[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


  HOME APPLIANCE ENERGY EFFICIENCY STANDARDS UNDER THE DEPARTMENT OF 
                    ENERGY: STAKEHOLDER PERSPECTIVES

=======================================================================

                                 HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 10, 2016

                               __________

                           Serial No. 114-152
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                 Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota

                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania        PAUL TONKO, New York
ROBERT E. LATTA, Ohio                ELIOT L. ENGEL, New York
GREGG HARPER, Mississippi            GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia     LOIS CAPPS, California
MIKE POMPEO, Kansas                  MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio                   PETER WELCH, Vermont
BILLY LONG, Missouri                 JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina     DAVID LOEBSACK, Iowa
BILL FLORES, Texas                   FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)
                                  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     3
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     4
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
    Prepared statement...........................................     7

                               Witnesses

Sofie E. Miller, Senior Policy Analyst, The George Washington 
  University Regulatory Studies Center...........................     9
    Prepared statement...........................................    11
Joseph M. McGuire, President and Chief Executive Officer, 
  Association of Home Appliance Manufacturers....................    21
    Prepared statement...........................................    23
Elizabeth Noll, Legislative Director, Energy and Transportation, 
  Natural Resources Defense Council..............................    51
    Prepared statement...........................................    53
Kevin J. Cosgriff, President and Chief Executive Officer, 
  National Electrical Manufacturers Association..................    71
    Prepared statement...........................................    73
Tom Eckman, Director, Power Division, Northwest Power and 
  Conservation Council...........................................    82
    Prepared statement...........................................    84
Stephen R. Yurek, President and Chief Executive Officer, Air-
  Conditioning, Heating and Refrigeration Institute..............    89
    Prepared statement...........................................    91

                           Submitted Material

Letter of June 10, 2016, from Cindy V. Chetti, Senior Vice 
  President of Government Affairs, National Multifamily Housing 
  Council, et a., to Mr. Whitfield and Mr. Rush, submitted by Mr. 
  Olson..........................................................   133
Letters of June 9 & 10, 2016, from Dr. David Woodward, Standards 
  and Regulations Manager Americas, Philips Lighting, et. al, to 
  Mr. Whitfield and Mr. Rush, submitted by Mr. Olson.............   139
Statement of Spire Energy by Mark Krebs, Energy Policies and 
  Standards Specialist, June 10, 2016, submitted by Mr. Olson....   153
Statement of the American Public Gas Association, submitted by 
  Mr. Olson......................................................   163
Letter of June 8, 2016, from Christopher M. Jessup, Corporate 
  Compliance Manager, Sub Zero Group, Inc., to Mr. Whitfield and 
  Mr. Rush, submitted by Mr. Olson...............................   169
Statement of the National Association of Home Builders, June 10, 
  2016, submitted by Mr. Olson...................................   173
Statement of the American Gas Association, June 10, 2016, 
  submitted by Mr. Olson.........................................   177

 
  HOME APPLIANCE ENERGY EFFICIENCY STANDARDS UNDER THE DEPARTMENT OF 
                    ENERGY: STAKEHOLDER PERSPECTIVES

                              ----------                              


                         FRIDAY, JUNE 10, 2016

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:34 a.m., in 
room 2123, Rayburn House Office Building, Hon. Ed Whitfield 
(chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Olson, Shimkus, 
Latta, Harper, McKinley, Johnson, Long, Flores, Mullin, Hudson, 
Rush, McNerney, Tonko, Castor, Sarbanes, Welch, and Pallone (ex 
officio).
    Staff present: Will Batson, Legislative Clerk, Energy and 
Power; Tom Hassenboehler, Chief Counsel, Energy and Power; A.T. 
Johnston, Senior Policy Advisor; Ben Lieberman, Counsel, Energy 
and Power; Tim Pataki, Professional Staff Member; Annelise 
Rickert, Legislative Associate; Chris Sarley, Policy 
Coordinator, Environment and the Economy; Dan Schneider, Press 
Secretary; Dylan Vorbach, Deputy Press Secretary; Jeff Carroll, 
Democratic Staff Director; Jean Fruci, Democratic Energy and 
Environment Policy Advisor; Rick Kessler, Democratic Senior 
Advisor and Staff Director, Energy and Environment; John 
Marshall, Democratic Policy Coordinator; Jessica Martinez, 
Democratic Outreach and Member Services Coordinator; Alexander 
Ratner, Democratic Policy Analyst; Timothy Robinson, Democratic 
Chief Counsel; Andrew Souvall, Democratic Director of 
Communications, Outreach, and Member Services; and Tuley 
Wright, Democratic Energy and Environment Policy Advisor.
    Mr. Whitfield. I would like to call the hearing to order 
this morning, and I want to thank our panel of witnesses for 
being with us. I am going to introduce you right before you 
give your opening statements, so I will just introduce you 
individually at that time. I would like to recognize myself for 
5 minutes for an opening statement.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Today's hearing is entitled ``Home Appliance Energy 
Efficiency Standards.'' Since 1987, we have had energy 
efficiency standards for certain appliances. It came about 
because back in 1975, there was a Federal Energy Policy Act 
that established that format. The Reagan administration was 
sued because it was not being implemented, and as a result that 
lawsuit, we now found ourselves in about the fifth or sixth 
gyration of these energy efficiency standards, which apply to 
almost anything that plugs into the wall in your home, whether 
it is an air conditioner, refrigerator, washer, dryer, furnace, 
oven, dishwasher, water heater, lighting, whatever it might be. 
And the argument was initially that you would save energy bills 
over time. Because of the efficiency, you would use less 
electricity, and the small amount of additional cost, you would 
end up saving money.
    Now, some people today are questioning that because we are, 
as I said, we are about the fifth, sixth, or seventh round of 
these efficiency standards, and some people say that you reach 
a point of diminishing returns, and some people say that the 
additional costs now is at such a rate that you really don't 
have any savings over the long term because the energy 
efficiencies are simply not that great.
    Now, other people say that is not the case. And of course, 
additionally, now, everybody is talking about global warming, 
and so there is additional emphasis being placed on this 
because of that.
    One of the problems that we have is, in America, we feel 
like we are doing more than any other country in the world on 
these types of issues. I was reading an article the other day 
that said there are 3 billion people in the world who use open 
flames to cook today, and in the developing world, by 2040, 
they expect that 65 percent of energy consumption will come 
from the developing world.
    We also hear a lot today about people being concerned about 
the cost of living. And we know that in California and New 
York, they are trying to raise the minimum wage, and many 
people are urging that we raise the minimum wage. Some people 
agree with that and some people don't, but it is interesting 
that those strong advocates for raising the minimum wage, they 
don't want to consider the additional cost caused by 
regulations. And it is one thing to say, OK, we need to raise 
the minimum wage, but to a low-income, middle-class family, if 
these appliances are going to cost additional money, what does 
that mean to their pocketbook?
    And then, we are even hearing now from some of the 
appliance makers that some of these new appliances really don't 
work as well as the old ones, and so it is a situation where I 
think no one really expected that the Department of Energy and 
this administration would be as aggressive as they have been on 
so many different fronts.
    Now, the good news was that in 1975, when they were 
considering these efficiency standards, they were supposed to 
consider that the technology was really feasible and that there 
was an economic justification for it. But today, that is 
beginning to be blurred, and we know certainly at EPA, when 
they consider--they certainly don't consider whether it is 
technologically feasible or economically justified.
    So if we wanted to have a more balanced approach, what we 
are trying to do is hear from people who are involved in this 
on a daily basis because the American public, when they go to 
the appliance store to buy an appliance, they don't understand 
all about this efficiency, they just know what the price is, 
and then some people are telling them, well, you going to save 
money even though it is a lot more because the electricity will 
go down, and other people make the other argument.
    So one of our objectives today is to just try to get a 
better understanding of what is the reality of this, and that 
is why we are here. So I want to thank all of you for joining 
us, and at this time, I would like to introduce the 
distinguished gentleman from Illinois, Mr. Rush, for his 
opening statement.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    This subcommittee has cast a critical eye on several major 
regulations--such as the ozone rule and the Clean Power Plan--
that threaten billions of dollars in costs and thousands of 
jobs. But today, we focus on regulations that are significant 
for another reason--they directly impact the daily lives of 
every American. Done right, appliance standards can help us 
save on energy bills, but done wrong they can cause appliance 
prices to skyrocket while also undermining product quality and 
freedom of choice. And lately, we have seen many appliance 
standards done wrong.
    Air conditioners, refrigerators, washer/dryers, furnaces, 
ovens, dishwashers, water heaters, lighting and many others--
just about everything that plugs in or fires up around the 
house has been subjected to these rules since 1987. The first 
round of standards may have been ok, and maybe even the second, 
but DOE is now onto the 3rd of 4th or even 5th round of 
successively tighter requirements for many appliances, and 
there is no end in sight. It is as if the agency is out to 
prove the law of diminishing marginal returns.
    According to DOE, the higher up-front costs of compliant 
products are earned back in the form of energy savings, but a 
number of outside analysts are not so sure. Furthermore, some 
of these standards compromise product choice, features, 
performance, or reliability. In my view, an appliance that 
saves a few dollars per year on energy but doesn't work as well 
is being penny wise and pound foolish.
    And, like so many other energy-related programs, DOE's 
appliance standards are being made even more consumer-
unfriendly by the inclusion of global warming considerations. 
Although the statutory provisions never specify that global 
warming should be a factor, DOE now includes the social cost of 
carbon in its analysis of every rule. In fact, the President's 
Climate Action Plan calls for appliance regulations to reduce 
carbon emissions by 3 billion tons, and I might add that this 
arbitrary target was set without any regard to whether 
consumers will benefit from these new standards. In order to 
meet its global warming goals before the end of the 
administration, DOE is now rushing the pace of these 
rulemakings and cutting corners on stakeholder input.
    According to the administration, DOE has 15 more home 
appliance standards in the regulatory pipeline, including ones 
for computers, light bulbs, air conditioners, ovens, furnaces, 
battery chargers, dishwashers, and ceiling fans. History shows 
that these so-called ``midnight regulations'' pushed out the 
door in the final months of an administration can be especially 
bad news for consumers. This includes a rule for air 
conditioners finalized at the very end of the Clinton 
administration that added more than $700 to their cost. Of 
course, the disproportionate victims of appliance price hikes 
are low-income households that can least afford them.
    As many of you know, the energy bill contained a number of 
useful reforms to the appliance rulemaking process as well as 
some specific fixes for certain problematic rules. This 
includes additional opportunities for stakeholder input, as 
well as the requirement that the data and analysis relied upon 
by DOE be available for review. A discussion of these 
provisions will of course be a part of the upcoming energy 
conference.
    But I hope the reform efforts do not end there, and that we 
can consider more fundamental reforms that restore common sense 
and balance to the appliance efficiency standards program.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. Good morning. I want to thank you, Mr. Chairman, 
for holding today's hearing on the ``Home Appliance Energy 
Efficiency Standards Under the Department of Energy: 
Stakeholder Perspectives,'' and I want to welcome, Mr. 
Chairman, all of our witnesses before the subcommittee here 
today.
    Mr. Chairman, since there are DOE standards that we are 
addressing here today, I think that it would definitely benefit 
the members of the subcommittee to also hear from the agency 
directly, and I hope that we can invite them to testify on this 
issue at a near date in the near future.
    Mr. Chairman, historically, energy efficiency has proven to 
mean the low hanging fruit that has brought both parties 
together legislatively, while also making our country safer, 
more secure, and more attentive to the impacts of climate 
change.
    Indeed, the story of energy efficiency, Mr. Chairman, is 
one that is filled with success stories that really help 
prepare our country forward by making us more independent and 
more secure, while also reducing the cost of energy, both in 
our pocketbooks, and its impact to our environment. In fact, 
Mr. Chairman, by DOE's own estimation, American families save 
close to $63 billion as a result of their energy bills going 
down, and this is a result of these appliance standards that we 
are considering just in the year 2015 alone.
    The agency also forecast, Mr. Chairman, that standards 
issued since 2009 will save the American consumer over $53 
billion in utility cost, and decrease common emissions by 2.3 
billion metric tons by the year 2030.
    Mr. Chairman, in addition to the huge energy savings and 
the benefits to the environment, appliance and equipment 
standards also lead to additional investments in the workforce 
and the ultimate creation of jobs. A 2011 report by the 
American Council for an Energy Efficient Economy entitled, and 
I quote, ``Appliance and equipment efficiency standards are a 
money maker and a job creator,'' end of quote, found that the 
efficiency standards led to net job creation in every single 
State. The study also found that by 2020, appliance and 
equipment standards will contribute up to 387,000 annual jobs 
to the U.S. economy.
    Mr. Chairman, while almost every effort by DOE to establish 
or revise energy efficiency standards has been met with some 
type of opposition, traditionally, this issue has been pursued 
in what I will commend on both sides of this committee--
subcommittee on, they have been presumed in a bipartisan manner 
with contributions to the party put forward by our President's 
and my past congressmen, even though those congressmen and the 
White House had been under the control of both Republicans and 
Democrats. It is my hope, Mr. Chairman, that following today's 
hearing, we will ultimately get back to that type of 
collaboration and that type of cooperation on this issue.
    Mr. Chairman, it is critically important that the Federal 
Government maintains its leadership role of promoting, 
encouraging, and enticing interested stakeholders to continue 
with the progress that has already been made in efficiency 
technologies so that we can continue to keep moving the 
Nation's energy policy forward.
    Mr. Chairman, I want to end by saying I look forward to 
today's hearing. I am looking forward to our expert witnesses 
on the successes and the challenges that are facing this Nation 
as it relates to energy efficiency appliance, and with that, I 
yield back.
    Mr. Whitfield. The gentleman yields back. At this time I 
recognize the gentleman from Illinois, Mr. Shimkus, for 5 
minutes.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman, and welcome. It is 
important to hear from stakeholders because the stories that we 
weave here may not always really reflect the real world, and we 
are hoping that you will give us what is going on on the 
ground. And so I am going to weave a little story to put this 
all in perspective, too.
    Congressman Bost and I met with a small manufacturer about 
2 months ago, and their--subject to a DOE enforcement case, 
and, of course, because of the enforcement case, they even told 
to stop selling a piece of equipment. This company spent 
several months trying to find out why a third--they and a third 
party lab that tested the product, why they met the standard 
and why when DOE got their hands on it, they didn't meet the 
standard.
    So DOE tested that the product, 7 months later, and not 
only--and I will weave the story why DOE came to a different 
conclusion, but it is also under a new regulation than when the 
product was originally produced. So here is this fraud in, 
catch-22 world in which you all have to try to live in to try 
to catch up, after a product has been manufactured, to a new 
regulation, and then face the heavy hand of the Federal 
Government.
    So the company was not aware of section 2.11 because it was 
not included in the proposed rulemaking. It was two lines in a 
large rule previously represented as not materially altering 
efficiency measures. This piece of equipment did not pass the 
automatic test, but it did pass the manual test. So this is a 
piece of equipment that you can operate manually, or you can 
hook up a thermostat and operate automatically. It did meet the 
standards for the manual test. It didn't meet the test for the 
automatic.
    DOE would never tell them why they failed the test until 
months later, even when they asked for transparency, show us 
your work, tell us what you are doing.
    So this is a crazy world in which we live in. The Federal 
Government is there to help, not punish. The Federal Government 
is there to, if they want to have efficiency and they want to 
encourage movement forward, they should be incenting. They 
should not--so this small company, it is a small company, has a 
proposed $241,000 penalty, because DOE is now saying that they 
knowingly, knowingly kind of jimmied the efficiency standards 
where the equipment met the manual standard, didn't meet the 
automatic standard.
    Of course, when you fall into this regime, you can't sell 
your product. It is banned from being sold until this conflict 
gets resolved. Small companies just can't survive this type of 
work. It would be best, as we hear, I am sure, similar stories 
about the struggles of maintaining it, businesses' goal is to 
help to raise capital, assume risk, hoping to get a return, and 
while they are doing that, they create jobs.
    If the Government--we just want the Government to be fair 
players in this system. If we are going to create these new 
standards, give industry a chance to meet them, and don't play 
games of delay by not working with the industry and then 
telling them why they failed to meet the standard, or changing 
the rules for automatic or manual-type systems. So I am really 
looking forward to the hearing. I think it is very, very 
important, and I have got questions, when we come to it, on--to 
address the jobs debate, which I think people find pretty 
problematic that these are now causing the loss of jobs in our 
country, and I yield back my time.
    Mr. Whitfield. The gentleman yields back. At this time I 
recognize the gentleman from New Jersey, Mr. Pallone, for 5 
minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman. The Appliance and 
Equipment Efficiency Standards Program at the Department of 
Energy has been incredibly successful over the years in 
reducing energy consumption and lowering consumers' energy 
bills. The program has also been beneficial to manufacturers, 
making energy saving products more ubiquitous and leaving the 
playing field--leveling, I should say, the playing field 
nationally.
    In fact, efficiency standards for consumer appliances and 
other products likely constitute the single most effective 
Federal effort to reduce energy consumption in the United 
States. According to the Energy Department, Americans save $63 
billion on their utility bills last year because of these 
standards, and this has also resulted in avoiding 2.6 billion 
tons of carbon dioxide emissions, which would equal the annual 
level of emissions from roughly 543 million vehicles.
    These figures are staggering and highlight the dual 
benefits of this important program. Consumers save money, and 
our environment is spared billions of tons of pollution every 
year. And all of this began with enactment of the Energy Policy 
and Conservation Act, EPCA, which was signed into law by 
Republican President Gerald Ford. I highlight ``Republican.'' 
This apparently started a trend because with the exception of 
an amendment to the statute directing DOE to establish 
efficiency standards for consumer products under the Carter 
administration, every major expansion of the appliance 
efficiency standards program has been signed into law by a 
Republican president.
    So while some of our witnesses and my colleagues on the 
other side of the aisle may lament the long list of appliance 
standards proposed by the Obama administration, they should 
remember that, depending on your point of view, much of the 
credit or blame for the Obama standards can be traced back to 
two laws signed by President George W. Bush, the Energy Policy 
Act of 2005, and the Energy Independence and Security Act of 
2007.
    And while the 2007 Act was passed by a Democratic Congress, 
the Energy Policy Act of 2005 was borne out of a fully 
Republican Congress and authored by the former Republican 
chairman of this committee. I don't know why I have to keep 
saying ``fully Republican Congress.'' That is obviously not 
what I like, but the fact of the matter is that, that most of 
this legislation was done by Republican Congress and 
Presidents, and this underscores an important fact: For the 
past 40 years, energy efficiency has been a bipartisan issue 
where Republicans and Democrats have come together to reduce 
energy consumption and save consumers money.
    Times have changed, obviously. Certainly, there are a few 
Republicans who still understand the importance of energy 
efficiency. Mr. McKinley has worked with Mr. Welch to 
demonstrate that bipartisanship in this area is still alive to 
some degree. Yet regrettably, that seems to be the only 
Republican support for major efficiency legislation in this 
Congress. Consider the recent House vote to go to conference on 
an energy package that would actually increase consumption by 
rolling back efficiency. Again, how times have changed.
    Could the efficiency-standard-setting process use 
improvement? Of course it could, because there is always room 
for improvement, despite a revisionist view that disputes over 
efficiency standards are a new development, the fact is that 
the standard-setting process has always yielded some 
controversy from one industry participant or another. But these 
controversies were generally worked out, and the results were 
better products, more efficiency, and often useful changes to 
the standard setting process.
    My concern is that improvement simply may not be possible 
in this current Congress. Last year, when we were working to 
forge a bipartisan compromise on furnace standards, the less 
and forthright positions taken by certain stakeholders made me 
question the sincerity of the so-called reform efforts. Perhaps 
it is just a matter of perspective. What some stakeholders view 
as minor tweaks, look an awful lot to me like a thorough 
gutting of the standards program.
    So ultimately, I believe a serious, successful energy 
policy for our Nation must address demand, not just supply. 
Improving the use of the resources we have to get more from 
less is common sense, and that is why efficiency has 
traditionally been a concept that brought parties together. And 
Mr. Chairman, I just hope that one day we will see that again. 
It doesn't seem like today is the day. So thank you. I yield 
back.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Thank you, Mr. Chairman.
    The appliance and equipment efficiency standards program at 
the Department of Energy (DOE) has been incredibly successful 
over the years in reducing energy consumption and lowering 
consumers' energy bills. The program has also been beneficial 
to manufacturers, making energy saving products more ubiquitous 
and leveling the playing field nationally.
    In fact, efficiency standards for consumer appliances and 
other products likely constitute the single most effective 
Federal effort to reduce energy consumption in the U.S. 
According to the Energy Department, Americans saved $63 billion 
on their utility bills last year because of these standards. 
And this has also resulted in avoiding 2.6 billion tons of 
carbon dioxide emissions, which would equal the annual level of 
emissions from roughly 543 million vehicles. These figures are 
staggering, and highlight the dual benefits of this important 
program. Consumers save money, and our environment is spared 
billions of tons of pollution every year.
    All of this began with enactment of the Energy Policy and 
Conservation Act (EPCA), which was signed into law by 
Republican President Gerald Ford. This apparently started a 
trend because with the exception of an amendment to the statute 
directing DOE to establish efficiency standards for consumer 
products during the Carter administration, every major 
expansion of the appliance efficiency standards program has 
been signed into law by a Republican President.
    So while some of our witnesses and my colleagues on the 
other side of the aisle might lament the long list of appliance 
standards proposed by the Obama administration, they should 
remember that -depending on your point of view-much of the 
credit or blame for the Obama standards can be traced back to 
two laws signed by President George W. Bush:
    The Energy Policy Act of 2005 and the Energy Independence 
and Security Act of 2007. And, while the 2007 Act was passed by 
a Democratic Congress, the Energy Policy Act of 2005 was born 
out of a fully Republican Congress and authored by the former 
Republican chairman of this committee.
    This underscores an important fact: for the past 40 years, 
energy efficiency has been a bipartisan issue where Republicans 
and Democrats have come together to reduce energy consumption 
and save consumers money.
    How times have changed. Certainly, there are a few 
Republicans who still understand the importance of energy 
efficiency. Mr. McKinley has worked with Mr. Welch to 
demonstrate that bipartisanship in this area is still alive to 
some degree.
    Yet regrettably, that seems to be the only Republican 
support for major efficiency legislation in this Congress. 
Consider the recent House vote to go to conference on an energy 
package that would actually increase consumption by rolling 
back efficiency. Again, how times have changed.
    Could the efficiency standard setting process use 
improvement? Of course it could, because there's always room 
for improvement. Despite a revisionist view that disputes over 
efficiency standards are a new development, the fact is that 
the standard setting process has always yielded some 
controversy from one industry participant or another. But, 
these controversies were generally worked out and the result 
was better products, more efficiency, and often useful changes 
to the standard setting process.
    I'm concerned that improvements simply may not be possible 
in this current Congress. Last year, when we were working to 
forge a bipartisan compromise on furnace standards, the less 
than forthright positions taken by certain stakeholders made me 
question the sincerity of so-called ``reform'' efforts. Perhaps 
it's just a matter of perspective: what some stakeholders view 
as ``minor tweaks'' look an awful lot to me like a thorough 
gutting of the standards program.
    Ultimately, I believe a serious, successful energy policy 
for our Nation must address demand, not just supply. Improving 
the use of the resources we have--to get more from less- is 
common sense. That's why efficiency has traditionally been a 
concept that brought both parties together--and, Mr. Chairman, 
I hope it will again one day soon.

