[Federal Register Volume 80, Number 223 (Thursday, November 19, 2015)]
[Proposed Rules]
[Pages 72373-72390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29435]


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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket No. EERE-2011-BT-CE-0077]
RIN 1904-AC68


Energy Conservation Program: Enforcement of Regional Standards 
for Central Air Conditioners

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The U.S. Department of Energy (DOE) is proposing requirements 
related to the enforcement of regional standards for central air 
conditioners, as authorized by the Energy Policy and Conservation Act 
(EPCA) of 1975.

DATES: DOE will accept comments, data, and information regarding this 
notice of proposed rulemaking (NOPR) no later than January 4, 2016.
    In compliance with the Paperwork Reduction Act, DOE is also seeking 
comment on a new information collection. See the Paperwork Reduction 
Act section under Procedural Issues and Regulatory Review, section 
III.C. Please submit all comments relating to information collection 
requirements to DOE no later than January 19, 2016. Comments to OMB are 
most useful if submitted within 45 days of publication.

ADDRESSES: Any comments submitted must identify the NOPR for 
Enforcement of Regional Standards for Central Air Conditioners and 
provide docket number EERE-2011-BT-CE-0077 and/or regulatory 
information number (RIN) 1904-AC68. Comments may be submitted using any 
of the following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: [email protected] Include the 
docket number and/or RIN in the subject line of the message.
    3. Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building 
Technologies Program, Mailstop EE-2J, 1000 Independence Avenue SW., 
Washington, DC 20585-0121. If possible, please submit all items on a 
CD. It is not necessary to include printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD. It is not necessary to include printed 
copies.
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at regulations.gov. All 
documents in the docket are listed in the regulations.gov index. 
However, some documents listed in the index, such as those containing 
information that is exempt from public disclosure, may not be publicly 
available. The docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-CE-0077.
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact Ms. Brenda Edwards at (202) 586-2945 or by email: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Ashley Armstrong, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Program, EE-5B, 1000 Independence Avenue SW., Washington, 
DC 20585-0121. Telephone: 202-586-6590. Email: 
[email protected].
    Laura Barhydt, U.S. Department of Energy, Office of the General 
Counsel, GC-32, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 287-5772. Email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Authority and Background
    A. Authority
    B. Background
II. Discussion
    A. Regional Standards
    B. Definitions
    C. Public Awareness
    D. Reporting
    E. Proactive Investigation
    F. Record Retention and Requests
    G. Violations and Routine Violations
    H. Remediation
    I. Labeling
    J. Manufacturer Liability
    K. Additional Prohibited Acts for Distributors, Contractors and 
Dealers
    L. Summary Table
    M. Impact of Regional Enforcement Proposal on National Impacts 
Analysis
III. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act of 1995
    D. Review Under the National Environmental Policy Act of 1969

    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988

[[Page 72374]]

    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under Treasury and General Government Appropriations 
Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under Section 32 of the Federal Energy Administration 
Act of 1974
IV. Public Participation
    A. Submission of Comments
    B. Issues on Which DOE Seeks Comment
V. Approval of the Office of the Secretary

I. Authority and Background

A. Authority

    Title III of the Energy Policy and Conservation Act of 1975, as 
amended (``EPCA'' or, in context, ``the Act'') sets forth a variety of 
provisions designed to improve energy efficiency.\1\ Part A of Title 
III (42 U.S.C. 6291-6309) establishes the ``Energy Conservation Program 
for Consumer Products Other Than Automobiles.'' These consumer products 
include central air conditioners, which are the subject of this rule. 
(42 U.S.C. 6295(d))
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    \1\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 114-11 (Apr. 30, 2015).
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    Under EPCA, this program consists essentially of four parts: (1) 
Testing; (2) labeling; (3) Federal energy conservation standards; and 
(4) certification and enforcement procedures. The Federal Trade 
Commission (FTC) is primarily responsible for labeling consumer 
products, and DOE implements the remainder of the program.
    Pursuant to EPCA, any new or amended energy conservation standards 
for covered consumer products must be designed to achieve the maximum 
improvement in energy efficiency that are technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new 
or amended standard must result in significant conservation of energy. 
(42 U.S.C. 6295(o)(3)(B)) The Energy Independence and Security Act of 
2007 (EISA 2007) amended EPCA to require that DOE consider regional 
standards for certain products if the regional standards can save 
significantly more energy than a national standard and are economically 
justified. (42 U.S.C. 6295(o)(6)(A)) Under EPCA, DOE is authorized to 
establish up to two additional regional standards for central air 
conditioners and heat pumps. (42 U.S.C. 6295(o)(6)(B)(ii)) DOE must 
initiate an enforcement rulemaking after DOE issues a final rule that 
establishes a regional standard. (42 U.S.C. 6295(o)(6)(G)(ii)(I)) DOE 
must also issue a final rule for enforcement after DOE issues a final 
rule that establishes a regional standard. (42 U.S.C. 
6295(o)(6)(G)(ii)(III))

B. Background

    On June 27, 2011, DOE promulgated a Direct Final Rule (June 2011 
DFR) that, among other things, established regional standards for 
central air conditioners. 76 FR 37408. DOE subsequently published a 
notice of effective date and compliance date for the June 2011 DFR on 
October 31, 2011, setting a standards compliance for central air 
conditioners and heat pumps of January 1, 2015. 76 FR 67037.
    As required by EPCA, DOE initiated an enforcement rulemaking by 
publishing a notice of data availability (NODA) in the Federal Register 
that proposed three approaches to enforcing regional standards for 
central air conditioners. 76 FR 76328 (December 7, 2011). DOE received 
numerous comments expressing a wide range of concerns in response to 
this NODA. Consequently, on June 13, 2014, DOE published a notice of 
intent to form a working group to negotiate regulations for the 
enforcement of regional standards for central air conditioners and 
requested nominations from parties interested in serving as members of 
the Working Group. 79 FR 33870. On July 16, 2014, the Department 
published a notice of membership announcing the eighteen nominations 
that were selected to serve as members of the Working Group, in 
addition to two members from Appliance Standards and Rulemaking Federal 
Advisory Committee (ASRAC), and one DOE representative.\2\ 79 FR 41456. 
The members of the Working Group were selected by ASRAC to ensure a 
broad and balanced array of stakeholder interests and expertise, and 
included efficiency advocates, manufacturers, utility representatives, 
contractors, and distributors. Id.
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    \2\ The list of members is published in Table II.1.
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    As required, the Working Group submitted a final report to ASRAC on 
October 24, 2014, summarizing the group's recommendations 
for DOE's rule for enforcement of regional standards for central air 
conditioners. Working Group Recommendations, No. 70.\3\ The 
recommendations included a statement that the nongovernmental 
participants conditionally approved the recommendations contingent upon 
the issuance of the final guidance (See No. 89 and No. 90 for the draft 
versions) consistent with the understanding of the Working Group as set 
forth in these recommendations. Working Group Recommendations, No. 70 
at 37. ASRAC subsequently voted to approve these recommendations on 
December 1, 2014. ASRAC Meeting Transcript, No. 73 at 42-43. In this 
document, DOE is proposing to adopt the Working Group's 
recommendations. Working Group Recommendations, No. 70.
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    \3\ A notation in this form provides a reference for information 
that is in the docket for this rulemaking (Docket No. EERE-2011-BT-
CE-0077), which is maintained at www.regulations.gov. This notation 
indicates that the statement preceding the reference is from 
document number 70 in the docket.
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    After consideration of the comments received in response to the 
guidance documents, DOE determined that regulatory changes were 
necessary to implement the approach agreed to by the Working Group. 
Accordingly, DOE has proposed changes to the unit selection and testing 
requirements in a parallel test procedure rulemaking (CAC TP SNOPR). 80 
FR 69278 (November 9, 2015). DOE reaffirms its commitment to the 
approach advocated by the Working Group, subject to consideration of 
comments received in this and the test procedure rulemaking.

II. Discussion

    Between August 13, 2014, and October 24, 2014,\4\ the Working Group 
held fourteen full public meetings in Washington, DC, primarily at the 
DOE headquarters.\5\ Thirty-seven interested parties, including members 
of the Working Group, attended the various meetings. Table II.1 lists 
the entities that attended the Working Group meetings and their 
affiliation. The Working Group's recommendations for enforcement of the 
regional standards for central air conditioners are presented in this 
proposed rule. A more detailed discussion of the recommendations can be 
found in the Working Group meeting transcripts.\6\
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    \4\ The Working Group met on August 13, 2014; August 14, 2014; 
August 26, 2014; August 27, 2014; August 28, 2014; September 3, 
2014; September 4, 2014; September 24, 2014; September 25, 2014; 
October 1, 2014; October 2, 2014; October 15, 2014; October 16, 
2014; and October 24, 2014.
    \5\ Due to conflicts at DOE, the August 27th meeting took place 
at ACEEE's office in Washington, DC.
    \6\ Docket Folder, Energy Conservation Program: Enforcement of 
Regional Standards for Residential Furnaces and Central Air 
Conditioners and Heat Pumps, http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-CE-0077 (last visited Aug. 26, 2015).

[[Page 72375]]



                                         Table II.1--Interested Parties
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                                                                                                  Working group
                 Name                            Acronym                Organization type         membership (Y/
                                                                                                        N)
----------------------------------------------------------------------------------------------------------------
Air Conditioning Contractors of         ACCA....................  Contractor Association.......               Y
 America.
Air Conditioning, Heating, and          AHRI....................  Manufacturer Trade                          Y
 Refrigeration Institute.                                          Association.
Allied Air Enterprises................  Allied Air..............  Manufacturer.................               Y
American Council for an Energy-         ACEEE...................  Energy Efficiency Advocacy                  Y
 Efficient Economy.                                                Group.
American Public Gas Association.......  APGA....................  Utility Association..........  ...............
California Energy Commission..........  CEC.....................  California State Government                 Y
                                                                   Agency.
California Investor Owned Utilities...  CA IOUs.................  Utility Association..........  ...............
Carrier Corporation...................  Carrier.................  Manufacturer.................               Y
Daikin Corporation....................  Daikin..................  Manufacturer.................  ...............
EarthJustice..........................  ........................  Energy Efficiency Advocacy                  Y
                                                                   Group.
Edison Electric Institute.............  EEI.....................  Utility Association..........  ...............
Emerson...............................  ........................  Manufacturer.................  ...............
First Co..............................  ........................  Manufacturer.................  ...............
Goodman Global, Inc...................  Goodman.................  Manufacturer.................               Y
Scott Harris*.........................  ........................  Appliance Standards and                     Y
                                                                   Rulemaking Federal Advisory
                                                                   Committee (ASRAC).
Heating, Air-conditioning and           HARDI...................  Distributor Trade Association  ...............
 Refrigeration Distributors
 International.
Ingersoll Rand........................  ........................  Manufacturer.................               Y
Johnson Controls Inc..................  JCI.....................  Manufacturer.................               Y
Johnstone Supply......................  ........................  Distributor..................               Y
Lennox International, Inc.............  Lennox..................  Manufacturer.................  ...............
Lincoln Electric Cooperative..........  ........................  Utility......................               Y
McDermott Will & Emery................  ........................  Law Firm.....................  ...............
Mortex Products, Inc..................  Mortex..................  Manufacturer.................  ...............
National Association of Home Builders.  NAHB....................  Trade Association............  ...............
National Comfort Products.............  ........................  Manufacturer.................  ...............
National Consumer Law Center*.........  ........................  Consumer Advocacy Group......               Y
National Rural Electric Cooperative     NRECA...................  Utility Association..........  ...............
 Association.
Natural Resources Defense Council.....  NRDC....................  Energy Efficiency Advocacy                  Y
                                                                   Group.
New York State Office of Attorney       ........................  Government Agency............  ...............
 General.
NORDYNE Inc...........................  NORDYNE.................  Manufacturer.................               Y
Pacific Gas and Electric Company......  PG&E....................  Utility......................               Y
Plumbing-Heating-Cooling Contractors--  PHCC....................  Contractor Association.......               Y
 National Association.
Pacific Northwest National Laboratory.  PNNL....................  U.S. Government Research       ...............
                                                                   Laboratory.
Regal-Beloit Corporation..............  Regal-Beloit............  Manufacturer.................  ...............
Rheem Manufacturing Company...........  Rheem...................  Manufacturer.................               Y
Unico, Inc............................  Unico...................  Manufacturer.................  ...............
Xcel Energy*..........................  ........................  Utility Association..........               Y
----------------------------------------------------------------------------------------------------------------
* Withdrew from working group.

