[Federal Register Volume 84, Number 30 (Wednesday, February 13, 2019)]
[Proposed Rules]
[Pages 3910-3953]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01854]



[[Page 3909]]

Vol. 84

Wednesday,

No. 30

February 13, 2019

Part III





Department of Energy





-----------------------------------------------------------------------





10 CFR Parts 430 and 431





Energy Conservation Program for Appliance Standards: Proposed 
Procedures for Use in New or Revised Energy Conservation Standards and 
Test Procedures for Consumer Products and Commercial/Industrial 
Equipment; Proposed Rule

  Federal Register / Vol. 84 , No. 30 / Wednesday, February 13, 2019 / 
Proposed Rules  

[[Page 3910]]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

10 CFR Parts 430 and 431

[EERE-2017-BT-STD-0062]
RIN 1904-AD38


Energy Conservation Program for Appliance Standards: Proposed 
Procedures for Use in New or Revised Energy Conservation Standards and 
Test Procedures for Consumer Products and Commercial/Industrial 
Equipment

AGENCY: Office of Energy Efficiency and Renewable Energy (EERE), 
Department of Energy.

ACTION: Notice of proposed rulemaking (NOPR) and request for comment.

-----------------------------------------------------------------------

SUMMARY: The U.S. Department of Energy (``DOE'' or ``the Department'') 
proposes to update and modernize the Department's current rulemaking 
methodology titled, ``Procedures, Interpretations, and Policies for 
Consideration of New or Revised Energy Conservation Standards for 
Consumer Products'' (``Process Rule''). In overview, in this document, 
DOE is proposing to clarify that the Process Rule applies to the 
establishment of new or revised energy conservation standards and test 
procedures for both consumer products and commercial/industrial 
equipment. This proposed rule would make the specified rulemaking 
procedures binding on DOE, and it would also revise language in certain 
provisions to make it consistent with the Energy Policy and 
Conservation Act of 1975 (``EPCA''), as amended, and other applicable 
law. It also proposes to expand early opportunities for public input on 
the Appliance Program's priority setting and rulemaking activities, to 
define a significant energy savings threshold for updating energy 
conservation standards, to commit to publishing final test procedures 
at least 180 days in advance of a standards proposal, and to delineate 
procedures for rulemaking under the separate direct final rule and 
negotiated rulemaking authorities, among other issues. DOE may consider 
additional changes to the Process Rule in a future proceeding. In 
addition to requesting written comments on its proposal, DOE will also 
hold a public meeting at DOE Headquarters to discuss this proposal and 
obtain additional input.

DATES: Comments: DOE will accept comments, data, and information 
regarding this notice of proposed rulemaking before and after the 
public meeting, but no later than April 15, 2019. See section V, 
``Public Participation,'' for details.
    Meeting: DOE will hold a public meeting on Thursday, March 21, 
2019, from 9 a.m. to 4:30 p.m. The meeting will also be broadcast as a 
webinar. See section V, ``Public Participation,'' for webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW, 
Washington, DC 20585.
    Interested persons are encouraged to submit comments, identified by 
``Process Rule NOPR'' and docket number EERE-2017-BT-STD-0062 and/or 
the regulatory information number (RIN) 1904-AD38. Comments may be 
submitted using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include ``Process Rule 
NOPR'' and docket number EERE-2017-BT-STD-0062 and/or RIN number 1904-
AD38 in the subject line of the message. Submit electronic comments in 
WordPerfect, Microsoft Word, PDF, or ASCII file format, and avoid the 
use of special characters or any form of encryption.
     Postal Mail: Sofie Miller, U.S. Department of Energy, 
Office of Energy Efficiency and Renewable Energy, 1000 Independence 
Avenue SW, Washington, DC 20585, Room 6A-013, Washington, DC, 20585. If 
possible, please submit all items on a compact disc (CD), in which case 
it is not necessary to include printed copies.
     Hand Delivery/Courier: Sofie Miller, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, 1000 
Independence Avenue SW, Washington, DC 20585. Telephone: (202) 586-
5000. If possible, please submit all items on a CD, in which case it is 
not necessary to include printed copies.
    No telefascsimilies (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on the 
rulemaking process, see section V of this document (Public 
Participation).
    Docket: The docket for this activity, which includes Federal 
Register notices, comments, and other supporting documents/materials, 
is available for review at http://www.regulations.gov. All documents in 
the docket are listed in the http://www.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: https://www.regulations.gov/docket?D=EERE-2017-BT-STD-0062. The docket web page contains 
instructions on how to access all documents, including public comments, 
in the docket. See section V, ``Public Participation,'' for further 
information on how to submit comments through http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Sofie Miller, Senior Advisor, U.S. 
Department of Energy, Office of Energy Efficiency and Renewable Energy, 
1000 Independence Avenue SW, Washington, DC 20585. Telephone: (202) 
586-5000. Email: [email protected].
    Francine Pinto, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585. 
Telephone: (202) 586-7432. Email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Summary of Proposal
II. Introduction
    A. Authority
    B. Background on the Process Rule
III. Discussion of Specific Revisions to the Process Rule
    A. The Process Rule Will Be Binding on the Department of Energy
    B. The Process Rule Will Apply to Both Consumer Products and 
Commercial Equipment
    C. The Application of the Process Rule to ASHRAE Equipment
    D. Priority Setting
    E. Coverage Determinations
    F. Early Stakeholder Input to Determine the Need for Rulemaking
    1. Standards
    a. Avenues for Early Stakeholder Input: Early Assessment Review
    b. Other Avenues for Early Stakeholder Input
    c. Elimination of ANOPRs From the Process Rule
    d. Decision-Making Process for Issuing a Determination Not To 
Amend Current Standards
    2. Test Procedures
    G. Significant Savings of Energy Threshold
    H. Finalization of Test Procedures Prior to Issuance of a 
Standards NOPR
    I. Adoption of Industry Standards
    J. Direct Final Rules
    1. DOE's Authority Under the DFR Provision
    2. Interested Persons Fairly Representative of Relevant Points 
of View
    3. Adverse Comments
    K. Negotiated Rulemaking
    1. Utilizing the Negotiated Rulemaking Process, Including the 
Establishment of the Appliance Standards and

[[Page 3911]]

Rulemaking Federal Advisory Committee (ASRAC)
    2. Inclusion of Negotiated Rulemaking in the Process Rule
    3. Suggestions Regarding Implementation of Negotiated 
Rulemakings
    L. Other Revisions and Issues
    1. DOE's Analytical Methodologies, Generally
    2. Cumulative Regulatory Burden
    3. Should DOE Conduct Retrospective Reviews of the Energy 
Savings and Costs of Energy Conservation Standards?
    4. Certification, Compliance, and Enforcement (CCE)-Related 
Issues
IV. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under Executive Order 13771
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act of 1995
    E. Review Under the National Environmental Policy Act of 1969
    F. Review Under Executive Order 13132
    G. Review Under Executive Order 12988
    H. Review Under the Unfunded Mandates Reform Act of 1995
    I. Review Under the Treasury and General Government 
Appropriations Act, 1999
    J. Review Under Executive Order 12630
    K. Review Under the Treasury and General Government 
Appropriations Act, 2001
    L. Review Under Executive Order 13211
    M. Review Under the Information Quality Bulletin for Peer Review
V. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
VI. Approval of the Office of the Secretary

I. Summary of Proposal

    DOE generally uses the procedures set forth in its Process Rule 
(found in 10 CFR part 430, subpart C, appendix A) when prescribing 
energy conservation standards for both consumer products and commercial 
equipment pursuant to the Energy Policy and Conservation Act of 1975 
(Pub. L. 94-163, codified at 42 U.S.C. 6291, et seq.). In this 
document, DOE is proposing to update and modernize its Process Rule by 
addressing the following major topics: (1) Emphasizing that the 
procedures outlined in the Process Rule are binding on the agency; (2) 
formalizing DOE's past practice of applying the Process Rule to both 
consumer products and commercial equipment; (3) clarifying the Process 
Rule's application with regard to equipment covered by ASHRAE Standard 
90.1; (4) expanding the Process Rule to test procedure rulemakings, as 
well as energy conservation standards rulemakings; (5) committing to 
both an ``early look'' process and other robust methods for early 
stakeholder input; (6) defining a significant energy savings threshold 
that must be met before DOE will update an energy conservation 
standard; (7) clarifying DOE's commitment to publish a test procedure 
six months before a related standards NOPR; (8) articulating DOE's 
authority under the Negotiated Rulemaking Act and EPCA's direct final 
rule (``DFR'') provision, while clarifying that negotiated rulemakings 
and DFRs are two separate processes with their own sets of 
requirements; and (9) addressing other miscellaneous issues. DOE 
welcomes written comments from the public on any subject within the 
scope of this proposal (including related topics not specifically 
raised in this NOPR).
    DOE continues to contemplate additional topics regarding its 
process for undertaking appliance standards rulemakings that may lead 
to additional rulemaking proceedings to update the Process Rule. In 
particular, DOE continues to think about potential changes to its 
analytical methodologies and models for assessing the costs and 
benefits of appliance standards rulemakings.

II. Introduction

A. Authority

    In overview, the Department of Energy's Process Rule was developed 
to guide implementation of the Appliance Standards Program, which is 
conducted pursuant to Title III, Parts B \1\ of the Energy Policy and 
Conservation Act of 1975 (``EPCA'' or ``the Act''), Public Law 94-163 
(42 U.S.C. 6291-6309, as codified), for consumer products, and Part C 
\2\ for certain industrial equipment (42 U.S.C. 6311-6317, as 
codified), added by Public Law 95-619, Title IV, Sec.  441(a).\3\
---------------------------------------------------------------------------

    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part C was redesignated Part A-1.
    \3\ All references to EPCA in this document refer to the statute 
as amended through the EPS Improvement Act of 2017, Public Law 115-
115 (January 12, 2018).
---------------------------------------------------------------------------

    Under EPCA, DOE's energy conservation program for covered products 
consists essentially of four parts: (1) Testing; (2) labeling; (3) the 
establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. The Federal Trade Commission 
(``FTC'') is primarily responsible for labeling, and DOE implements the 
remainder of the program. Subject to certain criteria and conditions, 
DOE is required to develop test procedures to measure the energy 
efficiency, energy use, or estimated annual operating cost of each 
covered product and covered equipment. (42 U.S.C. 6293 and 6314) 
Manufacturers of covered products and covered equipment must use the 
prescribed DOE test procedure as the basis for certifying to DOE that 
their products and equipment comply with the applicable energy 
conservation standards adopted under EPCA and when making any other 
representations to the public regarding the energy use or efficiency of 
those products. (42 U.S.C. 6293(c), 6295(s) 6314(a), and 6316(a)) 
Similarly, DOE must use these test procedures to determine whether the 
products comply with standards adopted pursuant to EPCA. Id.
    In addition, pursuant to EPCA, any new or amended energy 
conservation standard for covered products (and at least certain types 
of equipment) must be designed to achieve the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a)) Furthermore, the new 
or amended standard must result in a significant conservation of energy 
(42 U.S.C. 6295(o)(3)(B), 6313(a)(6), and 6316(a)), and comply with any 
other applicable statutory provisions.

B. Background on the Process Rule

    DOE conducted a formal effort between 1995 and 1996 to improve the 
process it follows to develop energy conservation standards for covered 
appliance products. This effort involved many different stakeholders, 
including manufacturers, energy-efficiency advocates, trade 
associations, State agencies, utilities, and other interested parties. 
The result was the publication of a final rule on July 15, 1996, 
titled, ``Procedures, Interpretations and Policies for Consideration of 
New or Revised Energy Conservation Standards for Consumer Products.'' 
61 FR 36974. This document was codified at 10 CFR part 430, subpart C, 
appendix A.\4\
---------------------------------------------------------------------------

    \4\ As explained in the final rule for the Process Rule, this 
rule came within the scope of the Administrative Procedure Act's 
exemption from notice-and-comment rulemaking for procedural rules at 
5 U.S.C. 553(b)(A). 61 FR 36974, 36980 (July 15, 1996). Although 
DOE's current rulemaking to consider potential revisions to the 
Process Rule might similarly warrant exemption from notice-and-
comment requirements, DOE nonetheless seeks input from the 
interested public regarding potential avenues to improve DOE's 
procedures.
---------------------------------------------------------------------------

    The Process Rule was designed to provide guidance to stakeholders 
as to how DOE would implement its rulemaking responsibilities under 
EPCA for the Appliance Program. As part of this enhanced process, 
supplementing the traditional notice-and-comment rulemaking process 
under the

[[Page 3912]]

Administrative Procedure Act (APA), DOE has invited and promoted 
extensive stakeholder involvement in its energy conservation standards 
and test procedure rulemakings. An important legacy of the Process Rule 
has been both to educate and learn from the many stakeholders who 
participate in DOE's appliance rulemaking efforts. Some of the 
successes that have resulted from the Process Rule include: (1) More 
involvement of a wider variety of stakeholders in DOE's appliance 
rulemaking process; (2) improved technical analyses in support of the 
appliance rules due to enhanced input from stakeholders at an early 
stage of the rulemaking process; (3) improved solutions to issues and 
problems because of increased stakeholder involvement; and (4) more 
open dialogue and improved relationships between stakeholders and also 
between stakeholders and DOE.
    While there have been many positive results from the Process Rule, 
DOE proposes to further improve the Process Rule in this document. 
These proposals would address: (1) Processes that may no longer track 
the current legal requirements of EPCA; (2) processes that do not take 
into account the maturation of DOE's appliance program to the point 
that modernization is necessary; (3) that DOE has not rigorously 
followed the Process Rule in many instances; (4) the need for 
regulatory reform to reduce the costs and burdens of rulemaking; and 
(5) the need to clarify that the Process Rule applies to commercial/
industrial equipment. In evaluating and seeking to expand the positive 
impacts of the Process Rule, as well as remedying the above-described 
negative developments, this proposal will address the changed landscape 
of the rulemaking process under EPCA, and endeavor to modernize the 
Process Rule.\5\
---------------------------------------------------------------------------

    \5\ In November 2010, DOE also issued a statement intended to 
expedite its rulemaking process. The statement is currently 
available at http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf. In this 
proposal, DOE is undertaking a thorough review of its Process Rule 
to determine the procedures it will follow in considering new or 
amended energy conservation standard and test procedures. As a 
result, if adopted, this proposed rule would supersede those 
portions of the November 2010 statement pertaining to the 
elimination of these early rulemaking steps.
---------------------------------------------------------------------------

    On December 18, 2017, DOE issued an RFI (December 2017 RFI) to 
address potential improvements to DOE's Process Rule so that it could 
to achieve meaningful burden reduction while continuing to achieve the 
Department's statutory obligations in the development of appliance 
energy conservation standards and test procedures. 82 FR 59992. 
Originally, the comment period for this RFI was scheduled to end on 
February 16, 2018. However, several stakeholders requested a 30-day 
extension to file comments. (Letter dated January 29, 2018 from Air-
Conditioning, Heating, and Refrigeration Institute (``AHRI''), the 
Association of Home Appliance Manufacturers (``AHAM''), and the 
National Electrical Manufacturers Association (``NEMA''), to John 
Cymbalsky, U.S. Department of Energy, Office of Energy Efficiency and 
Renewable Energy, Buildings Technologies Program). Consequently, DOE 
extended the comment period until March 2, 2018. 83 FR 5374 (Feb. 7, 
2018). Subsequently, DOE posted a notice on its website on March 2, 
2018, which stated that the comment period was further extended until 
March 5, 2018, due to a brief closure of the Federal government in the 
Washington DC area.
    To explore the issues in the December 2017 RFI, DOE convened a 
public meeting on January 9, 2018, which was attended by a wide range 
of stakeholders. The Department also simultaneously hosted a webinar, 
which was attended by approximately 150 additional persons. At this 
all-day public meeting, a wide variety of topics were addressed, 
including, but not limited to: (1) Direct final rules; (2) negotiated 
rulemaking; (3) elimination of the statutory requirement for an advance 
notice of proposed rulemaking and alternate means to gather additional 
information early in the process; (4) application of the process rule 
to commercial equipment; (5) use of industry standards in DOE test 
procedures; (6) timing of the issuance of DOE test procedures; (7) 
certification, compliance and enforcement; (8) improvements to DOE's 
analyses; and (9) any other issues or topics raised by stakeholders.
    Overall, DOE experienced a high level of engagement from 
stakeholders and the interested public regarding potential changes to 
the Process Rule.\6\ Such comments provided important input to DOE's 
current proposal to modernize the Process Rule, and the issues raised 
in those public comments are addressed subsequently in this document. 
Once finalized, DOE envisions promulgation of a Process Rule that 
increases transparency and public engagement and achieves meaningful 
burden reduction, while at the same time continuing to meet the 
Department's statutory obligations under EPCA.
---------------------------------------------------------------------------

    \6\ The following organizations or individuals provided comments 
in response to the December 18, 2017 RFI (82 FR 59992): ABB; Acuity 
Brands, Inc. (``Acuity Brands''); American Boiler Manufacturers 
Association (``ABMA''); American Public Power Association 
(``APPA''); American Public Gas Association (``APGA''); Joint 
Commenters of the Appliance Standards Awareness Project (ASAP), 
Alliance to Save Energy, American Council for an Energy-Efficient 
Economy (ACEEE), Consumer Federation of America (CFA), National 
Consumer Law Center (NCLC), Natural Resources Defense Council 
(NRDC), Northeast Energy Efficiency Partnerships (NEEP), and the 
Northwest Energy Efficiency Alliance (NEEA) (filing joint and 
collectively identified as, ``the ASAP Joint Comment''); Atlas Copco 
North America (``Atlas Copco''); Big Ass Solutions (``BAF''); 
Bradford White Corporation (``Bradford White''); California Investor 
Owned Utilities (comprised of Pacific Gas and Electric Company, 
Southern California Gas Company, San Diego Gas and Electric, and 
Southern California Edison) (collectively referred to as ``CA 
IOUs''); California Energy Commission (``CEC''); CSA America, Inc. 
(``CSA''); Daikin U.S. Corp. (``Daikin''); Edison Electric Institute 
(``EEI''); Energy Solutions; George Washington University (``GW''); 
Mile High Equipment, LLC. (``Ice-O-Matic''); joint comments filed by 
the Air-Conditioning, Heating, and Refrigeration Institute 
(``AHRI''), Air Movement and Control Association International Inc. 
(``AMCA''), American Lighting Association (``ALA''), Association of 
Home Appliance Manufacturers (``AHAM''), Hearth, Patio & Barbecue 
Association (``HPBA''), Heating Air-Conditioning & Refrigeration 
Distributors International (``HARDI''), National Association of 
Manufacturers (``NAM''), National Electrical Manufacturers 
Association (``NEMA''), and Plumbing Manufacturers International 
(``PMI'') (collectively, ``the Joint Commenters''); Lennox 
International Inc. (``Lennox''); Lochinvar; Lutron Electronics Co., 
Inc. (``Lutron''); Manufactured Housing Institute (``MHI''); Miles & 
Stockbridge P.C. (``Miles & Stockbridge''); North American 
Association of Food Equipment Manufacturers (``NAFEM''); National 
Consumer Law Center (``NCLA'') and the Consumer Federation of 
America (``CFA''); National Conference of State Legislatures 
(``NCSL''); Northeast Energy Efficiency Partnerships (``NEEP''); 
Nor-Lake, Inc. (``Nor-Lake''); Northwest Power and Conservation 
Council (``NPCC''); National Propane Gas Association (``NPGA''); 
Office of Information and Regulatory Affairs (``OIRA''); Plumbing 
Heating Cooling Contractors Association (``PHCC''); Regal Beloit 
Corporation (``Regal''); Sierra Club and Earth Justice; Rheem; 
Southern Company Services Inc. (``Southern Company''); Spire Inc. 
(``Spire''); Sub Zero Group, Inc. (``Sub Zero''); Schneider 
Electric; ITW-Food Equipment Group (``Traulsen/Kairak''); United 
Technologies (``UT-Carrier''); Whirlpool Corporation 
(``Whirlpool''); Daikin; Westinghouse Lighting; and Chris Soares.
---------------------------------------------------------------------------

III. Discussion of Specific Revisions to the Process Rule

A. The Process Rule Will Be Binding on the Department of Energy

    In the December 2017 RFI, DOE asked stakeholders whether DOE should 
make compliance with the Process Rule mandatory. 82 FR 59992, 59997. At 
the January 9, 2018, Process Rule public meeting, most stakeholders 
agreed that the Process Rule should be binding on the Department. 
(AHRI, January 9, 2018 Public Meeting Transcript at pp. 24, 169, 265; 
AHAM, January 9, 2018 Public Meeting Transcript at pp. 31, 168; Spire, 
January 9, 2018 Public Meeting Transcript at pp. 54-55; Southern

[[Page 3913]]

Company, January 9, 2018 Public Meeting Transcript at p. 268; NEMA, 
January 9, 2018 Public Meeting Transcript at p. 265; AGA, January 9, 
2018 Public Meeting Transcript, at p. 37)
    One commenter at the January 9, 2018, public meeting recommended 
that any amended Process Rule retain flexibility for DOE. (ASAP, 
January 9, 2018 Public Meeting Transcript, at pp. 266-268) Two 
commenters, Spire and Southern Company, suggested a savings or escape 
clause, respectively, to address this problem. According to Spire, this 
would mean that DOE must follow the Process Rule unless there is a 
conflict with EPCA. (Spire, January 9, 2018, Public Meeting Transcript, 
at p. 266) Southern Company stated that if it is difficult to follow 
the Process Rule, the matter can be sent to negotiated rulemaking and 
the group can decide whether to change the procedure. (Southern 
Company, January 9, 2018 Public Meeting Transcript, at p. 268)
    Commenters who took the position that the Process Rule should be 
binding on the Department generally argued that the Department should 
be held accountable for complying with its own procedures so that the 
public will have confidence in the transparency and fairness of DOE's 
regulatory process, including the certainty that mandatory application 
would bring. (Joint Commenters, No. 51 at pp. 2, 19, 32; EEI, No. 72 at 
p. 2; Atlas Copco North America, No. 54 at p. 7; ALA, No. 55 at p. 2; 
Lennox, No. 62 at p. 1; PHCC, No. 63 at p. 3; Southern Company, No. 70 
at p. 2; Public Power Association, No. 36 at p. 4; NPCC, No. 35 at p. 
22; Ice-O-Matic, No. 29 at p. 1; Spire, No. 57 at p. 2; Sub-Zero, No. 
43 at p. 4)
    Conversely, several commenters expressed that it would be 
potentially harmful to the Department's Appliance Program if DOE were 
to eliminate all flexibility in the Process Rule. These commenters 
supported application of the Process Rule, including its goal, among 
others, of promoting transparency and early stakeholder engagement, as 
long as DOE also meets its statutory obligations. (Sierra Club and 
Earth Justice, No. 66 at p. 2) The California Energy Commission 
(``CEC'') and Natural Resources Defense Council (``NRDC'') stated that 
DOE should not be subject to prescriptive requirements that limit its 
flexibility and restrict its ability to respond to the circumstances of 
each rulemaking. Such an approach, in CEC's view, would increase DOE's 
litigation risk. (CEC, No. 53, at p. 8) At the same time, NRDC, along 
with others, expressed openness to revisions to the Process Rule that 
would make it clearer or provide greater predictability with respect to 
how DOE will act in the standards-setting process. (NRDC, No. 74 at p. 
3) Other commenters also supported maintaining flexibility in the 
Process Rule and maintaining it as guidance. (CA IOUs, No. 65 at pp. 3, 
5; NEEP, No. 77 at pp. 1, 5; ASAP Joint Comment, No. 75 at p. 9)
    DOE acknowledges the important points made by commenters on this 
issue. In the December 2017 RFI, DOE stated that it has declined to 
follow the procedures in the Process Rule in a number of cases in the 
recent past. 82 FR 59992, 59993. And, DOE agrees that substantive 
improvements must be made in the Process Rule to promote greater 
transparency, consistency, and meaningful participation in DOE 
rulemakings.
    DOE has carefully considered all the comments on this matter and 
has determined that requiring mandatory compliance on the part of DOE 
with its own Process Rule would clearly promote a rulemaking 
environment that is both predictable and consistent (i.e., one where 
all stakeholders know what to expect during the rulemaking process). 
Accordingly, DOE is proposing language for the amended Process Rule to 
make clear that its provisions are binding on the agency. This approach 
would promote DOE's efforts to achieve meaningful burden reduction in 
the context of standards setting and compliance, as well as testing 
requirements, while continuing to achieve the Department's statutory 
obligations in the development of appliance standards.
    DOE hopes that this approach will promote a rulemaking environment 
that is open, consistent, and predictable for all stakeholders. 
Furthermore, DOE anticipates that going forward, the rulemaking process 
with its binding application on the Department, will result in reduced 
burden to stakeholders through a more consistent set of procedures.

B. The Process Rule Will Apply to Both Consumer Products and Commercial 
Equipment

    By its terms (and specifically by its title), the current Process 
Rule is applicable only to consumer products. However, in practice, DOE 
has routinely followed the procedures set forth in the Process Rule 
when establishing standards for commercial equipment. In its December 
2017 RFI, DOE requested comment as to whether the agency should amend 
the Process Rule to clarify that it is equally applicable to the 
consideration of standards for commercial equipment. 82 FR 59992, 
59996. At the January 9, 2018, Process Rule public meeting, DOE also 
asked stakeholders how the agency should treat equipment covered by the 
American National Standards Institute (``ANSI'')/American Society of 
Heating, Refrigerating, and Air-Conditioning Engineers (``ASHRAE'')/
Illuminating Engineering Society of North America (``IESNA'') Standard 
90.1 (``ASHRAE Standard 90.1''), if DOE were to amend the Process Rule 
to include commercial equipment. DOE pointed out that EPCA provides a 
separate set of procedural requirements and timelines for ASHRAE 
equipment that are different than those in the Process Rule. (DOE, 
January 9, 2018 Public Meeting Transcript at pp. 183-184)
    Commenters generally supported the principle that the Process Rule 
procedures should explicitly apply to both new and amended energy 
conservation standards for both covered consumer products and 
industrial and commercial covered equipment, but with modified 
provisions specific to ASHRAE equipment. (AHRI, January 9, 2018 Public 
Meeting Transcript, at p. 25; Spire, January 9, 2018 Public Meeting 
Transcript, at p. 184; EEI January 9, 2018 Public Meeting Transcript, 
at p. 184; AHAM, January 9, 2018 Public Meeting Transcript, at p. 184; 
AHRI, January 9, 2018 Public Meeting Transcript, at pp. 184-185; Joint 
Comment, No. 51 at pp. 2, 32-33; NPCC, No. 35 at pp. 7, 16; Spire, No. 
57 at p. 15; PHCC, No. 63 at p. 2; Southern Company, No. 70 at p. 2; 
APPA, No. 36 at p. 3; Ice-O-Matic, No. 29 at p. 1; Nor-Lake, No. 68 at 
pp. 1-2; Acuity Brands, No. 46 at p. 4; CA IOUs, No. 65 at p. 5; NAFEM, 
No. 47 at p. 3; CEC, No. 53 at p. 5; NEEP, No. 77 at p. 3; ASAP Joint 
Comment, No. 75 at p. 7; Lennox, No. 62 at p. 2, 8)
    Some of the commenters expressed the reasons for their support of 
this principle. For instance, Acuity Brands stated that a consistent 
approach would ease compliance burdens by applying the same set of 
rules across the board. (Acuity Brands, No. 46 at p. 4) The North 
American Association of Food Equipment Manufacturers (``NAFEM'') agreed 
that a consistent approach reduces administrative burdens and costs. 
NAFEM also stated that the Process Rule need not be identical as it 
relates to consumer products and commercial equipment given that there 
could be differences in the two markets that necessitate differences in 
the standard-setting process. (NAFEM, No. 47 at p. 3) The Joint 
Commenters stated that since the procedures for developing energy 
efficiency standards for both consumer products and commercial

[[Page 3914]]

equipment are largely the same, with the exception of ASHRAE equipment, 
it makes sense to have one set of expectations regardless of whether 
the regulated product/equipment has residential or commercial 
applications. (Joint Commenters, No. 51 at p. 33) Spire stated that it 
sees no legal impediment to extending the requirements of the Process 
Rule to commercial equipment. (Spire, No. 57 at p. 15)
    One commenter, the American Boiler Manufacturers Association 
(``ABMA''), did not agree that a Process Rule developed for consumer 
products can be equally applied to commercial equipment. It states that 
in many sectors, including the boiler industry that it represents, 
consumer products do not resemble their commercial counterparts in 
terms of size, complexity, and application, to name just a few 
distinctions. ABMA stated that this is particularly true for the 
largest commercial equipment engineered for a specific application that 
have sales in the single digits annually in some instances. ABMA 
advocated that there needs to be a way to differentiate between the 
equipment with a similar name but possessing significant differences in 
terms of processes and features, including capacity. (ABMA, No. 71 at 
pp. 2-3)
    Overall, DOE agrees with commenters that a modernized and amended 
Process Rule should apply to both consumer products and industrial and 
commercial equipment, and that the Process Rule must contain language 
that clarifies this coverage. Historically, DOE has applied the Process 
Rule to both consumer and industrial and commercial rules. This 
proposal would make clear that such practice will continue. To promote 
a consistent process that reduces the regulatory burden of the 
rulemaking, DOE proposes to apply the same procedures in the Process 
Rule to both consumer products and industrial and commercial equipment 
rulemakings, except as discussed in section III.C for ASHRAE equipment. 
In response to ABMA, DOE does not see the procedural safeguards of the 
Process Rule in any way negatively impacting the detailed consideration 
to be accorded a given type of product or equipment in the context of 
an individual standards or test procedure rulemaking. On the contrary, 
DOE has tentatively concluded that formally applying the Process Rule 
to commercial and industrial equipment will enhance the consideration 
of such equipment by ensuring that there is proper time and information 
before the agency prior to promulgation of new or amended regulations.