    Mr. Whitfield. The gentleman yields back, and that 
concludes the opening statements on our side.
    So at this time, our first witness will be Ms. Sofie 
Miller, who is the senior policy analyst at the George 
Washington University Regulatory Studies Center. So, Ms. 
Miller, thanks for being with us, and you will be given 5 
minutes, and just make sure the microphone is on and it is up 
close to you so we can hear every single word that you say. And 
you are recognized for 5 minutes.

   STATEMENTS OF SOFIE E. MILLER, SENIOR POLICY ANALYST, THE 
GEORGE WASHINGTON UNIVERSITY REGULATORY STUDIES CENTER; JOSEPH 
M. MCGUIRE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ASSOCIATION 
 OF HOME APPLIANCE MANUFACTURERS; ELIZABETH NOLL, LEGISLATIVE 
DIRECTOR, ENERGY AND TRANSPORTATION, NATURAL RESOURCES DEFENSE 
   COUNCIL; KEVIN J. COSGRIFF, PRESIDENT AND CHIEF EXECUTIVE 
  OFFICER, NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION; TOM 
     ECKMAN, DIRECTOR, POWER DIVISION, NORTHWEST POWER AND 
CONSERVATION COUNCIL; AND STEPHEN R. YUREK, PRESIDENT AND CHIEF 
EXECUTIVE OFFICER, AIR-CONDITIONING, HEATING AND REFRIGERATION 
                           INSTITUTE

                  STATEMENT OF SOFIE E. MILLER

    Ms. Miller. Well, thank you very much, Chairman Whitfield 
and Ranking Member Rush and members of the subcommittee for 
inviting me to share my expertise today. I appreciate the 
subcommittee's interest in the Department of Energy's energy 
conservation program as well as opportunities for Congress to 
improve it.
    I am the senior policy analyst at the George Washington 
University Regulatory Studies Center, where I analyze the 
effects of regulation on public welfare, including the effects 
of DOE's energy efficiency standards on consumers specifically.
    Through my research, I have identified ways in which these 
standards can harm consumers rather than benefiting them by 
limiting the products available and removing from the market 
appliances that might best suit their needs.
    DOE's energy efficiency standards regulate appliances used 
in most households such as dishwashers, air conditioners, and 
refrigerators, and as a result, they affect almost all U.S. 
consumers. These standards increase the prices of common 
appliances in exchange for reducing consumers' energy and water 
bills in the future.
    While DOE does estimate that consumers receive large net 
benefits from this tradeoff, it does not take into account the 
diversity of Americans, or that U.S. households have very 
different needs and preferences when it comes to household 
appliances. As a result, one-size-fits-all energy efficiency 
standards can deprive consumers of the ability to make 
purchases that best suit their circumstances and constraints, 
and in such cases, these regulations are a cost to consumers 
rather than a benefit.
    For example, efficient dishwashers or clothes dryers save 
consumers more money in the long term the more frequently they 
are used and tends not to benefit households with lower 
frequency of use, which includes couples or single residents, 
such as the elderly. In proposing energy efficiency standards 
for clothes washers, DOE calculated large benefits by 
estimating that a household operates its clothes washer 392 
times per year or more than once a day on average.
    And while this might be realistic for large families or 
households with small children, it does not represent every 
household. In fact, even after accounting for their lower 
energy bills, the standards ended up costing the nearly 70 
percent of American households that use clothes washers less 
frequently than six times per week. And to illustrate from 
personal experience, a very efficient dishwasher made sense for 
my mother, who has nine children and used to run the dishwasher 
as much as four times per day, if you can imagine that. But my 
current household of two, we run the dishwasher twice a week, 
and in our case, it is not likely that a more efficient and 
more expensive appliance is going to be worth the investment.
    In addition, efficiency standards are particularly costly 
for low-income households. Wealthier Americans can afford to 
wait years or even decades to recoup the higher cost of an 
efficient appliance while poor Americans with less certain 
streams of income have higher opportunity costs. DOE calculates 
high benefits by using a relatively low time value of money, 
which field studies find represents wealthier households.
    Changing DOE's model to reflect the actual time value of 
money to low- and median-income households shows that they 
encourage large net costs as a result of efficiency standards. 
When a paycheck has to cover rent, food, and other necessities, 
a very efficient appliance may not be affordable even if it 
does reduce electric bills in the future. Many families simply 
cannot borrow at the 3 percent rates that DOE assumes.
    But energy cost savings are not the only justification for 
these standards, as we have heard, as more efficient appliances 
can also reduce environmental emissions, but these 
environmental benefits are typically quite small relative to 
the cost of the standards. In fact, the costs outweigh these 
benefits by a factor of three to one. By looking at 
environmental benefits alone, DOE would not be able to justify 
the standards that it has set for most appliances.
    In sum, the payoff from more efficient appliances will vary 
depending on a household's income, size, and other 
characteristics such as geographic location. It is perfectly 
rational for individual households to prefer to purchase 
different appliances, including those that do not meet DOE's 
standards. By taking away those choices and preventing 
households from buying the appliance that best suits their 
individual needs, DOE is imposing a cost on consumers and not a 
benefit. This is particularly true for low- and median-income 
Americans and the elderly who bear the highest costs of 
appliance efficiency standards.
    Thank you all for your time. I look forward to your 
questions.
    [The prepared statement of Ms. Miller follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thank you, Ms. Miller, very much for your 
opening statement. And our next witness this morning is Mr. 
Joseph McGuire, who is the president and CEO of the Association 
of Home Appliance Manufacturers. Thanks for being with us, and 
you are recognized for 5 minutes.

