[Federal Register Volume 85, Number 31 (Friday, February 14, 2020)]
[Rules and Regulations]
[Pages 8626-8711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00023]
[[Page 8625]]
Vol. 85
Friday,
No. 31
February 14, 2020
Part II
Department of Energy
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10 CFR Parts 430 and 431
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Energy Conservation Program for Appliance Standards: Procedures for
Use in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment; Final Rule
Federal Register / Vol. 85, No. 31 / Friday, February 14, 2020 /
Rules and Regulations
[[Page 8626]]
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DEPARTMENT OF ENERGY
10 CFR Parts 430 and 431
[EERE-2017-BT-STD-0062]
RIN 1904-AD38
Energy Conservation Program for Appliance Standards: Procedures
for Use in New or Revised Energy Conservation Standards and Test
Procedures for Consumer Products and Commercial/Industrial Equipment
AGENCY: Office of Energy Efficiency and Renewable Energy (EERE),
Department of Energy.
ACTION: Final rule.
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SUMMARY: The U.S. Department of Energy is updating and modernizing
aspects of its current rulemaking method for considering new or revised
energy conservation standards for consumer products and certain types
of industrial equipment. The rule clarifies the process DOE will follow
with respect to its application to these items, makes the specified
rulemaking procedures binding on DOE, and revises certain provisions to
bring consistency with existing statutory requirements. Other changes
include expanding early opportunities for public input on the Appliance
Program's priority setting and rulemaking activities, setting a
significant energy savings threshold for updating standards,
establishing a window between test procedure final rules and standards
proposals, and delineating procedures for rulemaking under the separate
direct final rule and negotiated rulemaking authorities.
DATES: The effective date of this rule is April 14, 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:
Table of Contents
I. Summary of the Final Rule
II. Introduction
A. Authority
B. Background on the Process Rule
C. General Comments on DOE's Process Rule Proposal
III. Discussion of Specific Revisions to the Process Rule
A. The Process Rule Will Be Binding on the Department of Energy
B. The Process Rule Will Apply to Both Consumer Products and
Commercial Equipment
C. The Application of the Process Rule to ASHRAE Equipment
D. Priority Setting
E. Coverage Determinations
F. Early Stakeholder Input To Determine the Need for Rulemaking
a. Early Assessment Review
b. Other Avenues for Early Stakeholder Input in the Rulemaking
Process
G. Decision-Making Process for Issuing a Determination Not To
Issue a New or Amended Energy Conservation Standard or an Amended
Test Procedure
H. Significant Savings of Energy Threshold
1. Comments on the Proposed Threshold Approach
A. Comments Supporting the Proposed Threshold Approach
B. Comments Opposing the Proposed Threshold Approach
C. Comments Regarding DOE's Notice of Data Availability
2. Response to Comments on the Proposed Thresholds
A. Response to Comments Supporting the Proposed Threshold
Approach
B. Response to Commenters Opposing DOE's Proposed Use of
Thresholds
C. Response to Comments on the Notice of Data Availability
I. Finalization of Test Procedures Prior to Issuance of a
Standards NOPR
J. Adoption of Industry Standards
K. Direct Final Rules
1. DOE's Authority Under the DFR Provision
2. Interested Persons Fairly Representative of Relevant Points
of View
3. Adverse Comments
L. Negotiated Rulemaking
M. Other Revisions and Issues
1. DOE's Analytical Methodologies, Generally
a. Peer Review
b. Walk-Down
c. Other
2. Cumulative Regulatory Burden
3. Should DOE conduct retrospective reviews of the energy
savings and costs of energy conservation standards?
4. Certification, Compliance, and Enforcement (CCE)-Related
Issues
5. Other Issues
IV. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under Executive Orders 13771 and 13777
C. Economic Analysis
D. Review Under the Regulatory Flexibility Act
E. Review Under the Paperwork Reduction Act of 1995
F. Review Under the National Environmental Policy Act of 1969
G. Review Under Executive Order 13132
H. Review Under Executive Order 12988
I. Review Under the Unfunded Mandates Reform Act of 1995
J. Review Under the Treasury and General Government
Appropriations Act, 1999
K. Review Under Executive Order 12630
L. Review Under the Treasury and General Government
Appropriations Act, 2001
M. Review Under Executive Order 13211
N. Review Consistent With OMB's Information Quality Bulletin for
Peer Review
O. Congressional Notification
V. Approval of the Office of the Secretary
I. Summary of the Final Rule
The United States Department of Energy (``DOE'' or, in context,
``the Department'') generally uses the procedures set forth in its
``Procedures, Interpretations, and Policies for Consideration of New or
Revised Energy Conservation Standards for Consumer Products''
(``Process Rule''), see 10 CFR part 430, subpart C, appendix A, when
prescribing energy conservation standards for both consumer products
and commercial equipment pursuant to the Energy Policy and Conservation
Act of 1975 (Pub. L. 94-163, codified at 42 U.S.C. 6291, et seq.), as
amended (``EPCA''). In this document, DOE is updating and modernizing
its Process Rule in the following major topics: (1) Requiring that the
procedures outlined in the Process Rule are binding on the agency; (2)
formalizing DOE's past practice of applying the Process Rule to both
consumer products and commercial equipment; (3) clarifying the Process
Rule's application with regard to equipment covered by ASHRAE Standard
90.1; (4) expanding the Process Rule to include test procedure
rulemakings, as well as energy conservation standards rulemakings; (5)
committing to both an ``early look'' process and other robust methods
for early stakeholder input; (6) defining a significant energy savings
threshold that must be met before DOE will update an energy
conservation standard; (7) clarifying DOE's commitment to publish a
test procedure six months before a related standards NOPR; (8)
articulating DOE's authority under the Negotiated Rulemaking Act and
EPCA's direct final rule (``DFR'') provision, while clarifying that
negotiated rulemakings and DFRs are two separate processes with their
own
[[Page 8627]]
sets of requirements; and (9) addressing other miscellaneous issues.
At this time DOE is not finalizing its prior proposal concerning
the process by which DOE selects among alternative energy efficiency
standards under EPCA (also known as the ``walk-down'' approach). In a
separate but related action, DOE is publishing in this issue of the
Federal Register, a proposed rule to amend this process, such that
those standards achieve 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
response to the concerns and requests for further explanation related
to the economically rational consumer mentioned in DOE's prior
proposal, DOE is: (1) Clarifying 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 based on comparisons across the full range of trial
standard levels (TSLs) is consistent with EPCA. This proposal will
respond to public comments requesting further clarity on DOE's initial
proposal that in making the determination of economic justification,
DOE would choose one TSL over other feasible TSLs after considering all
relevant factors, including, but not limited to, energy savings,
efficacy, product features, and life-cycle costs.
DOE continues to contemplate additional topics regarding its
process for undertaking appliance standards rulemakings that may lead
to additional rulemaking proceedings to update the Process Rule. In
particular, DOE continues to think about potential changes to its
analytical methodologies and models for assessing the costs and
benefits of appliance standards rulemakings.
II. Introduction
A. Authority
In overview, the Department of Energy's Process Rule was developed
to guide implementation of the Appliance Standards Program, which is
conducted pursuant to Title III, Part B \1\ of the Energy Policy and
Conservation Act (``EPCA'' or ``the Act''), Public Law 94-163 (42
U.S.C. 6291-6309, as codified), for consumer products, and Part C \2\
for certain industrial equipment (42 U.S.C. 6311-6317, as codified),
added by Public Law 95-619, Title IV, Sec. 441(a).\3\
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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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Under EPCA, DOE's energy conservation program for covered products
consists essentially of four parts: (1) Testing; (2) labeling; (3) the
establishment of Federal energy conservation standards; and (4)
certification and enforcement procedures. The Federal Trade Commission
(``FTC'') is primarily responsible for labeling, and DOE implements the
remainder of the program. Subject to certain criteria and conditions,
DOE is required to develop test procedures to measure the energy
efficiency, energy use, or estimated annual operating cost of each
covered product and covered equipment. (42 U.S.C. 6293 and 42 U.S.C.
6314) Manufacturers of covered products and covered equipment must use
the prescribed DOE test procedure as the basis for certifying to DOE
that their products and equipment comply with the applicable energy
conservation standards adopted under EPCA and when making any other
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c), 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. Id.
In addition, pursuant to EPCA, any new or amended energy
conservation standard for covered products (and at least certain types
of equipment) must be designed to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6316(a)) 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.
B. Background on the Process Rule
DOE conducted a formal effort between 1995 and 1996 to improve the
process it follows to develop energy conservation standards for covered
appliance products. This effort involved many different stakeholders,
including manufacturers, energy-efficiency advocates, trade
associations, state agencies, utilities, and other interested parties.
The result was the publication of a final rule on July 15, 1996,
titled, ``Procedures, Interpretations and Policies for Consideration of
New or Revised Energy Conservation Standards for Consumer Products.''
(61 FR 36974) This document was codified at 10 CFR part 430, subpart C,
appendix A,\4\ and became known colloquially as the ``Process Rule.''
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\4\ This final rule that amends the Process Rule is a
legislative rule and therefore subject to the notice and comment
requirements in the APA. (5 U.S.C. 553) Accordingly, DOE has
conducted a ``notice and comment'' proceeding as evidenced by two
public meetings and webinars and a robust period for written
comments.
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The Process Rule was designed to provide guidance to stakeholders
as to how DOE would implement its rulemaking responsibilities under
EPCA for the Appliance Program. As part of this enhanced process,
supplementing the traditional notice-and-comment rulemaking process
under the Administrative Procedure Act \5\ (APA), DOE has invited and
promoted extensive stakeholder involvement in its energy conservation
standards and test procedure rulemakings. An important legacy of the
Process Rule has been both to educate and learn from the many
stakeholders who participate in DOE's appliance rulemaking efforts.
Some of the successes that have resulted from the Process Rule include:
(1) Greater involvement from a wider variety of stakeholders in DOE's
appliance rulemaking process; (2) improved technical analyses in
support of the appliance rules due to enhanced input from stakeholders
at an early stage of the rulemaking process; (3) improved solutions to
issues and problems because of increased stakeholder involvement; and
(4) more open dialogue and improved relationships between stakeholders
and also between stakeholders and DOE.
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\5\ 5 U.S.C. 551 et seq.
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While there have been many positive results from the Process Rule,
DOE came to understand through the intervening years that the Appliance
Program might benefit from additional improvements to the Process Rule,
as reflected in this document. These amendments address: (1) Processes
that may no longer track the current legal requirements of EPCA; (2)
processes that do not take into account the maturation of DOE's
appliance program to the point that modernization is necessary; (3)
that in many instances DOE has not rigorously followed the Process
Rule; (4) the need for regulatory reform to reduce the costs and
burdens of rulemaking; and (5) the need to clarify that the Process
Rule applies to commercial/industrial equipment. In evaluating and
seeking to
[[Page 8628]]
expand the positive impacts of the Process Rule, as well as remedying
the above-described negative developments, this final rule addresses
the changed landscape of the rulemaking process under EPCA, and
endeavors to modernize the Process Rule.\6\
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\6\ In November 2010, DOE also issued a statement intended to
expedite its rulemaking process. The statement is currently
available at http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf. As reflected
in this final rule, DOE has undertaken a thorough review of its
Process Rule to determine the procedures it will follow in
considering new or amended energy conservation standard and test
procedures. As a result, this final rule supersedes those portions
of the November 2010 statement pertaining to the elimination of
these early rulemaking steps. DOE will revise its statement so as to
conform to the amendments contained in this final rule.
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On December 18, 2017, DOE issued an RFI (December 2017 RFI) to
address potential improvements to the Process Rule so as to achieve
meaningful burden reduction while continuing to achieve the
Department's statutory obligations in the development of appliance
energy conservation standards and test procedures. (82 FR 59992)
Originally, the comment period for this RFI was scheduled to end on
February 16, 2018. However, several stakeholders requested a 30-day
extension to file comments.\7\ Consequently, DOE extended the comment
period until March 2, 2018. (83 FR 5374 (Feb. 7, 2018)) Subsequently,
DOE posted a notice on its website on March 2, 2018, which stated that
the comment period was further extended until March 5, 2018, due to a
brief closure of the Federal government in the Washington, DC area.
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\7\ See letter dated January 29, 2018 from Air-Conditioning,
Heating, and Refrigeration Institute (``AHRI''), the Association of
Home Appliance Manufacturers (``AHAM''), and the National Electrical
Manufacturers Association (``NEMA''), to John Cymbalsky, U.S.
Department of Energy, Office of Energy Efficiency and Renewable
Energy, Buildings Technologies Program. [EERE-2017_BT-STD-0096, No.
17, p. 1]
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To explore the issues in the December 2017 RFI, DOE convened a
public meeting on January 9, 2018, which was attended by a wide range
of stakeholders. The Department also simultaneously hosted a webinar,
which was attended by approximately 150 additional persons.
After carefully reviewing the numerous public comments submitted on
the December 2017 RFI and the issues raised at the January 2018 public
meeting, DOE published a notice of proposed rulemaking (``NOPR'')
regarding the Process Rule in the Federal Register on February 13,
2019. (84 FR 3910) This document responded to the RFI comments and
proposed amendments to the Process Rule in a variety of areas, as
discussed subsequently. Comments on the Process Rule NOPR were due by
April 15, 2019.
To facilitate discussion of the issues in the February 2019 NOPR,
DOE held a public meeting on March 21, 2019 in Washington, DC. The
meeting was widely attended, both in person and via webinar. At the
public meeting, numerous topics were discussed, including, but not
limited to: (1) Making the Process Rule binding on DOE; (2) making the
Process Rule applicable to both consumer products and commercial/
industrial equipment; (3) explaining application of the Process Rule to
ASHRAE equipment; (4) priority-setting; (5) the process for coverage
determinations; (6) early assessment review for energy conservation
standard and test procedure rulemakings; (7) consideration of a
significant savings of energy threshold; (8) finalizing test procedures
180 days before issuance of a standards NOPR; (9) adoption of consensus
standards as DOE test procedures; (10) direct final rules; (11)
negotiated rulemakings; (12) analytical methodologies and peer review;
(13) potential changes to the ``walk-down approach'' for assessing
standard levels; (14) cumulative regulatory burden; (15) retrospective
reviews of energy savings and costs for past standards; (16)
certification, compliance, and enforcement issues, and (17) any other
issues or topics raised by stakeholders. However, due to the large
number of matters to be addressed and the significant public interest,
DOE determined it necessary to carry over the public meeting to a
second day and to extend the public comment period, actions which were
announced in a Federal Register notice published on April 2, 2019. (84
FR 12527) Accordingly, a continuation of the NOPR public meeting was
held on April 11, 2019, and the comment period on the NOPR was extended
to May 6, 2019.
Overall, DOE experienced a high level of engagement from
stakeholders and the interested public regarding potential changes to
the Process Rule. Such comments provided important input to DOE's final
rule to modernize and refine the Process Rule. The issues raised in the
NOPR public comments are addressed subsequently in this document.
Through the amendments adopted in this final rule, DOE expects that its
revised Process Rule will increase transparency, foster public
engagement, and achieve meaningful burden reduction, while at the same
time continuing to meet the Department's statutory obligations under
EPCA.
Commenters who provided written comments in response to DOE's NOPR
consisted of the following parties:
Table of Commenters
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Acronym,
Commenter(s) Affiliation identifier
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A.O. Smith...................... Manufacturer...... A.O. Smith.
Acuity Brands................... Manufacturer...... Acuity.
Air-Conditioning, Heating, and Manufacturer Trade AHRI.
Refrigeration Institute. Group.
