Testimony of Lowell Randel on Behalf of the International Association of Refrigerated Warehouses

Before the Senate Environment and Energy Committee October 27, 2014

Mr. Chairman and members of the committee, thank you for holding this hearing regarding S- 2511. I would also like to thank Senator Maddon for his leadership in introducing the bill. My name is Lowell Randel and I serve as the Vice President of Government and Legal Affairs for the International Association of Refrigerated Warehouses (IARW). The IARW is comprised of companies in the third party logistics industry with members across the United States and in over 70 countries internationally. This includes 29 refrigerated warehouses in the State of New Jersey representing over 2,000 jobs.

Over 95 percent of refrigerated warehouses in the United States utilize anhydrous ammonia as their primary refrigerant. Our members overwhelming choose ammonia because it is the most efficient refrigerant for industrial applications. It is also important to note that ammonia is a natural refrigerant that poses no global warming potential. The one exception to the widespread use of ammonia is the State of New Jersey.

The IARW stands in strong support of S-2511. This legislation helps address some of the biggest issues that our members in New Jersey currently face and removes two major barriers that are restricting them from expanding their facilities or building new ones, the Toxic Control Prevention Act and the New Jersey Refrigeration Operator licensing requirements.

The Toxic Catastrophe Prevention Act (TCPA), as it currently applies to ammonia refrigeration systems in New Jersey, is the most restrictive of its kind in the United States. We estimate that the initial cost to come into compliance under the TCPA is approximately $32,500 and the annual cost after that is over $21,000. It is important to note that the TCPA comes on top of the U.S. Environmental Protection Agency’s Risk Management Program (RMP) and the U.S. Occupational Safety and Health Administration’s Process Safety Management requirements. Because federal regulations are in place to address the very same hazards as TCPA, there will be no diminishment in safety to workers or the environment should anhydrous ammonia be removed from the TCPA.

The second barrier is the New Jersey Refrigeration Operator licensing requirement that mandates a 24 hour Gold Seal operating engineer. New Jersey is the only state with such licensing requirements, which place a significant economic burden on facilities using ammonia as an industrial refrigerant. Requirements for trained Refrigeration Operators in Federal regulations such as PSM and RMP already ensure that qualified personnel are operating ammonia refrigeration systems. Additionally, the current requirements do not take into consideration the increased automation and safety features built into modern ammonia

refrigeration systems. On average, it is estimated that these licensing requirements costs facilities in New Jersey an additional $40,000 annually.

Combined, the TCPA and operator licensing requirements cost facilities in New Jersey using anhydrous ammonia over $60,000 more annually than their counterparts in neighboring states. This puts the State of New Jersey at a definite competitive disadvantage when competing for jobs and economic growth. This has taken a toll on growth of the refrigerated warehousing industry in New Jersey, as well as the broader food sector. This has led to growth in neighboring states, while expansion and construction of new facilities in New Jersey has been stagnant. For example, according to EPA’s Risk management database, there are currently only nine facilities with ammonia refrigeration systems in the State of New Jersey (population 8.9 million), while the neighboring county of Lehigh, Pennsylvania (population 355,000) has eight. When faced with an additional $60,000 in annual compliance costs at the start, New Jersey is facing an uphill battle for attracting new businesses and jobs.

Removing anhydrous ammonia from the TCPA and operator licensing requirements will not only make New Jersey more attractive to new facilities considering the state, but help current facilities stay in New Jersey. Because of the current restrictions on ammonia, most of our members and others in the food industry are using R-22 as their primary refrigerant. EPA is aggressively moving to phase out R-22 by 2018 and other synthetic refrigerants will follow. This is due to the ozone depleting nature and global warming potential of R-22 and other synthetic refrigerants. Facilities in New Jersey are faced with the difficult and costly decision of how to transition away from R-22. Should S-2511 be enacted, it would give these facilities a viable option to convert their systems to ammonia, which is highly efficient and has no global warming potential and does not deplete the ozone.

In summary, IARW strongly support S-2511 and greatly appreciates the leadership of Senator Maddon for introducing the legislation. The bill removes major barriers facing members of our industry and will make New Jersey much more attractive for new facilities to enter the state and keep those who are already here, all while maintaining the safety of workers and the environment.

Thank you for the opportunity to present testimony today and we stand ready to assist the Committee as the legislative process moves forward.