.S. share of the
global export market. These projected benefits are not small.
Just as important, American businesses recognize that any
lagging on our part will open the door for China and other
nations to erode our existing global market share. This bill
supports the industry in anticipating such competition and
would help propel America's industry.
I would like to explain briefly a few aspects of this
bipartisan proposal.
First, we are not proposing a ban. This bill would phase-
down the production and consumption of HFCs over 15 years,
limiting the production and consumption to 15 percent of
baseline levels beginning in 2036.
The benefits include certainty for manufacturers and
consumers and an orderly and predictable transition to next-
generation technologies, while still allowing for exceptions
for essential uses for which no substitute is available.
The legislation is modeled on Title VI of the Clean Air
Act, which was enacted in 1990 with 401 bipartisan votes in the
House and proved an able vehicle to foster an orderly, market-
based phase-down of HFCs' predecessors. In fact, that earlier
transition away from ozone-depleting substances was successful
at an even lower cost than originally anticipated.
Second, this bill will not force consumers to replace
equipment before the end of its useful life. Today, some older
equipment is still using CFCs. This framework will guarantee
that consumers are protected during the transition.
These benefits are why a phase-down of this kind has
received incredibly broad support. I have served on this
subcommittee for seven years. I cannot remember a time when we
had the United States Chamber of Commerce, the National
Association of Manufacturers, and the Natural Resources Defense
Council in complete agreement on anything, let alone granting
new targeted authority to EPA.
Companion legislation has received significant bipartisan
support in the Senate, with 32 cosponsors, half Republican and
half Democratic.
On Capitol Hill, the phrase ``commonsense legislation''
gets thrown around a lot, but this bill truly fits that
description. It addresses an environmental concern in a manner
that will spur innovation and make U.S. manufacturers more
globally competitive.
This bill presents us a bipartisan opportunity to ensure
the next generation of refrigerants are American made and that
our constituents experience the significant economic and job
benefits that come from American-led innovation.
I want to thank Mr. Olson for co-leading this effort, and I
yield the remainder of my time to him.
[The prepared statement of Mr. Tonko follows:]
Prepared Statement of Hon. Paul Tonko
Today the subcommittee will examine H.R. 5544, the American
Innovation and Manufacturing Leadership Act of 2020, which was
introduced last week by Reps. Olson, Peters, Stefanik, and
myself.
Hydrofluorocarbons, commonly known as HFCs, are a class of
chemicals primarily used as refrigerants in heating,
ventilation, air conditioning, and refrigeration. HFCs gained
widespread use in the 1990s as replacements for ozone-depleting
substances, such as CFCs and HCFCs.
But HFCs have their own challenges, which is why a global
transition to the next generation of refrigerant technologies
is currently underway.
U.S. manufacturers are already investing billions of
dollars in the research and development of new products and
equipment to maintain their competitiveness.
In fact, American companies are global leaders in the
development of HFC substitutes. One such class of substitutes
are known as HFOs. HFOs are more environmentally-friendly, but
even more importantly, American manufacturers stand to gain the
most in the global marketplace by leaning into this transition.
According to a study by the Interindustry Forecasting at
the University of Maryland, the HFC phase down will drive the
creation of 33,000 new U.S. manufacturing jobs, $12.5 billion
more in direct manufacturing output annually, a significant
trade balance improvement in equipment and chemicals, and a 25
percent growth of the U.S. share of the global export market.
These projected benefits are not small.
Just as important, American businesses recognize that any
lagging on our part will open the door for China and other
nations to erode our existing global market share.
This bill supports the industry in anticipating such
competition and would help propel America's industry.
I would like to explain briefly a few aspects of this
bipartisan proposal.
First, we are not proposing a ban. This bill would phase
down the production and consumption of HFCs over 15 years,
limiting the production and consumption to 15 percent of
baseline levels beginning in 2036.
The benefits include certainty for manufacturers and
consumers and an orderly and predictable transition to next
generation technologies, while still allowing for exceptions
for essential uses for which no substitute is available.
The legislation is modeled on Title VI of the Clean Air
Act, which was enacted in 1990 with 401 bipartisan votes in the
House and proved an able vehicle to foster an orderly, market-
based phase down of HFCs' predecessors.
In fact, that earlier transition away from ozone-depleting
substances was successful at an even lower cost than originally
anticipated.
Second, this bill will not force consumers to replace
equipment before the end of its useful life. Today, some older
equipment is still using CFCs. This framework will guarantee
that consumers are protected during the transition.
These benefits are why a phase down of this kind has
received incredibly broad support.
I have served on this subcommittee for seven years. I
cannot remember a time when we had the U.S. Chamber of
Commerce, the National Association of Manufacturers, and the
Natural Resources Defense Council in complete agreement on
anything-let alone granting new, targeted authority to EPA.
Companion legislation has received significant bipartisan
support in the Senate with 32 cosponsors, half Republican and
half Democratic.
On Capitol Hill, the phrase ``commonsense legislation''
gets thrown around a lot, but this bill truly fits the
description. It addresses an environmental concern in a manner
that will spur innovation and make U.S. manufacturers more
globally competitive.
This bill presents us a bipartisan opportunity to ensure
the next generation of refrigerants are American-made, and that
our constituents experience the significant economic and job
benefits that come from American-led innovation.
I want to thank Mr. Olson for co-leading this effort, and I
yield him the balance of my time.
I yield my remaining time to Representative Olson.
Mr. Olson. Thank you, Chairman Tonko, lead Republican
Member Shimkus, and members of the subcommittee, for letting me
waive on this morning.
Now, this hearing is about H.R. 5544, the so-called AIM
Act. This is a rare bipartisan bill that, as was mentioned, is
supported by normal combatants like the ATR, FreedomWorks, and
the NRDC. They appreciate the hard work done by Chairman Tonko.
Seven thousand people back home working for Dicon, living in
Katy, Texas, in Texas 22, appreciate your hard work, too, sir.
And people in America, manufacturers, appreciate all this hard
work to get this bill where it is today.
I am proud of H.R. 5544. The AIM Act is a commonsense
approach that will create American jobs, expand exports, and
encourage more investment in our economy. New jobs, about
33,000 are expected. We will keep jobs here in America that may
go overseas.
This bill provides a clear, deliberate framework to
transition from HFCs, and puts American manufacturers, American
workers, and American consumers first. It ensures we keep doors
open to foreign markets that have been opened because of our
new competitive Tax Code.
Mr. Shimkus. Mr. Chairman, my colleague is 33 seconds over.
Mr. Olson. I thank the chairman. I thank the ranking
member. I am proud to support this bill. I yield back.
Mr. Tonko. The gentleman yields back.
The Chair now recognizes Mr. Shimkus, ranking member of the
Subcommittee on Environment and Climate Change, for 5 minutes
for his opening statement.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. Thank you, Mr. Chairman, for recognizing me.
Today's legislative hearing demands a certain baseline
amount of knowledge about the subject, particularly to review a
bill on this multilayered subject and whose text itself belies
the many issues it is trying to address.
If I didn't know better, I would think, as we are going to
hear today, that this is a simple subject that certain parts of
the industry have worked with a few environmental advocacy
organizations to solve. I want to believe that tidy story, but
the more I look into this issue, the more my eyes notice a
story much different from the one my ears are hearing.
The issues we are discussing in this bill before us today
go back five decades. In fact, the last time this committee
addressed ozone-depleting substances and the Montreal Protocol,
only one-third of the members of both this committee and the
full committee was on the panel.
This issue is far too big and has far too many implications
on the American consumer for our committee to put members in a
position of asking questions about legislation for which they
have little background.
Moreover, Mr. Chairman, after the minority outlined the
need for a comprehensive and fair look at both the issue and
the bill, since the committee had not done anything to put them
in context for us, the majority denied the minority a second
witness for this hearing.
This was not because that perspective was already covered.
This was not because there were time pressures or the panel was
already unwieldy. No, this rejected request was done to
suppress dissenting voices. It is unseemly and sours the desire
that some have to get to, quote, unquote, ``yes'' on this bill.
Speaking of the bill, I do have some questions about that I
want to explore based upon what I do know about this subject.
This bill seeks to phase-out production of HFCs or
hydrofluorocarbons. I question how much a bill like this is
needed.
Why? The Illinois-based North American Association of Food
Equipment Manufacturers is the lead trade association for
commercial food service refrigeration projects. It hasn't taken
a position on this legislation, but, since 2015 has
proactively, on their own, undertaken transitioning away from
HFCs to meet customers' demands.
How many other parts of the impacted universe are also
making this transition without a government mandate? If it is
necessary, I understand the bill's industry advocates want a
law because States like California are acting in a way that is
creating an uneven national marketplace. Yet this legislation
contains no preemption provisions.
Perhaps the States didn't engage much after Montreal almost
four decades ago, but as TSCA and CAFE debates have recently
shown, increasing Federal action is no barrier to additional
State action and sometimes serves as an incentive for more
State action.
The accelerated phaseout and technology transition
provisions in this legislation also give me pause. I worry
that, as Justice Kavanaugh found with certain Significant New
Alternatives Program, commonly known as SNAP rules, these
provisions can be gamed by market actors for competitive
advantage at the expense of consumers.
Likewise, these provisions could be used by nonmarket
actors to drive technology that is infeasible and without EPA
needing much of a basis to make that leap.
Finally, I think it bears mentioning that we should be
exploring the constitutional precedent of this proposal, in an
effort to implement requirements necessary for participation in
the Kigali Amendment to the Montreal Protocol.
This amendment has not been submitted to the Senate for
ratification by either the Obama or the Trump administrations.
While I understand the attractiveness of a proposal like this
to some, I wonder whether a Federal court would see this as a
durable solution.
Mr. Chairman, although I wish we had a legitimate small
business and other sector perspectives represented, I want to
welcome our witnesses here this morning.
I especially welcome Energy and Commerce Committee staff
alumnus Ben Lieberman to our second panel. Ben served our
committee with honor for nearly ten years on these issues and
it is good to have his friendly face back in the committee
room.
And, Mr. Chairman, going off script for a second, I had
constantly defended the majority over the past year through our
rush to legislate, bypassing regular order, which would define
it as having a hearing on the general subject and then doing a
subcommittee legislative hearing and then going through markup.
We are in a new year. It is hard to continue to defend that
position of not going through regular order when we haven't had
a hearing on the Montreal Protocol, HFCs, or CFCs in over a
decade, which makes it more difficult for my colleagues. As I
said in the opening statement, one-third of us have never had
this before us.
So with that, I wish we would return to regular order. And
I yield back my time.
[The prepared statement of Mr. Shimkus follows:]
Prepared Statement of Hon. John Shimkus
Thank you, Mr. Chairman for recognizing me for this opening
statement.
Today's legislative hearing demands a certain baseline
amount of knowledge about this subject. Particularly to review
a bill on this multi-layered subject and whose text itself
belies the many issues it is trying to address.
If I didn't know better, I would think--as we are going to
hear today - that this is a simple subject that certain parts
of the industry have worked with a few environmental advocacy
organizations to solve. I want to believe that tidy story, but
the more I look into this issue, the more my eyes notice a
story much different from the one my ears are hearing.
The issues we're discussing in the bill before us today go
back five decades. In fact, the last time this Committee
addressed ozone depleting substances and the Montreal Protocol,
only one-third of the members of both this subcommittee and the
full committee were on this panel. This issue is far too big
and has far too many implications on the American consumer for
our Committee to put members in the position of asking
questions about legislation for which they have very little
background.
Moreover, Mr. Chairman, after the Minority outlined the
need for a comprehensive and fair look at both the issue and
the bill--since the Committee had not done anything to put them
in context for us--the Majority denied the Minority a second
witness for this hearing. This was not because that perspective
was already covered, this was not because there were time
pressures, or the panel was already unwieldy. No, this rejected
request was done to suppress dissenting voices--it is unseemly
and sours the desire some might have to get to ``yes'' on this
bill.
Speaking of the bill, I do have some questions about it
that I want to explore based upon what I do know about this
subject.
This bill seeks to phase out the production and use of HFCs
or hydro-fluoro- carbons. I question how much a bill like this
is needed.
Why?
The Illinois-based North American Association of Food
Equipment Manufacturers (NAFEM) is THE lead trade association
for commercial foodservice refrigeration products. It not only
has not taken a position on the legislation, but since 2015,
has proactively undertaken transitioning away from HFCs to meet
customer demands. How many other parts of the impacted universe
are also making this transition without a government mandate?
If it is necessary, I understand the bill's industry
advocates want a law because states, like California, are
acting in a way that is creating an uneven national
marketplace. Yet, this legislation contains NO PREEMPTION
provisions. Perhaps the States didn't engage much after
Montreal almost four decades ago, but as TSCA and CAF debates
have recently shown, increasingly Federal action is NO barrier
to additional State action and sometimes serves as an
incentive.
The accelerated phase-out and technology transition
provisions in the legislation also give me pause. I worry that,
just as Justice Kavanaugh found with certain SNAP rules, these
provisions can be gamed by market actors for competitive
advantage at the expense of consumers. Likewise, these
provisions could be used by non-market actors to drive
technology that is infeasible and without EPA needing much of a
basis to make that leap.
Finally, I think it bears mentioning that we should be
exploring the constitutional precedent of this proposal--an
effort to implement requirements necessary for participation in
the Kigali Amendment to the Montreal Protocol. This Amendment
has not been submitted to the Senate for ratification by either
the Obama or Trump Administrations. While I understand the
attractiveness of a proposal like this to some; I wonder
whether a Federal court would see this as a durable solution.
Mr. Chairman, although I wish we had a legitimate small
business or other sector perspective represented, I want to
welcome our witnesses here this morning. I especially welcome
Energy and Commerce Committee staff alumnus, Ben Lieberman, to
our second panel. Ben served our Committee with honor for
nearly ten years on these issues and it's good to have his
friendly face back here.
Mr. Tonko. The gentleman yields back.
The Chair now recognizes Mr. Pallone, chair of the full
committee, for 5 minutes for his opening statement, please.
OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairman Tonko.
We are here this morning to discuss H.R. 5544, the
bipartisan American Innovation and Manufacturing and Leadership
Act. This legislation is supported by both industry and the
environmental community. It will benefit our economy, maintain
American manufacturing leadership, create jobs, and protect the
environment.
I want to congratulate Chairman Tonko and Representatives
Olson, Peters, and Stefanik for seizing this opportunity.
The bill will help the United States maintain its position
as a leader in the chemical, appliance, and equipment
industries. It will also allow us to continue as a leader in
innovation and on global environmental issues.
H.R. 5544 builds upon our previous experience in phasing
out CFCs and their replacement chemicals, HCFCs. Our success
working with other nations within the global framework of the
Montreal Protocol is healing the ozone layer and reducing risks
associated with higher exposures to ultraviolet radiation.
Because CFCs and HCFCs are also potent greenhouse gases;
their phaseout also averted additional global warming. And
their replacement chemicals, hydrofluorocarbons, or HFCs,
helped us to address the ozone problem, but are also potent
greenhouse gases.
Fortunately, American companies are innovating new
substitutes for HFCs, and that means we have an opportunity to
gain additional environmental benefits.
Innovation by industry resulted in a transition away from
CFCs that was less costly to business and consumers than
originally anticipated, and I am confident we can achieve the
same outcome in the transition away from HFCs.
The European Union and other nations, like Japan, Canada,
and China, are already transitioning away from HFCs. This
legislation will provide the certainty and stability American
companies need to do the same. Not only will it help these
companies remain competitive in the global market for air
conditioning, heating, and other consumer products, but it will
also help them increase their share of the global market and it
has the potential of creating tens of thousands of high quality
American jobs.
The bill, H.R. 5544, braces innovation and the power of the
market to add billions to our economy while delivering
environmental benefits, phasing down the use of HFCs, and
transitioning to next-generation technologies, provides the
policy certainty American companies need to capitalize on their
investments and innovation, and provide consumers with quality
products that are anticipated to have lower operating cost.
So I think this bill is good for workers, good for the
economy, good for consumers, and good for the environment. And
I thank our witnesses for being here today.
I want to welcome back to the committee Ben Lieberman, who
once served on the Republican staff.
And I would like to yield the remaining time to
Representative Peters.
[The prepared statement of Mr. Pallone follows:]
Prepared Statement of Hon. Frank Pallone, Jr.
We are here this morning to discuss H.R. 5544, the
bipartisan American Innovation and Manufacturing Leadership
Act. This legislation is supported by both industry and the
environmental community. It will benefit our economy, maintain
American manufacturing leadership, create jobs, and protect the
environment.
I congratulate Chairman Tonko, and Representatives Olson,
Peters and Stefanik for seizing this opportunity. H.R. 5544
will help the United States maintain its position as a leader
in the chemical, appliance, and equipment industries. It will
also allow us to continue as a leader in innovation and on
global environmental issues.
H.R. 5544 builds upon our previous experience in phasing
out CFCs--and their replacement chemicals, HCFCs. Our success
working with other nations within the global framework of the
Montreal Protocol is healing the ozone layer and reducing risks
associated with higher exposures to ultraviolet radiation.
Because CFCs and HCFCs are also potent greenhouse gases,
their phase out also averted additional global warming. Their
replacement chemicals, hydrofluorocarbons or HFCs, helped us to
address the ozone problem, but are also potent greenhouse
gases. Fortunately, American companies are innovating new
substitutes for HFCs. That means we have an opportunity to gain
additional environmental benefits.
Innovation by industry resulted in a transition away from
CFCs that was less costly to business and consumers than
originally anticipated. I am confident we can achieve the same
outcome in the transition away from HFCs.
The European Union, and other nations like Japan, Canada,
and China are already transitioning away from HFCs. This
legislation will provide the certainty and stability American
companies need to do the same. Not only will it help these
companies remain competitive in the global market for air
conditioning, heating, and other consumer products, but it will
also help them increase their share of the global market. It
has the potential of creating tens of thousands of high-quality
American jobs.
H.R. 5544 embraces innovation and the power of the market
to add billions to our economy while delivering environmental
benefits. Phasing down the use of HFCs and transitioning to
next-generation technologies provides the policy certainty
American companies need to capitalize on their investments in
innovation and provide consumers with quality products that are
anticipated to have lower operating costs.
H.R. 5544 is good for workers, good for the economy, good
for consumers, and good for the environment. I thank our
witnesses for being here today, and welcome back to the
Committee Ben Lieberman, who once served on the Republican
staff.
I yield my remaining time to Representative Peters.
Mr. Peters. Thank you very much, Mr. Chairman.
