[House Report 118-431]
[From the U.S. Government Publishing Office]


118th Congress   }                                      {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                      {      118-431

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



 
     PROTECTING AMERICA'S DISTRIBUTION TRANSFORMER SUPPLY CHAIN ACT

                                _______
                                

 March 26, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mrs. Rodgers of Washington, from the Committee on Energy and Commerce, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4167]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4167) to prohibit the Secretary of Energy from 
changing energy conservation standards for distribution 
transformers for a certain period, and for other purposes, 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Committee Action.................................................     3
Committee Votes..................................................     3
Oversight Findings and Recommendations...........................     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Congressional Budget Office Estimate.............................     6
Federal Mandates Statement.......................................     7
Statement of General Performance Goals and Objectives............     7
Duplication of Federal Programs..................................     7
Related Committee and Subcommittee Hearings......................     7
Committee Cost Estimate..........................................     8
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     8
Advisory Committee Statement.....................................     8
Applicability to Legislative Branch..............................     8
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............     9
Minority Views...................................................    10

                          PURPOSE AND SUMMARY

    H.R. 4167, the ``Protecting America's Distribution 
Transformer Supply Chain Act,'' was introduced by 
Representative Richard Hudson (R-NC) on June 15, 2023. This 
legislation would prohibit the Department of Energy (DOE) from 
imposing new efficiency standards for distribution transformers 
until five years after the date of enactment and maintain the 
current standards for distribution transformers that were 
published in 2013 as remaining in effect for the intervening 
period.

                  BACKGROUND AND NEED FOR LEGISLATION

    Pursuant to the Energy Policy and Conservation Act of 1975 
(EPCA), DOE is authorized to establish minimum energy 
efficiency standards for consumer appliances and equipment. 
Since the passage of EPCA, DOE has issued regulations for more 
than 60 products, representing about 90 percent of home energy 
use.\1\ Some of those products include dishwashers, dryers, 
washing machines, cooktop stoves, refrigerators, ceiling fans, 
furnaces, air conditioners, and light bulbs. The procedures DOE 
utilizes to issue efficiency standards were first formalized by 
the 1996 Process Rule.
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    \1\U.S. Department of Energy, Saving Energy & Money with Appliance 
and Equipment Standards in the U.S., (2017), https://www.energy.gov/
eere/buildings/articles/appliance-and-equipment-standards-fact-sheet.
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    In 2020, DOE finalized a rule to modernize the Process Rule 
in an effort to increase transparency, accountability, and 
regulatory certainty for the American people. In its 
justification for updating the Process Rule, DOE conducted an 
analysis which found that ``over the last three decades, 60 
percent of standards were projected to save 0.3 quads or more 
over 30 years, and those 60 percent of standards accounted for 
96 percent of total energy savings. The other 40 percent of 
standards, projected to save less than 0.3 quads, accounted for 
just 4 percent of total energy savings.''\2\
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    \2\https://www.energy.gov/articles/department-energy-issues-final-
process-rule-modernizing-procedures-consideration-energy.
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    In December 2021, DOE issued another final rule relating to 
the Process Rule, removing the recently-added requirement to 
conduct a comparative economic analysis of economic 
justification, and removing the threshold for determining when 
the significant energy savings criterion is met.\3\
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    \3\10 C.F.R. Part 40 (2021), https://www.regulations.gov/document/
EERE-2021-BT-STD-0003-0075.
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    On January 11, 2023, DOE issued a proposed rule that, if 
finalized, would raise the minimum efficiency standards for 
certain types of distribution transformers manufactured and 
sold into commerce. DOE has stated this may require switching 
to a new type of steel for one part of the transformer. Certain 
electric power trade groups have cited supply chain challenges 
that may impact the availability of this type of steel and 
suggested that DOE's proposed standards could negatively impact 
grid reliability. The Committee finds that DOE's proposed rule 
would not save a significant amount of energy, and it is not 
technically feasible or cost-effective.
    H.R. 4167, the ``Protecting America's Distribution 
Transformer Supply Chain Act,'' was introduced by Rep. Hudson 
(R-NC) on June 15, 2023. The legislation would prohibit DOE 
from imposing new efficiency standards for distribution 
transformers until 5 years after the date of enactment. Under 
the legislation, the current standards for distribution 
transformers that were published by DOE in 2013 would remain in 
effect in the intervening period of time.

