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Appliance and equipment makers worry about states creating conflicting standards

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Makers of ovens, blenders and other household appliances are pushing back against a sweeping federal climate change bill that would change the way they do business.

Two of the leading industry groups say legislation sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.) could let states set efficiency standards higher than Washington currently allows.

That would "weaken the system, which was designed for a national marketplace so economies of scale could thrive," said Joseph McGuire, president of the Association of Home Appliance Manufacturers (AHAM).

AHAM is not formally opposing the Waxman-Markey bill, and it expressed support for certain parts of the legislation, like its promotion of the "smart grid."

However, another group, which represents makers of air-conditioning units, heaters and large refrigerators, has officially opposed the bill. The Air-Conditioning, Heating, and Refrigeration Institute, also known as AHRI, announced last month that the bill would "eviscerate" the federal law that limits how efficient states can require equipment to be.

Together, the industries have a wide-ranging presence in Americans' everyday lives, as well as considerable economic weight. AHAM's members make dozens of goods that show up in kitchens, bedrooms and offices. The heating and cooling systems produced by AHRI, worth roughly $35 billion in 2005, show up in nearly every home and business in America. The industries' products play an important role in the buildings sector, which accounts for about 40 percent of U.S. carbon dioxide emissions.

Both groups said they have much at stake in a 1987 federal law called the National Appliance Energy Conservation Act, or NAECA. The law set the first federal efficiency standards for home appliances, resolving the "patchwork" that had existed between states that had different levels of regulation.

Will Waxman-Markey weaken federal pre-emption?

In doing that, experts said, the law also set up the principle of "federal pre-emption." That is, since the federal law had set the standards, states would not be allowed to set higher standards of their own.

AHAM and AHRI said the Waxman-Markey bill presents a threat to pre-emption and could hurt their product sales.

David Calabrese, AHRI's vice president of public policy, pointed to the bill's aggressive path on building codes. The bill would establish a federal building code -- currently, states face no binding energy codes from the federal government -- that uses 30 percent less energy than the codes currently recommended by Washington. Eventually, that would rise to 50 percent.

Calabrese said AHRI isn't opposed to stronger building codes. But he said "it is very likely that to get to the 30 and 50 percent threshold required under law ... you would be setting standards for products that would be higher than the federal minimums."

In other words, states would find it difficult to make their buildings that much more efficient without using heaters, air conditioners and other equipment that are more efficient than NAECA allows.

For example, if Florida wants to reduce energy use in its buildings, it can adopt a tougher code. But under NAECA, its code cannot require the use of heaters or air conditioners that are more efficient than the standards the federal government has agreed to.

It's a rule that has frustrated states that are tugging the reins, trying to lead the pack in building efficiency, said Jim Edelson, a building codes consultant for the New Buildings Institute.

"The ability of building codes is severely restricted because NAECA has prevented building codes from moving beyond appliance standards" that are long outdated, he said. "NAECA puts a ceiling on how efficient equipment can be, and we believe NAECA should rather be a floor."

Edelson said groups in California, Oregon, Washington and Massachusetts have all expressed a desire to cut loose from the federal law. Since high-efficiency equipment is already available there, they have said, they want to be able to require it in their state building codes.

"It's not like we're forcing [manufacturers] to make new equipment," he said. "I really think it's a straw man. I think that [AHRI's] statement is a straw man that they're going to have to meet many state standards."

A replay of Calif. and cars?

The debate resembles the showdown between California and automakers. Over several years, California had asked Washington to raise its fuel economy standards above the federally mandated level. A dozen states lined up in support of the effort, saying they would adopt the California standard if it were approved. Automakers pleaded with the federal government to reject the application, saying it would create two vastly different markets and ruin their business plans.

While U.S. EPA under the Bush administration rejected California's effort, the Obama EPA recently resolved the dispute by raising the federal fuel economy standard to California's proposed level.

AHAM's McGuire also had reservations about the Waxman-Markey bill. Under NAECA, he said, states have to ask for a waiver if they want to set higher efficiency standards. To get this waiver, states currently have to show the federal government that they are having an energy emergency that justifies the standard, and that the increased standard would help. Second, they have to write this language into a state "energy plan" for sharing with the Energy Department.

McGuire said Waxman-Markey would eliminate both of these requirements, giving states more freedom to require efficient products.

Both AHAM and AHRI said they are talking to legislators about changing the language to address their concerns.

Others are asking whether it's time to abandon pre-emption, or at least weaken it, for the sake of energy efficiency.

Industry has tended to argue that a national standard is preferable to the "patchwork" of state standards, because instead of a few energy-aware states leading the pack, the whole country moves ahead on efficiency.

"The argument has been, would you rather have one ape on your back or 50 monkeys?" said Harry Misuriello, a visiting fellow in the buildings program at the American Council for an Energy-Efficient Economy.

But he and other efficiency advocates, Misuriello said, see things differently. "Right now, the minimum efficiency for furnaces is the same nationwide for Minnesota as it is for Miami," he said. He said advocates have pushed to let colder states -- which already have high-efficiency heaters available in their markets -- pull ahead of federal heater guidelines. He said the reverse should be true for air conditioning in the hotter states.

If the government gave states more leeway, he said, it would have benefits for climate, energy security and air quality.

"You have to weigh the national need against the individual manufacturer's inconvenience factor," he said. "I think it makes a lot of sense to look at these fundamentals for what we need in the future to meet our national needs."

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