C. The Application of the Process Rule to ASHRAE Equipment

    As noted previously, at the January 9, 2018, Process Rule public 
meeting, DOE requested comment as to how the agency should treat ASHRAE 
equipment subject to ASHRAE Standard 90.1, in the event DOE were to 
amend the Process Rule to formally apply to commercial equipment. In 
relevant part, EPCA provides that ASHRAE equipment is subject to unique 
statutory requirements and its own set of timelines. More specifically, 
pursuant to EPCA's statutory scheme for covered ASHRAE equipment, DOE 
is required to consider amending the existing Federal energy 
conservation standards for certain enumerated types of commercial and 
industrial equipment (generally, commercial water heaters, commercial 
packaged boilers, commercial air-conditioning and heating equipment, 
and packaged terminal air conditioners and heat pumps) when ASHRAE 
Standard 90.1 is amended with respect to such equipment. (42 U.S.C. 
6313(a)(6)(A)) For each type of equipment, EPCA directs that if ASHRAE 
Standard 90.1 is amended, DOE must adopt amended energy conservation 
standards at the new efficiency level in ASHRAE Standard 90.1 as the 
uniform national standard for such equipment, unless DOE determines by 
rule, and supported by clear and convincing evidence, that a more-
stringent standard would result in significant additional conservation 
of energy and is technologically feasible and economically justified. 
(42 U.S.C. 6313(a)(6)(A)(ii)(I)-(II))
    Several stakeholders expressed their views as to how DOE should 
handle ASHRAE equipment. The Joint Commenters stated that ASHRAE 
equipment occupies a unique place under EPCA. They asserted that the 
language and intent of EPCA reflects the underlying policy that the 
stakeholder-driven process of ASHRAE Standard 90.1 is working and that 
DOE should defer to that process. The Joint Commenters argued that 
amendments to the Process Rule should set apart ASHRAE equipment and 
acknowledge the expectation that DOE will normally codify the industry 
consensus standards adopted in Standard 90.1 as the uniform national 
standard. Furthermore, they stated that DOE should undertake some form 
of early stakeholder engagement for ASHRAE equipment. They stated that 
if ASHRAE Standard 90.1 is amended to increase minimum efficiency 
requirements for covered equipment, DOE should act promptly to publish 
a NOPR with the expectation that the applicable ASHRAE Standard 90.1 
levels will be adopted as a final rule within 18 months. (Joint 
Commenters, No. 51 at p. 33)
    Lennox stated that the Process Rule should be applied to commercial 
equipment except when it would conflict with special statutory 
provisions specific to commercial equipment rulemakings, such as 
provisions for adopting ASHRAE 90.1 industry standards. For commercial 
equipment covered by ASHRAE Standard 90.1, Lennox pointed out that DOE 
must adopt the industry standard unless ``clear and convincing 
evidence'' dictates otherwise. (42 U.S.C. 6313(a)(6)(A)(ii)) It stated 
that if DOE simply adopts ASHRAE Standard 90.1 standards, the 
additional provisions in the Process Rule are not necessary. However, 
if DOE considers promulgating regulations more stringent than ASHRAE 
90.1 standards, Lennox argued that DOE should follow the Process Rule. 
Moreover, according to Lennox, the Process Rule should clarify the high 
bar for what constitutes ``clear and convincing evidence'' for 
promulgating a standard more stringent than ASHRAE Standard 90.1. 
(Lennox, No. 62 at p. 8) The Joint Commenters agreed with Lennox that 
an amended Process Rule should develop an interpretation of what the 
higher bar of ``clear and convincing'' evidence means for the 
establishment of energy conservation standards. The Joint Commenters 
stated that in recent years, DOE has published rules that adopt more 
stringent standards than the national uniform consensus ASHRAE 90.1 
energy efficiency standards and has not taken steps to demonstrate that 
their findings meet a higher threshold of evidentiary proof. They 
stated that EPCA provides a statutory presumption that standards more 
stringent than those required by ASHRAE Standard 90.1 are not 
necessary, and that presumption can be rebutted only on the basis of 
``clear and convincing evidence.'' (Joint Commenters, No. 51 at p. 34) 
(Also see, AHRI, January 9, 2018 Public Meeting Transcript at p. 188, 
for the proposition that DOE should codify the clear and convincing 
burden of proof standard for when DOE seeks to go beyond the ASHRAE 
levels.)
    The Joint Commenters also stated that DOE needs evidence to support 
its assumptions in every case, and it needs even more evidence when the 
``clear and convincing'' standard applies. The commenter argued that 
the ``clear and convincing'' standard is more demanding than the 
``reasonable''

[[Page 3915]]

standard required for non-ASHRAE rulemakings. The Joint Commenters 
added that an assumption is not even ``reasonable'' in the absence of 
any evidence of its validity (i.e., unless it is supported by 
``substantial evidence,'' which EPCA requires in the case of standards 
for consumer products under 42 U.S.C. 6306(b)(2)). The Joint Commenters 
gave as an example the single package, vertical unit rulemaking in 
which DOE raised the standard level over the ASHRAE minimums, arguing 
that if DOE had developed the required evidence, the agency would have 
reached a different and better result. (Joint Commenters, No. 51 at pp. 
34-35)
    One commenter (AHRI) stated that to the extent DOE plans on 
conducting an ASHRAE rulemaking that goes above the ASHRAE Standard 
90.1 standards level, the full Process Rule should apply. Also, if DOE 
is doing a six-year review of ASHRAE standards and DOE is initiating 
that review, AHRI argued that the full Process Rule should apply. 
However, if a rule is being conducted based upon and consistent with an 
ASHRAE change, AHRI suggested that the process should be the same as it 
is now. (AHRI, January 9, 2018 Public Meeting Transcript at pp. 185-
186)
    In this proposal, DOE has tentatively determined that the amended 
Process Rule will contain a new section that clearly delineates the 
procedure DOE will follow for evaluating amendments to ASHRAE Standard 
90.1 and conducting related rulemakings. First, DOE's statutory 
obligations for ASHRAE equipment will be reiterated in this new 
section. Through its amended Process Rule, DOE is also announcing its 
tentative decision that, going forward, DOE anticipates adopting the 
revised ASHRAE levels as contemplated by EPCA, except in very limited 
circumstances as discussed below. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) 
DOE's commitment to adopting the amended ASHRAE Standard 90.1 level(s) 
as its regular practice will result in reducing the regulatory burden 
on stakeholders and will promote consistency and simplicity when DOE is 
addressing ASHRAE equipment.
    With respect to DOE's consideration of more-stringent standards 
than the ASHRAE levels, DOE tentatively takes the position that for DOE 
to utilize its statutory authority to establish more-stringent 
standards than the amendments to ASHRAE Standard 90.1 pursuant to 42 
U.S.C. 6313(a)(6)(A)(ii)(II), DOE will be required to meet a very high 
bar to demonstrate the ``clear and convincing evidence'' threshold that 
is articulated in this latter subsection. When evaluating whether it 
can proceed with a rulemaking to potentially establish more-stringent 
standards than those adopted by ASHRAE, DOE will seek, from interested 
stakeholders and the public, data and information to assist in making 
this determination, prior to publishing a proposed rule to adopt more 
stringent standards. Moreover, DOE proposes that clear and convincing 
evidence would exist only if:
    Given the circumstances, facts, and data that exists for a 
particular ASHRAE amendment, DOE determines there is no substantial 
doubt that the more stringent standard would result in a significant 
additional conservation of energy, is technologically feasible and 
economically justified.
    This high bar would mean that only in extraordinary circumstances 
would DOE conduct a rulemaking to establish more-stringent standards 
for covered ASHRAE equipment. In the event that DOE determines that 
such a rule is possible, all of the Process Rule requirements would 
apply. However, for the typical situation wherein DOE is adopting the 
ASHRAE Standard 90.1 level(s), DOE would follow the EPCA statutory 
requirements and not be required to follow additional Process Rule 
requirements.
    Making clear that DOE will adopt the action taken by ASHRAE except 
in rare circumstances raises the question as to how broadly DOE is 
triggered by ASHRAE action in amending Standard 90.1. For example, if 
ASHRAE acts to amend its standard at the equipment class level for air-
cooled variable refrigerant flow (VRF) multi-split air conditioners 
greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h, is 
DOE triggered to consider amended standards: (1) Only for that specific 
equipment class that was actually amended in ASHRAE 90.1; (2) for the 
entire equipment category of VRF equipment, or (3) for the entire 
covered equipment type of small commercial package air conditioning and 
heating equipment? EPCA does not specifically define the term 
``amended'' in the context of ASHRAE Standard 90.1. Although the 
statute is not entirely clear on this matter, DOE has maintained a 
consistent position for over a decade, at least since it interpreted 
what would constitute an ``amended standard'' in a final rule published 
in the Federal Register on March 7, 2007. 72 FR 10038. In that rule, 
DOE stated that the statutory triggering event requiring DOE to adopt 
uniform national standards based on ASHRAE action is for ASHRAE to 
change a standard for any of the equipment listed in EPCA section 
342(a)(6)(A)(i) (42 U.S.C. 6313(a)(6)(A)(i)) by increasing the energy 
efficiency level for that equipment. Id. at 10042. In other words, if 
the revised ASHRAE Standard 90.1 leaves the standard level unchanged or 
lowers the standard, as compared to the level specified by the national 
standard adopted pursuant to EPCA, DOE does not have the authority to 
conduct a rulemaking to consider a higher standard for that equipment 
pursuant to 42 U.S.C. 6313(a)(6)(A). DOE subsequently reiterated this 
position in final rules published in the Federal Register on July 22, 
2009 (74 FR 36312, 36313), May 16, 2012 (77 FR 28928, 28937), and July 
17, 2015 (80 FR 42614, 42617).
    In the American Energy Manufacturing Technical Corrections Act 
(AEMTCA), Public Law 112-210 (Dec. 18, 2012), Congress modified several 
provisions related to ASHRAE Standard 90.1 equipment. In relevant part, 
DOE must act whenever ASHRAE Standard 90.1's ``standard level or design 
requirements under that standard'' are amended. (42 U.S.C. 
6313(a)(6)(A)(i)) Furthermore, that statutory amendment required that 
DOE must conduct an evaluation of each class of covered equipment in 
ASHRAE Standard 90.1 ``every 6 years.'' (42 U.S.C. 6313(a)(6)(C)(i))
    In practice, DOE's review in making this assessment has been 
strictly limited to the specific standards for the specific equipment 
for which ASHRAE has made a change (i.e., determined down to the 
equipment class level). DOE believes that this is the best reading of 
the statutory provisions discussed previously, because if ASHRAE were 
to change the standard for a single equipment class, but DOE then 
considered itself triggered at the equipment category level or 
equipment type level, the process would arguably no longer comport with 
the statutory scheme. More specifically, in such cases, DOE would be 
addressing certain classes of ASHRAE equipment for which standards had 
not changed, so it would be impossible for DOE to adopt the ASHRAE 
level as the statute envisions (as it would already be the same as the 
existing Federal standard). Instead, DOE could only consider adoption 
of more-stringent standard levels. Such interpretation would arguably 
run counter to the ``follow ASHRAE'' statutory structure set in place 
by Congress. Furthermore, Congress specifically and recently added a 6-
year-lookback provision for covered ASHRAE equipment at 42 U.S.C. 
6313(a)(6)(C)(i), a provision which arguably instructs DOE in terms of 
how and when to address covered

[[Page 3916]]

equipment upon which ASHRAE has not acted in a timely manner. However, 
DOE believes that ASHRAE not acting to amend Standard 90.1 is 
tantamount to a decision that the existing standard remain in place. 
Thus, as required by 42 U.S.C. 6313(a)(6)(C), DOE would need to find 
clear and convincing evidence, as defined above, to issue a standard 
more stringent than the existing standard for the product. DOE welcomes 
comments, data, and information on this topic.

D. Priority Setting

    The current Process Rule at 10 CFR part 430, subpart C, Appendix A, 
section 3(d) outlines DOE's priority-setting analysis, which considers 
ten factors: (1) Potential energy savings; (2) potential economic 
benefits; (3) potential environmental or energy security benefits; (4) 
applicable deadlines for rulemakings; (5) incremental DOE resources 
required to complete the rulemaking process; (6) other relevant 
regulatory actions affecting products; (7) stakeholder recommendations; 
(8) evidence of energy efficiency gains in the market absent new or 
revised standards; (9) status of required changes to test procedures; 
and (10) other relevant factors. The current Process Rule requires that 
the results of this analysis will be used to develop rulemaking 
priorities and proposed schedules for the development and issuance of 
all rulemakings which will then be documented and distributed for 
review and comment. 10 CFR part 430, subpart C, Appendix A, section 
3(a). The Process Rule also states that each fall, DOE will issue, 
simultaneously with the Administration's Regulatory Agenda, a final set 
of rulemaking priorities, the accompanying analysis, and the schedules 
for all priority rulemakings that it anticipates within the next two 
years. Id. at section 3(c).
    In this document, while DOE intends to continue considering the 10 
factors in its priority-setting, DOE proposes to revise the process 
discussed above. In the past, DOE has not successfully fulfilled its 
prioritization objectives as outlined in the Process Rule, perhaps in 
part because DOE determined that the analysis described in the current 
Process Rule is reflected in the Regulatory Agenda, which is available 
to the public. In any event, DOE sees value in streamlining and 
clarifying the reporting of its priority-setting activities in the 
revised Process Rule. Going forward, DOE is proposing that stakeholders 
would have the opportunity to provide input on prioritization of 
rulemakings through a request for comment as DOE begins preparation of 
its Regulatory Agenda each spring. In particular, DOE would point 
interested parties to the Regulatory Agenda posted to www.reginfo.gov 
the previous fall and would request input concerning which rulemaking 
proceedings should be in particular action categories in the spring 
Regulatory Agenda and the timing of such rulemakings. If stakeholders 
believe that the Department is pursuing a rule that should not be 
prioritized, they would have the opportunity to use this mechanism to 
so inform DOE. If stakeholders believe DOE should act more quickly on 
another rulemaking they could make that point as well. Through this 
revised process, DOE has tentatively concluded that increased 
stakeholder input early in the rulemaking process, combined with the 
public availability of the Regulatory Agenda, would meet the same 
objectives as DOE's previous priority-setting analysis.

E. Coverage Determinations

    In addition to specifying a list of covered residential and 
commercial products, EPCA contains provisions that enable the Secretary 
of Energy to classify additional types of consumer products and 
industrial/commercial equipment as ``covered'' within the meaning of 
EPCA. (42 U.S.C. 6292(b); see also 42 U.S.C. 6295(l) for consumer 
products; 42 U.S.C. 6312 for commercial and industrial equipment) This 
authority allows DOE to consider regulating additional products/
equipment that further the goals of EPCA; that is, to conserve energy 
for the Nation as long as the statutory threshold requirements are met.
    If DOE determines to initiate the coverage determination process, 
it will first publish a notice of proposed determination, limited to 
the issue of coverage, in which DOE will explain how such products/
equipment that it seeks to designate as ``covered'' meet the statutory 
criteria for coverage and why such coverage is ``necessary or 
appropriate'' to carry out the purposes of EPCA. (42 U.S.C. 6292(b)(1)) 
In the case of commercial/industrial equipment, DOE follows the same 
process, except that the Department need only show the coverage 
determination is ``necessary'' to carry out the purposes of EPCA. (42 
U.S.C. 6312) DOE's authority to add commercial equipment is more 
limited than its authority to add consumer products because Congress 
specified the particular types of equipment that could be added. (42 
U.S.C. 6311(2)(B)) Stakeholders would then be given 60 days to submit 
written comments to DOE on the proposed determination notice. 
Subsequently (and in a change from DOE's past practice), DOE would 
assess the written comments and then publish its final decision on 
coverage as a separate notice, an action which would be completed prior 
to the initiation of any rulemaking for related test procedures or 
energy conservation standards. If the final decision determines that 
coverage is warranted, DOE will proceed with its typical rulemaking 
process for both test procedures and standards, applying the 
requirements of the Process Rule, as amended. Specifically, DOE would 
not issue any RFIs, notices of data availability (``NODAs''), or any 
other mechanism to gather information for the purpose of initiating a 
rulemaking to establish a test procedure or energy conservation 
standard for the proposed covered product prior to finalization of the 
coverage determination. DOE will also finalize coverage for a product 
at least six months prior to publication of a proposed rule to 
establish a test procedure. And, DOE will complete the test procedure 
rulemaking at least six months prior to publication of a proposed 
energy conservation standard. This timing does not present any legal 
issue because adding coverage for a product and establishing test 
procedures and standards is a purely discretionary act without legal 
deadline.
    The Joint Commenters, citing to 42 U.S.C. 6292(b)(1)(A), argued 
that DOE should exercise its authority to identify new ``covered 
products'' in a limited fashion, extending only to those products for 
which EPCA regulation is ``necessary or appropriate'' to the 
achievement of EPCA's purposes. They further argued that DOE's 
authority to identify new ``covered products'' is limited to products 
that consume at least enough energy to satisfy a stated minimum energy 
consumption criterion. The Joint Commenters urged that coverage 
determinations be made on a product-specific basis with each new 
covered product being defined separately with sufficient clarity to 
ensure that products serving different purposes are not treated as a 
single covered product. They added that each product should 
individually satisfy the minimum energy consumption requirement and 
qualify as a ``necessary or appropriate'' target for regulation. The 
Joint Commenters advocated that the Process Rule should be amended to 
require that proposed and final coverage determinations under 42 U.S.C. 
6292(b) specifically identify each of the products at issue and provide 
a separate justification for the coverage of each.

[[Page 3917]]

They further added that DOE has failed to satisfy these requirements in 
the past. Moreover, the Joint Commenters recommended that a final 
coverage determination be in place before substantive rulemaking on 
test procedures or energy conservation standards commences so that the 
public clearly understands which products are covered, thus avoiding 
unnecessary confusion, wasted resources, and the failure to address 
critical issues. Lastly, the Joint Commenters suggested that the 
current Process Rule requires a reopening of comment on the 
justification for a coverage determination during the first rulemaking 
in which substantive regulation is imposed and if broader coverage is 
required, a new coverage determination must be proposed and finalized 
before initiating a rulemaking to regulate the broader range of 
products. (Joint Comment, No. 51 at pp. 9-10) Whirlpool and Lutron 
expressed support for these views. (See Whirlpool, No. 76 at p. 1; 
Lutron, No. 50 at p. 2)
    DOE agrees with the points raised by the Joint Commenters, 
discussed above, that DOE should exercise its authority to identify new 
``covered products'' in a limited fashion. To this end, DOE proposes to 
extend coverage only to: (1) Those consumer products for which EPCA 
regulation is ``necessary or appropriate'' to the achievement of EPCA's 
purposes and which meet statutory consumption criterion, and (2) to 
that commercial/industrial equipment for which EPCA regulation is 
``necessary'' to the achievement of EPCA's purposes. DOE agrees that 
any proposed new covered products/equipment should be narrowly defined 
with sufficient clarity so that the proposed coverage corresponds to 
that which is intended.
    DOE does not agree with the Joint Commenter's suggestion that all 
coverage determinations must be reopened as a matter of course in the 
first substantive rulemaking on the newly covered product/equipment. 
After completing notice and comment on a proposed coverage 
determination and issuing a final determination, DOE believes it is 
appropriate to accord such process finality. However, if during the 
substantive rulemaking proceeding DOE finds it necessary and 
appropriate to expand or reduce the scope of coverage, the Department 
agrees with the Joint Commenter's that a new coverage determination 
process at that point should be initiated and finalized prior to moving 
forward with the test procedure or standards rulemaking.

F. Early Stakeholder Input To Determine the Need for Rulemaking

1. Standards
    In the December 2017 RFI, DOE sought comment on whether the Process 
Rule should be revised to eliminate its current provisions related to 
the publication of an advanced notice of proposed rulemaking 
(``ANOPR'') because of statutory amendments that eliminated the ANOPR 
requirement and/or to include additional preliminary rulemaking steps. 
82 FR 59992, 59995. DOE received a number of comments regarding both 
the elimination of the ANOPR and the inclusion of other avenues for 
early stakeholder input, which are discussed in further detail, along 
with DOE's response, in the subsections immediately following.
a. Avenues for Early Stakeholder Input: Early Assessment Review
    In response to comments discussed below, DOE proposes adding a 
process for an early assessment review of a potential rule. For 
example, the Joint Commenters recommended that DOE should adopt ``a 
quick hard look process'' for use at an early juncture in the 
rulemaking to determine whether a standard needs to be amended. The 
Joint Commenters stated that this type of preliminary evaluation 
procedure would allow DOE to focus its resources on rulemakings 
offering the potential for significant energy savings. In those 
instances where opportunities for energy savings are not significant or 
an amended standard is not technologically feasible or economically 
justified, DOE could make a determination to not amend standards. The 
Joint Commenters argued that such an approach would continue to allow 
DOE to meet its statutory obligations, while focusing the regulatory 
process on those areas where the most benefit can be obtained and at 
the same time reducing the burden on stakeholders. As part of this 
``quick hard look,'' the Joint Commenters recommended that DOE should 
publish an RFI seeking information that would assist the Department in 
determining whether anything has changed (technologically, 
economically, or otherwise) since the last final rule as would 
necessitate amended standards. Under this preliminary assessment 
procedure, the Joint Commenters presume that standards would not need 
amendment unless DOE or stakeholders identify significant changes since 
the last rulemaking. (Joint Commenters, No. 51 at pp. 4-6)
    In contrast to the Joint Commenters, the Appliance Standards 
Awareness Project (``ASAP'') Joint Commenters did not support a 
separate ``quick look'' process to determine whether a full rulemaking 
is necessary. The ASAP Joint Commenters argued that existing law 
already provides the necessary framework for DOE to quickly determine, 
after notice and comment, that no change is warranted for a particular 
standard. (ASAP Joint Comment, No. 75 at p. 6)
    In response to the Joint Comment, DOE agrees generally with the 
need for an early assessment review at the beginning of the rulemaking 
process to allow DOE to focus its resources appropriately, and an 
understanding of any changed circumstances since the last final rule 
would certainly be relevant to that inquiry. DOE notes that it 
discusses significant energy savings in detail later in this proposal 
(see section III.G). An assessment of the potential energy savings at 
issue would also be an important consideration when evaluating the need 
for further rulemaking. Thus, DOE is proposing to adopt provisions in 
the revised Process Rule that would provide for an early assessment 
review of the suitability of further rulemaking, thereby allowing both 
the agency and interested stakeholders to conserve and target limited 
resources so as to achieve the greatest benefit. Therefore, as the 
first step in any proceeding to consider establishing or amending any 
energy conservation standard, DOE proposes to publish a notice in the 
Federal Register announcing that DOE is considering initiation of a 
proceeding, and as part of that notice, DOE would request submission of 
related comments, including data and information showing whether any 
new or amended standard is economically justified, technologically 
feasible or would result in a significant savings of energy. If DOE 
receives sufficient information suggesting that it could justify a 
determination that no new or amended standard would meet the applicable 
statutory criteria, DOE would engage in notice and comment rulemaking 
to make that determination. If DOE does not receive sufficient 
information or the information received is inconclusive with regard to 
the statutory criteria, DOE would undertake the preliminary stages of a 
rulemaking to issue or amend an energy conservation standard. Beginning 
such a rulemaking, however, would not preclude DOE from later making a 
determination that a new or amended energy conservation standard is not 
economically justified, technologically feasible or would not result in 
a significant savings of energy.

[[Page 3918]]

b. Other Avenues for Early Stakeholder Input
    In response to comments discussed below, DOE will continue to seek 
early stakeholder input after the early assessment review. A number of 
commenters stressed the importance of early stakeholder input during 
the rulemaking process. (UT-Carrier, No. 41 at p. 4; Sub Zero, No. 43 
at p. 4; Ice-O-Matic, No. 29 at p. 1; NAFEM, No. 47 at p. 2) The 
California Investor-Owned Utilities (``CA IOUs'') urged that as part of 
such engagement, DOE should perform testing and research so as to 
generate publicly-available information to inform the process. (CA 
IOUs, No. 65 at p. 5) Other commenters touted early stakeholder input 
as a means of understanding the industry's own efforts to advance 
energy efficiency. (See e.g., Schneider Electric, No. 69 at p. 2) CEC 
stated that for newly covered products, a Framework Document is likely 
appropriate, whereas for previously covered products, a Request for 
Information would probably be adequate. CEC added that depending on the 
product, a Preliminary Technical Support Document or Notice of Data 
Availability should typically precede a NOPR. (CEC, No. 53 at p. 4)
    In response to these comments, DOE agrees that early stakeholder 
input is an important part of the rulemaking process, particularly when 
it comes to information exchange. In the November 6, 2010, policy 
statement (https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf), DOE stated that ``the energy 
conservation standards rulemaking process typically began with a 
framework document, followed by a preliminary analysis. Only after 
these two steps were completed did the Department issue a proposed rule 
for public comment. While the framework document and preliminary 
analysis provide useful information, there are more efficient ways of 
gathering data. Accordingly, in appropriate cases, the Department will 
gather the needed preliminary data informally and begin the public 
rulemaking process with the issuance of a proposed rule for public 
comment.'' DOE now proposes, however, that after conducting the early 
assessment review process described above, if the Department does not 
receive sufficient information suggesting that it could justify a 
determination that no new or amended standard would meet the applicable 
statutory criteria, or the information received is inconclusive with 
regard to the statutory criteria, the preliminary stages of a 
rulemaking to issue or amend an energy conservation standard that DOE 
would undertake would be the framework document and preliminary 
analysis or an ANOPR. These documents, as opposed to ``informal'' data 
gathering, would provide the necessary robust analysis to determine 
whether to move forward with a proposed standard. RFIs and NODAs could 
be issued, as appropriate, in addition to these analytical documents, 
and the Department will continue to rely on a variety of notices 
(including those mentioned by the commenters) to ensure opportunities 
for public input in the rulemaking process.
c. Elimination of ANOPRs From the Process Rule
    A number of commenters spoke specifically about the use of ANOPRs 
during the rulemaking process, including whether DOE should follow 
through on removal of that step in the rulemaking process, given the 
statute's rescission of such requirements. Several commenters did not 
support the elimination of the ANOPR from the Process Rule, stating 
that it helps to ensure early stakeholder input in the process. 
(Bradford White, No. 42 at pp. 1-2; Atlas Copco, No. 54 pp. 7-8; Ice-O-
Matic, No. 29 at p. 2; Spire, No. 57 at p. 14; ABMA, No. 71 at p. 2; 
Lennox, No. 62 at p. 7) Acuity Brands added that ANOPRs can improve the 
quality of proposed rules/standards, in part by obtaining prompt input 
on topics such as defining terms and scope and setting criteria for 
data modeling. Without stakeholder involvement at the front end of the 
process, the commenter argued that there is a higher risk of proceeding 
with erroneous assumptions, which could negatively impact the NOPR. As 
part of the ANOPR (or at a similar preliminary stage), Acuity Brands 
recommended that DOE should undertake consideration of the effect of 
any current standards, in order to assess the usefulness, scope, and 
parameters of a new rulemaking. (Acuity Brands, No. 46 at pp. 3-4) The 
National Propane Gas Association (``NPGA'') did not favor the 
elimination of ANOPRs because early stakeholder engagement encourages 
the exchange of valuable information and transparency. (NPGA, No. 59 at 
p. 2) In contrast, two commenters supported the elimination of the 
ANOPR in order to reflect the Congress's change to the statute, 
reminding that DOE has alternative ways to achieve the same objectives. 
(Sierra Club and Earth Justice, No. 66 at p. 5; NPCC, No. 35 at p. 7, 
15; CEC, No. 53 at p. 4)
    Others expressed support for either an ANOPR or a similar method 
for early stakeholder involvement. (Southern Company, No. 70 at p. 4; 
APPA, No. 36 at p. 3; EEI, No. 72 at p. 3; ASAP Joint Comment, No. 75 
at p. 7; PHCC, No. 63 at p. 2) The Northeast Energy Efficiency 
Partnerships (``NEEP'') commented that data collection early in the 
rulemaking process helps to ensure a successful rule in the end. It 
further stated that DOE has several available options for obtaining 
advanced information: ANOPRs, Framework Documents, Preliminary 
Analyses, NODAs, and/or RFIs. Because of the wide breadth of consumer 
appliances and commercial equipment that DOE regulates, NEEP commented 
that DOE should select the tool that is most appropriate for a given 
products/equipment rulemaking. (NEEP, No. 77 at p. 3)
    In response to these comments, DOE has tentatively concluded that 
there are multiple procedures the agency could adopt as part of the 
revised Process Rule that achieve the aims of early information 
gathering in the rulemaking process. The ANOPR might be preferable in a 
given proceeding. Alternatively, an RFI or Notice of Data Availability 
would allow for early stakeholder input through a request for comments 
in circumstances where DOE may not have sufficient information to 
develop an ANOPR. DOE might issue a Framework Document and Preliminary 
Analysis where DOE received information in response to the early look 
that might have been inconclusive with regard to the need for a new or 
amended standard, and DOE seeks additional input to help make that 
determination. These alternate tools should equally promote 
transparency in DOE's process and allow for early information exchange. 
In all cases, however, contrary to DOE's November 2010 policy 
statement, DOE will provide for some form of preliminary data gathering 
and public comment process, including either an ANOPR or Framework 
Document and Preliminary Analysis, prior to issuing a proposed rule.
d. Decision-making Process for Issuing a Determination Not To Amend 
Current Standards
    DOE received a number of comments regarding the potential for DOE's 
issuance of a determination not to amend a current energy conservation 
standard. These comments fell within two groups--those that supported 
the potential for such a determination and those that did not.
    Commenters at the January 9, 2018, public meeting supported DOE's 
review of the suitability of pursuing amended standards for a given 
type of product or equipment at the start of a rulemaking. In cases 
where covered products have

[[Page 3919]]

undergone multiple amended standards rulemakings to date, these 
commenters asserted that DOE's analyses have demonstrated diminishing 
returns that either left little room for technical improvement to move 
energy efficiency beyond the current minimum efficiency standard or 
indicated that the highest efficiency models have already achieved a 
significant share of the market. These commenters added that, in their 
view, DOE and stakeholders understand that amending the standards for 
certain products/equipment would be unlikely to result in significant 
energy savings and present either serious economic or technological 
obstacles to further improve efficiency. For such products/equipment, 
these commenters suggested that DOE should exercise the opportunity to 
issue a determination pursuant to EPCA that the applicable standards 
will remain unchanged ithout going through the usual costly suite of 
analyses (i.e., market, manufacturer impact teardown, and LCC analyses) 
and multiple rounds of amendment proposals and comment periods. In 
their collective view, the continued application of this approach, is 
neither required by statute, nor a good use of DOE's resources. AHRI in 
particular recommended that the Process Rule should specify that the 
opportunity to issue a notice determining that no new standard is 
needed will occur early in the rulemaking process so that DOE, 
industry, and other stakeholders can allocate time and resources to 
focus on those products/equipment that are the best candidates for 
improvement based on technological feasibility and economic 
opportunity. It added that such an approach would need to be designed 
to meet all statutory timelines and requirements. (AHRI, January 9, 
2018, Public Meeting Transcript at pp. 25-27, 182-183, 250; AHAM, 
January 9, 2018, Public Meeting Transcript at pp. 30-32, 177-179)
    Other industry commenters held similar views. The American Public 
Power Association (``APPA'') supported the inclusion of guidelines 
regarding the issuance of determinations that no amended standards are 
warranted, particularly in cases where it would apply to products for 
which little energy savings would result due to declining shipments. 
(APPA, No. 36 at p. 4) Ice-O-Matic supported the inclusion of such 
guidelines and argued in favor of formalizing a process for the 
immediate assessment of whether an amended standard is required. It 
argued that many covered products and equipment have undergone multiple 
rulemakings, and the pace of normal technological development shows a 
diminishing rate of return with each rulemaking. The company stressed 
that DOE has the ability under EPCA to allow a standard to remain 
static after first determining from available data that there will be 
little return from a future rulemaking. In its view, the current 
approach of fully reviewing a given standard creates high levels of 
``non-valued added work'' for the Department of Energy and 
stakeholders. (Ice-O-Matic, No. 29 at p. 1)
    NEMA commented that the Process Rule must fit within the statutory 
parameters and take into account DOE's experience with EPCA over the 
past several decades. (NEMA, January 9, 2018, Public Meeting Transcript 
at pp. 45-48) In NEMA's view, DOE's Energy Conservation Program has 
reached in some cases, or is reaching in other cases, a point of 
maturity for many covered products. (NEMA, January 9, 2018, Public 
Meeting Transcript at pp. 48-49) The energy savings to date stemming 
from these standards are very large, and the program, by that metric, 
has achieved a measure of success. NEMA argued that for a number of 
regulated products, DOE's rulemaking experience indicates that the 
limit of efficiency improvements through further rulemaking has 
occurred or is fast approaching. In NEMA's view, DOE should re-examine 
its approach used to-date for undertaking rulemakings to amend a given 
standard for a covered product. (NEMA, January 9, 2018, Public Meeting 
Transcript at p. 46) According to NEMA, this approach of continuing the 
pursuit of a full-blown multi-year regulatory process under the 
Administrative Procedure Act in the face of likely diminishing returns 
on energy savings is costly for both the government and the 
stakeholders who participate in DOE's rulemakings. In NEMA's view, if 
the public is going to continue to invest in this regulatory process, 
where products have been subject to multiple rulemakings over time, it 
should be on the basis that there are very significant economic 
benefits to be realized at a reasonable cost. (NEMA, January 9, 2018, 
Public Meeting Transcript at pp. 46-47) Accordingly, NEMA suggested 
that when reviewing whether a covered product is a suitable candidate 
for amended standards, DOE should inquire whether further efforts at 
amending the standards are really needed. (Id.)
    NEMA also commented that when the current Process Rule was first 
adopted in 1996, DOE had little experience with rulemakings, and part 
of the intent behind the Process Rule was to find an efficient means 
forward for gaining that experience. It stated that the Process Rule 
was aimed at prioritizing regulatory activity in a manner consistent 
with the statute as written at that point in time, and it relied on 
scarce appropriated funds that Congress had provided for the program. A 
modern Process Rule, NEMA argued, needs to fit with both DOE's 
experience and the statute as it is now written. (NEMA, January 9, 
2018, Public Meeting Transcript at p. 48) With a modernized version of 
the Process Rule, NEMA asserted that DOE should be able to determine 
very quickly in the next rulemaking cycle for any given covered product 
or equipment, whether the current situation has changed so 
significantly as to warrant a different conclusion. (NEMA, January 9, 
2018, Public Meeting Transcript at pp. 48-49)
    AHRI added that it did not believe that a determination not to 
amend the current standards for a given product or equipment would 
require the development of additional criteria beyond those already 
used by DOE in its analyses. It argued that this assessment should be 
made pursuant to EPCA and suggested developing a process for doing so. 
(AHRI, January 9, 2018 Public Meeting Transcript, at p. 250)
    Lennox argued that DOE should more actively consider ``no amended 
standard'' scenarios, and to this end, DOE should apply presumptions 
against over-regulation as part of this consideration. By having robust 
presumptions against new or more stringent regulations--for instance, 
by applying an approach that avoids new efficiency standards where 20 
percent or more of consumers would be ``economically harmed''--these 
presumptions would, in Lennox's view, protect manufacturers from over-
regulation. Lennox argued that applying this type of approach would be 
better than trying to develop a one-size-fits-all approach definition 
of significant energy savings. (See Lennox, No. 17 at pp. 14-15)
    Spire argued that the Process Rule should specify appropriate 
decision criteria to preclude the adoption of standards that impose net 
costs on too many purchasers or that are overly regressive for which 
average payback periods are unreasonably long and that would have 
excessive adverse impacts on manufacturers. (Spire, No. 57 at p. 22) 
Spire added that DOE should be required to provide more than 
``'substantial evidence'' in support of a proposed standard, 
particularly in those instances where a ``clear and convincing'' 
standard ``is required by anyone attempting to refute EERE's 
findings.'' Id. In its opinion, DOE and