Alliance to Save Energy......... Advocacy Group.... ASE.
American Council for an Energy Advocacy Group.... ACEEE.
Efficient Economy.
American Efficient.............. Energy Efficiency AE.
Consultancy.
American Gas Association........ Utility Trade AGA.
Group.
American Lighting Association... Manufacturer Trade ALA.
Group.
American Public Gas Association. Utility Trade APGA.
Group.
American Public Power Utility Trade APPA.
Association. Group.
American Society of Heating, Technical Society. ASHRAE.
Refrigeration, and Air
Conditioning Engineers.
Appliance Standards Awareness Advocacy Group.... ASAP, et al.
Project.
(Joint Comments filed with
ACEEE, Consumer Federation of
America, Consumer Reports,
National Consumer Law Center,
NRDC, and NEEA).
[[Page 8629]]
Appliance Standards Awareness Advocacy Groups... ASAP, et al. 2.
Project 2.
(Joint Comments filed with
ACEEE, the California Energy
Commission, Consumer Federation
of America, Consumer Reports,
National Consumer Law Center
(on behalf of its low-income
clients), and NEEA).
Attorneys General of California, State, Local AG Joint
Colorado, Connecticut, Governments. Commenters.
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.
Bradford White Corporation...... Manufacturer...... BWC.
Burnham Holdings, Inc. (dba U.S. Manufacturer...... BHI.
Boiler Company).
California Energy Commission.... State............. CEC.
California Investor-Owned Utilities......... Cal-IOUs.
Utilities.
Connecticut Department of Energy State............. CT-DEEP.
& Environmental Protection.
Consumer Technology Association. Manufacturer Trade CTA.
Group.
Earthjustice.................... Advocacy Group.... Earthjustice.
GE Appliances................... Manufacturer...... GEA.
George Mason University--Antonin Academic GMU Law.
Scalia Law School, Institution.
Administrative Law Clinic.
George Washington University-- Academic GWU.
Regulatory Studies Center. Institution.
Hearth Products and Barbecue Manufacturer Trade HPBA.
Association. Group.
Ingersoll Rand.................. Manufacturer...... Ingersoll Rand.
Joint Industry Commenters....... Manufacturer Trade Joint Commenters.
Groups.
Lennox International............ Manufacturer...... Lennox.
Lutron.......................... Manufacturer...... Lutron.
Manufactured Housing Association Manufacturer Trade MHARR.
for Regulatory Reform. Group.
Manufactured Housing Institute.. Manufacturer Trade MHI.
Group.
New Buildings Institute......... Advocacy Group.... NBI.
New York University School of Academic NYU Law.
Law--Institute for Policy Institution.
Integrity.
North American Association of Manufacturer Trade NAFEM.
Food Equipment Manufacturers. Group.
National Electrical Manufacturer Trade NEMA.
Manufacturers Association. Group.
National Propane Gas Association Utility Trade NPGA.
Group.
Natural Resources Defense Advocacy Group.... NRDC.
Council.
Northwest Power and Conservation Interstate Compact NPCC.
Council.
Northwest Energy Efficiency Advocacy Group.... NEEA.
Alliance.
Rheem........................... Manufacturer...... Rheem.
Robert Bosch, LLC............... Manufacturer...... Bosch.
Samsung......................... Manufacturer...... Samsung.
Sierra Club..................... Advocacy Group.... Sierra Club.
Signify......................... Manufacturer...... Signify.
Southern Co..................... Utility........... Southern.
Spire, Inc...................... Utility........... Spire.
Steinberg, Linda................ None.............. Steinberg.
United Cool Air................. Manufacturer...... UCA.
Zero Zone....................... Manufacturer...... Zero Zone.
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C. General Comments on DOE's Process Rule Proposal
As explained in further detail in section II.B of this final rule,
DOE's Process Rule was originally designed to provide guidance to
stakeholders as to how DOE would implement its rulemaking
responsibilities under EPCA for the Appliance Standards Program,
including extensive opportunities for stakeholder involvement in energy
conservation standards and test procedure proceedings. While many
benefits arose from the 1996 Process Rule, DOE determined that further
improvements are possible since circumstances have changed since it was
developed 25 years ago, as reflected in the agency's proposal. DOE's
intent in proposing an updated Process Rule was to increase
transparency and public engagement and achieve meaningful burden
reduction, while at the same time continuing to meet DOE's statutory
obligations under EPCA. (84 FR 3910, 3911-3912 (Feb. 13, 2019)) Not
surprisingly, DOE's proposal was met with a wide variety of viewpoints.
The paragraphs that follow summarize these stakeholder comments,\8\
followed by DOE's response.
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\8\ When submitting their own individual comments, a number of
organizations also explicitly signaled their endorsement of the
comments prepared by others. Specifically, the ALA stated that it
supports the detailed comments provided by the Joint Commenters.
(ALA, No. 104 at p. 1) GEA expressed support for the comments of the
Joint Commenters and incorporated them by reference into its own
comments. (GEA, No. 125 at p. 1) NEMA stated that it supports the
detailed Joint Comments of AHAM, AHRI, NEMA, and others. (NEMA, No.
107 at p. 2) Rheem supported the detailed comments provided by AHRI
and the Joint Commenters. (Rheem, No. 101 at p. 1) NRDC stated that
it signs onto and supports the comments submitted by the Appliance
Standards Awareness Project and Earthjustice. (NRDC, No. 131 at p.
3)
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A number of commenters expressed general support for DOE's Process
Rule proposal. (Zero Zone, No. 102 at p. 1; Rheem, No. 101 at pp. 1-2;
APGA, No. 106 at p. 2; BWC, No. 103 at p. 1) More specifically, AHRI
praised DOE's responsiveness to stakeholder comments and adherence to
the statutory principles of EPCA that it believes the agency had
previously set aside. (AHRI, April 11, 2019 Public
[[Page 8630]]
Meeting Transcript at pp. 234) APGA stated that DOE's comprehensive and
transparent proposal would improve the way the Department fulfills its
responsibilities under EPCA. (APGA, No. 106 at p. 2) BWC suggested that
DOE's proposed Process Rule changes have the potential to make the
rulemaking process more objective and improve its execution. (BWC, No.
103 at p. 1)
According to GEA, the proposed Process Rule should help alleviate
many unnecessary regulatory burdens on both the regulated community and
the DOE. GEA suggested that the following portions of the proposed
Process Rule are of particular importance: (1) That all processes in
the rule are binding on DOE; (2) the proposed early assessment process;
and (3) the requirement to demonstrate significant energy savings
before a revised standard is set. (GEA, No. 125 at p. 2)
In their overall assessment, the Administrative Law Clinic at
George Mason University's Antonin Scalia Law School (GM Law) found the
proposed changes to DOE's Process Rule to be consistent with good
regulatory principles and all governing law. GM Law supported the
proposal as sound regulatory policy by promoting stakeholder input,
predictability, and transparency. Furthermore, GM Law found DOE's
proposal to comport with the D.C. Circuit's decision in NRDC v.
Herrington, 768 F.2d 1355, 1372-73 (D.C. Cir. 1985), and it
characterized other commenters' suggestions to the contrary as
unfounded. (GM Law, No. 105 at pp. 1-2)
The Joint Commenters expressed support for DOE's proposal as
representing the Department's renewed commitment to sound procedural
practices that will increase regulatory efficiency, provide all
interested stakeholders with a common understanding regarding DOE
regulatory process, and ensure appropriate and reasonable investment of
resources into DOE's important energy efficiency initiatives. Overall,
the Joint Commenters offered support for the goal of EPCA's appliance
efficiency program (i.e., maximizing improvements in energy savings
that are technologically feasible and economically justified). However,
to succeed, these commenters stated that DOE should act on a consistent
and predictable procedural basis and have an analytical structure that
accounts for practical and technological realities, while ensuring
regulatory transparency, consistency, and rationality. The Joint
Commenters stated their belief that the proposed rule will provide
greater certainty, transparency, and predictability in DOE's
promulgation of test procedures and amended rules, a point echoed by
Rheem. (Joint Commenters, No. 112 at p. 1; Rheem, No. 101 at pp. 1-2)
NEMA stated its understanding that the Process Rule NOPR did not
add any steps to the rulemaking process, and added that concerns raised
by certain other stakeholders about meeting deadlines can be addressed
by appropriate project management solutions. (NEMA, No. 107 at p. 2)
Finally, while supporting the Process Rule proposal generally,
Lennox expressed concern that the proposed Process Rule revisions may
have weakened certain protections against regulations that are not
economically justified. The commenter stated that in the prior version
of the Process Rule, presumptions had existed against regulations such
as those that: (1) Result in a negative return on investment for the
industry or would significantly reduce the value of the industry; (2)
would be the direct cause of plant closures, significant losses in
domestic manufacturer employment, or significant losses of capital
investment by domestic manufacturers; or (3) would have a significant
adverse impact on the environment or energy security. Lennox argued
that these presumptions against regulation have been eliminated in the
revised Process Rule, which now only identifies these as
``considerations.'' (Compare ``Considerations in assessing economic
justification'' in current Process Rule section 5(e)(3)(i)(A)-(C)
versus proposed Process Rule section 7(e)(2)(i)(A)-(C)). Lennox
recommended that these presumptions against regulation should be re-
instituted and protections strengthened for avoiding these obviously
deleterious impacts, because doing so provides valuable transparency
and regulatory predictability regarding DOE decision-making. (Lennox,
No. 133 at p. 8)
Other commenters opposed DOE's proposed Process Rule changes for a
variety of reasons. For example, while ASE acknowledged that there are
some improvements associated with the Process Rule NOPR, it stated that
most of the proposed changes would likely complicate the program, add
redundancy, remove flexibility, and make it more difficult to comply
with statutory deadlines. More specifically, ASE expressed concerns
that many of the proposed provisions of the Process Rule NOPR could
have the effect of making it more difficult for DOE to follow the law,
because they would likely slow the program down, remove flexibility to
respond to stakeholders and make course corrections during rulemakings,
and remove the prospect of negotiations leading to direct final rules.
Instead, ASE stressed the need for a program that is transparent,
predictable, robust, steady, and meets its statutory deadlines. (ASE,
No. 108 at pp. 1-2)
The AGs Joint Comment opposed DOE's Process Rule proposal, arguing
that it would unlawfully impede DOE's energy conservation standards
rulemakings and frustrate the purpose of EPCA. Furthermore, the AGs
Joint Comment stated that DOE's proposed revisions to the Process Rule
are unnecessary, counterproductive, and likely to slow or halt energy
efficiency rulemakings, while exposing DOE to frequent litigation. The
AGs then argued that in its proposal, DOE has misinterpreted factors
which EPCA requires DOE to consider and has favored elements of
industry which oppose energy efficiency standards. These commenters
also stated that DOE's allocation of resources to an unnecessary
Process Rule NOPR, which introduces obstacles and new procedural
hurdles to meeting EPCA's core statutory requirements in a timely
manner, is contrary to the statute because it puts the agency further
behind on its statutorily-mandated deadlines for energy conservation
standards. The AGs Joint Comment also argued that the Process Rule NOPR
proposes to add unnecessary procedural steps for the establishment of
standards and adding administrative barriers which make it more
difficult to complete the rulemaking process. These commenters found
this to be particularly troubling when DOE is already behind on so many
rulemakings. Consequently, the AGs recommended that DOE withdraw its
proposal. (AGs Joint Comment, No. 111 at pp. 1-2, 4-5)
Overall, NRDC's comments opposed DOE's proposed revisions to the
Process Rule as jeopardizing issuance of cost-effective energy
conservation standards. NRDC stated that although all stakeholders
agree that the standards process should be transparent, predictable,
and flexible, DOE's proposal does not advance those goals. (NRDC, No.
131 at p. 2) Instead, NRDC stated that the proposed changes to the
Process Rule, when considered together, would make it substantially
more difficult for DOE to set standards. The commenter argued that DOE
has not shown why additional steps are necessary, how they would
improve the program, or how the extended process could be completed in
the timeframe required by law, particularly in light of the number of
statutorily-mandated
[[Page 8631]]
rulemaking deadlines that the Department has already missed. (NRDC, No.
131 at pp. 3-4) Along the same lines, the Cal-IOUs posed two key
questions for DOE to address: (1) How will adopting these [proposed]
Process Rule provisions help DOE meet EPCA requirements, specifically
with respect to rulemaking timelines? (2) How do the provisions in the
NOPR regarding industry test procedures help DOE independently assess
the representativeness and enforceability of DOE test procedures? (Cal-
IOUs, No. 124 at p. 2)
NRDC argued that it is premature and inappropriate for DOE to move
forward with the Process Rule because its proposal was unclear on a
number of key issues (e.g., ordering and timeframe for various
rulemaking steps, how DOE would comply with statutory deadlines, how
test procedures would be established, details around the significant
energy savings threshold, and changes to the ``walk-down''
methodology), thereby depriving NRDC and others an adequate opportunity
to comment. (NRDC, No. 131 at p. 3) Similarly, PG&E argued that it is
premature for DOE to move to a final rule, because the Process Rule
NOPR poses too many unknowns and has sparked too much confusion, a
situation which could lead to litigation. Instead, PG&E urged DOE to
provide further clarification and an additional opportunity for
stakeholders comment on the clarified proposal in order to allow for
meaningful input. (PG&E, April 11, 2019 Public Meeting Transcript at p.
227)
Southern California Edison encouraged DOE to use its discretion to
see what to improve, but it also stated that it does not want DOE to
lose its flexibility. (Southern California Edison, April 11, 2019
Public Meeting Transcript at pp. 222-223) ACEEE stated that it was
surprised that the revised Process Rule does not incorporate regulatory
review requirements from Congress, and it also suggested that any
general rulemaking timeline envisioned by DOE should include test
procedures as well as standards. (ACEEE, March 21, 2019 Public Meeting
Transcript at p. 143, 206)
In response, DOE appreciates the many comments expressing a deep
interest in its Process Rule proposal, through which the Department
strives to simultaneously increase transparency and predictability,
foster public participation, reduce unnecessary burdens, and conserve
scarce public and private resources, all while ensuring compliance with
applicable statutory requirements. DOE acknowledges the many comments
suggesting that the Department's Process Rule proposal makes
substantial progress in advancing these objectives, gains which the
agency seeks to fully realize through promulgation of this final rule.
DOE proposed these changes to address identified shortfalls in its
implementation of the Process Rule in recent years. Consequently, as
NEMA pointed out, DOE did not add a host of cumbersome new steps to its
rulemaking process, but it is instead adopting a narrowly tailored
update to the Process Rule. In its only new procedural step, DOE has
added an early assessment provision to gauge whether there are
sufficiently changed circumstances to justify moving forward with an
energy conservation standards or test procedure rulemaking. The early
assessment process would add, at most, one brief additional comment
period, but in cases where technologies and costs have not
significantly changed since the last rulemaking, there is the potential
to obviate the need for additional rulemaking, thereby allowing
resources to be rapidly channeled to other rulemakings where
economically justified and significant energy savings are possible.
Otherwise, this final rule largely reflects a faithful implementation
of provisions already in place, albeit with certain modifications
intended to facilitate operation of the Appliance Standards Program and
to address changes in the statute since the original Process Rule was
promulgated.
For the reasons that follow, DOE finds the concerns raised by
opponents of the Process Rule NOPR to be theoretical, and unpersuasive.
DOE needs a clear and effective process to facilitate execution of its
statutory mandate for energy conservation standards and test procedures
under EPCA. Many commenters have expressed the need for updates to
DOE's Process Rule, a position the agency has acknowledged and with
which it agrees. For example, in recent years, DOE frequently failed to
meet the Process Rule's guidance that ``[f]inal, modified test
procedures will be issued prior to the NOPR on proposed standards.''