                            COMMITTEE ACTION

    On September 13, 2023, the Subcommittee on Energy, Climate, 
and Grid Security held a hearing on H.R. 4167. The title of the 
hearing was ``Keeping the Lights On: Enhancing Reliability and 
Efficiency to Power American Homes.'' The Subcommittee received 
testimony from:
           Gene Rodrigues, Assistant Secretary for 
        Electricity, Office of Electricity, U.S. Department of 
        Energy;
           David Ortiz, Director, Office of Electric 
        Reliability, Federal Energy Regulatory Commission;
           Kevin Messner, Executive Vice President and 
        Chief Policy Officer, Association of Home Appliance 
        Manufacturers;
           B. Robert Paulling, President and Chief 
        Executive Officer, Mid-Carolina Electric Cooperative on 
        behalf of the National Rural Electrical Cooperatives 
        Association;
           Ben Lieberman, Senior Fellow, Competitive 
        Enterprise Institute; and,
           Andrew deLaski, Executive Director, 
        Appliance Standards Awareness Project.
    On October 24 and 25, 2023, the Subcommittee on Energy, 
Climate, and Grid Security met in open markup session and 
forwarded H.R. 4167, without amendment, to the full Committee 
by a record vote of 17 yeas and 13 nays.
    On December 5 and 6, 2023, the full Committee on Energy and 
Commerce met in open markup session and ordered H.R. 4167, 
without amendment, favorably reported to the House by a record 
vote of 24 yeas and 22 nays.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII requires the Committee to list the 
record votes on the motion to report legislation and amendments 
thereto. The following reflects the record votes taken during 
the Committee consideration:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 OVERSIGHT FINDINGS AND RECOMMENDATIONS

    Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII, the Committee held hearings and made findings that 
are reflected in this report.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII, the Committee 
finds that H.R. 4167 would result in no new or increased budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII, the following is 
the cost estimate provided by the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.R. 4167 would prohibit the Department of Energy (DOE) 
from proposing or implementing any rule that, within five years 
of enactment, amends energy conservation standards for 
distribution transformers as specified in a final rule that 
took effect in June 2013.\1\ (A distribution transformer is a 
device that provides the final voltage transformation in the 
electric power system.) Under current law, the Energy Policy 
and Conservation Act, as amended, authorizes DOE to regulate 
energy efficiency standards for various appliances and 
equipment, including distribution transformers.
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    \1\Department of Energy, ``Energy Conservation Program: Energy 
Conservation Standards for Distribution Transformers,'' 78 Fed. Reg. 
23336 (April 18, 2013), http://tinyurl.com/myup9abc.
---------------------------------------------------------------------------
    CBO is unaware of any proposed rules related to 
distribution transformers that would affect the federal budget. 
In addition, CBO does not expect that the bill's provisions 
would affect federal spending on programs related to 
distribution transformers, such as the Energy Efficient 
Transformer Rebates Program. On that basis, CBO estimates that 
implementing H.R. 4167 would not affect the federal budget.
    The CBO staff contact for this estimate is Aaron Krupkin. 
The estimate was reviewed by H. Samuel Papenfuss, Deputy 
Director of Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to ensure 
energy reliability by maintaining the current efficiency 
standards and prohibiting the DOE from imposing new efficiency 
standards for distribution transformers until five years after 
the date of enactment.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 4167 is known to be duplicative of another Federal 
program, including any program that was included in a report to 
Congress pursuant to section 21 of Public Law 111-139 or the 
most recent Catalog of Federal Domestic Assistance.

