Changes Loom for HVAC Systems, Some Water Heaters

Here is an end-of-the-year reminder of two changes planned for early 2015 for HVAC systems and some water heaters.

  • New regional standards for furnaces, air conditioners and heat pumps have been approved by the federal Department of Energy (DOE) for units installed in homes after Jan. 1, 2015. Get the details in this NAHBNow post from November.
  • Custom builders and others who install extra-large water heaters should also be aware of new requirements that go into effect for electric and gas models produced after April 15, 2015. There are alternatives, though: Get the details here.

Waters of the US: All of Your Questions Answered (And Why the EPA Has it Wrong)

“As you extend the definition of ‘Waters of the U.S.’ to streams that only flow after it rains and isolated ponds and drainage ditches, you extend the areas in which home builders are required to get permits,” leading to bureaucratic delays, additional expenses and ultimate, more expensive homes. Learn more in this interview with NAHB Environmental Policy Program Manager Owen McDonough and National Association of Counties Legislative Director Julie Ufner.

More Questions
The U.S. Small Business Administration (SBA) has joined the throng of home builders, farmers and elected officials asking the Environmental Protection Agency to drop its proposed definitions for waters of the U.S., citing the disproportionate effect of the rule on small businesses.

It’s a situation that could have been avoided all together had the agency done what it was supposed to do in the first place: Have the SBA review the rule before releasing it to the public.

The new definitions could encompass land near bodies of water previously under the jurisdiction of states and counties – or in the case of some drainage ditches or upland bodies of water, not jurisdictional at all under the Clean Water Act.

SBA is “extremely concerned about the rule as proposed. The rule will have a direct and potentially costly impact on small businesses. The limited economic analysis which the agencies submitted with the rule provides ample evidence of a potentially significant economic impact,” said SBA Chief Counsel for Advocacy Winslow Sargeant, PhD., in an Oct. 1 letter to EPA Administrator Gina McCarthy.

On Oct. 14, Rep. Bob Goodlatte (R.-Va) wrote an op-ed in The News Virginian, saying, “The impact of the Waters of the U.S. rule on farmers, landowners, local economies, and jobs is very real. Protecting America’s waterways is critical, but continued power grabs by the EPA is not the solution. This should be a collaborative approach – not a mandate or murky definition from the EPA.”

On Wednesday, two NAHB members – builders from Louisiana and Maryland – were scheduled to visit the EPA offices in Washington to talk about the effects of the proposed rule on their businesses – as well as the expected eventual costs, by extension, to home buyers. The EPA invitation is appreciated, said NAHB Environmental Policy Analyst Owen McDonough, but it’s like shutting the proverbial gate after the horse has galloped away.

“EPA may have questions about how the rule will affect home builders and developers, but they were obligated to ask those questions before they proposed these new definitions,” McDonough said.

Remodeler to EPA: Lead Paint Rule Infeasible in Multifamily Renovations

Remodeler to EPA: Lead Paint Rule Infeasible in Multifamily Renovations

Mike Nagel, CGR, CAPS

In a recent meeting with EPA staff, NAHB State Representative and professional remodeler Mike Nagel, CGR, CAPS, spelled out for regulators why it is bad public policy to expand the Lead: Renovation, Repair and Painting (LRRP) rule from residential to commercial construction – including multifamily renovation projects — particularly until that rule is amended to restore the opt-out provision for owners of homes not occupied by pregnant women or young children.

Noting that his company is an EPA-registered firm and that he is an EPA Lead Safe Certified remodeler with considerable experience on large-scale renovation projects in high-rise buildings, Mike provided the officials specific examples of how the rule is infeasible and counterproductive in certain projects. He told them how his company recently added $8,800 to its estimate to pay for what it thought it would cost to comply with the rule on a whole condo remodel. In the end, total compliance costs for the $360,000 project amounted to $16,000.

“The question is,” he said, “how do I take scores of cubic yards of debris eight stories down in a 5-foot by 6-foot by 7-foot common elevator, down a 30-foot common hallway, down a ramp to the alley and up 90 feet to an enclosed truck without contaminating everything in sight along the way? The answer is that I don’t – at least not in a manner that is economically feasible.”

Mike noted that the rule is already causing single-family remodeling companies to be priced out by “fly-by-nighters” who won’t obey the law – and the same thing is likely to happen if the rule is extended to commercial remodeling. He also emphasized that the lack of an effective, reliable test kit for measuring the presence of lead paint – and the Government Accounting Office’s own study criticizing the cost effectiveness of the rule — are two important reasons to fix the existing problems before increasing the scope of the LRRP program to include commercial buildings.

