Bipartisan HFC Bill Gets Socially-Distanced Senate Hearing

With the COVID-19 pandemic disrupting normal Senate business, the Environment and Public Works Committee (EPW) held an unusual written “hearing” to consider the bipartisan American Innovation and Manufacturing Act (S. 2754) to phase down the powerful climate pollutants called hydrofluorocarbons (HFCs). 

The AIM Act, which I’ve described here, has 34 cosponsors led by Sens. John Kennedy (R-LA) and Tom Carper (D-DE) and drawn equally from both sides of the aisle. It has unusually broad support spanning from NRDC to the U.S. Chamber of Commerce. A companion bill (H.R. 5544) is moving in the House.

The AIM Act offers Congress an extraordinary chance for bipartisan action that protects the climate and builds the economy.  It will help avoid a disastrous increase in global temperatures (up to a half-degree Celsius) and create some 33,000 American jobs and promote billions in American exports—without tax breaks or federal spending.  That would also be helpful as Congress looks for ways to help address the economic crisis due to the COVID pandemic.

Despite the bill’s wide support, months had gone by without any move by EPW chairman Sen. John Barrasso (R-WY) to take up the AIM Act in his committee. So the bill’s sponsors pushed to add it to energy legislation being considered on the Senate floor in early March. The HFC amendment attracted even more supporters and would have passed. But Sen. Barrasso and Majority Leader Mitch McConnell blocked a vote. Combined with other issues, the energy bill faltered after two unsuccessful cloture votes. 

In the wake of the energy bill standoff, Sen. Barrasso agreed to hold a hearing in his committee. Adapting to the COVID crisis, the committee switched to inviting written testimony in late March and answers to senators’ follow-up questions near the end of April.

Sen. Carper, the committee’s ranking Democrat, and 13 other senators from both parties (here and here) supported the bill as introduced. Most industry witnesses—literally from A (A-Gas) to Z (Zero Zone)—supported the bill, along with states and environmental groups including NRDC.

Sen. Barrasso, however, called for major changes, principally adding broad exemptions and preempting state action. Let’s look closer at how industry and others responded to those issues.

Exemptions

A few companies and associations asked for outright exemptions from the phase-down for HFCs they use in fire suppression, plastic foams, and other niche applications. These witnesses failed to show that they need more than the bill already allows. 

As a wide range of other witnesses explained, the AIM Act is designed as a gradual phase-down—not a phase-out—reducing HFC production in steps by 85 percent in 2036 and beyond. As summarized by the Air Conditioning, Heating, and Refrigeration Institute (AHRI) (p.23):

[T]he AIM Act does not mandate transitions for any specific sector, but instead takes a gradual, market-driven, technology-sensitive approach over a 15-year period that allows those sectors able to transition quickly to do so while providing additional time and flexibility for those sectors facing challenges in identifying, testing, and marketing appropriate substitutes. … 15 percent of the HFC baseline is preserved for the continued use of HFCs in the U.S. economy, which AHRI estimates to be approximately 60,000 tons – a significant quantity, particularly for niche and specialty applications.

That amount, AHRI pointed out (p.26), will be supplemented by a large amount of HFCs reclaimed from retiring equipment, cleaned up, and put back on the market.

The bill thus gives companies ample time to develop and adopt safe alternatives. In fact, some industries have already completed their transition from HFCs, and many others have plans to be out of HFCs in the early- to mid-‘20s.

Others pointed out that, as a further safeguard, the bill allows exemptions for producing additional HFCs starting in 2034 if the supply of new and reclaimed HFCs is inadequate for any uses that still lack adequate alternatives.

In response to follow-up questions, many exemption advocates admitted that their HFC usage is very small. Boeing, for example, said it uses “far less than 1% of what is produced or imported in the United States.” (p.52) Truck makers pegged their use at “less than one percent.” (p.123) For boat builders, Composite Applications Group said: “less than 0.01% which includes structural preforms supplied to the entire marine industry by members.” (p.58) Looking across industries, the U.S. Chamber of Commerce said: “According to EPA and industry data, the percentage of HFCs used in the U.S. for which there are no substitutes is small—in most uses less than one percent of the total volume of HFCs used.” 