A. Regional Standards

    As discussed in section I.B, DOE adopted regional standards for 
central air conditioners in its June 2011 DFR. That rule set regional 
standards for split-system central air conditioners and single-package 
central air conditioners. 10 CFR 430.32(c). A split-system central air 
conditioner is a type of air conditioner that has one or more of its 
major assemblies separated from the others. Typically, the air 
conditioner has a condensing unit (``outdoor unit'') that is separate 
from the evaporator coil and/or blower (``indoor unit''). Accordingly, 
a split-system condensing unit is often sold separately from the indoor 
unit and may be matched with several different models of indoor units 
and/or blowers. For this reason, a condensing unit could achieve a 14 
SEER or above if it is paired with certain indoor units and/or blowers 
and could perform below 14 SEER when paired with other indoor units 
and/or blowers.
    The Working Group suggested the regional standards required 
clarification because a particular condensing unit may have a range of 
efficiency ratings when paired with various indoor evaporator coils 
and/or blowers. The Working Group provided the following four 
recommendations to clarify the regional standards: that (1) the least 
efficient rated combination for a specified model of condensing unit 
must be 14 SEER for models installed in the Southeast and Southwest 
regions; (2) the least efficient rated combination for a specified 
model of condensing unit must meet the minimum EER for models installed 
in the Southwest region; (3) any condensing unit model that has a 
certified combination that is below the regional standard(s) cannot be 
installed in that region; and (4) a condensing unit model certified 
below a regional standard by the original equipment manufacturer cannot 
be installed in a region subject to a regional standard(s) even with an 
independent coil manufacturer's indoor coil or air handler combination 
that may have a certified rating meeting the applicable regional 
standard(s). Working Group Recommendations, No. 70 at 4.
    DOE is proposing to adopt these recommendations as part of this 
NOPR and requests comment on these recommendations. DOE notes that the 
test procedure supplemental notice of proposed rulemaking (CAC TP 
SNOPR) proposes multiple regulatory changes necessary to implement 
these recommendations. See the CAC TP

[[Page 72376]]

SNOPR for those detailed proposals. 80 FR 69278. In addition, DOE has 
proposed two alternatives to implement the clarification with respect 
to the standards. In this rulemaking, DOE proposes to specify that any 
condensing unit model that has a certified combination with a rating 
below 14 SEER cannot be installed in the Southeast and Southwest United 
States. To clarify responsibility with respect to split-system air 
conditioners, this rulemaking proposes that a condensing unit model 
certified below 14 SEER by the outdoor unit manufacturer cannot be 
installed in those regions even if an independent coil manufacturer 
certifies an indoor coil or air handler combination with that outdoor 
unit with a rating at or above 14 SEER. In contrast, in the test 
procedure rulemaking, DOE proposes to specify that the least efficient 
combination of each basic model must comply with the regional standard, 
but provides additional parameters regarding what combinations are 
permitted to be certified. See, e.g., 80 FR 69278 at 69290. The 
approach taken in this rulemaking relies less on some of the other 
regulatory changes that are necessary to implement the policies the 
Working Group advocated with respect to the guidance documents; the 
approach taken in the test procedure rulemaking would require the 
additional regulatory changes with respect to unit selection and 
testing. DOE requests comment on the two approaches, whether interested 
parties consider one approach to be easier to understand, and what the 
pros or cons may be of the two alternatives.

B. Definitions

    EPCA prohibits manufacturers from selling to ``distributors, 
contractors, or dealers that routinely violate the regional 
standards.'' (42 U.S.C. 6302(a)(6)) EPCA defines a distributor as a 
person (other than a manufacturer or retailer) to whom a consumer 
appliance product is delivered or sold for purposes of distribution in 
commerce. (42 U.S.C. 6291(14))
    Because neither EPCA nor existing DOE regulations define the terms 
``contractor'' and ``dealer,'' the Working Group recommended the 
following definitions to further clarify the prohibited act:
    Contractor means a person \7\ (other than the manufacturer or 
distributor) who sells to and/or installs for an end user a central air 
conditioner subject to regional standards.
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    \7\ DOE defines ``person'' as ``any individual, corporation, 
company, association, firm, partnership, society, trust, joint 
venture or joint stock company, the government, and any agency of 
the United States or any State or political subdivision thereof.'' 
(10 CFR 430.2)
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    Dealer means a type of contractor, generally with a relationship 
with one or more specific manufacturers.
    The Working Group further requested DOE make clear that in the 
context of the definition of ``contractor,'' the term ``end user'' 
means the entity that purchases or selects for purchase the central air 
conditioner. Some examples of typical ``end users'' are homeowners, 
building owners, building managers, and property developers.
    Additionally, the Working Group recommended that DOE define the 
term ``installation'' as:
    Installation of a central air conditioner means the connection of 
the refrigerant lines and/or electrical systems to make the central air 
conditioner operational.
    In this NOPR, DOE proposes to adopt the Working Group's recommended 
definitions for these three terms and requests comments on these 
definitions. DOE also proposes to codify the definition of 
``distributor.''
    The Working Group requested that DOE make explicit in this proposed 
rule that, depending upon their particular conduct, parties conducting 
internet sales may be considered a contractor or distributor under the 
proposed definitions. Specifically, internet sellers that sell to 
contractors or dealers meet the definition of a ``distributor,'' while 
internet sellers that sell directly to home owners would qualify as 
``contractors.'' Further, retailers who sell central air conditioners 
directly to homeowners would also fit within the definition of a 
``contractor.''
    While not specifically discussed by the Working Group, it is also 
of note that some internet sellers will be considered manufacturers if 
they are the importers of the product they are selling via the 
internet. Pursuant to EPCA, the term ``manufacturer'' includes 
importers. (42 U.S.C. 6291(10), (12)) Those parties that import 
products subject to regional standards are expected to meet the 
regulatory obligations of manufacturers.
    In their discussion of definitions, members of the Working Group 
also raised the point that some manufacturers distribute their own 
product. DOE clarified that, consistent with EPCA's definitions of 
``manufacturer'' and ``distributor,'' if a manufacturer distributes its 
own product, then the company (the manufacturer-owned or ``factory 
owned'' distributor) is considered to be a manufacturer rather than a 
distributor.
    Since DOE received the recommendations of the Working Group from 
ASRAC, DOE has received questions about the applicability of the 
regional standards to private labelers. The Working Group did not 
address this issue. The statutory prohibited acts treat manufacturers 
and private labelers in the same way. (42 U.S.C. 6302(a)(6) (making it 
unlawful for ``any manufacturer or private labeler to knowingly sell a 
product to a distributor, contractor, or dealer with knowledge that the 
entity routinely violates any regional standard applicable to the 
product.'')) DOE notes that, although private labelers are liable for 
distribution in commerce of noncompliant products generally, DOE does 
not require private labelers to submit certification reports unless the 
private labeler is also the importer. Therefore, DOE believes that it 
may not be necessary for exactly the same requirements to apply to 
private labelers. Consequently, DOE is proposing that the same 
requirements apply to private labelers as discussed in more detail 
throughout this notice. However, DOE requests comment on whether these 
proposed requirements should be the same or whether different 
requirements should apply. DOE may adopt the same requirements as 
proposed today or some variation for private labelers in the final rule 
as a result of comments received.

C. Public Awareness

    The Working Group discussed the importance of public education to a 
successful enforcement program for central air conditioner regional 
standards. The Working Group recommended DOE establish a Web page with 
information on regional standards for central air conditioners that 
could be referenced by manufacturers, distributors, contractors, and 
other interested parties. As recommended, DOE established a Web page 
about enforcement of regional standards which can be found at http://www.energy.gov/gc/enforcement.
    The Working Group also opined on the need to deliver a consistent 
message to central air conditioner consumers and contractors about the 
regional standards. The Working Group recommended that DOE provide 
public educational materials that manufacturers and distributors could 
provide their customers. Accordingly, DOE is posting links from its Web 
page for regional standards to two different documents: (1) A printable 
trifold tailored to provide information to consumers and (2) and a 
printable flier to educate

[[Page 72377]]

contractors and answer common questions.
    Beyond creating a regional standards Web page, the Working Group 
recommended DOE conduct a public presentation (accessible via internet 
as well as in-person) on regional standards for central air conditioner 
standards and the enforcement of such standards to educate stakeholders 
and the public on these regulations. The Department will issue a Notice 
of Public Meeting announcing its presentation on regional standards 
after the issuance of a final rule and will post the slides from the 
presentation to this docket and on the regional standards Web page.
    The Working Group also recommended that all information sources--
the Web page, trifold, flier, and presentation--should include 
information, including email links, on how to report suspected 
violations of the regional standards for central air conditioners.
    Finally, the Working Group recommended that central air conditioner 
manufacturers provide training about regional standards to distributors 
and contractors/dealers. Distributors and contractors also agreed to 
conduct their own training on regional standards. The Working Group did 
not establish specific guidelines for the training.

D. Reporting

    The Working Group discussed methods for facilitating the reporting 
of suspected regional standards violations and recommended that the 
Department provide multiple pathways for the public to report such 
information. Specifically, the Working Group recommended that DOE 
accept complaints regarding central air conditioners regional standards 
from both an email address and call-in number. As requested, the 
Department will accept reports of suspected violations of the regional 
central air conditioner standards that are received via the email 
address: [email protected] or phone number: 202-
287-6997. DOE committed to look into all credible complaints, meaning 
DOE will follow up on all complaints that provide a reasonable amount 
of information to the Department. The Working Group emphasized, and DOE 
affirmed, that the complainant will have confidentiality to the maximum 
extent authorized by law.