Today is a good day. We are here to discuss the American
Innovation and Manufacturing Leadership Act of 2020, a
bipartisan bill that enjoys widespread support from industry
groups and environmental organizations, Democrats and
Republicans, and both Chambers of Congress. It is also a bill
that I am proud to support as an original cosponsor.
As we will hear today, the global phase-down of HFCs has
begun. Their transition provides an opportunity for the United
States to establish new domestic production facilities and
innovative industrial processes to meet the growing demand for
HFC alternatives from countries around the world. There is
plenty of evidence that the private sector is poised to lead
this transition if they have the right legal framework.
First, major manufacturers in the U.S., but also Japan,
China, and India, are developing low-cost alternatives to HFC.
In California, there are more than 5,500 direct jobs in the
HVACR industry alone, and the bill's orderly phase-down of HFCs
is projected to create tens of thousands more jobs nationally.
Second, phasing down the use of HFCs is certainly
profitable. The Chamber of Commerce and the Consumer Goods
Forum, which represents over 400 member companies,
enthusiastically support the bill.
Third, companies that use HFCs in their operations and
supply chains will benefit from the clarity and certainty this
bill provides.
Fourth, this bill will protect American businesses against
highly anticompetitive practices that include the dumping of
highly subsidized HFCs. Right now, there are no limits on how
much HFCs can be imported and this bill would change that.
And finally, placing HFCs with non-HFC alternatives has no
downside. It protects the environment while also promoting
industry.
So I am eager to get this hearing underway. I thank my
colleagues and committee staff for assembling this important
hearing. I am proud to be a cosponsor. I yield back.
Mr. Tonko. The gentleman yields back.
I now recognize Mr. Walden, ranking member of the full
committee, for 5 minutes for his opening statement, please.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Good morning, Mr. Chairman.
Today's hearing obviously examines a bill that would
mandate a rapid phase-down in the U.S. of the use of
hydrofluorocarbons, or HFCs.
Now, these substances, which, as we all know, contribute to
climate change when emitted into the atmosphere, serve many
important uses, including as a very critical ingredient in
cooling and refrigeration equipment throughout our society.
Scrutiny of this issue for the purpose of addressing risk
to the climate is important and it is welcome. However, the
approach today falls short of what is necessary to make good
policy decisions.
Indeed, there appears to a rush towards a prepackaged
legislative solution without having developed a full
understanding of the problem we are trying to solve or whether
this regulatory approach is truly the most appropriate way to
work in a dynamic and very complex marketplace or in the best
interests of the American consumer or even who specifically
benefits from this.
To do this completely requires more upfront work in terms
of oversight and background hearings, as we heard from Mr.
Shimkus, so we can have a record that we can rely upon as we
consider pretty major policy options that have long-term
implications for environmental policy, for market competition,
and household economics.
This is especially the case in policy areas like this one,
where most members have, frankly, pretty limited experience.
Not all, however.
Consider that the broad backdrop of this legislation or
concerns about international emissions in the international
agreement under the Montreal Protocol in substances that
deplete the ozone layer. That was finalized in the late 1980s.
Yet the committee, which was instrumental in developing
provisions to address implementation of the protocol in the
Clean Air Act, has not had a single hearing on that topic for
more than a decade.
Meanwhile, we are considering a bill that implicates U.S.
participation under the protocol, and I would like to better
understand how this will work in real life and practice.
Recent amendments under the protocol, which have not been
ratified by the United States Senate, anticipate a rapid growth
of demand for refrigerants in cooling that is occurring in the
developing world. How to address the needs of the developing
world is a key policy matter. For example, we should understand
how mandating U.S. conversion to new technologies addresses
development internationally and whether it is this bill or
amendment ratification that is the linchpin in the Kigali
Amendment ratification.
It is worth noting that certain industries were already
innovating towards non-HFC substances, which begs the question,
does this have to be mandated phase-down? What are the problems
in the marketplace that require government intervention at this
time rather than the natural turnover to newer, more innovative
technologies?
We would also benefit from a deeper understanding of the
implications of any policies to phase-out HFCs on existing U.S.
stock of refrigeration and cooling equipment in businesses and
in households and automobiles and what those costs might be.
Are there safety issues to consider with replacement
substances? We haven't heard about that. Are there energy
efficiency issues? We should learn more. Will routine repair
and maintenance costs accelerate for consumers? Will States
implement their own more accelerated schedules for phasing out
HFCs that will send the market into further turmoil?
I am hopeful the witnesses can help us answer some of these
questions today and help us understand other areas that may be
worth exploring.
There appears to be strong support from industry,
environmentalists, and others to work on this legislation and
to be clear; I am open to working on it. But we should look to
do more regarding HFCs and related greenhouse gasses and we
should be open to practical policies, and I am.
Maybe this legislation is a good starting point. But I
think we have to look carefully to be sure it will provide the
benefits promised and actually work in the best interests of
American consumers.
So I should note we have some quality witnesses here this
morning, including Ben Lieberman.
We are delighted to have you back.
He served on our committee staff for many years, did great
public service, and did much to ensure we were keeping the
consumer in mind.
So with that, Mr. Chairman, I would willfully yield back
the remaining minute of my time so we can get about the
hearing. And thank you.
[The prepared statement of Mr. Walden follows:]
Prepared Statement of Hon. Greg Walden
This morning's hearing will examine a bill that would
mandate a rapid phase down, in the United States, of the use of
hydrofluorocarbons, or HFCs.
These substances, which contribute to climate change when
emitted into the atmosphere, serve many important uses,
including as a very critical ingredient in cooling and
refrigeration equipment throughout our society.
Scrutiny of this issue for the purpose of addressing risks
to the climate is important, and welcome. However, the approach
today falls short of what is necessary to make good policy
decisions.
Indeed, there appears to be a rush towards a pre-packaged
legislative solution, without having developed a full
understanding of the problem we are trying to solve or whether
this regulatory approach is truly the most appropriate way to
work in a dynamic and complex marketplace or in the best
interest of the American consumer.
To do this competently requires more upfront work in terms
of oversight and background hearings so we can have a record to
rely upon as we consider policy options that have long term
implications for our environmental policy, market competition,
and household economics. This is especially the case in policy
areas like this one where most members have limited experience.
Consider that the broad backdrop for this legislation are
concerns about international emissions and the international
agreement under the Montreal Protocol on Substances that
Deplete the Ozone Layer, which was finalized the late 1980s.
Yet the Committee, which was instrumental in developing
provisions to address implementation of the Protocol in the
Clean Air Act, has not had a single hearing on the topic for
more than a decade.
Meanwhile, we're considering a bill that implicates U.S.
participation under the Protocol. I would like to better
understand how this will work in practice.
Recent amendments under the Protocol, which have not been
ratified by the U.S. Senate, anticipate a rapid growth of
demand for refrigerants and cooling that is occurring in the
developing world.
How to address the needs of the developing world is a key
policy matter. For example, we should understand how mandating
U.S. conversion to new technologies addresses development
internationally and whether it is this bill or Kigali Amendment
ratification that is the lynch pin.
It is worth noting that certain industries are already
innovating towards non HFC substances, which begs the
questions: Does this have to be a mandated phase down? What are
the problems in the marketplace that require government
intervention, rather than the natural turnover to newer, more
innovative technologies?
We would also benefit from a deeper understanding of the
implications of any policies to phase out HFCs on the existing
U.S. stock of refrigeration and cooling equipment-in businesses
and in households, in automobiles- and what the costs of that
are. Are there safety issues to consider with replacement
substances? Are there energy efficiency issues? Will routine
repair and maintenance costs accelerate for consumers? Will
states implement their own, more accelerated schedules for
phasing out HFCs that will send the market into further
turmoil?
I am hopeful the witnesses can help us answer some of these
questions today and help us understand other areas that may be
worth exploring.
There appears to be strong support-from industry,
environmentalists, and others-to work on this legislation. And
to be clear, I am open to working on it. We should look to do
more regarding HFCs and related greenhouse gases and we should
be open to practical policies. Maybe this legislation is a good
starting point, but I think we have to look carefully to be
sure it will provide the benefits promised and actually work in
the best interests of American consumers.
I should note we have some quality witnesses this morning,
including Ben Lieberman, who served on the Committee staff for
many years, and did much to ensure we were keeping the consumer
in mind.
Mr. Tonko. Thank you, Representative Walden. The gentleman
yields back.
The Chair would like to remind members that, pursuant to
committee rules, all Members' written opening statement shall
be made part of the record.
I now will introduce the witness for our first panel, a
single witness at today's hearing, Ms. Cynthia Newberg,
director of the Stratospheric Protection Division, Office of
Atmospheric Programs, at the U.S. Environmental Protection
Agency, Office of Air and Radiation.
Before we begin, I would like to explain the lighting
system. In front of you are a series of lights. The light will
initially be green. The light will turn yellow when you have 1-
minute remaining. Please begin to wrap up your testimony at
that point. The light will turn red when your time has expired.
So at this time, the Chair recognizes Ms. Newberg for 5
minutes; please to provide your opening statement.
STATEMENT OF CYNTHIA NEWBERG, DIRECTOR, STRATOSPHERIC
PROTECTION DIVISION, OFFICE OF ATMOSPHERIC PROGRAMS, U.S.
ENVIRONMENTAL PROTECTION AGENCY, OFFICE OF AIR AND RADIATION
Ms. Newberg. Good morning, Chairman Tonko, Ranking Member
Shimkus, and members of the subcommittee. My name is Cindy
Newberg, and I am the director of the Stratospheric Protection
Division in the Office of Atmospheric Programs in the Office of
Air and Radiation at the U.S. Environmental Protection Agency.
The Stratospheric Protection Division implements the
Montreal Protocol and substances that deplete the ozone layer
in Title VI of the Clean Air Act, which have the shared goal of
restoring the ozone layer.
I appreciate the opportunity to testify today regarding
H.R. 5544. Although the Agency does not have a formal position
on the bill, my testimony today will focus on how EPA
implements current stratospheric protection programs, as well
as technical aspects of the committee's bill to address
hydrofluorocarbons, or HFCs, which are substitutes for certain
ozone-depleting substances.
To provide a brief background, I have been with EPA for
more than 27 years and have served on delegations for the
Montreal Protocol representing the United States and EPA's
interests under the last three administrations.
The Montreal Protocol is a global agreement to protect the
Earth's ozone layer by phasing out production and consumption
of chemicals that deplete it. The protocol was signed by the
United States in 1987 and ratified by the Senate in 1988.
Today, all countries that are members of the U.N. are parties
to the protocol.
By restoring the ozone layer we reduce risk of skin cancer
and cataracts. For Americans, full implementation of the
Montreal Protocol is expected to result in the avoidance of
more than 280 million cases of skin cancer and more than 45
million cases of cataracts in the United States alone.
Ozone-depleting substances have been used in many
households, industrial and military applications. The phase-out
of the U.S. production and consumption of ozone-depleting
substances is managed by issuing tradable allowances through
rulemaking.
In addition, Title VI of the Clean Air Act includes
complementary measures to smooth transition to alternatives,
including provisions to support recovery and reuse of existing
chemicals and identification of alternatives for relevant
applications.
To facilitate transition, EPA has implemented domestic
regulations and partnership programs that have enabled the
United States to not only meet, but to exceed our commitments
outlined in the Montreal Protocol. Many other countries have
looked at our programs as models. And at the same time, U.S.
companies have shown great leadership with the development and
deployment of alternatives.
In the wake of the Montreal Protocol and Title VI of the
Clean Air Act, the U.S. has been substituting ozone-depleting
substances with alternatives, including, to a large extent
HFCs. And at the same time, global demand for refrigeration and
air conditioning has increased and more HFCs are being used,
particularly in cooling applications.
While HFCs do not deplete the ozone layer, most HFCs are
potent greenhouse gases. The AIM Act would establish new
domestic authority to phase-down production and consumption of
HFCs. If signed, the AIM Act would require the EPA to do many
of the same types of activities for HFCs that we have done and
continue to do for the ozone-depleting substances.
The bill would require EPA to publish a list of HFCs and
their exchange values, which are defined in the bill. It would
require periodic reporting to the EPA for HFCs that are
produced, imported, exported, reclaimed, destroyed, used and
consumed in the manufacture of other chemicals. It would
establish a baseline which would be used to help create an
allowance and trading program.
The EPA Administrator would bear responsibility for
allocating allowances on either an annual or multiyear basis,
following a phase-down schedule for production and consumption.
Transfer of allowances between companies would be allowed, and
the Administrator could be petitioned to increase the speed of
the phase-down schedule.
The Administrator would also be required to promulgate
regulations to establish standards for the management of HFCs
to control practices for servicing, repairing, disposing, or
installing of equipment.
Furthermore, the Administrator would be authorized to
facilitate transition to next-generation technologies by
establishing restrictions on specific uses of HFCs based on
availability of alternatives.
Again, while EPA does not have a position on the
legislation, I am here on behalf of the agency to discuss
technical aspects of the bill and provide a perspective on our
stratospheric protection programs.
In conclusion, the AIM Act would provide EPA authority to
phase-down production and consumption of HFCs in the United
States, as well as authority to establish complementary
measures.
Thank you again for the opportunity to testify, and I look
forward to answering your questions.
[The prepared statement of Ms. Newberg follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Tonko. Thank you very much. And we are indeed fortunate
to have you here today because of your wealth of technical
expertise on many issues before us. But in regard to this
committee hearing, and subcommittee hearing, thank you for
being here for the technical assistance that EPA is providing
to the committee and subcommittee on this legislation.
So, Ms. Newberg, I would like to begin broadly. First,
subject to the technical assistance EPA has provided, does EPA
have any concerns about its ability to implement this
legislation?
Ms. Newberg. Thank you very much, Chairman Tonko.
I believe our view is that, based on the technical
assistance that we provided that were taken up in the bill, we
believe that it could be implemented.
Mr. Tonko. Thank you.
And how goes the regulatory program that this legislation
creates compare to existing programs under Title VI of the
Clean Air Act.
Ms. Newberg. There are many similarities between what is in
this bill and what is in the current Title VI Clean Air Act and
how we implement that in the domestic program. There are a few
differences between the two, but there are relatively
provisions that are more niche. And most of the main
components, particularly the phase-down, is very similar.
Mr. Tonko. Thank you.
And do you foresee EPA implementing a program that phases-
down HFCs in a substantially similar manner as to how CFCs and
HCFCs were addressed?
Ms. Newberg. I can speak to what is in this bill, and if we
were to implement something that was based on this bill, then
there is certainly a likelihood that we would do so in a
similar manner.
Mr. Tonko. Thank you.
And for entities already subject to regulation under Title
VI, does EPA believe it could implement this legislation in an
efficient and streamlined manner that minimizes additional
burdens on regulated entities?
Ms. Newberg. I believe that we would look at our existing
regulations and seek to find ways to make sure that they were
taken up together. There are a few places in this bill where
specifically coordination with existing programs is mentioned.
And there is at least, I can recall, at least one other
instance in our technical assistance where we suggest similar
coordination should be requested.
Mr. Tonko. Thank you.
And, Ms. Newberg, if I could please direct your attention
to section 3, paragraph (d), of the draft bill.
My understanding--do you have the section?--my
understanding of the intent of this provision is to preclude
the Agency from listing a blend of substances as a regulated
substance. That way, if the blend contains a regulated HFC and
some other chemical, the non-HFC chemical would now become
subject to the phase-down.
I do not believe the intent was to affect the regulation of
any listed HFC that may be used in such a blend. Does EPA
believe this legislative text accomplishes this intent?
Ms. Newberg. In the technical direction that we provided,
EPA actually did speak to this particular provision, and we
indicated that we thought that, based on our understanding and
based on what you have just said now, it looked to us like the
provision may have been drafted perhaps more broadly than what
was intended.
It looked like the intent may be to effect insurance that
we would not somehow be listing twice chemicals under the
phase-down schedule and our suggestion was to perhaps narrow
that provision and we provided some text.
Mr. Tonko. OK. And the draft legislation requires EPA to
include isomers in the initial list of regulated substances. I
understand the Agency has suggested there may not be any
benefit to this requirement.
Ms. Newberg, would you please explain why the Agency does
not think it is necessary to include isomers in the list of
regulated substances?
Ms. Newberg. I would be happy to.
The schedule and the list of chemicals that were provided
on the HFCs would be the only chemicals, in our understanding,
that would be subject to the provisions. So our view was that
collecting information on isomers could be burdensome and would
not be necessary to effectuate what was being asked for in the
legislation.
Mr. Tonko. Thank you.
Those are the questions I have. I will now allow Mr.
Shimkus, our subcommittee ranking member, to have 5 minutes for
questioning please.
Mr. Shimkus. Thank you, Mr. Chairman. And thanks for
identifying section 3(d), because I want to go originally to
there also.
And based upon the questions that the chairman already
asked, I guess my follow-up question would be, what would be
the practical impact of having this provision remain so
ambiguous? If not changed, based upon your advice, identifying
it as ambiguous, what is the risk?
Ms. Newberg. I appreciate the question and I believe it is
also one that I would want our general counsel to consult with,
so we may have to come back to you on that. I think our view is
that we may have to take up some better understanding of this.
Mr. Shimkus. So you do agree, as you replied to the
chairman, that it is ambiguous and needs more legislative
scrutiny?
Ms. Newberg. I believe the terms I used were a little bit
different. I think what I said was in our technical advice, we
had suggested that if it were intended to be limited to just
the phase-down schedule that it needed to be more narrowly
aimed. I don't believe I had indicated----
Mr. Shimkus. More narrowly named, OK, more specific, more
narrowly focused.
Ms. Newberg. If that is the intent.
Mr. Shimkus. Yes. And that is why we have legislative
hearings.
Let me go to then; I want to ask about transparency and the
public's ability to know what is happening at the Agency on
this matter.
Is it your opinion that section 7(c)(3) provides
transparency on decisions regarding the evaluation of
petitions.
Ms. Newberg. Thank you very much.
And, again, I will refer to the fact that we did provide
some technical assistance on this section as well. And in
particular, what we had commented on was that the provision
seems to indicate that petitions that were denied would be
subject to providing that information in the Federal Register.
And I think our suggestion was that both petitions that were
granted or denied should be treated in the same manner.
Mr. Shimkus. So by filing in the Federal Register, then you
are saying that is the transparency of the basis of my
question?
Ms. Newberg. I believe that the technical advice suggests
that on the grounds that we did believe a transparent process
would be necessary.
Mr. Shimkus. So let's go to section 7(c)(5). Does this
section ensure petitions are available to the public?
Ms. Newberg. As drafted, it would ask that we publish the
full petition, so that would make them available to the public.