[[Page 3920]]

interested parties with a dissenting view of a proposed standard should 
share the same evidentiary burden. (Id.)
    NAFEM also argued in favor of applying a ``no amended standards'' 
determination. It asserted that because certain products have gone 
through multiple rounds of standards rulemaking, improvements in energy 
savings are becoming harder to obtain at costs the market is able to 
bear. In its view, regulations are outpacing product and equipment 
design and life-cycles, and the data about the real world outcomes of 
the last round of rulemaking are not available by the time the next 
rulemaking starts. NAFEM stated that EPCA allows for a determination 
that no new standards are needed and that DOE needs to consider taking 
this route in appropriate cases. (NAFEM, No. 47 at pp. 4-5)
    EEI and Southern Company indicated that with some products there is 
little margin for improvement, so for these products, it makes no sense 
to invest resources for only limited further gain in energy savings. 
(EEI, January 9, 2018, Public Meeting Transcript at pp. 251-252; 
Southern Company, January 9, 2018 Public Meeting Transcript at p. 253)
    With respect to the contours of a possible approach that DOE could 
follow, NEMA referred to the Direct Heating Equipment final rule as an 
instance providing lessons for other future rulemaking proceedings. In 
that case, DOE determined early on not to amend the energy conservation 
standard by comparing the current market for the covered product 
against the market that it evaluated six years earlier. NEMA argued 
that section 325(m) (42 U.S.C. 6295(m)) provides the opportunity to 
quickly look and determine early on whether standards need further 
amending. (NEMA, January 9, 2018, Public Meeting Transcript at pp. 49-
50) In NEMA's view, a modernized version of the Process Rule should 
invite public comment at the outset of every rulemaking proceeding 
examining a given energy conservation standard as to whether DOE 
should: (1) Amend that standard after accounting for what has been 
accomplished with that particular product/equipment since the previous 
rulemaking and (2) discuss any changes (technological or otherwise) 
that have occurred since that time. It further asserted that DOE's 
modernized Process Rule could also inquire as to whether the prior 
rulemaking contained any erroneous conclusions or assumptions. 
Additionally, NEMA stated that DOE should focus on asking whether there 
are opportunities for increasing deployment by customers and users of 
energy-consuming products of the most efficient set of already 
efficient products that remain in the marketplace (instead of 
establishing new minimum energy conservation standards for a given 
covered product where the regulatory limit has effectively been 
reached). NEMA mentioned that both the current Process Rule and 
Executive Orders encourage consideration of non-regulatory approaches 
to achieving statutory goals--and where the EPCA program has reached 
maturity, other approaches may offer better ways of achieving 
incremental, permanent energy savings over time. (NEMA, January 9, 
2018, Public Meeting Transcript at pp. 50-52)
    Acuity Brands also suggested that DOE should develop a ``quick 
look'' process before engaging in ``serial'' rulemakings for covered 
products in order to assess early on whether new, higher energy 
conservation standards are warranted. In its view, such early 
determinations will save time and resources by avoiding standards 
updates that would not produce significant energy savings. It added 
that adopting such an approach would focus DOE's process on ensuring 
that proposed standards offer actual utility and value to consumers and 
towards DOE's energy efficiency goals, in part by accounting for 
technological advancements, changes in marketplace demand, and other 
real-world dynamics. (Acuity Brands, No. 46 at p. 8)
    In contrast, the Northwest Power and Conservation Council 
(``NPCC'') expressed the view that EPCA already provides DOE with more 
than sufficient guidance and flexibility to make a ``no new standards'' 
determinations without needing to add criteria to the Process Rule. 
(NPCC, No. 35 at p. 21) NEEP articulated a similar view, asserting that 
there would be no benefit to adding criteria to the Process Rule for 
reaching no amended standards determinations. (NEEP, No. 77 at p. 5) 
The CEC also stated that the statutory criteria in EPCA are already 
adequate and allow for a determination of ``no amended standards.'' It 
did not, however, object to DOE revising the Process Rule to conform to 
EPCA. (CEC, No. 53 at p. 7) The CA IOUs acknowledged that EPCA allows 
for a ``no new standards'' determination, but they asserted that DOE 
would need to go through the complete rulemaking process to determine 
the impact of updated standards. Consequently, they opposed the 
suggestion that a no new standards determination could be made through 
a truncated (i.e., abbreviated or quick) process. (CA IOUs, No. 65 at 
p. 9)
    While DOE considers four factors in screening energy conservation 
standard design options, Nor-Lake pointed out that DOE does not 
consider the economic impact to manufacturers from revising a standard 
until after a proposed standard has been selected. In its view, the 
Process Rule should also gauge the economic impact to manufacturers 
during the ``screening'' phase; otherwise, DOE may only be left with 
options that all have economically detrimental impacts on 
manufacturers, often with only minimal energy conservation results. 
Accordingly, Nor-Lake argued that the inclusion of this evaluation at 
the earliest stage of the rulemaking process (i.e., screening analysis) 
may save many unnecessary steps in the protracted regulatory process. 
(Nor-Lake, No. 68 at pp. 2-3)
    After careful consideration, DOE responds to these comments as 
follows. In those instances where the early hard look either suggested 
that a new or amended energy conservation standard might be justified 
or in which the information was inconclusive on this point, DOE has 
tentatively decided to develop a process by which it will examine the 
potential costs and benefits of a new standard that will enable it to 
more expeditiously review and determine whether to amend a given energy 
conservation standard. The process would apply both to instances where 
DOE is establishing a new standard and in cases where DOE is weighing 
whether to amend an already-existing standard. Performing this task in 
an expeditious manner--i.e., something short of initiating the usual 
three-year process involved in proposing and finalizing a new 
standard--is consistent with the statute (see 42 U.S.C. 6295(m) 
(providing that the Secretary shall publish either a notice of 
determination that standards for a product do not need to be amended or 
a proposal with new standards). In determining whether to move forward 
with a given standards rulemaking, DOE intends to address a series of 
issues that, while more expeditious than a complete rulemaking 
analysis, will nonetheless be supported by a thorough analysis to 
ensure that DOE proceeds with only those rulemakings that are likely to 
yield a significant conservation of energy and be technologically 
feasible and economically justified. That process would consider a 
variety of factors, such as whether there are sufficiently developed, 
cost-effective technological improvements that would allow a given 
product to achieve an enhanced level of efficiency. The level of 
improvement under consideration would need to be

[[Page 3921]]

consistent with the threshold for significant energy conservation, as 
discussed elsewhere in this document. In evaluating the prospects of 
proposing a new standard--or in determining that no new standard is 
needed--DOE would first look to the projected energy savings that are 
likely to result using available information solicited from the public 
through an ANOPR, preliminary analysis, RFI or NODA, as appropriate. 
DOE would then compare these projected savings against the 
technological feasibility of, and likely costs necessary to meet, the 
amended standards needed to achieve these energy savings. DOE disagrees 
with commenters who insist DOE must always go through the full 
analysis, because if potential amended standards can be shown to be 
lacking in terms of significant energy savings, technological 
feasibility, or economic justification, DOE cannot adopt them 
regardless of whether DOE makes such determination at an early stage or 
upon completion of its full suite of analyses.
    In the Department's view, applying this new approach would enable 
DOE to more readily ascertain whether the expenditure on a rulemaking 
of its limited resources and those of interested parties is merited for 
a given regulated product or equipment. DOE believes that this proposed 
approach, if adopted, would enable it to focus its efforts in the most 
efficient manner possible, while satisfying its legal obligations.
    DOE seeks comment on its initial decision-making process for 
determining whether to proceed with a standard rulemaking, including 
what specific criteria, factors, or circumstances it should apply when 
conducting this proposed approach.
2. Test Procedures
    As with the early stakeholder input process for energy conservation 
standards, DOE believes that early stakeholder input is also very 
important during test procedure rulemakings. Consequently, DOE proposes 
to publish a notice in the Federal Register announcing whenever DOE is 
considering initiation of a rulemaking for new or revised test 
procedures. Particularly when considering amended test procedures, DOE 
would follow an early assessment process similar to that described in 
the preceding sections discussing DOE's consideration of new or amended 
energy conservation standards. As part of such notice, DOE would 
request submission of related comments, including data and information 
substantively showing that an amended test procedure rule is not 
necessary at that time and that DOE should not proceed with the 
rulemaking. DOE would review these comments and, subject to its 
statutory obligations, determine whether it agrees with the submitted 
information. If DOE agrees that the test procedure is not justified at 
that time, it would not pursue the rulemaking and would publish a 
notice to that effect.
    However, these documents would offer stakeholders the chance to 
provide DOE with feedback on such test procedures, including 
information about industry-based test procedures that may meet the same 
need as those proposed by DOE.

G. Significant Savings of Energy Threshold

    DOE received numerous comments regarding whether it should 
determine or otherwise apply a threshold with respect to whether the 
projected energy savings for a given standard would be significant for 
purposes of satisfying the statutory requirements under EPCA. (See 42 
U.S.C. 6295(o)(3)(B) (providing, among other things, that the Secretary 
may not prescribe an amended or new standard that ``will not result in 
significant conservation of energy'')) Applying such a threshold would 
determine whether DOE proceeds forward with a rulemaking to amend or 
establish energy conservation standards for a given covered product or 
covered equipment. Comments are discussed immediately below, followed 
by DOE's response.
    A number of industry commenters suggested during the January 9, 
2018, public meeting that DOE should determine an appropriate threshold 
of what constitutes significant energy savings. AHRI, for example, 
indicated that using a reasonable threshold for energy savings would 
permit DOE and industry to allocate resources to improve technologies 
that will have the greatest impact. (AHRI, January 9, 2018 Public 
Meeting Transcript at pp. 28-29, 264; AHAM, January 9, 2018 Public 
Meeting Transcript at p. 32; Spire, January 9, 2018 Public Meeting 
Transcript at 261)
    Interested parties who submitted written comments also indicated 
that DOE should focus on standards rulemakings that produce significant 
energy savings. In that vein, they suggested that DOE should take steps 
to define a threshold level for significant energy savings, which some 
argued would help avoid producing regulations yielding a small 
reduction in energy usage but requiring a significant expenditure of 
resources to meet and resulting in higher product and equipment prices 
for consumers. (See Ice-O-Matic, No. 29 at p. 2; Nor-Lake, No. 68 at p. 
2; Lutron, No. 50 at p. 2; ABMA, No. 71 at p. 4; and Whirlpool, No. 76 
at p. 1) Ice-O-Matic argued that DOE has conducted rulemakings in the 
past producing ``a very small total energy reduction'' while requiring 
manufacturers and stakeholders to expend many months and years of work 
for a very small total payback, thereby ``resulting in negative impacts 
on consumers due to higher product and equipment prices.'' (Ice-O-
Matic, No. 29 at p. 2) ABMA, which focused its attention on issues 
related to boilers, supported the use of a baseline for significant 
energy savings, particularly since, in its view, current boiler designs 
may be close to the point of diminishing returns with respect to 
improved efficiency for this product. (ABMA, No. 71 at p. 4)
    In ascertaining what constitutes ``significant'' energy savings, 
Nor-Lake urged DOE to solicit comments from stakeholders and suggested 
that DOE should follow a number of steps. (Nor-Lake, No. 68 at p. 2) 
First, it suggested that DOE should only promulgate an amended energy 
conservation standard if it will result in ``significant'' energy 
savings. Nor-Lake criticized DOE's approach to date, arguing that the 
agency has rarely determined that incremental energy savings were not 
significant--including cases where the projected incremental savings 
amounted to less than a 1 percent gain in efficiency. It also stated 
that there is currently no definition for the term ``significant'' as 
it relates to energy savings. Second, it suggested that DOE should more 
rigorously examine whether an existing (or proposed) standard imposes 
``significant'' costs on manufacturers and solicit comments on how to 
define ``significant'' manufacturer costs and other impacts. The 
company pointed to DOE rulemakings and Office of Hearings and Appeals 
orders that appear to endorse, or at least accept, that a 10-percent to 
20-percent impact on earnings is not significant to a manufacturer, a 
stance with which the commenter appeared to disagree. Third, it 
suggested that DOE should evaluate the economic impact of proposed 
energy conservation standards on manufacturers earlier in the process 
than it currently does under the Process Rule. Nor-Lake also suggested 
that DOE should articulate criteria, whether by rule or through 
guidance, for issuing a ``no amended standard determination,'' which 
would be justified when the energy savings from an incremental increase 
in the energy conservation standard for a given product would not

[[Page 3922]]

result in significant energy savings and/or when the economic impact on 
manufacturers from a revised standard would be significant, in 
isolation or relative to the energy savings to be gained. (Nor-Lake, 
No. 68 at pp. 2-3)
    Lutron asserted that setting a threshold for ``significant 
conservation of energy'' in the Process Rule is needed to plan for 
future rulemakings and to add clarity to those rulemakings. By 
establishing a threshold for this term, it argued that DOE can limit 
the variability in how this term has been applied, which would reduce 
the overall burden on regulated industries. The company, citing to a 
recommendation from the Joint Commenters, suggested a threshold of 
``one quad (or equivalent amount of energy savings in kWh) saved over 
30 years'' be used. (Lutron, No. 50 at p. 2) \7\ (See also APPA, No. 36 
at p. 4 (suggesting that DOE should apply criteria for energy savings 
such as a threshold difference of under 2-4 percent between the 
standard under consideration and max-tech or savings over a 30-year 
period of less than 0.2 quads) and Sullivan-Palatek, No. 64 at p. 1 
(criticizing DOE's recent rulemaking efforts on compressors, commercial 
packaged boilers, and pumps, which it asserted provided energy savings 
of 0.6 percent, 0.6 percent, and 1.0 percent, respectively))
---------------------------------------------------------------------------

    \7\ Although Lutron referenced the submission from the Joint 
Commenters with respect to the one quad threshold, that comment 
contained no reference to, or discussion on, that particular issue.
---------------------------------------------------------------------------

    Other commenters, however, asserted that such an approach was 
unnecessary or flat-out opposed it. (NPCC, No. 22, at p. 9; CEC, No. 53 
at p. 8; NRDC, No. 74 at p. 3; NEEP, No. 77 at p. 5) In Joint Comments 
filed by ASAP, those groups stated that DOE must comply with the 
meaning provided by the U.S. Court of Appeals for the District of 
Columbia in NRDC v. Herrington for ``significant'' energy savings. 
(ASAP Joint Comment, No. 75 at pp. 6, 8) This position was also 
supported by NRDC. (See NRDC, No. 74, at p. 1) The CEC added that if 
DOE were to decide that a baseline for significant energy savings was 
necessary, the determination of that baseline would need to be done on 
a case-by-case basis and require updating to reflect market changes for 
the product at issue, as well as studies of the existing product stock 
and specific sales data. (CEC, No. 53 at p. 8) NEEP asserted that there 
is no benefit in adding criteria for considering the establishment of a 
baseline for energy savings with respect to qualifying for a ``not 
significant'' determination. It emphasized that DOE should adhere to 
the definition of ``significant'' laid out in NRDC v. Herrington. 
(NEEP, No. 77 at p. 5)
    Separately, the CA IOUs suggested that DOE should continue 
reviewing standards, even in cases where several rounds of rulemaking 
have already been conducted, because the potential savings from an 
updated standard which were determined not to be significant in one 
round of rulemaking may become significant in a later round of 
rulemaking due to technological innovation. (CA IOUs, No. 65 at p. 8) 
They also urged DOE not to adopt a no-standard standard since such an 
approach would prevent individual States from adopting their own 
levels. In their view, such an approach can prevent significant, cost-
effective energy savings from being realized. (Id. at p. 9)
    In response to these comments, DOE has undertaken a review of how 
it applies the concept of ``significant conservation of energy'' in its 
rulemaking process, including how it has interpreted the court's 
mandate in Natural Resources Defense Council v. Herrington, 768 F.2d 
1355 (DC Cir. 1985) (hereinafter, ``NRDC v. Herrington'', the 
``Herrington case'' or ``Herrington''). The following discussion 
reflects DOE's understanding of that term in light of the court case, a 
response to comments on this issue, and DOE's proposed approach moving 
forward.
    EPCA provides that the Secretary of Energy may not prescribe an 
amended or new energy conservation standard if the Secretary determines 
that such standard will not result in significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B); 42 U.S.C. 6313(a)(6)(A)(ii)(II); 42 
U.S.C. 6316(a)) A determination of significant energy savings is made 
for each type of covered product or covered equipment when conducting 
an energy conservation standards rulemaking. Congress did not define 
the statutory term ``significant conservation of energy'' (nor has DOE 
done so in regulation), but the United States Court of Appeals for the 
District of Columbia Circuit (``D.C. Circuit'') added a judicial gloss 
to the understanding of that term in NRDC v. Herrington. In Herrington, 
the court held that it was unlikely that Congress intended for DOE to 
pass up a ``cost-free chance to save energy unless the amount of energy 
saved was genuinely trivial,'' but stressed that it was not dictating 
any specific definition of significance to DOE with respect to the 
application of this term. Id. at 1373. With this decision in mind, DOE 
conducted numerous rulemakings for a variety of covered products and 
equipment that yielded a range of energy savings (typically quantified 
in terms of the number of quadrillion British thermal units or 
``quads'' of energy saved) projected over a 30-year period.
    In further examining the Herrington decision, however, DOE has 
tentatively concluded that the court's opinion affords DOE a degree of 
latitude with respect to determining whether a given level of energy 
savings constitutes ``significant'' energy savings for purposes of 
satisfying the requirements under EPCA. Specifically, in DOE's view, 
the agency may, consistent with the Herrington decision, apply a 
specific numeric and/or percentage threshold rather than the more 
general conceptual approach it has applied in years past when 
considering potential new or amended energy conservation standards 
authorized under EPCA. Such threshold may be determined in absolute 
terms (i.e., setting a uniform level of significance for each product 
or equipment type--a total quads saved threshold), in relative terms 
(i.e., setting a level of significance based on a percentage of energy 
use), or a combination of both. DOE is considering applying such a 
threshold to ensure that limited agency resources are devoted to the 
analysis of those standards rulemakings that are most likely to yield 
substantial benefits to consumers and the Nation. DOE is concerned with 
the direct economic impacts that are likely to flow from imposing 
standards that are projected to yield relatively lower energy savings--
standards that may produce little in overall benefits in energy and 
cost savings for consumers when compared to the costs related to the 
manufacture and purchase of products and equipment meeting these kinds 
of standards. This approach gives effect to the Herrington court's 
reference to not forego energy savings that are ``cost-free.'' However, 
this approach would also limit the first-cost impacts to consumers to 
those instances where a given rulemaking is expected to generate 
significant energy savings and other substantial benefits.
    In the aftermath of Herrington, DOE largely focused on the court's 
``genuinely trivial'' language, without accounting for the fact that 
this language was in reference to ``cost-free'' standards when 
determining the significance of potential energy savings. This approach 
resulted in a low bar for setting standards.\8\ However, in examining

[[Page 3923]]

DOE's regulatory history post-Herrington through July 10, 2017 (i.e., 
publication of the final rule for walk-in coolers and freezers--see 82 
FR 31808), DOE set standards for covered products and equipment a total 
of 57 times (excluding instances where DOE set no-standard standards or 
adopted the standard levels from ASHRAE Standard 90.1). This figure 
also reflects, in certain cases, the same products or equipment being 
regulated more than once. Of that total, 23 of those rulemakings 
adopted standards that DOE projected would achieve less than 0.50 quad 
of energy savings over the standard 30-year period that DOE uses when 
analyzing the impacts of its standards (which yielded a total of 4.24 
quads in energy savings); in contrast, the remaining 34 rulemakings 
each resulted in over 0.50 quad of energy savings over the same period 
(for a total of 109 quads in energy savings).\9\ These figures suggest 
that instituting an appropriate threshold for energy savings may 
significantly reduce the burdens of regulation without significantly 
reducing energy savings.
---------------------------------------------------------------------------

    \8\ The language contained in DOE's 1989 final rule establishing 
energy conservation standards for refrigerators and small gas 
furnaces is illustrative of the agency's understanding of how it was 
to determine ``significant energy savings'' in the post-Herrington 
environment. Specifically, that rule's preamble stated:
    Under section 325(l)(3)(B) of the Act, the Department is 
prohibited from adopting a standard for a product if that standard 
would not result in ``significant'' energy savings. While the term 
`significant' has never been defined in the Act, the Department 
believes that a standard level option need not meet a threshold 
level of energy savings to be considered a ``significant'' saver of 
energy. The U.S. Court of Appeals, NRDC v. Herrington, 768 F.2d 1355 
(DC Cir. 1985), concluded that Congressional intent in using the 
word ``significant'' was to mean ``non-trivial.'' Id. at 1373. Thus, 
for this rulemaking, DOE believes that each candidate standard 
considered results in significant energy savings.
    54 FR 47916, 47920 (Nov. 17, 1989).
    \9\ These totals were drawn from DOE's analysis of rulemakings 
done since the inception of the Appliance Standards Program. It is 
noted that these values reflect: (1) The lower end of any range of 
energy savings reported in a final rule, and (2) the reported values 
for analytical periods less than 30 years (i.e., without 
extrapolation of those values to 30 years). Nonetheless, in DOE's 
view, these totals should be sufficient to represent the trends 
under discussion vis-[agrave]-vis DOE's energy conservation 
standards rulemakings.
---------------------------------------------------------------------------

    In this proceeding, DOE is seeking a middle ground with regard to 
what constitutes a significant savings of energy to help improve both 
the predictability and transparency of its rulemaking process when 
setting standards for the various products and equipment it regulates. 
Looking to the statute, the Herrington court discussed DOE's authority 
to prescribe a discretionary standard for an appliance if, among other 
criteria, the national energy consumption of the appliance exceeds 
0.014335 quads per year, which corresponds to 1.449 quads of source 
energy over 30 years. Herrington at 1374. The court suggested that a 
threshold that exceeded this value ``is inconsistent with the 
congressional decision to authorize discretionary standards for [these] 
appliances.'' Id. at 1375-76. However, the court acknowledged that DOE 
may set energy savings thresholds so long as the levels ``show some 
awareness of the range of energy savings congress thought worth 
pursuing.'' Id. at 1372. Thus, DOE has some latitude when determining 
significant energy savings. In this regard, one factor of particular 
relevance is the fact that DOE has completed multiple cycles of 
standards rulemakings for those products and equipment for which 
Congress has mandated standards since the Herrington decision. With now 
decades of completed rulemakings that have steadily increased the 
stringency of the energy conservation standards for a wide variety of 
products and equipment, evaluating the significance of the energy 
savings produced by a given standard--along with the likelihood of 
additional energy efficiency improvements (i.e., the prospect for 
diminishing returns) and the likely increasing cost of additional 
efficiency gains--must be viewed against that backdrop.
    After careful consideration, DOE has tentatively decided to apply a 
threshold-based analysis that, in DOE's view, is both comprehensive and 
workable while remaining cognizant of the goals and requirements of 
EPCA. This ``hybrid'' approach would examine energy savings through the 
twin lenses of the total amount of projected energy savings and the 
relative percentage increase in efficiency/decrease in energy usage 
that could be obtained from setting or amending standards for a given 
product/equipment.
    Under the first step of this approach, the projected energy savings 
from a potential maximum technologically feasible (``max-tech'') 
standard would be evaluated against a given numerical threshold. This 
initial step would be performed to ascertain whether a potential 
standard satisfies 42 U.S.C. 6295(o)(3)(B) to ensure that DOE avoids 
setting a standard that ``will not result in significant conservation 
of energy.'' If the projected max-tech energy savings does not meet or 
exceed this numerical threshold (with any lower level expected to 
achieve even less energy savings), those max-tech savings would then be 
compared to the total energy usage of the product/equipment to 
calculate a potential percentage improvement in energy efficiency/
reduction in energy usage. If this comparison does not yield an energy 
savings improvement of a given percentage, the analysis would end, and 
DOE would determine that no significant energy savings would likely 
result from setting new or amended standards. This step would ensure 
promulgation of those standards most likely to confer substantial 
benefits to consumers and the Nation by eliminating from further 
consideration those potential standards that are projected to result in 
low energy savings.
    If either one of these thresholds is reached, DOE would then 
conduct analyses to ascertain whether a standard can be prescribed that 
produces the maximum improvement in energy efficiency that is both 
technologically feasible and economically justified (and still 
constitutes significant energy savings at the level determined to be 
economically justified). See 42 U.S.C. 6295(o)(2)(A). Because 
technological feasibility is already determined through the max-tech 
analysis, DOE would then focus on performing an economic justification 
analysis under 42 U.S.C. 6295(o)(2)(B)(i).
    In performing this analysis, DOE would consider the total amount of 
energy savings at issue at each trial standard level (``TSL''). 
Assuming that DOE uses a minimum numerical threshold and a separate 
percentage threshold, the projected savings for any given TSL would be 
measured against these two thresholds. DOE would perform its economic 
analysis to determine whether an economically justified level 
(producing the maximum amount of energy savings possible) can be 
reached that meets or exceeds either of these thresholds. The analysis 
would proceed to compare that projected savings against the amount that 
the examined product/equipment consumes at each TSL.
    In DOE's view, this approach would enable the agency to more 
readily ascertain whether pursuing a standards rulemaking for a given 
product/equipment would yield energy savings that the Secretary would 
consider significant under EPCA. It would also provide the public with 
greater transparency and predictability regarding how DOE's analytical 
process would work with respect to the setting of standards through the 
use of these minimum energy savings thresholds and potentially allow 
industry to improve its product planning. Further, DOE believes that 
following this approach would encourage the development of gradual 
efficiency improvements independent of mandatory regulatory 
requirements and help focus utility and energy efficiency advocacy 
efforts on development of

[[Page 3924]]

standards that generate greater energy savings and that yield more 
meaningful impacts through fewer regulatory actions.\10\
---------------------------------------------------------------------------

    \10\ While this discussion does not delve into the details of 
how the max-tech and economic justification analyses are performed, 
there are a number of variables that may come into play depending on 
the product/equipment at issue that may not be readily apparent 
during the max-tech analysis but appear in the more comprehensive 
economic justification analysis. For example, fuel-switching (e.g., 
in the context of furnaces) may affect the projected energy savings 
from a standard and result in lower than expected savings when 
performing the relevant economic analysis. Similarly, there may be 
cases where technology-switching may occur that could impact the 
analysis. Also, depending on the pricing impacts of adopting more 
stringent efficiency standards, the projected savings may be less if 
potential purchasers of the more efficient product opt to repair 
their current product, rather than replace it.
---------------------------------------------------------------------------

    Based on an examination of all past DOE standards rulemakings, DOE 
is considering using a quad threshold value (over a 30-year period) of 
0.5 quad and a percentage threshold value of 10 percent. DOE requests 
comments, information, and data regarding whether these values 
represent an appropriate threshold for determining significant energy 
savings.
    To aid in understanding the energy conservation standards 
rulemaking process envisioned by DOE, the below chart is included to 
visualize DOE's decision-making approach.
BILLING CODE 6450-01-P

[[Page 3925]]

[GRAPHIC] [TIFF OMITTED] TP13FE19.000


[[Page 3926]]


BILLING CODE 6450-01-C

H. Finalization of Test Procedures Prior to Issuance of a Standards 
NOPR

    Currently, the Process Rule states that DOE will propose any 
modifications to a test procedure prior to issuing an ANOPR for energy 
conservation standards and finalize those modifications prior to 
issuing a NOPR for energy conservation standards. However, DOE has 
deviated from this schedule in the past and conducted test procedure 
and standards rulemakings concurrently. DOE recognizes that a finalized 
test procedure allows interested parties to provide more effective 
comments on proposed standards. Further, if the test procedure is 
finalized sufficiently in advance of the issuance of proposed 
standards, manufacturers will have experience using the new test 
procedure, which may provide additional insights into the proposed 
standards. As a result, DOE proposes to require that test procedures 
used to evaluate new or amended standards will be finalized at least 
180 days before publication of a NOPR proposing new or amended 
standards.
    Commenters were in general agreement that test procedures should be 
finalized before DOE proposes new or amended standards. For example, 
Acuity Brands stated that manufacturers need time to develop baseline 
data using the finalized test procedure before evaluating the proposed 
efficiency levels. (Acuity Brands, No. 46 at pp. 4-5) Similarly, the 
ASAP Joint Commenters expressed support for finalizing test procedures 
prior to DOE proposing new or amended standards ``because it allows 
manufacturers and other stakeholders to better assess the effects of 
proposed standard levels.'' (ASAP Joint Commenters, No. 75 at p. 5)
    Commenters also provided more specific suggestions regarding the 
timing of test procedure and standards rulemakings. For instance, UT-
Carrier stated that an ``[e]nergy conservation standard rulemaking 
should only be initiated 3-6 months after the related test procedure is 
finalized and is published in the Federal Register.'' (UT-Carrier, No. 
41 at p. 2) Big Ass Fans (``BAF'') recommended that new test procedures 
be finalized 6 to 18 months before DOE proposes a new energy 
conservation standard. (BAF, No. 73 at p. 2) The Joint Commenters 
recommended that test procedure amendments be finalized 6 months before 
initiating a standards rulemaking and that test procedures for newly 
covered products be finalized 1 year before initiating a standards 
rulemaking. (Joint Commenters, No. 51 at p. 19) Several other 
commenters simply stated that test procedures should be finalized prior 
to DOE initiating a rulemaking to propose new or amended standards. 
(See, e.g., Bradford White, No.42 at p. 2; ABMA, No. 71 at p. 3)
    As stated previously, DOE is proposing that test procedures used to 
evaluate proposed standards be finalized at least 180 days prior to 
publication of a NOPR proposing new or amended standards. DOE believes 
that 180 days provides interested parties with sufficient time to 
evaluate the new or amended test procedure. DOE seeks comment on the 
appropriateness of this 180-day period.
    Currently, the Process Rule states that DOE will propose any 
modifications to a test procedure prior to issuing an ANOPR for energy 
conservation standards and finalize those modifications prior to 
issuing a NOPR for energy conservation standards. However, DOE has 
deviated from this schedule in the past and conducted test procedure 
and standards rulemakings concurrently. DOE recognizes that a finalized 
test procedure allows interested parties to provide more effective 
comments on proposed standards. Further, if the test procedure is 
finalized sufficiently in advance of the issuance of proposed 
standards, manufacturers will have experience using the new test 
procedure, which may provide additional insights into the proposed 
standards. As a result, DOE proposes to require that test procedures 
used to evaluate new or amended standards will be finalized at least 
180 days before publication of a NOPR proposing new or amended 
standards.
    Commenters were in general agreement that test procedures should be 
finalized before DOE proposes new or amended standards. For example, 
Acuity Brands stated that manufacturers need time to develop baseline 
data using the finalized test procedure before evaluating the proposed 
efficiency levels. (Acuity Brands, No. 46 at pp. 4-5) Similarly, the 
ASAP Joint Commenters expressed support for finalizing test procedures 
prior to DOE proposing new or amended standards ``because it allows 
manufacturers and other stakeholders to better assess the effects of 
proposed standard levels.'' (ASAP Joint Commenters, No. 75 at p. 5)
    Commenters also provided more specific suggestions regarding the 
timing of test procedure and standards rulemakings. For instance, UT-
Carrier stated that an ``[e]nergy conservation standard rulemaking 
should only be initiated 3-6 months after the related test procedure is 
finalized and is published in the Federal Register.'' (UT-Carrier, No. 
41 at p. 2) Big Ass Fans (``BAF'') recommended that new test procedures 
be finalized 6 to 18 months before DOE proposes a new energy 
conservation standard. (BAF, No. 73 at p. 2) The Joint Commenters 
recommended that test procedure amendments be finalized 6 months before 
initiating a standards rulemaking and that test procedures for newly 
covered products be finalized 1 year before initiating a standards 
rulemaking. (Joint Commenters, No. 51 at p. 19) Several other 
commenters simply stated that test procedures should be finalized prior 
to DOE initiating a rulemaking to propose new or amended standards. 
(See, e.g., Bradford White, No.42 at p. 2; ABMA, No. 71 at p. 3)
    As stated previously, DOE is proposing that test procedures used to 
evaluate proposed standards be finalized at least 180 days prior to 
publication of a NOPR proposing new or amended standards. DOE believes 
that 180 days provides interested parties with sufficient time to 
evaluate the new or amended test procedure. DOE seeks comment on the 
appropriateness of this 180-day period.