E. Proactive Investigation

    In addition to responding to reports of noncompliance with the 
regional standards, the Working Group recommended that the Department 
consider conducting proactive investigations. Specifically, the Working 
Group recommended that, if funding is available, DOE consider 
conducting a survey of homes in any region of the United States to 
determine if a central air conditioner not in compliance with the 
regional standards has been installed. DOE, as a member of the Working 
Group, agreed to consider proactive investigations if funding for such 
investigations is available.

F. Record Retention and Requests

    To ensure that the Department is able to obtain sufficient 
information to establish a noncompliant installation and the relevant 
parties, the Working Group recommended that manufacturers, dealers, and 
contractors retain records detailing specific information about central 
air conditioner sales and installations. The Working Group recommended 
the following records retention scheme.
    Beginning 30 days after the issuance of a final rule, a 
manufacturer must retain:
     For split-system central air conditioner condensing units: 
the model number, serial number, date of manufacture, date of sale, and 
party to whom the unit was sold (including person's name, full address, 
and phone number);
     For split-system central air conditioner indoor coils or 
air handlers (not including uncased coils sold as replacement parts): 
the model number, date of manufacture, date of sale, and party to whom 
the unit was sold (including person's name, full address, and phone 
number); and
     For single-package central air conditioners: the model 
number, serial number, date of manufacture, date of sale, and party to 
whom the unit was sold (including person's name, full address, and 
phone number).
    Beginning November 30, 2015, a distributor must retain:
     For split-system central air conditioner condensing units: 
the manufacturer, model number, serial number, date the unit was 
purchased from the manufacturer, party from whom the unit was purchased 
(including person's name, full address, and phone number), date unit 
was sold to a dealer or contractor, party to whom the unit was sold 
(including person's name, full address, and phone number), and, if 
delivered to the purchaser, the delivery address; and
     For single-package central air conditioners: the 
manufacturer, model number, serial number, date the unit was purchased 
from the manufacturer, party from whom the unit was purchased 
(including person's name, full address, and phone number), date unit 
was sold to dealer or contractor, party to whom the unit was sold 
(including person's name, full address, and phone number), and, if 
delivered to the purchaser, the delivery address.

For all installations in the Southeast and Southwest, beginning 30 days 
after issuance of a final rule in this rulemaking, contractors must 
retain:
     For split-system central air conditioner condensing units: 
the manufacturer name, model number, serial number, location of 
installation (including street address, city, state, and zip code), 
date of installation, and party from whom the unit was purchased 
(including person's name, full address, and phone number);
     For split-system central air conditioner indoor coils or 
air handlers (not including uncased coils sold as replacement parts): 
the manufacturer name, model number, location of installation 
(including street address, city, state, and zip code), date of 
installation, and party from whom the unit was purchased (including 
person's name, full address, and phone number); and
     For single-package central air conditioners: the 
manufacturer name, model number, serial number, location of 
installation (including street address, city, state, and zip code), 
date of installation, and party from whom the unit was purchased 
(including person's name, full address, and phone number).

See 2013-BT-NOC-0005, No. 30 at 14-16.
    The Working Group recommended that contractors retain records for 
48 months after the date of installation, distributors retain records 
for 54 months after the date of sale, and manufacturers retain records 
for 60 months after the date of sale. The Working Group explicitly 
noted that retaining records allows each entity to archive records as 
long as they are not deleted or disposed of. The Working Group also 
clarified that the records retention requirements neither mandate that 
contractors, distributors, or manufacturers create new forms for the 
purpose of tracking central air conditioners nor require records to be 
electronic. See 2013-BT-NOC-0005, No. 30 at 17-18. DOE proposes to 
adopt these record retention requirements as with a few minor 
modifications and requests comment on these requirements.
    DOE proposes two modifications to the recommendations of the 
Working Group. First, due to the delay issuing this notice of proposed 
rulemaking, DOE proposes that distributors be

[[Page 72378]]

required to retain records as of July 1, 2016. Second, after extensive 
discussion, the working group recommended that DOE refer to ``indoor 
coils or air handlers'' with respect to the record retention 
requirements for split-system air conditioners. DOE proposes, instead, 
to use the term ``indoor unit'' to reflect the term proposed in DOE's 
recent CAC TP SNOPR. See 80 FR 69278 at 69284. At the time of the 
negotiation, DOE had no regulatory term that embodied the concept the 
Working Group sought to describe. If ``indoor unit'' is adopted in the 
test procedure final rule, then its use in the context of this 
rulemaking would conform to the concept the Working Group described 
while ensuring consistency within the DOE regulations.
    Although not discussed by the Working Group, DOE recognizes that 
some internet sellers may perform the role of contractor or 
distributor, depending on who is purchasing the product. DOE proposes 
that those entities will have to keep records consistent with the 
requirements of the transaction, for the length of time required for 
that transaction.
    To limit the potential of burden associated with producing records 
at the request of the Department, the Working Group recommended that 
DOE must have a reasonable belief a violation occurred before 
requesting records. DOE will determine if it has reasonable belief by 
assessing a variety of factors, such as:
     Whether it has an address of a suspected noncompliant 
installation or attempted installation;
     Whether it has identifying information for an installed 
unit;
     Whether it has physical evidence (e.g., a picture of a 
noncompliant condensing unit and its nameplate, copy of EnergyGuide 
label, copy of completed work order or invoice, bill of sale for 
equipment, copy of bid for installation, distributor prepared price 
book);
     Whether there have been repeat complaints about the party; 
or
     Whether the complainant has a history of filing complaints 
of violations that have been substantiated by the Department through 
investigation.
    Once DOE determines it has a reasonable belief, then it may request 
records from relevant manufacturers, distributors, and contractors. 
Records must be produced within 30 days of a request by the Department. 
However, DOE may, at its discretion, grant additional time for 
production of records if the affected entity makes a good faith effort 
to produce records within 30 days. To receive this extra time, the 
entity, after working to gather the records within the 30 days, must 
provide DOE all the records gathered and a written explanation for the 
need for additional time including the requested date for completing 
the records request.
    DOE proposes to adopt the Working Group's recommendations for 
records requests. The Department requests comment on the threshold for 
records requests and the proposed timeframe for responding to such 
requests.

G. Violations and Routine Violations

    As mentioned above, it is unlawful for any manufacturer to 
knowingly sell to a distributor, contractor, or dealer with knowledge 
that the entity routinely violates any regional standard applicable to 
the product. (42 U.S.C. 6302(a)(6), 10 CFR 430.102(a)(10)) To clarify 
this prohibited act, the Working Group discussed what activities would 
constitute a violation by a distributor, contractor or dealer. For a 
distributor, the Working Group agreed that it would be a violation to 
knowingly sell a product to a contractor or dealer with knowledge that 
the entity will sell and/or install the product in violation of any 
regional standard applicable to the product. Additionally, it would be 
a violation for a distributor to knowingly sell a product to a 
contractor or dealer with knowledge that the entity routinely violates 
any regional standard applicable to the product. For contractors, the 
Working Group agreed it would be a violation to knowingly sell to and/
or install for an end user a central air conditioner subject to 
regional standards with knowledge that such product would be installed 
in violation of any regional standard applicable to the product.
    To further clarify what constituted an installation of a central 
air conditioner in violation of an applicable regional standard, the 
Working Group agreed that:
    (1) A person cannot install a complete central air conditioner 
system--meaning the condensing unit and evaporator coil and/or blower--
unless it has been certified as a complete system that meets the 
applicable standard. A previously discontinued combination may be 
installed as long as the combination was previously validly certified 
to the Department as compliant with the applicable regional standard 
and the combination was not discontinued because it was found to be 
noncompliant with the applicable standard(s);
    (2) a person cannot install a replacement condensing unit unless it 
is certified as part of a combination that meets the applicable 
standard; and
    (3) a person cannot install a condensing unit that has a certified 
combination with a rating that is less than the applicable regional 
standard.
    To determine if a violation occurred, the Department will conduct 
an investigation into the alleged misconduct. In a typical 
investigation, DOE may discuss the installation in question with the 
end user or the homeowner and other relevant parties, including the 
alleged violator. DOE may also request records from the dealer, 
contractor, distributor, and/or manufacturer if the Department has 
reasonable belief a violation occurred.
    The Working Group recommended that if no violation is found, the 
Department should issue a case closed letter to the party being 
investigated. If DOE finds that a contractor or dealer completed a 
noncompliant installation in one residence or an equivalent setting 
(e.g., one store), but the violator remediated that violation by 
installing a compliant unit before DOE concluded its investigation, 
then DOE will issue a case closed letter to the party being 
investigated, as long as that person has no history of prior 
violations. The purpose of this practice would be to incentivize 
parties who, on one occasion, mistakenly install one noncompliant unit 
to replace the product and thereby not suffer any public stigma. 
However, if the non-compliant installation is not remediated and a 
violation is found, DOE will issue a public ``Notice of Violation.'' 
The party found to be in violation can remediate the single violation 
and it will not count towards the finding of ``routine violator'' 
unless the party is found, in the course of a subsequent investigation, 
to have committed another violation. For more on remediation of a 
single violation, see section II.H.
    In determining whether a party ``routinely violates'' a regional 
standard, the Working Group recommended that DOE consider the following 
factors:
     Number of violations (in both current and past 
investigations);
     Length of time over which the violations were committed;
     Ratio of compliant to noncompliant installations or sales;
     Percentage of employees committing violations;
     Evidence of effort or intent to commit violations;
     Evidence of training or education provided on regional 
standards; and
     Subsequent remedial actions.
    The Working Group also agreed that DOE should consider whether the 
routine violation was limited to a specific contractor or distribution

[[Page 72379]]

location. DOE would rely on the same factors considered in determining 
whether a routine violation occurred.
    The Working Group recommended that DOE issue a ``Notice of Finding 
of Routine Violator'' if the Department determines that a violator 
routinely violated a regional standard. This notice would identify the 
party found to be a routine violator and explain the scope of the 
violation. Additionally, if DOE, in its discretion, finds that the 
routine violation was limited to a specific location, DOE may in the 
Notice of Finding of Routine Violation state that the prohibition on 
manufacturer sales is limited to a particular contractor or 
distribution location This notice would be both posted to the 
Department's enforcement Web site and would be emailed to those signed 
up for email updates.\8\
---------------------------------------------------------------------------

    \8\ DOE's enforcement Web site is: http://energy.gov/gc/enforcement.
---------------------------------------------------------------------------

    If DOE makes a finding of routine violation, the violator has the 
right to file an administrative appeal of the finding. Any appeal of a 
Notice of Finding of Routine Violation would be required to be filed 
within 30 days of the issuance of the notice. The appeal would be 
reviewed by DOE's Office of Hearings and Appeals. The appeal must 
present information rebutting the finding of routine violation. The 
appeal will be decided within 45 days of filing of the appeal. The 
violator may also file a Notice of Intent to Appeal with the DOE Office 
of Hearings and Appeals. If this notice of intent is filed within three 
business days of the Notice of Finding of Routine Violation, then 
manufacturers may continue to sell products to the routine violator 
during the pendency of the appeal. See section II.J for more details on 
sales during the pendency of an appeal.
    DOE proposes to adopt the Working Group's recommendations 
pertaining to violations and routine violations and requests comment on 
these proposals.