We did provide some advice on perhaps we could notify that they
were available and make them available on a docket, rather than
publish the full petition in the Federal Register.
Mr. Shimkus. Should the criteria established in section
7(d) apply to regulations promulgated under both section 7(a)
and in response to a petition under section 7(c)?
Ms. Newberg. So. Again, referring back to our technical
assistance, that was the suggestion that we did make.
Mr. Shimkus. OK. Let me just ask some general questions.
This is coming from the Democratic memo.
On page one, they say a global transition away from
hydrofluorocarbons is beginning. Do you agree with that general
statement?
Ms. Newberg. I think generally we are seeing that.
Mr. Shimkus. OK. And that is without any movement of any
legislation. That is just a global movement away from HFCs.
And on their second page, they have a statement: Since
then, the United States has led the world in the transition
away from ozone-depleting substances. Would you agree with that
statement?
Ms. Newberg. I would.
Mr. Shimkus. On their third page, they identify that EPA's
refrigerant management regulations established requirements for
the handling, recovering, and disposal of refrigerants, as well
as the prevention and repair of leaks. This framework has led
to more than 168 million pounds of refrigerants being reclaimed
from 2000 to 2016, which has avoided significant ozone-depleted
substance emissions to the atmosphere. In addition, EPA
regulations have successfully facilitated transitions away from
ozone-depleting systems in specific applications.
Would you agree with that?
Ms. Newberg. I would need to go back and work with my
congressional affairs to provide you with that answer. We do
have information reported to the Agency on reclaimed
refrigerant on an annual basis, so we could provide it that.
Mr. Shimkus. Yes. And I think that is going to be one of
the points as we raise this again.
My other concern has been that we will have industry, we
will have the environmental community. We will not have small
businesses representing or consumers being represented in this
hearing. We are going to make an attempt to make sure their
voices are heard.
And with that, Mr. Chairman, I yield back my time.
Mr. Peters [presiding]. Thank you. The gentleman yields
back.
The Chair now recognizes himself for 5 minutes for the
purpose of asking questions.
Thank you again, Ms. Newberg, for being here.
I wanted to ask you a little bit about small users and the
phase-down. So the legislation requires a phase-down in the
production and consumption of the listed HFCs--and I take the
gentleman's point about isomers; we will follow up on that--by
85 percent over 15 years. It is not a ban. I think you have
seen things like this in other contexts.
When the phase-down is complete in 2036, 15 percent of
baseline levels of production and consumption will still be
available.
So, Ms. Newberg, can you put the 15 percent amount in
context? Is that a sufficient amount to allow small or niche
users of these materials to continue to use HFCs?
Ms. Newberg. Thank you very much.
There may be a couple points to that that are worth noting.
First, there are provisions that are included in here that seem
to allow for additional production or consumption if there are
needs that are going unmet. So that may be something that is
there.
In terms of the 15----
Mr. Peters. In addition to the 15 percent potentially.
Ms. Newberg. Additional. That is our read of what is
written.
Mr. Peters. Correct.
Ms. Newberg. With regard to the 15 percent, for the ozone-
depleting substances, the phase-outs have been complete to
zero, and we have had at times had to look at whether or not
there were additional uses.
Typically, those were not for small business. It was more
for human health. For example, for metered dose inhalers for
asthmatics. And in those cases, we have always found a way to
work with those uses.
From a point of view in terms of the percentage, the 15
percent number seems consistent with numbers that we looked at
to ensure that we would not have to look at any kind of
additional amounts needed in order to service existing
equipment, ensure that equipment met its useful lifetime, and
ensure that if there were any niche applications that were
consumer based or military or others that those uses could get
met.
Mr. Peters. And just to follow up then, if the 15 percent
somehow isn't enough, there are other protections in the bill
for small uses that don't have substitutes available for their
applications. Is that correct?
Ms. Newberg. That seems consistent with what is in the
bill.
Mr. Peters. OK. Good.
On the subject of developing substitutes for the use of
HFCs, how has EPA considered lead times for transitions away
from certain chemicals when acting under Title VI?
Ms. Newberg. In this particular space, chemicals are used
in a wide variety of applications. So anywhere from an aerosol
or a solvent wipe to foam products.
So for the ozone-depleting substances--and HFCs are used in
all of the same applications as their predecessor chemicals--we
have seen lead times vary, industry by industry, end use by end
use, and without any specific minimum time needed.
Mr. Peters. OK. So you do see a variation.
And then are there restrictions under Title VI on the
import of HFCs at this time.
Ms. Newberg. There are no restrictions under Title VI for
the import of HFCs.
Mr. Peters. So if H.R. 5544 became law, imports of the HFCs
to be phased-down under the law would be subject to the
allowance-based phase-down program. Is that true in your
understanding?
Ms. Newberg. Our understanding is that we would be
establishing an allowance-based program.
Mr. Peters. OK. Good. Well, thank you very much.
I don't have any more questions, so I will yield back and
at this time, recognize Mrs. McMorris Rodgers from Washington
for 5 minutes.
Mrs. Rodgers. Thank you, Mr. Chairman.
While a stated goal of this legislation is to provide
certainty to U.S. companies to phase down the use of HFCs and
to invest in next-generation coolants, I am concerned that this
bill will just add to a growing patchwork of State laws phasing
outs these chemicals.
This past year, Washington State, along with California and
Vermont, passed legislation to phase them out. More States are
expected to follow suit.
Like other debates we are having in the committee, for
example on CAFE standards and privacy, having one national
standard often makes the most sense for providing that
regulatory certainty.
Ms. Newberg, I am concerned about the danger of
unrealistic, legally enforceable timelines and increasing
litigation. Does the Agency believe 90 days is enough time for
the Agency to meet the listing requirements in section 3(a),
including the requirement to list all isomers?
Ms. Newberg. Thank you very much for the question.
The Agency did provide technical assistance suggesting that
180 days would be more appropriate and suggesting that the
trigger not be based on publication in the Federal Register
since publication is outside of our scope.
Mrs. Rodgers. Should the obligation to create such a list
by a date certain or to publish it--should the obligation be a
date certain or a date to publish it in the Federal Register?
Ms. Newberg. Our technical assistance indicated that we
could--we would be able to implement something that was within
180 days. We did not suggest that we needed to have no date
included in the bill.
Mrs. Rodgers. Why do you think it is important to have a
date?
Ms. Newberg. I think that is up to Congress.
Mrs. Rodgers. But you are advising 180 days.
Ms. Newberg. We were advising 180 days as opposed to 90
day, that is right.
Mrs. Rodgers. OK. Thank you. I don't have any further
questions.
Mr. Peters. The gentlelady yields back.
The chair now recognizes the gentlelady from Delaware, Ms.
Blunt Rochester, for 5 minutes.
Ms. Blunt Rochester. Thank you, Mr. Chairman.
And I want to thank the members who worked very hard on
this legislation, H.R. 5544.
And thank you, Ms. Newberg, for being here today and for
the technical assistance that you provided on this legislation.
I would like to begin with a few questions about how
consumers will be affected. And my first question is, have you
evaluated the cost to consumers of an HFC phase-down, and if
so, what are the results of the Agency's evaluation?
Ms. Newberg. So we have not provided--I am sorry, we have
not prepared a cost assessment of this particular bill.
Ms. Blunt Rochester. OK. Do you intend to?
Ms. Newberg. We have not been asked to.
Ms. Blunt Rochester. OK. I think we might want to ask you
to do that. OK.
Would this legislation result in consumers having to
replace equipment using HFCs before the natural end of life for
that equipment? For example, let's say my air conditioner is
only a couple of years old. If this legislation passes, will I
have to replace my air conditioner?
Ms. Newberg. No. In reading this bill and our understanding
of the provisions, particularly the provisions in the section,
I believe it is in section 6, we do not believe that that would
at all force anyone to replace their air conditioner before it
reaches the end of its useful lifetime.
Ms. Blunt Rochester. So what about for servicing my air
conditioner, will service technicians still have access to the
HFC in my air conditioner if, for example, it needs to be
topped up?
Ms. Newberg. So, again, looking at section 6, it does
appear that that section would promote recover, recycle, reuse
of existing chemicals. I can say from our history on the ozone-
depleting substances, we phased out of CFCs in 1996 and we
still have CFCs available for servicing equipment. So the
history shows that it should be available.
Ms. Blunt Rochester. OK. And can you describe how this
worked for the phase-out of CFCs and HCFCs? And specifically,
were there early equipment retirements necessary or were there
sufficient CFCs and HCFCs available to continue servicing
existing equipment?
Ms. Newberg. Based on looking at the programs that we have
in place today, and those programs have been in place since the
1990s, we have not seen situations where people have replaced
equipment because they have not had access to CFCs or HCFCs.
And the recovered CFCs and HCFCs need to meet the same purity
standard as newly manufactured chemicals.
Ms. Blunt Rochester. And I understand that refrigerant
management, such as requiring that refrigerants be recovered
and addressing leaks, is critical to minimizing emissions to
the atmosphere of refrigerants like HFCs. Does section 6 of the
bill give EPA sufficient authority to address refrigerant
management and work to minimize emissions?
Ms. Newberg. I believe our review of it seems to indicate
that it would provide sufficient authority to establish
recovery, recycling, and reclamation programs.
Ms. Blunt Rochester. And under Title VI, does EPA currently
address things like training for HVAC technicians? And is that
done broadly, or does it have to be focused on an environmental
focus?
Ms. Newberg. Currently, Title VI has provisions that we
have implemented that do require that technicians are certified
to work on equipment that contains ozone-depleting substances
and nonexempt chemicals. In those instances, the training is
focused really much more on the environmental outcome. We don't
see ourselves as establishing trade programs.
Ms. Blunt Rochester. OK. And, Ms. Newberg, we are obviously
interested in making sure that this new regulatory program
would be implemented efficiently and in coordination with
existing requirements for regulated businesses, such as under
Title VI. With respect to section 7 of the legislation, does
EPA have sufficient authority to coordinate any regulations
issued under section 7 with other regulatory requirements?
Ms. Newberg. We did note in our technical assistance that
language that was similar to language that is in section 6
would be useful to ensure that there was coordination and that
we did not create duplicative requirements.
Ms. Blunt Rochester. And I want to thank you, and just ask
a more broad question. Is it your expectation that, if passed,
EPA would implement this legislation by integrating and
coordinating the HFC phase-down with the existing regulatory
structure of Title VI?
Ms. Newberg. I believe that is a question I would need to
take back and we would need to consider that within the Agency.
But I think based on what is here, there are a lot of
similarities to Title VI.
Ms. Blunt Rochester. Thank you so much for your testimony.
And I would close by just saying it is not often,
especially in these times, that we see things that are
bipartisan, members of both Houses, both Chambers, in support,
and industry and advocates. And so I am strongly in support of
this bill, and I hope that my colleagues will also recognize
the time is now.
Thank you, and I yield back.
Mr. Peters. The gentlelady yields back.
The chair now recognizes the gentleman from Ohio, Mr.
Johnson, for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman.
And, Ms. Newberg, thanks for being with us today.
And I know you already know this. The Kigali Amendment to
the Montreal Protocol aims to phase down the use of HFCs but
has not been ratified by the United States.
If the legislation before us today is enacted, what would
still need to be done to align our domestic laws in a way that
ensures full compliance with the Kigali Amendment?
Ms. Newberg. Thank you very much, and I appreciate the
question.
We have not done an assessment of how this bill compares to
Kigali. That process would be an interagency process that would
include the Department of State.
Mr. Johnson. OK. How could this lack of full compliance
affect U.S. interactions with other countries that have already
ratified the agreement?
Ms. Newberg. Well, again, we haven't done an assessment of
that.
Mr. Johnson. So you would address that issue in your
assessment?
Ms. Newberg. I think that the process for determining
whether or not an international treaty and how that works with
domestic regulation, typically that is a process that is led by
the Department of State. EPA certainly participates, but
typically that is a Department of State-led process.
Mr. Johnson. OK.
I would like to get a better understanding of the language
used in H.R. 5544. And if you can't answer some of these now,
just say so, and I would appreciate an answer for the record if
we get to that point.
Does H.R. 5544's definition of consumption allow an
importing country to have established the same or similar
requirements to those in the bill?
Ms. Newberg. I am sorry. To allow an importing country?
Mr. Johnson. Yes.
Ms. Newberg. I think I would need to take that back.
Typically we think about companies, not countries.
Mr. Johnson. OK. All right.
Does H.R. 5544's definition of exchange value have clear
direction for purposes of calculations under this act, since
other provisions provide for different calculations aside from
the exchange value?
Ms. Newberg. I believe we provided some technical
assistance with regards to different areas in the draft--in the
legislation--that would rely on the exchange value. So we can
go back and provide additional information if needed and see.
But I think generally, we have already addressed that in the
technical assistance.
Mr. Johnson. OK.
And does H.R. 5544's definition of produce, produced, and
production operate similarly to how EPA implements Title VI of
the Clean Air Act when it comes to excluding regulated
substances that were destroyed?
Ms. Newberg. We did make a suggestion in our technical
assistance that there should be maybe an addition of a phrase
at the end of that section just to be more clear that
destruction would be excluded.
Mr. Johnson. OK. All right. Thank you.
Mr. Chairman, I am going to yield the remaining balance of
my time to my colleague from Oklahoma, Mr. Mullin.
Mr. Peters. The gentleman is recognized.
Mr. Mullin. Thank you, Mr. Johnson.
I would like to address some of the stuff that Ms.
Rochester, who is a good friend of mine, brought up.
Ms. Newberg, are you in the HVAC business?
Ms. Newberg. I am not.
Mr. Mullin. You are not? Well, it is interesting to me how
you could certainly answer questions about refrigerant and
about replacement parts when she was asking you about service
and repair, such as, have you seen that the equipment runs its
full life span without replacement? And you said: We have not
seen that.
Well, I have been in the business 20 years--actually 23
years. I have seen it.
Because what happens is the R-22, which is the ODS that is
being phased out right now--so you don't have to go back to
counsel on this one, which you did the rest of them, but I
appreciate your answering with certainty some of these
questions--the R-22, when you do a replacement drop-in, what we
call a drop-in of new refrigerant, what ends up happening is
you lose 80 percent of the capacity of the unit.
So if you go from an R-22 and you are going to do a drop-in
of like, say, a 421A--which I am sure you are probably not
familiar with that--or you are going to do a drop-in of a 422
or an R-453A, what happens is you lose 80 percent of your
capacity.
And then your PSIs on your compressor runs at 136 PSI,
which is your pressure, at 80 degree temperature day. And when
you do your replacement, it jumps that PSI for your compressor
to run up to 236 to 240 PSI, which burns out the unit, with
less efficiency and less capacity.
So what happens is, yes, you do have to replace it. So when
you talk about a phase-out, you are talking about phasing out a
system; 60 to 65 percent of all the systems out there right now
are still running on R-22. And we haven't even phased out R-22
and we are supposed to be phasing it to the 410A, and now you
are saying we are going to phase it out. There is a problem
here.
Mr. Johnson. Sorry, Mr. Mullin, I am going to reclaim my
time.
And, Mr. Chairman, I yield back.
Mr. Peters. The gentleman's time has expired.
The Chair now recognizes the gentleman from Florida, Mr.
Soto, for 5 minutes.
Mr. Soto. Thank you, Mr. Chairman.
And thank you, Ms. Newberg, for being here today. I am from
Florida, and we have a lot of sun, and obviously a lot of ACs,
and care deeply about the ozone layer and about clean air.
I wanted to ask you about section 4 monitoring and
reporting. Does section 4, as drafted provide the EPA with all
of the information that it would need to implement the phase-
down?
Ms. Newberg. It provides some technical assistance with
regards to section 4. Generally speaking, I think we did feel
like the section did provide us with the information that the
Agency needed. In a few instances, we noted that some of the
information being requested, we may already have that
information, particularly information with regards to the 1989
baselines.
Mr. Soto. Right. And I have in my notes that you all have
been collecting it since that day. So to confirm, is the
current requirement that persons subject to the reporting
requirement report data for the baseline years of 2011, 2012,
and 2013, helpful? Is that helpful to you all?
Ms. Newberg. I am sorry; I may need to look back at that. I
believe for 2011 and 2013 the information would be helpful in
the sense that those are the years that are the baseline years.
The Agency has some information already reported, but we did
not feel that we necessarily would have a perfect set. We would
have to go back and look at that. So having something included
would be helpful.
Mr. Soto. I would direct your attention to section 4,
paragraph (d), entitled ``Coordination.'' Does this paragraph
provide sufficient authority to EPA to allow for efficient
integrated reporting between this legislation and existing
reporting requirements?
Ms. Newberg. We believe the paragraph on coordination was
very helpful and would allow for us to streamline some of the
reporting requirements.
Mr. Soto. I appreciate your assistance.
And I yield back.
Mr. Peters. The gentleman yields back.
The Chair now recognizes the ranking member of the full
committee, Mr. Walden, for 5 minutes.
Mr. Walden. Well, thank you, Mr. Chairman. As you know, we
have got this other subcommittee going on downstairs. So I
wanted to ask a couple of questions, and hopefully, they
haven't been already asked.
Section 7 of H.R. 5544 calls for the EPA to engage in
negotiated rulemaking with the stakeholders and promulgate
regulations on the sector level, meaning a limited list of
stakeholders may participate.
Since consumers are left out of this engagement, do you
think it is appropriate to have the consumers' voices and not
just the manufacturers' made a part of this rulemaking
discussion about the products they will be able to buy?
Ms. Newberg. I believe in any rulemaking that the Agency
does that participation by the public is always welcome and
always encouraged.
I have not personally had experience with a negotiated
rulemaking, so that would be something I would want to check
back as to how best we would make sure that other voices are
heard in the process.
Mr. Walden. All right. Section 5(d)(2) of H.R. 5544 allows
any outside party to petition the Agency to accelerate the
scheduled phase-down of HFCs. Section 7(c) of the bill allows
any outside party to petition the Agency to restrict the use of
an HFC in a specific industry.
It appears that the Agency grants these petitions; they
automatically must issue regulations with the requested
outcomes, thereby limiting public input.
So do you believe it is clear how the petition process
described in these sections and their subsequent rulemaking
processes relate to one another?
Ms. Newberg. So the Agency did provide technical assistance
suggesting that in instances both where we grant and deny a
petition, in both instances that information should be put in
the Federal Register and should be in a more transparent way so
that the public is aware of that.
Mr. Walden. But do you think--well, when would the public
have the opportunity for meaningful participation in that kind
of decisionmaking?
Ms. Newberg. I would probably need to go back and consult
with our general counsel. Generally, in our rulemaking process,
obviously, we do provide comment periods. In this particular
instance with this language, I would want to go back and
consult.
