[Federal Register Volume 85, Number 31 (Friday, February 14, 2020)]
[Proposed Rules]
[Pages 8483-8490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00022]


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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2017-BT-STD-0062]
RIN 1904-AE84


Energy Conservation Program for Appliance Standards: Procedures 
for Evaluating Statutory Factors for Use in New or Revised Energy 
Conservation Standards

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

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: The Department of Energy (DOE) is proposing amendments to its 
decision-making process for selecting energy conservation standards. 
More specifically, DOE is proposing changes that would require DOE to 
conduct a comparative analysis of the relative costs and benefits of 
all of the proposed alternative levels for potentially establishing or 
amending an energy conservation standard in order to make a reliable 
determination that the chosen alternative is economically justified.

DATES: DOE will accept comments, data, and information regarding this 
notice of proposed rulemaking on or before March 16, 2020.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at https://www.regulations.gov. All documents in the docket are 
listed in the https://www.regulations.gov index. However, not all 
documents listed in the index may be publicly available, such as 
information that is exempt from public disclosure.
    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.

FOR FURTHER INFORMATION CONTACT: Ms. 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:
I. Summary of the Supplemental Notice of Proposed Rulemaking
II. Authority and Background
    A. Authority
    B. Background
III. Discussion of Revisions to DOE's Policies on Selecting Standard 
Levels
    A. Consumer Impacts on Economic Justification
    B. The ``Walk-Down'' Process
    C. Proposed Changes
IV. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under Executive Orders 13771 and 13777
    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 Consistent With OMB's Information Quality Bulletin for 
Peer Review
V. Approval of the Office of the Secretary

I. Summary of the Supplemental Notice of Proposed Rulemaking

    On February 13, 2019, the United States Department of Energy 
(``DOE'' or ``the Department'') published a Notice of Proposed 
Rulemaking (``NOPR'') to update and modernize its ``Procedures, 
Interpretations, and Policies for Consideration of New or Revised 
Energy Conservation Standards for Consumer Products'' (i.e., ``Process 
Rule'') found in 10 CFR part 430, subpart C, appendix A. 84 FR 3910. 
Among other changes, DOE proposed a process to determine whether a 
trial standard level (``TSL'') would be economically justified when 
compared to the set of other feasible TSLs. Further, in the NOPR DOE 
explained that in making that determination it would consider whether 
an economically rational consumer would choose a product meeting the 
TSL over products meeting the other feasible TSLs after considering 
relevant statutory factors, including but not limited to, energy 
savings, efficacy, product features, and life-cycle costs. DOE received 
numerous comments asking for clarification on how this concept would be 
implemented and what effect it would have on DOE's ``walk-down'' 
process for selecting standard levels. In response, DOE did not 
finalize that proposal when it issued a final rule in the proceeding to 
update the Process Rule. Rather, in this document, DOE proposes to 
revise Section 7 of the Process Rule, Policies on Selection of 
Standards, to clarify its earlier proposal and explain how this 
approach would be incorporated into DOE's decisionmaking process for 
selecting energy conservation standards. More specifically, DOE 
clarifies that its revisions to Section 7 would require the agency to 
conduct a comparative analysis of the relative costs and benefits of 
all of the proposed TSLs in order to make a reliable determination that 
the chosen TSL is economically justified. This comparative analysis 
includes assessing the incremental changes in costs and benefits for 
each TSL's benefits and burdens relative to other TSLs and as part of 
an holistic analysis across all TSLs. 42 U.S.C. 6295(o)(2)(B).