                 STATEMENT OF JOSEPH M. MCGUIRE

    Mr. McGuire. Mr. Chairman and Ranking Member Rush, and 
members of the subcommittee, thank you for the opportunity to 
testify this morning. AHAM's membership includes more than 150 
companies throughout the world, and employs tens of thousands 
of people in the United States. Our members produce more than 
95 percent of the household appliances shipped for sale in this 
country. I don't think there is any disagreement at this table 
that the appliance standards and Energy Star programs have been 
successful.
    Energy efficiency gains across core major appliance 
categories are dramatic and undeniable. For example, the most 
commonly purchased modern refrigerator uses the same amount of 
electricity as a 50-watt light bulb. A new clothes washer uses 
73 percent less energy than it did in 1990 and half the water.
    I also want to make very clear that our industry has been a 
strong supporter of these programs and has been involved in 
numerous rulemakings and legislative solutions to strengthen 
and improve the programs. In 1987, I personally led the 200-
plus organizations that initiated and supported the National 
Appliance Energy Conservation Act. We strongly support a system 
of Federal standards and State preemption, and we do not 
propose a rollback of any standards.
    But while these programs are both successful, they are both 
in need of modernization to recognize the success achieved and 
to establish a framework for policies and programs focused on 
meaningful additional efficiency gains. Yes, there should still 
be Federal standards that guarantee energy savings nationwide, 
by absent technological breakthroughs, a process geared towards 
continually ratcheting up efficiency standards, particularly 
for products that have already been subject to multiple 
revisions, does not make sense for the environment, the 
consumer, or the economy. But this will not happen under the 
current standards construct.
    Reform legislation is needed. H.R. 8 is a practical step 
along that path offering modest, sensible changes to EPCA that 
will essentially require DOE to follow the regulatory 
procedures it had agreed to with the very organizations that 
advocated for EPCA reform in 1987, but more is needed. Today, 
AHAM is calling on Congress to take further steps to modernize 
our national energy efficiency law by ending mandatory serial 
rulemaking and permitting amended standards only when justified 
by quantifiable metrics, including a list of covered products 
for which no further rulemaking is needed, absent technological 
game changers; requiring DOE to meaningfully consider 
cumulative regulatory burden on product manufacturers; 
mandating procedures regarding transparency and public 
engagement, no more black box analyses; applying the 
Administrative Procedure Act to the Energy Star program.
    There have been more than 30 standards and amendments that 
apply to the AHAM products under the program, and there have 
also been numerous test procedure revisions accompanying these 
standards. The reality is, though, that for many product 
categories, the relentless march of sequential rulemakings is 
not justified. That is because opportunities for additional 
energy savings beyond those already achieved are severely 
diminished as products are nearing maximum efficiency under 
technology. Further standards are likely to increase cost to 
consumers and manufacturers beyond an acceptable level, and for 
some products, reduced energy use will likely result in 
degraded performance and functionality.
    We saw this in the flawed proposed dishwasher rule last 
year whose consumer payback period exceeded the product's life 
and resulted in products that could not clean dishes. DOE, to 
its credit, retracted the proposal, but it shouldn't take a 
national uproar for this to happen. The rule never should have 
been proposed.
    As for Energy Star, the program has drifted from its 
original mission of energy efficiency into other areas beyond 
its expertise and authority. This drift must be considered in 
concert with the reality that the success of the program has 
essentially made it mandatory in the marketplace.
    Congress needs to bring this program under the much more 
traditional procedures and specific criteria of the 
Administrative Procedures Act, which applies to virtually every 
other program EPA administers. It is also important that 
Congress make clear that Energy Star is about energy efficiency 
only, not about EPA's ideas regarding quality, functionality, 
sustainability, other nonenergy factors.
    Our ultimate objective is to improve the U.S. regulatory 
environment in measurable ways that foster fair, more 
predictable, more open, and more efficient regulatory 
landscape. As an industry, we will continue to live up to our 
responsibility to provide consumers with life-enhancing 
products that deliver superior performance and energy 
environmental benefits. Our industry is very competitive, which 
drives not only innovation, but also reduce product costs 
through hundreds of millions of dollars in productivity 
improvements. That is why home appliance prices don't keep up 
with the CPI, not because of appliance standards.
    Productivity investments hide the fact that changing 
product design and materials to meet energy standards adds 
costs. Implying that the huge efforts in time and capital 
investments to achieve productivity somehow make energy 
efficiency free is a great misunderstanding.
    Mr. Chairman and members of the subcommittee, in summary, 
we call on Congress to modernize EPCA so that it addresses 
current circumstances by recognizing the diminishing energy 
savings opportunities for many products, evaluating cumulative 
regulatory burden and the actual impact of past rules in 
improving transparency in stakeholder engagement. Thank you for 
the opportunity to testify. I will be happy to answer any 
questions.
    [The prepared statement of Mr. McGuire follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thank you, Mr. McGuire. And our next witness 
is Ms. Elizabeth Noll, who is the legislative director for 
Energy and Transportation at the Natural Resources Defense 
Council. Ms. Noll, thanks for being with us, and you are 
recognized for 5 minutes.

                  STATEMENT OF ELIZABETH NOLL

    Ms. Noll. Good morning. Mr. Chairman, members of the 
subcommittee, thank you for the opportunity to share the 
perspective of the Natural Resources Defense Council on 
national energy efficiency standards set by the Department of 
Energy for many household appliances and commercial products. 
This program sets dependable, minimum levels of energy 
efficiency that all Americans can count on to reduce their 
utility bills, the carbon pollution that harms human health 
while promoting innovation and new job opportunities. My name 
is Elizabeth Noll, and I am the legislative director for the 
Energy and Transportation Program at NRDC.
    NRDC has long supported energy efficiency standards, and we 
are far from alone. We have successfully worked alongside many 
groups, including NEMA, AHRI, and AHAM here today, and was 
reiterated in a recent op ed we authored with the National 
Association of Manufacturers. And let's not forget, the initial 
law establishing standards was signed by President Ronald 
Reagan, then expanded and improved with broad bipartisan 
support in law signed by both Presidents George H.W. And W. 
Bush. And why is there such strong support for efficiency 
standards?
    This program is wildly successful, delivering tremendous 
consumer and national benefits. It has broad and bipartisan 
support founded on a long history of collaboration and 
consensus building, and by all accounts, there is still huge 
potential for even more energy and financial savings now and in 
the future.
    To my first point, by every single measure, the program 
provides huge benefits. In fact, national appliance standards 
are the second biggest energy saving policy in U.S. history, 
second only to vehicle fuel economy standards. Appliance 
standards are saving the typical U.S. household about $500 per 
year on their utility bills. Last year alone, American 
consumers saved $63 billion. And thanks to standards already on 
the books today, consumers and benefits will save almost $2 
trillion on their energy bill due to improved appliance and 
equipment sold through 2035.
    Because these standards are cutting American energy 
consumption, it also reduces the need to burn polluting fossil 
fuels to run those appliances and equipment. Last year alone, 
national appliance standards helped the U.S. avoid emissions of 
300 million tons of carbon dioxide. That is equivalent to the 
annual pollution from about 63 million cars.
    As I noted earlier, three Republican presidents have signed 
laws supporting energy efficiency standards, and for the first 
time since the early 1990s, the Department of Energy is up to 
date with its legal deadlines that Congress enacted. In the 
spirit of consensus building and collaboration, the agency has 
done more than ever to open up avenues to increase stakeholder 
participation and collaboration. Of the 42 standards finalized 
since 2009, almost a quarter stemmed from consensus agreements 
negotiated with industry support.
    And those that aren't negotiated, go through a normal 
rulemaking process, which includes multiple opportunities for 
input from industry. As a result, the vast majority of American 
energy efficiency standards go into effect without controversy.
    As noted in other testimony today, manufacturers much 
prefer a single national standard over a State-by-State 
patchwork of requirements. Consumer groups, State Governments, 
business groups, utilities, all have engaged constructively and 
support the program. One might ask, Are there more energy 
consumer and environmental savings to be achieved? 
Emphatically, yes. One example involves the biggest energy and 
pollution saver from a single standard in the agency's history 
which was completed in January for commercial rooftop air 
conditioners, heat pumps, and warm air furnaces, and it 
represents the third revision to this standard. This standard 
is expected to save 15 quadrillion BTUs of energy over a 30-
year period, which is nearly equivalent to the amount of energy 
in all of the coal burned to generate electricity in the United 
States in 1 year.
    A forthcoming report by the Appliance Standards Awareness 
Project and the American Council for an Energy-Efficient 
Economy finds that the savings potential for Federal standards 
that will be eligible for update within the next 8 years 
exceeds what has been accomplished over the last 8, and 
innovation by our leading manufacturers is likely to open up 
new opportunities for savings that we cannot even contemplate 
today.
    Without standards, cost-effective energy efficiency 
opportunities will be lost leading to unnecessarily high energy 
bills, increased energy consumption, more harmful pollution, 
and uncertainty from manufacturers. There is no doubt that this 
program works and will continue to deliver huge consumer and 
environmental value now and into the future. Thank you for the 
opportunity to share my views, and I look forward to your 
questions.
    [The prepared statement of Ms. Noll follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thank you, Ms. Noll, for your statement.
    At this time, I would like to introduce Mr. Kevin Cosgriff, 
who is the president and CEO of the National Electrical 
Manufacturers Association, and thanks for being with us, and 
you are recognized for 5 minutes.

                 STATEMENT OF KEVIN J. COSGRIFF

    Mr. Cosgriff. Thank you, Mr. Chairman, Ranking Member Rush, 
and members of the subcommittee for having us today. I am the 
president and CEO of the National Electrical Manufacturers 
Association, some nearly 400 members that provide virtually 
everything in the electrical world, and I appreciate this 
opportunity to talk about EPCA with the subcommittee.
    We have a central position in this dialogue given that 20 
of the 63 covered products are made by NEMA members, and an 
additional 30 covered products contain components made by NEMA 
members.
    I have three main points that I would like to make today. 
First, as has been stated, there are diminishing energy savings 
returns to multiple rulemakings on the same product. That is 
not saying that we don't believe in energy savings. We are just 
saying there is diminishing returns on multiple rulemakings 
that ought to be considered.
    Future energy efficiency opportunities should include 
looking at energy use systems, not simply components or 
individual products. And lastly, serial regulation does, over 
time, limit consumer choice.
    First, on diminishing returns. EPCA was written 40 years 
ago, and many of the covered products have since achieved then 
unimagined levels of efficiency. Several products have been 
through two or more different rulemakings, and the EPCA statute 
requires the DOE to determine whether higher standards are 
warranted on every single covered product at least every 6 
years. This applies even to products that have already reached 
the stage of regulatory maturity, as it were, that is to say, 
the products for which cost-effective efficiency improvements 
have essentially reached their limits. Cost-effective energy 
improvements have reached their limits.
    There are two components to this situation we believe 
warrant congressional attention. We should retire several and 
mature covered products, and by that, I mean retire at the 
current level of efficiency, not backslide, and that 
stakeholders, including Government, should be given sufficient 
time to analyze the impact of a previous regulation before a 
new rulemaking cycle kicks off. Rarely has a product entered 
the market before the next rule process kicks off. There has 
not been enough time to really analyze the information in the 
real world to see if it works.
    My second point is that energy efficiency opportunities 
should begin to looking at energy use systems. EPCA was crafted 
for individual products. The challenge ahead, I think, is to 
build on this past industry success with a new, more holistic 
approach to these savings opportunities. Individual products 
are increasingly interconnected and operate as a system, rather 
than singularly. We suggest Congress consider this opportunity 
when discussing energy savings.
    Think energy savings from a building versus energy savings 
from a lamp. Demands from--my third point is serial regulation 
impacts consumer choice. Demands from global competition, 
Government regulation, and all important consumer preference 
requires manufacturers to sprint to remain competitive. While 
our members are accustomed and good at running this race, and 
endless regulatory environment erects hurdles that they must 
repeatedly clear each and every time to remain viable. They are 
the definition of having skin in the game.
    One tendency of EPCA, however, is that over time, it will 
trend towards eliminating certain products from the market. 
Under this type of regulatory scheme, there will be fewer and 
fewer choices offered to consumers. We assert that markets 
should drive and, in fact, are driving the energy-efficient 
economy. One choice that markets can do without, however, is 
availability of products entering the United States that do not 
comply with U.S. law and policy. This deprives consumers of 
energy-efficient benefits, and disadvantages law abiding 
manufacturers. This is an area where the Federal Government 
especially could be helpful with policing up these imports.
    In conclusion, electrical manufacturers' contribution to 
the energy efficiency economy has been diligent, and I believe 
commendable. Throughout this effort, NEMA has made constructive 
proposals to Congress, to DOE, and working with other 
stakeholders to advance energy efficiency where we believe it 
was justified and where the savings were significant. We have 
resisted regulation for the sake of simply doing something more 
when the benefits are insignificant, Or the costs were just too 
high. The 40-year-old model of regulating energy use in single 
products has, in many cases, done its duty, but its diminishing 
returns are exacting an increasing cost for our industry and 
higher price for our consumers.
    The legislative overhaul that builds on the success of the 
last 40 years, but allows us to all keep the energy efficiency 
economy moving forward is what we wish to support. We urge 
Congress to seize this unique opportunity. Thank you. I look 
forward to your questions.
    [The prepared statement of Mr. Cosgriff follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thank you, Mr. Cosgriff.
    At this time, our next witness is Mr. Thomas Eckman, who is 
the director of the Power Division of the Northwest Power and 
Conservation Council. Thanks for being with us, and you are 
recognized for 5 minutes.