(See section 7(c) of 10 CFR part 430, subpart C, appendix A) There is
general agreement that the preferred regulatory approach in this
context is to have a final test procedure in place to inform the
accompanying standard-setting rulemaking, but DOE has frequently
deviated from the Process Rule and conducted test procedure and
standards rulemakings concurrently. Likewise, while the Process Rule
applied only to rulemakings for consumer products, there has been
little opposition to DOE's past application of the Process Rule to
covered commercial and industrial equipment. Moreover, DOE has gained
significant rulemaking experience under the Appliance Standards Program
over the past 25 years since the Process Rule was first adopted.
Accordingly, amendments to the Process Rule present a natural and
logical evolution of DOE's rulemaking process.
DOE likewise does not agree with comments that the Department's
Process Rule proposal would complicate or add redundancy to the
regulatory process. With the exception of the early assessment and
associated comment period, the amended Process Rule reflected in this
final rule contains the same basic elements found in the 1996 Process
Rule. Take again, the example of ensuring that a test procedure change
is finalized prior to issuance of an energy conservation standards
NOPR, which was also a provision in the previous Process Rule. While
some commenters might consider that a complication, others could
rightly call that an important procedural safeguard. As explained in
detail elsewhere in this document, the procedural changes to the
Process Rule adopted in this final rule are intended to address
identified problems, not to complicate or unnecessarily delay DOE's
rulemaking process.
Although several commenters asserted that the proposed changes to
DOE's Process Rule would negatively impact the agency's ability to
complete rulemakings and meet statutory deadlines, DOE disagrees. DOE
is cognizant of its legal obligations under EPCA, and the Department
anticipates being able to fulfill the requirements of both the statute
and the Process Rule. The amended Process Rule has the potential to
streamline DOE's rulemaking through the use of the early assessment,
which can better enable the Department to satisfy its statutory time
constraints. By meeting its obligations within the allotted timeframes,
DOE would not need commenters' recommended flexibility to waive the
procedural safeguards of the Process Rule. Thus, commenters' arguments
that DOE's Process Rule proposal would cause the Department to miss
statutory deadlines and improperly delay rulemakings are speculative,
at best.
In response to the AGs Joint Comment that DOE has misinterpreted
the statute, the Department disagrees and has addressed specific claims
to that effect at appropriate places elsewhere in this document.
Regarding the AGs Joint Comment's assertion that the Process
[[Page 8632]]
Rule proposal has incorporated provisions favoring industry, DOE once
again disagrees. In many ways, DOE has merely updated the Process Rule
to better reflect its current practice, and in other areas, it has made
modifications to faithfully meet the requirements of the statute, to
increase public participation, and to institute procedural safeguards
to the benefit of all stakeholders.
Regarding assertions of that commenters' confusion necessitates
further proceedings, DOE notes that most commenters on the Process Rule
NOPR did not make such claims in response to the agency's proposal.
Instead, such confusion was limited to a small number of commenters who
generally opposed DOE's proposal. DOE published a Process Rule RFI,
convened an interactive public meeting on the RFI, published a Process
Rule NOPR, convened two interactive public meetings on the NOPR,
published a Notice of Data Availability (``NODA'') on the topic of its
significant energy savings calculations, and accepted public comments
through all of those mechanisms. In total, the Department has hosted
three public meetings and solicited public comments for 197 days (i.e.,
longer than 6 months) on potential changes to the Process Rule. DOE
believes it articulated clearly the changes to the Process Rule that it
was proposing and finds that there has been thorough discussion and
opportunity for comment on virtually all the subjects mentioned by NRDC
and PG&E.\9\ In fact, the lengthy and detailed comments on all of the
topics raised in the proposed Process Rule submitted by the very
parties claiming confusion belie that assertion. DOE recognizes that it
may never be possible to explain its proposals to the complete
satisfaction of every stakeholder, but given its numerous publications
and opportunities for public engagement on the Process Rule, as well as
the detailed nature of the comments received, the agency has concluded
that stakeholders were afforded an adequate opportunity to comment on
the topics contained in this final rule.
---------------------------------------------------------------------------
\9\ The one exception involved the proposed changes to the
``walk-down'' methodology. DOE agrees that that topic will require
further study before making a decision to move forward.
---------------------------------------------------------------------------
Regarding comments that DOE's amended Process Rule would invite
increased litigation, the Department believes the opposite to be true.
By having a transparent process with increased opportunity for public
input that operates on a predictable schedule (e.g., completion of test
procedure prior to proposing standards), DOE anticipates a decreased
incidence of litigation. And rather than frustrating the purpose of
EPCA, DOE believes that this Process Rule final rule advances the
purpose of EPCA by having better and more efficient procedures in place
that allow the Department to better target its resources to those
rulemakings which are technologically feasible, economically justified,
and save a significant amount of energy.
Regarding the particular point made by Lennox about the Process
Rule's considerations in assessing economic justification, DOE notes
that in reorganizing the regulatory text, it did not intend to make
substantive changes in this area regarding the analysis of economic
justification criteria, nor did it discuss such action in the NOPR. DOE
maintained the substance of those criteria, but it deleted a clear
statement of the consequences that would flow from situations
implicating those criteria (i.e., deleting language stating ``that
standard level will be presumed not to be economically justified unless
the Department determines that specifically identified expected
benefits of the standard would outweigh this and any other expected
adverse effects''). Although DOE's streamlined version of the
regulatory text was not proposing to change how those criteria are
applied, the Department understands that the absence of the deleted
language could be misinterpreted as indicating a substantive change in
approach. Accordingly, DOE is reinserting the regulatory text language
raised by Lennox in its comments.
In response to ACEEE's suggestion that DOE incorporate regulatory
review requirements from Congress in its proposal, the agency believes
that a detailed and comprehensive recitation of applicable statutory
requirements in the Process Rule is unnecessary. Those statutory
requirements are a given, so instead, DOE endeavored to focus on the
procedures it will follow to meet those requirements. Regarding ACEEE's
suggestion that any general rulemaking timeline envisioned by DOE
should include test procedures as well as standards, DOE believes that
the regulatory text of the Process Rule adequately addresses the topic
of test procedures, and DOE has already made clear the key timing
provision that any test procedure rulemaking is to be completed prior
to publication of a standards NOPR. Consequently, DOE has determined
that no further clarifications are required on these topics.
In sum, DOE has determined that the changes to the Process Rule
adopted in this final rule will provide for a program that is
transparent, predictable, robust, steady, and which meets its statutory
deadlines, just as ASE suggested.
III. Discussion of Specific Revisions to the Process Rule
A. The Process Rule Will Be Binding on the Department of Energy
In the December 2017 RFI, DOE asked stakeholders whether DOE should
make compliance with the Process Rule mandatory. (82 FR 59992, 59997)
At the January 9, 2018, Process Rule public meeting, most stakeholders
agreed that the Process Rule should be binding on the Department, that
is, the Department should be held accountable for complying with its
own procedures so that the public will have confidence in the
transparency and fairness of DOE's regulatory process. Others
recommended that any amended Process Rule retain flexibility for DOE so
that the agency is not restricted in its ability to respond to the
circumstances of each rulemaking and to avoid increased litigation
risk.
Similarly, in response to the NOPR, most commenters support DOE's
inclusion of a provision providing for the mandatory nature of the
Process Rule to the Department to hold DOE accountable to its own
procedures, thereby increasing public confidence in the fairness of the
regulatory process. Those commenters are as follows: AHAM March 21,
2019 Public Meeting Transcript, No. 87, at pp. 68-69; AHRI, March 21,
2019 Public Meeting Transcript, No. 87 at p.10; AGA, March 21, 2019
Public Meeting Transcript, No. 87, at pp. 18-19; AGA, No. 114, at pp.
7-8; ALA, No. 104 at p. 2; APGA, March 21, 2019 Public Meeting
Transcript, No. 87, at p. 14; APGA, No. 106 at p. 3; ASHRAE, No. 109 at
p. 3; BWC, No. 103 at p. 1; CTA, No. 136 at p. 2; Danfoss, March 21,
2019 Public Meeting Transcript, No. 87, at p. 40; GEA, No. 125 at p. 2;
GM Law, No. 105 at pp. 2, 4; GWU, No. 132 at p. 3; Joint Commenters,
No. 112 at p. 2; Lennox, No. 133, at p. 2; Lutron, No. 137 at p. 2;
NPCC, No. 94, at p. 4; NPGA, No. 110 at pp. 1-2; Rheem, No. 101 at p.
1; Southern Company, March 21, 2019 Public Meeting Transcript, No. 87,
at p. 70; Southern Company, April 11, 2019 Public Meeting Transcript,
No. 92, at p.233; Spire, March 21, 2019 Public Meeting Transcript, No.
87, at p. 37; Spire, No. 139, at p. 2; BHI, No. 135, at p. 1; and
Westinghouse, March 21, 2019 Public Meeting Transcript, No. 87, at pp.
72-75; CTA, No. 136 at p. 2) Specifically, APGA added that if DOE
merely makes changes to the ``voluntary'' guidelines, there is no
[[Page 8633]]
change to the status quo in which there are no consequences for not
following the Process Rule. (APGA, No. 106 at p. 3)
Conversely, also in response to the NOPR, other stakeholders oppose
requiring that the Process Rule be mandatory to the Department for
three reasons. First, commenters state that such a provision would
deprive the Department of needed flexibility during the rulemaking
process; second, commenters state that such a provision could lead to
additional litigation, thereby causing delay in the rulemaking process,
and third, commenters state that there may be cases where adherence to
the Process Rule creates a conflict with the statute.
For those commenters concerned that the Department would lose
flexibility during the rulemaking process, some recommended a ``limited
or good cause exception'' that the Department could use in certain
circumstances. For instance, A.O. Smith stated the a ``limited
exception'' clause would grant the Department limited authority to
deviate from its Process Rule under certain criteria such as: Consensus
agreements; negotiated rulemakings; test procedure rulemakings
addressing clarifications necessary to provide clarity to the market,
reduce uncertainty, and provide a level playing field; and rulemakings
completed to fix errors. A.O. Smith recommended that such criteria be
proposed in a supplemental notice of proposed rulemaking. Furthermore,
A.O. Smith explained that this limited exception would not be meant to
circumvent the integrity of the rulemaking process but recognize
circumstances where process deviations are necessary and expediting the
process is reasonable. (A.O. Smith, No. 127, at p. 2)
Another commenter, ASE opposed making the Process Rule binding,
because it would take away DOE's flexibility to respond to unforeseen
developments during the rulemaking process and leave the Department
vulnerable to lawsuits filed by stakeholders opposed to standards based
upon real or perceived departures from procedure. ASE seemed to favor
adoption of a ``good cause'' exception to the Process Rule to provide
the agency with some flexibility. ASE also suggested that DOE consider
documenting any deviations from the Process Rule for public comment
throughout the rulemaking process, particularly but not limited to when
a statutory deadline was set to be missed. (ASE, No. 108 at pp. 2-3)
Furthermore, ASAP, et al. states that making the Process Rule
binding would take away important flexibility that benefits all
stakeholders and increases the potential for litigation. ASAP stated
that at a minimum, it should include a ``good cause'' exception as was
included in DOE's draft NOPR provided to OIRA. However, any ``good
cause exception'' should not be restricted but should provide DOE with
the necessary flexibility to address specific situations that arise.
(ASAP, et al., No. 126 at pp. 1-3) Other commenters, including ACEEE
(ACEEE, No. 123, at p. 3) and CT-DEEP (CT-DEEP, No. 93, at p. 2) agreed
that a ``good cause exception'' should be included in the Process Rule
if it is a mandatory requirement. Earthjustice suggested that if the
Process Rule is going to be binding, there should be a procedure to
deviate from the Process Rule. (Earthjustice, March 21, 2019 Public
Meeting Transcript, No. 87, at p. 76) Westinghouse took the position
that the Process Rule should be mandatory but also that flexibility
should be provided. (Westinghouse, March 21, 2019 Public Meeting
Transcript, No. 87, at pp. 72-75)
Several additional stakeholders voiced their concern that mandatory
application of the Process Rule to the Department will generate
additional litigation, which could create uncertainty in the market.
(A.O. Smith, No. 127, at p. 2; ACEEE, No. 123, at p. 3; ASE, No. 108 at
pp. 2;; ASAP, et al., No. 126 at pp. 1-2; AGs Joint Comment, No. 111 at
pp. 5-6; CEC, April 11, 2019 Public Meeting Transcript, No. 92, at pp.
232-233; CEC, No. 121, at pp. 2-3; Cal-IOUs, No. 124, at pp. 3-4;
Earthjustice, No. 134, at p. 2) Earthjustice believes that a mandatory
Process Rule gives new leverage for parties seeking judicial review.
(Earthjustice, No. 134, at p. 2) Further, Energy Solutions added that
DOE would lose its discretion with mandatory binding requirements and
wouldn't be able to address ``one-off'' issues. (Energy Solutions,
March 21, 2019 Public Meeting Transcript, No. 87, at p. 72)
More specifically, the AGs Joint Comment argued that such
litigation would not only delay completion of the rulemaking process,
but simultaneously. It would frustrate DOE's stated objectives of
increasing predictability and consistency, and likely deprive consumers
and businesses the full and timely benefits of energy and cost savings
associated with standards. (AGs Joint Comment, No. 111 at pp. 5-6)
Another commenter, the CEC states that if DOE continues to move
forward with a binding process rule, it should include provisions that
allow for substantial compliance with the Process Rule. (CEC, April 11,
2019 Public Meeting Transcript, No. 92, at pp. 232-233) In CEC's
opinion, making the Process Rule binding will prevent DOE from
responding quickly and effectively when it is in the interest of all
stakeholders to do so and may make DOE more vulnerable to litigation
challenges. (CEC, No. 121, at p. 2) Pointing to other instances where
DOE needed to make modifications to its processes, the CEC noted that
these changes brought about more effective means for gathering
stakeholder input--e.g. shifting from using an ANOPR to other vehicles
such as RFIs, Framework Documents, and NODAs. (CEC, No. 121, at p. 2)
The CEC emphasized that DOE needs this flexibility to fit the
appropriate process to the appliance standard or test procedure at
issue. (CEC, No. 121, at p. 2) By making the Process Rule binding, the
CEC asserted that DOE would be inviting stakeholders who are opposed to
regulations to sue DOE for procedural violations that would not have
changed the outcome of DOE's determination related to a given
efficiency standard--which will in turn lead to delays in implementing
the standard, lost energy savings to consumers, and regulatory
uncertainty for manufacturers, distributors, and retailers. (CEC, No.
121, at pp. 2-3) To the contrary, the Joint Commenters disagree that
binding DOE to the Process Rule will result in excessive litigation
disrupting the goals of certainty and expediency. Most litigation stems
from substantive defects caused by shortcutting the process and a
binding process will reduce procedural litigation and result in better
rules. (Joint Commenters, No. 112 at p. 2) AHRI also disagrees that a
mandatory Process Rule would result in more litigation. (AHRI, March
21, 2019 Public Meeting Transcript, No. 87 at p. 10)
Next, ASAP, et al., the AG's Joint Comment, and Cal-IOUs raised the
issue as to how to reconcile a mandatory Process Rule and DOE's
adherence to the statutory requirements in EPCA. ASAP, et al. states
that DOE compliance with the statute must take precedence over the
Department's self-imposed restrictions in the Process Rule. (ASAP, et
al., No. 126 at pp. 1-3) ASAP does not believe DOE is clear on how it
would resolve a conflict between the Process Rule and the statute.