II. Authority and Background

A. Authority

    Title III, Parts B \1\ and C \2\ of the Energy Policy and 
Conservation Act, as amended, (``EPCA'' or ``the Act''), Public Law 94-
163 (42 U.S.C. 6291-6317, as codified), established the Energy 
Conservation Program for consumer products and certain industrial 
equipment.\3\ Under EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) 
certification and

[[Page 8484]]

enforcement procedures; (3) establishment of Federal energy 
conservation standards; and (4) labeling. 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 during a representative 
average use cycle or period of use. (42 U.S.C. 6293 and 42 U.S.C. 6314) 
Manufacturers of covered products and covered equipment must use the 
prescribed DOE test procedure when 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), 42 U.S.C. 6295(s), 42 U.S.C. 6314(a), and 42 U.S.C. 
6316(a)) Similarly, DOE must use these test procedures to determine 
whether the products comply with standards adopted pursuant to EPCA. 
(42 U.S.C. 6295(s) and 42 U.S.C. 6316(a)) 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 42 U.S.C. 6316(a)) In determining whether a standard 
is economically justified, EPCA requires DOE, to the greatest extent 
practicable, to consider the following seven factors: (1) The economic 
impact of the standard on the manufacturers and consumers; (2) the 
savings in operating costs, throughout the estimated average life of 
the products (i.e., life cycle costs), compared with any increase in 
the price of, or in the initial charges for, or operating and 
maintaining expenses of, the products which are likely to result from 
the imposition of the standard; (3) the total projected amount of 
energy savings likely to result directly from the imposition of the 
standard; (4) any lessening of the utility or the performance of the 
products likely to result from the imposition of the standard; (5) the 
impact of any lessening of competition, after consultation with the 
Department of Justice; (6) the need for national energy and water 
conservation; and (7) other factors DOE finds relevant. (42 U.S.C. 
6295(o)(2)(B)(i)) Furthermore, the new or amended standard must result 
in a significant conservation of energy (42 U.S.C. 6295(o)(3)(B), 42 
U.S.C. 6313(a)(6), and 42 U.S.C. 6316(a)) and comply with any other 
applicable statutory provisions, such as that DOE may not prescribe an 
amended or new standard if that standard is likely to result in the 
unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States at the time of 
the Secretary's finding. (42 U.S.C. 6295(o)(4)) Finally, the Federal 
Trade Commission (``FTC''), in consultation with DOE, is generally 
responsible for issuing labeling rules. (42 U.S.C. 6294(a)(1), 42 
U.S.C. 6294(a)(5) and 42 U.S.C. 6294(f))
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    \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 America's Water Infrastructure Act of 2018, 
Public Law 115-270 (Oct. 23, 2018).
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B. Background

    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, and became known colloquially as the ``Process Rule.''
    On December 18, 2017, DOE issued an RFI to address potential 
improvements to the Process Rule so as to achieve meaningful burden 
reduction while continuing to discharge the Department's statutory 
obligations in the development of energy conservation standards and 
test procedures. 82 FR 59992. On February 13, 2019, DOE issued a NOPR 
(``February 2019 NOPR'') to update and improve the Process Rule. 84 FR 
3910. Among other revisions, DOE proposed to refine its current walk-
down approach for selecting standard levels. Under the proposed 
approach, DOE would require determinations of economic justification to 
consider comparisons of economically relevant factors across trial 
standard levels, consistent with the relative economics of the choices 
and rational purchasing behavior of the average consumer. 84 FR 3938. 
As noted previously, elsewhere in this issue of the Federal Register, 
DOE has published a final rule to amend the Process Rule. In that final 
rule, DOE stated that it is initiating another rulemaking to further 
consider potential amendments to the walk-down approach.