                    STATEMENT OF TOM ECKMAN

    Mr. Eckman. Thank you, Mr. Chairman and Ranking Member 
Rush. My name is Tom Eckman. I am the Director of Power 
Planning for the Northwest Power and Conservation Council. I 
will start with a very quick thumbnail of who we are. Since 
there are no northwest delegates here, I thought you might--it 
might be important to figure out why I am here representing the 
northwest.
    The Northwest Power and Conservation Council was 
established under a congressional authorization under the 
Northwest Power and Conservation Act of 1980, public law 96-
501. We are an interstate compact authorized by you folks here 
in Congress to do power planning for the northwest. So we, for 
the States of Oregon, Washington, Idaho, and western Montana, 
we produce a 20-year power forecast of future needs and a 
resource plan to meet those needs for electricity, and our 
statutory requirement is that we are to treat energy efficiency 
as one of the resources we can rely on to meet those needs.
    Over the past three decades, 3 \1/2\, 35 years, we produced 
seven different power plans. We are to update those plans every 
5 years, so we started back in 1982 with the first plan, and 
called for cost-effective energy efficiency to be a major 
component of that planning process as directed by Congress.
    Over that past 35 years, energy efficiency has been a very 
significant contributor to the northwest economy and to meeting 
our needs. In summary, since 1980, the northwest region has 
saved enough electricity through codes and standards, utility 
programs, to be equivalent of roughly six Seattles in annual 
electricity consumption, or more than one and one quarter times 
the actual consumption of the State of Oregon, so it is a 
significant contributor. It roughly represents our second 
largest resource in the region. It has met 55 percent of low 
growth since 1980, so we really believe in energy efficiency 
that is cost effective.
    The reason I am here is to talk to you about the role that 
Federal standards have played in making that happen and what 
they look like going forward. Over the past 35 years, Federal 
standards have basically produced one-fifth of the total 
savings that we have been able to achieve. Energy code is about 
20 percent, and the remaining through rate pair-funded utility 
programs. One-fifth of the savings turns out to be worth about 
$1 billion in annual savings out of the--on an annual basis, 
and saves about 5 million metric tons of carbon off of our 
system. And we have a very clean system because about half of 
our power comes from hydroelectricity. So that is a significant 
component of us. It is about 10 percent of our total carbon 
emissions on an annual basis.
    So on a going-forward basis, we looked at the Federal 
standards that have been adopted between 2009 and 2014. Those 
standards alone will reduce our forecast low growth from 1.1 
percent to .8 percent, about 30 percent reduction in low 
growth. Again, saving significant consumer cost for new 
generation and saving consumer pain and agony from carbon 
emissions. So we are here to support those standards because 
not only have they been a huge benefit to us, but we have been 
involved in the negotiations that led to not only the Federal 
standards, but many of the standards that have been adopted 
since 20--since 1987.
    I am a member of the Appliance Standards Rulemaking 
Advisory Committee that was appointed by DOE to facilitate 
better communication between manufacturers and advocates for 
energy efficiency to begin to develop more transparent and open 
processes to engage in rulemaking. And that--since the advent 
of that committee, which was basically formed at the behest of 
the Department itself because it understood that it could do a 
better job of rulemaking in the negotiations, and it could, in 
a standard notice and comment process, it can't always do a 
better job, but in some instances, particularly Elizabeth noted 
the appliance rulemaking for air conditioners and package 
rooftop systems, those consensus agreements between 
manufacturers and advocates have produced better standards, 
more regulatory certainty on behalf of the manufacturers, and 
greater compromise and facility to implement standards on 
behalf of the manufacturers.
    So I think those--that particular improvement was not 
envisioned in the original statute, but as a regulatory process 
that DOE implemented on a voluntary basis and has improved 
immeasurably the transparency of the standards development 
process on a going-forward basis, and I think that we can talk 
more about that in the time that you have questions for me. I 
will stop there. Thank you.
    [The prepared statement of Mr. Eckman follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thanks, Mr. Eckman.
    And our next witness, and last witness, is Mr. Stephen 
Yurek, who is the president and CEO in the Air-Conditioning, 
Heating and Refrigeration Institute. So thanks for being with 
us, and you are recognized for 5 minutes.