(ASAP, March 21, 2019 Public Meeting Transcript, No. 87, at pp. 53, 62-
63) Moreover, the AGs Joint Comment stated strong opposition to making
the Process Rule binding, as opposed to guidance, because that would
preclude DOE from having the procedural flexibility to take a different
course of
[[Page 8634]]
action when necessary to meet statutory requirements, and a rigid
application of the Process Rule would jeopardize DOE's ability to meet
its legal obligations under EPCA. The AGs Joint Comment opposed what it
categorized as unnecessary and time-consuming procedural steps (e.g.,
coverage determination or test procedure restart requirements) that
could further jeopardize DOE meeting its EPCA mandates. The AGs Joint
Comment argued that because DOE's proposal failed to address how the
Process Rule could be made mandatory while meeting its statutory
duties, it has failed to provide sufficient detail to allow for
meaningful and informed comment, as required under the APA. (AGs Joint
Comment, No. 111 at p. 6) The AGs Joint Comment stated that if DOE does
proceed to make the Process Rule binding, it should include a good
cause waiver, particularly for use in cases where the Process Rule
requirements would conflict with the text or purposes of EPCA. (AGs
Joint Comment, No. 111 at p. 7)
The Cal-IOUs argued that the 1996 Process Rule had intended to be
used as guidance and urged that DOE be mindful of this approach with
respect to any new provisions or the ``modernization'' of the Process
Rule, particularly with respect to any conflict between it and EPCA.
(Cal-IOUs, No. 124, at p. 3) Another commenter, PG&E stated that making
the Process Rule mandatory will impose added burdens on DOE and
stakeholders which could prevent DOE from meeting its statutory
obligations. PG&E urged DOE to use its resources to first catch-up on
rulemakings that are past due and finalize pre-publication or consensus
term sheets before introducing new procedures that will limit agency
discretion and create more regulatory burden. (PG&E, March 21, 2019
Public Meeting Transcript, No. 87, at pp. 21-22; PG&E, April 11, 2019
Public Meeting Transcript, No. 92, at p. 228)
DOE has carefully considered all the comments on this matter and
has determined that requiring mandatory compliance on the part of DOE
with its own Process Rule would clearly promote a rulemaking
environment that is both predictable and consistent (i.e., one where
all stakeholders know what to expect during the rulemaking process). In
the past, DOE has been criticized by stakeholders for not following its
Process Rule, and instead exercising its discretion on a case-by-case
basis on procedural matters during the rulemaking process. Today, DOE
is affirming language in the amended Process Rule to make clear that
its provisions are binding on the agency. DOE believes that this
approach will promote confidence, consistency, clarity, and
transparency in the rulemaking process that some feel has been lacking
in the past. Moreover, it has been the rare instance, if at all, where
all parties in a rulemaking proceeding agreed that deviating from the
Process Rule was advisable. Rather, it is DOE's experience that
deviations from normal process has resulted in one or more parties
raising issues that have slowed the regulatory process. Even on
rulemaking matters DOE thought to be relatively simple and straight-
forward, the same parties suggesting in comment that the Process Rule
should provide for flexibility have sought more procedural steps and
raised issues of DOE proceeding too quickly and without appropriate
stakeholder interaction. Making the Process Rule binding on DOE should
result in no party arguing that the process used by DOE was unfair or
lacking. Furthermore, DOE believes that the argument that a binding
Process Rule will generate increased litigation is highly speculative
and, accordingly, is not an appropriate basis to reject the mandatory
application of the amended Process Rule. Clearly, it is in the best
interests of all stakeholders to work together during the rulemaking
process so that DOE efforts to establish economically justified and
technologically feasible energy conservation standards and promote
meaningful burden reduction in the context of standards setting,
compliance, and testing requirements can be achieved. And lastly, the
amended Process Rule has been drafted to closely follow and implement
EPCA. As such, following the Process Rule will mean that DOE will
conduct its rulemaking activities to comply with all EPCA requirements.
After years of debate as to the nature of DOE's compliance with the
current Process Rule, DOE believes it appropriate to increase public
confidence in the fairness and predictability of the rulemaking
process. Accordingly, DOE is adopting language in this final rule
making the application of the Process Rule mandatory to the Department.
B. The Process Rule Will Apply to Both Consumer Products and Commercial
Equipment
By its terms (and specifically by its title), the 1996 Process Rule
applies only to consumer products. However, in practice, DOE has
routinely followed the procedures set forth in the Process Rule when
establishing standards for commercial equipment. In its December 2017
RFI, DOE requested comment as to whether the agency should amend the
Process Rule to clarify that it is equally applicable to the
consideration of standards for commercial equipment. (82 FR 59992,
59996) At the January 9, 2018, Process Rule public meeting, DOE also
asked stakeholders how the agency should treat equipment covered by the
American National Standards Institute (``ANSI'')/American Society of
Heating, Refrigerating, and Air-Conditioning Engineers (``ASHRAE'')/
Illuminating Engineering Society of North America (``IESNA'') Standard
90.1 (``ASHRAE Standard 90.1''), if DOE were to amend the Process Rule
to include commercial equipment. DOE pointed out that EPCA provides a
separate set of procedural requirements and timelines for ASHRAE
equipment that are different than those in the Process Rule. (DOE,
January 9, 2018 Public Meeting Transcript at pp. 183-184)
Commenters agree with the principle that the Process Rule
procedures should explicitly apply to both new and amended energy
conservation standards for both covered consumer products and
industrial and commercial covered equipment, but with modified
provisions specific to ASHRAE equipment. (Acuity, No. 95, at p. 2;
AHRI, March 21, 2019 Public Meeting Transcript, No. 87, at p. 87; ASE,
No. 108 at p. 3; ACEEE, No. 123, at p. 1; AGA, No. 114, at pp. 8-9;
ASAP, March 21, 2019 Public Meeting Transcript, No. 87, at p. 88; ASAP,
et al., No. 126 at pp 1, 3; BWC, No. 103 at p. 1-2; CEC, No. 121, at p.
3; Edison Electric Institute, March 21, 2019 Public Meeting Transcript,
No. 87, at p. 87; GM Law, No. 105 at p. 3; GWU, No. 132 at p. 3; Joint
Commenters, No. 112 at p. 2; Lennox, No. 133, at p. 2; NAFEM, No. 122,
at p. 2; NPCC, No. 94 at p. 4; NPGA, No. 110 at p.1; Cal-IOUs, No. 124,
at p. 4; Rheem, No. 101 at p. 1; Spire, No. 139, at p. 24; BHI, No.
135, at p. 2) Only one commenter, the Cal-IOUs, supported expanding the
scope of the Process Rule to include covered commercial and industrial
equipment as long as the Process Rule is not binding. (Cal-IOUs, No.
124, at p. 4) This commenter did not explain the rationale for its
position.
DOE agrees with commenters that a modernized Process Rule should
apply to both consumer products and industrial and commercial
equipment, and that the Process Rule must contain language that
clarifies this coverage. Historically, DOE has applied the Process Rule
to both consumer and industrial and commercial rulemakings. The final
rule makes clear that this practice will continue. To promote a
[[Page 8635]]
consistent process that reduces the regulatory burden of the rulemaking
process, DOE will apply the same procedures in the Process Rule to both
consumer products and industrial and commercial equipment rulemakings,
except as discussed in section III.C for ASHRAE equipment. The Joint
Commenters clearly articulated the rationale for such a decision as
follows, there are no cogent reasons for treating the rulemaking
process for commercial equipment differently than for consumer
products. The benefits of a well-defined, consistent process apply
regardless of product or equipment type. ASHRAE equipment holds unique
status in EPCA and therefore must be considered separately. (Joint
Commenters, No. 112 at p. 2)
Accordingly, DOE has concluded that formally applying the Process
Rule to commercial and industrial equipment will enhance the
consideration of such equipment by ensuring that there is proper time
and information before the agency prior to promulgation of new or
amended regulations.
C. The Application of the Process Rule to ASHRAE Equipment
In the February 13, 2019 Process Rule NOPR, DOE explained its
proposed approach as to how the agency should treat ASHRAE equipment
subject to ASHRAE Standard 90.1, Energy Standard for Buildings Except
Low-Rise Residential Buildings, in the event DOE were to amend the
Process Rule so as to formally apply to commercial equipment. (84 FR
3910, 3914-3916) As statutory background, EPCA provides, in relevant
part, that ASHRAE equipment is subject to unique statutory requirements
and its own set of timelines. More specifically, pursuant to EPCA's
statutory scheme for covered ASHRAE equipment, DOE is required to
consider amending the existing Federal energy conservation standards
for certain enumerated types of commercial and industrial equipment
(generally, commercial water heaters, commercial packaged boilers,
commercial air-conditioning and heating equipment, and packaged
terminal air conditioners and heat pumps) when ASHRAE Standard 90.1 is
amended with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) For
each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is
amended, DOE must adopt amended energy conservation standards at the
new efficiency level in ASHRAE Standard 90.1 as the uniform national
standard for such equipment, unless DOE determines by rule, and
supported by clear and convincing evidence, that a more-stringent
standard would result in significant additional conservation of energy
and is technologically feasible and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)(I)-(II)); 84 FR 3910, 3914 (Feb. 13, 2019)
The Process Rule NOPR examined numerous topics, including the need
to address ASHRAE equipment explicitly in the Process Rule, the level
of deference to be accorded to ASHRAE (and the openness of that
process), the ``clear and convincing evidence'' standard for
establishing standard levels more stringent than those adopted in
ASHRAE Standard 90.1, and DOE's interpretation of EPCA's ASHRAE trigger
provisions (and related implementation). In response to the NOPR,
several stakeholders expressed their views as to how DOE should handle
ASHRAE equipment, including concerns regarding each of the topics
raised in the NOPR. Each of these matters will be addressed in the
paragraphs that follow, including public comments received and DOE's
responses.
The Need for ASHRAE Equipment To Be Addressed Separately
In the Process Rule NOPR, DOE stated that it tentatively determined
that the amended Process Rule will contain a new section that clearly
delineates the procedure DOE will follow for evaluating amendments to
ASHRAE Standard 90.1 and conducting related rulemakings. DOE noted that
it would first reiterate its statutory obligations for ASHRAE equipment
in this new section of the Process Rule. In the event that DOE
determines that it is appropriate to conduct a rulemaking seeking to
adopt standards for ASHRAE equipment more stringent than those in
ASHRAE Standard 90.1, all of the Process Rule requirements would apply.
However, for the typical situation wherein DOE is adopting the ASHRAE
Standard 90.1 level(s), DOE would follow the EPCA statutory
requirements rather than the Process Rule requirements. (84 FR 3910,
3915 (Feb. 13, 2019))
Many commenters supported (or did not object to) DOE's proposal to
have the Process Rule separately and specifically address ASHRAE
equipment. (AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at
pp. 10, 95; Spire, March 21, 2019 Public Meeting Transcript, No. 87 at
pp. 100-101; Rheem, No. 101 at p. 1; NRDC, No. 131 at pp. 14-15; Spire,
No. 139 at p. 5; BHI, No. 135 at p. 2) For example, ASHRAE expressed
support for the clarification in DOE's proposal regarding the extent to
which it would rely on ASHRAE Standard 90.1, an outcome which the
commenter suggested would achieve the clear statutory intent of EPCA
and would result in a less costly and burdensome rulemaking process.
(ASHRAE, April 11, 2019 Public Meeting Transcript, No. 92 at pp. 224,
226) The CEC also supported the inclusion of a means to facilitate the
adoption of ASHRAE 90.1 levels for commercial equipment. (CEC, No. 121
at p. 3) Similarly, the AGA expressed support for the Process Rule
NOPR's proposal that in the event that DOE conducts a rulemaking to
establish more-stringent standards for covered ASHRAE equipment, DOE
would follow the procedures established in the Process Rule, while
still complying with EPCA's ASHRAE-specific deadlines. AGA also agreed
with the Department's proposal in the NOPR to add a section into the
Process Rule to clearly define the process used to adopt ASHRAE 90.1
equipment standards and also define a mechanism when a more-stringent
equipment efficiency standard over the ASHRAE level can be pursued.
(AGA, No. 114 at p. 10) The Joint Commenters also supported the
Department's proposed approach to rulemakings for ASHRAE equipment,
agreeing that the Process Rule should apply to commercial equipment
covered by ASHRAE 90.1 standards only in the case where standards
rulemakings for ASHRAE equipment are prompted by a six-year review or
where DOE proposes standard levels more stringent than those in ASHRAE
Standard 90.1. (Joint Commenters, No. 112 at p. 2)
ASHRAE expressed support for DOE's inclusion of a new section in
its proposed Process Rule that clearly delineates the procedure DOE
will follow for evaluating amendments to ASHRAE Standard 90.1 and
conducting related rulemakings with respect to equipment covered by
ASHRAE Standard 90.1. ASHRAE lauded DOE's decision to follow EPCA's
mandate and adopt the revised ASHRAE levels, except in very limited
circumstances. It also agreed with DOE's assessment that adopting the
amended ASHRAE Standard 90.1 levels as its regular practice will result
in reduced regulatory burden on stakeholders and will promote
consistency and simplicity when DOE is addressing ASHRAE equipment.
(ASHRAE, No. 109 at pp. 2-3)
However, several parties sought clarification as to how DOE's
proposal would alter the agency's historical treatment of ASHRAE
equipment and expressed concern that the Department would deviate from
the relevant statutory requirements. For example, Danfoss argued that
the Process Rule
[[Page 8636]]
should not apply to ASHRAE equipment when DOE is adopting the standard
levels in Standard 90.1 because the ASHRAE process already has
requirements for fairness and transparency, but if DOE should decide
that a more-stringent standard is warranted, then the Process Rule
should apply. (Danfoss, March 21, 2019 Public Meeting Transcript, No.