H. Remediation

    As previously mentioned, the Working Group recommended that 
violators may be given the opportunity to remediate. The sole method of 
remediation would be the replacement of noncompliant unit with 
compliant units. If a violator is unable to replace all noncompliant 
units, then the Department may, in its discretion, consider the 
remediation complete if the violator satisfactorily demonstrates to the 
Department that it attempted to replace all noncompliant units. In 
practice, the violator would have to show that they replaced almost all 
of the noncompliant units and document significant, yet refused, 
efforts to complete the replacement of the remaining noncompliant 
units. The Department would also scrutinize those ``failed'' attempts 
at replacement to ensure that there was indeed a good faith effort to 
complete remediation of the noncompliant unit.
    The replacement of noncompliant units with compliant units would be 
at the cost of the violator. The violator would not be allowed to use 
warranty or other replacement claims to recoup the cost of the 
replacement from the manufacturer. To ensure that warranties or other 
replacement claims are not used, the violator must provide DOE with the 
serial numbers for the new and old units. The Department will then 
provide these numbers to the manufacturer(s) and distributor(s) to 
verify that warranties and other replacement claims were not wrongfully 
used. If the violator successfully remediates, then DOE will issue a 
public ``Notice of Remediation.''
    The Working Group recommended that routine violators should also be 
entitled to remediation. As manufacturers are prohibited from selling 
to routine violators, remediation would be coordinated through the 
Department. If the routine violator wants to remediate then it must 
contact the DOE Office of the General Counsel, Office of Enforcement, 
via the DOE point of contact listed in the Notice of Finding of Routine 
Violation. The routine violator must inform DOE of the distributor or 
manufacturer from whom it wishes to purchase compliant replacement 
units. Within three business days of the routine violator's request to 
remediate, the Department will contact the necessary distributor(s) or 
manufacturer(s) and authorize sale for purposes of remediation. DOE 
will also provide the manufacturer(s) or distributor(s) with an 
official letter authorizing the sale for purposes of remediation for 
the seller's records. The routine violator must provide documentation 
of the installation of the compliant units to DOE once the remediation 
is completed. DOE will also follow up with the routine violator within 
30 days of the date of the official letter authorizing the sale for 
purposes of remediation to determine the status of the remediation. If 
a routine violator successfully remediates, then DOE will issue a 
Notice indicating the entity is no longer a routine violator no more 
than 30 days after DOE received documentation demonstrating the 
remediation is completed.
    DOE proposes to adopt the Working Group's recommendation on 
remediation and requests comment on this proposal.

I. Labeling

    The Working Group recommended, with DOE abstaining, that the FTC 
initiate a rulemaking to adopt a simplified label for equipment rated 
below the regional standards and a separate simplified label for 
equipment rated at or above the regional standards. The Working Group 
found that the simplified labels, as drafted by AHRI (a manufacturer 
trade association), provide better alignment with the Working Group's 
proposed regional enforcement plan. The simplified labels are posted in 
the docket for this rulemaking. See Example Voluntary Marking, No. 91, 
for sample label provided by a manufacturer during the negotiation.
    The Working Group also recommended, and manufacturers agreed, to 
add a label to the central air conditioner condensing unit to indicate 
where the unit can legally be installed. The label would be near to, or 
part of, the nameplate and ruggedized to withstand elements. For units 
that do not meet the EER standards applicable to the Southwest region, 
the label would state, ``Install Prohibited in Southwest.'' For units 
that cannot be sold in the Southeast or Southwest because their SEER 
value is below the minimum required in those regions, the label would 
state, ``Install Prohibited in Southwest and Southeast.'' As a result, 
a contractor should never install for an end user in a region a unit 
that bears the label indicating that installation is prohibited in that 
region. The manufacturers agreed they would start using the label 
scheme by March 1, 2015. Additionally, AHRI stated it would require all 
manufacturers participating in the AHRI certification program to apply 
these labels to split-system and single package central air 
conditioners with rated combinations below the minimum standard(s) 
required in each region as of March 1, 2015.

J. Manufacturer Liability

    In accordance with the Department's regulations on prohibited acts, 
manufacturers may be fined for ``knowingly sell[ing] a product to a 
distributor, contractor, or dealer with knowledge that the entity 
routinely violates any regional standard applicable to the product.'' 
(42 U.S.C. 6302, 10 CFR 429.102(a)(10)) The Working Group had 
significant discussions on the scope of the term ``product'' as it 
relates to this prohibited act. The Department explained that it 
interprets the term ``product'' to include

[[Page 72380]]

all classes of central air conditioners and heat pumps found within 10 
CFR 430.32(c). Ultimately, the Working Group could not come to 
consensus on whether the scope of any prohibition on sales could be 
limited to split-system air conditioners and single-package air 
conditioners instead of the Department's interpretation.\9\
---------------------------------------------------------------------------

    \9\ For more details regarding this discussion, see the public 
meeting transcript for October 24, 2014, No. 88.
---------------------------------------------------------------------------

    EPCA defines a ``central air conditioner'' as a ``product . . . 
which . . . is a heat pump or a cooling only unit'' and refers to all 
central air conditioners as one ``product.'' (42 U.S.C. 6291(21)) 
Therefore, to be consistent with EPCA, DOE interprets the term 
``product'' to be inclusive of all central air conditioner and heat 
pump product classes listed in 10 CFR 430.32(c), meaning that 
manufacturers may be subject to civil penalties for sales to a routine 
violator of any unit within the central air conditioning product 
classes.
    If a manufacturer sells a central air conditioner (including heat 
pumps) to a routine violator after a Notice of Finding of Routine 
Violation has been issued, then the manufacturer would be liable for 
civil penalties. The maximum fine a manufacturer is subject to is $200 
per unit sold to a routine violator.\10\ (10 CFR 429.120)
---------------------------------------------------------------------------

    \10\ As discussed in section II.B, a manufacturer-owned 
distributor is considered to be a manufacturer and thus is liable 
for all noncompliant sales.
---------------------------------------------------------------------------

    The Working Group recommended that DOE provide manufacturers with 3 
business days from the issuance of a Notice of Finding of Routine 
Violation to stop all sales of central air conditioners and heat pumps 
to the routine violator. During this time, manufacturers would not be 
liable for sales to a routine violator. DOE noted that, consistent with 
its penalty guidance,\11\ it would consider the manufacturer's efforts 
to stop any sales in determining whether (or to what extent) to assess 
any civil penalties for sales to a routine violator after that three 
day window.
---------------------------------------------------------------------------

    \11\ The DOE civil penalty guidance is available at http://energy.gov/gc/enforcement under ``Enforcement Guidance.''
---------------------------------------------------------------------------

    If the routine violator is appealing the finding, the Working Group 
recommended that manufacturers be allowed to continue to sell central 
air conditioners and heat pumps to the routine violator during the 
pendency of the appeal. In order to provide parties notice that a 
routine violator is appealing the determination, the routine violator 
must file a Notice of Intent to Appeal with the Office of Hearings and 
Appeals within three business days after the issuance of the Notice of 
Finding of Routine Violator. If the finding is ultimately upheld, then 
the manufacturers could face civil penalties for sale of any products 
rated below the regional standards to the routine violator.
    The Working Group also recommended that DOE provide an incentive 
for manufacturers to report routine violators. The Working Group 
recommended that if a manufacturer has knowledge of a routine violator, 
then the manufacturer can be held liable for all sales made after the 
date such knowledge is obtained by the manufacturer. However, if the 
manufacturer reports such knowledge to DOE within 15 days of receipt of 
the knowledge, then the Department will not hold the manufacturer 
liable for sales to the suspected routine violator made prior to 
notifying DOE.
    On a separate note, nothing in this rulemaking impacts DOE's 
ability to determine that a manufacturer has manufactured and 
distributed a noncompliant central air conditioner in accordance with 
the existing procedures at 10 CFR 429.104-429.114. Furthermore, those 
processes apply to DOE's determination of a manufacturer's manufacture 
and distribution of a central air conditioner that fails to meet a 
regional standard. With respect to liability, if DOE determines that a 
model of condensing unit fails to meet the applicable regional 
standard(s) when tested in a combination certified by the same 
manufacturer (i.e., one entity manufactures both the indoor coil and 
the condensing unit), the condensing unit manufacturer will be 
responsible for this model's noncompliance. If DOE determines that a 
basic model fails to meet regional standards when tested in a 
combination certified by a manufacturer other than the outdoor unit 
manufacturer (e.g., an independent coil manufacturer (ICM)), the 
certifying manufacturer will be responsible for this combination's 
noncompliance. The responsible manufacturer will be liable for 
distribution in commerce of noncompliant units. The responsible 
manufacturer can minimize liability by demonstrating on a unit-by-unit 
basis that the noncompliant combination was installed in a region where 
it would meet the standards. For example, if a 14 SEER split-system air 
conditioner was tested by the Department and determined to be 13.5 
SEER, then the manufacturer may minimize its liability by proving only 
a portion of sales for this combination was installed in the Southeast 
and Southwest. Manufacturers represented during the course of the 
negotiations that the bulk of sales are of minimally compliant units 
and so they expect most of the products that comply with the Southeast 
and Southwest regional standards would be sold in those regions. Given 
this, DOE will presume all units of a model rated as compliant with a 
regional standard but determined to be noncompliant with that standard 
were in fact installed illegally. Manufacturers can rebut this 
presumption by providing evidence that a portion of the units were 
instead installed in a location where they would have met the 
applicable energy conservation standards.
    DOE proposes to adopt these clarifications of manufacturer 
liability as recommended by the Working Group and requests comment on 
this proposal.

K. Additional Prohibited Acts for Distributors, Contractors and Dealers

    The Working Group had significant discussions on whether to include 
additional prohibited acts and ultimately could not come to consensus 
on whether to include additional prohibited acts.\12\
---------------------------------------------------------------------------

    \12\ For details on the discussions regarding additional 
prohibited acts see the public meeting transcript for October 16, 
2014. No. 87 pp. 3-87.
---------------------------------------------------------------------------

L. Summary Table

    The Working Group developed a summary table for inclusion in this 
document. This summary table helps explain the responsibilities for the 
various parties impacted by this rulemaking and does not include any 
proposed requirements not previously described in today's NOPR. DOE has 
further added columns depicting the roles and responsibilities of those 
making sales through the internet to this chart.