III. Discussion of Revisions to DOE's Policies on Selecting Standard 
Levels

    DOE received a substantial amount of comment on its proposal that 
determinations of economic justification be based on choices made by an 
economically rational consumer. A significant number of commenters 
stated that DOE's proposal, specifically the use of a rational consumer 
to determine economic justification, lacked sufficient detail to 
provide for a meaningful opportunity to comment. For instance, the 
Natural Resources Defense Council (``NRDC'') argued that without a 
definition of an economically rational consumer, it was impossible to 
provide feedback on the methodology by which standard levels would be 
evaluated. (NRDC, EERE-2017-BT-STD-0062, No. 131, at pp. 16-17) \4\ 
Furthermore, even if the term ``economically rational consumer'' were 
to be defined, some of the commenters expressed doubt about the utility 
of such a construct. For example, the Connecticut Department of Energy 
& Environmental Protection (``CT-DEEP'') opposed DOE's proposal based 
on what it characterized as a hypothetical and arbitrary economically 
rational consumer, arguing that modern economic theory suggests that 
such a consumer does not truly exist. (CT-DEEP, EERE-2017-BT-STD-0062, 
No. 93 at p. 4) Several commenters also questioned whether the proposal 
is permissible under EPCA. For example, the Attorneys General (``AG'') 
Joint Commenters \5\ argued that DOE's focus on what TSL an 
economically rational consumer would choose ``ignores the EPCA-defined 
factors that DOE must consider and thus violates the statute.'' (AG 
Joint Commenters, EERE-2017-BT-STD-0062, No. 111, at p. 16) The 
Alliance to Save Energy (``ASE'') expressed concern that the proposal 
would result in DOE choosing the most economically justified TSL as 
opposed to the TSL that results in the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(ASE, EERE-2017-BT-STD-0062, No. 108, at pp. 6-7)
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    \4\ This type of notation identifies the commenter, the docket 
document number of the comment, and the relevant pages of that 
document, pp. 16-17.
    \5\ Comments of Attorneys General of California, Colorado, 
Connecticut, Illinois, Maine, Maryland, Michigan, Minnesota, New 
York, North Carolina, Oregon, Vermont, Washington, the Commonwealth 
of Massachusetts, the District of Columbia, and the city of New 
York.
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    A number of other commenters expressed varying degrees of 
theoretical support for potential modifications to DOE's walk-down but 
requested more

[[Page 8485]]

detail or explanation concerning the DOE proposal. Among this group, 
the Association of Home Appliance Manufacturers (``AHAM'') stated that 
because DOE's walk-down proposal was not sufficiently clear and fully 
articulated, it was not in a position to comment, but it added that the 
concept should not be discarded. (AHAM, April 11, 2019 Public Meeting 
Transcript, EERE-2017-BT-STD-0062, No. 92, at p. 169) Similarly, the 
National Electrical Manufacturers Association (``NEMA'') stated that 
while it is not opposed to considering the behavior of consumers as 
part of the walk-down to determine the economic justification of 
potential standards, it would need to know more about how such approach 
would work in regulatory practice. NEMA expressed concern that 
different perspectives about the ``rational consumer'' are capable of 
being variably applied, and consequently, it recommended that DOE 
approach this issue on a case-by-case basis in rulemakings where there 
is an opportunity for notice and comment. Thus, NEMA suggested that 
these principles would need to evolve before being incorporated into 
the Process Rule. (NEMA, EERE-2017-BT-STD-0062, No. 107 at pp. 7-8). 
Many commenters favored further examination of the subject matter of 
the proposal (perhaps as part of a peer review) but stated that the 
lack of clarity and sufficient detail rendered them unable to express 
an opinion or comment further.
    As noted earlier, EPCA requires that in prescribing new or amended 
standards, DOE shall design a standard such that it achieves the 
maximum improvement in energy efficiency, or in the case of 
showerheads, faucets, water closets, or urinals, water efficiency, 
which the Secretary determines is technologically feasible and 
economically justified. 42 U.S.C. 6295(o)(2)(A). In determining whether 
a standard is economically justified, EPCA further requires that DOE 
determine whether the benefits of the standard exceed its burdens based 
on the previously noted seven statutory factors. 42 U.S.C. 
6295(o)(2)(B) More specifically, in response to the concerns and 
requests for further explanation, DOE is: (1) Clarifying its proposal 
on how impacts are considered in determining economic justification 
through the seven factors specified in EPCA; and (2) explaining that 
the requirement to determine economic justification is based on 
comparisons across the full range of TSLs and is consistent with EPCA. 
This comparative analysis includes assessing the incremental changes in 
costs and benefits for each TSL's benefits and burdens relative to 
other TSLs and as part of an holistic analysis across all TSLs. 42 
U.S.C. 6295(o)(2)(B). DOE has determined that the ``walk-down'' 
approach may not allow for a full consideration of the economic 
justification required by 42 U.S.C. 6295(o)(2)(B)(i) for any new or 
amended standard. In only comparing the costs and benefits of the TSL 
under consideration against the baseline case (no new or amended 
standards) and generally ceasing consideration at the highest TSL for 
which benefits exceed burdens, DOE may select a TSL that has 
significant, adverse economic impacts when compared to another TSL. DOE 
is concerned that this approach may make it more likely that DOE would 
inadvertently select a TSL that has significant, adverse economic 
impacts that exceed the benefits of the standard. DOE also believes 
that its consideration of whether the benefits of any particular 
standard exceed its burdens should be informed by a holistic 
understanding of the relative costs and benefits of other standards. 
Relatedly, DOE believes that its weighing of benefits and burdens of 
particular standards should be informed by consideration of alternate 
scenarios, i.e., other TSLs, against which benefits and burdens are to 
be assessed, and not simply by consideration of a scenario in which no 
new or amended standard is issued.