Mr. Walden. It is an issue, question we have. So that would
be helpful to know.
And could either of these subsections be read to prejudge
the outcome of a rulemaking process?
Ms. Newberg. We noted in our technical assistance that (c)4
could be read to prejudge the outcome and we had suggested
changes to that language on that basis.
Mr. Walden. Did those changes get incorporated into the
draft?
Ms. Newberg. To my knowledge, they have not yet been
incorporated.
Mr. Walden. OK. All right.
I would yield to the ranking member.
Mr. Shimkus. Just to jump in on your question. I think you
are debating between the words or the proposals of promulgating
and promote. And I think if an outside group can appeal and
there is a ruling, a decision made, that does exclude the
public from that debate. And I would hope that we wouldn't want
to do that.
And I would yield back.
Mr. Walden. Yes. No, I would hope that, too. I can't
imagine that is actually the intent of the authors, but it may
be the consequence, which is why I think having additional time
to fully consider these matters is pretty important.
So with that, I would yield back, Mr. Chairman.
Mr. Peters. The chairman yields.
The Chair now recognizes the gentlewoman from Michigan,
Mrs. Dingell, for 5 minutes.
Mrs. Dingell. Thank you, Mr. Chairman.
And I want to thank the committee ranking, the chair and
the ranking minority, for holding and participating in this
because I think this is very important legislation. I think
that if you are not in your position a lot of people that are
watching this hearing probably don't understand a lot of what
they are listening to.
But it is--this is a good, strong bill. It does have
bipartisan support. And it is important that we stay at the
forefront of innovation in this country, strengthen our
economy, protect our consumers, and protect our environment at
the same time.
As Mr. Shimkus asked earlier in his questioning; it is
clear that the transition away from hydrofluorocarbons is
already happening globally, and if we are to remain
competitive, we can't afford to sit on the sidelines.
Michigan is home to nearly 3,900 direct jobs in the
heating, ventilation, air conditioning, and refrigeration
industry. This bill would not only sustain those jobs and
another 134,500 manufacturing jobs in the United States, but it
would create another 33,000 high quality American jobs.
So I thank you for being here. I thank you for providing
testimony and your expertise. And I thank the second panel as
well.
So I am going to ask a basic question, because I think a
lot of people don't understand this question. How do
hydrofluorocarbons enter the environment? And why do they
matter?
Ms. Newberg. Thank you. They are generally released at some
point in time, either through--if it is in an aerosol, then it
is a direct release. If it is air conditioning or refrigeration
equipment, then it would maybe leak out over time. Or if it
were not properly recovered and recycled at the end of life
from a piece of equipment, it would be emitted as well. There
are other ways as well. Equipment that has been landfilled,
sometimes the degradation products over time will lead to
emissions.
Mrs. Dingell. And it is ending up in our air, our land, and
our water, correct, or at least our air and land?
Ms. Newberg. I am not familiar on the water side.
Mrs. Dingell. All right, I take that back. And how would
EPA go about promulgating a new regulation as directed in this
bill to establish standards for the management of HFCs as you
also mentioned in your testimony?
Ms. Newberg. What the bill seems to be identifying is for
the agency to promulgate notice and comment rulemaking, and we
would do so following both the requirements to do that and
using an information and availability for our partnership
programs as well.
Mrs. Dingell. We talked about earlier--my colleague, Mr.
Shimkus, raised it that the worldwide transition away from HFCs
is beginning. Are you aware of any other countries who are
implementing a regulatory framework to manage this transition
successfully, and are there lessons learned?
Ms. Newberg. I am certainly aware of a number of countries
that are already implementing restrictions and phase-downs of
HFCs. We have not evaluated whether or not there are lessons
learned from those.
Mrs. Dingell. Would it be a good idea to do that?
Ms. Newberg. I am sure we can take that back. It is always
a positive way to look at other countries and see what works
and what doesn't work.
Mrs. Dingell. And in your technical opinion, does H.R. 5544
give the EPA the necessary authority to phase-down HFCs
responsibly that provides both economic and environmental
benefits?
Ms. Newberg. We have not evaluated the bill in particular
on either the economic or environmental benefits in any kind of
specific way. It does appear to provide the authority that
would be needed to phase down HFCs.
Mrs. Dingell. I thank you for those answers, and I yield
back my time.
Mr. Peters. The gentlelady yields back.
The Chair now recognizes the gentleman from Oklahoma, Mr.
Mullin, for 5 minutes.
Mr. Mullin. Thank you, Chairman.
Can I go back to a question that was asked earlier too
about licensings. Ms. Newberg, starting with page 22, line 23,
it says regulations to control, where appropriate, any
practice, process, or activity regarding a service repair,
disposal, or installation of equipment that involves a
regulated substance or substitute for regulated substance that
the EPA administrator basically would set those standards. You
would be over the licensings of insulation, repair, service,
everything. Are you guys prepared to take over the licensing of
that?
Earlier you said--when Ms. Rochester asked the question,
you said that you guys are already in that space. You are not
in the space where I am at for the install, repair. You are not
in that space.
Ms. Newberg. Under Title 6 of the Clean Air Act, there are
regulations today that do guide air conditioning service and
repair.
Mr. Mullin. About emitting. It is emitting. It is when it
is released. That is where you guys are in it, when we release
the product that is being used. It is illegal.
Ms. Newberg. There are additional requirements on recovery,
recycling----
Mr. Mullin. Sure.
Ms. Newberg [continuing]. And reclamation, including
provisions that deal with servicing practices.
Mr. Mullin. But you are not into the repair side of it.
Specifically, when this talks about licensing, that you are
going to be overseeing the regulations to control, where
appropriate, any practice, process, or activity, any, any
practice, process, or activity regarding the servicing, repair,
or disposal or the installation, that is the whole product.
That is everything. That is not the refrigerant at this point.
You guys are in the refrigerant space, not in this.
Ms. Newberg. So I will need to go back and consult and work
through our congressional affairs to provide----
Mr. Mullin. Well, while ago when you was asked the
question, you said that you guys are already in that space, and
so I want to clarify, you are not in that space. You are just
in the refrigerant space, right? And underneath this, it gives
you authority to enter in broadly, more broadly into the
licensing of service techs, of our technicians.
Ms. Newberg. So Title 6 under subsection 608, we do have a
licensing presence.
Mr. Mullin. Not Title 6. I am talking about this.
Ms. Newberg. Yes.
Mr. Mullin. Underneath this, this gives you more broad
authority. Does it not?
Ms. Newberg. I would like to make sure I answer your
question correctly.
Mr. Mullin. Yes.
Ms. Newberg. You asked about the licensing. So EPA does
provide licenses for air conditioning and refrigeration
technicians, both for motor vehicles and for stationary
equipment.
Mr. Mullin. For the recovery of the refrigerant.
Ms. Newberg. For including servicing practices associated
with----
Mr. Mullin. Not the servicing practicing because that comes
from the--our licensing that we do comes from the construction
industry board in the State of Oklahoma. And if we go to a
different State, that is where our licensing comes from. Where
you guys are over is when we start recovering or filling the
refrigerant of the units.
Ms. Newberg. I am happy to take this back and work with our
congressional affairs.
Mr. Mullin. Right.
Ms. Newberg. I believe the language is opening in our
regulation, so it is opening the system, but I am happy to----
Mr. Mullin. Right, which is the refrigerant. When we open
it, it is reclaiming the refrigerant.
Ms. Newberg. If you are asking if we have licensing on the
electrical side----
Mr. Mullin. I am not talking about the electrical side. I
am talking about what this says. It says any practice. And my
whole point that I am getting to is this is much more broader
language than what it is, which opens the door for
interpretation. So I am not--I am telling you where our
licensing already comes from versus reading this.
Now, going back, when we start talking about the recovery
of the refrigerant, is it illegal right now for the refrigerant
to be released into the air?
Ms. Newberg. There is a prohibition in the Clean Air Act
that prevents it.
Mr. Mullin. Right. And so what is the fine for that?
Ms. Newberg. I will have to check with the----
Mr. Mullin. Five thousand dollars. It is $5,000 per
occurrence is what we would get fined, according to our
training from the EPA, if we were to get caught releasing the
refrigerant. And so I say that because 65 percent of all the
units that are out there right now are still on the old R-22
system because when you was asked questions earlier, you was
asked can a system run its full cycle? Well, the full cycle is
15 to 20 years is what your system works.
And they phase-out--when you are phasing this stuff out,
you phase-out the parts to it too. That is why this has been
getting phased out since the Montreal Protocol, but yet 65
percent of the system, 60 to 65 percent of the systems, are
still working on the old system, the R22 system. And now we are
already trying to phase out the new system to which is
supposedly supposed to go to the 410A. What is the measurement
that you are using to say that the 410A needs to be phased out,
too, because in your testimony, you stated that while HFCs do
not deplete the ozone layer, most HFCs are potent greenhouse
gases? How are you measuring that because more of the systems
right now are still using the old system?
Ms. Newberg. I am sorry.
Mr. Mullin. What is the need----
Mr. Peters. Mr. Mullin--Mr. Mullin, ask her a question and
allow her to answer it, but your time has expired.
Mr. Mullin. I think she was answering me.
Mr. Peters. OK.
Mr. Mullin. What is the purpose to phase-out the HFCs? What
is causing the urgency to phase it out?
Ms. Newberg. Well, that is a question for Congress. That is
a policy question, and I can only answer based on what I can
interpret in the bill.
What your question was regarding the measurement, I believe
what they--of greenhouse gasses, I believe, was your question,
and the list that seems to be being used is an IPCC list of
greenhouse gas substances and their potency.
With regards to your question on fines, I believe it is
more like $50,000, but I would need to check that. I believe it
is $50,000 per incident per day is the maximum fines, but that
is----
Mr. Mullin. It depends on the----
Mr. Peters. The gentleman's time has expired. The Chair now
recognizes Mr. Carter from Georgia for 5 minutes.
Mr. Carter. Ms. Newberg, thank you for being here. We
appreciate you being here very much.
Ms. Newberg, I want to ask you about the--you are obviously
very familiar with--thank you--with the Kigali--Kigali, is that
the way you pronounce it?
Kigali.
Mr. Peters. He is from Georgia, he doesn't speak Georgia.
Mr. Carter. Kigali is the way you pronounce it in Geechee.
That is what we speak down in south Georgia. OK. And pay no
attention to my colleagues here up on the dais, but
nevertheless, you know, help me understand this. I am a
pharmacist. I am not in this area, necessarily, but I just want
to understand the difference, the basic difference between the
HFCs and the HFOs and how they differ in utilization.
Ms. Newberg. Between the HFCs and the HFOs?
Mr. Carter. Right.
Ms. Newberg. The HFOs are another class of substitute
chemicals. There are a lot of substitutes, ozone depleting
substances. They are not all HFCs. They are not all HFOs.
Hydrocarbons, carbon dioxide, many other types of chemicals
have been used, Methylene----
Mr. Carter. Right. So how much do we know about the HFOs?
Ms. Newberg. I think that may be a question----
Mr. Carter. I think the question that was asked earlier
about how can you measure this if we haven't been using them,
that is what I am concerned with here.
Ms. Newberg. So HFCs have been used in the United States
since at least the early 1990s, probably certainly before then.
They have been used in a variety of uses for a very long time.
They are not new chemistry from that perspective.
Mr. Carter. OK. One last question and that is--Mr.
Chairman, I want to ask unanimous consent to enter into the
record a letter from the National Marine Manufacturers
Association.
Mr. Peters. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Carter. Thank you. One thing, one point that the boat
makers make is that they do not have an option now, an
alternative, if they are not using the HFCs for certain parts
of the boats. Now, they have decreased, they have decreased
their use of them 80 to 90 percent. However, it adds to the
weight on it if they don't use the HFCs, and therefore, they
use more fuel. Are we not just shooting ourselves in the foot
here if we try to solve one problem but we create another
problem?
Ms. Newberg. I think there is a policy question in there
that has to be taken up in how this legislation is developed,
but in terms of your question on whether or not they have
alternatives, or any group has alternatives, I think the way
this is structured in the legislation is, that is something
that we would look at as sector-by-sector basis.
And the technical assistance we provided is that we should
actually cut that even finer and not just look at the sector
but look at the individual end uses. Because foams used in
boats is going to be different used than foams used, for
example, in chairs or foams used in building insulation.
Mr. Carter. So what you are telling me is, you may have
exemptions, exceptions?
Ms. Newberg. I believe the legislation is set up both to
allow for that, and also the gradual phase-down means that
different sectors could go at very different times.
Mr. Carter. OK. I am going to yield the rest of my time to
the gentleman from Oklahoma.
Mr. Mullin. What is the reason for the change to phase-out
410A to A2L?
Ms. Newberg. So A2L is a designation by ASHRAE as to types
of refrigerant. It is not a specific type. There are a number
of refrigerants that are both HFCs and non-HFCs that would meet
that designation.
Mr. Mullin. But to phrase out from the 410L to the new
refrigerant that we are going to, what is the need for that?
Why do we feel the need for it if it is not depleting the
ozone?
Ms. Newberg. Well, I mean, I noted in my testimony, they
are put in greenhouse gases, but I believe that is a question
for the co-sponsor of the bill.
Mr. Mullin. But isn't the A2L, isn't it flammable? The
refrigerant that we are going to, we go from a non-flammable
refrigerant to a flammable refrigerant, is that not true?
Ms. Newberg. So there are both flammable and non-flammable
refrigerants in use broadly today, including, you mentioned
410A----
Mr. Mullin. The one that we are specifically talking about,
that we use daily, each day, inside customers' air
conditioners, consumers, it is non-flammable?
Ms. Newberg. I believe you are referencing a particular
product.
Mr. Mullin. The 410A to which we are going out, to which we
are phasing out because it is part of the FHCs, we are phasing
that out, and we are going to a flammable, to, the manufacturer
says, a mildly flammable refrigerant. Is that not accurate?
Ms. Newberg. I don't believe there is anything that
legislation that dictates a specific choice on what
manufacturers----
Mr. Mullin. But that is the direction that we are going to.
That is what the manufacturers are phasing out to. The
manufacturers are even claiming that it is mildly flammable.
Ms. Newberg. So I believe there are a full range of
flammable, non-flammable, and mildly flammable alternatives. It
would depend on the end use and the manufacturer----
Mr. Mullin. Not widely used right now. We are not putting
flammable refrigerant in consumers' homes.
Ms. Newberg. I believe in certain products we are.
Mr. Mullin. Not for refrigerant, we are not putting them in
because we are not allowed to. I am not allowed to put those
in. The only way they can come in is they come in with a
closed-loop system, and then we are not allowed to work on
those. That takes a whole other classification. I yield back.
Mr. Peters. The gentleman's time has expired. The chair now
recognizes the gentleman from West Virginia, Mr. McKinley, for
5 minutes.
Mr. McKinley. Thank you, Mr. Chairman. And I would really
like to give more of the time to Representative Mullin to
continue his questioning if he could, please. I yield to him.
Mr. Peters. OK.
Mr. Mullin. Coming back to the question that I was asking,
to reference it again--and I will try to give you more time to
answer it here--if we are still using the old, old system,
which is the R22, if we are still using the old, old system, it
is 60 to 65 percent of all the air conditioners that are still
in customers' homes that are being used today, and only 30 to
35 percent of the systems are running on the HFCs, which is the
410A system for customers that are running refrigerant, my
whole point that I am trying to get to is, does it seem
reasonable that we are phasing out the 410As when they are not
even widely used yet? So we really don't have a way to measure
what their impact is on the environment. Would you say that is
accurate?
Ms. Newberg. So we have not installed new equipment in the
United States, at least not legally, since 2010, using R22.
Since that time----
Mr. Mullin. All right. There is a complete phase-out in
2015. You couldn't even buy replacement parts in 2015, and
then, of course, in 2020, this year, you can't even buy the
drop-in refrigerant anymore for what we call for the R22s.
Ms. Newberg. So R22 is available today. It is just not
newly manufactured. It is recovered and recycled. It is still
available today. It has not been available for new equipment
since 2010.
Mr. Mullin. Right.
Ms. Newberg. And then I think to answer your other
question, the agency hasn't approved any A2L refrigerants for
split systems for-- I believe what you are talking about is
what we would commonly call essential air conditioning. We have
not approved an A2L refrigerant for that application to date.
Mr. Mullin. Well, the manufacturers are already saying that
the phase-out, the replacement for the 410A will be the A2L,
and they openly say that it is mildly flammable.
Ms. Newberg. A2L is an ASHRAE designation----
Mr. Mullin. I know that.
Ms. Newberg. --it might be mildly flammable, but my
understanding--and I am not--I think you have a panel coming up
of industry experts, so you may be better off having that
conversation with them.
Mr. Mullin. Well, but we are talking about the environment.
My whole point that I am trying to get to, is it really safe?
Is it really safe for us to be going to a non-flammable to a
flammable when the product that we have right now is safe to be
in a home, it is not ozone-depleting, it is against the law to
release it, we have to recover it, we have to measure it? For
your account, you are saying 50,000; for our account, it is
5,000 depending on what level of claims that you are bringing
into it--for the fines to be able to release it.
And all I am saying is, the consumer is the one that is
getting hit with this. Because when you replace the system, the
system for a three-ton unit which is the average for a average
home inside the United States, the replacement cost it roughly
$6,500. For a five-ton system which is what you have in a lot
of Midwest because the homes are slightly larger, the
replacement cost is roughly $10,000. So that is today.
And so I am trying to figure out, what is the consumer
benefit of this. We are going to cause the consumer to switch
to a new system that is going to be already out in another 15
years. So we are going to take out--we are going to say, you
can't put in the R22 systems anymore, so you got to go to the
410A systems. And by the way, when you put that 410A system in
it, by the time it is going to start needing repairs, which is
about 15 years, it is not going to be able to be repaired, and
you are going to replace the system again to the new A2L, which
by the way, that is flammable. We are going to put--now we are
going to put a flammable product into your system. How is that
best for the consumer?
And when you start talking about, according to you, the
410L--or 410A isn't ozone depleting, what is the measurable
reason then that we would put the consumers' safety at risk
over a possible greenhouse gas potential leak?
Ms. Newberg. I think if you--we would be happy to follow up
through my Congressional Affairs Office and provide you with
information on refrigerant safety.
Mr. Mullin. But that is not answering the question. Is it--
in your opinion, is that the right way to do, to put--to
switch, to go from a non-flammable product to a mildly
flammable product?
Ms. Newberg. I believe that is a question that I can take
back and work with you with our Congressional Affairs to
provide you with information.