[[Page 72381]]



                                         Table II-2--Central Air Conditioner Regional Enforcement Summary Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Internet
                                                                     Manufacturer       Independent     Contractors or     sellers to        Internet
                                 Manufacturer        Importer            owned          distributor         dealer       contractors or   sellers to end
                                                                      distributor                                           dealers           users
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subject to civil penalties     Yes.............  Yes.............  Yes.............  No..............  No.............  No.............  No.
 based upon committing a
 prohibited act.
Can be labeled a routine       No..............  No..............  No..............  Yes.............  Yes............  Yes............  Yes.
 violator.
Considered a manufacturer      Yes.............  Yes.............  Yes.............  No..............  No.............  No.............  No.
 under definition.
Can remediate to get off       N/A.............  N/A.............  N/A.............  Yes.............  Yes............  Yes............  Yes.
 routine violator list.
Right to appeal finding of     N/A.............  N/A.............  N/A.............  Yes.............  Yes............  Yes............  Yes.
 Routine Violation.
Record retention.............  60 months.......  60 months.......  60 months.......  54 months.......  48 months......  54 months......  48 months.
Record retention start date..  30 days after     30 days after     30 days after     Nov. 30, 2015     30 days after    Nov. 30, 2015    30 days after
                                Final Rule.       Final Rule.       Final Rule.       (DOE proposes     Final Rule.      (DOE proposes    Final Rule.
                                                                                      July 1, 2016).                     July 1, 2016).
--------------------------------------------------------------------------------------------------------------------------------------------------------

M. Impact of Regional Enforcement Proposal on National Impacts Analysis

    In the June 2011 DFR, DOE considered the economic impacts of 
amending the standards for central air conditioners and heat pumps. 
Included in the economic analyses was National Impacts Analysis (NIA) 
which estimated the energy savings and the net present value (NPV) of 
those energy savings that consumers would receive from the new energy 
efficiency standards of central air conditioners (CAC) and heat pumps 
(HP). This NPV was the estimated total value of future operating-cost 
savings during the analysis period (2015-2045), minus the estimated 
increased product costs (including installation), discounted to 2011. 
However, DOE did not account for the financial burden on distributors 
and installers related to record retention requirements necessary to 
demonstrate compliance with the regional standards in the June 2011 
DFR.
    From the enforcement plan proposed in this rulemaking, DOE 
estimated that manufacturers, distributors, and contractors face some 
financial burden primarily related to the proposed record retention 
requirements. DOE assumed that the proposed records retention 
requirements would cause manufacturers, distributors, and contractors 
additional labor costs from collecting and filing such records. These 
labor costs would be an annual burden to the market participants. At 
the Working Group public meetings, distributors stated that the 
proposed records retention requirements would cause distributors to 
update their enterprise resource planning (ERP) systems to track the 
necessary information. DOE considered this update to the EPR systems an 
initial conversion cost. The cost of retaining records on each market 
participant is summarized in Table II-3.

Table II-3--Cost of Proposed Records Retention Due to Regional Standards Enforcement for Central Air Conditioner
                                        and Heat Pump Market Participants
----------------------------------------------------------------------------------------------------------------
                                                              Manufacturers     Distributors       Contractors
----------------------------------------------------------------------------------------------------------------
Estimated Total Annual Burden Hours.......................           574,167           287,083           359,949
Estimated Total Annual Cost...............................        $4,162,708        $2,081,354        $2,609,631
Estimated Initial Conversion Cost.........................  ................       $46,340,000  ................
----------------------------------------------------------------------------------------------------------------

    In this NOPR, DOE re-evaluated the NIA to include the cost of the 
proposed record retention requirements to manufacturer, distributors, 
and contractors. DOE conservatively estimated the consumer benefits by 
assuming that the annual cost from the proposed record retention 
requirements would be passed on to consumers and thus decreasing the 
NPV. However, DOE assumed that distributors would entirely bear the 
initial up-front cost of updating their ERP systems, causing no impact 
to the NPV for that portion of the impacts. The updated NPV results are 
summarized in Table II-4. The impact of including the proposed record 
retention requirement costs on the NPV is estimated to reduce the 
benefit by $0.30 billion at a 3% discount rate and $0.16 billion at a 
7% discount rate. The costs of the record retention requirements are 
estimated to have no impact on national energy savings. Because the 
record retention requirement costs have only a small impact on NPV, 
ranging from a minimum of 2-percent at a discount rate of 3% and a 
maximum of 4-percent at a discount rate of 7%, and no impact on 
national energy savings, DOE's economic justification of the energy 
conservation standards chosen and

[[Page 72382]]

published in the 2011 DFR would be unaffected by the quantification and 
inclusion of enforcement plan costs. Consequently, DOE is reaffirming 
the 2011 DFR energy conservation standards based on this analysis.

 Table II-4--National Impacts Analysis Results With Costs From Proposed
  Regional Enforcement Plan for Central Air Conditioners and Heat Pumps
------------------------------------------------------------------------
                                                       National impacts
                                   National impacts     estimated from
                                    estimated from     2011 DFR for the
                                   2011 DFR for the      chosen energy
                                     chosen energy       conversation
                                     conservation       standards with
                                       standards       enforcement plan
                                                             costs
------------------------------------------------------------------------
National Energy Savings (quads).  3.20 to 4.22......  3.20 to 4.22.
NPV of Consumer Benefits at 3%    14.73 to 17.55....  14.43 to 17.25.
 discount rate (2009$ billion).
NPV of Consumer Benefits at 7%    3.93 to 4.21......  3.77 to 4.05.
 discount rate (2009$ billion).
------------------------------------------------------------------------

    DOE requests comment on its assumptions for the financial burden 
from the proposed record retention requirements and the resulting 
impact on NPV at the amended standard level.

III. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    The Office of Management and Budget (OMB) has determined that 
today's regulatory action is not a ``significant regulatory action'' 
under section 3(f) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993). Accordingly, this action was not 
subject to review under the Executive Order by the Office of 
Information and Regulatory Affairs (OIRA) in the OMB.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (IFRA) for 
any rule that by law must be proposed for public comment, unless the 
agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by Executive Order 13272, ``Proper Consideration of Small 
Entities in Agency Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE 
published procedures and policies on February 19, 2003, to ensure that 
the potential impacts of its rules on small entities are properly 
considered during the DOE rulemaking process. 68 FR 7990. DOE has made 
its procedures and policies available on the Office of the General 
Counsel's Web site: http://energy.gov/gc/office-general-counsel.
    DOE reviewed the proposed requirements under the provisions of the 
Regulatory Flexibility Act and the procedures and policies published on 
February 19, 2003. As discussed in more detail below, DOE found that 
the entities impacted by the proposals in this NOPR (central air 
conditioning manufacturers, distributors, and contractors) could 
potentially experience a financial burden associated with these new 
requirements. Additionally, the majority of central air conditioning 
contractors and distributors are small business as defined by the Small 
Business Administration (SBA). DOE determined that it could not certify 
that the proposed rule, if promulgated, would not have a significant 
effect on a substantial number of small entities. Therefore, DOE has 
prepared an IRFA for this rulemaking. The IRFA describes potential 
impacts on small businesses associated with the proposed requirements.
    DOE has transmitted a copy of this IRFA to the Chief Counsel for 
Advocacy of the Small Business Administration for review.
1. Description and Estimated Number of Small Entities Regulated
    The SBA has set a size threshold for manufacturers, distributors, 
and contractors of central air conditioning products that define those 
entities classified as ``small businesses.'' DOE used SBA's size 
standards to determine whether any small businesses would be impacted 
by this NOPR. 65 FR 30836, 30849 (May 15, 2000), as amended at 65 FR 
53533, 53545 (Sept. 5, 2000) and codified at 13 CFR part 121. The size 
standards are listed by North American Industry Classification System 
(NAICS) code and industry description, and are available at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. The 
size standards and NAICS codes relevant to this rulemaking are listed 
in Table III-1.
    To estimate the number of companies that could be small business 
manufacturers, distributors, and contractors of equipment covered by 
this rulemaking, DOE conducted a market survey using available public 
information. DOE's research involved examining industry trade 
association Web sites, public databases, and individual company Web 
sites. DOE also solicited information from industry representatives 
such as AHRI, HARDI, ACCA, and PHCC. DOE screened out companies that do 
not offer products covered by this rulemaking or are not impacted by 
this rulemaking, do not meet the definition of a ``small business,'' or 
are foreign owned and operated.

                            Table III-1--Small Business Classification Summary Table
----------------------------------------------------------------------------------------------------------------
                                                                                   Total number    Total number
            Impacted entity               NAICS Code       NAICS Definition of      of impacted      of small
                                                             small business         businesses      businesses
----------------------------------------------------------------------------------------------------------------
Contractors \13\......................          238220  $15 million or less in       \14\ 22,207          21,763
                                                         revenue.
Distributors..........................          423730  100 or less employees...      \15\ 2,317           2,000
Manufacturers.........................          333415  750 or less employees...              29              12
----------------------------------------------------------------------------------------------------------------


[[Page 72383]]

2. Description and Estimate of Regional CAC Requirements
    As discussed in the preamble of this proposed rule, the Working 
Group recommended an enforcement plan for central air conditioners that 
would include public awareness efforts, records retention requirements, 
and voluntary efforts like remediation and labeling. The Working Group 
also made explicit the terms ``violation'' and ``routine violator.'' 
While most of the proposals in this rulemaking will not have an impact 
on manufacturers, distributors, and contractors that adhere to the 
central air conditioner regional standards, the records retention 
requirements may result in some financial burden.
    The Working Group worked to negotiate records retention 
requirements that would have limited financial burden on the impacted 
parties--manufacturers, distributors, and contractors. The Working 
Group made a few general provisions regarding the records retention 
requirements to help mitigate some of the financial burden. The Working 
Group tried to reduce the impact of the records retention requirements 
by staggering the length of time for which records must be maintained. 
Manufacturers, the entities understood to have the most resources and 
sophistication, would have to retain records for the longest time 
period (60 months); distributors would have to retain records for less 
time (54 months); and contractors would have to retain records for the 
least amount of time (48 months). Additionally, in the case that 
records are requested, the Working Group recommended that the party 
from whom the records were requested should have an extended period of 
30 days to produce such records. The Working Group also explicitly 
recommended that manufacturers, distributors, and contractors should 
not have to create new forms to retain such records, and that the 
records would not have to be retained electronically.
    DOE expects central air conditioning manufacturers to be the least 
burdened entity of all the affected entities by the record retention 
requirements proposed in this document. Manufacturers have the fewest 
record retention requirements. Many of the record retention 
requirements being proposed in this rulemaking expand on DOE's existing 
certification requirements and thus should only slightly increase the 
recordkeeping burden. DOE does not expect manufacturers to incur any 
capital expenditures as a result of the proposals since the rulemaking 
does not impose any product-specific requirements that would require 
changes to existing plants, facilities, product specifications, or test 
procedures. Rather, this proposed rule imposes record retention 
requirements, which may have a slight impact on labor costs. DOE 
included certification and enforcement requirements associated with the 
regional standards for central air conditioners in the June 27, 2011 
energy conservation standards final rule for central air conditioners 
and heat pumps.\16\
---------------------------------------------------------------------------

    \13\ The number of impacted contractors and small contractors is 
based on the number of contractors installing in the Southwest and 
Southeast regions.
    \14\ Chapter 18: Regional Standards Impacts on Market 
Participants. Technical Support Document: Energy Efficiency Program 
for Consumer Products: Residential Central Air Conditioners, Heat 
Pumps, and Furnaces. http://www.regulations.gov/#!documentDetail;D=EERE-2011-BT-STD-0011-0012.
    \15\ ``Statistics of U.S. Businesses: 2008: NAICS 423730--HVAC 
equip. merchant wholesalers United States.'' U.S. Census Bureau. 
http://www.census.gov/epcd/susb/2008/us/us423730.htm.
    \16\ Chapter 12: Manufacturer Impact Analysis. Technical Support 
Document: Energy Efficiency Program for Consumer Products: 
Residential Central Air Conditioners, Heat Pumps, and Furnaces. 
http://www.regulations.gov/#!documentDetail;D=EERE-2011-BT-STD-0011-
0012.
---------------------------------------------------------------------------