87 at p. 40)
Lennox stated that the Process Rule should apply to commercial
equipment except when it would conflict with special statutory
provisions specific to commercial equipment rulemaking, such as
provisions for adopting ASHRAE 90.1 industry standards. Although it
found section 2 of the proposed Process Rule to be generally consistent
with this principle, Lennox nonetheless urged DOE to clarify this
point. For commercial equipment covered by ASHRAE Standard 90.1, Lennox
noted that DOE must adopt the industry standard unless ``clear and
convincing evidence'' dictates otherwise (i.e., by supporting more-
stringent standards). If DOE simply adopts ASHRAE 90.1 standards,
Lennox stated that the additional provisions in the Process Rule are
not necessary. However, Lennox suggested that additional Process Rule
processes and transparency enhancements may apply to commercial
equipment covered by ASHRAE 90.1 standards where: (1) Energy
conservation standard rulemakings for such ASHRAE products are prompted
by a six-year review or (2) DOE proposes standard levels over-and-above
those in ASHRAE 90.1, albeit in either case subject to the ``clear and
convincing evidence'' standard. Again, Lennox stated that although this
structure is consistent with section 9 of the proposed Process Rule and
DOE should clarify this in the final rule preamble. For instance,
Lennox stated that in the ``very limited circumstances'' when DOE seeks
to go beyond standards established by ASHRAE 90.1 for equipment covered
by those standards, relevant Process Rule provisions may include many
of those in Process Rule section 1 (Objectives) and sections 6 and 7
(which provide details on selecting standards, albeit these would apply
only in those ``very limited circumstances'' when DOE considers going
beyond ASHRAE standards and would be subject to the ``clear and
convincing evidence'' standard). Lennox also argued for the potential
continued applicability of section 8 (e.g., finalizing a test procedure
in advance of considering any amended energy conservation standard),
sections 10 and 11 (on DFRs and negotiated rulemakings), and sections
13 to 17 (on engineering analyses, assessment of impacts on
manufacturers and consumers, considering non-regulatory approaches, and
cross-cutting analytical assumptions, all again subject to the ``clear
and convincing evidence'' standard). Because of the potentially broader
applicability of other Process Rule provisions beyond the ASHRAE-
specific section 9, the Process Rule should include a clause whereby,
or otherwise clarify, the Process Rule applies to ASHRAE equipment: (1)
Except when doing so would conflict with the ASHRAE-specific provisions
and (2) in the two limited circumstances mentioned above when DOE might
go beyond ASHRAE-specified levels for ASHRAE products (albeit subject
to the ``clear and convincing evidence'' standard). (Lennox, No. 133 at
p. 3)
Bosch stated that the DOE proposal to adopt the revised ASHRAE
levels for standards as its regular practice, except in limited
circumstances, represents a significant change to the current
rulemaking process, as DOE would be deferring a considerable portion of
its rulemaking work to a non-governmental organization. Instead, Bosch
countered that DOE has a clear and statutory obligation to conduct a
full and sufficient evaluation of proposed ASHRAE amendments and not to
simply defer to a separate industry standards organization. The
commenter argued that instead of reducing regulatory burden, DOE's
proposal to defer to ASHRAE would create new burdens for manufacturers
by requiring companies to devote significant time and resources to
engaging in the ASHRAE process. Also, Bosch stated that the proposal
does not adequately address whether the levels set through the ASHRAE
standards-setting process are sufficient or are updated within an
appropriate period of time, unlike the six-year EPCA look-back review,
thereby hindering regulatory certainty. Based upon the foregoing
reasoning, Bosch requested that DOE reconsider this portion of its
proposal. (Bosch, No. 113 at pp. 3-4) Along these same lines, the CA
IOUs indicated that DOE's proposal with respect to deferring to
industry standards--such as those promulgated by ASHRAE--would have the
effect of the agency ignoring its statutory mandate to critically
assess whether a given test procedure requires amending. (CA IOUs, No.
124 at p. 5) The AGs Joint Comment similarly argued that DOE's proposed
modifications to its approach to regulating ASHRAE equipment amounts to
an abdication of its duties to assess Standard 90.1 and engage in
related rulemaking. (AGs Joint Comment, No. 111 at p. 12)
In contrast, the Joint Commenters expressed strong support for the
expectation that DOE would adopt revised ASHRAE levels except in ``very
limited circumstances,'' because they argued that historically, when
DOE has exceeded the ASHRAE proposed levels, it has imposed
disproportionate harm on industry segments in pursuit of
inconsequential energy efficiency benefits. (Joint Commenters, No. 112
at p. 2)
Ingersoll Rand stated that it supports alignment of overlapping
product energy efficiency requirements between ASHRAE Standard 90.1 and
DOE appliance standards, in terms of both stringency and effective
dates. However, Ingersoll Rand acknowledged that EPCA grants DOE some
limited discretion when considering amending appliance standards under
42 U.S.C. 6313(a)(6)(A). Consequently, the commenter agreed with the
Department's proposal that if standards established under ASHRAE
Standard 90.1 are adopted by DOE, the rulemaking does not need to
follow the Process Rule, but if the Department analyzes whether there
is clear and convincing evidence to justify more-stringent standards,
such rulemaking would need to abide by the Process Rule. However,
Ingersoll Rand disagreed with the Department's interpretation that
ASHRAE not acting to amend the energy efficiency requirements for DOE-
covered products is tantamount to a decision that the existing
standards remain in place. Ingersoll Rand stated that in this scenario,
DOE has proposed to hold revisions to appliance standards under 42
U.S.C. 6313(a)(6)(C) to the same ``very high bar'' as if ASHRAE had
revised the energy efficiency standards for these products in Standard
90.1. The commenter stated the while it expects ASHRAE to update these
standards when it is economically justified and technologically
feasible to do so, it is also conceivable that this process could be
delayed for procedural reasons, given the nature of the ASHRAE
consensus-based standards process. If the review of these standards is
triggered by the 6-year-lookback provision at 42 U.S.C.
6313(a)(6)(C)(i), Ingersoll Rand encouraged DOE to consider standards
for the appropriate equipment as it would any other standard under the
Process Rule. Ingersoll Rand reasoned that such approach would ensure
that any new appliance standards remain technologically feasible and
economically justified per DOE's analysis (and including any ASHRAE
analysis), without further delaying the
[[Page 8637]]
appropriate updates to these standards. (Ingersoll Rand, No. 118 at p.
2)
Other commenters were more skeptical of DOE's proposed approach to
ASHRAE equipment in the Process Rule NOPR and raised a number of
concerns. ACEEE commented that applying the full Process Rule to ASHRAE
products is not workable. According to ACEEE, DOE's proposal states
that all of the Process Rule requirements would apply to a decision to
go beyond ASHRAE levels, but it does not explain how an analysis and
public comment period on the ASHRAE levels followed by early
assessment, framework, full analysis, draft rule, and final rule,
including three additional public comment periods, would all be
accomplished within the statutory limit of 30 months (i.e., the
statutory time limit for adopting more-stringent standards). ACEEE
argued that ``the law (i.e., EPCA) recognizes that substantial analysis
and public input occur in the ASHRAE process, and the procedure for
setting modified requirements should reflect that.'' (ACEEE, No. 123 at
p. 2) The CA IOUs contended that EPCA prescribed a specific set of
conditions for DOE to follow with regard to setting standards for
ASHRAE equipment and commented that DOE is required to follow EPCA. (CA
IOUs, No. 124 at p. 4-5)
Finally, ASAP sought clarification as to whether ASHRAE equipment
would be subject to the early assessment process under the proposed
Process Rule. (ASAP, April 11, 2019 Public Meeting Transcript, No. 92
at p. 196)
In response, DOE recognizes its specific obligations under EPCA
vis-[agrave]-vis ASHRAE equipment and makes clear that it is
continually striving to meet those obligations. And, the Department
must have a process for doing so. As with other commercial equipment,
DOE has applied the Process Rule to ASHRAE equipment to the extent
permitted by statute, even though 10 CFR part 430, subpart C, Appendix
A technically applies to ``consumer products.'' DOE has found the
principles embodied in the Process Rule to be beneficial to both
stakeholders and the agency, without distinction as to whether a
consumer product or commercial/industrial equipment is at issue. After
considering public comments, in this final rule, DOE has decided to
make its existing practice more clear and transparent by explicitly
addressing the applicability of the Process Rule to ASHRAE equipment
and incorporating the key statutory timelines, as well as to clarify
how DOE will conduct rulemakings for ASHRAE equipment. To the extent
DOE can articulate a clear and rational process for implementing
related statutory requirements, the agency anticipates that it would
improve consistency across its ASHRAE rulemakings, thereby reducing
burdens on manufacturers of such equipment and increasing benefits to
consumers.
DOE also seeks to make clear that different procedures and
timelines apply under EPCA, depending upon whether the Department is
adopting the levels contained in ASHRAE Standard 90.1 or more-stringent
standards. When ASHRAE 90.1 is amended with respect to the standard
level or design requirements applicable under that standard to specific
products enumerated in EPCA, DOE is ``triggered'' to adopt those
measures as the uniform national standard (unless DOE finds clear and
convincing evidence that adoption of more stringent levels for the
product would result in significant additional energy savings and is
technologically feasible and economically justified). When DOE
determines to adopt the levels in ASHRAE Standard 90.1 as uniform
national standards, it will generally follow the specific procedures
and timelines set forth in the statute (i.e., a truncated process under
EPCA which directs DOE to adopt ASHRAE's consensus standards within 18
months). The other Process Rule procedures are generally not applicable
to that specific case and will not be required. However, where DOE
finds clear and convincing evidence to support more-stringent standards
(as required either under EPCA's ASHRAE ``trigger'' or 6-year-lookback
provisions), the statute's analytical requirements and longer 30-month
timeline are more akin to DOE's typical rulemaking process, so DOE
believes it appropriate to apply the Process Rule in such cases. DOE
has made a clarification to this effect in the Process Rule's
regulatory text (see sections 2 and 9).
Specifically in response to ASAP, DOE would not apply the early
assessment process to ASHRAE trigger rulemakings because DOE must
undertake such rulemaking pursuant to 42 U.S.C. 6313(a)(6)(A), so the
early assessment's inquiry as to whether a rulemaking is necessary
would not be relevant. Under the statutory process for ASHRAE, DOE is
obligated to publish a NODA presenting potential energy savings from
the ASHRAE action. DOE plans to use that vehicle to perform the early
assessment for ASHRAE regarding whether there is potentially clear and
convincing evidence to adopt a more stringent standard. In addition,
DOE will conduct an early assessment for rulemakings for ASHRAE
equipment that are initiated pursuant to the 6-year-lookback under 42
U.S.C. 6313(a)(6)(C), because in such cases, DOE is not statutorily
obligated to adopt a level set by ASHRAE and may ultimately determine
that no new standard is warranted.
DOE disputes ACEEE's assertion that applying the Process Rule to
rulemakings that go beyond ASHRAE Standard 90.1 levels is unworkable,
because DOE has been successfully applying most of those provisions to
its ASHRAE rulemakings already. The only new step DOE has added to the
rulemaking process through its revised Process Rule is the ``early
assessment'' (applicable only to ASHRAE 6-year-lookback rulemakings,
not ASHRAE ``trigger'' rulemakings). DOE sees no reason why through
sound management principles and proper scheduling that it cannot
satisfy the applicable provisions of the Process Rule while meeting
relevant statutory deadlines. In contrast to ACEEE's view, DOE
envisions this final rule's process improvements as increasing the
opportunity for public input and strengthening rulemaking analyses.
DOE is not deferring its statutory duties for standard setting to
an outside organization (i.e., ASHRAE) through these Process Rule
amendments. The Department is committed to undertaking the necessary
review, consistent with the EPCA timelines, to determine whether more-
stringent standards are appropriate, both under its ASHRAE trigger and
6-year-lookback authority, as it always has. DOE is making clear that
in doing so, it must meet the statutory requirement that the more-
stringent standard level be supported by clear and convincing evidence.
EPCA's statutory structure demonstrates a strong Congressional
preference for adoption of ASHRAE levels, except in extraordinary cases
where a high evidentiary hurdle has been surmounted. In this way,
Congress sought to ensure that more-stringent standards have
objectively recognized benefits that unquestionably justify their
costs. DOE simply intends for the Process Rule to reflect these
statutory requirements, not deviate from them or inappropriately shift
responsibility to ASHRAE. Consequently, DOE will continue to perform
all necessary review and analyses consistent with its statutory
obligations, and stakeholders should not incur any additional
responsibilities in terms of either the DOE rulemaking or participation
in the ASHRAE Standard 90.1 process.
[[Page 8638]]
Openness of/Deference to the ASHRAE Standards Development Process
In the Process Rule NOPR, the Department explained its tentative
decision that going forward, DOE would anticipate adopting the revised
ASHRAE levels as contemplated by EPCA, except in very limited
circumstances. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) DOE reasoned that its
commitment to adopting the amended ASHRAE Standard 90.1 levels as its
regular practice would result in reducing the regulatory burden on
stakeholders and would promote consistency and simplicity when
addressing ASHRAE equipment. 84 FR 3910, 3915 (Feb. 13, 2019).
There was considerable difference of opinion as to the openness of
the ASHRAE standards development process expressed by stakeholders both
at the March 21, 2019 public meeting and in written comments on the
Process Rule NOPR. At the March 21, 2019 public meeting, various
stakeholders debated the level of access to participation in the ASHRAE
process. (March 21, 2019 Public Meeting Transcript, No. 87 at pp. 99-
108) Some commenters suggested that despite the technical expertise of
ASHRAE Standard 90.1 committees, there are barriers to participation in
that process in terms of time and money, which stand in contrast to the
DOE regulatory process. For example, NEEA argued that although it does
like certain aspects of the ASHRAE process, on balance, it has not
found the ASHRAE process to be a viable pathway for bringing forth
innovative proposals, as they are frequently blocked in committees. In
contrast, NEEA believes that DOE has an open process which allows all
interested stakeholders to make a meaningful contribution.
Consequently, NEEA encouraged DOE to consider alternative processes
when seeking to regulate ASHRAE equipment. (Northwest Energy Efficiency
Alliance, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 105-
106)
Such commenters suggested that while the ASHRAE process may appear
to be open, the commenter expressed its view that the deck is often
stacked against their meaningful participation. Along these lines, PG&E
disagreed with DOE's proposed approach, asserting that ASHRAE is
dominated by the manufacturers that will benefit by test procedures
made by that organization. (PG&E, March 21, 2019 Public Meeting
Transcript, No. 87 at p. 93) The CA IOUs indicated that ASHRAE
decisions are based on a simple majority vote and that industry
representative members are typically the most vocal and have the most
influence over whatever test procedures (or standards) are ultimately
adopted by ASHRAE. (CA IOUs, No. 124 at p. 5) PG&E added that ASHRAE
``enforcement'' requirements are less rigorous than DOE enforcement
requirements in terms of the tolerances put around the requirements in
an ASHRAE test procedure versus a DOE test procedure. (PG&E, March 21,
2019 Public Meeting Transcript, No. 87 at pp. 93-94)
Energy Solutions stated that when there is an open ASHRAE Standard
90.1 process or when there is an opportunity for public review of
related documents, DOE should notify stakeholders of the Appliance
Standards Program so that interested parties will be better aware of
such activities. (Energy Solutions, March 21, 2019 Public Meeting
Transcript, No. 87 at p. 105)
Other stakeholders offered a vigorous defense of the openness,
fairness, and transparency of the ASHRAE process. ASHRAE itself stated
that it stands behind its standards development process and believes
that the results generated by this process are robust. According to
ASHRAE, all proposed changes to ASHRAE Standard 90.1 are open for
public review, which allows interested parties to provide input into
development of the standard and reach consensus, thereby ensuring
publication of a document that has been rigorously examined,
questioned, and defended. The organization defended its consensus
process as ensuring buy-in and reflecting input from energy advocates,
building owners, design professionals, utilities, manufacturers, and
representatives from DOE, and other materially-affected and interested
parties. ASHRAE refuted the criticism that DOE's use of privately-
developed consensus standards such as ASHRAE's relies too heavily on
industry, which may create potential conflicts of interest. With
respect to this criticism, ASHRAE emphasized that one does not need to
be an ASHRAE member to participate in the ASHRAE standards development
process. In addition, the organization argued that the 47 voting
members on the Standing Standards Project Committee (SSPC) 90.1 have
broad representation, and of the 19 industry voting members, only nine
come from industries that have a material interest in equipment covered
by potential DOE regulations. (ASHRAE, No. 109 at pp. 2-3)
ASHRAE further pointed out that the National Technology Transfer
and Advancement Act of 1995 (Pub. L. 104-113) has directed Federal
agencies to adopt voluntary industry consensus standards unless
inconsistent with the law or impracticable. According to ASHRAE, since
1998, the Executive Office of the President has supported this statute
through issuing and re-issuing Office of Management and Budget (OMB)
Circular A-119, which mandates that administrative agencies rely on
consensus standards. ASHRAE concluded that EPCA and DOE's proposal are
consistent with these directives. (ASHRAE, No. 109 at p. 3)
BWC expressed support for DOE's adoption of revised standard levels
set by ASHRAE, as that organization is a consensus body that permits a
variety of stakeholders to participate. (BWC, No. 103 at p. 2)
Similarly, BHI expressed support for the Department's approach to
rulemakings for ASHRAE Standard 90.1 equipment, as consistent with the
statutory requirements of 42 U.S.C. 6313. BHI also recommended adding a
clear statement to the Process Rule indicating that a DOE
representative will attend all ASHRAE 90.1 committee meetings to: (1)
Avoid unnecessary delays in publishing the analysis of the potential
energy savings of the amended energy conservation standard, or (2)
advocate for a more-stringent standard when the Department has clear
and convincing evidence of significant additional conservation of
energy that is technically feasible and technologically justified, or
(3) avoid delays in publishing a no-new-standard notification if ASHRAE
90.1 is not amended. (BHI, No. 135 at p. 2)
AGA stated that national codes and standards activities conducted
by organizations such as ASHRAE and the International Code Council,
among others, are very important to the natural gas industry. In recent
history, the commenter pointed out that DOE has become more involved in
these non-governmental organizations, such as by participating in
standards and code body proceedings as advocates of requirements and
generally becoming more active in these types of organizations.