                 STATEMENT OF STEPHEN R. YUREK

    Mr. Yurek. Thank you, Chairman Whitfield, Ranking Member 
Rush, and members of the subcommittee for inviting me to 
testify on this important topic. I am Steve Yurek, and I am the 
president and CEO of the Air-Conditioning, Heating and 
Refrigeration Institute. AHRI has 315 member companies that 
manufacture more than 90 percent of the residential, 
commercial, and industry air conditioning, space heating, water 
heating, and commercial refrigeration equipment sold and 
installed in North America.
    Our members employ over 100,000 people in manufacturing, 
and more than 1 million American jobs when you include those 
involved in distribution, installation, and maintenance of our 
equipment. I want to make it clear that our industry has a long 
record of leadership when it comes to innovation, energy 
efficiency, and environmental stewardship. In fact, the 
equipment our members produce is 50 percent more efficient than 
it was just 20 years ago. But even as we innovate and develop 
the next generation of highly efficient equipment, we always 
have in mind the needs of our customers who are, after all, the 
people who buy and use our equipment.
    We have three main concerns with the current statutes that 
I would like to discuss today. First, the authority Congress 
set forth for setting efficiency standards, the Energy Policy 
Conservation Act, is 40 years old and has not been undated to 
reflect new technologies and economic realities.
    Two, in addition to the impact in our industries, consumers 
are paying a heavy price, both in real monetary costs and in 
comfort and safety. When new equipment costs more than 
consumers can afford, they find alternatives, some of which 
compromise their comfort and safety while saving less energy, 
and in some cases, actually using more energy.
    Finally, American jobs are being lost, in part, because of 
the promulgation of ever more stringent deficiency regulations, 
and the worse thing is, DOE admits that these regulations cost 
jobs.
    While the Clinton administration issued six major 
efficiency rules during his 8 years in office, the current 
administration issued eight major efficiency rules in 2014 
alone. There are real consequences from this rush to regulate. 
Yes, complying with these rules cost my member companies 
millions and millions of dollars, but what is far more 
important, it should be far more worry to Congress, is that 
American jobs are being lost, and consumers, who are already 
feeling financially squeezed, are being forced to pay more for 
products they rely on in their everyday lives from comfort 
cooling and heating, to refrigeration, to hot water.
    EPCA requires that all efficiency standards meet the twin 
tests of technically feasible and economically justified, and 
yet, DOE has issued rules that use unrealistic assumptions in 
its analyses to justify higher efficiency levels. I will give 
you a couple of examples.
    For commercial boilers, DOE estimates the new standard 
would save just eight-tenths of a percent more energy than the 
existing standard, but would cost manufacturers up to $24 
million to comply. For residential boilers and commercial 
refrigeration equipment, DOE justified the economic impact of 
the higher efficiency levels by using the assumption that no 
matter how much the product increases in price, demand for that 
product would never decrease.
    Every time DOE issues a new rule, it issues a press release 
estimating the rule's benefit in cost savings for consumers and 
energy savings for the Nation based on theoretical models. DOE 
has never looked back to see what the energy savings actually 
were, or if consumers actually ever benefited from spending 
more money, and the current law does not even require such a 
review.
    Finally, DOE projects future job losses in several of its 
rulemakings for our products. For example, in two separate 
rulemakings for different types of commercial air-conditioning 
units, DOE noted small business manufacturers would need to 
redesign their entire private offering or leave the market. DOE 
acknowledged a potential scenario in which a rulemaking for 
commercial refrigeration equipment could cause all existing 
production to be moved outside of the United States, resulting 
in a loss of over 3,500 jobs.
    Changes to EPCA should be implemented in phases with the 
collaboration of all stakeholders. I urge all members of the 
upcoming conference committee to ensure that the technical 
corrections in H.R. 8 remain part of the final energy bill. 
Broader EPCA reform should stress flexibility, enhance 
technical and economic justifications, and the process should 
be overhauled to maximize transparency and stakeholder 
engagement. Congress should require DOE to convene stakeholders 
to discuss and recommend a new regulatory framework.
    AHRI is ready to work with Congress, DOE, and other 
stakeholders on ways we can, together, fix and update this 40-
year-old law to create a new, more open process, conserve 
energy, help manufacturers remain competitive in the global 
marketplace, and benefit all consumers. I appreciate the chance 
to appear today, and I look forward to answering any questions 
you might have and to working with you as we move forward on 
this important issue.
    [The prepared statement of Mr. Yurek follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Well, thank you, Mr. Yurek, and thank all of 
you very much for your testimony. We appreciate it, and I 
recognize myself for 5 minutes of questions.
    Ms. Miller, the George Washington University Regulatory 
Studies Center, how old is the center?
    Ms. Miller. It began in 2009.
    Mr. Whitfield. 2009.
    Ms. Miller. That is right.
    Mr. Whitfield. And how long have you been there?
    Ms. Miller. Since 2012.
    Mr. Whitfield. 2012.
    Ms. Miller. Uh-huh.
    Mr. Whitfield. So if you were running for public office or 
you going to some Rotary Club speaking somewhere around the 
country, could you categorically say that these efficiency 
regulations are saving consumers money because the reduction of 
electricity cost exceeds the additional cost of the new 
appliance?
    Ms. Miller. I would say that these standards have very 
different effects on different households based on some of the 
characteristics that I mentioned, and also some that I state as 
well in my written testimony.
    For instance, if you live in Texas, maybe it is more 
beneficial for you to have an efficient air conditioner, but do 
you care how efficient your furnace is, how often are you ever 
going to use it?
    Mr. Whitfield. Right.
    Ms. Miller. In that case, you may not actually save any 
money by getting an efficient furnace. So I would say that 
different situations----
    Mr. Whitfield. So geographical area would have an impact on 
it?
    Ms. Miller. Absolutely.
    Mr. Whitfield. And then you indicated the use of the 
product, obviously, would have an impact on it. And you 
mentioned, I think, that some elderly people who maybe use it 
less would have less benefit from it as well. Is that correct?
    Ms. Miller. That is correct, and the Department used that 
in its analysis.
    Mr. Whitfield. So you know, we--all of us make comments 
about, well, this is going to save money and so forth, but it 
is certainly possible, and in many instances, I would assume 
that low-income people and elderly are harmed more by these 
regulations perhaps than they are benefited. Would you agree 
with that?
    Ms. Miller. That seems to be the case, and the Department 
also does acknowledge that there are negative impacts on those 
groups in its own analyses.
    Mr. Whitfield. OK.
    Ms. Miller. It is not a view that is outside the 
mainstream.
    Mr. Whitfield. Well, you know, originally this started 
because of the Arab oil embargo. I think the reasoning that 
this all started was because of trying to conserve the use of 
energy. And certainly that has changed today because we have an 
abundance of energy in America, but today, it has become more 
of a climate change issue. That is what people talk about. 
Well, we have got to stop. We have got to be more efficient, 
less CO2, and so forth.
    Now, Mr. McGuire, you and Mr. Cosgriff and Mr. Yurek all 
touched on this, a need for reform. And you all made some 
pretty strong statements. You said that sometimes the product 
is not going to be as effective. It is going to cost more to 
consumers. It is going to reduce consumer choice. And one 
comment I would also make on H.R. 8, which is our energy bill, 
one of the most controversial aspects of it related to the 
process that the DOE goes through in adopting these new 
standards.
    For example, they really are not transparent on it. The 
data analysis is not really available until they are getting 
ready to notice it, and so all we were saying in this one 
provision, which was like we were turning the world upside down 
was, we want DOE to sit down with the manufacturers, the people 
who make these goods and have a more open and transparent 
discussion with them. I mean, you would agree with that, right?
    Mr. McGuire. We would agree with that, Mr. Chairman, and 
actually, that process that you are describing used to be used 
by the Department of Energy where manufacturers would have an 
opportunity to test a product under a new standard, or to even 
employ a new test procedure before you could determine whether 
a standard was appropriate.
    But what we have seen in the last several years is because 
so many rulemakings are going on at the same time, that DOE has 
not been able to go through this very thorough process of let's 
do a test procedure and make sure that works. A test can be 
repeatable and reproducible before we set a standard so that 
companies can see if you can test a product. It is very--
manufacturers spend an enormous amount of resources on 
compliance to these standards. The testing is very complicated.
    Mr. Whitfield. Right.
    Mr. McGuire. These products are more sophisticated than 
they used to be, so you want to get that right. You don't want 
to----
    Mr. Whitfield. Right.
    Mr. McGuire [continuing]. Mess that up. And what has 
happened is the process has become conflated, and it is very 
difficult to understand what is happening sometimes.
    Mr. Whitfield. Mr. Cosgriff, do you agree with that 
basically?
    Mr. Cosgriff. I would agree with that, it made me think, as 
Mr. McGuire was answering your question, the product cycle of 
some of the products entering the market now in our area, LED 
lamps as an example is in many cases, less than a year. So if 
you miss one of these hurdles I refer to, you have missed a 
product cycle. That is a very big deal.
    Mr. Whitfield. Yes.
    Mr. Cosgriff. And for a small or medium size company of 
which there is many making LEDs, that could be fatal.
    Mr. Whitfield. Well, I have a lot of other questions, but 
my time has already expired. Mr. Rush, you are recognized for 5 
minutes.
    Mr. Rush. I want to thank you again, Mr. Chairman. Ms. 
Noll, I want to thank you for your interesting testimony so 
far.
    There is a question that I have and there is an argument 
that while the efficiency standards have been very valuable in 
reducing energy costs and consumption, many of these standards 
have already reached their maximum efficacy and we cannot 
squeeze any more juice from the grapes in a certain manner of 
speaking. Do you agree with the statement that many of these 
appliances are as efficient as they can reasonably come, or is 
there--and there is no room to move forward with these new 
standards. Or do you believe that there is some more cost 
effective standards, and measures, and pathways that we could 
implement in order to greater have more efficiency than cost 
savings?
    Ms. Noll. Thank you Congressman Rush. Yes, I do think that 
there are more cost effective pathways to achieve greater 
energy savings that have yet to come. And I would begin by, as 
I stated in my opening remarks, the rule that was finalized 
just last year for commercial rooftop units represented the 
largest energy savings single standard in agency history. And 
that was the third time that that standard had been revised.
    And while this is going to deliver huge consumer and 
environmental value, it was nowhere near the most energy-
efficient technology that is commercially available. So it just 
suggests that there is still room to improve.
    And I would also note that, as I mentioned in my opening 
remarks, that the forthcoming report from ACEEE and the 
appliance standards awareness project, looked at the rules that 
will be up for revision in the next 8 years and has shown that 
the energy savings opportunity from those rules will exceed 
that of which, of those that were finalized from the last 8 
years. Again just further suggesting that--and some of those 
standards will be ones that will be products that have already 
had standards and have gone through revisions in the past.
    And I would finally just say that standards increase 
innovation and that technological innovation creates new 
product features, new design opportunities. Our refrigerators 
today have more features than ever before. And that also could 
unlock opportunity for increased energy savings and that could 
form the baseline for future revisions to standards in the 
future.
    Mr. Rush. Yes, ma'am. I want to shift my focus, my office 
has had many conversations regarding energy efficiency 
standards for appliances and their impacts on low-income 
families. One of the arguments that we hear quite often is that 
the cost of complying with new energy efficiency standards will 
have a disproportionate impact on low-income consumers. How do 
you respond to this charge?
    And secondly, are there any benefits to low-income 
households if industry is forced to comply with the most 
current energy-efficient appliance standards?
    Ms. Noll. Thank you. I guess I would begin by saying I know 
that the impacts on low-income customers is a priority of yours 
as it is for NRDC. And minimum efficiency standards set a 
dependable level of energy efficiency that every American can 
count on. Our analysis suggests that appliance standards will 
save the average American household, including low-income 
households, $500 a year compared to before standards were set. 
So that is significant.
    And I agree that low-income households pay--a 
disproportionately higher portion of their income goes to 
energy costs. A recent report by NRDC and ACEEE shows that 
energy efficiency is a key strategy for addressing and reducing 
that energy burden that low-income households face.
    So I would say that is why groups like the National 
Consumer Law Center and Texas ROSE and other consumer advocacy 
groups engage and are highly active in the standards setting 
process because of important benefits that it serves for the 
low-income populations that they support.
    Mr. Rush. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. The gentleman yields back. This time I 
recognize the gentleman from Illinois, Mr. Shimkus, for 5 
minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. This is actually a 
very good panel. There really is more that unites us than 
divides us on this whole debate. And I think that is true 
across the board.
    Ad first of all, for Mr. McGuire, Mr. Cosgriff and Mr. 
Yurek, you are saying that there is a need for some reform, but 
you are not claiming that there is a desire to jettison energy 
efficiency standards, are you?
    Mr. McGuire. No.
    Mr. Yurek. No.
    Mr. McGuire. Not at all. We are supporters of the program--
--
    Mr. Shimkus. OK. I am going to go quickly, so Mr. Cosgriff.
    Mr. Cosgriff. Absolutely not.
    Mr. Shimkus. Mr. Yurek?
    Mr. Yurek. No.
    Mr. Shimkus. So this is an example of where we really can 
work together to get some sensible changes to affect folks like 
the narrative that I provided earlier today, there is a trap 
that people do fall into, from big Federal agencies, and the 
rolling out of regs, and as the fluorescent light bulb case, 
Mr. Cosgriff, that they get caught in a trap. You don't want to 
miss a cycle of putting a product on the shelves because for a 
small company that could be deadly.
    So Ms. Noll, you did mention in the discussion with my 
colleague, Mr. Rush, that the confusing thing is we are not 
talking from a baseline of families. What is a family? What is 
the cost? I think Ms. Miller mentioned it, her cost in a two-
family household is different than a family--I am one of seven 
kids, nine in the family grew up--a lot different costs, a lot 
different projected savings. Don't you think that if we are 
going to have this debate that the Department of Energy ought 
to help us define what is a family? What is a savings? And to 
have part of that transparency, Ms. Noll?
    Ms. Noll. Thank you. I would say that the Department of 
Energy does take into account many perspectives.
    Mr. Shimkus. Buy don't you think they should help define 
this so we can have a better, accurate discussion of what these 
savings are and who they are--this amorphous savings is being 
disputed by economists based upon real data and real numbers.
    Ms. Noll. As many of the colleagues that I work with, we 
strive to find--get better data on----
    Mr. Shimkus. The question is, shouldn't the Department of 
Energy help us define their savings? The answer is they don't.
    Mr. Yurek, following up on this question, don't you think 
they should do a better job, the Department of Energy should 
help us define savings and costs?
    Mr. Yurek. Yes. I think the process, the DOE is in a bind 
in some ways by the statutory language of this 40-year-old act 
and how they are required do the analysis. They are in a bind 
by the timeframe in which they need do all these rules. They 
don't have the time anymore because of all the rules that they 
are involved in, to do the deep analysis that they used to be 
able to do and confer with everybody.
    And they also have the court order saying that they need to 
meet these deadlines so----
    Mr. Shimkus. OK. Let's go quickly to job losses you 
highlighted in part of your written testimony. Talk about the 
job loss, and shouldn't the DOE talk about that there is a loss 
of jobs? Especially as you get to this point of again as again 
my colleague, Mr. Rush, says here how much juice are you 
squeezing from the grape? And you identified that in your 
testimony.
    Mr. Yurek. Yes. No, I think that is one of the economic 
analyses that needs to be done. I think they forget the purpose 
of this act is not to go to the maximum tech and maximum 
efficiency, it is to slowly raise the bottom so that everybody 
can purchase that equipment and have those savings.
    There are other programs such as Mr. McGuire mentioned 
related to Energy Star that are the pull, to get those other 
higher efficients, to get people to buy that equipment. What we 
are seeing now is that this program is being used to go to the 
max tech versus going the minimal level where people get 
savings and benefits but don't have the cost.
    Mr. Shimkus. Aren't you asking for a return to a 
collaborative approach with the Department of Energy? Mr. 
McGuire?
    Mr. McGuire. Yes, we are----
    Mr. Shimkus. Mr. Cosgriff?
    Mr. Cosgriff. More collaborative----
    Mr. Shimkus. So I do have to applaud the DOE. We have 