    Based on comments at the Working Group meetings, DOE expects the 
record retention requirements to cause distributors the most financial 
burden. Distributors track equipment and sales in ERP systems and are 
expected to incorporate the proposed recordkeeping requirements into 
their ERP systems. HARDI expected that 40% of distributors currently 
retain the proposed records and will not need to update their ERP 
systems. HARDI expected 50% of distributors would need to make some 
changes to their ERP systems and 10% of distributors would need to make 
major changes to their ERP system. HARDI expected that small 
distributors are more likely to require major changes to their ERP 
systems because typically small distributors have older and more 
inflexible systems. HARDI estimated that changes to ERP systems to 
accommodate the record retention proposals may cost $20,000 to $100,000 
depending on the type of change needed to the system. According to 
HARDI, the entire central air conditioner distribution industry would 
incur an initial conversion cost of around $46,340,000 to modify the 
ERP systems. To help alleviate some of the financial burden, the 
Working Group recommended that DOE not require distributors to retain 
records for sales of central air conditioner indoor coils or air 
handlers, which were identified as difficult components to track for 
the distributors. Additionally, the Working Group recommended that 
distributors should not have to start retaining records until November 
30, 2015, at the earliest, which DOE is proposing in this NOPR to delay 
until July 1, 2016. Finally, as previously stated, DOE is not proposing 
to require records to be retained in electronic form and is not 
mandating that distributors make changes in their ERP systems to retain 
the information proposed in this document.
    DOE believes central air conditioning contractors will experience a 
minimal recordkeeping burden. DOE is proposing to limit the records 
retention requirements on contractors to installations in the Southeast 
and Southwest. For all central air conditioner installations in those 
regions, contractors would have to keep a record of installation 
location, date of installation, and purchaser. Contractors would have 
to keep records specific to the type of units (outdoor condensing unit, 
indoor coil or air handler, or single-package air conditioner) 
installed as well. A contractor trade association remarked at the 
public meetings that most contractors already retain such records and 
the record retention requirements would have limited financial impacts. 
(ACCA, Public Meeting Transcript, No. 77 at 12-13) DOE estimates that 
any additional expense caused by the records requirements proposed in 
this rulemaking would be related to the time required to file these 
records. DOE estimates that contractors may spend an additional 10 
minutes per installation to comply with the proposed records retention 
requirements.
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the proposed rule being considered today.
4. Significant Alternatives to the Rule
    DOE could mitigate the potential impacts on small manufacturers, 
distributors, or contractors by reducing or eliminating the proposed 
types of information to be maintained. However, these requirements were 
negotiated as an acceptable compromise among the participants in the 
Working Group. While there may be some financial burden, the Working 
Group unanimously agreed to the record retention requirements for 
manufacturers, distributors, and contractors. Furthermore, DOE believes 
that the record retention requirements are the least burdensome 
requirements possible to provide DOE sufficient

[[Page 72384]]

information to determine whether manufacturers, distributors and 
contractors are complying with regulatory requirements. Thus, DOE 
rejected the alternative of reducing or eliminating the record 
retention requirements and is proposing these record retention 
requirements for the aforementioned parties. DOE continues to seek 
input from businesses that would be affected by this rulemaking and 
will consider comments received in the development of any final rule.

C. Review Under the Paperwork Reduction Act of 1995

1. Description of the Requirements
    In this document, DOE proposed record retention requirements for 
central air conditioner manufacturers, distributors, and contractors. 
DOE is requesting approval for a new information collection associated 
with these requirements. These requirements were developed as part of a 
negotiated rulemaking effort for regional central air conditioner 
enforcement. These requirements are described in detail in section 
II.F.
    2. Information Collection Request Title: Enforcement of Regional 
Standards.
    3. Type of Request: New.
    4. Purpose: Generally, DOE is proposing that manufacturers retain 
records of the model number and serial number for all split system and 
single-package air conditioners, when these units were manufactured, 
when these units were sold, and to whom the units were sold. DOE 
proposed that manufacturers would retain these records for 60 months. 
DOE proposed that distributors would retain the manufacturer, model 
number and serial number for all their split system outdoor condensing 
units and single-package units. In addition, distributors must keep 
track of when and from whom each of these types of units was purchased, 
and when and to whom each of these units was sold. Distributors would 
retain these records for 54 months. Contractors must retain records of 
all split system and single-package air conditioner installations in 
the Southeast and Southwest region. These records would be required to 
include what was installed (e.g. manufacturer and model number), date 
of sale, and the party to whom the unit was sold. Contractors would 
retain these records for 48 months.
    This proposed rule primarily requires central air conditioner 
manufacturers, distributors, and contractors to retain records for CAC 
installations. If DOE has a ``reasonable belief'' that an installation 
in violation of regional standards occurred, then it may request 
records specific to an ongoing investigation from the relevant 
manufacturer(s), distributor(s), and/or contractor(s). The Working 
Group recommended that DOE determine if it has a ``reasonable belief'' 
of a CAC violation based on the factors described in section II.F. Once 
DOE establishes reasonable belief and requests records from the 
relevant parties, then the entity from whom DOE requested records has 
30 days to produce those records. The party from whom DOE requested 
records may ask for additional time with a written explanation of the 
circumstances.
    The following are DOE estimates of the total annual recordkeeping 
burden imposed on manufacturers, distributors, and contractors of 
central air conditioners. These estimates take into account the time 
necessary collect, organized and store the record required by this 
notice of proposed rulemaking.
Manufacturers
    Estimated Number of Impacted Manufacturers: 29.
    Estimated Time per Record: 10 minutes.
    Estimated Total Annual Burden Hours: 574,167 hours.
    Estimated Total Annual Cost to the Manufacturers: $4,162,708.
Distributors
    Estimated Number of Impacted Distributors: 2,317.
    Estimated Time per Record: 5 minutes.
    Estimated Total Annual Burden Hours: 287,083 hours.
    Estimated Total Annual Cost to the Distributors: $2,081,354.
Contractors
    Estimated Number of Impacted Contractors: 22,207.
    Estimated Time per Record: 10 minutes per installation.
    Estimated Total Annual Burden Hours: 359,949 hours.
    Estimated Total Annual Cost to the Contractors: $2,609,631.
    5. Annual Estimated Number of Respondents: 24,553.
    6. Annual Estimated Number of Total Responses: 24,553.
    7. Annual Estimated Number of Burden Hours: 1,221,199.
    8. Annual Estimated Reporting and Recordkeeping Cost Burden: 
$8,853,693.

D. Review Under the National Environmental Policy Act of 1969

    DOE has determined that this proposed rule falls into a class of 
actions that are categorically excluded from review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and DOE's 
implementing regulations at 10 CFR part 1021. Specifically, this 
proposed rule would adopt changes to the manner in which regional 
standards for central air conditioners are enforced, which would not 
affect the amount, quality or distribution of energy usage, and, 
therefore, would not result in any environmental impacts. Thus, this 
rulemaking is covered by Categorical Exclusion A6 under 10 CFR part 
1021, subpart D. Accordingly, neither an environmental assessment nor 
an environmental impact statement is required.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have Federalism 
implications. The Executive Order requires agencies to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the States and to carefully assess 
the necessity for such actions. The Executive Order also requires 
agencies to have an accountable process to ensure meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have Federalism implications. On March 14, 2000, DOE 
published a statement of policy describing the intergovernmental 
consultation process it will follow in the development of such 
regulations. 65 FR 13735. DOE has examined this proposed rule and has 
determined that it would not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. EPCA governs and prescribes Federal 
preemption of State regulations as to energy conservation for the 
products that are the subject of today's proposed rule. States can 
petition DOE for exemption from such preemption to the extent, and 
based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) No further 
action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    Regarding the review of existing regulations and the promulgation 
of new regulations, section 3(a) of Executive Order 12988, ``Civil 
Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on Federal 
agencies the general

[[Page 72385]]

duty to adhere to the following requirements: (1) Eliminate drafting 
errors and ambiguity; (2) write regulations to minimize litigation; (3) 
provide a clear legal standard for affected conduct rather than a 
general standard; and (4) promote simplification and burden reduction. 
Section 3(b) of Executive Order 12988 specifically requires that 
Executive agencies make every reasonable effort to ensure that the 
regulation: (1) Clearly specifies the preemptive effect, if any; (2) 
clearly specifies any effect on existing Federal law or regulation; (3) 
provides a clear legal standard for affected conduct while promoting 
simplification and burden reduction; (4) specifies the retroactive 
effect, if any; (5) adequately defines key terms; and (6) addresses 
other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires Executive agencies to review regulations 
in light of applicable standards in sections 3(a) and 3(b) to determine 
whether they are met or it is unreasonable to meet one or more of them. 
DOE has completed the required review and determined that, to the 
extent permitted by law, the proposed rule meets the relevant standards 
of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect small governments. On March 18, 1997, 
DOE published a statement of policy on its process for 
intergovernmental consultation under UMRA. 62 FR 12820; also available 
at http://energy.gov/gc/office-general-counsel. DOE examined this 
proposed rule according to UMRA and its statement of policy and 
determined that the rule contains neither an intergovernmental mandate, 
nor a mandate that may result in the expenditure of $100 million or 
more in any year, so these requirements do not apply.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This proposed rule would not have any impact on the autonomy or 
integrity of the family as an institution. Accordingly, DOE has 
concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

I. Review Under Executive Order 12630

    DOE has determined, under Executive Order 12630, ``Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights'' 53 FR 8859 (March 18, 1988), that this proposed rule would not 
result in any takings that might require compensation under the Fifth 
Amendment to the U.S. Constitution.

J. Review Under Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and 
DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has 
reviewed this proposed rule under the OMB and DOE guidelines and has 
concluded that it is consistent with applicable policies in those 
guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OMB, 
a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgated or is expected to lead to promulgation of a 
final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy; or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    Today's proposal to adopt a regional standards enforcement plan for 
central air conditioners is not a significant regulatory action under 
Executive Order 12866. Moreover, it would not have a significant 
adverse effect on the supply, distribution, or use of energy, nor has 
it been designated as a significant energy action by the Administrator 
of OIRA. Therefore, it is not a significant energy action, and, 
accordingly, DOE has not prepared a Statement of Energy Effects.

L. Review Under Section 32 of the Federal Energy Administration Act of 
1974

    Under section 301 of the Department of Energy Organization Act 
(Pub. L. 95-91; 42 U.S.C. 7101), DOE must comply with section 32 of the 
Federal Energy Administration Act of 1974, as amended by the Federal 
Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA) 
Section 32 essentially provides in relevant part that, where a proposed 
rule authorizes or requires use of commercial standards, the notice of 
proposed rulemaking must inform the public of the use and background of 
such standards. In addition, section 32(c) requires DOE to consult with 
the Attorney General and the Chairman of the Federal Trade Commission 
(FTC) concerning the impact of the commercial or industry standards on 
competition. Today's proposed rule does not requires use of any 
commercial standards.