              RELATED COMMITTEE AND SUBCOMMITTEE HEARINGS

    Pursuant to clause 3(c)(6) of rule XIII, the following 
related hearings were used to develop or consider H.R. 4167:
           On June 16, 2023, the Subcommittee on 
        Energy, Climate, and Grid Security held a hearing. The 
        title of the hearing was ``Enhancing America's Grid 
        Security and Resilience.'' The Subcommittee received 
        testimony from:
                   William Ray, Director and Deputy 
                Homeland Security Advisor, Division of 
                Emergency Management, North Carolina Department 
                of Public Safety;
                   Mark Aysta, Managing Director, 
                Enterprise Security, Duke Energy;
                   Tim Ponseti, Vice President, 
                Operations, SERC Reliability Corporation; and,
                   Jordan Kern, Assistant 
                Professor, North Carolina State University, 
                Department of Industrial and Systems 
                Engineering.
           On September 13, 2023, the Subcommittee on 
        Energy, Climate, and Grid Security held a hearing on 
        H.R. 4167. The title of the hearing was ``Keeping the 
        Lights On: Enhancing Reliability and Efficiency to 
        Power American Homes.'' The Subcommittee received 
        testimony from:
                   Gene Rodrigues, Assistant 
                Secretary for Electricity, Office of 
                Electricity, U.S. Department of Energy;
                   David Ortiz, Director, Office of 
                Electric Reliability, Federal Energy Regulatory 
                Commission;
                   Kevin Messner, Executive Vice 
                President and Chief Policy Officer, Association 
                of Home Appliance Manufacturers;
                   B. Robert Paulling, President 
                and Chief Executive Officer, Mid-Carolina 
                Electric Cooperative on behalf of the National 
                Rural Electrical Cooperatives Association;
                   Ben Lieberman, Senior Fellow, 
                Competitive Enterprise Institute; and,
                   Andrew deLaski, Executive 
                Director, Appliance Standards Awareness 
                Project.
           On September 28, 2023, the Subcommittee on 
        Energy, Climate, and Grid Security held a hearing. The 
        title of the hearing was ``Powering America's Economy, 
        Security, and Our Way of Life: Examining the State of 
        Grid Reliability.'' The Subcommittee received testimony 
        from:
                   Gordon van Welie, President and 
                Chief Executive Officer, ISO New England;
                   Paul Suskie, Executive Vice 
                President of Regulatory Policy and General 
                Counsel, Southwest Power Pool;
                   Richard J. Dewey, President and 
                Chief Executive Officer, New York ISO;
                   Todd Ramey, Senior Vice 
                President, Markets and Digital Strategy, 
                Midcontinent ISO;
                   Woody Rickerson, Senior Vice 
                President and Chief Operating Officer, ERCOT;
                   Neil Millar, Vice President for 
                Infrastructure and Operations Planning, 
                California ISO; and,
                   Frederick S. Bresler III, Senior 
                Vice President of Market Services, PJM 
                Interconnection, LLC.

                        COMMITTEE COST ESTIMATE

    Pursuant to clause 3(d)(1) of rule XIII, the Committee 
adopts as its own the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974.

       EARMARK, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 4167 contains no earmarks, limited 
tax benefits, or limited tariff benefits.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 provides that the Act may be cited as the 
``Protecting America's Distribution Transformer Supply Chain 
Act.''

Section 2. Energy Conservation Standards for Distribution Transformers

    Section 2 would prohibit the DOE from imposing new 
efficiency standards for distribution transformers until five 
years after the date of enactment. Section 2 also would 
maintain the current standards for distribution transformers, 
which were published in 2013 as remaining in effect for the 
intervening period.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                             MINORITY VIEWS