I. Adoption of Industry Standards

    The current Process Rule does not discuss the verbatim adoption of 
industry standards as DOE test procedures. That being said, DOE is 
obligated to adopt industry standards in certain cases. For example, 
under EPCA, DOE is required to use industry standards developed or 
recognized by ASHRAE for several categories of covered equipment. (42 
U.S.C. 6314(a)(4)(A)) Additionally, if these industry standards are 
amended, EPCA requires that DOE amend its test procedures as necessary 
to be consistent with the amended industry standard unless it 
determines, by rule published in the Federal Register and supported by 
clear and convincing evidence, that the amended test procedure would be 
unduly burdensome to conduct or would not produce test results that 
reflect the energy efficiency, energy use, and estimated operating 
costs of that equipment during a representative average use cycle. (42 
U.S.C. 6314(a)(2), (3) and (4)(B)) As for covered products and 
equipment where use of an industry standard is not mandated by EPCA, 
DOE still routinely adopts industry standards as DOE test procedures. 
In many cases, aspects of these industry standards are modified by DOE 
upon incorporation into the DOE test procedure. DOE recognizes that 
modifications to these standards impose a burden on industry.

[[Page 3927]]

For instance, manufacturers will face increased costs if the DOE 
modifications require different testing equipment or facilities.
    Some commenters urged DOE to adopt industry standards without 
modification. For example, Sub Zero stated that industry is best 
positioned to develop tests that accurately, fairly, and consistently 
measure energy, and modifications to industry test procedures are 
costly, unnecessary, and duplicative. (Sub Zero, No. 43 at p. 3) 
Similarly, the Joint Commenters stated that DOE modifications to 
industry standards frequently have little impact on test results, but 
significantly increase the testing burden on manufacturers. (Joint 
Commenters, No. 51 at p. 21) The Joint Commenters also stated that DOE 
should only modify industry standards in narrow circumstances, 
supported by clear and convincing evidence. (Id.)
    Other commenters supported the adoption of industry standards under 
certain conditions. For instance, Nor-Lake stated that industry 
standards should only be adopted without modification if there is 
unanimous agreement among DOE, manufacturers, and other stakeholders. 
(Nor-Lake, No. 68 at p. 3)
    Finally, some commenters opposed adding language to the Process 
Rule that would require DOE to adopt industry standards without 
modification. For example, the CA IOUs stated that industry standards 
may serve as a useful starting point for a DOE test procedure, but they 
are not typically developed with DOE's energy efficiency metrics and 
CCE requirements in mind. And, as such, DOE should not amend the 
Process rule to specify the use of industry standards without 
modification. (CA IOUs, No. 65 at p. 5) Similarly, NPCC stated that 
adopting industry standards without modifications would rarely satisfy 
EPCA requirements. Correspondingly, NPCC stated that DOE should not 
amend the Process Rule to specify the use of industry standards without 
modification. (NPCC, No. 35 at pp. 8, 16)
    In recognition of the costs discussed by commenters that are 
imposed by DOE's adoption of changes to industry test methods, DOE 
proposes to amend the Process Rule to require adoption, without 
modification, of industry standards as test procedures for covered 
products and equipment unless such standards would be unduly burdensome 
to conduct or would not produce test results that reflect the energy 
efficiency, energy use, and estimated operating costs of that equipment 
during a representative average use cycle. DOE seeks comment on this 
proposal. Further, given DOE's past adoption of test procedures that 
did vary from the industry test, DOE seeks comment on whether, if DOE 
were to adopt this proposal, there are existing test procedures that 
should be modified to conform to the existing industry test method.

J. Direct Final Rules

    The Energy Independence Security Act of 2007 (``EISA 2007'') (Pub. 
L. 110-140) amended EPCA, in relevant part, to grant DOE authority to 
issue a ``direct final rule'' (i.e. DFR) to establish energy 
conservation standards. As amended, EPCA establishes requirements for 
when DOE uses this type of rulemaking proceeding for the issuance of 
certain actions. Specifically, DOE may issue a DFR adopting energy 
conservation standards for a covered product or equipment upon receipt 
of a joint proposal from a group of ``interested persons that are 
fairly representative of relevant points of view,'' provided DOE 
determines the energy conservation standards recommended in the joint 
proposal conform with the requirements of 42 U.S.C. 6295(o) or section 
342(a)(6)(B) as applicable. (42 U.S.C. 6295(p)(4)(A))
    In the December 2017 RFI, DOE requested feedback as to whether it 
should amend the Process Rule to include provisions related to the use 
of DFRs. 82 FR 59992, 59993 (Dec. 18, 2017). Most responders supported 
both the use of the DFR process in developing rules and addressing the 
DFR provision in the Process Rule. A more detailed discussion of these 
DFR-related comments follows, along with DOE's response.
    Some commenters supported DFRs as an alternative to negotiated 
rulemaking, while others stated conversely that DFRs should only be 
issued in the context of negotiated rulemaking, led by an Appliance 
Standards and Rulemaking Federal Advisory Committee (``ASRAC'') 
subcommittee. The CEC stated that DFRs should remain available as an 
option for finalizing standards developed in either ASRAC negotiations 
or in non-ASRAC negotiations. (CEC, No. 53 at p. 2) Lennox supported 
the use of DFRs and suggested that identifying DFRs as an alternative 
to consensus rulemaking outlined in the current Process Rule would be 
helpful. (Lennox, No. 62 at p. 3) EEI stated that DFRs that have not 
been the result of negotiated rulemakings should be part of the final 
Process Rule. However, EEI stressed that DOE should have a preference 
for conducting notice and comment rulemaking, and the use of DFR's 
should be limited in practice. (EEI, No. 72 at p. 2). The National 
Consumer Law Center (``NCLC'') supported the DFR process when it can be 
used to speed up the rulemaking process, reduce unnecessary time and 
expense for all parties, reduce the likelihood of contentious hearings 
and litigation, and lead to results that maximize the satisfaction of 
all parties. (National Consumer Law Center, January 9, 2018 Public 
Meeting Transcript at pp. 22)
    The APPA expressed its opinion that DOE should not issue DFRs 
outside of negotiated rulemakings. (APPA, No. 36 at p. 2) The NPCC 
supports the continued use of DFRs coupled with the ASRAC negotiated 
rulemaking process. (NPCC, No. 35 at pp. 7, 10) Southern Company stated 
that it is unrealistic to expect that an energy or water standard which 
is not part of a negotiated rulemaking would be adopted using this 
process. (Southern Company, No. 70 at p. 3). NEMA suggested that the 
DFR and the negotiated rulemaking process should be treated as two 
separate processes. (NEMA, January 9, 2018 Public Meeting Transcript at 
pp. 78-79)
    In response to these comments, DOE notes that DFRs are intended to 
be a process that is distinct from that outlined under the Negotiated 
Rulemaking Act, although in the recent past, the Department has 
sometimes conflated the two. The Negotiated Rulemaking Act clearly 
contemplates that the outcome of the negotiation process will be a 
proposed rule. See 5 U.S.C. 563. In contrast, the purpose of the DFR 
provision in EPCA is to allow the Secretary to adopt a final rule 
without first utilizing the normal notice and comment process. Thus, 
although negotiated rules and direct final rules are both valuable 
tools, they represent two distinct administrative processes. Going 
forward, DOE intends to treat them as the two separate processes that 
they are, and consequently, DOE proposes to codify this distinction in 
the revised Process Rule.
    A number of commenters stated that DOE should clarify the DFR 
provision in the Process Rule. (See e.g., Rheem, January 9, 2018 Public 
Meeting Transcript at pp. 76-77) The ALA recommended that DOE set forth 
the specific conditions DOE would need in order to consider a joint 
proposal under the DFR authority in EPCA. (ALA, No. 55 at p. 2) The CEC 
stated that in its amended Process Rule, DOE should provide additional 
guidance--but not strict prescriptive criteria--describing the minimum 
parameters a consensus proposal must meet in order to be a candidate 
for a DFR. (CEC, No. 53 at p.

[[Page 3928]]

2) In response, DOE agrees with these comments and is providing 
clarification in this proposed rule about its DFR authority and the 
conditions a submitted joint proposal must meet in order for DOE to 
consider publication, as explained in further detail subsequently.
    Two commenters expressed concerns about potential negative outcomes 
that might result from potential changes to the current DFR process. 
NEEP stated that adding unnecessary provisions to the Process Rule 
could result in a more cumbersome procedure and a less effective DFR 
outcome. (NEEP, No. 77 at p. 2) NPCC conceded that the DFR procedures 
can always be improved, but it urged caution so as not to lose any of 
the value that is gained from the DFR process. NPCC stated that the 
procedures as developed are generally effective, efficient, and 
transparent; they also offer great opportunity for involvement by, and 
generally have the support of, industry, States, efficiency advocates, 
and others. (NPCC, No. 35 at pp. 7, 10) In response, DOE notes that in 
providing clarification as to its expectations for DFR submittals, it 
aims to improve, rather than hinder, the DFR process.
    Some commenters offered their concerns about the use of DFRs. For 
example, Spire argued that DFRs should only be utilized in non-
controversial efficiency rules where prior notice and comment 
procedures serve no useful purpose. (Spire, January 9, 2018 Public 
Meeting Transcript at pp. 70-72) The NPGA stated that DOE should not 
rely on DFRs because they fail to uphold the spirit of open dialogue 
with the public called for under EPCA and the APA. (NPGA, No. 59 at p. 
2) In response, DOE notes that the purpose of addressing the DFR 
provision in this proposed rule is to, in part, ensure open dialogue 
with stakeholders and to limit controversy. The Department does not 
agree that the DFR mechanism is somehow unsuitable for complex or 
controversial cases; on the contrary, the DFR may be beneficial in 
those instances due to early and broad stakeholder involvement.
    In light of the comments described above, as part of this proposed 
rule, DOE is: (1) Clarifying its authority under the DFR provision 
found at 42 U.S.C. 6295(p)(4); (2) providing guidance as to DOE's 
interpretation of ``fairly representative,'' and (3) explaining DOE's 
obligations upon receipt of an adverse comment. In this way, DOE hopes 
to improve the transparency, consistency, and inclusiveness of its 
existing DFR process.
1. DOE's Authority Under the DFR Provision
    The DFR provision is found in EPCA at 42 U.S.C. 6295(p), the 
heading and introduction of which state: ``Procedure for prescribing 
new or amended standards. Any new or amended energy conservation 
standard shall be prescribed in accordance with the following 
procedure.'' Given this description, DOE believes that 42 U.S.C. 
6295(p)(4) must be understood as procedural; that is, the provision is 
not a substantive grant of rulemaking authority but rather outlines a 
process DOE must follow when issuing a DFR. Supporting this view is the 
fact that subparagraphs (p)(1) and (p)(2) are merely procedural 
provisions. That is, subparagraphs (p)(1) and (p)(2) outline the 
process the Secretary must follow to propose and finalize a standard 
using the ``normal'' rulemaking approach. However, neither of those 
subparagraphs is an independent grant of rulemaking authority. Both are 
meaningless unless a separate provision of EPCA authorizes issuance of 
a rule to establish a new or amend an existing energy conservation 
standard. Thus, subparagraphs (p)(1) and (p)(2) could not be 
interpreted as granting DOE separate and independent standard issuing 
authority. When read in context with the rest of the subsection, 42 
U.S.C. 6295(p)(4) likewise must be read as procedural, i.e., not a 
separate and independent grant of rulemaking authority. Under this 
interpretation, DOE must rely on authority provided by other sections 
of EPCA.
    As the DFR provision is not a separate grant of authority, any 
standard issued must comply with the provisions of the EPCA subsection 
under which the rule was authorized. For example, if the DFR were a 
recommendation that DOE amend the standards for metal halide lamp 
fixtures under 42 U.S.C. 6295(hh)(3)(A), which requires that not later 
than January 1, 2019, the Secretary shall publish a final rule to 
determine whether the standards then in effect for metal halide lamp 
fixtures should be amended, the standards must comply with 42 U.S.C. 
6295(hh)(3)(B), which requires that any amended standards apply to 
products manufactured after January 1, 2022, along with all other 
applicable parts of EPCA. DOE will not accept or issue as a DFR a 
submitted joint proposal that does not comply with all pertinent parts 
of EPCA, including those product specific requirements included in the 
provision that authorizes issuance of the standard.
2. Interested Persons Fairly Representative of Relevant Points of View
    In the December 2017 RFI, DOE requested comment on when a joint 
statement with recommendations related to an energy or water 
conservation standard would be deemed to have been submitted by 
``interested persons that are fairly representative of relevant points 
of view,'' thereby permitting use of the DFR mechanism. 82 FR 59992, 
59993-59994. A number of commenters provided feedback on this issue.
    Several commenters recommended that DOE should do its best to be as 
inclusive as possible in identifying fairly representative points of 
view, but they recognized that fairly representative does not mean 
``all.'' For example, the Joint Commenters stated that ``fairly'' 
cannot practically mean ``every point of view;'' otherwise, there would 
be no need to seek public comment on the proposed standard as required 
by EPCA in 42 U.S.C. 6295(p)(4)(B). According to the Joint Commenters, 
the Secretary can make an initial determination of how ``fairly'' the 
group represents the relevant points of view based on the identity of 
the persons submitting the Joint Statement, and can reassess that 
initial determination after the public comment period has expired. 
(Joint Commenters, No. 51 at pp. 17-18)
    The ALA stated that the DOE should develop a more substantive 
definition of ``fairly representative'' in the Process Rule, but the 
ALA also suggested that because each product and market is unique, the 
definition should be flexible. The ALA further stated that any joint 
proposal should include, at a minimum, representative stakeholders from 
industry/manufacturers, along with energy-efficiency advocates and 
States. (ALA, No. 55 at p. 2) Southern Company commented that the group 
should also include, distributors, utilities, consumer groups, and any 
other groups that might be relevant for that specific rulemaking. 
(Southern Company, No. 70 at p. 3) The CEC stated that it may be 
appropriate to identify constituents whose points of view should always 
be included in order for a proposal to be considered representative but 
that an extreme definition of ``fairly representative,'' such as 
consideration of ``all'' relevant points of view would create an 
insurmountable hurdle. (CEC, No. 53 at p. 3) In contrast, Spire 
asserted that the term should be interpreted to mean ``all known 
relevant points of view.'' (Spire, No. 57 at pp. 9-10) Spire, NEEP and 
EEI

[[Page 3929]]

argued that the outcome of the residential furnaces DFR rulemaking made 
clear that there must be an intentionally inclusive group negotiating a 
DFR. (NEEP, No. 77 at p. 2; Spire, No. 57 at pp. 9-10; EEI, January 9, 
2018 Public Meeting Transcript at p. 64) EEI added its concern about 
how stakeholders who are not included in the DFR process do not see the 
rule until it is published in the Federal Register, and as a result, 
they are excluded from any preliminary input. EEI suggested that a 
possible solution would be for DOE to announce the negotiations and 
welcome other parties to join in the process. (EEI, January 9, 2018 
Public Meeting Transcript at p. 64) The American Gas Association 
(``AGA'') stated that the DFR should only be used where a consensus has 
been developed among all affected parties. (AGA, January 9, 2018 Public 
Meeting Transcript, at pp. 36)
    A few commenters argued against changing the existing definition of 
``fairly representative.'' (See e.g., Lennox, No. 35 at p. 3) The NPCC 
asserted that any joint proposal developed under the Negotiated 
Rulemaking Act meets the definition of ``fairly representative.'' NPCC 
further stated that if a DFR is not developed under the Negotiated 
Rulemaking Act, then DOE should consult with ASRAC to determine if a 
recommendation was submitted by interested persons that are fairly 
representative of relevant points of view. (NPCC, No. 35 at p. 12)
    The NPGA stated its opposition to DFRs and asserted that it would 
not be beneficial for DOE to define ``fairly representative.'' NPGA 
further stated that in trying to define this term, DOE would either 
intentionally or inadvertently exclude certain stakeholders from the 
DFR rulemaking process. (NPGA, No. 59 at p. 2)
    In response to these comments, DOE agrees that the rulemaking 
process must be as inclusive as possible, even though it cannot 
reasonably be expected to encompass every possible viewpoint. DOE notes 
that at a minimum, ``fairly representative of relevant points of view'' 
must include larger concerns and small businesses in the regulated 
industry/manufacturer community, energy advocates, energy utilities, as 
appropriate, consumers, and States. However, DOE also believes that it 
will be necessary to evaluate the meaning of ``fairly representative'' 
on a case-by-case basis, subject to the circumstances of a particular 
rulemaking, to determine additional parties that must be part of a 
joint statement in order to be ``fairly representative of relevant 
points of view.'' DOE notes that it cannot be a member of a group that 
submits a joint statement to be issued as a DFR.
    In order to assist DOE in making this case-by-case determination, 
upon receipt of a joint statement recommending energy conservation 
standards, DOE will publish in the Federal Register that statement, as 
submitted to DOE, in order to obtain feedback as to whether the joint 
statement was submitted by a group that is fairly representative of 
relevant points of view. The comment period would occur during the time 
DOE analyzes the submission for other legal and analytical issues and 
considers preparation of a rulemaking document. (DOE notes that such 
preliminary comment period would not diminish or eliminate the 
statutory comment period(s) associated with publication of a subsequent 
DFR and/or NOPR.) Therefore, if any substantive concerns are raised 
about parties not included during the negotiation of the consensus 
agreement, DOE can make the appropriate decision as to whether the rule 
can move forward as a DFR. If DOE determines that the rule does not 
meet the requirements for publication as a direct final rule, DOE will 
consider whether any further rulemaking activity is appropriate, 
consistent with the procedures for the regular rulemaking process.
    DOE appreciates the comments received in response to the RFI and 
considered in the development of this proposal. DOE continues to seek 
comment on what it means for a statement to be submitted by interested 
persons that are ``fairly representative of relevant points of view.'' 
DOE continues to seek comment on what constitutes a relevant point of 
view for purposes of using the EPCA authority in 42 U.S.C. 6295(p)(4) 
to issue a DFR. More generally, DOE seeks further comment on the 
strengths and weaknesses of using the DFR process to promulgate energy 
conservation standards.
3. Adverse Comments
    Simultaneous with the issuance of a DFR, DOE must also issue a 
notice of proposed rulemaking (``NOPR'') containing the same energy 
conservation standards as in the DFR. Following publication of the DFR, 
DOE must solicit public comment for a period of at least 110 days; 
then, not later than120 days after issuance of the DFR, the Secretary 
must determine whether any adverse comments ``may provide a reasonable 
basis for withdrawing the direct final rule,'' based on the rulemaking 
record. (42 U.S.C. 6295(p)(4)(B),(C)(i)) In the December 2017 RFI, DOE 
solicited comment on the nature and extent of ``adverse comments'' that 
may provide the Secretary with a reasonable basis for withdrawing the 
DFR, leading to further rulemaking under the accompanying NOPR. 82 FR 
59992, 59994.
    Currently, to determine whether a comment is sufficiently 
``adverse'' so as to provide a reasonable basis for withdrawal of the 
direct final rule, DOE weighs the substance of any adverse comment 
received against the anticipated benefits of the consensus agreement 
and the likelihood that further consideration of the comment would 
change the result of the rulemaking (referred to as the ``balancing 
test''). This approach was outlined in recent DOE rulemakings, such as 
DOE's final rule for energy conservation standards for dishwashers. 77 
FR 59712, 59714 (Oct. 1, 2012).
    A number of commenters supported DOE's current balancing test. (See 
e.g., Southern Company, No. 70 at 3; NPCC, No. 35 at 11; CA IOUs, No. 
65 at p. 4) Some of these commenters further noted that in order to 
result in the withdrawal of a DFR, adverse comments should be 
substantive, accompanied by supporting data, and further consideration 
of the issues raised through the normal notice and comment process 
could materially affect the outcome of the particular DFR. (Lennox No. 
35 at p. 4) The Joint Commenters agreed that the determination to 
withdraw a DFR should be based on substance and quality, not the 
quantity of the adverse comments. (Joint Commenters, No. 51 at pp. 16-
17) The CA IOUs stated that DOE should maintain the flexibility to 
modify its analysis or decision so that such comments do not become a 
tactic to delay the rulemaking. Both Lennox and the CA IOUs argued that 
if the negative commenters had the opportunity to provide such comments 
earlier in the rulemaking process, DOE should not be required to modify 
the analysis or decision. (CA IOUs, No. 65 at p. 4; Lennox No. 35 at p. 
4)
    While the Joint Commenters supported the concept of the balancing 
test, they noted that the determining factor is not the anticipated 
benefits of the consensus agreement against which these adverse 
comments must be measured, but whether the adverse comments merit 
concluding that the Joint Statement is not in accordance with 42 U.S.C. 
6295(o) or 42 U.S.C. 6313(a)(6)(B) of EPCA. (Joint Commenters, No. 51 
at p. 17)
    Both Spire and GW expressed concern that the balancing test 
excludes the opinions of some stakeholders directly affected by a DFR 
because DOE does not sufficiently take into account adverse comments. 
(GW, No. 48 at p. 4; Spire,

[[Page 3930]]

No. 57 at pp. 9-10) GW pointed out that DOE has rarely, if ever, 
deviated from a DFR, even when it received adverse comments. (GW, No. 
48 at p. 5) Spire further raised specific criticisms in the context of 
prior rulemakings with respect to the treatment of adverse comments. 
(Spire, No. 57 at pp. 9-10) EEI stated that the DFR process is 
worrisome because parties that were not involved in negotiation do not 
know what issues were raised or addressed during negotiations, and can 
only supply input once the DFR has been submitted. EEI further argued 
that quantity, as well as quality and substance of comments, should be 
taken into account. (EEI, January 9, 2018 Public Meeting Transcript at 
p. 87)
    ABMA suggested that DOE should mirror EPA's treatment of adverse 
comments to a DFR, whereby a single adverse comment is sufficient to 
send the rule to notice and comment rulemaking. (ABMA, No. 71 at p. 2) 
Spire stated that if an interested party goes through the trouble of 
commenting, then that comment should be considered relevant, and the 
rule should undergo notice and comment. (Spire, January 9, 2018 Public 
Meeting Transcript at p. 117)
    In response, given the concerns expressed regarding DFRs, DOE plans 
to move away from the previously announced balancing test. As suggested 
by commenters, DOE will look not at the quantity of comments received 
but rather at the substance of the adverse comment, though one comment 
may present an argument that could lead DOE to conclude that it is an 
adverse comment providing a basis for withdrawal of the DFR. Moreover, 
in contrast to previous policy, DOE may take into account, as adverse, 
comments even if the issue was brought up previously during DOE-
initiated discussions (e.g. publication of a framework or RFI document) 
that preceded submission of a joint statement, if the Department 
concludes that the comment merits further consideration. In short, if 
DOE determines that one or more substantive comments objecting to the 
final rule provides a sufficient reason to withdraw the DFR, DOE will 
do so, and instead proceed with the published NOPR (which could include 
withdrawal of that NOPR, as appropriate).

K. Negotiated Rulemaking

1. Utilizing the Negotiated Rulemaking Process, Including the 
Establishment of the Appliance Standards and Rulemaking Federal 
Advisory Committee (ASRAC)
    Negotiated rulemaking is a process by which an agency attempts to 
develop a consensus proposal for regulation in consultation with 
interested parties, thereby addressing salient comments from 
stakeholders before issuing a proposed rule.\11\ Consequently, when 
done properly, negotiated rulemaking can yield better decisions, while 
conserving time and resources of both the agency and interested 
parties. Negotiated rulemaking is a topic not directly addressed by the 
current Process Rule. However, the Process Rule does recognize the 
value and encourage submission of joint stakeholder recommendations.
---------------------------------------------------------------------------

    \11\ This process is conducted in accordance with the 
requirements of the Negotiated Rulemaking Act (``NRA''), Public Law 
104-320 (5 U.S.C. 561-570).
---------------------------------------------------------------------------

    To facilitate potential negotiated rulemakings, DOE established the 
Appliance Standards and Rulemaking Federal Advisory Committee (i.e. 
ASRAC) so as to comply with the Federal Advisory Committee Act 
(``FACA''), Public Law 92-463 (1972) (codified at 5 U.S.C. App. 2).
    As part of the DOE process, working groups have been established as 
subcommittees of ASRAC, from time to time, for specific products, and 
one member from the ASRAC committee attends and participates in the 
meetings of a specific working group. Ultimately, the working group 
reports to ASRAC, and ASRAC itself votes on whether to make a 
recommendation to DOE to adopt a consensus agreement.
    The negotiated rulemaking process allows real-time adjustments to 
the analyses as the working group is considering them. Furthermore, it 
allows parties with differing viewpoints and objectives to negotiate 
face-to-face regarding the terms of a potential standard. Additionally, 
it encourages manufacturers in a more direct manner to provide data for 
the analyses, thereby helping to better account for manufacturer 
concerns.
    In the December 2017 RFI, DOE asked a number of questions related 
to negotiated rulemaking, including whether the Process Rule should be 
amended to provide for the use of negotiated rulemaking in appropriate 
cases. DOE opened up the issue broadly to seek comments on matters 
related to negotiated rulemaking, including how DOE can improve its 
current process in a manner consistent with the Negotiated Rulemaking 
Act (``NRA''). (5 U.S.C. 561-570a) Specifically, DOE asked whether the 
Process Rule should provide for the use of a convener or facilitator 
for each negotiated rulemaking. DOE also asked about measures to ensure 
that a negotiated rulemaking consider all reasonable alternatives, 
including the option of not amending/issuing standards or alternatives 
that would affect different stakeholders differently. Finally, DOE 
requested comments on the use of a direct final rule mechanism at the 
conclusion to a negotiated rulemaking. 82 FR 59992, 59995.
    DOE received a number of comments from interested stakeholders 
regarding DOE's use of negotiated rulemaking, most of whom supported 
inclusion of such mechanism in the Process Rule (either explicitly or 
implicitly through positive statements regarding negotiated 
rulemaking). Commenters addressed negotiated rulemaking generally and 
also specifically regarding its implementation in the DOE context.
2. Inclusion of Negotiated Rulemaking in the Process Rule
    As noted above, the majority of commenters supported DOE's use of 
negotiated rulemakings in appropriate cases and either explicitly 
called for, or voiced no objection to, its inclusion in the Process 
Rule. (Bradford White, No. 42 at p. 1; HARDI, No. 56 at p. 3; Lennox, 
No. 62 at p. 5; NPCC, No. 35 at pp. 7, 12-13; Nor-Lake, No. 68 at p. 4; 
Spire, No. 57 at p. 13; Acuity Brands, No. 46 at p. 3; EEI, No. 72 at 
p. 3; ABMA, No. 71 at p. 2; NEMA, January 9, 2018 Public Meeting 
Transcript, at pp. 78-79; AGA, January 9, 2018 Public Meeting 
Transcript, at p. 36; NPCC, January 9, 2018 Public Meeting Transcript, 
at pp. 57-58; Southern Company, January 9, 2018 Public Meeting 
Transcript, at p. 123; Lennox, January 9, 2018 Public Meeting 
Transcript, at pp. 124, 133-134; Daikin, January 9, 2018 Public Meeting 
Transcript, at p. 124; AHRI, January 9, 2018 Public Meeting Transcript, 
at p. 125; AHAM, January 9, 2018 Public Meeting Transcript, at p. 126; 
NEMA, January 9, 2018 Public Meeting Transcript, at p. 127) A number of 
commenters stated that negotiated rulemaking should be the preferred 
option. (Lennox, No. 62 at p. 5; NPCC, No. 35 at pp. 7, 12-13; ABMA, 
No. 71 at p. 2; Daikin, January 9, 2018 Public Meeting Transcript, at 
124; AHRI, January 9, 2018 Public Meeting Transcript, at p. 125; AHAM, 
January 9, 2018 Public Meeting Transcript, at p. 126; NEMA, January 9, 
2018 Public

[[Page 3931]]