The industry Alliance for Responsible Atmospheric Policy put the combined figure for aerospace, defense, metered dose inhalers, personal protection sprays, and semiconductors at “well less than 10% of U.S. baseline consumption.” (p.273) NRDC similarly projected “single digit percentages” of current production (p.197), making even the exemptions already authorized under the bill unlikely to be needed even after 2036.

In short, even the organizations and groups asking for exemptions appear to acknowledge that the AIM Act accommodates their needs. They seem to be asking for blanket exemptions just to save themselves the trouble of looking for alternatives over the coming years and following the exemption application process later if needed. In short, no witness has made a credible case that its genuine needs for HFCs cannot be met under the AIM bill.

Preemption

For 50 years, the Clean Air Act has set minimum national standards while respecting the authority and responsibility of states to take stronger action. Congress took the same approach in 1990 when adopting the program to phase out CFCs. 

Some companies echoed Sen. Barrasso’s call to break with this approach in favor of preempting state authority. Other companies and associations, however, emphasized the need to enact a strong federal HFC program. Based on experience with the CFC phase-out, they have seen states get involved when there is no effective federal program, and step back when the national government is doing its job. That makes preemption unnecessary at a practical level.

As AHRI explained it (pp.23, 27): 

The relatively small degree of state activity on HFCs has emerged only in the past two years and only because of the absence of any competent federal means to regulate HFCs.… Given the limited time and resources at the state level, we think it extremely unlikely a state would continue to pursue HFCs once the main reason for their involvement in the first place—the lack of a federal standard for HFCs—has been addressed.

[O]ur priority as an industry is not to do away with state standards—it is to fill the federal void with a competent, common sense federal standard, which we believe the AIM Act represents. Once that void is filled,…we do not believe state standards will pose a problem, particularly given that once a company has transitioned from HFCs, there is nothing further for a state to regulate.

As the U.S. Chamber of Commerce put it: “the presence of a comprehensive federal program led states to abandon efforts to regulate CFCs and other ozone-depleting substances in the 1990s.” (p.234) The Alliance for Responsible Atmospheric Policy added: “It is our view that most if not all states would decline to further regulate HFCs if a credible uniform Federal program were adopted as is contained in the AIM Act.”

California and other states defended their responsible action on HFCs and their traditional authority under the Clean Air Act. (pp.63-66, 87-88) NRDC also explained why preemption proposals were both unnecessary and politically divisive. (pp.196-97) Sen. Carper summed the issue up nicely, asking why a company would support preemption language “knowing that this addition would prevent passage of the legislation.” (p.111)

Interestingly, the deputy director of the Heritage Foundation, while opposing the bill, also opposed preemption: “I do not believe the federal government should preempt state action. States can and should have the ability to set up and enforce their own HFC regulatory regimes.” (p.153)

In short, if the AIM Act passes as proposed, it will plug the specific holes in the HFC transition program that led states to step up, and it will provide a strong federal program again. There is every reason to expect that states then will primarily rely on the federal program as they have in the past. They have many calls on state resources, and they will not lightly use them here if the federal government is doing its job. The focus on preemption is only creating an unnecessary obstacle to proceeding on the practical pathway that has worked for decades.

Other Issues

Industry also pushed back on other changes Sen. Barrasso proposed in the AIM Act. 

The EPW chairman proposed to drop the bill’s authority to accelerate the phase-down after 2024 if, as has happened repeatedly over the last 30 years, safe and affordable alternatives are developed more rapidly than currently forecast. The Alliance for Responsible Atmospheric Policy responded that this authority, part of the CFC phase-out program adopted in the 1990 Clean Air Act, was “sensible” and “used rarely, and only with industry support, and with the assurance of the availability of alternate technologies that provided users a choice.”

Sen. Barrasso also proposed to delete federal authority to require specific sectors to transition to safer alternatives at the same time he proposed to preempt states from doing so. As Sen. Carper noted, that would leave no one able to establish end-use transition requirements. The Alliance responded that “the combination of the technology transition for user sectors along with the producer allocation phasedown schedule is a key element to ensure a rational and cost beneficial transition to new technologies.”

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The AIM Act gives Congress an extraordinary a chance for bipartisan and broadly supported action to protect the climate, create jobs, and promote American manufacturing and exports.

As Congress looks for ways to pull the economy out of the COVID recession, the AIM Act stands out, especially as it requires no tax breaks or federal spending. 

We’ll continue working this year on all pathways to get this bill enacted.