Mr. Mullin. OK. With that, I yield back.
Mr. Peters. The gentleman yields. The Chair now recognizes
the gentleman from Texas, Mr. Flores, for 5 minutes.
Mr. Flores. Thank you, Mr. Chairman. Ms. Newberg, thanks
for joining us today. I have two quick questions for you. In
section 5, there is an outline for a timeline for the phase-
down of regulated substances. But that timeline also allows
exemptions under certain circumstances. So my question is this.
Do you believe that section 5 is clear when it comes to
specifying for when and what and why exemptions would be
allowed under the HFC phase-down?
Ms. Newberg. Thank you. I believe we provided in our
technical assistance, and I am just looking now, that we did
believe that there were some small changes that could be made
to make that a little bit more clear and connect that
information.
Mr. Flores. OK. Great. I appreciate that. My next question
builds on the question that GOP Leader Walden was asking about,
section 7. There is an evaluation provision that is designated
as ``E'' under section 7 for technology transitions. It is
clear in that provision that the EPA shall consider the
availability of alternatives to regulated substances for
potential rulemaking procedures. And so my question in this
regard is, what would help facilitate this process and also to
make sure that there is transparency for the public in this
process?
Ms. Newberg. Thank you. I appreciate the question. And I
will note that one of the conditions that the EPA is supposed
to look at is safety in particular. I believe we provided
technical assistance that also noted for more transparency what
might be helpful is for some language to be added in, language
that could be consistent with Title 6 on a clearinghouse, which
would be just for folks to understand what alternatives we are
looking at in terms of availability.
Mr. Flores. OK. Great. I appreciate the responses on that.
I am going to yield the balance of my time to the gentleman
from Oklahoma, Mr. Mullin.
Mr. Mullin. Ma'am, I am sorry you and I get to talk so
much. It is just that this is a very passionate point for me
because at the end of the day, the consumer, I think, is the
one that is being left out of this conversation.
I know we have heard from different people up here that
they said it is rare that the manufacturers and the chamber
come together on an agreement, but as our--Ranking Member
Shimkus pointed out, the small businesses and the customer, the
consumer, our constituents, are left out. And the whole thing
that I am trying to get to is, is we talk about certainty
inside the industry through regulation, but what about the
uncertainty to the consumer?
As I said, we haven't even completely finished out the
phase-out of the R22. And I go back to the same question. I
can't figure out what the need is if we haven't already phased
out the R22, the 410A, what is the need to go ahead and phase-
out the HFCs which is the 410A? What is--your expert opinion,
what is driving the need to do this?
Ms. Newberg. I appreciate the question and I do believe
that is a question for the drafters of the bill. It is a policy
question as to what the----
Mr. Mullin. OK. Well, in your opinion, do you feel like
there is actual need to phase-out HFCs?
Ms. Newberg. I am not here in my personal capacity. I am
here as a representative of my agency and providing technical
assistance on draft legislation.
Mr. Mullin. I understand that, but the drafters of the bill
was pointing towards the environment.
Ms. Newberg. I understand that.
Mr. Mullin. And you are the EPA.
Mr. Shimkus. If the gentleman would yield?
Mr. Mullin. Yes.
Mr. Shimkus. I have been in this position numerous times.
She is not supposed to give her personal opinion. She is just
supposed to comment on the legislative language of the bill and
whether it can be enacted or it can't or some other----
Mr. Mullin. OK. I will rephrase my question then. Is there
a concern at the EPA that 410A is hurting the environment?
Ms. Newberg. The agency already has regulations on 410A
because of recovery recycling and to prevent the venting of the
refrigerant.
Mr. Mullin. But do you feel like the 410A, the HFCs are
hurting the environment?
Ms. Newberg. The agency made a determination that it was
not exempt from the venting prohibition, that it needed to be
recovered and recycled under section 608--I am sorry--it needed
to be not vented.
Mr. Mullin. But with the recycling going on, is HFCs
hurting the environment?
Ms. Newberg. So the agency made a determination in 2001
that it was not exempt, meaning, it did not find that there was
no environmental impact. In other words, we found there was an
impact. Otherwise, we would have exempted it from the section
608 prohibition.
Mr. Mullin. That is back from 2001?
Ms. Newberg. That is back since 2001 and before then, the
agency had determined, based on what Congress gave us in the
Clean Air Act under section 608, that we could not allow the
releases during service, maintenance, repair, and disposal of
air conditioning refrigeration equipment.
Mr. Mullin. OK.
Mr. Peters. The gentleman's time has expired. The chair now
recognizes the gentleman from Texas, Mr. Olson, for 5 minutes.
Mr. Olson. Yes, I thank the Chair, and welcome to our
witness. Ma'am, my home in southeast Texas, I have lived there
since 1972. Now, I am a Texan, so I don't talk funny like my
friend from Georgia, but we moved there with one car, a 1963
Chevy station wagon with no AC. That car was in my family for,
maybe, two days maximum in Texas. We could not live without air
conditioning. The forecast in southeast Texas is the same from
late April to mid October. It is 95 degrees or more, and 95
percent humidity or more.
Without air conditioning, my home region would not be the
fastest growing region in the country with Houston, Texas,
about to become the third biggest city in America.
The Texas Medical Center, Texas Children's Hospital in the
medical center, M.D. Anderson Cancer Center, all those great
research places for kids get care, cancer cured, they would not
be here without air conditioning.
The 8th wonder of the world, a building called the Houston
Astrodome, was solely built for air conditioning. We have a
little park out there called Colts Park, outside, heat,
humidity, they cannot play there. The mosquitoes were as big as
flies. They kept swarming. So my point is, air conditioning is
a part of our life that we have to have in Houston, Texas.
We just replaced my air conditioner in my house. Have two
ACs, had to replace one because it got old. My question is, if
this bill becomes law, do I have to replace my air conditioner
within 15 years, 20 years, 25 years, or can I keep it as long
as it is working?
Ms. Newberg. You do not need to replace it. You can keep it
as long as it is working.
Mr. Olson. OK. That is good news for my wife. I want to
talk about the commercial aspect. As I mentioned in my opening
statement, a company called Daikin, which is a Japanese company
that has got 7,000 people working in Texas 22, they make air
conditioners. Their sales last year, $17 billion. They operate
in 150 countries. Their research and development budget last
year, $300 million. Been in business now since 1924, 96 years.
My question is, if this bill does not become law, what
happens to Daikin here in America? Can they stay here? Will
they stay here? Or will they be forced to go overseas because
we can't compete with old laws?
Ms. Newberg. I appreciate the question. I don't think I
could speak to the ramifications on any particular company or
business based on the legislation. We haven't done that type of
analysis.
Mr. Olson. But you said in your statement, though, lots of
countries right now, overseas, are switching to, you know,
getting rid of the CFCs, and we are behind that curve. So if we
don't adapt and give a phased, defined timeline, does that hurt
a company like Daikin that wants to stay here, that may have to
go somewhere else because the whole world is doing something
with HFCs and we are not?
Ms. Newberg. I appreciate the question, and it may be
better for the industry or others to weigh in on that more than
from the EPA's perspective. I think what we have seen before
and what we have spoken to is, the time--the time differences
could impact different industries in different ways, but we
haven't done any analysis on a particular company.
Mr. Olson. And this is not something new, right? EPA has
done this in the past where you phase in some new process or
some new chemical. We talked about what we did the last time
with the, you know, the Montreal Protocol. This is nothing new,
right? Not a big deal for EPA to adapt, correct?
Ms. Newberg. So Title 6 of the Clean Air Act set in motion
for EPA implementation of the Montreal Protocol and phase-out
of alternatives as well as--sorry--phase-out of the ozone-
depleting substances and identification of alternatives. The
legislation does seem to request the agency to do many of the
same activities.
Mr. Olson. So again we have been down this road once
before. It is not some radical path we are going down right now
with this bill.
Mr. Chairman, I would like to offer unanimous consent four
documents of support for the record. The first one is from five
Senators--Mr. Kennedy and Mr. Cassidy, Ms. Collins, Mr. Cotton,
and Mr. Graham. The second one, it was mentioned by my
colleague from Georgia. It is from the National Marine
Manufacturers Association. The third is from the U.S. Chamber
of Commerce and National Association of Manufacturers. And the
fourth one is from the Americans for Tax Reform, Freedom Works,
and the ACCF, the American Council for Capital Formation.
Mr. Peters. Without objection, those will be ordered.
[The information appears at the conclusion of the hearing.]
Mr. Olson. Thank you. I yield back.
Mr. Peters. OK. The gentleman yields back. That concludes
our first panel. I would like to thank Ms. Newberg for joining
us today. Thank you for being here.
I would like to recognize that Mr. Olson cannot not talk
about the Astros, no matter happens.
Mr. Olson. Well, we got caught----
Mr. Carter. Well we can talk about the Astro's we can talk
about them----
Mr. Peters. No matter what happens, he has got to mention
the Astros.
At this time, I would ask the staff to prepare the witness
table so we can get begin our second panel shortly. The
committee is in recess for 5 minutes.
[Recess.]
Mr. Peters. All right. We will call the committee to order.
We are now ready for our second panel, and I will now introduce
the witnesses.
Thank you all for being here very much. Mr. John Galyen is
president of Danfoss North America. He is testifying on behalf
of the Air Conditioning, Heating, and Refrigeration Institute.
Ben Lieberman, senior fellow, Competitive Enterprise
Institute, and I understand, Mr. Lieberman, you spent some time
with this committee before, so welcome back.
Mr. David Doniger, senior strategic director of Natural
Resources Defense Council.
Mr. Gary Bedard, president and chief operating officer of
Lennox International, who is testifying on behalf of the
Alliance for Responsible Atmospheric Policy.
Before we begin, just an explanation about the lighting
system. In front of you are a series of lights. The light will
initially be green. The light will turn yellow when you have 1
minute left. Please begin to wrap up your testimony at that
point. The light will turn red when your time expires.
At this time, Mr. Galyen, you are recognized for 5 minutes
for your opening statement.
STATEMENTS OF JOHN GALYEN, PRESIDENT, DANFOSS NORTH AMERICA, ON
BEHALF OF THE AIR-CONDITIONING, HEATING, AND REFRIGERATION
INSTITUTE; BEN LIEBERMAN, SENIOR FELLOW, COMPETITIVE ENTERPRISE
INSTITUTE; DAVID D. DONIGER, SENIOR STRATEGIC DIRECTOR, NATURAL
RESOURCES DEFENSE COUNCIL; AND GARY BEDARD, PRESIDENT AND CHIEF
OPERATING OFFICER, LENNOX INTERNATIONAL, INC., ON BEHALF OF THE
ALLIANCE FOR RESPONSIBLE ATMOSPHERIC POLICY
STATEMENT OF JOHN GALYEN
Mr. Galyen. Good morning, everyone. And thank you, Mr.
Chairman and Ranking Member Shimkus, and the members of the
subcommittee.
As already stated, my name is John Galyen, and I am the
chairman of the board of directors at the Air-Conditioning,
Heating, and Refrigeration Institute, the trade association of
manufacturers of HVACR and water heating equipment. AHRI is
more than 300 member companies, manufacture quality, efficient
and innovative residential and commercial air conditioning,
space heating, water heating, and commercial refrigeration
equipment and components for sale in North America and around
the world.
AHRI member companies produce more than 90 percent of the
previously named equipment used here and around the world. I
also serve as president of Danfoss North America, a
manufacturer and a member company of AHRI. Thank you for this
opportunity to provide comments on this important bill.
The companies in this industry, with significant business
and manufacturing operations here in the United States, are
among the recognized world leaders in HVACR technologies with
decades of substantial investments in innovation and R&D that
has enabled us to lead and support successful transitions in
refrigerant technologies over the past 30 years.
I would like to highlight that the swift enactment of the
AIM Leadership Act would establish a Federal framework to guide
the transition out of the group of substances known as
hydrofluorocarbons, commonly referred to as HFCs, into the
next-generation technologies, many of which are made here in
the United States.
HFCs are used as refrigerants as well as solvents, foam-
blowing agents, propellants, fire suppressants, and aerosols.
Some have asked, why is Federal legislation needed to phase-
down HFCs? Without Federal legislation, or passage of this
bill, we face a disorderly transition that puts American
industry and innovation at risk. This will add significantly
more cost and complexity that will be especially burdensome for
small and mid size businesses that have limited resources and
without the scale to absorb the incremental investments
required.
Many of the new technologies needed in the transition will
be developed here in the United States which can be a major
advantage for American business, workers, and consumers.
However, there is a big difference between an orderly
transition guided by Federal legislation and a disorderly
transition, which will occur in the absence of a Federal
framework.
With an orderly transition, the American HVACR industry has
certainty, stability, and predictability with regard to product
lines, supply chains, distribution networks, and legal and
regulatory requirements. This will enable businesses to invest
and innovate. This is where all the economic benefits come
from, 33,000 new jobs, $12 billion in direct manufacturing
output, and a 25 percent increase in exports.
In an orderly transition, we have a pretty clear picture of
how to manage the HFC transition and we can plan, invest, hire,
and build accordingly and to transition in a shorter timeframe.
In a disorderly transition, where there is no Federal
framework, it is likely that chaos will prevail. And it is
uncharted water for us, since all prior refrigerant transitions
were all guided by an early Federal framework.
In a disorderly transition, a company, in order to remain
competitive, will have to maintain multiple product lines
without a national framework. This complexity would extend into
supply chains, warehousing, distribution networks, and
significantly increase the cost of regulatory compliance. A
smaller company may be forced to compete in some regions and
not in others due to the extra costs and complexity.
The AIM Leadership Act puts us on a path for an orderly
transition away from HFCs. The American HVACR manufacturing
industry and the AHRI member companies are in strong support of
the AIM Leadership Act.
NAM and the U.S. Chamber of Commerce also support H.R.
5544. We believe it would create regulatory certainty,
stability, and predictability. This protects the interests of
large and small manufacturers and all consumers, while also
encouraging new technology investment and development that
would result in jobs creation and increased trade.
I urge Congress to act swiftly in the passage of this bill
for the benefit of American manufacturers, workers, and
consumers.
Thank you for the opportunity to testify, and I welcome any
questions you might have.
[The prepared statement of Mr. Galyen follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Peters. Thank you, Mr. Galyen.
Mr. Lieberman, you are now recognized for 5 minutes for
your opening statement.
STATEMENT OF BEN LIEBERMAN
Mr. Lieberman. Chairman Tonko, Vice-Chairman Peters, Mr.
Shimkus, and members of the subcommittee----
Mr. Peters. Ben, pull that a little bit closer to you.
Mr. Lieberman. You would think I would know that by now.
Mr. Peters. You would think.
Mr. Lieberman. Thank you for this invitation to speak today
at this hearing on H.R. 5544, the American Innovation and
Manufacturing Leadership Act of 2020.
My name is Ben Lieberman, and I am a senior fellow at the
Competitive Enterprise Institute, a nonprofit, nonpartisan,
public policy institute committed to advancing the principles
of free markets and limited government.
Before that I had the distinct privilege of being a staff
member for the House Committee on Energy and Commerce,
including work on this subcommittee from 2011 to 2018.
Now, I know that a number of you have expressed misgivings
about the Green New Deal or carbon taxes or other comprehensive
climate change measures, and I certainly share those
misgivings. But I also know that several of you are casting
about for something you can support on climate, something less
controversial and costly, the proverbial low-hanging fruit or
win-win proposal, and it appears that some of you may be
gravitating towards H.R. 5544, the American Innovation and
Manufacturing Leadership Act of 2020 as possibly being that
vehicle. But I would strongly caution against doing so.
I believe that this bill, especially in its present form,
risks imposing significant and unnecessary costs on homeowners,
vehicle owners, and many small business owners, and promises
more economic pain than environmental gain.
The bill places limits on production of hydrofluorocarbons,
or HFCs. These are the refrigerants currently used in literally
hundreds of millions of air conditioning and refrigeration
systems, nearly every vehicle air conditioner, many residential
air conditioners and refrigerators, and the equipment used in
millions of small businesses such as restaurants, for example.
Future repairs of this equipment and particularly, repairs
of leaks that require additional HFCs would very likely rise if
supplies of these refrigerants become restricted. In addition,
the cost of HFC substitute refrigerants and the equipment
designed to use them is also likely to be higher. For example,
perhaps the most common HFC targeted under the bill is HFC
134A, which is the stuff used in your car air conditioner and
refrigerator, as well as quite of the bit of the equipment you
might see in a food store.
Well, you can go to any of a number of online supply houses
and find 134A for around $5 to $7 a pound, even less if you buy
it in bulk. But its substitute, something called HFO 1234YF,
can be found on those same sites for something closer to $50
per pound. So make no mistake, this bill will imposes costs,
both higher repairs of existing equipment and a higher purchase
price for new equipment.
Now, there are a few provisions in this bill that are
particularly problematic, and I would like to spend a moment
highlighting them. This includes the provision that lets the
deadlines be accelerated. The bill sets out a schedule of a 40
percent reduction of HFCs by 2024 and an 80 percent reduction
by 2034. Not great, but not terrible in terms of allowing for a
gradual transition.
But the bill allows these deadlines to be accelerated. And
even if EPA chooses not to do so, the bill's wide open
litigation opportunities practically guarantee that
environmental groups will sue to do so. This provision destroys
any certainty and could lead to HFC restrictions far costlier
than originally set out for all those pieces of equipment that
will still need it.
At a minimum, I believe that any policy change should allow
the existing generation of HFC-dependent equipment to live out
its useful life relatively undisturbed without higher costs to
be replaced in due course by whatever comes next. And this
bill, in its present form, falls well short of that goal.
I also see problems with the lack of state preemption. Many
of the issues I worked for on this committee, such as cafe
standards and appliance efficiency standards were complicated
by California and other States going in their direction often
for the express purpose of trying to force the issue in
Washington. And that is already happening with HFCs.
However, this bill does nothing to rein in States that want
to continue setting conflicting HFC measures. I think one set
of HFC restrictions would be enough of a challenge. We don't
need a multiplicity of requirements.
I would also add that the bill's exceptions are far too
narrow and do not provide relief should compliance costs prove
to be high, especially for small businesses and consumers with
other issues like the flammability concerns that were touched
on, or not really resolved in time.
This bill would be uncharted territory in a number of
respects, so there should be a safety valve if things don't go
quite as well as proponents are predicting.
In conclusion, there are a number of things that could be
done to improve this bill, but I should add that I am not yet
convinced that a bill is necessary. To put it bluntly, what
would be so bad if the new stuff had to compete with the old
stuff----
Mr. Peters. Mr. Lieberman, you can conclude.