Meeting Transcript, at p. 127) However, commenters generally recognized 
that negotiated rulemaking may not be appropriate in each and every 
case, suggesting that its use should be encouraged, but not required. 
(NPCC, No. 35 at pp. 7, 12-13; CA IOUs, No. 65 at p. 5; AHRI, January 
9, 2018 Public Meeting Transcript, at p. 125) Some commenters clarified 
that negotiated rulemaking should not become the norm or be used in 
every case. (Southern Company, January 9, 2018 Public Meeting 
Transcript, at p. 123; Lennox, January 9, 2018 Public Meeting 
Transcript, at p. 124) Echoing this sentiment, Spire cautioned that not 
all rules can be negotiated, given that it is a very labor-intensive 
process which requires the right representation. (Spire, January 9, 
2018 Public Meeting Transcript, at pp. 128-130)
    After carefully considering the comments, DOE has tentatively 
decided that negotiated rulemaking can be beneficial in the context of 
the Appliance Standards Program in appropriate circumstances, and 
accordingly, the Department proposes to include a section on negotiated 
rulemaking in the updated Process Rule. DOE agrees that the 
appropriateness of a negotiated rulemaking for any given rulemaking 
should be determined on a case-by-case basis. When approached by one or 
more stakeholders or on its own initiative, DOE will use a convener to 
ascertain, in consultation with relevant stakeholders, whether review 
for a given product or equipment type would be conducive to negotiated 
rulemaking, with the agency evaluating the convener's recommendation 
before reaching a decision on such matter.
    A number of commenters expressed general support for continuing the 
current negotiated rulemaking process through the ASRAC. (HARDI, No. 56 
at p. 3; Lennox, No. 62 at p. 5; NPCC, No. 35 at pp. 7, 12-13; NEMA, 
January 9, 2018 Public Meeting Transcript, at pp. 78-79) According to 
the NPCC, the ASRAC process has generally resulted in successful and 
relatively uncontested rules because the appropriate parties have 
participated, there is transparency, and the parties have had a chance 
to interact with both DOE and its technical consultants who are 
performing the necessary supporting analytical work. (NPCC, January 9, 
2018 Public Meeting Transcript, at pp. 57-58) Lennox suggested that DOE 
should explore the feasibility of negotiated rulemaking for all major 
rulemakings (especially ones with some degree of complexity), including 
DOE outreach to determine whether there is a reasonable likelihood that 
the requisite consensus can be reached among core stakeholders 
(including manufacturers of the product subject to regulation, States, 
and efficiency advocates). (Lennox, No. 62 at p. 5; Lennox, January 9, 
2018 Public Meeting Transcript, at p. 124) NEMA added that 
consideration should be given to amending the Process Rule so as to 
incorporate the potential for a statutorily-compliant DFR proposal 
emerging from the ASRAC negotiated rulemaking process. (NEMA, January 
9, 2018 Public Meeting Transcript, at p. 80) The Plumbing Heating 
Cooling Contractors Association (``PHCC'') and the CEC also stated that 
DFRs could be the natural outcome of a successful negotiated 
rulemaking, thereby allowing DOE to proceed expeditiously to a final 
rule. (PHCC, No. 63 at pp. 1-2; CEC, No. 53 at p. 4) The Joint 
Commenters similarly pointed to DFRs as an important aspect of 
negotiated rulemaking, and it stated that if the Process Rule is 
amended to address DFRs, it should acknowledge DFRs in the context of 
both ASRAC working groups and other parties engaged in informal 
negotiations. (Joint Commenters, No. 51 at p. 14; Whirlpool, No. 76, 
was a signatory to the Joint Commenters submission and indicated its 
support on these issues.)
    DOE agrees with the commenters that the ASRAC has provided a 
workable and effective forum for conducting negotiated rulemakings, 
with working groups making a recommendation to ASRAC and ASRAC in turn 
making a recommendation to DOE for its ultimate decision. As stated 
previously, DOE plans to consider the use of negotiated rulemaking in 
appropriate cases. However, in a break from its previous practice, DOE 
intends to separate DFRs and negotiated rulemakings, with the latter 
leading to a notice of proposed rulemaking in all cases. The NRA 
contemplates that the committee will transmit to the agency a report 
containing a proposed rule (or more applicable in DOE's use of the 
process, a term sheet specifying the potential standard levels to be 
incorporated into a proposed rule). Accordingly, DOE is modifying its 
process for negotiated rulemaking so as to be more fully consistent 
with the statute. (See the DFR section of this proposal for a more 
complete discussion of direct final rules.)
    Commenters also saw a number of benefits associated with negotiated 
rulemaking. Daikin opined that negotiated rulemakings result in 
substantively better rules. (Daikin, January 9, 2018 Public Meeting 
Transcript, at pp. 124-125) Nor-Lake commented that negotiated 
rulemaking has the potential to streamline the rulemaking process. 
(Nor-Lake, No. 68 at p. 4) AHRI stated that negotiated rulemaking 
promotes greater transparency (in terms of both data and assumptions) 
and more stakeholder engagement. (AHRI, January 9, 2018 Public Meeting 
Transcript, at pp. 125-126; NEMA, January 9, 2018 Public Meeting 
Transcript, at p. 139) The CEC stated that negotiated rulemakings are a 
valuable process for appropriate products, because they allow for more 
direct engagement between interested parties, more rapid feedback from 
participants, and often proceed in a more expeditious manner than a 
notice and comment rulemaking. (CEC, No. 53 at p. 5) Acuity Brands 
suggested that like DFRs, negotiated rulemakings have the potential to 
reduce regulatory burdens, but they have the added benefit of including 
a broader set of stakeholders (including the DOE) from the start of the 
process. (Acuity Brands, No. 46 at p. 3) The CA IOUs and NCLC and the 
Consumer Federation of America (``CFA'') stated that negotiated 
rulemakings can help streamline DOE rulemaking process in certain 
circumstances, thereby saving time and resources and allowing consumers 
to realize benefits sooner. (CA IOUs, No. 65 at p. 4; NCLC and CFA, No. 
52 at p. 4) NCLC and CFA also commented that a successful negotiated 
rulemaking which reflects the interests of relevant stakeholders can 
reduce the likelihood of contentious hearings and litigation. (NCLC and 
CFA, No. 52 at p. 4)
    Even among those commenters who supported DOE's use of negotiated 
rulemaking and its inclusion in the Process Rule, there were some 
cautionary statements to ensure its proper application. ABMA and AGA 
cautioned that DOE must be certain that all stakeholders covering the 
full breadth of the marketplace are included in the process (ABMA, No. 
71 at p. 2; AGA, January 9, 2018 Public Meeting Transcript, at p. 36), 
and Schneider Electric added that DOE should engage in a dialogue with 
industry before starting a rulemaking. (Schneider Electric, No. 69 at 
pp. 2-3) Spire emphasized the need for ensuring that negotiated 
rulemakings are conducted transparently and impartially and that 
``short shrift'' is not given to any valid stakeholder--particularly 
those who provide ``substantive and legitimate documentation to support 
their comments.'' It also urged that ASRAC ``should remain an advisory 
committee to EERE only'' and should be required to meet the Process 
Rule and any data quality and FACA requirements. (Spire,

[[Page 3932]]

No. 57 at p. 13) EEI recommended that DOE allow extra time for 
stakeholders that are not part of the negotiation committee to provide 
input at committee meetings in order to allow for potentially adversely 
impacted parties to air concerns as part of the committee process. It 
also recommended that DOE create specific provisions allowing end-use 
consumers to participate in negotiated rulemakings for products being 
regulated for the first time, especially to get their perspective on 
which types of efficiency metrics can be most useful for actual end-
users. (EEI, No. 72 at p. 3) Finally, EEI commented that first-time 
regulated products might be more amenable to traditional, notice-and-
comment rulemaking, particularly given the resource-intensive nature of 
negotiated rulemakings (e.g., potential for significant travel). (EEI, 
January 9, 2018 Public Meeting Transcript, at p. 130)
    Other commenters were more ambivalent about the use of negotiated 
rulemaking and/or the need to directly address it in the Process Rule. 
GW stated that although negotiated rulemaking can be an effective tool 
for expeditious rulemaking, it has procedural and analytical drawbacks 
the Department should consider before codifying it into the Process 
Rule. On this point, GW argued that negotiated rulemakings lead to 
decisions being made based on consensus rather than net welfare 
optimization. Second, interested parties may reach a policy conclusion 
well before a benefit-cost analysis can suggest an approach that would 
maximize net societal benefits. Third, there is a risk that comments 
submitted by parties not included in the negotiation may receive less 
than due consideration because the policy approach has already been 
decided. Fourth, the Department should be alert to circumstances in 
which jointly recommended standards harm competition or prefer one 
manufacturer at the expense of others--which ultimately harms 
consumers. (GW, No. 48 at pp. 5, 13)
    Similarly, the Joint Commenters stated that they did not see the 
need to amend the Process Rule to clarify how negotiated rulemaking 
fits into the overall procedure, but it likewise did not oppose 
memorializing the status quo. The CA IOUs urged that if DOE decides to 
amend the Process Rule to address negotiated rulemakings, the agency 
should not make negotiated rulemaking mandatory, and it should retain 
flexibility within the negotiations. (CA IOUs, No. 65 at p. 5)
    Finally, there were at least two commenters who opposed the 
inclusion of negotiated rulemaking in the Process Rule, the first for 
practical considerations and the second on more substantive grounds. 
NEEP stated its view that given the case-by-case nature of a negotiated 
rule (a tool that DOE has used when there is a high likelihood of 
reaching stakeholder consensus), NEEP sees no benefit in explicitly 
adding negotiated rulemaking guidance to the Process Rule. It stated 
that adding unnecessary provisions through addition to the Process Rule 
could result in a more cumbersome and less effective negotiated 
rulemaking outcome. (NEEP, No. 77 at p. 2) NPGA argued that negotiated 
rulemakings may limit the number of stakeholders who can participate, 
may constrain review and development to meet arbitrary deadlines, and 
may cause an antagonistic rather than cooperative nature among the 
groups involved. Thus, NPGA suggested that negotiated rulemakings do 
not provide for the same open dialogue and input available through the 
traditional rulemaking route. (NPGA, No. 59 at p. 2)
    DOE agrees with those commenters who see potential benefits to the 
use of negotiated rulemaking in appropriate cases, and the Department 
has tentatively decided that it makes sense to clarify its approach to 
this procedural mechanism in the Process Rule. Negotiated rulemaking 
has the potential to increase transparency, to foster stakeholder/DOE 
engagement, and to streamline the rulemaking process, thereby 
conserving the time and resources of all interested parties. Thorough 
consideration of the underlying issues and recommending potential 
standards at a consensus level may also reduce litigation risk. DOE 
sees no reason why explicitly addressing negotiated rulemaking in the 
Process Rule should alter the manner in which that rulemaking will 
occur when such rulemaking approach is deemed appropriate or reduce any 
flexibility permissible under the statute.
    In response to ABMA, AGA, and Schneider Electric, DOE seeks broad 
representation of interested stakeholders for negotiated rulemakings as 
part of the ASRAC working groups, including representatives of 
individual manufacturers and their trade associations. In addition, DOE 
makes meetings of the ASRAC working groups open to the public, so there 
are additional opportunities for input from other interested parties, 
including public comment during those sessions. However, DOE takes 
EEI's point as to the need, as a matter of fairness, to fully air the 
concerns of stakeholders who are not part of the committee or working 
group (including end-use consumers), so DOE is proposing to incorporate 
provisions in the Process Rule to ensure their opportunity for public 
comment and to bring their concerns before the committee for 
discussion. However, DOE would stress that any proposed rule emerging 
from a negotiated rulemaking would still provide an opportunity for 
public comment on the published document, and DOE would be required to 
respond to public comments, as appropriate, so all interested parties 
retain the ability to play an active role in the rulemaking process. In 
response to Spire, DOE is committed to thoroughly considering all views 
and data brought before it, as well as to comply with all applicable 
statutory requirements. As to Spire's comments about first-time 
regulated products being more amenable to traditional notice-and-
comment rulemaking, rather than negotiated rulemaking, DOE reiterates 
that this is a determination best made on a case-by-case basis in the 
context of a given rulemaking. It is DOE's expectation that use of a 
convenor will help address each of these issues. That is, a neutral, 
independent convenor can identify issues that any negotiation would 
need to address, assess the full breadth of interested parties who 
should be included in any negotiated rulemaking to address those issues 
and make a judgment as to whether there is the potential for a group of 
individuals negotiating in good faith to reach a consensus agreement 
given the issues presented.
    DOE understands the concerns of GW that negotiated rulemaking 
should not lead to a rushed process where stakeholder opinions, public 
input, and analytical data are not fully considered and addressed. In 
part to mitigate such concerns, DOE is proposing to separate DFRs from 
the negotiated rulemaking process in the revised Process Rule. In this 
way, the outcome of any negotiated rulemaking would be a proposed rule, 
which would be subject to a comment period, as required under EPCA and 
the Administrative Procedure Act. DOE must then respond to comments 
received, including those regarding its data and analyses, in the final 
rule; in the event a comment raises a significant issue that previously 
had not been identified or properly considered, DOE may need to publish 
a supplemental notice of proposed rulemaking to modify its approach and 
seek further public comment. In this way, DOE endeavors to obtain the 
benefits of negotiated rulemaking, while making sure to maintain broad 
opportunity for

[[Page 3933]]

participation among working group members and the interested public and 
full consideration of relevant data and information. DOE believes that 
this reasoning also addresses the similar concerns of NPGA. Finally, 
DOE notes that a proposed appliance standards rule's impacts on 
competition is one of the topics that must be specifically addressed by 
the U.S. Department of Justice (``DOJ'') in any such rulemaking, as 
required under 42 U.S.C. 6295(o)(2)(B)(i)(VI) and (ii), and 
subsequently by DOE, regardless of whether the rule is developed 
through negotiated rulemaking, a joint proposal under DOE's DFR 
authority, or traditional notice-and-comment rulemaking.
3. Suggestions Regarding Implementation of Negotiated Rulemakings
    Commenters seemed to generally agree that negotiated rulemaking may 
not be appropriate for all DOE rulemaking actions, and in some 
instances, traditional notice-and-comment rulemaking may remain the 
preferred approach. For example, the CA IOUs commented that negotiated 
rulemaking may not be useful where product categories cover a broad 
range of product classes and manufacturers and where it may not be 
feasible to identify all appropriate industry representatives, thereby 
making such process difficult. (CA IOUs, No. 65 at p. 4) Southern 
Company stated that because negotiated rulemakings require substantial 
time commitments from stakeholders, they should be reserved for larger, 
higher impact rulemakings where the Department and major stakeholders 
agree that a negotiated rulemaking is appropriate; in contrast, for 
most rulemakings, the commenter argued that the traditional process of 
notice and comment is more appropriate. (Southern Company Services, No. 
70 at p. 4) The CEC stated that it does not object to a brief 
consideration of each product's potential for negotiated rulemaking but 
asserted that it is inappropriate to require the use, or even the 
evaluation, of a negotiated rulemaking for all products. (CEC, No. 53 
at p.5)
    DOE agrees with the commenters that negotiated rulemaking may not 
be appropriate in every case, particularly where there is not 
identification or participation of a significant number of interested 
stakeholders. DOE further acknowledges that negotiated rulemaking 
typically requires a significant input of time and resources on the 
part of both DOE and other interested parties, so it is important to 
initiate a negotiated rulemaking only where there is a reasonable 
likelihood of success. Consequently, as discussed previously, DOE plans 
to make a determination whether to conduct a negotiated rulemaking on a 
case-by-case basis in the context of a given rulemaking, based on a 
report produced by a third-party, neutral convenor.
    According to the Joint Commenters, the following factors should 
militate in favor of a negotiated rulemaking: (1) Stakeholders 
commented in favor of negotiated rulemaking in response to the initial 
rulemaking notice; (2) The rulemaking analysis or underlying 
technologies in question are complex, and DOE can benefit from external 
expertise and/or real-time changes to the analysis based on stakeholder 
feedback, information, and data; (3) The rulemaking involves standards 
that have already been amended one or more times; (4) Stakeholders from 
differing points of view are willing to participate; and (5) DOE 
believes that the parties may be able to reach an agreement. If DOE 
determines that a negotiated rulemaking is viable, DOE should make a 
recommendation to the ASRAC or support an interested party's 
recommendation to the ASRAC that the committee form a working group to 
negotiate a term sheet that will be submitted to DOE as a consensus 
recommendation. (Joint Commenters, No. 51 at p. 13)
    DOE agrees with the Joint Commenters that it would be beneficial to 
include relevant criteria in the Process Rule to improve the 
transparency of DOE's decision-making process for determining when a 
negotiated rulemaking may be appropriate. The points raised by the 
Joint Commenters would likely be helpful in that regard and, 
accordingly, merit inclusion in a proposed list of criteria. DOE 
welcomes comment on the aforementioned criteria and any additional 
factors that may serve as appropriate criteria for determining when 
negotiated rulemaking may be appropriate.
    In terms of how DOE should decide when a given rulemaking is 
conducive to negotiated rulemaking, a number of commenters urged DOE to 
consult with stakeholders, especially industry. (Bradford White, No. 42 
at p. 1; Schneider Electric, No. 69 at pp. 2-3) The CA IOUs suggested 
that DOE should work with stakeholders to outline the characteristics 
of standards and test procedures that would be appropriate for 
negotiated rulemaking. (CA IOUs, No. 65 at p. 4) AHRI also raised the 
possibility of using negotiated rulemaking when DOE makes modifications 
to its test procedures. (AHRI, January 9, 2018 Public Meeting 
Transcript, at p. 145) However, one commenter (Spire) recommended a 
more structured process, under which DOE would publish a notice in the 
Federal Register explaining that it is considering negotiated 
rulemaking and provide at least a 30-day comment period, prior to 
commencing such rulemaking; Spire added that the notice should also: 
(1) Identify the range of boundaries of the covered products at issue, 
including competing technologies and energy sources (e.g., gas and 
electricity); (2) request comments on whether DOE should or should not 
proceed with negotiated rulemaking; and (3) solicit comments concerning 
the range of interests to be represented in the negotiations and 
nominations of individuals to serve on the negotiating committee. 
(Spire, No. 57 at pp. 13-14)
    In response to these comments, DOE is open to broad input from 
stakeholders, including affected industry as well as interested members 
of the public, regarding the appropriateness of negotiated rulemaking 
for any given type of consumer product or commercial equipment. 
Questions regarding the boundaries of coverage, competing technologies 
and energy sources, appropriateness of negotiated rulemaking, the range 
of interests to be represented, and nominations for serving on an ASRAC 
working group are all topics worthy of discussion prior to engaging in 
a negotiated rulemaking. In response to AHRI's comment on the use of 
negotiated rulemaking for test procedures, DOE agrees that such 
mechanism may be suitable in certain situations (determined on a case-
by-case basis), but in those cases where DOE anticipates adoption of an 
industry consensus standard with either no or limited modifications, 
the need for a negotiated rulemaking may not arise. For each of these 
reasons, DOE is proposing that it will engage the services of an 
independent, neutral convenor, as contemplated in the NRA, to assess 
these subjects through research and discussions with potentially 
interested parties. The convenor would then make a recommendation to 
the Department regarding the potential for use of negotiated rulemaking 
given the facts, issues and parties at interest.
    When a negotiated rulemaking is determined to be appropriate, 
several commenters recommended that DOE continue to use its ASRAC 
process and procedures, which have generally provided a workable 
approach. (ALA, No. 55 at p. 2; HARDI, No. 56 at p. 3; Regal Beloit, 
No. 64 at p. 1) In addition

[[Page 3934]]

to expressing support for conducting negotiated rulemaking through the 
ASRAC, the Joint Commenters urged DOE to incorporate the ASRAC process 
and procedures into the Process Rule. According to the Joint 
Commenters, even though the 1996 Process Rule was drafted prior to the 
ASRAC being convened, the underlying principles and policies from the 
original Process Rule are embodied in the ASRAC process including, a 
breadth of participation from interested parties, effective and 
efficient proceedings, and support from agency staff, all of which are 
intended to result in a balanced and informed recommendation to the 
Department. When updating the Process Rule, the Joint Commenters argued 
that DOE should acknowledge both the ASRAC negotiated rulemaking 
process, as well as informal negotiations that result in consensus 
recommendations. (Joint Commenters, No. 51 at pp. 11-12)
    DOE agrees with the commenters who have found the ASRAC process to 
be a useful and workable approach, even in those instances where 
consensus could not ultimately be reached. DOE is very appreciative of 
the work ASRAC has done to date and sees great benefit in continuing 
the ASRAC process. Given that the ASRAC has been used successfully for 
a number of years with refinements along the way, DOE has tentatively 
concluded that it may be appropriate to include reference to the ASRAC 
process in the Process Rule in the context of negotiated rulemaking. 
DOE believes that there may be benefits in terms of transparency and 
consistency associated with formalizing the negotiated rulemaking 
process as part of the Process Rule.
    There were also various comments related to participation in the 
negotiated rulemaking process, some of which specifically referred to 
the ASRAC process. For example, the CA IOUs recommended that negotiated 
rulemaking participants should be fairly balanced, with a greater 
number of non-industry stakeholders drawn from consumer groups, utility 
companies, and energy efficiency advocacy organizations. (CA IOUs, No. 
65 at p. 4) The Public Power Association commented that for products 
that have not previously been regulated, there should be a process to 
allow end-use consumers who purchase, operate, and maintain products to 
be part of the negotiation process, and to have direct input on the 
efficiency metric used to evaluate such products. (Public Power 
Association, No. 36 at p. 3) Acuity Brands stated that when weighing 
comments and data during a negotiated rulemaking, similar to its 
comments on DFRs, DOE should consider a commenter's specific 
qualifications and areas of expertise (or lack thereof), require 
sources of data or other validation of input, and trigger preemption at 
the start of the process. (Acuity Brands, No. 46 at p. 3) APPA added 
that stakeholders that are not part of the negotiation committee should 
be provided more time to provide input at committee meetings. (APPA, 
No. 36 at p. 3) NPCC stated that having the DOE contractors who do the 
analysis in the room during a negotiated rulemaking is an advantage, 
and overall, the process builds trust and communication. (NPCC, January 
9, 2018 Public Meeting Transcript, at p. 138)
    In terms of forming an ASRAC working group for an individual 
rulemaking, DOE is routinely confronted with the task of striking an 
appropriate balance between inclusion of all relevant points of view 
and keeping the membership to a manageable size. As meetings of the 
ASRAC working groups are open to the public, there is always the 
opportunity for input from interested parties who are not members of 
the working group itself. DOE sees the most important objective to be a 
thorough airing of the issues surrounding the subject product/
equipment, regardless of the source or status of that source (i.e., 
member or non-member of the working group). Thus, DOE envisions the 
negotiated rulemaking process to be a collaborative one, as opposed to 
an adversarial one. Because the working group is intended not only to 
raise issues but also to resolve them, it is important to have 
representation from technical experts who have experience with the 
products/equipment under consideration. Moreover, given that a 
consensus recommendation requires unanimity (unless the working group 
itself votes to require something less than unanimity), DOE views 
parity of representation between industry groups and non-industry 
groups as unnecessary. Furthermore, DOE expects that non-members of the 
working group will caucus with like-minded members to make sure that 
their views are addressed by the committee. Absent that, non-members 
are free to raise issues themselves during opportunities for public 
comment at the ASRAC working group meetings. In response to APPA, DOE 
welcomes participation in the negotiated rulemaking process by end-
users of the subject product or equipment; industry trade associations 
or manufacturers may be well positioned to identify end-users who may 
wish to offer input to the negotiated rulemaking.
    In the spirit of fostering further public engagement, DOE is 
proposing to adopt APPA's suggestion to schedule a dedicated portion of 
each ASRAC working group meeting to receive input and data from non-
members. Such period would not truncate the public's existing ability 
to provide relevant comments at appropriate points in the ongoing 
negotiations. However, by setting aside a scheduled block of time, DOE 
would hope to raise the level of detail and substantive input from 
interested stakeholders who are not voting members of the working 
group. While DOE strongly supports comments accompanied by data, it 
does not agree with Acuity Brands that there should be a litmus test 
for comment based upon academic credentials or professional/technical 
experience. In DOE's view, a non-expert is capable of providing 
meaningful insight or raising legitimate concerns, even if further 
inquiry is then required on the part of the agency. Likewise, DOE does 
not support nor can it necessarily legally impose preemption at the 
start of a negotiated rulemaking; instead, DOE will continue to 
consider preemption as expressed in EPCA. DOE agrees with NPCC that 
there is value in having DOE contractors present at the negotiated 
rulemaking sessions to answer questions regarding related technical 
analyses, a practice which DOE intends to continue. In a final thought 
on this topic, DOE notes that under its proposed revisions to the 
Process Rule, every successful negotiated rulemaking would result in a 
notice of proposed rulemaking, so at that point, all interested parties 
would have an equal opportunity to comment on DOE's proposal, and DOE 
would be required to address comments in proceeding to a final rule.
    Commenters generally supported use of an experienced convener or 
facilitator for each negotiated rulemaking, an individual who can help 
guide the process by ensuring that all procedures are followed and that 
all participants have an equal opportunity to contribute to the 
dialogue. (Bradford White, No. 42 at p. 1; Lennox, No. 62 at p. 7; 
PHCC, No. 63 at pp. 1-2; Spire, No. 57 at pp. 13-14; Acuity Brands, No. 
46 at p. 3; CEC, No. 53 at p. 5; NEMA, January 9, 2018 Public Meeting 
Transcript, at p. 139) NEMA recommended that DOE should retain a 
professional facilitator, who is both neutral and independent, to meet 
with interested parties. (NEMA, January 9, 2018 Public Meeting 
Transcript, at p. 139) Spire stated that a neutral facilitator should 
be utilized at the option of the negotiating committee,

[[Page 3935]]

but such person should not be a stakeholder representative or DOE staff 
member. (Spire, No. 57 at pp. 13-14) Acuity Brands added that while a 
facilitator possessing some level of familiarity with energy 
conservation standards may be helpful, a facilitator with a high level 
of technical expertise (e.g., staff from national labs) may be an 
inappropriate choice, due to the potential to interject bias into the 
negotiations. (Acuity Brands, No. 46 at p. 3) Lennox commented that 
while it has generally found experienced facilitators to be helpful, 
the NRA already contains provisions regarding facilitators (e.g., 5 
U.S.C. 566(c),(d)). Accordingly, Lennox does not see a compelling need 
to amend the Process Rule in detail regarding the use of facilitators, 
although DOE could incorporate provisions along the lines of those 
statutory requirements. (Lennox, No. 62 at p. 7) The Joint Commenters 
expressed a similar sentiment, stating that while the use of a 
facilitator is generally helpful, the Joint Commenters have not 
identified the failure to assign a facilitator to be a problem that 
requires addressing in the amended Process Rule. (Joint Commenters, No. 
51 at p. 13)
    Other commenters (NPCC, ABB) suggested that use of a facilitator 
may not be essential in the context of a negotiated rulemaking. 
Instead, these commenters argued that while typically useful, sometimes 
the facilitator can get in the way of making progress when faced with 
complex technical issues. (NPCC, January 9, 2018 Public Meeting 
Transcript, at p. 144; ABB, January 9, 2018 Public Meeting Transcript, 
at pp. 144-145) EEI stated that the Process Rule should provide for the 
use of a facilitator or convener as a discretionary matter. (EEI, 
January 9, 2018 Public Meeting Public Meeting Transcript, at pp. 149-
150)
    In contemplating potential revisions to its Process Rule, DOE has 
decided to incorporate new mechanisms and procedures that the agency 
has been using subsequent to the adoption of the original Process 
Rule--such as negotiated rulemaking. In evaluating its current 
approaches, DOE is also seeking to identify further improvements that 
can be made and included in an updated Process Rule. Along these lines, 
DOE is proposing to use a neutral, third-party convener to gauge the 
suitability of negotiated rulemaking in a given case, consistent with 
the NRA (5 U.S.C. 566(b)).
    DOE envisions the convener providing an important evaluation and 
screening function, which can assist DOE in making its decision of how 
best to conduct a rulemaking. The convener would have early interaction 
with stakeholders, who could help shape how the rulemaking process 
unfolds.
    DOE also plans to continue its current practice of having a neutral 
and independent facilitator present at all ASRAC working group 
meetings. In DOE's experience, facilitators have played a beneficial 
role in the overwhelming majority of the agency's past negotiated 
rulemakings. The Department agrees that the facilitator should not be a 
stakeholder representative, a member of DOE's staff, a DOE consultant, 
or a technical expert in the subject matter (due to the potential to 
interject bias). DOE may elect to have the convener serve as 
facilitator, particularly given the knowledge acquired at the earlier 
stages of inquiry. Consistent with 5 U.S.C. 566(c), DOE will nominate a 
facilitator for the negotiations of the committee, subject to the 
approval of the committee by consensus. Given the useful role 
facilitators have played in past negotiated rulemakings and the 
similarly useful role that conveners could play in the future, DOE sees 
no reason not to explicitly include provisions for their use in the 
revised Process Rule.
    Whenever DOE conducts rulemaking, including negotiated rulemaking, 
the Department attempts to ensure broad stakeholder involvements and 
input, as well as ample opportunity for public comment. DOE provides 
notice in the Federal Register of its intent to form an ASRAC working 
group (including a request for nominations to serve on the committee), 
announcement of the selection of working group members (including their 
affiliation), and announcement of public meeting and the subject matter 
to be addressed. Such documents routinely note the products/equipment 
at issue and the responsible DOE contact. Consistent with 5 U.S.C. 
565(b), DOE ``shall limit membership on a negotiated rulemaking 
committee to 25 members, unless the agency head determines that a 
greater number of members is necessary for the functioning of the 
committee or to achieve balanced membership.'' DOE notes that in 
addition to formal membership on the ASRAC working group, the agency's 
negotiated rulemakings also provide the opportunity for substantial 
public comment and input, thereby helping to ensure that all relevant 
interests are represented. Again, it is DOE's expectation that use of a 
neutral, independent convenor will help ensure that the negotiating 
committee will encompass the necessary parties in a balanced way that 
can reach an agreement addressing relevant issues.
    If negotiations move forward and a consensus agreement is 
ultimately reached, Spire argued that DOE should publish a notice in 
the Federal Register (with a minimum 30-day comment period) explaining 
the consensus agreement, requesting public comments on additional 
issues to be addressed, and ascertaining whether DOE should move 
forward with the consensus agreement under its direct final rule 
authority or by issuing a notice of proposed rulemaking. Finally, Spire 
commented that all negotiated rules should undergo technological 
feasibility and economic justification analyses consistent with those 
applied to other covered products with similar market presence and 
potential, but for which the negotiated rulemaking path is not 
undertaken. Spire remarked that regardless of the use of negotiated 
rulemaking, EPCA requirements for meeting the test of technological 
feasibility and economic justification remain a requirement for minimum 
efficiency standards and need to receive full analytical consideration. 
(Spire, No. 57 at pp. 13-14)
    In response, DOE notes that it has tentatively decided to modify 
its approach such that any negotiated rulemaking would result in a 
NOPR. Once the NOPR is published, interested parties will be presented 
with DOE's proposal and supporting analyses, and as part of the NOPR, 
DOE will explain and document why its negotiated rulemaking proposal 
meets the statutory requirements for a significant savings of energy, 
technological feasibility and economic justification, just the same as 
with any other notice-and-comment rulemaking. In addition, the NOPR 
will provide a minimum comment period of 60 days, at which time 
commenters may raise any issue they have with DOE's proposal.
    A number of commenters cautioned DOE to make sure to maintain the 
flexibility associated with its current negotiated rulemaking process, 
which many see as a valuable feature. Specifically, the CEC stated that 
key to the success of negotiated rulemakings is the flexibility to fit 
the process to each individual product being considered, so any 
revisions to the Process Rule to incorporate negotiated rulemaking 
should maintain this flexibility and not be prescriptive (e.g., 
professional facilitation should be an option and composition of 
working groups should be a guideline). In contrast, the CEC stated that 
DOE could define ``consensus'' and apply that to all negotiated 
rulemakings instead of

[[Page 3936]]

having the definition of consensus be determined in each negotiated 
rulemaking. (CEC, No. 53 at p. 5) EEI added that the Process Rule 
should be flexible as to the time allotted for completion of a 
negotiated rulemaking. (EEI, January 9, 2018 Public Meeting Transcript, 
at pp. 141-142) In terms of flexibility to consider and recommend 
reasonable alternatives in the context of a negotiated rulemaking, 
Daikin appeared to support that concept (Daikin, January 9, 2018 Public 
Meeting Transcript, at pp. 153-154), whereas the CEC disfavored a 
requirement for the Process Rule to specify which alternatives can be 
considered for fear of restricting or delaying the negotiated 
rulemaking process (CEC, January 9, 2018 Public Meeting Transcript, at 
pp. 158-159). The Joint Commenters disfavors updating the Process Rule 
to specify the need to consider all reasonable alternatives, because 
the current state of negotiated rulemaking already provides for that 
and nothing prevents the parties to a negotiation from raising all 
possible options during the course of discussions. (Joint Commenters, 
No. 51 at p. 14)
    In response, DOE sees value in providing flexibility to interested 
and knowledgeable stakeholders to negotiate potential standard levels 
that take into account real world concerns regarding manufacturing 
processes, implementation challenges, and associated costs. The 
Department is open to allowing ASRAC working groups to tailor the 
negotiated rulemaking process to the specific product/equipment at 
issue. However, DOE emphasizes that any potential standard upon which 
an ASRAC working group reaches consensus must comply with all of the 
provisions of EPCA under which the rule was authorized. DOE will not 
accept recommended standard levels or issue a NOPR based upon 
negotiated rulemaking that does not comply with all pertinent parts of 
EPCA.
    In response to the CEC's concern about the facilitator somehow 
diminishing the group's flexibility, DOE does not view this to be a 
problem, because it is not the role of the facilitator to drive any 
particular outcome; rather, the facilitator is there to assist the 
committee members in achieving their own consensus, if possible. 
Similarly with the composition of ASRAC working groups, DOE is 
maintaining its discretion to select members best suited to analyzing 
potential standards for the product/equipment in question. DOE agrees 
that sufficient time should be allocated to properly conduct the 
negotiated rulemaking and thoroughly address the underlying issues, 
while keeping in mind any applicable statutory or judicial deadlines. 
Regarding the term ``consensus,'' section 562(2) of the NRA defines 
that term to mean unanimous concurrence among the interests represented 
on a negotiated rulemaking committee unless such committee agrees to 
another definition. Thus, defining consensus is committed to the 
discretion of the ASRAC committee by law, so DOE cannot establish a 
standardized measure of consensus for all negotiated rulemakings. 
Regarding the ability of the negotiated rulemaking committee to 
consider all reasonable alternatives, DOE notes that consideration of 
available alternatives is a routine part of negotiated rulemakings and 
requires no special provisions in the Process Rule.
    NPCC urged DOE, as part of the negotiated rulemaking process, to 
continue and enhance pre-rule access to DOE's technical staff, which 
NPCC finds improves the efficacy and validity of the data collection 
process, improves communications with manufacturers, builds confidence 
in the underlying data and analytics, and fosters greater understanding 
and acceptance of analytical results. (NPCC, No. 35 at pp. 5-6, 13) In 
a related comment on the technical aspects of a negotiated rulemaking, 
the CEC stated that to support that process, DOE should commit to: (1) 
Ensuring that adequate product data and technical consultation are made 
available to the negotiated rulemaking working group, and (2) ensuring 
that negotiations are scheduled such that participants can fully 
engage. (CEC, No. 53 at p. 6)
    DOE agrees that for a negotiated rulemaking to be successful, ASRAC 
working group members require access to relevant data and analyses, as 
well as support from DOE's technical staff. DOE has committed to 
providing technical support for consensus development in section 8 of 
the current Process Rule. The use of a convener should provide 
interested parties with further opportunity for engagement and to share 
relevant thoughts and information regarding the topic of the negotiated 
rulemaking prior to the beginning of such a proceeding. Furthermore, 
DOE understands that to achieve the optimal result, all committee 
members should be present and fully contributing to negotiating 
rulemaking sessions, so the agency strives to schedule meetings as to 
maximize participation (preferable through in-person attendance but 
through remote access when necessary). DOE intends to continue these 
practices as part of its negotiated rulemaking process.
    DOE continues to seek comment on any and all issues related to the 
use of negotiated rulemaking in the development of energy conservation 
standards, including how DOE can improve its current use of the process 
as envisioned by the NRA. DOE acknowledges the concern that relevant 
parties or points of view must be represented during the negotiations 
to ensure the most appropriate outcome and associated burden and 
distribution of costs. In particular, DOE seeks comment on its proposal 
to amend the Process Rule to provide for the use of a convenor or 
facilitator for each negotiated rulemaking. DOE also continues to 
request comment on amendments to the Process Rule that would ensure 
that all reasonable alternatives are explored in that process, 
including the option of not amending or issuing a standard and 
alternatives that will affect different stakeholders differently. DOE 
also requests further comment on the use of the DFR mechanism at the 
conclusion of a negotiated rulemaking.