A. Consumer Impacts on Economic Justification

    In the February 2019 NOPR, DOE proposed that a determination of 
economic justification for a particular trial standard level (TSL) 
should consider whether an economically rational consumer would choose 
a product meeting the TSL over products meeting other feasible TSLs 
after considering all relevant factors, including but not limited to, 
energy savings, efficacy, product features, and life-cycle costs. 84 FR 
3938. DOE went on to state that if an economically rational consumer 
would not choose the candidate trial standard level after considering 
these factors, the TSL would be rejected as economically unjustified. 
Id. As discussed previously, commenters either did not understand this 
construct or expressed concerns regarding the use of an economically 
rational consumer construct to determine whether a standard level is 
economically justified.
    After further consideration, DOE is of the view that it is not 
necessary to utilize the construct of an ``economically rational 
consumer'' to determine economic justification. The factors DOE stated 
that the economically rational consumer would consider in the previous 
proposed rule, (energy savings, efficacy, product features, and life-
cycle costs), arise out of EPCA's seven factors for determining 
economic justification. (See 42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII).) \6\ 
Because the seven factors are familiar to DOE stakeholders and can 
effectively provide a means to account for the decisions of an 
economically rational consumer discussed in the prior proposal, DOE 
believes it is unnecessary to refer to a theoretical concept of an 
``economically rational consumer'' to determine economic justification. 
Instead, DOE clarifies that because the current walk-down approach 
generally ceases analysis at the highest TSL for which benefits 
exceeded burdens, precluding a fuller consideration of the economic 
justification required by 42 U.S.C. 6295(o)(2)(B)(i) for any new or 
amended standard, DOE proposes to amend the prior process to require 
the agency to determine economic justification based on comparisons 
across the full range of TSLs and is consistent with EPCA. This 
comparative analysis includes assessing the incremental changes in 
costs and benefits for each TSL's benefits and burdens relative to 
other TSLs and as part of an holistic analysis across all TSLs. 42 
U.S.C. 6295(o)(2)(B).
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    \6\ The seven factors specified in 42 U.S.C. 6295(o)(2)(B)(i) 
are as follows:
    (I) The economic impact of the standard on the manufacturers and 
on the consumers of the product subject to the standard;
    (II) the savings in operating costs throughout the estimated 
average lifetime of the covered product in the type (or class) 
compared to any increase in the price of, or in the initial charges 
for, or maintenance expenses of, the covered products which are 
likely to result from imposition of the standard;
    (III) the total projected amount of energy, or as applicable, 
water, savings likely to result directly from imposition of the 
standard;
    (IV) any lessening of the utility or the performance of the 
covered products likely to result from the imposition of the 
standard;
    (V) the impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    (VI) the need for national energy and water conservation; and
    (VII) other factors the Secretary considers relevant.
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    This proposed approach is consistent with EPCA, which provides a 
list of factors that DOE may consider, and to weigh in DOE's 
discretion, in considering whether the benefits of a particular 
standard outweigh its burdens. EPCA authorizes DOE to consider seven 
factors including factors that the Secretary considers relevant. The 
authorization of these broad factors gives DOE wide discretion. 
Collectively,