Mr. Lieberman [continuing]. And let consumers decide for
themselves. That is the way it usually works when the new
product is introduced.
I appreciate the opportunity to participate in this hearing
and look forward to any questions you may have.
[The prepared statement of Mr. Lieberman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Peters. Thank you.
Mr. Doniger, you are now recognized for 5 minutes.
STATEMENT OF DAVID D. DONIGER
Mr. Doniger. Thank you very much, Mr. Chairman, Ranking
Member, for the opportunity to testify.
And thank you to the cosponsors of this bipartisan
legislation to phase-down harmful hydrofluorocarbons and help
U.S. companies lead the world in replacing them with innovative
and climate-friendlier alternatives.
I am David Doniger. I helped lead the Climate and Clean
Energy Program of the Natural Resources Defense Council, and I
have worked in this area for more than 30 years to safeguard
the ozone layer and the climate from the fluorocarbon family of
chemicals.
Under the Montreal Protocol in the 1990 Clear Air Act, we
successfully phased out the CFCs that were depleting the
stratospheric ozone layer. And if we had not eliminated CFCs,
humanity would have suffered hundreds of millions of skin
cancers, millions of them fatal, as well as cataracts and
immune disorders, and huge agriculture losses over this
century. You can see how bad it would have been in the 1-minute
NASA video that I linked to in my testimony.
But thanks to U.S. bipartisan leadership under President
Reagan and every President since, and the Congress, the ozone
layer will recover in the lifetime of my children. Phasing out
CFCs is also the most effective step we have taken so far to
slow climate change. And that is because CFCs are also
extremely powerful greenhouse gases, some more than 10,000
times the heat-trapping power, pound for pound, of carbon
dioxide. If we had let CFCs keep growing, the climate change
impacts we are feeling now--heat waves, droughts, wildfires,
storms, flooding, sea level rise--would have hit us ten years
ago, and they would be even worse today.
HFCs were an initial replacement for CFCs. They don't harm
the ozone layer, they have lower heat-trapping power, so they
were a step in the right direction on climate change, but not
enough because HFCs themselves still have hundreds of thousands
of times the heat-trapping power of CO2, and HFC emissions are
growing much more rapidly than CO2.
If HFCs keep growing, they could add nearly another half
degree Celsius, that is nearly a full degree Fahrenheit, to the
global average temperatures we will experience by 2100.
In a world now on track for at least a 3-degree Celsius
rise and struggling to find the policies to hold warming to one
and a half or even two degrees, we cannot afford to add another
half degree of new warming on top of everything else. So that
is the imperative for replacing HFCs with climate friendlier
alternatives.
Fortunately, this is an area of consensus and cooperation
between the industries that make and use these chemicals and
the environmental community. Industry leaders have pioneered a
wide range of alternatives, some new, some old, that can do the
jobs HFCs do effectively, safely, and economically with much
less, in some cases nearly zero, impact on the climate.
The transition has started, but as with CFCs, we need the
framework of an orderly phase-down under Federal law. That is
why both industry and environmentalists are here today to
testify in support of H.R. 5544.
The bill does three main things: It sets a schedule for
reducing the production and import of HFCs--and I emphasis the
import, because there are no restrictions on imports from China
and other countries now; it requires recovering your reusable
chemicals and reducing leaks; it provides for replacing HFCs in
end uses where safer alternatives are available.
It is not often that the committee hears support for the
same bill from all sides--from the environmental community,
from the chemical makers and equipment suppliers, from business
organizations like the Chamber of Commerce and the National
Association of Manufacturers.
Again, we applaud Representatives Tonko, Olson, Peters, and
Stefanik for their bipartisan leadership and invite all of you
to join in this bill. We note that the Senate companion bill
currently has 32 cosponsors drawn equally from both parties.
I will close by noting that American industries have led in
bringing new alternatives and new products to the multi-hundred
billion dollar international marketplace in these technologies.
If we sustain that leadership, that will mean more
manufacturing investment and jobs here in America and more
American exports, but American firms need the encouragement and
certainty of this bill. Companies in Europe, Japan, and China
are already working to catch up.
This legislation will enable our country to retain its
environmental leadership and our industries to maintain their
commercial edge and reap the rewards. That is why
environmentalists and industry alike support enacting this
legislation now. I would be happy to answer your questions.
[The prepared statement of Mr. Doniger follows:]
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Mr. Tonko [presiding]. I now recognize Mr. Bedard, I
believe, for 5 minutes.
STATEMENT OF GARY BEDARD
Mr. Bedard. Thank you Chairman Tonko, Ranking Member
Shimkus, and members of the committee. I am Gary Bedard, the
president and chief operating officer of Lennox International's
global refrigeration business, and today I speak on behalf of
the Alliance for Responsible Atmospheric Policy in support of
H.R. 5544, the American Innovation and Manufacturing Leadership
Act.
The Alliance is an organization of industry users and
producers of fluorocarbon compounds established in 1980. Today
the Alliance represents businesses that produce and use HFCs in
air conditioning, refrigeration, appliances, foam, electronics,
aerosols, and metered-dose inhalers.
Lennox International is based in Richardson, Texas, and
employs 10,000 people, many of whom work in American
manufacturing or engineering facilities in Georgia, Iowa,
Texas, South Carolina, Arkansas, and Mississippi.
American industry has invested billions in the development
of low GWP compounds and technologies and led the global
development of policies to achieve a cost-effective transition
to lower GWP technologies. Our future is dependent upon a
rational Federal transition to low GWP refrigerants. The AIM
Leadership Act facilitates an efficient and cost effective,
domestic phase-down of HFC refrigerants by providing narrow
authority to the EPA to transition to new substances.
The alternative is an inefficient process that increases
cost for manufacturers, distributors, contractors, and
ultimately consumers, your constituents. The most economical
transition is a predictable and rational Federal transition.
The AIM Leadership Act relies on three key components--a
market-based allocation system that gradually phases down
production, a flexible program for user sectors with no impact
on user--on existing equipment owners, and improved management
of refrigerants.
We successfully managed prior transitions yielding
significant consumer benefits and environmental improvements.
Independent analysis estimates a Federal transition will
stimulate additional domestic investment, generating 33,000
manufacturing jobs over the first decade while increasing
exports by $5 billion.
This legislation simplifies a complicated regulatory
structure using known policy approaches with some key
improvements from lessons learned. The AIM Leadership Act
advances American-made technology, provides economic benefits
and significant job growth while facilitating American
leadership globally.
A Federal program also curtails illegal dumping of HFCs
into the U.S. as is currently occurring, particularly from
countries like China. This transition is well underway
globally. More than 90 countries, including all of our major
economic competitors, have a defined policy approach. The only
debate remaining is the timing of the transition in the United
States, the efficiency by which it occurs, and whether our
industry maintains its global leadership in a market that is
expected to double in the next ten years.
The domestic HVAC in our industry is lagging and falling
behind both the EU and Asia as a result of uniform Federal
policy--a lack of uniform Federal policy. Failure to pass this
legislation into law significantly increases our regulatory
burden, ensuring a costly localized refrigerant transition.
This means industry will manufacture redundant product lines,
increase our distribution costs, and reduce our inventory
turns. Failure to pass this legislation means inefficiency wins
over innovation, and American industry, workers, and consumers,
lose to foreign competition.
Conversely, this legislation reduces regulation to a
single, rational, efficient, and cost-effective Federal
program. We strongly support smart Federal policy that enables
American industry to win globally. We believe that is what H.R.
5544 offers us.
The AIM Leadership Act is supported by industry--the
National Association of Manufacturers, the U.S. Chamber of
Commerce, and the NRDC. We should take advantage of this rare,
broad-based advocacy. Historically, Title 6 programs have
experienced broad bipartisan support as a similar legislator
proposal in the Senate, S. 2754, currently enjoys. We hope that
this legislation will also receive bipartisan support in the
House of Representatives.
The AIM Leadership Act provides regulatory simplification,
implements smart, market-based, and flexible approaches that
have proved cost effective over the years and are projected to
do so in the future. It is pro jobs, pro trade, pro American
technology, leadership, and pro environment. It deserves strong
bipartisan support, and we hope you will give it favorable
passage.
Thank you.
[The prepared statement of Mr. Bedard follows:]
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Mr. Tonko. Thank you, Mr. Bedard, and all of the members of
the panel for your testimony.
We will now move to Member questions, and I will start by
recognizing myself for 5 minutes.
Mr. Bedard, I mentioned the broad support from the heating,
ventilation, air conditioning, and refrigeration industry for
this legislation. Can you help us better understand the breadth
of that support?
Mr. Bedard. Sure.
Mr. Tonko. Does it improve the entire supply chain from
chemical and equipment manufacturers down to contractors? Just
let us better understand.
Mr. Bedard. Sure, Chairman. I think if you look at the
AHRI, which represents the manufacturers as well as the
chemical manufacturers--again, I talked about the alliance that
I am representing here today. Obviously, the chemical
manufacturers are part of that, but I think also included, you
know, small business. The Air Conditioning Contractors
Association has submitted a letter. Of course, there are small
businesses, there is not a district in the country that doesn't
have a small air conditioning contractor in their district, and
they are supportive through their trade association.
The wholesalers, those whom we sell to that then, in turn,
sell to contractors, are represented by HARDI, the wholesaler
group. And they also have provided support for it as well as
the Sheet Metal and Air Conditioner Contractors, SMACNA, of
North America. All of those organizations have submitted
letters in support of this bill.
Mr. Tonko. So there is also considerable private sector
support outside of your industry, and obviously you mentioned
the various end users and refrigerant consumers that will
benefit from an orderly transition to this next generation
refrigerant?
Mr. Bedard. That is correct. And from a consumer point of
view--obviously we are a manufacturer. We are very, very
concerned about costs. We understand the costs that
refrigerants have in the product. Frankly, they are a small
part of the cost of the product, and we have evaluated this
bill, and we have evaluated the timing, and we feel very
comfortable that with the kind of road map that this bill
provides, that we will be able to perform as we have in the
past.
And frankly we have been able to take the cost down, and
the consumers have received better product and in many cases
more efficient product for similar cost.
Mr. Tonko. Thank you.
It is a little unusual for us to receive testimony from
industry stakeholders, asking for the creation of a new EPA
program.
So Mr. Galyen, are American manufacturers currently making
investments to develop HFC substitutes?
Mr. Galyen. Yes, most certainly, Mr. Chairman, they are,
and have been for the last ten years. And most of us are also
servicing not only the U.S.--is it on? Maybe I just need to get
closer. Good. That we have been investing, and in fact, more
than ten years, to meet the North American requirements, but it
is also moving as it is already talked about globally. There is
a transition that is underway today to move away, to more--to
different chemical alternatives to the HFCs, so yes.
And we have been leading in the U.S.--this is also a key
point--so we have been leading in that area, we have been
leading here in the U.S. and that transitions to larger market
shares and business for us internationally.
Mr. Tonko. And so does an orderly transition to next-
generation refrigerants, as was done with the phase-down of
ozone-depleting substances, provide the certainty or grow that
certainty necessary to continue to make those investments in
the U.S. so that these HFS substitutes will be American-made?
Mr. Galyen. Without question. So I represent today the 300
member companies that manufacture for North America, as I made
in my testimony. We represent 90 percent of the equipment that
is produced and sold here in the U.S., and we are prepared to
make this transition.
Mr. Tonko. Thank you.
Mr. Doniger, you have worked on these issues for decades.
How has the phase-down of ozone-depleting substances informed
your position? And did that program benefit both industry and
the environment?
Mr. Doniger. Well, we learned a great deal from that
experience. In the early 1980s, the people on this panel were
at odds with one another. And in about the mid-1980s, we came
to a way of dealing with one other on a partnership basis.
NRDC asked for a phaseout of the CFCs over a period of time
rather than an immediate ban. And the industries began to
cooperate in the design of that system. They had alternatives,
they had the expertise. And we have worked together for 30
years on a successful phaseout of the CFCs, the HCFCs, and now,
hopefully, the HFCs.
This is really an island of cooperation and bipartisanship,
and it has come with tremendous health benefits, both for ozone
layer-related diseases and for the reduction of climate change,
and it has come at imperceptible impact on consumers.
Mr. Tonko. Thank you very much.
I will now recognize Mr. Shimkus, subcommittee ranking
member, for 5 minutes to ask questions, please.
Mr. Shimkus. Thank you, Mr. Chairman.
Mr. Galyen, Mr. Bedard, and Mr. Lieberman, and Mr. Doniger
also, you all talked about an orderly transition versus
disorder. You all talked about a rational transition. So two
questions.
Wouldn't it be more orderly, especially in this day and
age, that we would allow State preemption, we would have
preemption language in this bill?
And from the point of the interstate commerce--the Energy
and Commerce Committee, the International Commerce Clause is
the constitutional provision that gives us our power to be
involved in interstate commerce issues.
So let me start with Mr. Lieberman. Would it be helpful for
an orderly versus disorderly transition, using terminology that
you all have stated, that there be State preemption?
Mr. Lieberman. If certainty and order was the goal, there
are some flaws with this bill, especially the lack of State
preemption.
This is going to be a very big challenge if we set a set of
Federal requirements to phase-down HFCs. And then, on top of
that, California can go in its own direction, other States
which are already doing that can go also in their own
direction. That makes it a lot more difficult. So I think one
set of standards should be enough.
I would also point out, with the accelerator clause we
don't know how orderly and certain. This could happen a whole
heck of a lot faster than anybody here is talking about.
Mr. Shimkus. My next question was on the accelerator
clause.
Mr. Galyen, what certainty is there in the bill language
that would allow us to change and accelerate this provision to
an unknown time?
Mr. Galyen. Probably would have been good to ask the EPA
person, because I think the bill, actually provisions allow
them to petition and there is a review, just as the EPA has
done previously.
Mr. Shimkus. But don't you agree that having that
provision, instead of a State--a Federal standard across the
board that applies to all the States would bring more certainty
versus less certainty? And then you bring in the accelerator
provision, which creates more uncertainty.
Mr. Bedard?
Mr. Bedard. Sure. I think the best way to answer that is to
look at what history says, and that in the absence of a Federal
program what happens is you do see that balkanization of
regulation. In the past, when we have had a single Federal
standard, essentially the States just follow the Federal
standard.
Mr. Shimkus. Well, that is true for 40 years ago when we
did ozone.
Mr. Lieberman, in your testimony you mentioned CAFE and the
possible current actions of Federal law that don't support that
issue.
I am not asking you, Mr. Doniger, I am asking Mr.
Lieberman.
Mr. Lieberman. Yes. Well, if we don't want the States to
keep going in their own direction we should put it in writing.
It is that clear.
Mr. Shimkus. That is the certainty aspect.
My friends, and we discussed during the legislative
hearings on the side, they say, ``Oh, trust us,'' because it
didn't work for ozone, but the ozone era was 40 years ago, a
different era than now when we have a California environmental
agency that likens itself to be the Federal EPA. And then you
have New York follow, you will have New Hampshire, you will
have these States. So there is no certainty in this language
because there is no State preemption.
Also, I am going to ask unanimous consent, I know you are
going to look at it later on and make an approval of this,
economic impact of Kigali Amendment ratification, it speaks in
the language.
The first question I want to ask, Mr. Bedard, you might be
able to answer this. It says in this report that 49 percent of
HVAC equipment are imported into the United States. Is that
accurate?
Mr. Bedard. Forty-nine?
Mr. Shimkus. Eighty-nine percent. Mexico, 44 percent, China
is 27, South Korea 10, Canada 4, Japan 4 percent.
Mr. Bedard. Again, HVAC equipment is a very broad topic, so
it could be room air conditioners and those types of things.
Mr. Shimkus. OK. My point being is we have got to be
careful when we hear testimony. If these manufacturings are
overseas, the impact--the reason why they are being produced
overseas is because low cost, local equipment, parts. But you
are spinning the hearing to say we are--we may be doing the
research and development, and we may have a corporate
headquarters, but we are not building the equipment.
Last question is, HFC refrigerants currently cost four to
six pounds on Amazon compared to $40 to $60 per pound of HFOs.
Is it that an accurate price comparison, Mr. Galyen?
Mr. Galyen. Yes, I heard that in earlier testimony. So I
don't follow the exact price of refrigerants.
Mr. Shimkus. Well, maybe we should. If we are going to be
talking about consumers and their costs, maybe we should look
at that cost.
And I yield back my time.
Mr. Galyen. Can I continue to answer the question?
Mr. Tonko. Please.
Mr. Galyen. Put it in context. Today, if you look at the
broad base of different types of equipment, in a residential
air conditioning system the cost of refrigerant represents
something like one percent of the cost of that system. In a
commercial system, it is something like a quarter of a percent.
So it is a contributor, yes. OK?
But what I also heard earlier was talking about replacing
R-134a, so it is a chemical refrigerant, it is HFC today, to a
specific HFO that was mentioned. That is not the only option.
There are many options. And I would say that it depends very
much on the specific application.
Let me be specific. A white goods appliance refrigerator
today has historically used R-134a. Around the world and the
other millions of refrigerators have for more than two decades
used a hydrocarbon, R-600a, Isobutane. I would, fair to say,
that those prices are equal or less.
Mr. Shimkus. Mr. Chairman, if I may, because of the 2-
minute explanation of the question, the reality is $6 per pound
for HFCs versus for HFOs.
And I yield back my time.
Mr. Tonko. The chair now recognizes Mr. Peters for 5
minutes, please.
Mr. Peters. Thank you, Mr. Chairman.
San Diego is not thought of as a big manufacturing town,
but we have companies with household names in defense,
aerospace, shipbuilding, and repair medical devices, even craft
brewing, headquartered there. And we benefit tremendously from
our close proximity to Mexico, which I mentioned many times
before.
It is estimated that the value of the co-producing
manufacturing supply chain in San Diego County, Imperial
County, and Baja California is about $2.5 billion. So Mexico
has committed to transitioning away from HFCs.
Keeping our markets aligned and maintaining a strong
relationship between the U.S. and Mexico is vital to the San
Diego region. And today's testimony suggested that, if enacted,
the AIM Leadership Act will provide certain trade benefits.
According to one study, the transition to next-generation
technologies would increase the U.S. share of global HVACR
market by 25 percent, and that would lead to a $12.5 billion
positive swing in the balance of trade for the HVACR sector.
Conversely, if we went along with the so-called disorderly
transition, the prediction is we would lose about 14 percent of
our current market share.
So I would like to go ask the industry representatives, Mr.
Bedard and Mr. Galyen, how does that play out? Who are the
winners? And if we did not go forward with this kind of orderly
transition and maybe we have to massage it to make it perfect,
who are the losers?