L. Other Revisions and Issues

1. DOE's Analytical Methodologies, Generally
    DOE received a variety of comments regarding its analytical 
methodologies. Some commenters offered detailed suggestions on how DOE 
might improve on specific aspects of its current set of methodologies. 
These issues generally fell into certain discrete areas--the peer 
review process, proprietary data, and DOE's analytical methodologies. 
The suggestions were both detailed and specific. However, the general 
consensus from the commenters suggested that there was room for DOE to 
improve its analytical methods.
    In considering the numerous comments it received regarding its 
analyses, DOE believes it needs additional time to make a determination 
on proceeding and whether any changes to the Process Rule are necessary 
to address the methodological issues raised. In order to both assess 
what changes to the analytical methodologies are needed, and, 
potentially, what changes to the Process Rule might be appropriate, DOE 
is committing to conducting an expert independent peer review 
consistent with OMB's Information Quality Bulletin for Peer Review \12\ 
of its assumptions, models, and methodologies to ensure that its 
approach is designed to provide

[[Page 3937]]

projections that are sufficiently rigorous for their intended use. 
Additionally, in an effort to ensure that the analytical models and 
approaches that DOE regularly uses are as up-to-date and accurate as 
possible, DOE will undertake a recurring peer review of DOE's 
analytical methods at least once every 10 years.
---------------------------------------------------------------------------

    \12\ 70 FR 2664 (Jan. 14, 2005).
---------------------------------------------------------------------------

    While applying this approach may increase the overall commitment of 
time and resources both by DOE and interested parties wishing to 
participate as part of this peer review process, in DOE's view, making 
this investment should yield a number of potentially beneficial 
dividends with respect to each standards (or determination) rulemaking 
that DOE conducts when using this process--primarily in the form of 
more accurate economic forecasting and projections of energy savings. 
Because these benefits would apply across a wide variety of DOE's 
rulemakings and impact both consumer products and commercial equipment, 
in DOE's view, conducting a peer review in the immediate future and on 
a specified periodic basis thereafter would help improve the overall 
rulemaking process and ensure the credibility and validity of the 
results of that process. While DOE recognizes that the changes that the 
peer review process may bring could increase the amount of time that 
DOE must commit to any individual rulemaking activity, there may also 
be an opportunity for time and resource savings in those instances 
where it is readily apparent that a new standards rulemaking is 
unlikely to yield significant energy savings under EPCA. For those 
rulemakings which do move forward, there could be further savings of 
time and other resources to the extent that there is a diminished level 
of controversy surrounding DOE's rulemaking analyses.
    DOE last peer reviewed its analytical approaches in 2005. At that 
time, DOE supplied seven reviewers with three rulemaking analyses 
concerning commercial unitary air conditioners and heat pumps, 
distribution transformers, and residential furnaces and boilers. These 
analyses were publicly available in the technical support documents at 
the time and had been posted in July 2004 as part of the ANOPR process 
for the respective product groups. Selected peer reviewers were energy 
experts whose backgrounds were primarily in engineering.\13\
---------------------------------------------------------------------------

    \13\ https://www.energy.gov/sites/prod/files/2013/12/f5/peer_review_report021507.pdf.
---------------------------------------------------------------------------

    DOE has identified 12 potential focus areas for the review to which 
it is currently committing, which are outlined in Table L1.1 below. DOE 
plans to task participants with reviewing the appropriate time 
horizon(s) for its analysis, estimation of baseline product efficiency, 
forecasting of future product prices, consumer choice models/modeling, 
emissions analysis, approaches to estimating indirect employment 
effects, fuel switching analysis, marginal manufacturer markup, effects 
on product performance, subgroup analysis, and how to undertake a 
welfare analysis as part of DOE's regulatory analysis. The charge to 
the peer reviewers will emphasize that, overall, DOE is interested in 
the sensitivity of the results to the assumptions made, thus the 
uncertainty inherent in the final model that it adopts. Procedurally, 
DOE is also interested in comments regarding the Department's handling 
and use of proprietary data.
    Two peer review approaches that DOE is considering for this round 
of peer review are outlined in Table L1.1 below. The first approach, 
labeled ``Analytical Overview'', would differ from the peer review 
process in 2005 by drawing from portions of existing regulatory 
analyses to illustrate the analytical focus areas that DOE has 
identified. The second approach would more closely mirror the 2005 peer 
review by tasking reviewers with reviewing the entirety of 2-3 existing 
regulatory analyses. Both approaches would attempt to include analyses 
that include aspects of fuel switching, commercial products, and white 
goods.

                           Table L1.1--Proposed Peer Review Structure and Focus Areas
----------------------------------------------------------------------------------------------------------------
       Peer review structure           Peer review materials                 Analytical focus areas
----------------------------------------------------------------------------------------------------------------
Analytical overview...............  DOE would illustrate the     Analytical time horizon.
                                     analytical focus areas      Baseline efficiency estimates.
                                     using examples from         Consumer choice model.
                                     specific product            Emissions analysis.
                                     rulemakings.                Fuel switching analysis.
                                    Product examples would       Indirect employment effects.
                                     include illustrations       Marginal manufacturer markup.
                                     that touch on fuel          Product price forecasts.
                                     switching, commercial       Product performance.
                                     products, and white goods.  Subgroup analysis.
                                                                 Use of proprietary data.
                                                                 Welfare analysis and deadweight loss.
Rule Case Studies.................  DOE would assign 2-3
                                     docketed technical
                                     support documents for
                                     existing standards to
                                     illustrate focus areas.
                                     Selected TSDs would be
                                     recent (2014-2016) and
                                     include fuel switching,
                                     commercial products, and
                                     white goods.
----------------------------------------------------------------------------------------------------------------

    This review is intended to evaluate analytical methods employed by 
DOE rather than to evaluate the efficacy of DOE's programs themselves. 
DOE further intends to make the peer review available to the public, 
including an opportunity for public commenters to raise concerns for 
the peer reviewers' consideration. Consistent with the requirements of 
OMB's Information Quality Bulletin for Peer Review, DOE will make the 
results of the peer review and its responses available to the public. 
In addition, DOE may seek comment on its findings.
    DOE seeks comment on these proposed approaches, including comment 
on the areas of focus that DOE has identified. DOE also seeks 
suggestions regarding what specific

[[Page 3938]]

changes to its analytical methodologies would be needed to improve on 
its current approach. To the extent that certain specific changes are 
needed for particular product or equipment sectors, DOE seeks detailed 
information on those aspects as well. Any potential changes to the 
Process Rule that might be appropriate based on the results of the peer 
review and any methodological update would be addressed in a subsequent 
proceeding to amend the Process Rule.
    One methodological issue upon which DOE seeks comment in this 
document is the ``walk-down'' approach to assessing different potential 
standards. Using this approach, DOE starts from the most stringent 
choice to determine both economic justification and technological 
feasibility by ``walking-down'' through the available choices by 
stringency until arriving at the first choice that meets all of the 
statutory criteria. Economic theory suggests that the most logical way 
to determine if a particular option is ``economically justified'' is to 
compare it to the full range of available choices, rather than just one 
baseline. Applying economic theory, DOE is proposing at 10 CFR part 430 
Appendix A, sec. (7)(e)(2)(G) to require the Secretary to determine 
whether a candidate/trial standard level would be economically 
justified when compared to the full range of other feasible trial 
standard levels. In making this determination, the Secretary is to 
consider whether an economically rational consumer would choose a 
product meeting the candidate/trial standard level over products 
meeting the other feasible trial standard levels after considering all 
relevant factors, including but not limited to, energy savings, 
efficacy, product features, and life-cycle costs. If an economically 
rational consumer would not choose the candidate trial standard level 
after considering these factors, it would be rejected as economically 
unjustified. This approach recognizes that the ``economic 
justification'' of any particular option depends on a broader 
comparison of economic attributes relative to other available options, 
rather than relative to just one baseline, particularly one that is 
likely to be of little relevance to a consumer when choosing which 
product(s) are economically justified for her purchase. Rather she is 
likely to be focused on the set of actually available products at the 
time of purchase rather than some hypothetical baseline representing 
the set of products that would have been available in the absence of 
the standard (including perhaps the model she is currently replacing). 
DOE seeks public comment on its proposal to refine the ``walk-down'' 
approach to require determinations of economic justification to 
consider comparisons of economically relevant factors across trial 
standard levels, consistent with both economic theory and the actual 
purchasing behavior of rational consumers.
2. Cumulative Regulatory Burden
    DOE received a number of written comments related to the issue of 
addressing cumulative regulatory burden in conjunction with the 
agency's energy conservation standards rulemakings. Commenters 
generally suggested that the agency should account for this burden more 
comprehensively in light of the substantial burdens already faced by 
manufacturers from multiple regulatory requirements. For example, Sub-
Zero stated that in light of the large number of regulatory 
requirements involving energy consumption and related environmental 
restrictions applying to a variety of different appliance types, it 
must still continue to introduce new products and features to stay in 
business. The cumulative burden presented by these requirements is, in 
its view, almost insurmountable. Sub-Zero asserted that the timing of 
different regulations from various government agencies for different 
products is a significant factor that can increase the burden on 
manufacturers. While Sub-Zero acknowledged that DOE claims to take 
these factors into account when determining the economic and 
competitive impacts from a given rulemaking, the company asserted that 
the agency underestimates the overall impact--particularly for smaller 
manufacturers such as Sub-Zero. (Sub-Zero, No. 43 at p. 2)
    Other industry commenters held similar views. The Heating, Air-
conditioning & Refrigeration Distributors International (``HARDI'') 
stated that the Process Rule should account for cumulative regulatory 
burden. (HARDI, No. 56 at pp. 3-4) Lennox argued that DOE should 
develop transparent and more robust guidance on the process for 
including cumulative regulatory costs on manufacturers into its 
economic analysis, with supporting analysis made available to 
stakeholders, to ensure that the mandated cost-benefit analysis 
reasonably reflects real-world costs. (Lennox, No. 62 at p. 12) Within 
the context of its particular industry, MHI urged DOE to work with the 
Department of Housing and Urban Development (``HUD'') to consider the 
cumulative regulatory impact of such regulations on producers of 
manufactured housing as a part of its cost-benefit analyses. (MHI, No. 
67 at p. 2) Similarly, Nor-Lake stated that DOE should coordinate its 
efforts with other government agencies to avoid conflicting or 
overlapping mandates. (Nor-Lake, No. 68 at p. 3) Schneider Electric 
asserted that DOE should engage industry early enough in the process to 
ensure that standards under consideration are also reflective of its 
commitment to ENERGY STAR--a voluntary program geared towards 
encouraging the purchase of energy-efficient products and equipment 
that is overseen by the Environmental Protection Agency but that relies 
on technical expertise and input from DOE. (Schneider Electric, No. 69 
at p. 2)
    The Joint Commenters similarly argued that a modernized Process 
Rule should meaningfully consider cumulative regulatory burden in DOE's 
rulemaking analyses. They asserted that the Process Rule should include 
cumulative regulatory burden analysis as a factor in DOE's decision on 
a proposed and final energy conservation standard, but it should not be 
a stand-alone analysis with no real impact. Instead, in their view, DOE 
should consider that burden as part of its analysis that manufacturers 
must comply with both a variety of domestic and international 
regulations. They added that a true cumulative regulatory burden 
analysis should not only consider the number of rulemakings to which 
appliance manufacturers are subject, but also the timing and technical 
and economic relationship of those rulemakings. The Joint Commenters 
urged DOE to consider manufacturers' relative and cumulative research 
and development, testing, and certification burdens, which can be 
significantly higher when regulations from different agencies take 
effect in close temporal proximity to each other. This burden, they 
argued, can be especially difficult for industries that have access to 
only a small number of accredited labs, creating a bottleneck problem 
as industry is forced to comply with several largely unrelated 
requirements at the same time. They stated further that both time and 
resources are needed to evaluate and respond to DOE's proposed test 
procedures and energy conservation standards, and when these 
rulemakings occur simultaneously, the cumulative burden on industry 
increases dramatically. They also argued that the same burden applies 
when compliance dates are clumped together for all of these products. 
The Joint Commenters

[[Page 3939]]

suggested that DOE should consider voluntary, non-regulatory options in 
its analysis but cautioned that the Department should not assume that 
labeling is a less burdensome approach; even without energy 
conservation requirements, labeling and other forms of providing 
information can require the same amount of testing and can have similar 
compliance risks. (Joint Commenters, No. 51 at pp. 2, 23-25) Lutron and 
Whirlpool signed on to the Joint Commenters' submission. (Lutron, No. 
50 at p. 2 and Whirlpool, No. 76 at p. 1)
    In contrast, the CEC supported DOE's consideration of cumulative 
regulatory burden in DOE's manufacturer impact analysis. It stated that 
this burden should be considered when determining the mandatory 
compliance date of an energy conservation standard and stressed that 
considering the cumulative regulatory burden faced by regulated 
entities should not be a factor in the life-cycle cost analysis. (CEC, 
No. 53 at p. 7) Within this context, the CEC also supported vetting 
manufacturer interview questions with the appropriate trade 
organization to improve the consistency and effectiveness of the 
interviews. (CEC, No. 53 at p. 7)
    DOE acknowledges that its past treatment of the cumulative 
regulatory burdens faced by regulated entities may have lacked the 
comprehensiveness sought by some of the industry commenters. However, 
DOE has attempted to address these burdens in a consistent manner to 
ensure that it accounts for them in each of DOE's energy conservation 
standards rulemakings. To improve its assessments of the potential 
burdens (i.e., costs) faced by industry in implementing potential 
standards, DOE commits to improving its analysis. As part of this 
effort, DOE will attempt to account for these potential costs through 
its modeling approaches. And as always, DOE remains open to 
constructive feedback on particular steps it should take (consistent 
with its legal obligations) that would help improve its evaluation of 
the cumulative regulatory burdens faced by regulated entities within 
the energy conservation standards context.
3. Should DOE conduct retrospective reviews of the energy savings and 
costs of energy conservation standards?
    DOE solicited feedback during the public meeting regarding whether 
(and how) it should conduct a retrospective review of the energy 
savings and costs for its current standards and associated costs and 
benefits as part of any pre-rulemaking process that it ultimately 
adopts. A number of commenters weighed in with suggestions and varying 
viewpoints on this issue.
    Some commenters supported the use of a retrospective review. AHRI 
suggested that a retrospective review could be part of the initial 
assessment when DOE is deciding whether to proceed to another round of 
rulemaking and that it should be required every time. (AHRI, January 9, 
2018 Public Meeting Transcript at pp. 175-176) NPCC supported the use 
of retrospective review, but it did not believe it would be useful or 
informative to carry out such an analysis on every standard or any 
current standard prior to commencing work on the development of revised 
standards. Looking back, the commenter asserted that prior 
retrospective reviews found that DOE overestimated the costs of meeting 
standards. Going forward, NPCC added that if DOE undertakes a 
retrospective review, it should determine the scope and submit that 
scope for public comment. (NPCC, No. 35 at p. 15)
    GW expressed support for the use of retrospective review, and it 
recommended that DOE should follow GW's suggested framework, which was 
contained in a supplemental attachment to its submission. GW argued 
that revisiting regulatory inputs is key to effective retrospective 
review. It asserted that these types of reviews could help DOE in 
verifying the accuracy of its forecasted assumptions on consumer 
behavior and energy prices, which both illustrate the costs and 
benefits of previous appliance standards and help improve future 
forecast analyses by providing more accurate inputs. (GW, No. 48 at pp. 
8, 13-14)
    Nor-Lake suggested that DOE should solicit feedback from 
stakeholders, either in the form of an RFI or otherwise, as to the 
retrospective impacts of the standard that is scheduled to be revised. 
In its view, this information would guide DOE in establishing its 
priorities and in determining whether it should promulgate an amended 
standard. (Nor-Lake, No. 68 at p. 2)
    NAFEM stated that at the pre-rulemaking stage, DOE's first step 
should be to evaluate whether under the current standard, the 
anticipated energy efficiency gains have been achieved and assess what 
the actual associated costs to consumers and manufacturers were. NAFEM 
argued that this step would be one of the most important ways for DOE 
to reduce regulatory burdens. (NAFEM, No. 47 at pp. 2-3)
    NPGA commented on the importance of DOE conducting a retrospective 
review and evaluation of current energy conservation standards prior to 
initiating a rulemaking for amended standards. It argued that the 
agency should refrain from amending its energy conservation standards 
on an arbitrary schedule (e.g., every 5 years, every 8 years), but 
instead, DOE should assess the performance of the current standard, as 
well as the market penetration of more efficient standards, to 
determine whether a new rulemaking is in fact necessary. (NPGA, No. 59 
at p. 3)
    While the Joint Commenters conceded that the actual impact and 
energy savings attributable to a current standard are highly relevant 
for future rulemakings, they did not support the creation of a separate 
process for performing retrospective review of current standards. They 
stated that such a review would essentially be another rulemaking and 
would significantly draw out the regulatory process by requiring the 
collection of data which would impose an additional burden on 
stakeholders. In their view, the imposition of a regular, mandatory 
retrospective review process would add burden, cost, and delay to the 
rulemaking process and would serve no real benefit. They added that 
commenters can always raise views on the impact of current standards, 
and DOE can respond to these issues without the need to dedicate its 
limited resources to obtaining the necessary data to support a 
retrospective review on its own. Instead, the Joint Commenters 
recommended the adoption of an inquiry at an early stage of a DOE 
regulatory action examining whether anything has changed since a 
previous DOE appliance efficiency standards final rule was adopted. 
(Joint Commenters, No. 51 at pp. 10-11) Lutron and Whirlpool supported 
the Joint Commenters' view by signing on to the Joint Comment. (See 
Lutron, No. 50 at p. 2 and Whirlpool, No. 76 at p. 1)
    Other commenters flatly opposed the use of a separate retrospective 
analysis. The American Lighting Association (``ALA'') opposed this 
approach and asserted that DOE should instead engage stakeholders by 
asking what, if any, new developments have occurred since the previous 
rulemaking proceeding. (ALA, No. 55 at p. 2) HARDI also opposed the 
creation of a separate retrospective review process, suggesting instead 
that such a process could occur concurrently with the standards 
rulemaking process to help reduce both the regulatory timetable and 
associated product development costs. (HARDI, No. 56 at pp. 2-3) Lennox 
similarly asserted that

[[Page 3940]]

requiring a retrospective review for all rulemakings would 
unnecessarily burden DOE and manufacturers alike. It argued that EPCA 
already requires an extensive economic justification test (e.g., 42 
U.S.C. 6295(o)), so a retrospective review of market impacts some six 
years or more before a rulemaking is not necessarily relevant to 
determining whether a standard under consideration is economically 
justified. As part of this economic justification analysis for a 
particular product, rather than leaping to a full and burdensome 
retrospective review, Lennox argued that DOE ``should make common sense 
inquiries such as what, if anything, has changed since a previous DOE 
appliance efficiency standards final rule for that product was 
adopted.'' (Lennox, No. 62 at p. 8)
    NEEP stated that it sees no benefit in performing a retrospective 
review of current standards and associated costs and benefits as part 
of a pre-rule process. It argued that the market analysis being 
conducted to inform a new standard will already include the impacts of 
earlier standards, as they have influenced the market. In its view, as 
DOE maps out any given market to inform a rule, the costs and benefits 
from current standards will become clear as will any other market 
influences (e.g., utility programs, technological innovations, and 
economies of scale being reached). NEEP added that DOE's understanding 
of the real-world impact of appliance standards is important in 
understanding the success of the program, but it is not needed as an 
explicit goal of data collection before a rule begins. (NEEP, No. 77 at 
p. 3)
    The CA IOUs stated that retrospective reviews should not be 
compulsory, because there is often not enough publicly available 
information to allow for a comprehensive review in time for DOE to meet 
its statutory obligations for completing updated rulemakings. (CA IOUs, 
No. 65 at p. 5) However, the CA IOUs did endorse the idea of DOE 
conducting some retrospective reviews to ensure that the predictions of 
its analytical models are accurate, and based upon these reviews, DOE 
should adjust the models accordingly where inaccuracies are found. (CA 
IOUs, No. 65 at pp. 7-8) Similarly, the CEC did not object to DOE 
performing a retrospective analysis of current standards, but it argued 
that it should not be a mandatory requirement for all rulemakings. CEC 
recommended that DOE should instead conduct a retrospective analysis 
outside of any specific rulemaking. It also noted that DOE must meet 
its statutory obligations to review standards and test procedures, 
regardless of any retrospective analysis. (CEC, No. 53 at p. 4)
    A few commenters were undecided or expressed misgivings about the 
appropriateness of conducting a retrospective review. Given the 
statutory timelines, one commenter expressed the opinion that there may 
not be time for a retrospective review. (EEI, January 9, 2018 Public 
Meeting Transcript at pp. 174-175) Other commenters (Lennox, January 9, 
2018 Public Meeting Transcript, at p. 176; Southern Company, January 9, 
2018 Public Meeting Transcript at pp. 176-177) expressed reservations 
about investing the extensive time and effort in a retrospective review 
without first having a clear understanding of what to examine. Bradford 
White urged DOE to conduct an analysis of its current standards as part 
of the ANOPR process, but it did not suggest that a retrospective 
analysis should occur separately from this process. (Bradford White, 
No. 42 at p. 2)
    In response, DOE acknowledges that a broad and comprehensive 
retrospective review of DOE's current and past energy conservation 
standards could provide significant data for DOE to consider as part of 
future standards rulemakings. While DOE recognizes the potential 
benefits of conducting this type of retrospective review on a periodic 
basis, it also recognizes that it faces limits on its own resources to 
conduct the broad and comprehensive analyses that would be needed to 
collect and analyze this information. As indicated by the variety of 
positions detailed in the comments submitted in response to the RFI, 
interested parties also recognize the considerable efforts and 
resources that would need to be committed to conducting these reviews 
on a regular basis. Accordingly, DOE is continuing to evaluate the 
prospect of conducting these types of reviews, including on a longer-
term (e.g., 10-year) basis but has not, as of yet, reached a final 
decision as to how to proceed. DOE does note that the early assessment 
processes proposed in this proceeding to amend the Process Rule do 
incorporate an element of retrospective review. That is, by beginning a 
potential proceeding to amend existing energy conservation standards or 
test procedures for a product by asking if anything has changed since 
issuance of the last standard or test procedure, DOE will be seeking 
input in what effectively amounts to a retrospective review of the 
impact and effectiveness of its most recent regulatory action for the 
product at issue.
4. Certification, Compliance, and Enforcement (CCE)-Related Issues
    DOE received a variety of comments regarding its certification, 
compliance, and enforcement (CCE) process. In summary, these comments 
offered suggestions on how DOE might improve the effectiveness of the 
agency's CCE-related efforts and steps that could be taken to 
streamline the rulemaking process involving CCE matters.
    DOE has given serious consideration to the various CCE-related 
issues raised by the commenters. However, the comments raise issues 
with DOE regulations other than the Process Rule. In light of the 
nature of these issues and others that DOE is addressing in this 
proposal, DOE is opting to evaluate this topic further.
    In 2010-2011 when DOE changed its certification, compliance, and 
enforcement requirements for all products in a single rulemaking, DOE 
learned that process was unwieldy, particularly given the level of 
interest from various parties and volume of comments received. 76 FR 
38287 (June 30, 2011).\14\ In light of that, DOE's plan is to address 
changes to the certification, compliance, and enforcement regulations, 
and related provisions in 10 CFR parts 430 and 431, in separate 
rulemakings with separate public meetings to help manage comments and 
to allow DOE to consider industry-specific issues in a more focused 
format. DOE may ultimately adopt different provisions for different 
products based on comments and would make appropriate changes to 
regulatory text to be more general or product-specific in a final rule.
---------------------------------------------------------------------------

    \14\ Docket Number EERE-2010-BT-CE-0014, https://www.regulations.gov/docket?D=EERE-2010-BT-CE-0014.
---------------------------------------------------------------------------

IV. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    This proposed regulatory action, if adopted, would be a significant 
regulatory action under section 3(f) of Executive Order 12866, 
``Regulatory Planning and Review,'' 58 FR 51735 (Oct. 4, 1993). 
Accordingly, this proposed regulatory action was subject to review 
under the Executive Order by the Office of Information and Regulatory 
Affairs (OIRA) in the Office of Management and Budget (OMB).

B. Review Under Executive Order 13771 and 13777

    On January 30, 2017, the President issued Executive Order (E.O.) 
13771,

[[Page 3941]]

``Reducing Regulation and Controlling Regulatory Costs.'' 82 FR 9339 
(Jan. 30, 2017). That Order states that the policy of the Executive 
Branch is to be prudent and financially responsible in the expenditure 
of funds, from both public and private sources. More specifically, the 
Order provides that it is essential to manage the costs associated with 
the governmental imposition of requirements necessitating private 
expenditures of funds required to comply with Federal regulations. In 
addition, on February 24, 2017, the President issued Executive Order 
13777, ``Enforcing the Regulatory Reform Agenda.'' 82 FR 12285 (March 
1, 2017). The Order requires the head of each agency to designate an 
agency official as its Regulatory Reform Officer (RRO). Each RRO is 
tasked with overseeing the implementation of regulatory reform 
initiatives and policies to ensure that individual agencies effectively 
carry out regulatory reforms, consistent with applicable law. Further, 
E.O. 13777 requires the establishment of a regulatory task force at 
each agency. The regulatory task force is required to make 
recommendations to the agency head regarding the repeal, replacement, 
or modification of existing regulations, consistent with applicable 
law.
    To implement these Executive Orders, the Department, among other 
actions, issued a request for information (RFI) seeking public comment 
on how best to achieve meaningful burden reduction while continuing to 
achieve the Department's regulatory objectives. 82 FR 24582 (May, 30, 
2017). In response to this RFI, the Department received numerous and 
extensive comments pertaining to DOE's Process Rule.

C. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996) 
requires preparation of an initial regulatory flexibility analysis 
(IRFA) for any rule that by law must be proposed for public comment and 
a final regulatory flexibility analysis (FRFA) for any such rule that 
an agency adopts as a final rule, unless the agency certifies that the 
rule, if promulgated, will not have a significant economic impact on a 
substantial number of small entities. A regulatory flexibility analysis 
examines the impact of the rule on small entities and considers 
alternative ways of reducing negative effects. Also, as required by 
Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 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 website at: http://energy.gov/gc/office-general-counsel.
    Because this proposed rule would not directly regulate small 
entities but instead only imposes procedural requirements on DOE 
itself, DOE certifies that this proposed rule would not have a 
significant economic impact on a substantial number of small entities, 
and, therefore, no regulatory flexibility analysis is required. Mid-Tex 
Elec. Co-Op, Inc. v. F.E.R.C., 773 F.2d 327 (1985).

D. Review Under the Paperwork Reduction Act of 1995

    Manufacturers of covered products/equipment must certify to DOE 
that their products comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers must test their 
products according to the DOE test procedures for such products/
equipment, including any amendments adopted for those test procedures, 
on the date that compliance is required. DOE has established 
regulations for the certification and recordkeeping requirements for 
all covered consumer products and commercial equipment. 76 FR 12422 
(March 7, 2011); 80 FR 5099 (Jan. 30, 2015). The collection-of-
information requirement for certification and recordkeeping is subject 
to review and approval by OMB under the Paperwork Reduction Act (PRA). 
This requirement has been approved by OMB under OMB control number 
1910-1400. Public reporting burden for the certification is estimated 
to average 30 hours per response, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.
    Specifically, this proposed rule, addressing clarifications to the 
Process Rule itself, does not contain any collection of information 
requirement that would trigger the PRA.

E. Review Under the National Environmental Policy Act of 1969

    In this document, DOE proposes to revise its Process Rule, which 
outlines the procedures DOE will follow in conducting rulemakings for 
new or amended energy conservation standards and test procedures for 
covered consumer products and commercial/industrial equipment. DOE has 
determined that this 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 is 
strictly procedural and is covered by the Categorical Exclusion in 10 
CFR part 1021, subpart D, paragraph A6. Accordingly, neither an 
environmental assessment nor an environmental impact statement is 
required.

F. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 10, 
1999), imposes certain requirements on Federal 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 tentatively 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. It will 
primarily affect the procedure by which DOE develops proposed rules to 
revise energy conservation standards and test procedures. EPCA governs 
and prescribes Federal preemption of State regulations that are the 
subject of DOE's regulations adopted pursuant to the statute. In such 
cases, States can petition DOE for exemption from such preemption to 
the extent, and based on criteria, set forth in EPCA. (42 U.S.C.

[[Page 3942]]

6297(d)) Therefore, Executive Order 13132 requires no further action.

G. 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 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. Regarding the review required by section 3(a), 
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 tentatively determined that, 
to the extent permitted by law, the proposed rule meets the relevant 
standards of Executive Order 12988.