NAHB: Victory on bank rules keeps credit flowing

The Federal Reserve Board on July 2 approved a final rule covering most of the Basel III bank regulatory requirements, which will increase the amount of capital banks have to hold in their reserves.

In a victory for the HBA and Home Builders, the final rule contains major improvements over what was proposed last year related to home mortgages. NAHB had urged regulators to shield community banks from overly burdensome capital rules that would have restricted their ability to provide new-home production loans and small business loans. The Fed addressed many of these concerns in posting its final rule.

View a more detailed analysis at NAHB .org by clicking here.

Builders Give Congress an Earful on Regulatory Excesses

Flawed, unnecessary and costly regulations burden small home builders by raising expenses and slowing the home building process, which ultimately robs builders of time and money and results in higher housing costs for consumers, NAHB told Congress recently.

The problem is so severe that a 2011 study by NAHB found that on average, regulations imposed by governments at all levels account for 25% of the final price of a new single-family home.

Nearly two-thirds of this regulatory burden – 16.4% of the final price of the house – is imposed during the land development process, resulting in a higher-priced finished lot.

About one-third – 8.6% of the house price – is the result of the construct costs incurred by the builder after purchasing the finished lot.

Higher regulatory costs are particularly significant in the current business environment, and represent a major obstacle that home builders need to overcome as the market returns to normal conditions.

Small Business Input Imperative on Regulations
So lawmakers received an earful when NAHB had the opportunity to talk about the impact of regulations on small home builders at a March 14 hearing by the House Small Business Committee’s Subcommittee on Investigations, Oversight and Regulations.

Testifying on behalf of NAHB, Carl Harris, co-founder of Carl Harris Co., Inc., based in Wichita, Kansas, told Congress that federal agencies must stop ignoring the input from small businesses when making rules that directly affect their livelihood and the way they do business.

Federal agencies are circumventing the intent and the letter of a law that is intended to make the regulatory process more cost effective and less burdensome for small businesses, he said. As a result, the regulatory process continues to unnecessarily increase compliance costs and is acting as a drag on the housing and economic recovery.

Harris was referring to agency compliance with the Regulatory Flexibility Act (RFA), which requires federal agencies to convene a Small Business Advocacy Review Panel to evaluate a regulation’s potential impact on small businesses before finalizing the rulemaking process.

Harris, who has represented the residential construction industry on a number of small business review panels over the years, described a process that is seriously flawed.

“Far too often, federal agencies either view compliance with the act as little more than a procedural ‘check-the-box’ exercise or they artfully avoid compliance by other means,” he said. “Agencies should seek to partner with small entities to help create more efficient, more effective regulations and, in so doing, reduce the compliance costs for small businesses. We truly are the experts in the field.”

Cranes and Derricks Rule

For example, in 2008 OSHA proposed the Cranes and Derricks Rule which was intended to protect workers from the hazards associated with hoisting equipment during construction. The Regulatory Flexibility Act required OSHA to convene a Small Business Advocacy Review Panel to evaluate the rule’s potential impact on small businesses. However, OSHA did not establish a panel until after the rulemaking process was completed.

Harris, who participated on the review panel, explained to OSHA officials that the rule does not take into account the differences between crane applications on residential construction sites and large commercial construction sites.

“I personally put forward an effective, feasible alternative that would save lives while keeping the cost of compliance low for small businesses,” he said.

However, since small businesses were not brought into the process until after the rule was finalized, Harris said his comments “fell on deaf ears. It seemed little more than a procedural hurdle with little interest from OSHA to make changes based on the feedback received.”

Stormwater Discharges
In 2010, the Environmental Protection Agency issued changes to its policies covering stormwater discharges from developed sites that had major ramifications for home builders. Once again, EPA failed to provide sufficient information about the proposed changes to a small business review panel on which Harris also served.

“As a result, we had no way to estimate compliance costs or provide meaningful feedback on ways to reduce the regulatory burden for small businesses,” he said.

“Unfortunately, the pattern is often the same: Agencies either fail to comply with the Regulatory Flexibility Act by ignoring the statutory obligation to convene a small entity review panel or convene a panel but fail to provide the panelists sufficient information concerning the proposed rule to allow them to evaluate regulatory options or provide alternatives,” Harris added.

In his testimony, Harris provided numerous other examples – lead paint abatement rules, OSHA reporting requirements on work-related musculoskeletal disorders, critical habitat designations and other instances where a smarter and more sensible regulatory process would benefit the housing industry, home builders and small businesses as well as consumers.

“Unfortunately, all too often federal agencies view compliance with the Regulatory Flexibility Act as either a technicality of the federal rulemaking process or, worse yet, as unnecessary,” Harris said. “I urge Congress to seek ways to improve agency compliance with this law.”