We will start with you, Mr. Galyen.
Mr. Galyen. Sure. Thank you for the question.
I think here that we have and are today the leaders. So our
R&D, our engineers, our manufacturers are the state of the art
and the reference in the global economy. And we compete
globally.
If the national standards are something different than what
is moving in the global standards we will not invest for that
R&D here, but our competitors globally will. And they are in
China, they are in Asia, they are in Europe. And they will take
a lead because they are serving their own markets that are
typically under a national framework to move to something--to
have a phase-down framework.
Mr. Peters. And we are trying to export to those countries
with those new standards. Is that correct?
Mr. Galyen. Correct. But if we are relying most of our
production on the old way of doing it to the new way, we will
not also be competitive and we will lose market share, and I
think that is what the study reflects.
Mr. Bedard. Manufacturers tend to have centers of
excellence, both form a design point of view as well as from a
manufacturing point of view. And to the extent that we are
dissimilar from the rest of the world, those design centers and
those manufacturing centers will be elsewhere.
Mr. Peters. Let me ask you another question just about the
cross-border shipments. I asked Ms. Newberg from EPA this
morning about the limits on how much HFC can be imported. There
is no limit right now.
She has testified that if H.R. 5544 becomes law imports
would also be subject to the phase-down program. We set up a
system for tracking imports, and imports would be unlawful
without an allowance.
And I understand that there have been longstanding concerns
among American manufacturers that foreign producers of HFCs are
exporting them to the U.S., heavily subsidizing their price,
which undercuts American-made products and potentially violates
trade rules.
Again, Mr. Bedard, can you address how the AIM Leadership
Act would address these anticompetitive practices, and
particularly with reference to China?
Mr. Bedard. So there are restrictions in the bill on the
import of those substances. And from that point of view, that
would limit the dumping, if you will.
Mr. Peters. Mr. Galyen, do you have a comment on that?
Mr. Galyen. Yes. We are aware. And actually it has been
recognized that in a lot of cases China has been dumping
refrigerants or being subsidized. And then while there have
been some attempts to restrict that, there is the movement to
other countries, which doesn't allow a benefit here. So this
bill would allow regulations of all imports and put it on a
level playing field.
Mr. Peters. It just seems to me that it is rare that we
have an industry sort of from small to large across the country
interested in the Federal Government setting a regulatory
framework that other groups don't object to. And it seems to me
that we ought to take that opportunity, we ought to pursue
this.
And I do understand there may be some massaging, and I have
got a list of issues here that people have raised. We should do
that. That is the purpose of a hearing on this legislation.
But it does strike me that it is important for trade, and
for business, and for industry that we move forward today. It
doesn't bother me that it is helpful to the environment as
well.
So I am happy to be a cosponsor of this. I look forward to
continuing work.
Mr. Chairman, thank you for the hearing, and I yield back.
Mr. Tonko. The gentleman yields back.
The Chair now recognizes Mr. Walden, full committee ranking
member, for 5 minutes, please.
Mr. Walden. Thank you, Mr. Chairman.
Mr. Bedard, if I heard you correctly, you said about this
bill that this sets up a national single Federal standard,
right? That was what you said in your testimony.
Mr. Bedard. It does, yes.
Mr. Walden. But yet it doesn't have State preemption in it,
correct?
Mr. Bedard. That is correct.
Mr. Walden. So do you think that States won't on their own
try and do something beyond this national Federal standard?
Mr. Bedard. I mean, frankly, the States have other things
to do, they have other work to do. In the absence--what I can
tell you with certainty is, without a Federal standard, they
will.
Mr. Walden. So let me ask you this. Do you oppose a
preemption provision added to this bill?
Mr. Bedard. Do I oppose it? No, I do not.
Mr. Walden. Mr. Doniger, do you oppose a Federal preemption
if we are going to set a Federal standard?
Mr. Doniger. I do. We would oppose it.
Mr. Walden. All right.
Mr. Lieberman?
Mr. Doniger. May I explain?
Mr. Walden. Let me just get that answer. I will come back
to you.
But, Mr. Lieberman?
Mr. Lieberman. It would put some lipstick on this pig, yes.
Mr. Walden. All right.
Mr. Galyen?
Mr. Galyen. The priority for industry and the AHRI members
is to have a Federal framework.
Mr. Walden. Federal framework or a Federal preemption? That
is my question. Yes or no?
Mr. Galyen. The priority is Federal framework.
Mr. Walden. Is that--OK. I need to understand what you mean
by Federal framework.
Mr. Galyen. A Federal framework sets a standard of which
then the States can refer to. That is the priority for our
industry.
Mr. Walden. So that is not a preemption. So you are telling
me you don't support a Federal preemption.
Mr. Galyen. The priority for our industry is that we have a
Federal framework.
Mr. Walden. Yes. That is different than a preemption.
Because for me, and I think Mr. Shimkus' point, is we can set
up a Federal framework for you, but our history is maybe
different than yours in that States tend to then try and one-up
the Federal Government--or precede the Federal Government, to
your point, Mr. Bedard. But you don't support that.
Mr. Doniger, I said I would go back to you, and I will.
Mr. Doniger. Thank you.
Under Title VI from the 1990 Clean Air Act, we have had no
preemption and there has been no significant State activity
beyond the Federal minimum. Why? Because there is a strong
Federal program and the States use their resources to do other
things.
States are active in this area now because there is a gap.
There is an absence of Federal authority.
Mr. Walden. OK, I am going to--I appreciate that.
Mr. Doniger. And they, in my opinion, will stand down.
Mr. Walden. I am going to reclaim my time, sir. I reclaim
my time. Because we have seen this happen in CAFE standards
where there is a Federal standard in place and other States
then have proceeded to find their own paths, which sets up all
kinds of conflict.
I notice, too, that you also mentioned, Mr. Doniger, the
issue of wildfires. We are seeing what is happening in
Australia. My district has been ravaged by wildfires. Over the
years when I chaired the committee we had multiple hearings on
the air quality effects of wildfire.
And I have to confess, I looked up on your Web site NRDC's
views of biomass and your hatred toward them. I guess I would
call it that. I will let you read it and decide.
But if we don't do a better job of managing our Federal
forests to reduce the overstocking that puts them completely
out of balance with nature, you are going to have fires worse
than what we are seeing in the last few years. So I would hope
that we could have a discussion about that at some point.
But at this point, I will yield to my friend from Oklahoma,
Mr. Mullin, the remainder of my time.
Mr. Mullin. Thank you, Mr. Walden.
Can someone please tell me who came up with the idea of
this bill? Did the EPA think there was a need to make this
change in refrigerant from the 410A to the A2L? Somebody?
Mr. Lieberman. This is something that has been bubbling up
for about a decade or more. I think the genesis of it
particularly comes from Honeywell, which has patented a number
of the substitute refrigerants.
Mr. Mullin. So the manufacturing industry came up with it?
Mr. Lieberman. Yes. And the first attempt to put it in law
was the cap-and-trade bill of about a decade ago.
Mr. Mullin. So there wasn't--the EPA didn't, like, sound
the alarm that there was an environmental urgency to make this
change. It was the manufacturers thought maybe it would be a
good idea to go ahead and make this change. Is that fair to
say? I am not trying to put words in your mouth.
Mr. Bedard. Congressman, I think a better characterization
will be that under the Montreal Protocol when the HFCs were
introduced----
Mr. Mullin. Excuse me on this one. That called for the
removal of the R-22 to go to the 410A.
Mr. Bedard. Correct. Correct. I understand, Congressman.
Mr. Mullin. I am trying to figure out why we are making the
change to go to the 410A. And all I am saying is, who came up
with the idea?
Mr. Bedard. I understand, but at that time that transition
occurred industry recognized, everyone recognized that there
was a global warming potential issue with the HFCs. So I would
say the genesis of the concern was probably at the time of the
initial transition.
Mr. Mullin. Then why did we get sold on changing it to the
410As? If you already knew there was a concern--and I am out of
time, I yield back, and I will get back to that--but why then
was there an urgency to switch from the R-22 to the 410A and
now going to the A2L? That is a bigger question that I don't
have time to get into.
Mr. Tonko. The gentleman yields back.
The Chair now recognizes Representative Barragan for 5
minutes, please.
Ms. Barragan. Thank you.
I want to follow up a little bit, Mr. Galyen and Mr.
Bedard. We understand that this bill will help produce jobs.
Can you both speak to how many jobs this bill might help
protect and create? If you have any info on California in
particular or southern California, that would be helpful as
well.
Mr. Galyen. I can speak to the number of jobs we have
estimated by a third party, I think it was University of
Maryland: 33,000 new manufacturing jobs. I can't remember the
exact number. I can dig it up in my notes real quick. But it
protects something more than 120,000 existing jobs today that
are supporting the HVACR business.
Ms. Barragan. Great.
Mr. Bedard, do you want to add anything to that?
Mr. Bedard. No, not necessarily, Congresswoman. We are just
talking about the number of jobs throughout the U.S.
We manufacture in a number of different States. We have
lots of manufacturing workers in the U.S. We do not have them
in California. But we certainly have salespeople and wholesale
distribution folks. And so, again, the number was 33,000 jobs
and it will be spread across a number of different types.
Ms. Barragan. Great. Thank you.
Mr. Doniger, in your testimony you say that transitioning
off of HFCs can curb global warming by nearly half a degree
Celsius. Can you briefly speak to the scale of how great an
accomplishment this could be to achieve this through a bill at
no cost?
Mr. Doniger. Yes, thank you.
Let me point out that the phaseout of CFCs before this has
accomplished--already prevented one degree Celsius of warming
in the Arctic. The Arctic is warming much faster than the
global average. And by the middle of the century we will have
avoided a degree global average. That is equivalent to
postponing the effect of climate change, as I said in my
testimony, by ten years. So it would be that much worse now if
we hadn't acted.
The same thing is happening with HFCs. They are not as
potent, but there is a lot more of them because our air
conditioning industry is growing, the world air conditioning
and refrigeration industry is growing, the leakage is growing.
And if we let that go, we will get another half degree of
warming on top of what we are expecting.
We are struggling to hold warming to 2 degrees or 1.5
degree. Already we have these fires, floods, sea level rise,
and so on. It will only get worse if we layer on the additional
emissions from HFCs.
So that is why it is so important to phase these chemicals
down and to act now before we have to do it on an emergency
basis.
Ms. Barragan. Great.
Mr. Bedard, can you speak to how the bill will strengthen
the HVACR industry's competitiveness abroad?
Mr. Bedard. Sure. I have a unique position. I have
responsibility for HVAC in Europe. And I can tell you that
there is more certainty in Europe, believe it or not, than in
the U.S. in terms of taking a look at where things are going
from an air conditioning point of view.
And if you take a look at how that strengthens us globally,
is we don't have to waste our time on things that won't happen.
And if you understand where the direction is, if the supply
chain understands where the direction is, essentially it is a
more fruitful investment throughout the entire supply chain and
the market grows.
Ms. Barragan. Great.
Well, I just want to say, I want to congratulate
Congressmen Tonko and Peters and Olson and Stefanik for putting
this legislation together. Both this bill and the comparable
Senate bill are bipartisan, something that you don't get too
often on environmental concerns and issues and certainly on
addressing climate change. And so to hear about what it could
help do to address that, which I believe is critical, is so
great.
And this particular bill has a coequal number of Democrats
and Republicans that support it, which is a nice thing to see,
especially in today's time. It is supported by the HVACR
industry, the Chamber of Commerce, and NRDC.
And it is never easy to achieve the level of consensus that
this bill has done. So this HVAC initiative is a triple win--
for jobs, for consumers, and the environment. I look forward to
supporting it, and I urge all of my colleagues on the committee
to do the same. And just want to thank you again for having
this hearing today.
I yield back.
Mr. Tonko. The gentlewoman yields back.
The Chair now recognizes Representative McKinley for 5
minutes, please.
Mr. McKinley. Thank you, Mr. Chairman.
In 2016, apparently there was a conference in Rwanda, and
they developed an amendment, the Kigali--I hope I am
pronouncing that correctly--this Kigali Amendment that was to
phase-down the HFCs. But that never was ratified by the Senate
here in the United States. So it has been sitting there since
2016.
I am curious, Mr. Chairman, is there--maybe someone here
could answer--is there a difference between the Kigali
Amendment and this specific legislation? Is there a difference
between the two?
OK. Mr. Lieberman?
Mr. Lieberman. Very small differences. This is the
legislative attempt to get the U.S. on track for perhaps future
ratification of the Kigali Amendment. But you are right, we
haven't ratified it, so there are questions what we should be
doing in the absence of ratification.
Mr. McKinley. Thank you. OK.
Now, it is my understanding that under that Montreal
Protocol that it wouldn't go into effect until 20-some
countries had ratified that agreement. Have 20-some countries
ratified that so it is in effect?
Mr. Doniger. Ninety-one.
Mr. Lieberman. It is in effect. But developing nations--
which, incidentally, includes China--have generous extensions
of time to continue using HFCs. They demanded and got a lot of
extra time to stick with the old refrigerants. That is why the
claims of exports may be overblown. These nations demanded and
got extra time to continue using HFCs.
They have also said at the U.N. that they are not
interested in switching to these new refrigerants unless they
are subsidized to do so through something called the U.N.
Multilateral Fund.
And most of the demand growth around the world is from
these developing nations who just really don't have an interest
in these newer and largely more expensive refrigerants.
Mr. McKinley. I would like to understand maybe, Mr.
Lieberman, because you have obviously been paying attention to
this legislation more than I, why didn't the Senate take it up?
Why did we not ratify that treaty?
Mr. Lieberman. It has to be submitted by the President to
the Senate. President Obama chose not to do so. President Trump
chose----
Mr. McKinley. OK. But my question, why not? He is the one--
they agreed to the thing in Rwanda. Why didn't he submit it to
the Senate for ratification?
Mr. Lieberman. I could only guess. I would guess he was
concerned about the number of votes at the time. That is
President Obama. And I would guess that President Trump may not
support this effort. But that is just a guess on my part.
Mr. McKinley. OK. So someone has to submit it.
All right. I have two minutes left. If I could yield my
time to the gentleman from Oklahoma, if he would like to
continue his line of questioning.
Mr. Mullin. There has been a lot of question about the
industry supporting this. And while I agree that industry
does--I mean, let's be honest, for industry it is great, it is
job is security--I mean, wouldn't this make sure that you guys
are still producing units going forward, Mr. Bedard?
Mr. Bedard. We certainly intend to continue to heat and
cool people's homes.
Mr. Mullin. Sure. But we talk a lot about all the industry
supporting it, but once again we leave out the consumer. I
mean, if the consumer begins to understand what their options
are going to be--for instance, then when we phase-out the 410A,
what refrigerant is going to be replacing that?
Mr. Lieberman. That is a good question. And we have talked
a little bit about certainty, but there really isn't any
frontrunner to replace 410A. So we are going to see a number of
different refrigerants, some different companies going in
different directions.
And as you know from your history, the proliferation of
refrigerants is a very big problem. You don't know if the right
refrigerant was used by the last person to repair the system.
So it is the proliferation of refrigerants that is a problem
and it is not helped by this bill.
Mr. Mullin. And if you change refrigerants out then the
equipment doesn't operate the same. Is that correct, Mr.
Bedard?
Mr. Bedard. The equipment is designed for certain
refrigerants.
Mr. Mullin. For certain. So if you phase-out R-22, then
410A won't work with it, and if you phase-out the 410A, then
the A2L won't work very good with it, right?
Mr. Bedard. That is correct.
Mr. Mullin. Is the A2L, which is commonly used right now to
replace the 410A, what is the problem with it?
Mr. Lieberman. Well, there are some flammable refrigerants
that are being introduced. Flammability risk can largely be
engineered around. It can't be completely eliminated, but they
can be reduced. They are more of a problem for some types of
equipment than others.
I would say it is a safety issue, but it is also a cost
issue, because the things you have to do in order to reduce
those risks cost money. And these flammable refrigerants are
particularly an issue in retail environments where there is
proximity to customers and employees, and there are lease
issues and insurance issues and building code issues. These
issues are on their way to being worked out, but there is a
long way to go and it is still silent on that.
Mr. Mullin. And the consumer will be paying that bill, not
the manufacturers or the installers.
I yield back.
Mr. Tonko. The gentleman yields back.
The Chair now recognizes the gentlewoman from Delaware,
Representative Blunt Rochester, for 5 minutes, please.
Ms. Blunt Rochester. Thank you, Mr. Chairman. And in your
absence, now that you are back, I would like to say thank you
for your leadership and support on this bill, as well as Mr.
Peters, Mr. Olson, and Ms. Stefanik.
I also wanted to acknowledge that the senior Senator from
the State of Delaware, Tom Carper, actually is the lead on this
bill on the Senate side.
And I want to thank our witnesses for joining us as well.
This bill is a combination of a proven regulatory
framework, an industry that is innovating next-generation
technologies, providing both environmental and economic gains.
It is nonetheless notable and some might say remarkable to see
NRDC and two business associations sitting at the same table in
support of this bipartisan legislation, and the U.S. Chamber of
Commerce, the National Association of Manufacturers are also on
the record for officially supporting this bill.
It is also rare, some would say these days, that
Republicans and Democrats can be in support of the same thing,
small, medium, and large businesses, labor, environmentalists
can all agree on something. But this legislation does just
that.
H.R. 5544 will boost American innovation and manufacturing,
stimulate our economy, which ensures that we are competitive,
and create tens of thousands of new and high quality jobs.
I am going to start my first question with Mr. Doniger.
Can you describe how the environmental and business
communities came to agree to support this bill? Could you share
a little bit about that?
Mr. Doniger. Yes. As I said a little while ago, our
environmental and business interests originally were very much
at odds back in the early 1980s, but we found common ground.
And the common ground is on the notion of a transitional period
for each of these transitions, not an overnight ban, but also
that it should happen with some dispatch.
And also that there was advantage in having a strong
Federal framework, that the States were going to enter the area
if the Federal Government did not. That is what is happening
now. The States are not going to be active in this area if
there is a strong Federal program.
We don't always agree. NRDC would like these transitions to
go more quickly. We started work on this in the Bush
administration, in the George W. Bush administration, and it
took ten years to come to fruition in international
negotiations.
But we have always led with domestic legislation. The
international treaty is not what governs these guys. It is
American legislation. And that is what we need to do now.
Ms. Blunt Rochester. Now, I only have a minute and 40
seconds left. So there are two things that keep coming up, one
is cost and the other is safety. Can I ask Mr. Galyen to speak
on those?
