Docket No. EPA-HQ-OAR-2021-0044; Phasedown of Hydrofluorocarbons: Establishing the Allowance Allocation and Trading Program Under the American Innovation and Manufacturing Act; Proposed Rule 86 FR 27,150 (May 19, 2021)
Comments Submitted by Ben Lieberman, Senior Fellow, Competitive Enterprise Institute (CEI), on Behalf of CEI, Consumers’ Research, Caesar Rodney Institute, Committee for a Constructive Tomorrow, Center for the American Experiment, Rio Grande Foundation, Americans for Limited Government, Energy & Environment Legal Institute, 60 Plus Association, FreedomWorks Foundation, Buckeye Institute, John Locke Foundation, Project 21, Independent Women’s Forum, Cornwall Alliance for the Stewardship of Creation, Roughrider Policy Center, and Texas Public Policy Foundation
The undersigned free market organizations have a longstanding interest in bringing to light the deleterious consequences of federal regulations, which are often neglected by agencies in their attempts to adopt a regulatory agenda. Scrutiny is particularly important when a regulatory agency implements statutory authority for the first time, as any initial misinterpretations of that authority could set unnecessarily costly precedents.
For this reason, we raise a number of concerns with the Notice of Proposed Rulemaking (NPRM) implementing the American Innovation and Manufacturing (AIM) Act, which was enacted in December of 2020 as part of the Consolidated Appropriations Act, 2021.1
The AIM Act imposes limits on the future production of hydrofluorocarbons (HFCs), and does so on the grounds that they contribute to climate change. The economic impacts will be very significant and widespread, as HFCs are the class of refrigerants used in hundreds of millions of air conditioning and refrigeration systems. Keeping this equipment in operation will cost considerably more because of these provisions. In addition, new equipment designed to use alternative refrigerants with lower global warming potentials (GWP) carries a price premium and will likely continue doing so as competition with the HFC-using systems currently dominating the market is increasingly constrained.
While some of these cost increases are unavoidable, we believe that the NPRM exacerbates others through incorrect and/or unnecessarily aggressive interpretations of the law. Among them is the agency’s proposed means of determining the baselines of past HFC production from which the future percentage restrictions are calculated. The chosen method is likely to lead to an undercount and thus more stringent HFC quotas than the statute envisioned.
The NPRM is accompanied by a Regulatory Impact Analysis (RIA) that grossly understates the costs of the rule – and indeed makes the irrational claim that there are no net compliance costs. At the same time, the RIA overstates the climate change-related benefits of the rule. Perhaps most one-sided of all are the environmental justice claims which completely ignore the disproportionate impact of costlier air conditioning on low income households and communities.
Evident throughout the NPRM and RIA is EPA’s reliance on claims made by the air conditioning and refrigeration sector – the companies that supported the AIM Act and will benefit by the forced transition to more expensive products. In lobbying for the AIM Act, these companies made a number of outlandishly optimistic claims about minimal to non-existent compliance costs and astronomical environmental benefits, and these claims have now been incorporated into the NPRM.
Absent from the NPRM and RIA is any realistic consideration of the costs to the many consumers and businesses adversely affected by these measures, and especially so for those least able to afford these costs. Nor is there a realistic assessment of the environmental impacts. This comment seeks to remedy at least some of this imbalance so that the agency can make changes to the NPRM before the rule is finalized.