actually been pressuring them for years and also the EPA to 
say, ``tell us how that affects jobs.'' So in this most recent 
proposed rule, March 12, 2015, this is what it says.
    Some large manufacturers have already begun moving 
production to lower-cost countries. Short-term, U.S. job loss. 
This is the Department of Energy saying that. And an amended 
standard that necessitate large increases in labor content or 
that requires large expenditures to retool facilities should 
cause other manufacturers to reevaluate production citing 
options.
    What that means is, that if we squeeze too much--my 
colleague Mr. Rush--if we go too much, we lose jobs to overseas 
manufacturers and that would be unfortunate. Thank you, I yield 
back the balance of my time.
    Mr. Olson [presiding]. The gentleman's time has expired. 
The Chair recognizes the ranking member of the full committee, 
Mr. Pallone from New Jersey for 5 minutes.
    Mr. Pallone. Thank you, Mr. Chairman.
    Ms. Noll, from listening to some of the people sitting next 
to you on the panel and some of my colleagues on the other 
side, you would think that the standards process has suddenly 
become for more contentious than it used to be.
    In my opening statement I talk about the fact that the 
standard setting process has always yielded some controversy 
from one industry to another. And that is not to say that 
complaints or controversies weren't always important or even 
valid. But I just see some contention as an inevitable part of 
any meaningful standard setting process no matter how well it 
functions.
    So while not every standard can be negotiated, my sense is 
that there has been more consensus than ever before, and that 
every industry trade represented here today has been involved 
in and has likely benefited from that consensus.
    So my question is, do you agree with me that there actually 
seems to have been more consensus in the standard setting 
process over the past 8 years, and of the rules finalized in 
the last 8 years, what percentage of those rules has been 
established through consensus negotiations, if you could?
    Ms. Noll. Good morning. Um, yes, it is interesting because 
I think about the number of roles and the number of 
negotiations that have taken place over the years, and there 
are so many to choose from. The last two revisions to home air 
conditioning standards went through a consensus process and 
landed an unnegotiated consensus outcome. And that is fantastic 
for consumers and the value that it is going to deliver to them 
for the environment as well.
    So I think from my perspective I would say that the 
controversy is the exception and not the rule, you know, that 
we can demonstrate I think, as I said in my opening remarks, of 
the 42 standards that have been finalized since 2009, almost a 
quarter of those stemmed from joint consensus negotiations. And 
that is not to say that every rule needs to or can come from a 
consensus or a negotiation and those that didn't went through 
the normal rulemaking process. And with the exception of maybe 
a few standards have been without controversy and supported by 
stakeholders through the process and input.
    So I would just encourage us not to characterize action as 
controversy at this point.
    Mr. Pallone. All right. Now I am a strong supporter of 
energy efficiency programs, and again I am confused by some of 
the claims being made by members of today's panel.
    I find it difficult to believe that there are no more 
significant energy efficiency gains to consumer products unless 
you assume that we can improve upon our current technology or 
develop entirely new technologies that are more energy 
efficient.
    For example, TV went from tubes, to liquid crystal 
displays, to plasma, to LED in a little over a decade. So are 
we truly done with refrigerators, dishwashers air conditions, 
furnaces, whatever?
    Ms. Noll. Our experience has been no. I think in the latest 
refrigerator standard revision, this is the sixth time, 
including the State standards, that that had been revised. It 
represented about 20 to 30 percent improvement over the 
previous standard, and that is on par with other revisions, 
fully supported by manufacturers and stakeholders.
    And I think we have seen that that trajectory has held true 
that refrigerators are now 75 percent more efficient, they have 
more product features, they are 20 percent larger and they cost 
half as much.
    I think the lighting revolution that we have seen take 
place is another example of--I don't think in 2000 we could 
have predicted the number of choices and the efficiency that we 
would get from LEDs today. So I think that it is just a few 
examples of where this could be headed.
    Mr. Pallone. All right. Several witnesses have referred to 
mandatory serial rulemakings. And my understanding of the law 
is that it mandates the review of the standard every 6 years. 
However, to my knowledge, the law doesn't require that the 
standard be updated every 6 years.
    So just to clarify, would you answer yes or no to the 
following questions, OK? Does the law require a standard be 
reviewed every 6 years? Yes or no.
    Ms. Noll. Once it has gone through its statutory 
requirements, then yes, it is required to be reviewed every 6 
years.
    Mr. Pallone. All right. Does the law mandate that a 
standard be updated every 6 years regardless of any other fact 
pattern?
    Ms. Noll. No.
    Mr. Pallone. Does the DOE have to determine whether a 
rulemaking is likely to result in significant savings before 
requiring a standard be updated?
    Ms. Noll. Yes.
    Mr. Shimkus. And does DOE have to determine whether 
rulemaking is likely to be technologically feasible and cost 
effective before updating a standard?
    Ms. Noll. Yes.
    Mr. Pallone. OK, thanks a lot. Thank you, Mr. Chairman.
    Mr. Olson. The gentleman's time has expired the. The Chair 
uses the privilege of the vice chairman to recognize himself 
for 5 minutes.
    And a hearty Texas welcome to Ms. Miller, Mr. McGuire, Ms. 
Noll, Mr. Cosgriff, Mr. Eckman, and Mr. Yurek. In the interest 
of time I have one question about air conditioning.
    Southeast Texas, my home, exists in a climate we call 95, 
95. From early April to late September, it is 95 degrees 
Fahrenheit with 95 percent humidity. Until 1902 the only jobs 
in that region were picking cotton and guarding prisoners in 
big State prisons, that provided very, very slow low growth. 
And then Willis Carrier invented the air conditioner in 1902. 
That single invention, combined with oil being discovered at 
Spindletop, in 1901 in Beaumont, and the 51 mile Houston ship 
channel being built, has put Houston on track to be the 
Nation's third largest city some time this decade.
    Federal actions affecting air conditioning gets the 
attention of all Texans. Especially if two Federal agents are 
in conflict. We are seeing that situation now right now with 
air conditioners. DOE is demanding higher efficiency standards 
for air conditioners, while EPA is banning certain refrigerants 
and foam blowing agents from being used in air conditioners.
    My only question is for you Mr. McGuire and you Mr. Yurek, 
Mr. Yurek first, can companies comply with these conflicting 
standards, can they comply with these, what are the challenges?
    Mr. Yurek. First off, yes, they can comply with it, but how 
they comply with it is that it costs a considerable amount of 
money in the conflict between the two statutes going into 
effect in the needs to spend money on research and development. 
And then once that research and development is completed they 
need to then retool their plants. And so yes they can do it. It 
is going to cost. The big manufacturers that have the funds 
will have the ability to do it, it will be several of the small 
manufacturers that don't have the funds available that will go 
out of business either be acquired by the bigger ones or just 
leaving the area.
    Mr. Olson. The big guys thrive, the small guys go away. Mr. 
McGuire, you thoughts? Can they survive, can they work with 
these conflicting regulations from different departments?
    Mr. McGuire. The industry can comply, but the problem is it 
takes a certain amount of time to do that. And the EPA 
decisions, proposals on refrigerants is not being coordinated 
with DOE on the efficiency standards with the vast majority of 
greenhouse gas emission avoidance benefits come from the 
appliance standards not producing the changing the 
refrigerants.
    We have to deal with the fact that the safety standards in 
the U.S. do not allow the type of refrigerants we have to go to 
yet in the amounts necessary. That requires a safety risk 
assessment test that companies are doing. So it takes an amount 
of time, sequence and investment for this to happen. And it 
would be prudent for the two agencies to talk about this and 
reach a decision that makes sense for the environment and for 
the people that are making these products.
    Mr. Olson. Follow-up question, sir, do you believe the 
Obama administration is meeting their own goals set with the 
executive orders to minimum the cumulative impact of these 
regulations? These burdensome regulations, they said let's make 
that lower. Does this achieve that or is this in violation of 
that?
    Mr. McGuire. We do not believe the DOE has done a proper 
analysis to the cumulative regulatory burden on manufacturers 
when they are doing their appliance efficiency standards, 
because they are not taking into account the costs in 
investments that are made for previous versions that haven't 
been recouped, as well as investments that have to be made in 
alternative refrigerants.
    Mr. Olson. Mr. Yurek, you thoughts, sir?
    Mr. Yurek. I agree with Mr. McGuire in that that proper 
analysis has not been done. And the burden on manufacturers is 
not being considered, and actually has been ignored when raised 
in some of the rulemakings related to commercial refrigeration 
equipment where we did raise EPA changing the refrigerants that 
can be used at the same time efficiency regulations went into 
effect.
    And DOE said, well, they haven't changed it yes so we are 
using the current refrigerant. They issued the rule, 6 months 
later the EPA banned those refrigerants. There are two 
different implementation dates, one is 2016 for refrigerants 
and 2017 for the energy efficiency standards. You have to 
redesign twice in two different periods of time.
    Mr. Olson. Thank you, my time is expired. One word of 
warning, don't mess with Texas air conditioners.
    The Chair recognizes the gentleman from California, Mr. 
McNerney for 5 minutes.
    Mr. McNerney. I thank the assistant chair. Mr. Cosgriff, I 
believe that you stated that many of the imported products are 
not held to the same standards as American made products. Is 
that right?
    Mr. Cosgriff. I didn't say many. I said that we should be 
on guard to make sure that nonqualified products enter the 
stream of commerce inside the United States.
    Mr. McNerney. So that must be happening then.
    Mr. Cosgriff. I am sorry?
    Mr. McNerney. Is that happening are products entering the 
American----
    Mr. Cosgriff. We receive information from our manufacturers 
routinely that they find products in the stream that don't, by 
objective standards, meet the standards of the United States of 
America.
    Mr. McNerney. So U.S. consumers are buying products made 
overseas that are potentially less efficient and cost American 
jobs at the same time?
    Mr. Cosgriff. They might be, yes, sir.
    Mr. McNerney. How could we remedy that situation?
    Mr. Cosgriff. Well, NEMA in the past has worked with 
commerce in the area of counterfeiting to take our expertise 
from our member companies and make it available--Customs, 
excuse me, Customs and Border Security to make it available to 
their agents so they can though what they are looking for, to 
be able to identify what constitutes a valid third-party 
certification mark, what might be a counterfeit and other tells 
that you might see in products.
    Mr. McNerney. So this is an enforcement issue it is not a 
trade rules issue?
    Mr. Cosgriff. Mostly enforcement, yes sir.
    Mr. McNerney. OK, very good. Mr. Eckman, please elaborate a 
little bit if you would on how the rulemaking process could be 
improved, the transparency of the rulemaking process could be 
improved?
    Mr. Eckman. I will go through a little bit of history so 
the context is there.
    In the mid-2000s DOE staff directed their consulting staff 
to sit down with advocates and manufacturers to help negotiate 
a white good standard with the AHAM folks so the technical 
staff supporting DOE's rulemaking was appraised and involved in 
those negotiations that were informal at the time. They weren't 
authorized by DOE, we were handling those on the side.
    And that led to another process on electrical transformers 
where both DOE staff and their consultants got involved. And 
finally DOE established under the Federal Administrative 
Procedures Act a negotiated rulemaking group called the ASRAC 
of Appliance Standards Rulemaking Advisory Committee, which now 
oversees a series of requests that might come in from parties 
that want to enter into negotiations through a regulatory 
process, through regulating negotiation as opposed to 
rulemaking through a standard comment process.
    And that has opened I think the doors to more consensus 
agreement, to the agreement on major refrigeration products, 
the HVAC equipment, pumps and electrical transformers all came 
from those kinds of negotiations, where there is a great deal 
more transparency interaction with the manufacturers, with 
advocates staff and consultants because they can get down and 
talk face to face, roll the sleeves up in a meeting not in a 
very formal hearings type process.
    And I think that has improved both the outcomes and the 
feelings that come out of those outcomes about we agree that we 
can't get everything we need but the compromise works for all 
of us. And that process to me is really central to and 
advancing the rulemaking process.
    Mr. McNerney. Thank you. Mr. Cosgriff again, I am going to 
ask do you believe that the current standards are room to drive 
more innovation?
    Mr. Cosgriff. Do I believe the current standards have?
    Mr. McNerney. Can drive more innovation?
    Mr. Cosgriff. Can drive more innovation. I think the 
manufacturers are driving innovation. I think competition is 
driving innovation and I think standards have a part in that, 
but I wouldn't overstate what they are part is.
    So if a product is at the low end of efficiency, then the 
standards are a welcomed boost. If a product like a transformer 
is approaching 99 percent efficiency, I am not sure what their 
accomplishing.
    Mr. McNerney. Thank you. Ms. Noll, could you give some 
examples of efficiency improvements that are still possible?
    Ms. Noll. Yes, I would be happy to. I think as we look at 
some of the products that are still--that will be revised in 
the next 8 years, there is standards for equipment and 
household appliances that have seen standards before, water 
heaters is a likely--a potential opportunity for increased 
savings.
    As Mr. Cosgriff just mentioned distribution transformers, I 
mean they may be reaching a high level of efficiency but all of 
the electricity that is produced in America goes through 
transformers. So even half of a percent of improvements there 
will be a significant national benefit.
    So I do think that there is opportunities that still exist 
to improve through the standards process.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Olson. The gentleman's time has expired the Chair 
recognizes the gentleman from Ohio, Mr. Latta, for 5 minutes.
    Mr. Latta. Well, thanks, Mr. Chairman. And I would also 
like to echo I think this is a great panel today and really 
appreciate you all being here. I am kind of an expert, my wife 
and I in the last 6 weeks just bought a washer and dryer, and 
the refrigerator is next.
    But in northwest Ohio we do make HVAC, we make dishwashers, 
we make dryers, we make washing machines, we also make waffle 
irons, we make large mixers and we also have a large freezer 
plant right in northwest central Ohio. So we have a lot of 
things going on, and it is very important to our economy.
    But, Mr. McGuire, if I could start with you: You have been 
particularly critical of the proposed standards for 
dishwashers. Can you explain what is wrong with the standard in 
terms of substance of the proposed rule as well as the process 
by which it has come about?
    Mr. McGuire. Well the proposed dishwasher standard from 
last year, first of all, it required a 20-year payback to the 
consumer for a product with useful life was 13 years. It 
reduced the amount of water that a dishwasher uses in a cycle 
from five gallons to three. And the proposed rule did not go 
through any type of performance or consumer testing before it 
was issued, we did not get a chance to do that, we normally do 
in these rulemakings. So----
    Mr. Latta. Let me interrupt. Now why didn't you get to be 
part of that?
    Mr. McGuire. DOE just didn't do that part of the process. 
They just went right to the rule without that type of testing. 
So once it was proposed, we did the testing and we demonstrated 
to DOE and others that dishes were not clean. In multiple 
product manufacturers products, it did not clean the dishes. So 
the utility of the product was affected, the consumer payback 
was not there and the energy savings was minimal, less than a 
quad, 7 percent of one quad.
    Now the current dishwasher standard that is in place today, 
that has a pay back to the consumer of 12 years, so that was 
already at the limit in terms of economic sense. There was no 
need for this fifth dishwasher standard. So it messed up the 
product and it did not make sense for the consumer to buy such 
a product, so our view is that there is something wrong when 
the process spits something out like that. That has to be a 
product or a category where you don't do another rulemaking 
unless some quantifiable measure can show that there is going 
to be a real significant savings in energy that won't harm the 
consumer.
    But under the current process it is very difficult to get 
DOE's assumptions and other things that go into their analyses 
done by their contractors and the national labs. So that is 
part of the process change we would like to see.
    Mr. Latta. Now just out of curiosity, when you were doing 
this testing, when you were going from five gallons to three 
gallons, how much did that cost the industry? And what did that 
cost the consumer in the end run then?
    Mr. McGuire. Well, how much did it cost of the consumer 
for----
    Mr. Latta. So when you were doing the testing, when it was 
going from the five gallons down to the three gallons, you 
said, and I was just curious is there a cost to the industry 
that you had to do----
    Mr. McGuire. Oh, sure.
    Mr. Latta [continuing]. And then what was overall--I assume 
it would go back to the consumer?
    Mr. McGuire. Well these tests that we did on the proposed 
rule, this standard didn't go into effect. Those costs were 
absorbed by the companies. There is thousands of dollars to do 
these tests. Once a standard is in effect, in order to prove 
compliance with the standard, you have to test the product 