[[Page 8486]]

this list of factors allows DOE to consider the relative costs and 
benefits of alternative standards and to take into account disparities 
in cost-benefit profiles between standards that would result in 
significant costs to consumers or other stakeholders if a particular 
standard is chosen to the exclusion of another standard when considered 
after a determination of technological feasibility. Relatedly, DOE 
believes that its weighing of benefits and burdens of particular 
standards should be informed by consideration of alternate scenarios, 
i.e., other TSLs, against which benefits and burdens are to be 
assessed, and not simply by consideration of a scenario in which no new 
or amended standard is issued. The text of EPCA, which does not 
foreclose such consideration or use of alternate scenarios, provides 
DOE with ample discretion in identifying and applying methods for 
determining whether the benefits of a standard outweigh the burdens.

B. The ``Walk-Down'' Process

    To ensure that any new or amended standard meets these statutory 
criteria, DOE historically has implemented an approach referred to as 
the ``walk-down'' in selecting standard levels.
    As a first step in undertaking that approach, DOE puts possible 
technologies for improving energy efficiency through a design options 
screening process. In this process, as part of assessing technological 
feasibility, DOE reviews a number of design factors that overlap 
significantly with technical considerations, as well as some market 
considerations. DOE will not consider a technology for inclusion in a 
TSL if: (1) It is not incorporated in a commercial product or in a 
commercially-viable, existing prototype; \7\ (2) 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; (3) it is determined to have a 
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.; (4) it is determined 
to have significant adverse impacts on health or safety; or (5) it has 
proprietary protection and represents a unique pathway to achieving a 
given efficiency level.\8\ See section 7(b) of 10 CFR part 430, subpart 
C, appendix A.
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    \7\ For example, for purposes of technological feasibility, DOE 
would not consider as a dishwasher a box within which water is 
sprayed on dishware without actually cleaning that dishware.
    \8\ That is, for purposes of technological feasibility, DOE 
would not consider setting a standard that could only be met by 
using a particular patented technology.
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    Following the technological feasibility assessment, DOE then uses 
the remaining technologies to create a range of TSLs. These TSLs will 
typically include: (1) The most-stringent TSL that is technologically 
feasible, i.e., the ``max-tech'' standard; (2) the TSL with the highest 
life-cycle cost; (3) a TSL with a payback period of not more than three 
years; and (4) any TSLs that incorporate noteworthy feasible 
technologies or fill in large gaps between efficiency levels of other 
TSLs.
    After determining technological feasibility and developing the 
TSLs, DOE then conducts a cost-benefit assessment of the TSLs starting 
with the max-tech standard. Under the current walk-down approach, if 
the cost-benefit assessment demonstrates that the benefits of max-tech 
TSL exceed its costs, the analysis ends, and DOE adopts the max-tech 
TSL as the new or amended standard. However, if DOE determines that the 
benefits of the max-tech TSL do not exceed its costs, DOE ``walks 
down'' to consider the next most-stringent TSL, again by application of 
a simple cost-benefit comparison. This ``walk-down'' process continues 
until DOE determines that the benefits of a TSL exceed its costs, and, 
thus, is economically justified, or that none of the TSLs are 
economically justified.