Although AGA acknowledged that DOE's governing statute permits the
Department to be involved in such organizations, it argued that such
participation should be limited to the presentation of peer-reviewed
research/analysis and the review of codes. For example, it is
appropriate for DOE to evaluate and analyze codes, such as when the
International Energy Conservation Code issues codes to improve energy
efficiency in buildings, but such evaluations and related
determinations may appear less than arm's length if the Department has
had a role in creating the codes. In other words, AGA argued
[[Page 8639]]
that to maintain the independent nature of DOE's reviews of non-
governmental codes and standards, it would be prudent for the
Department to step back and not be intimately involved in the creation
of codes and standards that it may be called on to evaluate. (AGA, No.
114 at p. 31)
As these comments reflect, commenters on DOE's Process Rule NOPR
offered a variety of opinions about the ASHRAE Standard 90.1 review
committee process. Although the technical expertise of the committee
members was generally not questioned, there was considerable debate as
to the openness, fairness, and transparency of the ASHRAE process.
However, it is not DOE's place to judge that process, because in EPCA
(see 42 U.S.C. 6313(a)(6)(A)), Congress clearly and explicitly assigned
ASHRAE a role in that regulatory regime, as discussed previously.
Consequently, DOE does not have authority to alter ASHRAE's statutory
role, but instead must follow the relevant statutory requirements, as
reflected in the Process Rule.
Specifically, under the statute, DOE must adopt the standard levels
in ASHRAE Standard 90.1, unless DOE finds clear and convincing evidence
that adoption of more stringent levels for the equipment would result
in significant additional energy savings and is technologically
feasible and economically justified. (42 U.S.C. 6313(a)(6)(A) and
(C)(i)) Similarly, DOE must adopt the test procedures for ASHRAE
equipment specified in ASHRAE Standard 90.1, and DOE must update those
test procedures each time the ASHRAE test procedures are amended,
unless DOE has clear and convincing evidence to show that such test
procedure amendments are not reasonably designed to produce test
results which reflect energy efficiency, energy use, and estimated
operating costs of a type of industrial equipment (or class thereof)
during a representative average use cycle (as determined by the
Secretary) or are unduly burdensome to conduct. (42 U.S.C. 6314(a)(2)-
(4)) DOE notes that the statutory scheme, which directs DOE to adopt
ASHRAE technical standards and test procedures unless further EPCA
provisions command otherwise, comports with the requirements of the
National Technology Transfer and Advancement Act of 1995 and OMB
Circular A-119.
DOE understands Energy Solutions' desire for stakeholders of the
Appliance Standards Program to be made aware of open ASHRAE Standard
90.1 matters or when there is an opportunity for public review of
related documents, in order to more effectively participate in
standard-setting for the ASHRAE equipment subject to DOE regulation.
Although DOE participates in the ASHRAE committee process, it does not
control that process and may not always be aware of the complete or up
to date relevant information, so DOE does not find it feasible to
assume responsibility for the messaging role suggested by Energy
Solutions. However, DOE notes that ASHRAE's website offers interested
parties the opportunity to subscribe to listservers to be automatically
notified via email when activities and information related to various
project committees are available. (Available at: https://www.ashrae.org/technical-resources/standards-and-guidelines/options-to-stay-current.) DOE believes that the availability of such listservers
provides the notice of ongoing ASHRAE activities sought by Energy
Solutions in its comment.
DOE agrees with AGA's cautionary statement that the Department must
be careful to remain impartial in terms of its role in the ASHRAE
committee process, particularly since DOE is statutorily obligated to
adopt ASHRAE standards and test procedures, unless they fail to meet
other applicable statutory requirements. DOE may serve a neutral role
in ASHRAE proceedings (e.g., analyzing or evaluating--but not
creating--drafts of ASHRAE standards and test procedures, advising
committee members as to the requirements and limitations imposed by
EPCA), and will not inappropriately direct or coerce an outcome.
Finally, in response to BHI and as noted in the preceding
paragraphs, DOE participates in the standards review process of the
ASHRAE Standard 90.1 Committee. Although not required by the statute,
such participation helps inform DOE's ASHRAE-related rulemakings for
both standards and test procedures. As a result of its participation,
the Department does not see a need to formally include such provisions
in the Process Rule or to prescribe the appropriate participation of
the DOE representative.
The ``Clear and Convincing Evidence'' Standard for ASHRAE Equipment
The Process Rule NOPR also tentatively took the position that for
DOE to utilize its statutory authority to establish more-stringent
standards than the amendments to ASHRAE Standard 90.1 pursuant to 42
U.S.C. 6313(a)(6)(A)(ii)(II), DOE will be required to meet a very high
bar to demonstrate the ``clear and convincing evidence'' threshold that
is articulated in that subsection. The NOPR stated that when evaluating
whether it can proceed with a rulemaking to potentially establish more-
stringent standards from those adopted by ASHRAE, DOE will seek, from
interested parties and the public, data and information to assist in
making that determination, prior to publishing a proposed rule to adopt
more-stringent standards. DOE's proposal further stated that ``clear
and convincing evidence'' would exist only if: Given the circumstances,
facts, and data that exist for a particular ASHRAE amendment, DOE
determines there is no substantial doubt that the more-stringent
standard would result in a significant additional conservation of
energy and is technologically feasible and economically justified. In
the Process Rule NOPR, DOE stated that this high bar would mean that
only in extraordinary circumstances would DOE conduct a rulemaking to
establish more-stringent standards for covered ASHRAE equipment. 84 FR
3910, 3915 (Feb. 13, 2019).
Although the ``clear and convincing evidence'' requirement is
explicitly set forth in the statute, DOE's proposal in the Process Rule
NOPR to clarify that evidentiary standard drew considerable discussion
and debate. A number of commenters welcomed the clarification regarding
what some had viewed as an opaque process with no indication that a
higher evidentiary standard had been met. Other commenters were
concerned about DOE's proposed clarifications regarding ``clear and
convincing evidence'' and seemed to prefer the Department's prior
approach of simply assessing the evidentiary basis for amended
standards more stringent than the levels in ASHRAE Standard 90.1 on a
case-by-case basis. Still other commenters posed follow-up questions to
try to better understand how a ``clear and convincing evidence''
standard would be applied in this context. These comments are
summarized and addressed in the following paragraphs.
As noted, a number of commenters supported the Process Rule NOPR's
proposed clarification of the ``clear and convincing evidence''
standard in the context of DOE's rulemaking process for ASHRAE
equipment. (AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at
p. 12; Joint Commenters, No. 112 at pp. 2-3; NAFEM, No. 122 at p. 2;
AGA, No. 114 at p. 10; ASHRAE, No. 109 at pp. 2-3) On this topic, AHRI
stated that it agrees that a formal declaration of what ``clear and
convincing evidence'' means and how it will be implemented increases
certainty by increasing transparency and reflects the congressional
intent expressed through EPCA. (AHRI, March 21, 2019 Public Meeting
Transcript, No. 87 at p. 12)
[[Page 8640]]
Similarly, ASHRAE expressed appreciation for DOE's position that it
would only consider standards more stringent than the ASHRAE levels if
such standards can meet a very high bar to demonstrate the ``clear and
convincing'' evidence threshold mandated by EPCA. (ASHRAE, No. 109 at
pp. 2-3) The AGA commented that the proposal makes it clear that DOE
will adopt the action taken by ASHRAE except in those circumstances
where the Department, pursuant to a defined process and parameters,
determines a more-stringent standard is appropriate. (AGA, No. 114 at
p. 10)
The Joint Commenters and NAFEM concurred with the definition of
``clear and convincing evidence'' proposed by DOE with one minor edit,
suggesting to add the word ``specific'' before ``circumstances, facts,
and data.'' NAFEM sought this addition to clarify that DOE cannot make
a determination on its general understanding, but instead must base its
determination upon specific information related to the equipment class
standards subject to ASHRAE revision. In seeking to justify more
stringent standards than the ASHRAE level, the Joint Commenters
expressed a similar rationale in support of an evidentiary standard
that requires demonstration of specific facts and evidence to support a
higher standard or that an industry consensus test procedure is
demonstrably unreasonable. (Joint Commenters, No. 112 at pp. 2-3;
NAFEM, No. 122 at p. 2)
Although Spire agreed with the direction of DOE's approach, it
suggested taking matters a step further. Rather than envisioning the
possibility that ASHRAE Standard 90.1 levels and more-stringent DOE
levels could each save a significant additional amount of energy and be
technologically feasible and economically justified, Spire argued that
the statute's use of a ``clear and convincing'' standard should be
interpreted as a presumption that the industry consensus standards are
going to be adequate, unless there is clear evidence that they are not,
at which point such presumption is rebutted. (Spire, March 21, 2019
Public Meeting Transcript, No. 87 at pp. 114-115) In its written
comments, Spire reiterated its point by suggesting that DOE's approach
to application of the ``clear and convincing'' standard should be
modified to clarify that DOE would only go beyond the ASHRAE Standard
90.1 levels when DOE determines (supported by clear and convincing
evidence) that ``only'' a more-stringent standard would result in
significant additional conservation of energy and is technologically
feasible and economically justified. (Spire, No. 139, at p. 19)
In contrast to these viewpoints, another group of commenters
disfavored DOE's proposed approach to applying the ``clear and
convincing evidence'' standard in the ASHRAE context. A number of
commenters challenged DOE's attempted clarification as a legal matter,
characterizing it as an improper reinterpretation of the relevant
statutory provision. For example, Earthjustice faulted DOE's Process
Rule NOPR for assert[ing]--without substantiation--that the `clear and
convincing evidence' threshold is only met when `there is no
substantial doubt that the more stringent standard would result in a
significant additional conservation of energy, is technologically
feasible and economically justified.' 84 FR 3915. According to
Earthjustice, the cited DOE language is a legal interpretation for the
statutory requirement for ``clear and convincing evidence,'' but the
NOPR is devoid of any statutory or case law authority supporting the
proposition that evidence is only ``clear and convincing'' when it
leaves ``no substantial doubt.'' The commenter argued that the NOPR's
failure to provide a clear foundation (e.g., discussing how the term
``clear and convincing'' has been interpreted in other contexts)
deprives stakeholders a meaningful opportunity to comment on the
claimed equivalency. For example, Earthjustice referenced a U.S. Court
of Appeal for the District of Columbia Circuit case finding ``[t]he
clear and convincing standard `generally requires the trier of fact, in
viewing each party's pile of evidence, to reach a firm conviction of
the truth on the evidence about which he or she is certain.''' Parsi v.
Daioleslam, 778 F.3d 116, 131 (DC Cir. 2015) (quoting United States v.
Montague, 40 F.3d 1251, 1255 (DC Cir. 1994)). The commenter questioned
whether one could arrive at a ``firm conviction'' while recognizing the
existence of ``substantial doubt.'' Earthjustice argued that the
Process Rule NOPR does not answer that question and leaves stakeholders
uncertain as to the extent to which the proposed amendments to the
Process Rule comply with EPCA. (Earthjustice, No. 134 at p. 2;
Earthjustice, March 21, 2019 Public Meeting Transcript, No. 87 at pp.
125-126)
The AGs Joint Comment also questioned DOE's effort in the NOPR to
clarify what would constitute ``clear and convincing evidence,'' as
would justify the adoption of more-stringent standards than those set
forth in ASHRAE Standard 90.1. Specifically, in the NOPR DOE tried to
clarify the matter by suggesting that there would be ``no substantial
doubt'' on the part of the decision-maker that such standards are
warranted. However, the AGs Joint Comment argued that such description
is either the same as the statutory ``clear and convincing evidence''
standard (in which case it is purposeless and arbitrary) or more
restrictive (in which case it would be contrary to EPCA and improperly
cede authority to ASHRAE). (AGs Joint Comment, No. 111 at p. 13) On
this same point, NRDC stated that in its assessment, DOE's statements
about ``no substantial doubt'' and going beyond ASHRAE ``only in
extraordinary circumstances'' appear to be more narrow and restrictive
than Congress's intent. The commenter stated that it does not find
DOE's attempts to define ``clean and convincing'' to be either
necessary or helpful. NRDC also argued that DOE has failed to disclose
where it got this definition and on which legal authorities it is
relying, thereby frustrating the public's ability to meaningfully
comment on the proposal. (NRDC, No. 131 at pp. 14-15) NRDC reminded DOE
that it does not have the power to redefine ``clear and convincing'' so
as to make it something closer to a ``beyond a reasonable doubt''
standard. (NRDC, March 21, 2019 Public Meeting Transcript, No. 87 at p.
121)
The CEC also opposed DOE's attempt to clarify the ``clear and
convincing'' standard when pursuing standards more stringent than those
contained in ASHRAE Standard 90.1. In the CEC's view, the ``clear and
convincing'' standard has already been defined by case law, so further
regulatory clarification is irrelevant. The CEC also argued that
raising the evidentiary level to meet this standard--as it alleged that
DOE has attempted to do--would leave significant, cost-effective, and
technologically feasible energy savings on the table at a time when
manufacturers are already redesigning equipment to meet ASHRAE 90.1.
(CEC, No. 121 at p. 3)
The CA IOUs claimed that DOE's proposal to interpret the phrase
``clear and convincing'' to mean ``no substantial doubt'' ignores
historical context for standard and test procedure improvements to the
detriment of consumers. (CA IOUs, No. 124 at p. 4) The CA IOUs cited
the 2016 commercial unitary air conditioners (CUAC) direct final rule
\10\ (DFR) as an example of how DOE properly applied the clear and
convincing threshold previously. (CA IOUs, No. 124 at pp. 4-5)
---------------------------------------------------------------------------
\10\ 81 FR 2420 (Jan. 15, 2016).
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[[Page 8641]]
Other commenters focused on the potential practical effects of
DOE's proposed clarification of the statute's clear and convincing
evidence requirement in the context of ASHRAE equipment. For example,
ACEEE criticized DOE's attempt to clarify the term ``clear and
convincing,'' arguing that a new ``no substantial doubt'' criterion for
ASHRAE products would add uncertainty. As the commenter correctly
pointed out, Congress required ``clear and convincing evidence'' for
the Department to go beyond ASHRAE levels for such equipment. ACEEE
characterized DOE's change in terminology from a legal term of art to a
financial term as more of a substitution for, than an interpretation
of, congressional intent, which would introduce a new term that would
need to be interpreted, and would likely be subject to litigation. If
interpreted to be more stringent than the congressional requirement,
ACEEE argued that it would prevent the Department from adopting
standards or test procedures that best meet the legal requirements.