IV. Public Participation

A. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule no later than the date provided in the DATES section at 
the beginning of this proposed rule. Interested parties may submit 
comments using any of the methods described in the ADDRESSES section at 
the beginning of this NOPR.

[[Page 72386]]

    Submitting comments via regulations.gov. The regulations.gov Web 
page will require you to provide your name and contact information. 
Your contact information will be viewable to DOE Building Technologies 
staff only. Your contact information will not be publicly viewable 
except for your first and last names, organization name (if any), and 
submitter representative name (if any). If your comment is not 
processed properly because of technical difficulties, DOE will use this 
information to contact you. If DOE cannot read your comment due to 
technical difficulties and cannot contact you for clarification, DOE 
may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment or in any documents attached to your comment. 
Any information that you do not want to be publicly viewable should not 
be included in your comment, nor in any document attached to your 
comment. Persons viewing comments will see only first and last names, 
organization names, correspondence containing comments, and any 
documents submitted with the comments.
    Do not submit to regulations.gov information for which disclosure 
is restricted by statute, such as trade secrets and commercial or 
financial information (hereinafter referred to as Confidential Business 
Information (CBI)). Comments submitted through regulations.gov cannot 
be claimed as CBI. Comments received through the Web site will waive 
any CBI claims for the information submitted. For information on 
submitting CBI, see the Confidential Business Information section.
    DOE processes submissions made through regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery, or mail. Comments and 
documents submitted via email, hand delivery, or mail also will be 
posted to regulations.gov. If you do not want your personal contact 
information to be publicly viewable, do not include it in your comment 
or any accompanying documents. Instead, provide your contact 
information on a cover letter. Include your first and last names, email 
address, telephone number, and optional mailing address. The cover 
letter will not be publicly viewable as long as it does not include any 
comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery, please provide all items on a CD, if feasible. It is not 
necessary to submit printed copies. No facsimiles (faxes) will be 
accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, written in English and free of any defects or viruses. 
Documents should not contain special characters or any form of 
encryption and, if possible, they should carry the electronic signature 
of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. According to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery two well-marked copies: One copy 
of the document marked confidential including all the information 
believed to be confidential, and one copy of the document marked non-
confidential with the information believed to be confidential deleted. 
Submit these documents via email or on a CD, if feasible. DOE will make 
its own determination about the confidential status of the information 
and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person which would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

B. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. DOE requests comments on the four clarifications to the regional 
standards discussed in section II.A.
    2. DOE requests comments on its proposed definitions for 
contractor, dealer, and installation of a central air conditioner.
    3. DOE requests comments on its proposed records retention 
requirements for manufacturers, distributors, and contractors. The 
Department is specifically interested in any financial burden imposed 
but these proposed requirements.
    4. DOE requests comments on the threshold for records request and 
the proposed timeframe for responding to such requests.
    5. DOE requests comments on the proposed violations for 
distributors, contractors, and dealers.
    6. DOE requests comments on the factors used to determine if a 
violation is routine.
    7. DOE requests comments on the proposed concept for remediation.
    8. DOE requests comments on the proposed scheme for manufacturer 
liability.

V. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this proposed 
rule.

List of Subjects

10 CFR Part 429

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Reporting and recordkeeping 
requirements.

10 CFR Part 430

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Imports, 
Intergovernmental relations, Small businesses.


[[Page 72387]]


    Issued in Washington, DC, on November 12, 2015.
Kathleen B. Hogan,
Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and 
Renewable Energy.

    For the reasons stated in the preamble, DOE is proposing to amend 
parts 429 and 430 of Chapter II, subchapter D, of Title 10, Code of 
Federal Regulations as set forth below:

PART 429--CERTIFICATION, COMPLIANCE AND ENFORCEMENT FOR CONSUMER 
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT

0
1. The authority citation for part 429 continues to read as follows:

    Authority:  42 U.S.C. 6291-6317.

0
2. Amend Sec.  429.102 to add paragraph (c) to read as follows:


Sec.  429.102  Prohibited acts subjecting persons to enforcement 
action.

* * * * *
    (c) Violations of regional standards:
    (1) It is a violation for a distributor to knowingly sell a product 
to a contractor or dealer with knowledge that the entity will sell and/
or install the product in violation of any regional standard applicable 
to the product.
    (2) It is a violation for a distributor to knowingly sell a product 
to a contractor or dealer with knowledge that the entity routinely 
violates any regional standard applicable to the product.
    (3) It is a violation for a contractor or dealer to knowingly sell 
to and/or install for an end user a central air conditioner subject to 
regional standards with the knowledge that such product will be 
installed in violation of any regional standard applicable to the 
product.
    (4) A ``product installed in violation'' includes:
    (i) A complete central air conditioning system that is not 
certified as a complete system that meets the applicable standard. 
Combinations that were previously validly certified may be installed 
after the manufacturer has discontinued the combination, provided the 
combination meets the currently applicable standard.
    (ii) An outdoor unit with no match (i.e., that is not offered for 
sale with an indoor unit) that is not certified as part of a 
combination that meets the applicable standard.
    (iii) An outdoor unit that is part of a certified combination rated 
less than the standard applicable in the region in which it is 
installed.
0
3. Add an undesignated center heading and Sec.  429.140 in subpart C to 
read as follows:

Regional Standards Enforcement Procedures


Sec.  429.140  Regional standards enforcement procedures.

    Sections 429.140 through 429.158 provide enforcement procedures 
specific to the violations enumerated in Sec.  429.102(c). These 
provisions explain the responsibilities of manufacturers, private 
labelers, distributors, contractors and dealers with respect to central 
air conditioners subject to regional standards; however, these 
provisions do not limit the responsibilities of parties otherwise 
subject to 10 CFR parts 429 and 430.
0
4. Add Sec.  429.142 to subpart C to read as follows:


Sec.  429.142  Records retention.

    (a) Record retention. The following records shall be maintained by 
the specified entities.
    (1) Contractors and dealers.
    (i) For installations of a central air conditioner in the states of 
Alabama, Arizona, Arkansas, California, Delaware, Florida, Georgia, 
Hawaii, Kentucky, Louisiana, Maryland, Mississippi, Nevada, New Mexico, 
North Carolina, Oklahoma, South Carolina, Tennessee, Texas, or Virginia 
or in the District of Columbia, contractors and dealers must retain the 
following records for at least 48 months from the date of installation.
    A. For split-system central air conditioner outdoor units: The 
manufacturer name, model number, serial number, location of 
installation (including street address, city, state, and zip code), 
date of installation, and party from whom the unit was purchased 
(including person's name, full address, and phone number); and
    B. For split-system central air conditioner indoor units: The 
manufacturer name, model number, location of installation (including 
street address, city, state, and zip code), date of installation, and 
party from whom the unit was purchased (including person's name, full 
address, and phone number).
    (ii) For installations of a central air conditioner in the states 
of Arizona, California, Nevada, and New Mexico, contractors and dealers 
must retain the following, additional records for at least 48 months 
from the date of installation.
    A. For single-package central air conditioners: The manufacturer 
name, model number, serial number, location of installation (including 
street address, city, state, and zip code), date of installation, and 
party from whom the unit was purchased (including person's name, full 
address, and phone number).
    B. [Reserved]
    (2) Distributors. Beginning November 30, 2015, all distributors 
must retain the following records for no less than 54 months from the 
date of sale.
    (i) For split-system central air conditioner outdoor units: The 
outdoor unit manufacturer, outdoor unit model number, outdoor unit 
serial number, date unit was purchased from manufacturer, party from 
whom the unit was purchased (including company or individual's name, 
full address, and phone number), date unit was sold to contractor or 
dealer, party to whom the unit was sold (including company or 
individual's name, full address, and phone number), and, if delivered, 
delivery address.
    (ii) For single-package air conditioners: The manufacturer, model 
number, serial number, date unit was purchased from manufacturer, party 
from whom the unit was purchased (including company or individual's 
name, full address, and phone number), date unit was sold to a 
contractor or dealer, party to whom the unit was sold (including 
company or individual's name, full address, and phone number), and, if 
delivered, delivery address.
    (3) Manufacturers and Private Labelers. All manufacturers and 
private labelers must retain the following records for no less than 60 
months from the date of sale.
    (i) For split-system central air conditioner outdoor units: The 
model number, serial number, date of manufacture, date of sale, and 
party to whom the unit was sold (including person's name, full address, 
and phone number);
    (ii) For split-system central air conditioner indoor units: The 
model number, date of manufacture, date of sale, and party to whom the 
unit was sold (including person's name, full address, and phone 
number); and
    (iii) For single-package central air conditioners: The model 
number, serial number, date of manufacture, date of sale, and party to 
whom the unit was sold (including person's name, full address, and 
phone number).
0
5. Add Sec.  429.144 to subpart C to read as follows:


Sec.  429.144  Records request.

    (a) DOE must have reasonable belief a violation has occurred to 
request records specific to an on-going investigation of a violation of 
central air conditioner regional standards.
    (b) Upon request, the manufacturer, private labeler, distributor, 
dealer, or contractor must provide to DOE the

[[Page 72388]]

relevant records within 30 calendar days of the request.
    (1) DOE, at its discretion, may grant additional time for records 
production if the party from whom records have been requested has made 
a good faith effort to produce records.
    (2) To request additional time, the party from whom records have 
been requested must produce all records gathered in 30 days and provide 
to DOE a written explanation of the need for additional time with the 
requested date for completing the production of records.
0
6. Add Sec.  429.146 to subpart C to read as follows:


Sec.  429.146  Notice of violation.

    (a) If DOE determines a party has committed a violation of regional 
standards, DOE will issue a Notice of Violation advising that party of 
DOE's determination.
    (b) If, however, DOE determines a noncompliant installation 
occurred in only one instance, the noncompliant installation is 
remediated prior to DOE issuing a Notice of Violation, and the party 
has no history of prior violations, DOE will not issue such notice.
    (c) If DOE does not find a violation of regional standards, DOE 
will notify the party under investigation.
0
7. Add Sec.  429.148 to subpart C to read as follows:


Sec.  429.148  Routine violator.

    (a) DOE will consider, inter alia, the following factors in 
determining if a person is a routine violator: Number of violations in 
current and past cases, length of time over which violations occurred, 
ratio of compliant to noncompliant installations or sales, percentage 
of employees committing violations, evidence of intent, evidence of 
training or education provided, and subsequent remedial actions.
    (b) In the event that DOE determines a person to be a routine 
violator, DOE will issue a Notice of Finding of Routine Violation.
    (c) In making a finding of Routine Violation, DOE will consider 
whether the Routine Violation was limited to a specific location. If 
DOE finds that the routine violation was so limited, DOE may, in its 
discretion, in the Notice of Finding of Routine Violation limit the 
prohibition on manufacturer and/or private labeler sales to a 
particular contractor or distribution location.
0
8. Add Sec.  429.150 to subpart C to read as follows:


Sec.  429.150  Appealing a finding of routine violation.