H. 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 them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. (This policy is also available at http://www.energy.gov/gc/office-general-counsel under ``Guidance & Opinions'' 
(Rulemaking)) DOE examined the proposed rule according to UMRA and its 
statement of policy and has tentatively determined that the rule 
contains neither an intergovernmental mandate, nor a mandate that may 
result in the expenditure by State, local, and Tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
year. Accordingly, no further assessment or analysis is required under 
UMRA.

I. 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.

J. Review Under Executive Order 12630

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

K. Review Under the 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 Federal agencies to review 
most disseminations of information to the public under information 
quality 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 tentatively concluded that it is consistent with 
the applicable policies in those guidelines.

L. 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 OIRA 
at 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 promulgates 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.
    DOE has tentatively concluded that the regulatory action in this 
document, which proposes clarifications to the Process Rule that guides 
the Department in proposing energy conservation standards is not a 
significant energy action because 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 for 
this proposed rule.

M. Review Consistent With OMB's Information Quality Bulletin for Peer 
Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the

[[Page 3943]]

bulletin is to enhance the quality and credibility of the Government's 
scientific information. Under the Bulletin, the energy conservation 
standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have or does have a clear and 
substantial impact on important public policies or private sector 
decisions.'' Id. at 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report,'' dated February 2007, has been 
disseminated and is available at the following website: http://www1.eere.energy.gov/buildings/appliance_standards/peer_review.html. 
Because available data, models, and technological understanding have 
changed since 2007, DOE is committing in this proceeding to engage in a 
new peer review of its analytical methodologies.

V. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this document. If 
you plan to attend the public meeting, please notify Ms. Regina 
Washington at (202) 586-1214 or by email: [email protected].
    Please note that foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures which require advance 
notice prior to attendance at the public meeting. If a foreign national 
wishes to participate in the public meeting, please inform DOE of this 
fact as soon as possible by contacting Ms. Regina Washington at (202) 
586-1214 or [email protected] so that the necessary 
procedures can be completed.
    DOE requires visitors to have laptops and other devices, such as 
tablets, checked upon entry into the Forrestal Building. Any person 
wishing to bring these devices into the building will be required to 
obtain a property pass. Visitors should avoid bringing these devices, 
or allow an extra 45 minutes to check in. Please report to the 
visitor's desk to have devices checked before proceeding through 
security.
    Due to the REAL ID Act implemented by the Department of Homeland 
Security (DHS), there have been recent changes regarding identification 
(ID) requirements for individuals wishing to enter Federal buildings 
from specific States and U.S. territories. As a result, driver's 
licenses from several States and one territory will not be accepted for 
building entry, and instead, one of the alternate forms of ID listed 
below will be required. DHS has determined that regular driver's 
licenses (and ID cards) from the following jurisdictions are not 
acceptable for entry into DOE facilities: Alaska, American Samoa, 
Arizona, Louisiana, Maine, Massachusetts, Minnesota, New York, 
Oklahoma, and Washington. Acceptable alternate forms of Photo-ID 
include: U.S. Passport or Passport Card; an Enhanced Driver's License 
or Enhanced ID-Card issued by the States of Minnesota, New York, or 
Washington (Enhanced licenses issued by these States are clearly marked 
Enhanced or Enhanced Driver's License); a military ID or other Federal 
government-issued Photo-ID card.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's website at: https://www.energy.gov/eere/buildings/regulatory-processes, under the heading Process Rule. Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has plans to present a prepared general statement 
may request that copies of his or her statement be made available at 
the public meeting. Such persons may submit requests, along with an 
advance electronic copy of their statement in PDF (preferred), 
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to 
the appropriate address shown in the ADDRESSES section at the beginning 
of this document. The request and advance copy of statements must be 
received at least one week before the public meeting and may be 
emailed, hand-delivered, or sent by mail. DOE prefers to receive 
requests and advance copies via email. Please include a telephone 
number to enable DOE staff to make follow-up contact, if needed.

C. Conduct of the Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C. 
6306) A court reporter will be present to record the proceedings and 
prepare a transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the public meeting. There shall not be discussion of proprietary 
information, costs or prices, market share, or other commercial matters 
regulated by U.S. anti-trust laws. After the public meeting, interested 
parties may submit further comments on the proceedings, as well as on 
any aspect of the rulemaking, until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for prepared general statements by 
participants, and encourage all interested parties to share their views 
on issues affecting this rulemaking. Each participant will be allowed 
to make a general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will allow, as time 
permits, other participants to comment briefly on any general 
statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the public 
meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for the proper conduct of the public meeting.
    A transcript of the public meeting will be included in the docket, 
which can be viewed as described in the Docket section at the beginning 
of this notice and will be accessible on the DOE website. In addition, 
any person may buy a copy of the transcript from the transcribing 
reporter.

[[Page 3944]]

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this proposed 
rule. Interested parties may submit comments, data, and other 
information using any of the methods described in the ADDRESSES section 
at the beginning of this document.
    Submitting comments via http://www.regulations.gov. The http://www.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 itself 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. Otherwise, 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 http://www.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 
http://www.regulations.gov cannot be claimed as CBI. Comments received 
through the website will waive any CBI claims for the information 
submitted. For information on submitting CBI, see the Confidential 
Business Information section below.
    DOE processes submissions made through http://www.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 http://www.regulations.gov provides after you have successfully uploaded your 
comment.
    Submitting comments via email, hand delivery/courier, or postal 
mail. Comments and documents submitted via email, hand delivery/
courier, or postal mail also will be posted to http://www.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 in 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 postal mail 
or hand delivery/courier, please provide all items on a CD, if 
feasible, in which case it is not necessary to submit printed copies. 
No telefacsimiles (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, that are written in English, and that are 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. Pursuant 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/courier 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 that 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).

VI. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this notice of 
proposed rulemaking.

List of Subjects

10 CFR Part 430

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Imports, 
Incorporation by reference, Intergovernmental relations, Small 
businesses, Test procedures.

10 CFR Part 431

    Administrative practice and procedure, Confidential business 
information, Incorporation by reference, Reporting and recordkeeping 
requirements, Test procedures.

    Signed in Washington, DC, on January 28, 2019.
Daniel R. Simmons,
Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons stated in the preamble, DOE is proposing to amend 
parts 430 and 431 of title 10 of the Code of Federal Regulations as set 
forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
1. 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
2. Appendix A to subpart C of part 430 is revised to read as follows:

[[Page 3945]]

Appendix A to Subpart C of Part 430--Procedures, Interpretations, and 
Policies for Consideration of New or Revised Energy Conservation 
Standards and Test Procedures for Consumer Products and Certain 
Commercial/Industrial Equipment

1. Objectives
2. Scope
3. Mandatory Application of the Process Rule
4. Setting Priorities for Rulemaking Activity
5. Coverage Determination Rulemakings
6. Process for Developing Energy Conservation Standards
7. Policies on Selection of Standards
8. Test Procedures
9. ASHRAE Equipment
10. Direct Final Rules
11. Negotiated Rulemaking Process
12. Principles for Distinguishing Between Effective and Compliance 
Dates
13. Principles for the Conduct of the Engineering Analysis
14. Principles for the Analysis of Impacts on Manufacturers
15. Principles for the Analysis of Impacts on Consumers
16. Consideration of Non-Regulatory Approaches
17. Cross-cutting Analytical Assumptions

1. Objectives

    This appendix establishes procedures, interpretations, and 
policies that DOE will follow in the consideration and promulgation 
of new or revised appliance energy conservation standards and test 
procedures under the Energy Policy and Conservation Act (EPCA). This 
appendix applies to both covered consumer products and covered 
commercial/industrial equipment. The Department's objectives in 
establishing these procedures include:
    (a) Provide for early input from stakeholders. The Department 
seeks to provide opportunities for public input early in the 
rulemaking process so that the initiation and direction of 
rulemakings is informed by comment from interested parties. Under 
the procedures established by this appendix, DOE will seek early 
input from interested parties in determining whether establishing 
new or amending existing energy conservation standards will result 
in significant savings of energy and is economically justified and 
technologically feasible. In the context of test procedure 
rulemakings, DOE will seek early input from interested parties in 
determining whether--
    (1) Establishing a new or amending an existing test procedure 
will better measure the energy efficiency, energy use, water use (as 
specified in EPCA), or estimated annual operating cost of a covered 
product/equipment during a representative average use cycle or 
period of use (for consumer products); and
    (2) Will not be unduly burdensome to conduct.
    (b) Increase predictability of the rulemaking timetable. The 
Department seeks to make informed, strategic decisions about how to 
deploy its resources on the range of possible standards and test 
procedure development activities, and to announce these 
prioritization decisions so that all interested parties have a 
common expectation about the timing of different rulemaking 
activities. Further, DOE will offer the opportunity to provide input 
on the prioritization of rulemakings through a request for comment 
as DOE begins preparation of its Regulatory Agenda each spring.
    (c) Eliminate problematic design options early in the process. 
The Department seeks to eliminate from consideration, early in the 
process, any design options that present unacceptable problems with 
respect to manufacturability, consumer utility, or safety, so that 
the detailed analysis can focus only on viable design options. Under 
the procedures in this appendix, DOE will eliminate from 
consideration design options if it concludes that manufacture, 
installation or service of the design will be impractical, or that 
the design option will have a material adverse impact on the utility 
of the product, or if the design option will have a material adverse 
impact on safety or health. DOE will also eliminate from 
consideration proprietary design options that represent a unique 
pathway to achieving a given efficiency level. This screening will 
be done at the outset of a rulemaking.
    (d) Fully consider non-regulatory approaches. The Department 
seeks to understand the effects of market forces and voluntary 
programs on encouraging the purchase of energy efficient products so 
that the incremental impacts of a new or revised standard can be 
accurately assessed and the Department can make informed decisions 
about where standards and voluntary programs can be used most 
effectively. DOE will continue to support voluntary efforts by 
manufacturers, retailers, utilities, and others to increase product/
equipment efficiency.
    (e) Conduct thorough analysis of impacts. In addition to 
understanding the aggregate social and private costs and benefits of 
standards, the Department seeks to understand the distribution of 
those costs and benefits among consumers, manufacturers, and others, 
as well as the uncertainty associated with these analyses of costs 
and benefits, so that any adverse impacts on subgroups and 
uncertainty concerning any adverse impacts can be fully considered 
in selecting a standard. Pursuant to this appendix, the analyses 
will consider the variability of impacts on significant groups of 
manufacturers and consumers in addition to aggregate social and 
private costs and benefits, report the range of uncertainty 
associated with these impacts, and take into account cumulative 
impacts of regulation on manufacturers. The Department will also 
conduct appropriate analyses to assess the impact that new or 
amended test procedures will have on manufacturers and consumers.
    (f) Use transparent and robust analytical methods. The 
Department seeks to use qualitative and quantitative analytical 
methods that are fully documented for the public and that produce 
results that can be explained and reproduced, so that the analytical 
underpinnings for policy decisions on standards are as sound and 
well-accepted as possible.
    (g) Support efforts to build consensus on standards. The 
Department seeks to encourage development of consensus proposals for 
new or revised standards because standards with such broad-based 
support are likely to balance effectively the various interests 
affected by such standards.

2. Scope

    The procedures, interpretations, and policies described in this 
appendix apply to rulemakings concerning new or revised Federal 
energy conservation standards and test procedures, and related rule 
documents (i.e., coverage determinations) for consumer products in 
Part A and commercial and industrial equipment under Part A-1 of the 
Energy Policy and Conservation Act (EPCA), as amended, except 
covered ASHRAE equipment in Part A-1 are governed by section 9 in 
this appendix.

3. Mandatory Application of the Process Rule

    The rulemaking procedures established in this appendix are 
binding on DOE.

4. Setting Priorities for Rulemaking Activity

    (a) In establishing its priorities for undertaking energy 
conservation standards and test procedure rulemakings, DOE will 
consider the following factors, consistent with applicable legal 
obligations:
    (1) Potential energy savings;
    (2) Potential social and private, including environmental or 
energy security, benefits;
    (3) Applicable deadlines for rulemakings;
    (4) Incremental DOE resources required to complete the 
rulemaking process;
    (5) Other relevant regulatory actions affecting the products/
equipment;
    (6) Stakeholder recommendations;
    (7) Evidence of energy efficiency gains in the market absent new 
or revised standards;
    (8) Status of required changes to test procedures; and
    (9) Other relevant factors.
    (b) DOE will offer the opportunity to provide input on 
prioritization of rulemakings through a request for comment as DOE 
begins preparation of its Regulatory Agenda each spring.

5. Coverage Determination Rulemakings

    (a) DOE has discretion to conduct proceedings to determine 
whether additional consumer products and commercial/industrial 
equipment should be covered under EPCA if certain statutory criteria 
are met. (42 U.S.C. 6292 and 6295(l) for consumer products; 42 
U.S.C. 6312 for commercial/industrial equipment)
    (b) If DOE determines to initiate the coverage determination 
process, it will first publish a notice of proposed determination, 
providing an opportunity for public comment of not less than 60 
days, in which DOE will explain how such products/equipment that it 
seeks to designate as ``covered'' meet the statutory criteria for 
coverage and why such coverage is ``necessary or appropriate'' to 
carry out the purposes of EPCA. In the case of commercial equipment, 
DOE will follow the same process, except that the Department must 
demonstrate that coverage of the equipment type is ``necessary'' to 
carry out the purposes of EPCA.
    (c) DOE will publish its final decision on coverage as a 
separate notice, an action that

[[Page 3946]]

will be completed prior to the initiation of any test procedure or 
energy conservation standards rulemaking (i.e., DOE will not issue 
any RFIs, NODAs, or any other mechanism to gather information for 
the purpose of initiating a rulemaking to establish a test procedure 
or energy conservation standard for the proposed covered product/
equipment prior to finalization of the coverage determination.). If 
DOE determines that coverage is warranted, DOE will proceed with its 
typical rulemaking process for both test procedures and standards. 
Specifically, DOE will finalize coverage for a product/equipment at 
least 180 days prior to publication of a proposed rule to establish 
a test procedure. And, DOE will complete the test procedure 
rulemaking at least 180 days prior to publication of a proposed 
energy conservation standard.
    (d) If, during the substantive rulemaking proceedings to 
establish test procedures or energy conservation standards after 
completing a coverage determination, DOE finds it necessary and 
appropriate to expand or reduce the scope of coverage, a new 
coverage determination process will be initiated and finalized prior 
to moving forward with the test procedure or standards rulemaking.

6. Process for Developing Energy Conservation Standards

    This section describes the process to be used in developing 
energy conservation standards for covered products and equipment 
other than those covered equipment subject to ASHRAE/IES Standard 
90.1.
    (a) Early Assessment. (1) As the first step in any proceeding to 
consider establishing or amending any energy conservation standard, 
DOE will publish a notice in the Federal Register announcing that 
DOE is considering initiating a rulemaking proceeding. As part of 
that notice, DOE will request submission of related comments, 
including data and information on whether DOE should proceed with 
the rulemaking, including whether any new or amended rule would be 
economically justified, technologically feasible, or would result in 
a significant savings of energy. If DOE receives sufficient 
information suggesting that it could justify a determination that no 
new or amended standard would meet the applicable statutory 
criteria, DOE would engage in notice and comment rulemaking to make 
that determination. If DOE receives sufficient information 
suggesting it could justify a new or amended standard or the 
information received is inconclusive with regard to the statutory 
criteria, DOE would undertake the preliminary stages of a rulemaking 
to issue or amend an energy conservation standard, as discussed 
further in paragraph (a)(2) of this section.
    (2) If the Department determines it is appropriate to proceed 
with a rulemaking, the preliminary stages of a rulemaking to issue 
or amend an energy conservation standard that DOE will undertake 
will be a Framework Document and Preliminary Analysis, or an Advance 
Notice of Proposed Rulemaking (ANOPR). Requests for Information 
(RFI) and Notices of Data Availability (NODA) could be issued, as 
appropriate, in addition to these preliminary-stage documents.
    (3) In those instances where the early assessment either 
suggested that a new or amended energy conservation standard might 
be justified or in which the information was inconclusive on this 
point, and DOE undertakes the preliminary stages of a rulemaking to 
establish or amend an energy conservation standard, DOE may still 
ultimately determine that such a standard is not economically 
justified, technologically feasible or would not result in a 
significant savings of energy. Therefore, DOE will examine the 
potential costs and benefits and energy savings potential of a new 
or amended energy conservation standard at the preliminary stage of 
the rulemaking.
    (b) Significant Savings of Energy. (1) In evaluating the 
prospects of proposing a new or amended standard--or in determining 
that no new or amended standard is needed--DOE will first look to 
the projected energy savings that are likely to result. DOE will 
determine as a preliminary matter whether the rulemaking has the 
potential to result in ``significant energy savings.'' If the 
rulemaking passes the significant energy savings threshold, DOE will 
then compare these projected savings against the technological 
feasibility of and likely costs necessary to meet the new or amended 
standards needed to achieve these energy savings.
    (2) Under its significant energy savings analysis, DOE will 
examine both the total amount of projected energy savings and the 
relative percentage increase in efficiency or decrease in energy 
usage that could be obtained from establishing or amending energy 
conservation standards for a given covered product or equipment. 
Under the first step of this approach, the projected energy savings 
from a potential maximum technologically feasible (``max-tech'') 
standard will be evaluated against a threshold of 0.5 quads of 
energy saved over a 30-year period.
    (3) If the projected max-tech energy savings does not meet or 
exceed this threshold, those max-tech savings would then be compared 
to the total energy usage of the covered product or equipment to 
calculate a potential percentage improvement in energy efficiency or 
reduction in energy usage.
    (4) If this comparison does not yield an energy savings 
improvement of at least 10 percent, the analysis will end, and DOE 
will propose to determine that no significant energy savings would 
likely result from setting new or amended standards.
    (5) If either one of the thresholds described in paragraphs 
(b)(3) or (b)(4) of this section is reached, DOE will conduct 
analyses to ascertain whether a standard can be prescribed that 
produces the maximum improvement in energy efficiency that is both 
technologically feasible and economically justified and still 
constitutes significant energy savings (using the same criteria of 
either 0.5 quad of aggregate energy savings or a 10-percent 
improvement in energy efficiency or decrease in energy use) at the 
level determined to be economically justified.
    (c) Design options. (1) General. Once the Department has 
initiated a rulemaking for a specific product/equipment but before 
publishing a proposed rule to establish or amend standards, DOE will 
identify the product/equipment categories and design options to be 
analyzed in detail, as well as those design options to be eliminated 
from further consideration. During the pre-proposal stages of the 
rulemaking, interested parties may be consulted to provide 
information on key issues through a variety of rulemaking documents. 
The preliminary stages of a rulemaking to issue or amend an energy 
conservation standard that DOE will undertake will be a framework 
document and preliminary analysis, or an advance notice of proposed 
rulemaking (ANOPR). Requests for Information (RFI) and Notice of 
Data Availability (NODA) could also be issued, as appropriate.
    (2) Identification and screening of design options. During the 
pre-NOPR phase of the rulemaking process, the Department will 
develop a list of design options for consideration. Initially, the 
candidate design options will encompass all those technologies 
considered to be technologically feasible. Following the development 
of this initial list of design options, DOE will review each design 
option based on the factors described in paragraph (c)(3) of this 
section and the policies stated in section 7. The reasons for 
eliminating or retaining any design option at this stage of the 
process will be fully documented and published as part of the NOPR 
and as appropriate for a given rule, in the pre-NOPR documents. The 
technologically feasible design options that are not eliminated in 
this screening will be considered further in the Engineering 
Analysis described in paragraph (d) of this section.
    (3) Factors for screening of design options. The factors for 
screening design options include:
    (i) Technological feasibility. Technologies incorporated in 
commercial products or in working prototypes will be considered 
technologically feasible.
    (ii) Practicability to manufacture, install and service. If mass 
production of a technology under consideration for use in 
commercially-available products (or equipment) and reliable 
installation and servicing of the technology could be achieved on 
the scale necessary to serve the relevant market at the time of the 
effective date of the standard, then that technology will be 
considered practicable to manufacture, install and service.
    (iii) Adverse Impacts on Product Utility or Product 
Availability.
    (iv) Adverse Impacts on Health or Safety.
    (v) Unique-Pathway Proprietary Technologies. If a design option 
utilizes proprietary technology that represents a unique pathway to 
achieving a given efficiency level, that technology will not be 
considered further.
    (d) Engineering analysis of design options and selection of 
candidate standard levels. After design options are identified and 
screened, DOE will perform the engineering analysis and the benefit/
cost analysis and select the candidate standard levels based on

[[Page 3947]]

these analyses. The results of the analyses will be published in a 
Technical Support Document (TSD) to accompany the appropriate 
rulemaking documents.
    (1) Identification of engineering analytical methods and tools. 
DOE will select the specific engineering analysis tools (or multiple 
tools, if necessary to address uncertainty) to be used in the 
analysis of the design options identified as a result of the 
screening analysis.
    (2) Engineering and life-cycle cost analysis of design options. 
DOE and its contractor will perform engineering and life-cycle cost 
analyses of the design options.
    (3) Review by stakeholders. Interested parties will have the 
opportunity to review the results of the engineering and life-cycle 
cost analyses. If appropriate, a public workshop will be conducted 
to review these results. The analyses will be revised as appropriate 
on the basis of this input.
    (4) New information relating to the factors used for screening 
design options. If further information or analysis leads to a 
determination that a design option, or a combination of design 
options, has unacceptable impacts, that design option or combination 
of design options will not be included in a candidate standard 
level.
    (5) Selection of candidate standard levels. Based on the results 
of the engineering and life-cycle cost analysis of design options 
and the policies stated in paragraph (c) of this section, DOE will 
select the candidate standard levels for further analysis.
    (e) Pre-NOPR Stage--(1) Documentation of decisions on candidate 
standard selection.
    (i) If the early assessment and screening analysis indicates 
that continued development of a standard is appropriate, the 
Department will publish either:
    (A) A notice accompanying a framework document and, 
subsequently, a preliminary analysis or;
    (B) An ANOPR. The notice document will be published in the 
Federal Register, with accompanying documents referenced and posted 
in the appropriate docket.
    (ii) If DOE determines at any point in the pre-NOPR stage that 
no candidate standard level is likely to produce the maximum 
improvement in energy efficiency that is both technologically 
feasible and economically justified or constitute significant energy 
savings, that conclusion will be announced in the Federal Register 
with an opportunity for public comment provided to stakeholders. In 
such cases, the Department will proceed with a rulemaking that 
proposes not to adopt new or amended standards.
    (2) Public comment and hearing. The length of the public comment 
period for pre-NOPR rulemaking documents will vary depending upon 
the circumstances of the particular rulemaking, but will not be less 
than 75 calendar days. For such documents, DOE will determine 
whether a public hearing is appropriate.
    (3) Revisions based on comments. Based on consideration of the 
comments received, any necessary changes to the engineering analysis 
or the candidate standard levels will be made.
    (f) Analysis of impacts and selection of proposed standard 
level. After the pre-NOPR stage, if DOE has determined preliminarily 
that a candidate standard level is likely to produce the maximum 
improvement in energy efficiency that is both technologically 
feasible and economically justified or constitute significant energy 
savings, economic analyses of the impacts of the candidate standard 
levels will be conducted. The Department will propose new or amended 
standards based on the results of the impact analysis.
    (1) Identification of issues for analysis. The Department, in 
consideration of comments received, will identify issues that will 
be examined in the impacts analysis.
    (2) Identification of analytical methods and tools. DOE will 
select the specific economic analysis tools (or multiple tools if 
necessary to address uncertainty) to be used in the analysis of the 
candidate standard levels.
    (3) Analysis of impacts. DOE will conduct the analysis of the 
impacts of candidate standard levels.
    (4) Factors to be considered in selecting a proposed standard. 
The factors to be considered in selection of a proposed standard 
include:
    (i) Impacts on manufacturers. The analysis of private 
manufacturer impacts will include: Estimated impacts on cash flow; 
assessment of impacts on manufacturers of specific categories of 
products/equipment and small manufacturers; assessment of impacts on 
manufacturers of multiple product-specific Federal regulatory 
requirements, including efficiency standards for other products and 
regulations of other agencies; and impacts on manufacturing 
capacity, plant closures, and loss of capital investment.
    (ii) Private Impacts on consumers. The analysis of consumer 
impacts will include: Estimated private energy savings impacts on 
consumers based on national average energy prices and energy usage; 
assessments of impacts on subgroups of consumers based on major 
regional differences in usage or energy prices and significant 
variations in installation costs or performance; sensitivity 
analyses using high and low discount rates reflecting both private 
transactions and social discount rates and high and low energy price 
forecasts; consideration of changes to product utility, changes to 
purchase rate of products, and other impacts of likely concern to 
all or some consumers, based to the extent practicable on direct 
input from consumers; estimated life-cycle cost with sensitivity 
analysis; consideration of the increased first cost to consumers and 
the time required for energy cost savings to pay back these first 
costs; and loss of utility.
    Other analyses of social and distributional effects include:
    (iii) Impacts on competition, including industry concentration 
analysis.
    (iv) Impacts on utilities. The analysis of utility impacts will 
include estimated marginal impacts on electric and gas utility costs 
and revenues.
    (v) National energy, economic, and employment impacts. The 
analysis of national energy, economic, and employment impacts will 
include: Estimated energy savings by fuel type; estimated net 
present value of benefits to all consumers; and estimates of the 
direct and indirect impacts on employment by appliance 
manufacturers, relevant service industries, energy suppliers, 
suppliers of complementary and substitution products, and the 
economy in general.
    (vi) Impacts on the environment. The analysis of environmental 
impacts will include estimated impacts on emissions of carbon and 
relevant criteria pollutants, and impacts on pollution control 
costs.
    (vii) Impacts of non-regulatory approaches. The analysis of 
energy savings and consumer impacts will incorporate an assessment 
of the impacts of market forces and existing voluntary programs in 
promoting product/equipment efficiency, usage, and related 
characteristics in the absence of updated efficiency standards.
    (viii) New information relating to the factors used for 
screening design options.
    (g) Notice of Proposed Rulemaking--(1) Documentation of 
decisions on proposed standard selection. The Department will 
publish a NOPR in the Federal Register that proposes standard levels 
and explains the basis for the selection of those proposed levels, 
and will post on its website a draft TSD documenting the analysis of 
impacts. The draft TSD will also be posted in the appropriate docket 
on http://www.regulations.gov. As required by 42 U.S.C. 6295(p)(1) 
of EPCA, the NOPR also will describe the maximum improvement in 
energy efficiency or maximum reduction in energy use that is 
technologically feasible and, if the proposed standards would not 
achieve these levels, the reasons for proposing different standards.
    (2) Public comment and hearing. There will be not less than 75 
days for public comment on the NOPR, with at least one public 
hearing or workshop. (42 U.S.C. 6295(p)(2) and 6306)
    (3) Revisions to impact analyses and selection of final 
standard. Based on the public comments received, DOE will review the 
proposed standard and impact analyses, and make modifications as 
necessary. If major changes to the analyses are required at this 
stage, DOE will publish a Supplemental Notice of Proposed Rulemaking 
(SNOPR), when required. DOE may also publish a NODA or RFI, where 
appropriate.
    (h) Final Rule. The Department will publish a Final Rule in the 
Federal Register that promulgates standard levels, responds to 
public comments received on the NOPR, and explains how the selection 
of those standards meets the statutory requirement that any new or 
amended energy conservation standard produces the maximum 
improvement in energy efficiency that is both technologically 
feasible and economically justified and constitutes significant 
energy savings, accompanied by a final TSD.

7. Policies on Selection of Standards

    (a) Purpose. (1) Section 5 describes the process that will be 
used to consider new or revised energy efficiency standards and 
lists a number of factors and analyses that will be considered at 
specified points in the process. Department policies concerning the 
selection of new or revised standards, and decisions preliminary 
thereto, are described in this section. These policies are intended 
to elaborate on the statutory criteria provided in 42 U.S.C. 6295 of 
EPCA.

[[Page 3948]]

    (2) The procedures described in this section are intended to 
assist the Department in making the determinations required by EPCA 
and do not preclude DOE's consideration of any other information 
consistent with the relevant statutory criteria. The Department will 
consider pertinent information in determining whether a new or 
revised standard is consistent with the statutory criteria.
    (b) Screening design options. These factors will be considered 
as follows in determining whether a design option will receive any 
further consideration:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in commercially-viable, 
existing prototypes will not be considered further.
    (2) Practicability to manufacture, install and service. If it is 
determined that mass production of a technology in commercial 
products and reliable installation and servicing of the technology 
could not be achieved on the scale necessary to serve the relevant 
market at the time of the compliance date of the standard, then that 
technology will not be considered further.
    (3) Impacts on product utility. If a technology is determined to 
have significant adverse impact on the utility of the product/
equipment to subgroups of consumers, or result in the unavailability 
of any covered product type with performance characteristics 
(including reliability), features, sizes, capacities, and volumes 
that are substantially the same as products generally available in 
the U.S. at the time, it will not be considered further.
    (4) Safety of technologies. If it is determined that a 
technology will have significant adverse impacts on health or 
safety, it will not be considered further.
    (5) Unique-pathway proprietary technologies. If a technology has 
proprietary protection and represents a unique pathway to achieving 
a given efficiency level, it will not be considered further, due to 
the potential for monopolistic concerns.
    (c) Identification of candidate standard levels. Based on the 
results of the engineering and cost/benefit analyses of design 
options, DOE will identify the candidate standard levels for further 
analysis. Candidate standard levels will be selected as follows:
    (1) Costs and savings of design options. Design options that 
have payback periods that exceed the median life of the product or 
which result in life-cycle cost increases relative to the base case, 
using typical fuel costs, usage, and private discount rates, will 
not be used as the basis for candidate standard levels.
    (2) Further information on factors used for screening design 
options. If further information or analysis leads to a determination 
that a design option, or a combination of design options, has 
unacceptable impacts under the policies stated in this Appendix, 
that design option or combination of design options will not be 
included in a candidate standard level.
    (3) Selection of candidate standard levels. Candidate standard 
levels, which will be identified in the pre-NOPR documents and on 
which impact analyses will be conducted, will be based on the 
remaining design options.
    (i) The range of candidate standard levels will typically 
include:
    (A) The most energy-efficient combination of design options;
    (B) The combination of design options with the lowest life-cycle 
cost; and
    (C) A combination of design options with a payback period of not 
more than three years.
    (ii) Candidate standard levels that incorporate noteworthy 
technologies or fill in large gaps between efficiency levels of 
other candidate standard levels also may be selected.
    (d) Pre-NOPR Stage. New information provided in public comments 
on any pre-NOPR documents will be considered to determine whether 
any changes to the candidate standard levels are needed before 
proceeding to the analysis of impacts.
    (e) Selection of proposed standard. Based on the results of the 
analysis of impacts, DOE will select a standard level to be proposed 
for public comment in the NOPR. As required under 42 U.S.C. 
6295(o)(2)(A), any new or revised standard must be designed to 
achieve the maximum improvement in energy efficiency that is 
determined to be technologically feasible and economically 
justified.
    (1) Statutory policies. The fundamental policies concerning the 
selection of standards include:
    (i) A candidate/trial standard level will not be proposed or 
promulgated if the Department determines that it is not 
technologically feasible and economically justified. (42 U.S.C. 
6295(o)(2)(A) and (o)(3)(B)) For a standard level to be economically 
justified, the Secretary must determine that the benefits of the 
standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) A standard 
level is subject to a rebuttable presumption that it is economically 
justified if the payback period is three years or less. (42 U.S.C. 
6295(o)(2)(B)(iii))
    (ii) If the Department determines that a standard level is 
likely to result in the unavailability of any covered product/
equipment type with performance characteristics (including 
reliability), features, sizes, capacities, and volumes that are 
substantially the same as products generally available in the U.S. 
at the time, that standard level will not be proposed. (42 U.S.C. 
6295(o)(4))
    (iii) If the Department determines that a standard level would 
not result in significant conservation of energy, that standard 
level will not be proposed. (42 U.S.C. 6295(o)(3)(B))
    (2) Considerations in assessing economic justification.
    (i) The following considerations will guide the application of 
the economic justification criterion in selecting a proposed 
standard:
    (A) The Department will determine whether a candidate/trial 
standard level would result in a negative return on investment for 
the industry, would significantly reduce the value of the industry, 
or would cause significant adverse impacts to a significant subgroup 
of manufacturers (including small manufacturing businesses).
    (B) The Department will determine whether a candidate/trial 
standard level would be the direct cause of plant closures, 
significant losses in domestic manufacturer employment, or 
significant losses of capital investment by domestic manufacturers.
    (C) The Department will determine whether a candidate/trial 
standard level would have a significant adverse impact on the 
environment or energy security.
    (D) The Department will determine whether a candidate/trial 
standard level would not result in significant energy conservation 
relative to non-regulatory approaches.
    (E) The Department will determine whether a candidate/trial 
standard level is not practicable to manufacture or has a negative 
impact on consumer utility or safety.
    (F) The Department will determine whether a candidate/trial 
standard level is not consistent with the policies relating to 
consumer costs in paragraph (c)(1) of this section.
    (G) The Department will determine whether a candidate/trial 
standard level would be economically justified when compared to the 
set of other feasible trial standard levels. In making this 
determination, the Department will consider whether an economically 
rational consumer would choose a product meeting the candidate/trial 
standard level over products meeting the other feasible trial 
standard levels after considering all relevant factors, including 
but not limited to, energy savings, efficacy, product features, and 
life-cycle costs.
    (H) The Department will determine whether a candidate/trial 
standard level will have significant adverse impacts on a 
significant subgroup of consumers (including low-income consumers).
    (I) The Department of Energy and the Department of Justice will 
determine whether a candidate/trial standard level would have 
significant anticompetitive effects.
    (ii) DOE will, consistent with paragraph (f) of this section, 
account for the views expressed by the Department of Justice 
regarding a given proposal's effects on competition.
    (f) Selection of a final standard. New information provided in 
the public comments on the NOPR and any analysis by the Department 
of Justice concerning impacts on competition of the proposed 
standard will be considered to determine whether issuance of a new 
or amended energy conservation standard produces the maximum 
improvement in energy efficiency that is both technologically 
feasible and economically justified and still constitutes 
significant energy savings or whether any change to the proposed 
standard level is needed before proceeding to the final rule. The 
same policies used to select the proposed standard level, as 
described in this section, will be used to guide the selection of 
the final standard level or a determination that no new or amended 
standard is justified.