before it is submitted to the marketplace and then a regular 
routine testing market surveillance that our industry actually 
does some of that testing to police ourselves and provide some 
information to the Government.
    Those tests are very expensive and the cost of compliance--
the tolerances are very, very tight so manufacturers invest a 
lot to make sure their products meet the standards and the 
tests are sophisticated. So it is a costly part of being an 
appliance manufacturer. And those costs are going to the 
product like any other costs and are passed on to the consumer.
    Mr. Latta. Thank you.
    Mr. Yurek, I am concerned about the economic effects that 
the administration's aggressive regulatory agenda has.
    It is my understanding that DOE is implementing rules that 
set new standards for individual components and your members 
residential consumer products such as the new standard for the 
efficiency of furnace fans. How does regulating a specific 
component in a large heating or cooling system add to the cost 
of a furnace or air conditioning system?
    Mr. Yurek. We have a lot of concern. I think looking at 
this 40-year-old law, that it is dealing with products, and in 
some instances it is going into the components of those 
products and pieces of equipment, which is the wrong direction. 
Really what we should be looking at is how these products are 
put into the house or into the building and looking at an 
overall systems approach to efficiency to really look at the 
gains. Because if you start dictating and regulating the 
components, be it the compressor, now they are looking at 
regulating the fans that go into the HVAC, air conditioning and 
furnaces, and others, you are dictating how these products are 
designed. And once they are put into that product, they might 
have--and we have shown in a case, in a proposal out with the 
California energy commission when they were doing this with the 
air handlers, what they were proposing on the efficiency level 
for fans, actually used more energy when applied in the air 
handler than being able to design the overall product and the 
energy use of that air handler.
    And so we just want to make sure that this is done 
rationally and the current law doesn't give DOE that type of 
authority to look at the broader picture. And I think we just 
need to step back and say, it is 40 years old, let's look at it 
and make some changes and make it better so we can actually get 
some energy savings out in the field and have consumers be able 
to afford the equipment.
    Mr. Latta. Thank you very much, Mr. Chairman. My time has 
expired, I yield back.
    Mr. Olson. The gentleman's time has expired. The Chair 
recognizes the gentleman from Vermont Mr. Welch for 5 minutes.
    Mr. Welch. Thank you very much. This is a great panel, I 
appreciate it.
    A couple of things, we don't have a bill yet, right? So 
this is kind of an abstract discussion. And I thought Mr. 
Shimkus kind of laid out the potential for cooperation here. I 
do like the notion of collaboration in the process, because you 
have got folks at DOE who are doing their best to implement 
efficiency standards, you have got real world folks that are 
the manufacturers that have to contend with the very practical 
issues of implementation.
    Ms. Noll, you're OK with that, right?
    Ms. Noll. Yes----
    Mr. Welch. I think standards are incredibly important, but 
I don't think they are everything. Mr. Cosgriff, you mentioned 
that the standard in some cases especially at the low end does 
spur the innovation. But if you have got something that is 
highly efficient then it is not going to accomplish all that 
much. A lot of what you are saying sounds very reasonable to 
me.
    The jobs issue, I think, is not so much the jobs issue, I 
mean air conditionings--by the way, one the most outrageous 
loss of jobs is with Carrier leaving Indiana to go down to 3-
buck-an-hour wages in Mexico, which I think is pretty appalling 
but has nothing to go do with standards, particularly since 
whatever it is is manufactured at 3 bucks an hour has to meet 
the standards before it can come back into this country, right? 
So you know, you have a got to level the playing field, as long 
as the standards apply everywhere.
    But I do as a strong, strong supporter of efficiency 
standards with Mr. McKinley, who has got a lot of experience in 
this, I feel that those of us who believe standards can work 
have to be extremely diligent in trying to address practical 
concerns as they come up. That makes sense to me.
    So I have heard the industry folks saying you are not for 
unraveling them, you want them to be more practical. I am not 
asking a lot of questions because I don't think there is that 
much disagreement and we don't have a bill. But one of the 
things I think that would be helpful as part of this process 
would be to get the DOE folks in here and ask them what are 
some of perhaps the congressionally imposed burdens we are 
imposing on them where you are saying that they have so many 
rules they have to deal, they don't have the time and the 
space.
    The bottom line here, collaboration I think is really good. 
I think standards are absolutely essential. I mean, the energy 
efficiency savings that we have had have been tremendous in--if 
they are done right it can save consumers money, it is not 
without impact. We all understand that. There was a cost 
associated with requiring that automobile manufacturers install 
seat belts, that cost more money when you bought a car. Most of 
us think, it is about time.
    Mileage standards have been tremendous, that is a cost that 
has really had an impact on the average mileage in our fleet. 
So really what I am asking for is to take up Mr. Shimkus on his 
observation that this is an area where there is some 
opportunity for us to cooperate, but that means not letting it 
get adversarial. If there is acknowledgement even from the 
people who are affected by this in ways that they think are a 
little too aggressive, to have some interaction with DOE, and 
us to try to figure out what are the process improvements we 
can make in order to get the benefits of regulation.
    I mean, I will just ask the industry people Mr. McGuire and 
Mr. Eckman or Mr. Yurek, is that a problem for you the approach 
I am taking about?
    Mr. McGuire. It is not a problem. We have used consensus 
many times in the past, but we think consensus ought to be to 
change the law so that the process requires these improvements 
and they are not discretionary.
    Mr. Welch. Well, that has to be a discussion--there is no 
specifics here, all right? So we don't have a bill in front of 
us.
    Mr. McGuire. There are some process improvements in the 
energy bill in conference, but the ones that we are talking 
about the major reforms you are right, there is not----
    Mr. Welch. Well, I tell you what would be helpful for me if 
each of you did a 1-page bullet point assessment of concrete 
things that you think in the process would improve it. Then we 
can assess it, have a discussion, we can talk to DOE, how does 
that work, would it improve it or not? What is the down side? 
We are just having this real abstract discussion here.
    And regulations I think are really important, and it can be 
really beneficial, so if they are not done right can have a lot 
of downside to them with no upside.
    Ms. Noll, how about you do you, what I am saying----
    Ms. Noll. I would be happy to do that. I would also 
encourage us to look at some of these where the process is 
working. And I think dishwashers is an example of that where 
DOE heard from industry and Congress granted them the authority 
to look at consumer utility and performance criteria for 
economic justification----
    Mr. Welch. That would be helpful.
    Ms. Noll. As an example of how it is working and how it is 
serving to protect consumers and also ensuring a balanced 
both--the impacts on manufacturers as well as the impacts on 
consumers and the environment and reducing our energy 
consumption.
    Mr. Welch. That makes sense. What about you, sir?
    Mr. Olson. The gentleman's time has expired. I am sorry, 
sir. We have to move on with votes coming up.
    I recognize the gentleman from West Virginia, Mr. McKinley 
for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman. And let me just 
build a little bit on some of the remarks that have been made 
earlier about credentials. Peter Welch and I have had a 
wonderful working relationship, we both chair the efficiency 
caucus, we put language into the current energy bill that we 
are waiting to see what is happen in the Senate. We have been 
to the White House for the energy efficiency bills. So this is 
something I think he and I grasp fairly well with this.
    Back when I was in private practice in engineering we 
designed some of the first LEED certified schools and office 
buildings in West Virginia. I am working with Tonko over in 
energy efficiency with the turbines to create electricity to 
make that more efficient. So energy efficiency is one of the 
prime areas that I like to play with and can get involved in 
here.
    But I get to a point, there are some vast differences and I 
want to play back on what my colleague and good friend Bobby 
Rush from Illinois was talking about, was the disparity of 
income when people were facing this, if you look at this, it 
poses a challenge for all of us. It really does for it.
    If you look at Mississippi my colleague from Harper from 
Mississippi, their median family income $36,000 a year. In 
Mississippi. $36,000 a year, but in Maryland, it is over 
$70,000 per family income. So in those affluent States or 
neighborhoods, they make choices, they have choices. You will 
probably if we went through the motor vehicle licensing we 
would find they probably have more BMWs and Lexus cars there 
then we have in some other areas of the country or in 
neighborhoods.
    So cars are going to be different because people have 
choices. We have housing, different pricing for housing because 
people have choices for that. We have health care. When you go 
to the exchanges under ObamaCare there are different exchanges 
so people have choices. But when it comes to their major 
consumer appliance, they don't.
    For your air conditioning, your refrigerator, your range, 
your dishwasher, your furnace all of these now have been 
mandated that this is the only one that they have available to 
them. I am troubled with that, because of the diversity of 
income, their capability of doing it, and don't tell me it is 
going to save my $500 a year, because we understand the pay 
back is so much longer on all of these.
    So I am wondering is there a suggestion you all could make 
that might make it more palatable for people to be able to have 
a choice so that they are not confronted with this hard 
decision? I know of families that are trying to fix anything, 
their equipment--to make it last as long as possible, because 
they know that they can't afford the cost of the new one. And 
so they are spending a lot of money in repairs because they 
don't have a choice. They know what the cost is. That air 
conditioning costs the same in Connecticut as it does in 
Mississippi, or that dishwasher.
    So what would you suggest that we in Congress could do to 
maybe ameliorate some of these differences a little bit so that 
the poorer communities or States that have trouble, how can 
they afford to have this cost? Can some of you--OK, Mr. Yurek.
    Mr. Yurek. Congressman, I think this is a really important 
issue. And I think it is bringing back the balance that was 
originally put out in the 40-year-old law where it says, 
technically feasible and economically justified.
    Right now the focus is too much on the technical 
feasibility in saying, hey, my manufacturers manufacture 
products everywhere from the Federal minimum to very high 
efficiency. Yes, we can go to the high efficiency but we need 
to look at the cost. And I think it is bringing that balance 
back to that economic justification in saying this law is 
intended to raise that floor slowly.
    People that have the incomes in Maryland and other places 
are going to purchase the things with all the different bells 
and whistles on that you are refrigerators, their dishwashers, 
their air conditioners and everything else. But there are a lot 
of people in this country when you look at the cost now of the 
minimum-efficient air conditioner, you are looking at $6,000 to 
$10,000 at a minimum, that is done in an unplanned time, 
because most of the time these units go out when it is the 
hottest day of the year, or the furnace when it is coldest day 
of the year.
    And the Federal Reserve just had a study last week that 
said over 47 percent of the American people have less than $400 
in emergency cash available to them. So what are they going to 
do? They need that comfort. In the wintertime they need the 
heat. A lot of times for medical reasons they need the cooling 
in the summer. And so it is bringing back that balance. 
Probably putting more of an emphasis on the economic 
justification.
    Mr. McKinley. Thank you. My time expired, but I will ask 
can each of the six of you mind putting a paper together saying 
what would you suggest that might be a solution to help out for 
families in depressed areas?
    Thank you very much, I yield back.
    Mr. Olson. The gentleman's time has expired. The Chair 
recognizes the gentleman from New York, Mr. Tonko, for 5 
minutes.
    Mr. Tonko. Thank you, Mr. Chairman. Thank you to our 
witnesses.
    Certainly we are citing a 40-year history here. And again 
to repeat what my colleague from Vermont indicated, we have to 
look at some of the trade situations too. Where offshoring of 
jobs might have helped some families retain those jobs and be 
able to afford these items. And this job loss thing I think is 
much more complex than just suggesting standards caused it.
    Our energy efficiency standards have improved products that 
benefit all of our constituents. Many of these are not luxury 
goods but necessities found in nearly every home. We have heard 
support for national efficiency standards from manufacturers 
and consumers and we have heard from industries from States 
from environmental groups that there is consensus that this 
program has been a success.
    I am certainly open to improving the program, but 
improvements cannot undermine the purpose of this program. And 
while we look for those improvements, we should not lose sight 
of the fact that this program is incredibly successful. While 
there have been a few contentious rules, it is my understanding 
that of the final rules issued since 2009, almost one-quarter 
were the result of negotiating consensus agreements and only 
five have been subject to litigation.
    So to our witnesses, do you agree many of these rules have 
been consensus driven?
    Mr. Yurek. Mr. Chairman, yes. Most of them as Ms. Noll 
said, 25 percent of the rules in this administration have been 
through the consensus process. That means 75 percent of those 
40 others have not. I think we all support and would encourage 
that negotiation consensus process because there is more of 
that give and take that Mr. Eckman talked about versus the 
notice in comment where you only have--the adversarial is much 
more adversarial versus a negotiation and I think that is 
something we should look at.
    Mr. Tonko. OK. And I think it is worth noting that DOE has 
a history of working to improve the program especially around 
increasing stakeholder engagement dating back to the 1990s.
    A few years ago DOE established as I understand the 
Appliance Standards Regulatory Advisory Committee which 
formalized the process for negotiated consensus rulemakings for 
the first time.
    A number of our witnesses participate on this committee 
which includes again manufacturers, trade associations, States 
and consumer groups. Can anyone comment on this committee's 
work and what it is as a--what it might be as a positive step 
to formalize this process? Mr. Eckman.
    Mr. Eckman. Yes. I think it has improved the process a lot 
particularly where there is a likelihood that both the 
manufacturers and efficiency advocates and the DOE agency 
personnel and consultants can come to a more flexible 
conclusion than would otherwise be provided.
    I think it has allowed for lots of horse trading that 
wouldn't occur, as Mr. Yurek said, under the standard process, 
the rulemaking hearings process and file your report. So I 
think it has been a huge advantage. I have been a member since 
the committee was established. We have had multiple work 
groups, seven different work groups so far on negotiating 
standards. They work the best when both the parties that want 
to participate in that come before the committee and say, we 
think we can work this out, give us a chance.
    If that is not possible or there is not really an issue, 
everybody thinks we can do this through rule and comment, that 
is a much more expedient processes it takes a lot of time and 
energy to do the negotiations as you are aware, but they turn 
out to be better rules as a consequence for everybody involved. 
And I think supporting that on a continuous basis, the ASRAC 
committee and process that has improved the process a lot.
    Mr. Tonko. Does anyone else----
    Ms. Noll. I would just to note on the 75 percent that 
weren't consensus or joint negotiations does not mean that they 
weren't going through the normal rulemaking process to deliver 
superior outcome. And only five of those rules have been 
litigated and I think that is still a very small number on the 
grand scheme of things.
    Mr. Tonko. OK. Thank you. Mr. Cosgriff?
    Mr. Cosgriff. Yes and to Mr. Yurek's point to follow it up 
a little bit, we are sitting around a table taking about 
technical things, you better have the technical chaps to have 
that conversation. And so in this highly quantified algorithm 
that ASRAC and DOE consultants use, I would like to see inside 
that. We have mathematicians, we can figure it out. I don't 
understand why we can't see what the key assumptions are and 
how those assumptions play inside the model that they are run 
through the computer.
    So one of the things we learned over the last 4 years I 
think is that that incoming tide has raised all the boats. This 
is a good news story, so now let's perfect it so let's do it in 
as scientific way as possible and as transparently as possible.
    Mr. Tonko. Thank you. Anyone else? McGuire?
    Mr. McGuire. Mr. Tonko I would say----
    Mr. Olson. I am sorry, the gentleman's time is expired. We 
have votes coming up, my friends so make it quick. I recognize 
the gentleman from Missouri, Mr. Long for 5 minutes.
    Mr. Long. Thank you, Mr. Chairman.
    And Mr. McGuire could you recommend to me what type of hair 
dryer would be the best purchase for my dishwasher so I could 
dry my dishes whenever the cycle is through?
    Mr. McGuire. I will provide it for the record.
    Mr. Long. My dishes are not feeling the burn as they once 
did.
    Mr. Cosgriff, in some of the testimony given today, the 
issue of the Department of Energy coordinating better with 
other agency was mentioned as an area for improvement, 
particularly in the area of making sure that imported products 
containing regulated components are held at the same standards 
