[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]
=======================================================================
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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))
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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)
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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).
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\9\ 80 FR 4142.
---------------------------------------------------------------------------
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