8. Test Procedures

    (a) General. As with the early assessment process for energy 
conservation standards, DOE believes that early stakeholder input is 
also very important during test procedure

[[Page 3949]]

rulemakings. DOE will follow an early assessment process similar to 
that described in the preceding sections discussing DOE's 
consideration of new or amended energy conservation standards. 
Consequently, DOE will publish a notice in the Federal Register 
whenever DOE is considering initiation of a rulemaking for new or 
revised test procedures. In that notice, DOE will request submission 
of comments, including data and information on whether an amended 
test procedure rule would:
    (1) More accurately measure energy efficiency, energy use, water 
use (as specified in EPCA), or estimated annual operating cost of a 
covered product during a representative average use cycle or period 
of use; and
    (2) Not be unduly burdensome to conduct. DOE will review 
comments submitted and, subject to statutory obligations, determine 
whether it agrees with the submitted information. If DOE determines 
that a new or amended test procedure is not justified at that time, 
it will not pursue the rulemaking and will publish a notice in the 
Federal Register to that effect. If DOE receives sufficient 
information suggesting a new or amended test procedure could more 
accurately measure energy efficiency, energy use, water use (as 
specified in EPCA), or estimated annual operating cost of a covered 
product during a representative average use cycle or period of use 
and not be unduly burdensome to conduct or the information received 
is inconclusive with regard to these points, DOE would undertake the 
preliminary stages of a rulemaking to issue or amend the test 
procedure, as discussed further in the paragraphs that follow in 
this section.
    (b) Identifying the need to modify test procedures. DOE will 
identify any necessary modifications to established test procedures 
prior to initiating the standards development process. It will 
consider all stakeholder comments with respect to needed test 
procedure modifications. If DOE determines that it is appropriate to 
continue the test procedure rulemaking after the early assessment 
process, it would provide further opportunities for early public 
input through Federal Register documents, including NODAs and/or 
RFIs.
    (c) Adoption of Industry Test Methods. DOE will adopt industry 
test standards as DOE test procedures for covered products and 
equipment, unless such methodology would be unduly burdensome to 
conduct or would not produce test results that reflect the energy 
efficiency, energy use, water use (as specified in EPCA) or 
estimated operating costs of that equipment during a representative 
average use cycle.
    (d) Issuing final test procedure modification. Test procedure 
rulemakings establishing methodologies used to evaluate proposed 
energy conservation standards will be finalized at least 180 days 
prior to publication of a NOPR proposing new or amended energy 
conservation standards.
    (e) Effective Date of Test Procedures. If required only for the 
evaluation and issuance of updated efficiency standards, use of the 
modified test procedures typically will not be required until the 
implementation date of updated standards.

9. ASHRAE Equipment

    (a) EPCA provides that ASHRAE equipment are subject to unique 
statutory requirements and their own set of timelines. More 
specifically, pursuant to EPCA's statutory scheme for covered ASHRAE 
equipment, DOE is required to consider amending the existing Federal 
energy conservation standards and test procedures for certain 
enumerated types of commercial and industrial equipment (generally, 
commercial water heaters, commercial packaged boilers, commercial 
air-conditioning and heating equipment, and packaged terminal air 
conditioners and heat pumps) when ASHRAE Standard 90.1 is amended 
with respect to standards and test procedures applicable to such 
equipment. Not later than 180 days after the amendment of the 
standard, the Secretary will publish in the Federal Register for 
public comment an analysis of the energy savings potential of 
amended energy efficiency standards. For each type of equipment, 
EPCA directs that if ASHRAE Standard 90.1 is amended, not later than 
18 months after the date of publication of the amendment to ASHRAE 
Standard 90.1, DOE must adopt amended energy conservation standards 
at the new efficiency level in ASHRAE Standard 90.1 as the uniform 
national standard for such equipment, or amend the test procedure 
referenced in ASHRAE Standard 90.1 for the equipment at issue to be 
consistent with the applicable industry test procedure, 
respectively, unless--
    (1) DOE determines by rule, and supported by clear and 
convincing evidence, that a more-stringent standard would result in 
significant additional conservation of energy and is technologically 
feasible and economically justified; or
    (2) The test procedure would not meet the requirements for such 
test procedures specified in EPCA. In such case, DOE must adopt the 
more stringent standard not later than 30 months after the date of 
publication of the amendment to the ASHRAE/IES Standard 90.1 for the 
product.
    (b) For ASHRAE equipment, DOE will adopt the revised ASHRAE 
levels or the industry test procedure, as contemplated by EPCA, 
except in very limited circumstances.
    With respect to DOE's consideration of standards more-stringent 
than the ASHRAE levels or changes to the industry test procedure, 
DOE will do so only if it can meet a very high bar to demonstrate 
the ``clear and convincing evidence'' threshold. Specifically, clear 
and convincing evidence would exist only where the facts and data 
made available to DOE regarding a particular ASHRAE amendment 
demonstrates that there is no substantial doubt that the more 
stringent standard would result in a significant additional amount 
of energy savings over the relevant ASHRAE level, is technologically 
feasible and economically justified, or, in the case of test 
procedures, that the industry test procedure does not meet the EPCA 
requirements. DOE will make this determination only after seeking 
data and information from interested parties and the public to help 
inform the Agency's views. DOE will seek from interested 
stakeholders and the public data and information to assist in making 
this determination, prior to publishing a proposed rule to adopt 
more-stringent standards or a different test procedure.
    (c) DOE's review in adopting amendments based on an action by 
ASHRAE to amend Standard 90.1 is strictly limited to the specific 
standards or test procedure amendment for the specific equipment for 
which ASHRAE has made a change (i.e., determined down to the 
equipment class level). DOE believes that ASHRAE not acting to amend 
Standard 90.1 is tantamount to a decision that the existing standard 
remain in place. Thus, when undertaking a review as required by 42 
U.S.C. 6313(a)(6)(C), DOE would need to find clear and convincing 
evidence, as defined in this section, to issue a standard more 
stringent than the existing standard for the product.

10. Direct Final Rules

    (a) A direct final rule (DFR), as contemplated in 42 U.S.C. 
6295(p)(4), is a procedural mechanism separate from the negotiated 
rulemaking process outlined under the Negotiated Rulemaking Act (5 
U.S.C. 563). DOE may issue a DFR adopting energy conservation 
standards for a covered product provided that:
    (1) DOE receives a joint proposal from a group of ``interested 
persons that are fairly representative of relevant points of view,'' 
which does not include DOE as a member of the group. At a minimum, 
to be ``fairly representative of relevant points of view'' the group 
submitting a joint statement must include larger concerns and small 
businesses in the regulated industry/manufacturer community, energy 
advocates, energy utilities, as appropriate, consumers, and States. 
However, it will be necessary to evaluate the meaning of ``fairly 
representative'' on a case-by-case basis, subject to the 
circumstances of a particular rulemaking, to determine whether 
additional parties must be part of a joint statement in order to be 
``fairly representative of relevant points of view.''
    (2) This paragraph (a)(2) describes the steps DOE will follow 
with respect to a DFR.
    (i) DOE must determine the energy conservation standard 
recommended in the joint proposal is in accordance with the 
requirements of 42 U.S.C. 6295(o) or section 342(a)(6)(B) as 
applicable. Because the DFR provision is procedural, and not a 
separate grant of rulemaking authority, any standard issued under 
the DFR process must comply fully with the provisions of the EPCA 
subsection under which the rule is authorized. DOE will not accept 
or issue as a DFR a submitted joint proposal that does not comply 
with all applicable EPCA requirements.
    (ii) Upon receipt of a joint statement recommending energy 
conservation standards, DOE will publish in the Federal Register 
that statement, as submitted to DOE, in order to obtain feedback as 
to whether the joint statement was submitted by a group that is 
fairly representative of relevant points of view. If DOE determines 
that the DFR was not submitted by a group that is fairly 
representative of relevant points of view, DOE will not move forward 
with a DFR and

[[Page 3950]]

will consider whether any further rulemaking activity is 
appropriate. If the Secretary determines that a DFR cannot be issued 
based on the statement, the Secretary shall publish a notice of the 
determination, together with an explanation of the reasons for the 
determination.
    (iii) Simultaneous with the issuance of a DFR, DOE must also 
publish a NOPR containing the same energy conservation standards as 
in the DFR. Following publication of the DFR, DOE must solicit 
public comment for a period of at least 110 days; then, not later 
than 120 days after issuance of the DFR, the Secretary must 
determine whether any adverse comments ``may provide a reasonable 
basis for withdrawing the direct final rule,'' based on the 
rulemaking record. If DOE determines that one or more substantive 
comments objecting to the DFR provides a sufficient reason to 
withdraw the DFR, DOE will do so, and will instead proceed with the 
published NOPR (unless the information provided suggests that 
withdrawal of that NOPR would likewise be appropriate). In making 
this determination, DOE may consider comments as adverse, even if 
the issue was brought up previously during DOE-initiated discussions 
(e.g. publication of a framework or RFI document), if the Department 
concludes that the comments merit further consideration.

11. Negotiated Rulemaking Process

    (a)(1) In those instances where negotiated rulemaking is 
determined to be appropriate, DOE will comply with the requirements 
of the Negotiated Rulemaking Act (NRA) (5 U.S.C. 561-570) and the 
requirements of the Federal Advisory Committee Act (FACA) (5 U.S.C. 
App. 2). To facilitate potential negotiated rulemakings, and to 
comply with the requirements of the NRA and the FACA, DOE 
established the Appliance Standards and Rulemaking Federal Advisory 
Committee (ASRAC). Working groups can be established as 
subcommittees of ASRAC, from time to time, and for specific 
products/equipment, with one member representative from the ASRAC 
committee attending and participating in the meetings of a specific 
working group. (Consistent with 5 U.S.C. 565(b), committee 
membership is limited to 25 members, unless the agency determines 
that more members are necessary for the functioning of the committee 
or to achieve balanced membership.) Ultimately, the working group 
reports to ASRAC, and ASRAC itself votes on whether to make a 
recommendation to DOE to adopt a consensus agreement developed 
through the negotiated rulemaking.
    (2) DOE will use the negotiated rulemaking process, on a case-
by-case basis and, in appropriate circumstances, in an attempt to 
develop a consensus proposal before issuing a proposed rule. When 
approached by one or more stakeholders or on its own initiative, DOE 
will use a convener to ascertain, in consultation with relevant 
stakeholders, whether the development of the subject matter of a 
potential rulemaking proceeding would be conducive to negotiated 
rulemaking, with the agency evaluating the convener's recommendation 
before reaching a decision on such matter. A neutral, independent 
convenor will identify issues that any negotiation would need to 
address, assess the full breadth of interested parties who should be 
included in any negotiated rulemaking to address those issues, and 
make a judgment as to whether there is the potential for a group of 
individuals negotiating in good faith to reach a consensus agreement 
given the issues presented. DOE will have a neutral and independent 
facilitator, who is not a DOE employee or consultant, present at all 
ASRAC working group meetings.
    (3) DOE will base its decision to proceed with a potential 
negotiated rulemaking on the report of the convenor. The following 
additional factors militate in favor of a negotiated rulemaking:
    (i) Stakeholders commented in favor of negotiated rulemaking in 
response to the initial rulemaking notice;
    (ii) The rulemaking analysis or underlying technologies in 
question are complex, and DOE can benefit from external expertise 
and/or real-time changes to the analysis based on stakeholder 
feedback, information, and data;
    (iii) The current standards have already been amended one or 
more times;
    (iv) Stakeholders from differing points of view are willing to 
participate; and
    (v) DOE determines that the parties may be able to reach an 
agreement.
    (4) DOE will provide notice in the Federal Register of its 
intent to form an ASRAC working group (including a request for 
nominations to serve on the committee), announcement of the 
selection of working group members (including their affiliation), 
and announcement of public meetings and the subject matter to be 
addressed.
    (b) DOE's role in the negotiated rulemaking process is to 
participate as a member of a group attempting to develop a consensus 
proposal for energy conservation standards for a particular product/
equipment and to provide technical/analytical advice to the 
negotiating parties and legal input where needed to support the 
development of a potential consensus recommendation in the form of a 
term sheet.
    (c) A negotiated rulemaking may be used to develop energy 
conservation standards, test procedures, product coverage, and other 
categories of rulemaking activities.
    (d) A dedicated portion of each ASRAC working group meeting will 
be set aside to receive input and data from non-members of the ASRAC 
working group. This additional opportunity for input does nothing to 
diminish stakeholders' ability to provide comments and ask relevant 
questions during the course of the working group's ongoing 
deliberations at the public meeting.
    (e) If DOE determines to proceed with a rulemaking at the 
conclusion of negotiations, DOE will publish a proposed rule. DOE 
will consider the approved term sheet in developing such proposed 
rule. A negotiated rulemaking in which DOE participates under the 
ASRAC process will not result in the issuance of a DFR. Further, any 
potential term sheet upon which an ASRAC working group reaches 
consensus must comply with all of the provisions of EPCA under which 
the rule is authorized. DOE cannot accept recommendations or issue a 
NOPR based upon a negotiated rulemaking that does not comply with 
all applicable EPCA requirements, including those product- or 
equipment-specific requirements included in the provision that 
authorizes issuance of the standard.

12. Principles for Distinguishing Between Effective and Compliance 
Dates

    (a) It is critical to recognize that for any given rule, the 
effective and compliance dates for either DOE test procedures or DOE 
energy conservation standards are typically not identical. These 
terms should not be used interchangeably.
    (b) Effective date. The effective date is the date a rule is 
legally operative after being published in the Federal Register.
    (c) Compliance date. (1) For test procedures, the compliance 
date is the specific date when manufacturers are required to use the 
new or amended test procedure requirements to make representations 
concerning the energy efficiency or use of a product, including 
certification that the covered product/equipment meets an applicable 
energy conservation standard.
    (2) For energy conservation standards, the compliance date is 
the specific date upon which manufacturers are required to meet the 
new or amended standards for applicable covered products/equipment 
that are distributed in interstate commerce.

13. Principles for the Conduct of the Engineering Analysis

    (a) The purpose of the engineering analysis is to develop the 
relationship between efficiency and cost of the subject product/
equipment. The Department will use the most appropriate means 
available to determine the efficiency/cost relationship, including 
an overall system approach or engineering modeling to predict the 
improvement in efficiency that can be expected from individual 
design options as discussed in paragraphs (b) and (c) of this 
section. From this efficiency/cost relationship, measures such as 
payback, life-cycle cost, and energy savings can be developed. The 
Department will identify issues that will be examined in the 
engineering analysis and the types of specialized expertise that may 
be required. DOE will select appropriate contractors, 
subcontractors, and expert consultants, as necessary, to perform the 
engineering analysis and the impact analysis. Also, the Department 
will consider data, information, and analyses received from 
interested parties for use in the analysis wherever feasible.
    (b) The engineering analysis begins with the list of design 
options developed in consultation with the interested parties as a 
result of the screening process. The Department will establish the 
likely cost and performance improvement of each design option. 
Ranges and uncertainties of cost and performance will be 
established, although efforts will be made to minimize uncertainties 
by using measures such as test data or component or material 
supplier information where available. Estimated uncertainties will 
be carried forward in subsequent analyses. The use of quantitative

[[Page 3951]]

models will be supplemented by qualitative assessments as 
appropriate.
    (c) The next step includes identifying, modifying, or developing 
any engineering models necessary to predict the efficiency impact of 
any one or combination of design options on the product/equipment. A 
base case configuration or starting point will be established, as 
well as the order and combination/blending of the design options to 
be evaluated. DOE will then perform the engineering analysis and 
develop the cost-efficiency curve for the product/equipment. The 
cost efficiency curve and any necessary models will be available to 
stakeholders during the pre-NOPR stage of the rulemaking.

14. Principles for the Analysis of Impacts on Manufacturers

    (a) Purpose. The purpose of the manufacturer analysis is to 
identify the likely private impacts of efficiency standards on 
manufacturers. The Department will analyze the impact of standards 
on manufacturers with substantial input from manufacturers and other 
interested parties. This section describes the principles that will 
be used in conducting future manufacturing impact analyses.
    (b) Issue identification. In the impact analysis stage (section 
5(d)), the Department will identify issues that will require greater 
consideration in the detailed manufacturer impact analysis. Possible 
issues may include identification of specific types or groups of 
manufacturers and concerns over access to technology. Specialized 
contractor expertise, empirical data requirements, and analytical 
tools required to perform the manufacturer impact analysis also 
would be identified at this stage.
    (c) Industry characterization. Prior to initiating detailed 
impact studies, the Department will seek input on the present and 
past industry structure and market characteristics. Input on the 
following issues will be sought:
    (1) Manufacturers and their current and historical relative 
market shares;
    (2) Manufacturer characteristics, such as whether manufacturers 
make a full line of models or serve a niche market;
    (3) Trends in the number of manufacturers;
    (4) Financial situation of manufacturers;
    (5) Trends in product/equipment characteristics and retail 
markets including manufacturer market shares and market 
concentration; and
    (6) Identification of other relevant regulatory actions and a 
description of the nature and timing of any likely impacts.
    (d) Cost impacts on manufacturers. The costs of labor, material, 
engineering, tooling, and capital are difficult to estimate, 
manufacturer-specific, and usually proprietary. The Department will 
seek input from interested parties on the treatment of cost issues. 
Manufacturers will be encouraged to offer suggestions as to possible 
sources of data and appropriate data collection methodologies. 
Costing issues to be addressed include:
    (1) Estimates of total private cost impacts, including product/
equipment-specific costs (based on cost impacts estimated for the 
engineering analysis) and front-end investment/conversion costs for 
the full range of product/equipment models.
    (2) Range of uncertainties in estimates of average cost, 
considering alternative designs and technologies which may vary cost 
impacts and changes in costs of material, labor, and other inputs 
which may vary costs.
    (3) Variable cost impacts on particular types of manufacturers, 
considering factors such as atypical sunk costs or characteristics 
of specific models which may increase or decrease costs.
    (e) Impacts on product/equipment sales, features, prices, and 
cost recovery. In order to make manufacturer cash-flow calculations, 
it is necessary to predict the number of products/equipment sold and 
their sale price. This requires an assessment of the likely impacts 
of price changes on the number of products/equipment sold and on 
typical features of models sold. Past analyses have relied on price 
and shipment data generated by economic models. The Department will 
develop additional estimates of prices and shipments by drawing on 
multiple sources of data and experience including: Actual shipment 
and pricing experience; data from manufacturers, retailers, and 
other market experts; financial models, and sensitivity analyses. 
The possible impacts of candidate/trial standard levels on consumer 
choices among competing fuels will be explicitly considered where 
relevant.
    (f) Measures of impact. The manufacturer impact analysis will 
estimate the impacts of candidate/trial standard levels on the net 
cash flow of manufacturers. Computations will be performed for the 
industry as a whole and for typical and atypical manufacturers. The 
exact nature and the process by which the analysis will be conducted 
will be determined by DOE, with input from interested parties, as 
appropriate. Impacts to be analyzed include:
    (1) Industry net present value, with sensitivity analyses based 
on uncertainty of costs, sales prices, and sales volumes;
    (2) Cash flows, by year; and
    (3) Other measures of impact, such as revenue, net income, and 
return on equity, as appropriate.
    DOE also notes that the characteristics of a typical 
manufacturers worthy of special consideration will be determined in 
consultation with manufacturers and other interested parties and may 
include: Manufacturers incurring higher or lower than average costs; 
and manufacturers experiencing greater or fewer adverse impacts on 
sales. Alternative scenarios based on other methods of estimating 
cost or sales impacts also will be performed, as needed.
    (g) Cumulative Impacts of Other Federal Regulatory Actions. (1) 
The Department will recognize and seek to mitigate the overlapping 
effects on manufacturers of new or revised DOE standards and other 
regulatory actions affecting the same products or equipment. DOE 
will analyze and consider the impact on manufacturers of multiple 
product/equipment-specific regulatory actions. These factors will be 
considered in setting rulemaking priorities, conducting the early 
assessment as to whether DOE should proceed with a standards 
rulemaking, assessing manufacturer impacts of a particular standard, 
and establishing compliance dates for a new or revised standard 
that, consistent with any statutory requirements, are appropriately 
coordinated with other regulatory actions to mitigate any cumulative 
burden.
    (2) If the Department determines that a proposed standard would 
impose a significant impact on product or equipment manufacturers 
within approximately three years of the compliance date of another 
DOE standard that imposes significant impacts on the same 
manufacturers (or divisions thereof, as appropriate), the Department 
will, in addition to evaluating the impact on manufacturers of the 
proposed standard, assess the joint impacts of both standards on 
manufacturers.
    (3) If the Department is directed to establish or revise 
standards for products/equipment that are components of other 
products/equipment subject to standards, the Department will 
consider the interaction between such standards in setting 
rulemaking priorities and assessing manufacturer impacts of a 
particular standard. The Department will assess, as part of the 
engineering and impact analyses, the cost of components subject to 
efficiency standards.
    (h) Summary of quantitative and qualitative assessments. The 
summary of quantitative and qualitative assessments will contain a 
description and discussion of uncertainties. Alternative estimates 
of impacts, resulting from the different potential scenarios 
developed throughout the analysis, will be explicitly presented in 
the final analysis results.
    (1) Key modeling and analytical tools. In its assessment of the 
likely impacts of standards on manufacturers, the Department will 
use models that are clear and understandable, feature accessible 
calculations, and have clearly explained assumptions. As a starting 
point, the Department will use the Government Regulatory Impact 
Model (GRIM). The Department will also support the development of 
economic models for price and volume forecasting. Research required 
to update key economic data will be considered.
    (2) Reserved.

15. Principles for the Analysis of Impacts on Consumers

    (a) Early consideration of impacts on consumer utility. The 
Department will consider at the earliest stages of the development 
of a standard whether particular design options will lessen the 
utility of the covered products/equipment to the consumer. See 
paragraph (c) of section 6.
    (b) Impacts on product/equipment availability. The Department 
will determine, based on consideration of information submitted 
during the standard development process, whether a proposed standard 
is likely to result in the unavailability of any covered product/
equipment type with performance characteristics (including 
reliability), features, sizes, capacities, and volumes that are 
substantially the same as products/equipment generally available in

[[Page 3952]]

the U.S. at the time. DOE will not promulgate a standard if it 
concludes that it would result in such unavailability.
    (c) Department of Justice review. As required by law, the 
Department will solicit the views of the Department of Justice on 
any lessening of competition likely to result from the imposition of 
a proposed standard and will give the views provided full 
consideration in assessing economic justification of a proposed 
standard. In addition, DOE may consult with the Department of 
Justice at earlier stages in the standards development process to 
seek its preliminary views on competitive impacts.
    (d) Variation in consumer impacts. The Department will use 
regional analysis and sensitivity analysis tools, as appropriate, to 
evaluate the potential distribution of impacts of candidate/trial 
standard levels among different subgroups of consumers. The 
Department will consider impacts on significant segments of 
consumers in determining standards levels. Where there are 
significant negative impacts on identifiable subgroups, DOE will 
consider the efficacy of voluntary approaches as a means to achieve 
potential energy savings.
    (e) Payback period and first cost. (1) In the assessment of 
consumer impacts of standards, the Department will consider Life-
Cycle Cost, Payback Period, and Cost of Conserved Energy to evaluate 
the savings in operating expenses relative to increases in purchase 
price. The Department also performs sensitivity and scenario 
analyses when appropriate. The results of these analyses will be 
carried throughout the analysis and the ensuing uncertainty 
described.
    (2) If, in the analysis of consumer impacts, the Department 
determines that a candidate/trial standard level would result in a 
substantial increase in product/equipment first costs to consumers 
or would not pay back such additional first costs through energy 
cost savings in less than three years, Department will assess the 
likely impacts of such a standard on low-income households, product/
equipment sales and fuel switching, as appropriate.

16. Consideration of Non-Regulatory Approaches

    The Department recognizes that non-regulatory efforts by 
manufacturers, utilities, and other interested parties can result in 
substantial efficiency improvements. The Department intends to 
consider the likely effects of non-regulatory initiatives on 
product/equipment energy use, consumer utility and life-cycle costs, 
manufacturers, competition, utilities, and the environment, as well 
as the distribution of these impacts among different regions, 
consumers, manufacturers, and utilities. DOE will attempt to base 
its assessment on the actual impacts of such initiatives to date, 
but also will consider information presented regarding the impacts 
that any existing initiative might have in the future. Such 
information is likely to include a demonstration of the strong 
commitment of manufacturers, distribution channels, utilities, or 
others to such non-regulatory efficiency improvements. This 
information will be used in assessing the likely incremental impacts 
of establishing or revising standards, in assessing--where 
possible--appropriate compliance dates for new or revised standards, 
and in considering DOE support of non-regulatory initiatives.

17. Cross-Cutting Analytical Assumptions

    In selecting values for certain cross-cutting analytical 
assumptions, DOE expects to continue relying upon the following 
sources and general principles:
    (a) Underlying economic assumptions. The appliance standards 
analyses will generally use the same economic growth and development 
assumptions that underlie the most current Annual Energy Outlook 
(AEO) published by the Energy Information Administration (EIA).
    (b) Analytic time length. The appliance standards analyses will 
use two time lengths--30 years and another time length that is 
specific to the standard being considered such as the useful 
lifetime of the product under consideration. As a sensitivity case, 
the analyses will also use a 9-year regulatory time line in 
analyzing the effects of the standard.
    (c) Energy price and demand trends. Analyses of the likely 
impact of appliance standards on typical users will generally adopt 
the mid-range energy price and demand scenario of the EIA's most 
current AEO. The sensitivity of such estimated impacts to possible 
variations in future energy prices are likely to be examined using 
the EIA's high and low energy price scenarios.
    (d) Product/equipment-specific energy-efficiency trends, without 
updated standards. Product/equipment-specific energy-efficiency 
trends will be based on a combination of the efficiency trends 
forecast by the EIA's residential and commercial demand model of the 
National Energy Modeling System (NEMS) and product-specific 
assessments by DOE and its contractors with input from interested 
parties.
    (e) Price forecasting. DOE will endeavor to use robust price 
forecasting techniques in projecting future prices of products.
    (f) Private Discount rates. For residential and commercial 
consumers, ranges of three different real discount rates will be 
used. For residential consumers, the mid-range discount rate will 
represent DOE's approximation of the average financing cost (or 
opportunity costs of reduced savings) experienced by typical 
consumers. Sensitivity analyses will be performed using discount 
rates reflecting the costs more likely to be experienced by 
residential consumers with little or no savings and credit card 
financing and consumers with substantial savings. For commercial 
users, a mid-range discount rate reflecting DOE's approximation of 
the average real rate of return on commercial investment will be 
used, with sensitivity analyses being performed using values 
indicative of the range of real rates of return likely to be 
experienced by typical commercial businesses. For national net 
present value calculations, DOE would use the Administration's 
approximation of the average real rate of return on private 
investment in the U.S. economy. For manufacturer impacts, DOE 
typically uses a range of real discount rates which are 
representative of the real rates of return experienced by typical 
U.S. manufacturers affected by the program.
    (g) Social Discount Rates. Social discount rates as specified in 
OMB Circular A-4 will be used in assessing social effects such as 
costs and benefits.
    (h) Environmental impacts. (1) DOE calculates emission 
reductions of carbon dioxide, sulfur dioxide, nitrogen oxides, 
methane, nitrous oxides, and mercury likely to be avoided by 
candidate/trial standard levels based on an emissions analysis that 
includes the two components described in paragraphs (h)(2) and 
(h)(3) of this section.
    (2) The first component estimates the effect of potential 
candidate/trial standard levels on power sector and site combustion 
emissions of carbon dioxide, nitrogen oxides, sulfur dioxide, 
mercury, methane, and nitrous oxide. DOE develops the power sector 
emissions analysis using a methodology based on DOE's latest Annual 
Energy Outlook. For site combustion of natural gas or petroleum 
fuels, the combustion emissions of carbon dioxide and nitrogen 
oxides are estimated using emission intensity factors from the 
Environmental Protection Agency.
    (3) The second component of DOE's emissions analysis estimates 
the effect of potential candidate/trial standard levels on emissions 
of carbon dioxide, nitrogen oxides, sulfur dioxide, mercury, 
methane, and nitrous oxide due to ``upstream activities'' in the 
fuel production chain. These upstream activities include the 
emissions related to extracting, processing, and transporting fuels 
to the site of combustion as detailed in DOE's Fuel-Fuel-Cycle 
Statement of Policy (76 FR 51281 (August 18, 2011)). DOE will 
consider the effects of the candidate/trial standard levels on these 
emissions after assessing the seven factors required to demonstrate 
economic justification under EPCA. Consistent with Executive Order 
13783, dated March 28, 2017, when monetizing the value of changes in 
reductions in CO2 and nitrous oxides emissions resulting 
from its energy conservation standards regulations, including with 
respect to the consideration of domestic versus international 
impacts and the consideration of appropriate discount rates, DOE 
ensures, to the extent permitted by law, that any such estimates are 
consistent with the guidance contained in OMB Circular A-4 of 
September 17, 2003 (Regulatory Analysis).

PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 
INDUSTRIAL EQUIPMENT

0
3. The authority citation for part 431 continues to read as follows:

    Authority:  42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.

0
4. Section 431.4 is added to subpart A to read as follows:

[[Page 3953]]

Sec.  431.4  Procedures, interpretations, and policies for 
consideration of new or revised energy conservation standards and test 
procedures for commercial/industrial equipment.

    The procedures, interpretations, and policies for consideration of 
new or revised energy conservation standards and test procedures set 
forth in appendix A to subpart C of part 430 of this chapter shall 
apply to the consideration of new or revised energy conservation 
standards and test procedures considered for adoption under this part.

[FR Doc. 2019-01854 Filed 2-12-19; 8:45 am]
 BILLING CODE 6450-01-P