Mr. Galyen. Yes, please. Thank you. I appreciate the
opportunity, Congresswoman.
So let me say two clarifying points. So under the Montreal
Protocol and the other--the CFCs, because all you guys are not
that familiar with it, but that was actually a phaseout. I just
need to be clear that this bill is proposing a phase-down and
it is orderly over 15 years.
I have heard it come up time and time again: What about
service and replacement? It is 15 years, there will be ample
refrigerants available for those existing applications for
service and repair for the full lifetime of those individual
products.
I can then tell you switch to safety. This industry and the
member companies, including my own, have a track record of
safety. It is really important to us. We manage today gas
furnaces which are in propane, as well as natural gas, same for
water heating equipment, boilers, and the like, and we know how
to do that. And it is very important and critical for the
business.
Ms. Blunt Rochester. Thank you so much. Thank you all.
Mr. Bedard. And I would just add, Congresswoman.
Ms. Blunt Rochester. Yes, Mr. Bedard?
Mr. Bedard. Safety is very, very important to us. It is our
number one consideration. I am not here to ask Congress
questions, just think to yourselves how many of you have
natural gas or propane in your home. You probably do.
As long as the installation practices are that way, as long
as the equipment is designed for it, you can do it. We are
asking for your help. The longer that we have the certainty
that we have, we can exercise a fragmented supply chain to
train the installation folks and get this done the right way as
we have done twice in the past.
Ms. Blunt Rochester. Thank you so much. And I yield back.
Mr. Tonko. The gentlewoman yields back.
The Chair now recognizes Representative Long for 5 minutes,
please.
Mr. Long. Thank you, Mr. Chairman.
And thank you all for being here today.
And before I came to Congress, I had a 30-year career, a
little over 30 years, in the auction business. And for 20 of
those 30 years I did over 200 auctions a year. That is quite a
few auctions. So I have wrestled with this issue for all of
those 30 years, because as refrigerants would be inlawed and
then outlawed, you had to be careful what you were selling,
what was in that, who had done it the last time, as you have
talked about here today.
It is an issue, like I say, I have wrestled with for quite
a while. And you can see from the sling I am in that I wasn't
very good at wrestling my daughter's poodle back on the 20th of
December.
But for the rest of my time, my four minutes and 15
seconds, I am going to yield 5 minutes of that time to one of
the foremost wrestlers ever to come out of the State of
Oklahoma, my buddy, Markwayne Mullin.
Mr. Mullin. I don't know if I can take that title, but I
will say I was decent.
So before we quit talking a while ago, we talked about
additional measures that could be done to install this safe--
and, Mr. Bedard, you mentioned that just a second ago--which
additional measures can be done, like ventilation, right?
Mr. Bedard. Right.
Mr. Mullin. Yes? I mean, if it is flammable----
Mr. Bedard. There are a number of different things.
Mr. Mullin. If it is flammable it has to be ventilated.
Mr. Bedard. There are a number of different approaches,
yes.
Mr. Mullin. But you talked about natural gas appliances,
and we hear every year homes exploding because of natural gas
leaks. We hear of water heaters that are supposed to be
ventilated correctly and the pressure relief valve isn't
supposed to be capped off, but the homeowner decided to cap off
the pressure relief valve on the side of the water heater,
because they didn't know what it was, because it was leaking,
or they cap off the ventilation because it was allowing cold
air to go in, because the installers are trained on it but the
homeowner isn't.
And so when we start talking about safety, we start talking
about a safe way to do this, Mr. Bedard, what is a life worth
to you?
Mr. Bedard. We--we----
Mr. Mullin. No, no----
Mr. Bedard. Our products are safe, Congressman. Our
products are safe.
Mr. Mullin. No, no, no, I didn't ask that question. What is
a life worth to you?
Mr. Bedard. Our products are safe and we go through
multiple human analysis to make sure.
Mr. Mullin. Mr. Doniger, what is a life worth to you?
Mr. Doniger. I am offended by the question.
Mr. Mullin. No, I am not, because I am the installer, and
if a house were to explode or a house were to catch on fire,
who is liable for that life? Because we are talking about going
from a refrigerant that is nonflammable to a replacement
refrigerant that is flammable.
I am an installer. Believe me, safety is first and
foremost. I know you don't create products to make them unsafe.
You make them safer. But we are still talking about a
refrigerant that we are replacing that is mildly flammable. And
if you know anything about consumers, if it is mildly
flammable, it is flammable.
So what is a life worth? And then who is going to be liable
for this if we do lose a life? Anybody?
Mr. Lieberman. I think there are a lot of issues that
haven't been thought through on this.
Mr. Mullin. Agreed.
Mr. Lieberman. So with regard to flammability and flammable
refrigerants, there is a reason this industry has tried to
avoid using flammable refrigerants for as long as it could.
They have to consider new ones now that other things, the
nonflammable ones, one after another, have been replaced.
One quick point I wanted to make with regard to the claim
that the Montreal Protocol was a phaseout. Actually it wasn't.
It started out as a very reasonable phase-down, but it had one
of these accelerator clauses. So before the ink was dry,
organizations, I think including NRDC, pushed to accelerate the
deadlines and we ended up with a much tougher deadline than we
originally started with and that phase-down of HFCs can also be
accelerated.
Mr. Mullin. Mr. Galyen, you said that the products are
available through the lifespan of the equipment. Is that right?
Mr. Galyen. Refrigerants will be available for the service
and repair of those systems for their useful life.
Mr. Mullin. What is considered a useful life?
Mr. Galyen. Generally in air conditioning systems around 15
years.
Mr. Mullin. So for 15, 20 years Lennox is going to produce
both refrigerants?
Mr. Bedard. We don't produce refrigerants, Congressman.
However, if you want to buy R-22 today, you can.
Mr. Mullin. At what cost?
Mr. Bedard. It is----
Mr. Mullin. At what cost? Because that is the important
thing, what cost is it? Because I know the cost. So what is the
cost of the refrigerant right now to replace R-22, to buy R-22?
Mr. Bedard. So I know the wholesale cost is a little bit--
it is probably $12 a pound, or something like that, wholesale,
for----
Mr. Mullin. But you can't buy it wholesale right now.
Mr. Bedard. So we sell it to contractors, so I don't sell
it to consumers. The contractors in turn sell it.
Mr. Mullin. So the point is the refrigerant is priced out.
And if you price it out, then you price out the equipment.
With that, I will yield back.
Mr. Tonko. The gentleman yields back.
The Chair recognizes Representative McNerney for 5 minutes,
please.
Mr. McNerney. I thank the chairman.
I thank the witnesses this morning. Useful testimony.
I think it is important to highlight the fact, as Mr.
Galyen mentioned, H.R. 5544 does not force anyone to abandon
existing refrigeration or air conditioning equipment and really
requires a phase-down as opposed to a phaseout.
Mr. Galyen, the cost difference between HFCs and HFOs has
been mentioned a couple of times this morning, but is there a
likely decrease in cost of HFOs as they phase in to large-scale
production?
Mr. Galyen. First, for as it becomes commercially to scale.
But I want to clarify, if I can. The HFCs are not naturally
going to go to HFOs. There are--can you hear me now? Sorry.
There are many options. It is not a given that HFCs are
going to transition to HFOs. There are many, many chemical
options. They just all have a lower global warming potential--
or near zero in some cases if we are talking about hydrocarbons
and such. It will vary very much by application.
Mr. McNerney. Thank you.
Mr. Bedard, I liked your comment that lists legislation
proposes to use known proven policy approaches to accomplish
the goals of reducing HFCs. Could you expand on that a little
bit?
Mr. Bedard. Yes, sir.
Now, I have been in the HVAC business for 30 years, so I
have experienced two major transitions. One where the CFCs were
transitioned in the early 1990s, and one where the R-410A
replaced R-22 in 2010.
And what that gave us was a level of certainty where we
planned with gradually decreasing quotas that essentially
scaled down the availability of the other refrigerants, and it
allowed us what I would call is a soft landing. And so we see
this as a very similar approach, one that we are very
comfortable with.
Mr. McNerney. Excellent. Thank you.
Mr. Doniger, does H.R. 5544, in your opinion, embrace the
same legal framework that currently exists in Title VI?
Mr. Doniger. Yes. It is modeled very closely on Title VI,
the phase-down of production and consumption. And the other
provisions are modeled on Title VI.
Mr. McNerney. Well, can you speak to how the encouragement
and certainty that H.R. 5544 provides will assist us in
maintaining and extending American leadership?
Mr. Doniger. Right now American companies have the lead in
many areas of the technology in stuff they make here, as well
as the know-how for stuff made elsewhere in the world. And
other companies and other countries are trying hard to wrest
that lead. They have clear guidance from their governments
about the phase-down.
The lack of clarity here is risking the lead that the
American companies have, as well as risking the environmental
benefit that comes from phasing these chemicals down.
Mr. McNerney. So what was involved in maintaining American
leadership? Was it industrial investment in R&D? Or what would
go into that?
Mr. Doniger. In my perception, and of course I am not in
the companies, but that the companies were motivated to put a
lot of money and a lot of planning into the transition between
the late Bush administration through the Obama administration
because they saw this transition coming and coming into focus.
And now we need to solidify it with Federal legislation that
would give them the guidance they need.
Mr. McNerney. Mr. Galyen, could you take a stab at that?
What has been involved in establishing American leadership? And
can we build on that leadership stance that we have now with
this legislation?
Mr. Galyen. Yes. Thank you for the question.
And for sure I think that is what the bill's intent is. I
mean, Willis Carrier invented air conditioning in the United
States way back when. We have since that time have got the good
experience, the great engineers, the great designs that is
recognized here and it is recognized around the world.
But as Mr. Doniger said, if we give way and let other
countries or companies in those countries who are designing to
their own national framework, they will get a lead to us and
eventually get an advantage in the marketplace and make
American companies less competitive. That is a risk.
Mr. McNerney. OK. Thank you, Mr. Chairman. I yield back.
Mr. Tonko. The gentleman yields back.
The chair now recognizes Representative Rodgers for 5
minutes, please.
Mrs. Rodgers. Thank you, Mr. Chairman.
And to all the panelists, thank you for being here today.
Proponents of this legislation argue that it will create
approximately 33,000 new manufacturing jobs in the United
States America.
Mr. Lieberman, do you agree that the bill will directly
lead to new jobs in the U.S.?
Mr. Lieberman. It is probably not going to be 33,000 and
they are probably not going to be American.
I saw that study on jobs, and one word that was missing
from the study was outsourcing, which is interesting because
this is an industry, the air conditioning and refrigeration
industry, that has been very aggressively outsourcing in recent
decades.
And in fact, some of the biggest supporters of this bill
are some of the biggest outsourcers, and that includes the
products that are being touted as the next big thing if this
bill were to pass.
For example, the HFO refrigerants that we were talking
about, of which Honeywell and Chemours hold patents, well, both
Honeywell and Chemours built their first production of HFOs in
China. So all of the jobs--or some of the jobs and all of the
technology has been handed over to the Chinese.
And with regard to equipment makers, they buy compressors,
motors, refrigerants, other components from all over the world
and they do so because it is a cost-cutting measure. You want
to get the cheapest products consistent with quality.
And so I find it very hard to believe that that cost-
cutting incentive to outsource is going to come to an end if
this bill were to pass.
The reality is this bill does nothing to encourage exports.
The only thing this bill does is hamper the U.S. market by
restricting the low-cost option for American consumers.
Mrs. Rodgers. I think that is a very important point as we
think about American leadership, American competitiveness, and
the importance of us leading and the rest of the world
following our leadership.
Mr. Lieberman. And if any company thinks that these new
refrigerants and equipment really are the future, they are free
to go ahead and move in that direction. They don't need the AIM
Act to make this new stuff.
Mrs. Rodgers. OK.
I would like to yield the remainder of my time to the
gentleman from Oklahoma, Mr. Mullin.
Mr. Mullin. I know this hearing is winding down, and I want
to make a point. I am not saying that anybody is purposely
deceiving or misleading or is for sacrificing a life for a
product. I am not saying that.
What I am saying is that we are disguising this and not
being true to the consumer of understanding what their choice
is.
What Ben just said is we don't have to have this bill for
that. We can make the consumer, allow the consumer to choose,
do I want a flammable or a nonflammable product in there?
The EPA already said that the 410A doesn't hurt the ozone.
And in fact we were even told that--Mr. Doniger, I think you
said in your testimony that in your lifetime the ozone is
already being rebuilt for your children. Is that you that said
that in your testimony?
Mr. Doniger. Yes. But we have another problem to deal with.
Mr. Mullin. I get that. But what I am saying is, is the
consumers have been left out of this conversation.
Mr. Doniger. Not at all.
Mr. Mullin. The cost to install these new units is a real
cost. And we need to make sure that the consumer is, one, aware
of what their choices are, and, two, understand what the cost
is to them.
That is what I represent. I am not representing industry of
any sort. I am just representing my customers, my constituents,
my consumers, and all of our consumers.
And, Ben, when you were discussing the replacement and you
were discussing the cost of the jobs that the consumers are
going to have to bear, meaning in the installation of it, that
is all I am talking about.
Mr. Bedard. I understand the point, Congressman. I guess I
would just point out that this transition is underway. It is
happening. It is occurring. It is occurring in different
States. And the only question is, how is it going to happen,
under what terms, and are we going to accrue the benefits?
We are asking for your help to provide that Federal
structure that will help us, that will help the entire supply
chain, and will help the consumer. Absent that structure, many
of the things that you are predicting likely would occur. But
with that structure----
Mr. Mullin. Preemption is very important. Preemption, as
you said, is important. Then it should be part of this bill.
And not to mention that I believe what needs also to be part of
this bill is consumer choice.
I don't think we need a phase-down or phaseout where we are
at today with the 410A considering we are just now phasing out
the R-22 to the 410A, and we are already planning on already
phasing it out.
That means the products aren't going to be on online. And
that means the consumer today is going to be buying something
that they already know is out of compliance because we are
moving it forward. They have to be part of the conversation.
I appreciate every one of you guys here. And I appreciate
your time.
I think I am out of time.
Mr. Tonko. You are out of time.
Mr. Mullin. Yes, I am out of time.
Mr. Tonko. The gentleman yields back.
The House has called votes, and so we are going to
recognize 5 more minutes from the Democratic side and then
bring us to a close.
So I now recognize the Representative from California,
Representative Matsui, for 5 minutes, please.
Ms. Matsui. Thank you very much, Mr. Chairman.
I appreciate the witnesses for being here for so long.
I am pleased to see the Energy and Commerce Committee is
considering legislation that will phase-down the production and
consumption of HFCs from the American economy. This effort is
the result of years of groundwork laid within the international
community to take actions on a worldwide scale to reduce human
use of substances that are harmful to our environment and
public health.
It is clear that this is not just a question of chemicals
that contribute to climate change. It is a matter of whether
our country wants to protect public health and remain
competitive within the international community.
Depletion of the ozone results in dangerous increase in
levels of ultraviolet radiation, which lead to serious health
concerns like skin cancer, immune disorders, and eye cataracts.
Moreover, with the rest of the world already on schedule to
phase-out HFCs, industry is headed in a direction that will
render HFC-using equipment obsolete. We want to lead in this
effort and not fall behind.
We heard in Mr. Doniger's testimony the significance of the
Montreal Protocol and the broad support it has received over
the years, including from every U.S. President since Ronald
Reagan. In fact, as I understand it, Mr. Bedard, this bill is
based substantially on policies and regulatory design concepts
developed by President Reagan and President George H.W. Bush
which were applied with broad industry support to transition
out of earlier generations of refrigerants.
Mr. Bedard, isn't this bill simply a continuation of
regulatory principles that have proven to foster greater
competition, lower prices, and more innovation over the past 30
years?
Mr. Bedard. Yes, I would say that the structure is
identical. And I would expect the outcome to be very similar.
The industry has grown, the jobs have grown. And it gives us a
framework from which to work.
Ms. Matsui. OK. And, Mr. Bedard, with 91 countries acting
to phase-down HFCs, what changes are we seeing within your
industry at the international level? And what role have
American companies played in this transition thus far?
Mr. Bedard. Sure. So we are using some of the new
refrigerants in Europe. As a matter of fact, we just had a job
where we shipped one to Lebanon. So it is not just Europe that
are using the new refrigerants.
The design work for those refrigerants is being done in
Europe, but it was substantially assisted by work that we have
done in the U.S. I think over time that if the U.S. would not
be that center of excellence, then obviously those jobs would
go somewhere and that growth would go somewhere else.
Ms. Matsui. OK. Well, thank you very much.
And I would like to yield the remainder of my time to my
colleague from New York, Ms. Clarke.
Ms. Clarke. I thank the gentlelady. And I thank our
chairman and ranking member for convening this important
hearing on the necessary phase-down of climate warming
hydrofluorocarbons.
As Chairman Rush said the other day, climate change
represents only a tremendous threat to our future, but also a
tremendous opportunity: an opportunity to create millions of
new jobs, foster innovation in the new clean technologies, and
increase the competitiveness of American businesses on the
global stage.
The American Innovation and Manufacturing Leadership Act
represents one of these important opportunities. Transitioning
away from HFCs towards climate-friendly alternatives will not
only benefit the environment, it will also benefit American
consumers with better products, increase the global
competitiveness of our manufacturing sector, and spur the
generation of thousands of new domestic jobs in this field.
New York State is home to more than 2,600 direct jobs in
the heating, ventilation, air conditioning, and refrigeration
industry. And I anticipate that with this legislation we are
poised to bring forth even more.
So I want to thank each of you for coming today, lending
your expertise to this conversation, and looking at how we can
drill down and make this a reality. As I stated, I believe that
we have an enormous opportunity here to simultaneously reduce
climate-warming emissions and bolster the American economy, and
I look forward to supporting this legislation.
I did have questions for all of you gentlemen. I am going
to submit them to our chairman so that you can respond at an
appropriate time. I am down to the wire here. So thank you all
very much.
And I yield back, Mr. Chairman.
Mr. Tonko. The gentlewoman yields back. That concludes the
questioning of our panel.
I have before me a number of documents that have been
mutually agreed to. I request unanimous consent to enter them
into the record.
Mr. Shimkus. No objection.
Mr. Tonko. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Tonko. And I would like to thank again our witnesses
for joining us at today's hearing.
I remind members that, pursuant to committee rules, they
have 10 business days by which to submit additional questions
for the record to be answered by our witnesses. I ask each of
our witnesses to respond promptly to any such questions that
you may receive.
And at this time, the subcommittee is adjourned.
[Whereupon, at 1:28 p.m., the subcommittee was adjourned.]
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