    H.R. 4167, the Protecting America's Distribution 
Transformer Supply Chain Act H.R. 4167, the ``Protecting 
America's Distribution Transformer Supply Chain Act,'' would 
prohibit the Department of Energy (DOE) from proposing or 
finalizing energy efficiency standards for distribution 
transformers for five years. Committee Democrats strongly 
oppose this bill, as it would prevent DOE from finalizing a 
standard that would save Americans $15 billion.\1\
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    \1\Department of Energy, DOE Proposes New Efficiency Standards for 
Distribution Transformers (Dec. 28, 2022) (press release).
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    The Energy Policy and Conservation Act (EPCA) clearly 
requires DOE to re-examine its efficiency standards across a 
wide range of covered products no less than once every six 
years.\2\ Amendments made by the Energy Policy Act of 1992 made 
distribution transformers subject to EPCA's efficiency standard 
requirements,\3\ and DOE last finalized energy efficiency 
standards for distribution transformers in April 2013.\4\
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    \2\42 U.S.C. Sec.  6295.
    \3\Energy Policy Act of 1992 Sec. 124(a).
    \4\Department of Energy, Energy Conservation Standards for 
Distribution Transformers, 78 Fed. Reg. 23336 (June 17, 2013) (final 
rule).
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    During the Trump Administration, DOE ignored its statutory 
obligation under EPCA to either determine that efficiency 
standards for a given product did not need to be amended, or to 
promulgate new standards, triggering a lawsuit from 
environmental and consumer groups.\5\ DOE settled the lawsuit 
in September 2022, and agreed to new deadlines for a suite of 
covered products, including distribution transformers, to 
either publish a final determination that a new efficiency 
standard for a product would not be justified or publish a 
final rule containing a new efficiency standard for a covered 
product. In the settlement, DOE agreed to take final action on 
a rule or determination for distribution transformers by June 
30, 2024, over a decade after the previous standards were 
finalized, and over five years after the deadline set by 
EPCA.\6\ On January 11, 2023, DOE released a notice of proposed 
rulemaking for distribution transformer efficiency standards in 
the Federal Register.\7\
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    \5\National Resources Defense Council, Groups Sue Energy Dept. for 
Failure to Update 25 Overdue Efficiency Standards (Nov. 9, 2020) (press 
release).
    \6\National Resources Defense Council, DOE Settles Suit About 
Overdue Efficiency Updates (Sept. 20, 2022) (press release).
    \7\Department of Energy, Energy Conservation Standards for 
Distribution Transformers, 88 Fed. Reg. 1722 (Jan. 11, 2023) (proposed 
rule).
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    EPCA requires efficiency standards to be ``technologically 
feasible and economically justified.''\8\ DOE found that its 
proposed rule for distribution transformer standards satisfied 
those criteria and would generate approximately $15 billion in 
savings.\9\ However, the majority's report claims that ``DOE's 
proposed rule would not save a significant amount of energy, 
and it is not technically feasible or cost-effective.'' We are 
unaware of any data or analysis the committee received 
supporting this claim, and it directly contradicts testimony 
the Subcommittee on Energy, Climate, and Grid Security received 
in a September 13, 2023 hearing from DOE Assistant Secretary 
Gene Rodrigues, who testified that the proposed standards would 
reduce distribution transformer losses by over 20 percent while 
saving American households up to $1.5 billion per year.\10\ To 
address Republican concerns, Rep. John Sarbanes offered an 
amendment to H.R. 4167 during the full Committee markup of the 
bill that would have waived the applicability of the ban on new 
efficiency standards if the standards resulted in at least $5 
billion in net benefits--ensuring that any standard would be 
more than economically justified.\11\ Republicans voted the 
amendment down on a party-line vote.
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    \8\See note 2.
    \9\See note 1.
    \10\House Committee on Energy and Commerce, Testimony of Gene 
Rodrigues, Assistant Secretary for Electricity, U.S. Department of 
Energy, Hearing on Keeping the Lights on: Enhancing Reliability and 
Efficiency to Power American Homes, 118th Cong. (Sept. 13, 2023).
    \11\Amendment to H.R. 4167, 02XML, offered by Rep. Sarbanes, Dec. 
12, 2023, Full Committee Markup.
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    Rather than this effort that would cause American 
households to pay more, the Committee Republicans should be 
focused on increasing the supply of distribution transformers. 
Assistant Secretary Rodrigues testified that the bill would not 
increase the supply of distribution transformers and would do 
nothing to alleviate the existing supply chain issues. He did, 
however, testify about work that DOE is currently undertaking 
to relieve constraints in the distribution transformer supply 
chain, and that if granted additional resources and 
authorities, DOE would be able to do more.\12\ In response to 
that testimony, Rep. Schrier offered an amendment to H.R. 4167 
at Subcommittee markup that would have authorized DOE to 
establish ``a program to provide financial and technical 
assistance to domestic manufacturers to increase domestic 
production of distribution transformers, grid components, and 
electrical steel.''\13\ This authorization would have partnered 
with the Biden Administration's invocation of the Defense 
Production Act for distribution transformers,\14\ allowing the 
Administration to ease the sector's supply chain issues by 
manufacturing more transformers. Republicans voted the 
amendment down on a party-line vote.
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    \12\See note 10.
    \13\Amendment to H.R. 4167, SCN--03, offered by Rep. Schrier, Oct. 
24, 2023, Subcommittee on Energy, Climate, and Grid Security Markup.
    \14\The White House, Memorandum on Presidential Determination 
Pursuant to Section 303 of the Defense Production Act of 1950, as 
Amended, on Transformers and Electric Power Grid Components (June 6, 
2022) (press release).
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    For the reasons stated above, we dissent from the views 
contained in the Committee's report.
                                        Frank Pallone, Jr.,
                                                    Ranking Member.

                                  [all]