Finally, ACEEE asserted that the Department has failed to demonstrate a
problem with the legislative language as would justify the need to
change it. (ACEEE, No. 123 at p. 4)
ASAP also questioned what it views as the leap from an evidentiary
requirement of ``clear and convincing'' to ``no substantial doubt,''
and the commenter expressed concern that DOE would adopt ASHRAE
Standard 90.1 levels without consideration of other alternatives,
thereby eliminating the potential for negotiations and cooperation
among stakeholders, a point with which NEEA agreed. According to ASAP,
DOE's proposed language could make the process a ``one way street,''
which presumably means that ASHRAE would drive or monopolize DOE's
standard-setting process. (ASAP, March 21, 2019 Public Meeting
Transcript, No. 87 at pp. 111-112, 115, 119; NEEA, March 21, 2019
Public Meeting Transcript, No. 87 at pp. 116-7)
Instead, ASAP argued that there is no need to interpret the ``clear
and convincing evidence'' threshold as part of the Process Rule,
because DOE to date has appropriately interpreted that threshold.
According to ASAP, DOE's proposal to consider levels beyond the ASHRAE
levels only in ``extraordinary circumstances'' could sacrifice very
large energy and economic savings, outcomes which the commenter does
not believe reflects the intent of Congress. Even though DOE has
adopted the ASHRAE levels in most cases over the past decade, ASAP, et
al. offered concern that DOE's proposed changes are attempting to
severely restrict the Department's ability to consider standards higher
than the ASHRAE levels, as the agency has appropriately and effectively
done in the past. (ASAP, et al., No. 126 at pp. 2, 3-5)
CT-DEEP cautioned DOE from using the ``clear and convincing''
standard prescribed by EPCA with respect to setting standards higher
than those contained in ASHRAE Standard 90.1 as a means ``to avoid the
responsibility of evaluating the potential for more stringent standards
by setting the bar at `no substantial doubt that the more stringent
standard would result in a significant additional conservation of
energy.''' (CT-DEEP, No. 93 at p. 3)
NPCC disagreed with DOE''s application of the ``clear and
convincing evidence'' standard with respect to establishing energy
conservation standards more stringent than the ones adopted by ASHRAE,
arguing that such approach would mean that DOE could only set more-
stringent standards in extraordinary circumstances. Instead, NPCC urged
DOE to use the seven existing EPCA criteria at 42 U.S.C. 6295(o) when
determining whether to establish more-stringent standards for ASHRAE
equipment, consistent with the approach to other products. (NPCC, No.
94 at p. 4; NPCC, March 21, 2019 Public Meeting Transcript, No. 87 at
pp. 122-123)
Finally and in contrast to the several commenters who sought to
validate DOE's current process vis-[agrave]-vis ``clear and convincing
evidence,'' the AGs Joint Comment asserted that DOE's proposed revision
improperly applied the clear and convincing evidence standard and
ASHRAE deference when it is conducting its six-year-lookback review
under 42 U.S.C. 6313(a)(6)(C). Instead, these commenters suggested that
a six-year-lookback analysis should be conducted using a preponderance
of the evidence standard, arguing that DOE has misinterpreted the
relevant provisions of EPCA and risks failing to promulgate standards
when they are warranted under the statute. (AGs Joint Comment, No. 111
at pp. 13-14)
Similarly, Earthjustice argued that DOE has improperly applied the
``clear and convincing'' evidence requirement to instances where the
statute only requires a showing of substantial evidence. Earthjustice
asserted that ASHRAE's failure to amend the standards applicable to a
type of covered equipment under ASHRAE/IES Standard 90.1 does not
justify applying the ``clear and convincing'' standard to DOE's 6-year
review obligation under 42 U.S.C. 6313(a)(6)(C), a result which it
argues is foreclosed by the plain text of the statute. According to the
commenter, EPCA explicitly requires that clear and convincing evidence
support any determination to adopt a standard more stringent than an
amended Standard 90.1 requirement (pursuant to 42 U.S.C.
6313(a)(6)(A)(ii)(II)), but the statute does not apply this unique
standard outside of that context (see 42 U.S.C. 6306 (applying
``substantial evidence'' standard to other DOE rules)). Instead,
Earthjustice argued that when DOE considers amending standards for
equipment in the absence of ASHRAE action, EPCA requires that DOE apply
the ``criteria'' imposed under 42 U.S.C. 6313(a)(6)(A) if determining
that standards do not need to be amended and the ``criteria and
procedures'' applicable under 42 U.S.C. 6313(a)(6)(B) if proposing
amended standards. (42 U.S.C. 6313(a)(6)(C)(i)) Accordingly, the
commenter reasoned that the ``criteria'' governing any determination
not to amend the current standards for covered equipment are that
adoption of a more-stringent standard for the equipment would not
``result in significant additional conservation of energy and [be]
technologically feasible and economically justified'' (see 42 U.S.C.
6313(a)(6)(A)(ii)(II)). Under Earthjustice's theory, Congress's
decision to withhold the procedures applicable under 42 U.S.C.
6313(a)(6)(A) from any determinations not to amend in the context of a
6-year review means the evidentiary burden applicable under 42 U.S.C.
6313(a)(6)(A) does not apply to 6-year reviews. (Earthjustice, No. 134,
at pp. 2-3)
In response to these comments on the Process Rule NOPR, DOE
emphasizes that in discussing the need for ``clear and convincing
evidence'' in the context of more-stringent standard levels for ASHRAE
equipment, the Department was simply explaining the existing
requirements of the statute, rather than seeking to change or
reinterpret those requirements. Specifically, EPCA provides that in
order to adopt a more-stringent standard, DOE must determine, by rule
published in the Federal Register, and supported by clear and
convincing evidence, that adoption of a uniform national standard more
stringent than the amended ASHRAE/IES Standard 90.1 for the product
would result in significant additional conservation of energy and is
technologically feasible and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)(II)) The language of the statute makes clear that
Congress intended to establish a high bar for DOE to go beyond the
levels in ASHRAE
[[Page 8642]]
Standard 90.1, an intention clearly reflected by its decision to
require a heightened evidentiary standard. Thus, the statute itself
demonstrates that Congress intended for DOE to adopt the ASHRAE levels,
except for in extraordinary circumstances where the ``clear and
convincing evidence'' standard has been met. In the Process Rule NOPR,
DOE summarized the relevant ASHRAE-related statutory requirements and
sought to explain how it implements its legislative mandate. A number
of commenters supported DOE's clarification efforts as promoting
transparency, but others mistakenly believed that DOE was proposing
substantive and inappropriate changes. However, given that DOE proposed
no change to the existing statutory requirement, nor could it do so,
commenters were not deprived of any opportunity to comment, contrary to
what Earthjustice and NRDC suggest. Furthermore, by simply following
the requirements of the statute regarding the need for clear and
convincing evidence, DOE does not anticipate that there would be the
basis for enhanced litigation risk or successful legal challenges.
In the Process Rule NOPR, DOE offered language to explain its
understanding of Congress's clear and convincing evidence requirement
and how the Department has implemented that requirement. Specifically,
DOE stated that ``clear and convincing evidence'' would exist only if:
Given the circumstances, facts, and data that exist for a particular
ASHRAE amendment, DOE determines there is no substantial doubt that the
more-stringent standard would result in a significant additional
conservation of energy and is technologically feasible and economically
justified. Rather than changing the definition in question, DOE has
found this language consistent with how that term has historically been
interpreted and defined in the civil context in Federal Circuit and
District Courts throughout the United States. The Ninth Circuit Court
of Appeals has defined the ``clear and convincing'' standard as
requiring the evidence ``to be so clear as to leave no substantial
doubt [and] sufficiently strong to command the unhesitating assent of
every reasonable mind.'' Ittella Foods, Inc. v. Zurich Ins. Co., 98
Fed. Appx. 689, 691 (9th Cir. 2004) (internal citations omitted).
Similarly, the Eighth Circuit Court of Appeals has defined, ``clear and
convincing evidence'' as ``leav[ing] no substantial doubt,'' Hunt v.
Pan American Energy, 540 F.2d 894, 901 (8th Cir. 1976), and the Second
Circuit Court of Appeals stated, ``[c]lear and convincing proof is
highly probable and leaves no substantial doubt,'' Dongguk University
v. Yale University, 734 F.3d 113, 123 (2d Cir. 2013) (internal
citations omitted).\11\ Further, the Handbook of Federal Evidence,
which consists of materials designed to aid in understanding Federal
evidentiary rules, also defines ``clear and convincing evidence'' in
civil cases as requiring that ``evidence be so clear as to leave no
substantial doubt'' and describes this standard of proof to only be
sustained if the evidence induces a reasonable belief that the facts
asserted are highly probably true. (Handbook of Federal Evidence, Sec.
301:5 Burden of Persuasion, Incidence and Measure in Civil Cases (8th
ed., 2018))
---------------------------------------------------------------------------
\11\ Federal District Courts in circuits around the country have
provided similar definitions of ``clear and convincing evidence'' in
the civil context. See Mandel v. Boston Phoenix, Inc., 492 F. Supp.
2d 26, 29 (D. Mass. 2007) (``The meaning of the term `clear and
convincing evidence'--evidence so clear as to leave no substantial
doubt.''), Jersey Const., Inc. v. Pennoni Assoc., Inc., 1993 WL 2999
(E.D. Pa. 1993) (citing Joseph's v. Pizza Hut of America, Inc., 733
F. Supp. 222, 223-24 (W.D.Pa.1989), aff'd, 899 F.2d 1217 (3d Cir.
1990) (``Clear and convincing evidence is evidence that leaves no
substantial doubt . . . establishes not only that the proposition at
issue is probable, but also that it is highly probable.''), Hanna
Coal Co., Inc. v. I.R.S., 218 B.R. 825, 829 fn 2 (W.D. Va. 1997)
(``Clear and convincing evidence leaves no substantial doubt in your
mind. It is proof that establishes in your mind, not only [that] the
proposition at issue is probable, but also that it is highly
probable.''), Gentry v. Hershey Co., 687 F. Supp. 2d 711, 724 (M.D.
Tenn. 2010) (``Evidence is clear and convincing when it leaves no
serious or substantial doubt about the correctness of the
conclusions drawn.''), Sala v. U.S., 552 F. Supp. 2d 1157, 1162 (D.
Colo. 2007) (``Clear and convincing evidence leaves no substantial
doubt in your mind. It is proof that establishes in your mind, not
only [that] the proposition at issue is probable, but also that it
is highly probable.''), Tobinick v. Novella, 108 F. Supp. 3d 1299,
1309 (S.D. Fla. 2015) (``The burden of proof by clear and convincing
evidence requires a finding of high probability. The evidence must
be so clear as to leave no substantial doubt. It must be
sufficiently strong to command the unhesitating assent of every
reasonable mind.'').
---------------------------------------------------------------------------
Regarding NRDC's argument that the ``clear and convincing
evidence'' standard is a term of legal art, of which Congress was aware
when they adopted the language, and that DOE does not have the power to
redefine ``clear and convincing evidence'' to make it closer to
``beyond a reasonable doubt,'' as exhibited in the above paragraph, DOE
is not redefining the standard, and DOE's provision for ``clear and
convincing evidence'' is consistent with how it has been regularly
defined in Federal Courts for many years. Accordingly, DOE agrees with
NRDC that Congress was cognizant of the common law and accepted
definition of ``clear and convincing evidence'' when implementing 42
U.S.C. 6313(a)(6)(A)(ii)(II); the definition of ``clear and convincing
evidence'' as evidence that is so clear as to leave ``no substantial
doubt'' can be traced to a 1899 California Supreme Court decision,
decided far before 42 U.S.C. 6313(a)(6)(A)(ii)(II) was enacted. Sheehan
v. Sullivan, 126 Cal. 189, 193 (1899) (defining clear and convincing
evidence as clear, explicit, and unequivocal; so clear as to leave no
substantial doubt). Again, this language has been reiterated by Federal
Courts in the many years since.
Given DOE's commitment to meet its statutory duty to determine
whether more-stringent standards are appropriate for ASHRAE equipment
under either the ASHRAE trigger or the 6-year-lookback authority, the
concerns expressed by CT-DEEP and ASAP that DOE will use the
requirement for clear and convincing evidence to avoid its
responsibility to consider whether the criteria for more-stringent
standards have been met is unfounded. DOE will continue to evaluate the
potential for more-stringent standards as a routine part of its ASHRAE
rulemaking process. As part of that process, DOE will ensure that all
three statutory criteria are met (i.e., that there is clear and
convincing evidence that a more stringent standard can achieve
significant additional energy savings, technological feasibility, and
economic justification); DOE cannot focus on only one factor (economic
justification criteria), as NPCC suggested, because the statute is
clear in terms of the criteria that must be considered. By following
the requirements of the statute, there is no risk of forgone energy and
economic savings as ASAP suggests, nor harm to consumers as the CEC
asserts. Moreover, there should not be any impediments in the context
of negotiated rulemakings, because DOE will always consider alternate
standard levels, provided they comport with all applicable statutory
requirements. In light of the tenets of the ASHRAE-related provisions
Congress wrote into the statute, there is little incentive for
gamesmanship on the part of ASHRAE, because if that organization fails
to consider amended standards or only adopts weak standards, DOE's
obligation to consider more-stringent standards will resolve that
problem.
In terms of the technical modification suggested by the Joint
Commenters and NAFEM--suggesting to add the word ``specific'' to the
definition of ``clear and convincing evidence'' right before
``circumstances, facts, and data,'' DOE agrees with these commenters
that the agency cannot make a determination on its general
understanding, but instead
[[Page 8643]]
must base its determination upon specific information related to the
equipment class standards subject to ASHRAE revision. Such specific
circumstances, facts, and data are necessary to support a finding that
a standard higher than that contained in ASHRAE Standard 90.1 is
permitted or that an industry consensus test procedure is demonstrably
unreasonable. Consequently, DOE is adding the word ``specific,'' as
recommended by these commenters.
DOE does not agree with Spire's recommended interpretation of
``clear and convincing evidence'' so as to provide a presumption that
the industry consensus standards are going to be adequate, unless there
is clear evidence that they are not, at which point such presumption is
rebutted. Again, Spire suggested that DOE's approach to application of
the ``clear and convincing'' standard should be modified to clarify
that DOE would only go beyond the ASHRAE Standard 90.1 levels when DOE
determines (supported by clear and convincing evidence) that ``only'' a
more-stringent standard would result in significant additional
conservation of energy and is technologically feasible and economically
justified. Although the statute presumes that ASHRAE Standard 90.1
levels are going to be adequate (given the requirement for DOE to adopt
them when triggered), it also contemplates that a more-stringent
standard, supported by clear and convincing evidence, could exist which
would result in significant additional energy savings and be
technologically feasible and economically justified. Spire would not
only ask DOE to prove a negative, but also to reject a more-stringent
standard that meets the statutory criteria on that basis. DOE finds no
basis in the statute to support such a reading, and consequently, the
Department declines to adopt Spire's suggested interpretation.
Finally, DOE would address the comments from the AGs Joint Comment
and Earthjustice suggesting that the Department should not apply the
``clear and convincing evidence'' standard and ASHRAE deference when
the agency is conducting a 6-year-lookback review rulemaking under 42
U.S.C. 6313(a)(6)(C), but instead use a preponderance of the evidence
standard. Notwithstanding any past DOE statements to the contrary, the
plain language of the statute does not support such a reading.
