IIAR

By Lowell Randel, IIAR Government Relations Director

Joe Biden began his presidency on January 20th by signing a series of Executive Orders impacting a wide range of policy issues. In just the first 10 days of his Administration, Biden took 42 individual executive actions, many of which reversed policies instituted by former President Trump. Regulatory review and climate change are among the major actions that will have an impact on the natural refrigerants industry.

REGULATORY REVIEW AND FREEZE OF TRUMP ACTIONS

It is customary for incoming Presidents to freeze late term actions of the previous administration. The Biden Administration is following this practice by pausing the implementation of rules finalized in the last days of the Trump administration. In a memo to agencies, the Biden administration has directed that agencies not propose or issue rules in any manner until a department or agency head appointed or designated by Biden reviews and approves the rule. Rules that have already been sent to the Federal Register, but not published, shall be immediately withdrawn for review and approval. Effective dates for rules that have been published in the Federal Register, or otherwise issued, but have not taken effect shall be postponed for 60 days to allow for review.

In addition to reviewing late term Trump regulations, the Biden administration has issued a memo on modernizing the regulatory review process. The modernization calls for concrete suggestions on how the regulatory review process can promote public health and safety, economic growth, social welfare, racial justice, environmental stewardship, human dignity, equity, and the interests of future generations. The recommendations should also include proposals that would ensure that regulatory review serves as a tool to affirmatively promote regulations that advance these values.

The memo also calls for the development of procedures that account for distributional consequences of regulations, including as part of any quantitative or qualitative analysis of the costs and benefits of regulations. These changes to the review process are likely to shift how cost benefit analysis is viewed and lead to a more aggressive regulatory agenda. The policies articulated in the memo are a strong indication that agencies are likely to be very active in increasing the role of regulations in advancing the Biden administration’s priorities.

ADDRESSING CLIMATE CHANGE

Joe Biden stressed the need to act on climate change during the campaign. He has pledged that the US will reach net-zero greenhouse gas emissions by 2050 and has proposed investment of $1.7 trillion in clean energy and green jobs, ending fossil fuel subsidies and banning new oil and gas permits on public lands. Some of Biden’s first actions as President have focused on combating climate change. The Executive Order on Tackling the Climate Crisis at Home and Abroad sets the stage for climate to be at the center of US foreign policy and national security.

Making good on his campaign promise, Biden is moving to have the U.S. rejoin the Paris Climate Agreement and is committed to playing a greater role in multilateral climate efforts. Examples of increased global engagement include hosting a Leaders’ Climate Summit on Earth Day, April 22, 2021; reconvening the Major Economies Forum and creating a new position, the Special Presidential Envoy for Climate, which will have a seat on the National Security Council. The order initiates the process of developing the United States’ “nationally determined contribution” (emissions reduction targets) under the Paris Agreement.

In addition to the Paris Agreement, Biden has signed an Executive Order regarding the Kigali Amendment to phase down HFCs. The order directs the Secretary of State to prepare, within 60 days, a transmittal package seeking the Senate’s advice and consent to ratification of the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer. The U.S. signed the Kigali Amendment during the Obama Administration, but the Trump Administration did not take any steps to further its ratification. The Kigali Amendment has been ratified by 112 countries, but the three largest users of HFCs, the U.S., China and India, have yet to ratify. Should the U.S. complete ratification, that could encourage China and India to follow suit.

Ratification of Kigali would also build on recent Congressional action to pass the American Innovation and Manufacturing Act (AIM Act), which was included in the Omnibus Appropriations and COVID relief bill passed in December 2020. The AIM Act provides EPA with regulatory authority to phase down HFCs, something the courts had ruled the agency did not have previously when the Obama Administration attempted to use the Significant New Alternatives Policy (SNAP) Program to restrict HFC use.

Under the AIM Act, EPA will administer an allowance system reducing the permitted amount of HFCs that can be consumed (i.e. produced or imported) in the U.S. by 85% at the end of 2035. The bill gives EPA a mechanism by which it can meet Kigali Amendment targets and authorizes prohibitions or restrictions on HFC use by sector or subsector. The AIM Act includes provisions to improve the management of refrigerants to “minimize release” by regulating servicing, repair, disposal, or installation of equipment and reclamation.

The Biden Administration’s efforts on regulations and climate change represent both opportunities and challenges for the industrial refrigeration industry. An increased focus on regulatory enforcement and potential efforts to revise programs such as Process Safety Management and the Risk Management Program could add to regulatory burdens. IIAR will work closely with government and industry partners to promote and protect the industry as these policies evolve.