C. Proposed Changes

    While the current ``walk-down'' approach ensures that DOE considers 
adopting TSLs that represent the maximum improvement in energy 
efficiency that is technologically feasible, it may not allow for a 
full consideration of the economic justification required by 42 U.S.C. 
6295(o)(2)(B)(i) for any new or amended standard. In only comparing the 
costs and benefits of the TSL under consideration against a baseline 
case and generally ceasing consideration at the highest TSL for which 
benefits exceed burdens, DOE may select a TSL that has significant, 
adverse economic impacts when compared to another TSL. For example, if 
two TSLs have similar energy savings (one is slightly higher than the 
other) and would both have monetized benefits that exceed monetized 
burdens when compared to the case, typically DOE has selected the TSL 
with the slightly higher energy savings under this approach. However, 
if, for example, the TSL with the slightly higher energy savings also 
has a significant, adverse impact on small business manufacturers as 
compared to the other TSL, it could be difficult to argue that it is 
economically justified. To generalize further, in considering whether 
the benefits exceed the burdens for a particular standard, the relative 
impacts on lessening market competition in moving from one TSL to 
another may prove material to the choice of TSL, all other factors 
considered. As a result, in order to make a determination of economic 
justification, it is necessary to compare the TSLs to each other to 
determine the relative benefits in light of the costs to achieve those 
benefits. As such, DOE must conduct a comparative analysis of the 
relative costs and benefits of all of the proposed TSLs to make a 
reliable determination that a specific TSL is economically justified. 
This comparative analysis includes assessing the incremental changes in 
costs and benefits for each TSL's benefits and burdens relative to 
other TSLs and as part of an holistic analysis across all TSLs. 42 
U.S.C. 6295(o)(2)(B).
    To implement this comparative analysis, DOE is proposing to modify 
the ``Policies on Selection of Standards'' section of the Process Rule 
to clarify that a determination of economic justification for a 
specific TSL must be based on a comparison of the benefits and burdens 
of that standard, determined by considering the seven factors listed in 
EPCA, against the benefits and burdens of the baseline case (no new 
standards case) and all other TSLs as an incremental comparison. In 
addition, this approach is intended to incorporate the potential 
consumer welfare impacts that would arise out of the factors 
contemplated in EPCA, and specifically 42 U.S.C. 6295(o)(2)(B). As a 
result, while DOE will continue to start the TSL evaluation process 
with the max-tech TSL and ``walk down'' to less-stringent TSLs, 
economic justification would be expanded to be determined through a 
comparative analysis of the benefits and burdens of all of the proposed 
TSLs, including relative comparisons of each TSL's benefits and burdens 
as part of an holistic analysis among all TSLs as outlined in 42 U.S.C. 
6295(o)(2)(B). To be clear, this new comparative analysis will inform 
the policy choice, based on the statutory factors, and DOE will no 
longer simply adopt the max-tech TSL without clear consideration of the 
results of the comparative analysis.

[[Page 8487]]