as the domestically manufactured products are on their own. 
What are your thoughts on how we can ensure a level playing 
field for U.S. made components?
    Mr. Cosgriff. There would be a number of things. I think 
clearly it may not be DOE's responsibility, but it would be 
their responsibility to make sure that their fellow travelers 
principally, Customs and similar policing function are aware of 
what the standards are, what to be looking for.
    Mr. Long. Can you pull your mike a little closer?
    Mr. Cosgriff. I think industry has a role in that too. We 
should step up offer our technical expertise. There is other 
distributors would have a role in that, systems manufacturers 
will have a role in that. So it is not going to be one easy 
solution, but we don't want the products in the stream or in 
the system.
    Mr. Long. Well the energy conservation standards program 
required the Department of Energy to start a new rulemaking 
procedure on a product as part of 6-year review cycle. Can you 
tell me generally how long it takes to fully comply with the 
energy conservation standards for a product factoring in all of 
the cumulative rules, including test procedures?
    Mr. Cosgriff. Three years sticks in my mind, I think it 
would be different for different products, I mentioned lighting 
happens a little bit faster. If we are meeting a motor 
efficiency standard, that is a little more complex machine. So 
I think it is different.
    But assuming we have 3 years to get into compliance and 
then that gives you 3 years of run time before the next 
rulemaking kicks off and DOE tends to as you would expect, and 
as they should, start that rulemaking early so they are able to 
comply with the law when they get to 6 years.
    I would also point out in the covered products for NEMA, we 
know of only two times where the Department has chosen for the 
cost-benefit analysis to forego the rule.
    Mr. Long. What are some of the challenges in complying with 
both the energy conservation standards and additional test 
procedures?
    Mr. Yurek. Congressman, that is one of the interesting 
things that--the change when we made the serial rule part of 
the I think the 2005 amendments to EPCA, you have to review the 
standards every 6 years. And the requirement is review the test 
procedures every 7. And what we are starting to see in light of 
lot of our products, the test procedures aren't complete for 
the products that they are setting standards for.
    So as a matter of fairness don't even know what the test 
procedures can be and how our products will be measured. The 
information isn't there. And they are setting efficiency 
standards in minimum levels. And so, I think, the 
interrelationship is very important and we need to know what 
the rules are, be able to evaluate what those rules are through 
testing our products and providing that information to DOE 
before they start setting the next standard.
    And the same thing in the previous question Mr. Cosgriff, 
our products it is a 5-year implementation time from the 
standard being set and when it becomes effective. And it takes 
that entire time to do it. And so what we are seeing is that 
even before in some cases the standards are put into effect, we 
are seeing the next round, and we saw that with residential air 
conditioners. The standard went into effect January 2015. The 
fall of 2014 they already started discussing the next round of 
efficiency. So you are looking at increasing the efficiency 
standards on the equipment before the prior standard went into 
effect.
    Mr. Long. Welcome to Washington, DC. Mr. Cosgriff, do you 
care to comment on that as to what the challenges are?
    Mr. Cosgriff. It pretty much is, as Mr. Yurek said, it is 
going to take us some additional time depending upon the 
product.
    Mr. Long. Thank you. Mr. Chairman, I yield back.
    Mr. Olson. The gentleman yields back. The Chair recognizes 
the gentleman from North Carolina, Mr. Hudson for 5 minutes.
    Mr. Hudson. Thank you, Mr. Chairman and thank the panel for 
being here today, a very informative discussion.
    Mr. McGuire, which of your appliances have been regulated 
multiple times? I mean, do you believe we are reaching a point 
of diminishing marginal returns with this serial rulemaking?
    Mr. McGuire. Virtually all of our products have been 
regulated multiple times. The current refrigerator standard 
that has been in effect since last year is the fourth version 
of that standard, same for dishwashers. And the rule I 
mentioned proposed was the fifth revision.
    So we believe we hit the point of diminishing returns in 
the last tranche of standards that were negotiated through the 
consensus process. We think standards going forward for most 
our products not justified on the economics or the energy 
savings.
    Mr. Hudson. I appreciate that. Mr. Long asked one of the 
other panelists about the issue of having the DOE propose new 
standards for some products while the underlying test 
procedures are also changing, would you like to elaborate on 
how this is a problem for you?
    Mr. McGuire. It is a major issue because a manufacturer 
cannot tell what they have to do to comply with the new 
standard until they know how to test to it. So that is why the 
law said test procedures come first, but that process is a 
little out of whack right now.
    So we, in the case of portable air conditioners, we have 
had to comment on proposed standard before we knew what the 
final test procedure was. That is really impossible to do but 
that has what we are forced to do under the current process 
that is being employed.
    Mr. Hudson. Well that seems like it is not serving the best 
interest of the people either if we aren't getting the true 
assessment of the as a result of these tests. I obviously see 
why that is a mistake.
    Many of your manufacturers made several regulated products 
and face multiple rules. What is the challenge, maybe you can 
elaborate a little more it for your member companies in terms 
of complying with all these different requirements 
simultaneously, just in addition to the testing things we 
talked about but just elaborate on that?
    Mr. McGuire. The initial investment to gear up for a new 
standard is as Mr. Yurek and Cosgriff said, is quite an 
investment to understand the test procedure and get your 
products qualified. But ongoing, once a standard is in effect, 
a manufacturer has to test and certify those products with the 
Department of Energy. If you want your products to be Energy 
Star qualified, that requires a further up front test as well 
as ongoing testing of a certain percentage of your products.
    So that is a pretty significant testing burden for the 
manufacturers. And when the test procedures are under revision, 
it has to be very precise in order for you to design a product. 
What we have experienced also is that Energy Star sometimes 
will want a different test procedure than DOE requires for the 
standards.
    One of the benefits we found of negotiating the consensus 
process, is we would peg the Energy Star requirement to the 
standard requirement with the same test procedures so 
manufacturers can plan that out. But that hasn't always been 
the case, so these are processes that used to be employed, but 
haven't been across the board in recent years.
    Mr. Hudson. Thank you. Industry groups have repeatedly 
asked DOE to establish separate product categories for 
condensing and noncondensing covered products only to have DOE 
provide response that condensing and noncondensing equipment 
provide the same utility to consumers so there is no 
justification for establishing separate product categories. Is 
this another area that warrants an objective third-party 
review?
    Mr. Yurek. Congressman, what you are talking about is the 
famous furnace rule. And there again is related to technology.
    This equipment is at a point where you have condensing and 
noncondensing and there is cost differences is considerable 
between the two technologies. Right now we are at the highest 
level of noncondensing efficiency and the rulemaking is looking 
at making a condensing requirement.
    I think the groups--this would have been a rule that would 
have been great for negotiation, because we have seen over the 
years every rule that is come out has landed in litigation, and 
to see the groups come together and reach a solution would be a 
better solution.
    But right now we are in the midst of notice and comment, 
and I believe DOE has just issued their proposed rule to OMB 
for review, so we will see what happens there. But having two 
separate product classes for condensing and noncondensing does 
not look like it will be something that will be put forward.
    Mr. Hudson. I appreciate that.
    And Mr. Chairman, it looks like my time is about expired, 
so I will yield back.
    Mr. Olson. The gentleman yields back. The Chair recognizes 
the gentleman from Ohio, Mr. Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman, and I, too, want to 
thank the panel for joining us today. Thank you all. I know 
this is--you have been here awhile already.
    For Mr. McGuire, Mr. Cosgriff, and Mr. Yurek, how important 
is early stakeholder input in the rulemaking process? I mean, 
what are the additional challenges that you face when DOE 
issues a notice of proposed rulemaking without having consulted 
with you beforehand?
    Mr. McGuire, let's start with you.
    Mr. McGuire. I think it is very important from an 
effectiveness point of view. If the manufacturer hasn't had the 
ability to be in a dialogue with the Government about the 
proposal and how they except the efficiency requirements to be 
achieved, and do some testing, then you are really dealing in a 
vacuum.
    This is what happened with the proposed dishwasher rule. So 
it is very important. These are technical matters. It is very 
important that not only manufacturers are engaged early but all 
stakeholders. This ASRAC process does do that, but the ASRAC 
process is useful once the decision has been made that there 
will be a new standard.
    And so what we are talking about is changing the process 
for determining whether there should be a new standard. If 
there is going to be one, consensus is always the best. We feel 
we will do better. I think as the advocates feel, giving a 
give-and-take, putting the data on the table, and not wondering 
where the data came from.
    Mr. Johnson. Before we go any further, I really want you 
guys to get the dishwasher rule right. I am the dishwasher at 
my house, and if the dishwashers don't clean, I have got a real 
problem. So I mean, it is going to be double work for me, so 
Mr. Cosgriff, go ahead.
    Mr. Cosgriff. I certainly agree with what my colleague 
says, and I think what I have heard is--listening to this 
conversation is, at least by the manufacturers, this is not an 
assault on the standards. This is--we want the energy-efficient 
economy to thrive. It is good for business, as Elizabeth Noll 
pointed out. That said, it can be more transparent.
    The Department of Energy has some true experts in their 
field, but so do we, and it should be, as was stated, let's put 
the numbers on the table, and then let's bring in the business 
people and say, OK, the cost of efficiency improvement goes 
like that or goes like that, but the efficiency curve is almost 
flat. At some point, we got to call it off.
    Mr. Johnson. Got you. Thank you. Mr. Yurek.
    Mr. Yurek. I think it is very important because industry 
has the information that this rule is going to be based on it. 
It has information on what technology is available. It has 
information on the costs. It has information on the products 
that are being sold in there today, you know, both on the 
different efficiency levels. And so if that conversation 
doesn't occur, what is the regulator looking at to make its 
decision on is there significant energy savings? Can there be 
energy savings? And should we move forward with the rule?
    And so it is very necessary for that dialogue. And I think 
DOE would like to have that dialogue, but again, they are tied 
by what you as Congress has put in this act in the serial 
rulemakings where you are mandating these rules every 6 years, 
and they just don't have the time, you know, to do a lot of 
times everything they need to do or like to do to get these 
rules out and also meet the court order from the 2nd Circuit to 
make sure they meet all their deadlines.
    Mr. Johnson. OK. Let's continue with you, Mr. Yurek. The 
DOE has proposed new standards for some of your products while 
the underlying test procedure is also changing. Why is this a 
problem for you?
    Mr. Yurek. Congressman, it is a huge problem, as I stated 
earlier, in that we need to know what the rules are, how all 
our products can be measured. And again, it is getting DOE the 
right information. If the test procedures aren't set, how do 
they know how products are performing out in the field?
    Mr. Johnson. Is it safe to say it is pretty dadgum hard to 
innovate when you don't know what--how you are going to be 
measured at the end of the--end of this?
    Mr. Yurek. You don't know what the target is. You don't 
know what you are going to be measured on.
    Mr. Johnson. You don't know where you are going, any road 
to get you there?
    Mr. Yurek. Right.
    Mr. Johnson. OK. Mr. Chairman, I am going to yield back 45 
seconds.
    Mr. Olson. We thank the gentleman from Ohio.
    The Chair recognizes the gentleman from Oklahoma, Mr. 
Mullin for 5 minutes.
    Mr. Mullin. Thank you, sir, and thank you for having this 
meeting. You know, I will be honest with you, there is a few 
meetings that we have in here that I have to really study hard 
on because I am not familiar with it. This is, as I would say, 
in my wheelhouse.
    I understand this situation extremely well. And Ms. Noll, I 
am going to kind of just talk to you for probably the remainder 
of the time Because of a couple of things that you said, and I 
just kind of want to set the record straight. One, you said 
huge savings of these energy efficiency standards that DOE has 
put out, has put huge savings. That was your words, right? 
Based on what?
    Ms. Noll. Based on analysis.
    Mr. Mullin. What analysis?
    Ms. Noll. The analysis that ACEEE and Appliance Standards 
Awareness Project has done, as well as the Department of 
Energy's own analysis.
    Mr. Mullin. And I mean, are you really looking at bills and 
prices, because you said huge savings, and then you said up to 
$500 a year on energy costs. Is that correct?
    Ms. Noll. Correct
    Mr. Mullin. So in Oklahoma, the average household today, 
their total energy bill a year is $1,296. So you are saying 
that because of your savings, you know, that bill would have 
been $1,796. Is that right?
    Ms. Noll. Absent standards.
    Mr. Mullin. Yes. But yet if I go back and I look at 2008, 
the midline--just the midline Whirlpool dishwasher, the average 
use was about $29 a year is what that unit cost to run. At the 
same time, the cost of the unit was $375. Today, the same unit 
is $399, and it costs $32 a month to--or a year to run.
    Ms. Noll. The standards program has been in effect since 
1987, and recently----
    Mr. Mullin. I am just talking about--you said huge savings.
    Ms. Noll. Uh-huh.
    Mr. Mullin. So I am trying to figure out where the huge 
savings are from because right now, we are just talking about 
dishwashers. Well, dishwashers, we can see in the last 8 years, 
have actually went up. They cost more. So that is not a 
savings. And they cost more to run per year. So just give me an 
opportunity again, where is huge? If huge would be massive. I 
mean, I am thinking like big time, that is huge, your word. 
$500, I guess you could say that is huge, but I don't see it. 
That is the dishwasher. So I will give you the mic and let you 
go ahead and try to explain that for me.
    Ms. Noll. In my opinion, I think $2 trillion in savings to 
consumers is a lot of huge savings.
    Mr. Mullin. No, you say $2 trillion. I am just trying to 
figure out where the $2 trillion are. DOE comes in here and 
makes all these outlandish claims all the time, how much they 
are saving, you know, the mid-level households and all this 
stuff, and how much energy is down when energy cost is actually 
up, and then you are in here making claims that the household 
is saving money, and I am just not seeing it.
    If anybody on the panel can help me, let me know because I 
don't want to make a claim that is not true, and right now I am 
seeing a claim that is not true. Go ahead, Ms. Miller.
    Ms. Miller. I think it is a valid question to say what is 
this analysis based on, and I think to reiterate some of the 
other remarks made by other members of this panel, it is 
difficult to see where those claims come from in DOE's 
analysis.
    Mr. Mullin. Right.
    Ms. Miller. And if you are looking at dishwashers 
specifically, if you look at the standards that were finalized 
in 2012, they assumed, as you mentioned before, Mr. McGuire, 
that the payback period would be about 12 years, which is only 
as long as your dishwasher is going to last, and I think they 
assume that households would save on net $3.
    Mr. Mullin. Let me read you a manual for a startup, for a 
new dishwasher now. On top of it costing more to run, quote, 
this is out of the manual, says: ``Run hot water at sink 
nearest your dishwasher until water is hot. Turn off water. For 
best dishwasher results, water should be 120 degrees before it 
enters the dishwasher.''
    This is a new standards that we have to have out. So not 
only does it cost more to run, Ms. Noll, now we are having--we 
are wasting water, which this is a big issue nowadays. We 
always talk about water savings, especially let's go to 
California. Let's talk about California for a second. They are 
supposed to run--waste hot water and let it run, and this is 
the manual that comes for dishwashers now that says that.
    Refrigerators, let me use refrigerators real quick. 
Refrigerators in 2008, average Whirlpool refrigerator costs 
$999. That same unit comparable today is $1,299. Energy cost? 
Also up. Now, these are two major appliances. We are talking 
about a refrigerator. We are talking about a dishwasher.
    Where are the huge savings? DOE and the argument on all 
these energy-efficient appliances are always out there talking 
about huge savings, and American people think it is huge, and 
yet I gave you two examples of two----
    Mr. Rush. Time, Mr. Chairman.
    Mr. Mullin [continuing]. That it is----
    Mr. Olson. The gentleman's time is expired.
    Mr. Mullin. I yield back
    Mr. Olson. Thank you. Seeing no further witnesses seeking 
time, the Chair asks unanimous consent to enter for the record 
a multitude of statements on this subject matter from a number 
of agencies and concerned citizens.
    Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    In closing, the Chair wants to thank all the witnesses for 
your time and expertise and your insights as to how to use hair 
blow dryers to dry dishes in the dishwasher.
    The Chair reminds the members you have 5 legislative days 
to submit questions for the record and statements, EORs, 
statements for the record. Without objection, this hearing is 
adjourned.
    [Whereupon, at 11:43 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
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