    (a) Any person found to be a routine violator may, within 30 
calendar days after the date of Notice of Finding of Routine Violation, 
request an administrative appeal to the Office of Hearings and Appeals.
    (b) The appeal must present information rebutting the finding of 
violation(s).
    (c) The Office of Hearings and Appeal will issue a decision on the 
appeal within 45 days of receipt of the appeal.
    (d) A routine violator must file a Notice of Intent to Appeal with 
the Office of Hearings and Appeals within three business days of the 
date of the Notice of Finding of Routine Violation, serving a copy on 
the GC Office of Enforcement to retain the ability to buy central air 
conditioners during the pendency of the appeal.
0
9. Add Sec.  429.152 to subpart C to read as follows:


Sec.  429.152  Removal of finding of ``routine violator''.

    (a) A routine violator may be removed from DOE's list of routine 
violators through completion of remediation in accordance with the 
requirements in Sec.  429.154 of this subpart.
    (b) A routine violator that wants to remediate must contact DOE 
Office of Enforcement via the point of contact listed in the Notice of 
Finding of Routine Violation and identify the distributor(s), 
manufacturer(s), or private labeler(s) from whom it wishes to buy 
compliant replacement product.
    (c) DOE will contact the distributor(s), manufacturer(s), or 
private labeler(s) and authorize sale of central air conditioner units 
to the routine violator for purposes of remediation within 3 business 
days of receipt of the request for remediation. DOE will provide the 
manufacturer(s), distributor(s), and/or private labeler(s) with an 
official letter authorizing the sale of units for purposes of 
remediation.
    (d) DOE will contact routine violators that requested units for 
remediation within 30 days of sending the official letter to the 
manufacturer(s), distributor(s), and/or private labeler(s) to determine 
the status of the remediation.
    (e) If remediation is successfully completed, DOE will issue a 
Notice indicating a person is no longer considered to be a routine 
violator. The Notice will be issued no more than 30 days after DOE has 
received documentation demonstrating that remediation is complete.
0
10. Add Sec.  429.154 to subpart C to read as follows:


Sec.  429.154  Remediation.

    (a) Any party found to be in violation of the regional standards 
may remediate by replacing the noncompliant unit at cost to the 
violator; the end user cannot be charged for any costs of remediation.
    (1) If a violator is unable to replace all noncompliant 
installations, then the Department may, in its discretion, consider the 
remediation complete if the violator satisfactorily demonstrates to the 
Department that it attempted to replace all noncompliant installations.
    (2) The Department will scrutinize any ``failed'' attempts at 
replacement to ensure that there was indeed a good faith effort to 
complete remediation of the noncompliant unit.
    (b) The violator must provide to DOE the serial number of any 
outdoor unit and/or indoor unit installed not in compliance with the 
applicable regional standard as well as the serial number(s) of the 
replacement unit(s) to be checked by the Department against warranty 
and other replacement claims.
    (c) If the remediation is approved by the Department, then DOE will 
issue a Notice of Remediation and the violation will not count towards 
a finding of ``routine violator''.
0
11. Add Sec.  429.156 to subpart C to read as follows:


Sec.  429.156  Manufacturer and private labeler liability.

    (a) In accordance with Sec.  429.102(c), manufacturers and private 
labelers are prohibited from selling central air conditioners and heat 
pumps to a routine violator.
    (1) To avoid financial penalties, manufacturers and/or private 
labelers must cease sales to a routine violator within 3 business days 
from the date of issuance of a Notice of Finding of Routine Violation.
    (2) If a Routine Violator files a Notice of Intent to Appeal 
pursuant to Sec.  429.150, then a manufacturer and/or private labeler 
may assume the risk of selling central air conditioners to the Routine 
Violator during the pendency of the appeal.
    (3) If the appeal of the Finding of Routine Violator is denied, 
then the manufacturer and/or private labeler may be fined in accordance 
with Sec.  429.120, for sale of any units to a routine violator during 
the pendency of the appeal that do not meet the applicable regional 
standard.
    (b) If a manufacturer and/or private labeler has knowledge of 
routine violation, then the manufacturer can be held liable for all 
sales that occurred after the date the manufacturer had knowledge of 
the routine violation. However, if the manufacturer and/or private 
labeler reports its suspicion of a routine violation to DOE within 15 
days of receipt of such knowledge, then it

[[Page 72389]]

will not be liable for product sold to the suspected routine violator 
prior to reporting the routine violation to DOE.
0
12. Add Sec.  429.158 to subpart C to read as follows:


Sec.  429.158  Product determined noncompliant with regional standards.

    (a) If DOE determines a model of outdoor unit fails to meet the 
applicable regional standard(s) when tested in a combination certified 
by the same manufacturer, then the outdoor unit basic model will be 
deemed noncompliant with the regional standard(s). In accordance with 
Sec.  429.102(c), the outdoor unit manufacturer and/or private labeler 
is liable for distribution of noncompliant units in commerce.
    (b) If DOE determines a combination fails to meet the applicable 
regional standard(s) when tested in a combination certified by a 
manufacturer other than the outdoor unit manufacturer (e.g., ICM), then 
that combination is deemed noncompliant with the regional standard(s). 
In accordance with Sec.  429.102(c), the certifying manufacturer is 
liable for distribution of noncompliant units in commerce.
    (c) All such units manufactured and distributed in commerce are 
presumed to have been installed in a region where they would not comply 
with the applicable energy conservation standard; however, a 
manufacturer and/or private labeler may demonstrate through installer 
records that individual units were installed in a region where the unit 
is compliant with the applicable standards.

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
13. The authority citation for part 430 continues to read as follows:

    Authority:  42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

0
14. Amend Sec.  430.2 by adding, in alphabetical order, new definitions 
for ``contractor,'' ``dealer,'' ``distributor,'' and ``installation of 
a central air conditioner'' to read as follows:


Sec.  430.2  Definitions.

* * * * *
    Contractor means a person (other than the manufacturer or 
distributor) who sells to and/or installs for an end user a central air 
conditioner subject to regional standards. The term ``end user'' means 
the entity that purchases or selects for purchase the central air 
conditioner. Some examples of typical ``end users'' are homeowners, 
building owners, building managers, and property developers.
* * * * *
    Dealer means a type of contractor, generally with a relationship 
with one or more specific manufacturers.
* * * * *
    Distributor means a person (other than a manufacturer or retailer) 
to whom a consumer appliance product is delivered or sold for purposes 
of distribution in commerce.
* * * * *
    Installation of a central air conditioner means the connection of 
the refrigerant lines and/or electrical systems to make the central air 
conditioner operational.
* * * * *
0
15. Amend Sec.  430.32, by revising paragraph (c) to read as follows:


Sec.  430.32  Energy and water conservation standards and their 
compliance dates.

* * * * *
    (c) Central air conditioners and heat pumps. The energy 
conservation standards defined in terms of the heating seasonal 
performance factor are based on Region IV, the minimum standardized 
design heating requirement, and the provisions of 10 CFR 429.16 of this 
chapter.
    (1) Each basic model of single-package central air conditioners and 
central air conditioning heat pumps and each individual combination of 
split-system central air conditioners and central air conditioning heat 
pumps manufactured on or after January 1, 2015, shall have a Seasonal 
Energy Efficiency Ratio and Heating Seasonal Performance Factor not 
less than:

------------------------------------------------------------------------
                                             Seasonal         Heating
                                              energy         seasonal
              Product class                 efficiency      performance
                                           ratio  (SEER)  factor  (HSPF)
------------------------------------------------------------------------
(i) Split-system air conditioners.......              13  ..............
(ii) Split-system heat pumps............              14             8.2
(iii) Single-package air conditioners...              14  ..............
(iv) Single-package heat pumps..........              14             8.0
(v) Small-duct, high-velocity systems...              12             7.2
(vi)(A) Space-constrained products--air               12  ..............
 conditioners...........................
(vi)(B) Space-constrained products--heat              12             7.4
 pumps..................................
------------------------------------------------------------------------

    (2) In addition to meeting the applicable requirements in paragraph 
(c)(1) of this section, products in product class (i) of that paragraph 
(i.e., split-system air conditioners) that are installed on or after 
January 1, 2015, in the States of Alabama, Arkansas, Delaware, Florida, 
Georgia, Hawaii, Kentucky, Louisiana, Maryland, Mississippi, North 
Carolina, Oklahoma, South Carolina, Tennessee, Texas, or Virginia, or 
in the District of Columbia, shall have a Seasonal Energy Efficiency 
Ratio not less than 14. The least efficient combination of each basic 
model must comply with this standard.
    (3) In addition to meeting the applicable requirements in paragraph 
(c)(1) of this section, split-system air conditioners that are 
installed on or after January 1, 2015, in the States of Alabama, 
Arkansas, Delaware, Florida, Georgia, Hawaii, Kentucky, Louisiana, 
Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, 
Tennessee, Texas, or Virginia, or in the District of Columbia, must 
have a Seasonal Energy Efficiency Ratio of 14 or higher. Any outdoor 
unit model that has a certified combination with a rating below 14 SEER 
cannot be installed in these States. An outdoor unit model certified 
below 14 SEER by the outdoor unit manufacturer cannot be installed in 
this region even with an independent coil manufacturer's indoor unit 
that may have a certified rating at or above 14 SEER.
    (4) In addition to meeting the applicable requirements in paragraph 
(c)(1) of this section, split-system air conditioners and single-
package air conditioners that are installed on or after January 1, 
2015, in the States of Arizona, California, Nevada, or New Mexico must 
have a Seasonal Energy Efficiency Ratio of 14 or higher and have an 
Energy Efficiency Ratio (at a

[[Page 72390]]

standard rating of 95[emsp14][deg]F dry bulb outdoor temperature) not 
less than the following:

------------------------------------------------------------------------
                                                              Energy
                      Product class                         efficiency
                                                           ratio  (EER)
------------------------------------------------------------------------
(i) Split-system rated cooling capacity less than 45,000            12.2
 Btu/hr.................................................
(ii) Split-system rated cooling capacity equal to or                11.7
 greater than 45,000 Btu/hr.............................
(iii) Single-package systems............................            11.0
------------------------------------------------------------------------

    Any outdoor unit model that has a certified combination with a 
rating below 14 SEER or the applicable EER cannot be installed in this 
region. An outdoor unit model certified below 14 SEER or the applicable 
EER by the outdoor unit manufacturer cannot be installed in this region 
even with an independent coil manufacturer's indoor unit that may have 
a certified rating at or above 14 SEER and the applicable EER.
    (5) Each basic model of single-package central air conditioners and 
central air conditioning heat pumps and each individual combination of 
split-system central air conditioners and central air conditioning heat 
pumps manufactured on or after January 1, 2015, shall have an average 
off mode electrical power consumption not more than the following:

------------------------------------------------------------------------
                                                           Average  off
                                                            mode  power
                      Product class                         consumption
                                                              PW,OFF
                                                              (watts)
------------------------------------------------------------------------
(i) Split-system air conditioners.......................              30
(ii) Split-system heat pumps............................              33
(iii) Single-package air conditioners...................              30
(iv) Single-package heat pumps..........................              33
(v) Small-duct, high-velocity systems...................              30
(vi) Space-constrained air conditioners.................              30
(vii) Space-constrained heat pumps......................              33
------------------------------------------------------------------------

* * * * *
[FR Doc. 2015-29435 Filed 11-18-15; 8:45 am]
 BILLING CODE 6450-01-P