    DOE has done such comparisons in the past. For example, in the most 
recent energy conservation standards rulemaking for dehumidifiers, DOE 
stated that one TSL would minimize disproportionate impacts to small, 
domestic dehumidifier manufacturers relative to two other TSLs under 
consideration. 81 FR 38338, 38388 (June 13, 2016). DOE's current 
proposal would ensure that such comparisons are consistently conducted 
across rulemakings with respect to the factors and considerations for 
determining economic justification listed in 42 U.S.C. 6295(o)(2)(B)(i) 
and section 7(e)(2) of the proposed Process Rule, respectively.
    Furthermore, concerns that this proposal will result in DOE 
selecting standards that are the most economically justified, instead 
of standards that result in the maximum improvement in energy 
efficiency that is technologically feasible and economically justified, 
are misplaced. If DOE determines more than one trial standard level is 
economically justified, DOE will select the standard that results in 
the maximum improvement in energy efficiency with the greatest 
beneficial impact given burdens. 42 U.S.C. 6295(o)(2)(B). That could be 
the standard level that maximizes net benefits. It may, in some cases, 
be the TSL that optimizes consumer life cycle cost savings (i.e., the 
comparison of upfront increases in installed cost against long-term 
energy savings and operating and maintenance costs), which would 
indicate the standard level that is best tailored to a specific 
product. It could also be the standard that minimizes negative impacts 
to either consumers or manufacturers even if a different TSL would 
maximize energy savings or net benefits. For example, in the 2015 final 
rule amending the standards for general service fluorescent lamps, TSL 
5 would have resulted in maximum energy savings and positive net 
benefits; however, DOE did not select TSL 5 because the Secretary 
determined that doing so would decrease industry net present value by 
24 percent and pose net costs for 22 percent of consumers.\9\ In the 
dehumidifier example discussed above, TSL 2 was selected, at least in 
part, because it minimized the impact to small business manufacturers 
compared to other TSLs. Additionally, DOE may consider a range of 
potential consumer effects in this calculation, potentially including 
effects on product functionality or consumer utility, following the 
conclusion of its ongoing peer review on analytical methods. For 
example, to the extent that a revised standard could extend cycle times 
or other convenience factors that consumers' value, DOE would seek to 
quantify this impact and assess that value in its comparison of 
potential standard levels.
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    \9\ 80 FR 4142.
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    When considered as part of the amendments to DOE's Procedures for 
Use in New or Revised Energy Conservation Standards and Test Procedures 
for Consumer Products and Commercial/Industrial Equipment finalized 
elsewhere in this issue of the Federal Register, this proposal will 
enable DOE to more readily and consistently satisfy its continuing 
obligation to review its standards, as well as its separate ongoing 
obligations to review all of its test procedures, on a cyclical basis, 
by helping DOE to quickly identify those areas that will yield the most 
beneficial information from DOE's efforts to amend or establish 
standards producing significant energy conservation for a given 
regulated product or equipment. By helping DOE to prioritize its 
efforts, the revised procedures will allow DOE to better focus on 
standards that effectively provide for improved energy efficiency of 
major appliances and certain other consumer products. See 42 U.S.C. 
6201(5).) The proposed changes in this document (and the final rule 
published elsewhere in this issue of the Federal Register) as a whole 
are anticipated to help enable manufacturers to focus more on 
innovation and to make more investment in research and development for 
their products. DOE seeks comment on the clarifications provided in 
this document and its proposed approach for determining economic 
justification.

IV. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    This regulatory action is 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 Orders 13771 and 13777

    On January 30, 2017, the President issued Executive Order (E.O.) 
13771, ``Reducing Regulation and Controlling Regulatory Costs.'' 82 FR 
9339 (Jan. 30, 2017). 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

[[Page 8488]]

available on the Office of the General Counsel's website at: http://energy.gov/gc/office-general-counsel.
    Because this proposed rule does not directly regulate small 
entities but instead only imposes procedural requirements on DOE 
itself, DOE certifies that this proposed rule will 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 determined that it will 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. 
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 each 
Executive agency make every reasonable effort to ensure that when it 
issues a regulation, 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 has 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. (Pub. L. 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

[[Page 8489]]

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 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 will 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 will 
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 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 makes 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 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 70 FR 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 has engaged in a new peer review of its 
analytical methodologies.

V. Approval of the Office of the Secretary

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

List of Subjects in 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.

    Signed in Washington, DC, on December 31, 2019.
Daniel R Simmons,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons stated in the preamble, DOE proposes to amend part 
430 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. In appendix A to subpart C of part 430, revise section 7(e) to read 
as follows:

[[Page 8490]]

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

* * * * *
    7. Policies on Selection of Standards
* * * * *
    (e)(1) 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 both technologically feasible and economically 
justified.
    (2) 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 both 
technologically feasible and economically justified. (42 U.S.C. 
6295(o)(2)(A) and 42 U.S.C. (o)(3)(B)) For a standard level to be 
economically justified, the Secretary must determine that the 
benefits of the standard exceed its burdens by, to the greatest 
extent practicable, considering the factors listed in 42 U.S.C. 
6295(o)(2)(B)(i). In making such a determination, the Secretary 
shall compare the benefits and burdens of the standard against the 
benefits and burdens of the baseline case (no new standards case) 
and all other candidate/trial standard levels. This comparative 
analysis includes assessing the incremental changes in costs and 
benefits for each TSL's benefits and burdens relative to other TSLs 
and as part of an holistic analysis across all TSLs. 42 U.S.C. 
6295(o)(2)(B). 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))
* * * * *

[FR Doc. 2020-00022 Filed 2-13-20; 8:45 am]
 BILLING CODE 6450-01-P