Under the 6-year-lookback, the statute provides that every six
years, DOE shall conduct an evaluation of each class of covered
equipment and shall publish either: (1) A notice of determination that
standards for the product do not need to be amended, based on the
criteria established under subparagraph (A) (42 U.S.C. 6313(a)(6)(A))
or (2) a notice of proposed rulemaking including new proposed standards
based upon the criteria and procedures established under subparagraph
(B) (42 U.S.C. 6313(a)(6)(B)). These commenters focus on the
distinction that Congress directed DOE to subsection (A) when DOE makes
a finding that no new standard is warranted (i.e., the provision
containing the ``clear and convincing evidence'' requirement), but
directed the agency to subsection (B) when proposing to adopt more
stringent standards, thereby presuming that an ordinary preponderance
of evidence standard should apply. The commenters' interpretation is
difficult to square with the statute on more than one level. First, it
seems illogical that Congress would hold DOE to two different
evidentiary standard levels that involve essentially the same standard-
setting decision. Under the commenter's interpretation, DOE would issue
a notice of determination that a product does not need to be amended
when there is no clear and convincing evidence to support a more-
stringent standard (applying the criteria of subparagraph (A)), but
would be able to issue a proposed rule for those same more-stringent
standards using the preponderance of the evidence standard. Such
reading seems unworkable in practice. However, Congress arguably
foreclosed that anomalous result when it directed that the proposed
rule to amend the standard be based on the criteria and procedures
established under subparagraph (B). (42 U.S.C 6313 (a)(6)(C)(i)(II)) In
parsing the economic justification provisions of that subsection, the
statute prominently states, ``In determining whether a standard is
economically justified for the purposes of subparagraph (A)(ii)(II),
the Secretary shall . . . determine whether the benefits of the
standard exceed the burden of the proposed standard by to the maximum
extent practicable, considering . . . .'' (42 U.S.C. 6313(a)(6)(B)(ii)
(Emphasis added)) Thus, in determining whether it is appropriate to set
a more-stringent standard, 42 U.S.C. 6313(a)(6)(B) clearly references
42 U.S.C. 6313(a)(6)(A)(ii)(II), which contained the ``clear and
convincing evidence'' requirement. In other words, 42 U.S.C.
6313(a)(6)(C) references 42 U.S.C. 6313(a)(6)(B), which references 42
U.S.C. 6313(a)(6)(A). The explicit language of the statute furthers
congressional intent that DOE should defer to ASHRAE in most cases when
setting uniform national standards for covered equipment within that
organization's purview. Consequently, DOE affirms its understanding
that the statute's clear and convincing evidence requirement applies in
the context of both ASHRAE trigger and 6-year-lookback rulemakings.
A handful of commenters raised other viewpoints regarding the
``clear and convincing evidence'' standard or questions regarding how
DOE would implement its proposed clarifications. Among this group,
Southern Company asked DOE to provide more specificity regarding what
``high standard for overriding ASHRAE'' means. (Southern Company, March
21, 2019 Public Meeting Transcript, No. 87 at p. 113) In response to
this question, DOE refers back to the statutory scheme because the
Department is not changing the standard for review regarding when it is
appropriate to adopt levels more stringent than those set forth in
ASHRAE Standard 90.1 as uniform national standards. Under 42 U.S.C.
6313(a)(6)(A)(ii)(II), EPCA makes clear that DOE may adopt more-
stringent levels only where the Department determines, supported by
clear and convincing evidence, that adoption of a more-stringent
standard would result in significant additional conservation of energy
and is technologically feasible and economically justified. As
discussed previously, the case law makes clear that ``clear and
convincing evidence'' is a level higher than a preponderance of the
evidence, and as explained in the paragraphs immediately above, the
statute applies this evidentiary requirement to both ASHRAE ``trigger''
and 6-year-lookback rulemakings. Thus, under the statutory scheme, DOE
believes it reasonable to expect that in most cases, Federal standards
will be set at a level corresponding to those in ASHRAE Standard 90.1.
Regarding ``clear and convincing'' evidence, Ingersoll Rand stated
that it had in the past assumed that DOE would only consider
alternative energy efficiency requirements if there were clear and
convincing evidence that such standards would save a significant amount
of energy, be technologically feasible, and be economically justified
when compared to both the existing appliance standards and those
contained in the updated version of ASHRAE Standard 90.1. As part of
DOE's process under 42 U.S.C. 6313(a)(6), Ingersoll Rand reasoned that
DOE should review the same analysis developed by the ASHRAE Standard
[[Page 8644]]
90.1 development committee to justify revisions to the energy
efficiency requirements for these products. The commenter stated that
it does not interpret the proposed definition for ``clear and
convincing evidence'' as a departure from this process. (Ingersoll
Rand, No. 118 at p. 2)
In response, DOE generally agrees with Ingersoll Rand, in that the
Department thoroughly considers the existing uniform national standard
(for both ASHRAE trigger and 6-year-lookback rulemakings) and the
ASHRAE standard (for trigger rulemakings \12\). In conducting the
comprehensive review and analysis in support of its rulemaking under
the ASHRAE trigger, DOE would anticipate examining the work of the
ASHRAE Standard 90.1 Committee, to the extent it is publicly available.
---------------------------------------------------------------------------
\12\ DOE does not anticipate the need to examine the ASHRAE
levels in the context of a 6-year-lookback rulemaking, because the
existing Federal standard already would reflect either the level in
ASHRAE Standard 90.1 or a more-stringent level supported by clear
and convincing evidence.
---------------------------------------------------------------------------
Spire commented that any evidence on which DOE relies in support of
the adoption of an energy conservation standard--including ASHRAE
equipment--must be made available for review and public comment during
the rulemaking process and with adequate time to do so. (Spire, No. 97
at p. 9; Spire, No. 139 (Attachment C)) In response, DOE strives to
make as much of the data underlying its appliance standards rulemakings
publicly available to the greatest extent possible through posting of
such information to the docket for that rulemaking. However, because it
is frequently the case that some portion of the relevant data on which
the agency makes its decision is proprietary in nature, DOE makes such
data available in aggregated and anonymized form. DOE has determined
that this approach is sufficient to allow interested stakeholders to
understand the rationale for DOE's decision while appropriately
protecting confidential information.
EEI argued that if DOE is going to revise ASHRAE equipment
standards, it will publish a proposed rule for public comment, so even
if the evidentiary bar is raised, there is still an open process with
the opportunity for parties to suggest changes. (EEI, March 21, 2019
Public Meeting Transcript, No. 87 at pp. 124-125) In response, DOE
agrees with EEI's understanding that it is the Department's standard
practice to issue a proposed rulemaking with an opportunity for public
comment prior to adopting any new or revised Federal standards for
covered ASHRAE equipment. However, DOE would once again clarify that it
may not and is not changing the statute's ``clear and convincing
evidence'' requirement for adopting levels more stringent than those
contained in ASHRAE Standard 90.1 as uniform national standards.
Interpretations of the ASHRAE ``Trigger'' Provisions and Other ASHRAE
Issues
The Process Rule NOPR also sought to address certain issues of
statutory interpretation regarding EPCA's ASHRAE trigger provisions.
Making clear that DOE will adopt the action taken by ASHRAE except in
rare circumstances raises the question as to when DOE is triggered by
ASHRAE action in amending Standard 90.1. In the February 13, 2019
Process Rule NOPR, DOE proposed to clarify its interpretation of the
ASHRAE trigger provision in this context. For example, if ASHRAE acts
to amend its standard at the equipment class level for air-cooled
variable refrigerant flow (VRF) multi-split air conditioners greater
than or equal to 135,000 Btu/h, is DOE triggered to consider amended
standards: (1) Only for the specific equipment class(es) actually
amended in ASHRAE Standard 90.1; (2) for the entire equipment category
of VRF equipment, or (3) for the entire covered equipment type of small
commercial package air conditioning and heating equipment? EPCA does
not specifically define the term ``amended'' in the context of ASHRAE
Standard 90.1. (84 FR 3910, 3915) Although the statute is not entirely
clear on this matter, DOE has maintained a consistent position for over
a decade, at least since it interpreted what would constitute an
``amended standard'' in a final rule published in the Federal Register
on March 7, 2007. 72 FR 10038. In that rule, DOE stated that the
statutory triggering event requiring DOE to adopt uniform national
standards based on ASHRAE action is for ASHRAE to change a standard for
any of the equipment listed in EPCA section 342(a)(6)(A)(i) (42 U.S.C.
6313(a)(6)(A)(i)) by increasing the efficiency level for that
equipment. Id. at 72 FR 10042. In other words, if the revised ASHRAE
Standard 90.1 leaves the standard level unchanged or lowers the
standard, as compared to the level specified by the uniform national
standard adopted pursuant to EPCA, DOE does not have authority to
conduct a rulemaking to consider a higher standard for that equipment
pursuant to 42 U.S.C. 6313(a)(6)(A). DOE subsequently reiterated this
position in final rules published in the Federal Register on July 22,
2009 (74 FR 36312, 36313), May 16, 2012 (77 FR 28928, 28937), and July
17, 2015 (80 FR 42614, 42617).
However, in the American Energy Manufacturing Technical Corrections
Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012), Congress modified
several provisions related to ASHRAE Standard 90.1 equipment. In
relevant part, DOE must act whenever ASHRAE Standard 90.1's ``standard
level or design requirements under that standard'' are amended. (42
U.S.C. 6313(a)(6)(A)(i)) Furthermore, that statutory amendment required
that DOE must conduct an evaluation of each class of covered equipment
in ASHRAE Standard 90.1 ``every 6 years.'' (42 U.S.C. 6313(a)(6)(C)(i))
In practice, DOE's review in making this assessment of ASHRAE's
actions has been strictly limited to the specific standards for the
specific equipment for which ASHRAE has made a change (i.e., determined
down to the equipment class level). In the Process Rule NOPR, DOE
stated that it believes that this is the best reading of the statutory
provisions discussed previously, because if ASHRAE were to change the
standard for a single equipment class, but DOE then considered itself
triggered at the equipment category level or equipment type level, the
process would arguably no longer comport with the statutory scheme.
More specifically, in such cases, DOE would be addressing certain
classes of ASHRAE equipment for which standards had not changed, so it
would be impossible for DOE to adopt the ASHRAE level as the statute
envisions (as, in most cases, it would already be the same as the
existing Federal standard). Instead, DOE could only consider adoption
of more-stringent standard levels. Such interpretation would arguably
run counter to the ``follow ASHRAE'' statutory structure set in place
by Congress. Furthermore, Congress specifically and recently added a 6-
year-lookback provision for covered ASHRAE equipment at 42 U.S.C.
6313(a)(6)(C)(i), a provision which instructs DOE in terms of how and
when to address covered equipment upon which ASHRAE has not acted in a
timely manner. Furthermore, DOE believes that ASHRAE not acting to
amend Standard 90.1 is tantamount to a decision that the existing
standard should remain in place. DOE believes it is reasonable to
assume that, in revising ASHRAE Standard 90.1, ASHRAE would consider an
entire equipment category before deciding to adopt a revised standard
for only one or more classes of equipment in that category.
[[Page 8645]]
Thus, for equipment classes for which it was not triggered, DOE would
act under its 6-year-lookback authority at 42 U.S.C. 6313(a)(6)(C) to
issue a standard more stringent than the existing standard for the
product, provided that there exists clear and convincing evidence, as
defined above, to support such decision.
Commenters raised a number of other issues of statutory
interpretation which would be expected to impact how the revised
Process Rule would treat ASHRAE equipment, each of which is addressed
below. Again, consistent with its long-standing interpretation, the
Department proposed to define the ASHRAE ``trigger'' to be applicable
only to those equipment classes where ASHRAE Standard 90.1 has adopted
an increase to the efficiency level as compared to the current Federal
standard for that specific equipment class. Most commenters supported
DOE's interpretation regarding EPCA's ASHRAE trigger provision. BWC
agreed with DOE's proposal to limit its changes to those specific
equipment classes where ASHRAE has made a change, even though other
similar equipment types were left untouched. (BWC, No. 103 at p. 2) The
Joint Commenters also supported DOE's clarification that ASHRAE's
revision of one equipment class's performance standards or test method
does not trigger DOE's statutory obligation to initiate a rulemaking on
all related equipment classes, explaining that DOE is correct to
decline to initiate additional rulemaking on related products that were
never considered by the consensus body. (Joint Commenters, No. 112 at
p. 3) Similarly, Lennox agreed with DOE's clarification that ASHRAE's
revision of one equipment class's performance standard or test method
does not trigger DOE's statutory obligation to initiate a rulemaking on
all related equipment classes. Lennox stated that this clarification
will avoid the artificial imperative to initiate a rulemaking on a
product class that was not addressed by ASHRAE. (Lennox, No. 133 at p.
3)
However, one commenter appeared to favor a different interpretation
of the ASHRAE trigger, under which triggering would result in a
significantly broader rulemaking action. A.O. Smith raised a number of
questions seeking additional clarification regarding DOE's
interpretation in the Process Rule NOPR of the statutory provisions
related to ASHRAE equipment (particularly the ``ASHRAE trigger'' and 6-
year-lookback which would lead to rulemaking action). The commenter's
inquiries were focused on packaged boilers, storage water heaters,
instantaneous water heaters, and unfired hot water storage tanks,
although DOE notes that the issues raised would apply more broadly to
the full suite of covered ASHRAE equipment. (A.O. Smith, No. 127 at pp.
7-8)
First, A.O. Smith asked, if the ASHRAE trigger only applies to
those specific equipment classes where ASHRAE Standard 90.1 has
increased the efficiency level, how will the Department handle the
other equipment classes within the same product category or within the
same covered product that ASHRAE 90.1 did not address? In other words,
how does the statutory requirement by which, every six years, the
Secretary shall conduct an evaluation of each class of covered
equipment and shall publish either: (a) A notice of the determination
of the Secretary that standards for the product do not need to be
amended, based on the criteria established in the statue; or (b) a
notice of proposed rulemaking including new proposed standards based on
the criteria and procedures established under subparagraph (B), apply
to those equipment classes where ASHRAE 90.1 took no action? Would the
Department conduct a separate ``six-year look back'' rulemaking to
address those equipment classes where ASHRAE 90.1 took no action, or
does the Department interpret ASHRAE 90.1 action on a single equipment
class sufficient to satisfy the statutory requirement for the entire
category or covered product? (A.O. Smith, No. 127 at p. 7)
As explained previously, EPCA contains two separate provisions
pertaining to updating the standards for ASHRAE equipment, one for the
ASHRAE trigger (see 42 U.S.C. 6313(a)(6)(A)) and another for the 6-
year-lookback (see 42 U.S.C. 6313(a)(6)(C)). Under DOE's
interpretation, these two statutory provisions act in harmony to ensure
that the standards for all types of covered ASHRAE equipment are
reviewed on a periodic basis and updated as appropriate. Although not
compelled to do so by the statute, DOE may decide in appropriate cases
to simultaneously conduct an ASHRAE trigger rulemaking (i.e., for those
equipment classes for which ASHRAE set a higher standard) and a 6-year-
lookback rulemaking (i.e., for those equipment classes where ASHRAE
left levels unchanged or set a lower standard) so as to address all
classes of an equipment category at the same time. In other cases, DOE
may choose to bifurcate the rulemakings and to handle the non-triggered
equipment classes on a schedule to comply with the requirement to
review standards every six years. As a general principle, DOE believes
it appropriate to weigh the benefits of expediency (e.g., consolidated
rulemaking, potentially earlier energy savings) against the burdens
(e.g., accelerated compliance and certification costs for non-triggered
equipment) for any given ASHRAE rulemaking. DOE anticipates stakeholder
feedback on this preliminary issue in response to publication of the
ASHRAE NODA following an ASHRAE triggering event.
Second, A.O. Smith asked, if a metric is changed by ASHRAE Standard
90.1 for a given equipment class, does this trigger Department action?
The new metric may or may not result in an increase in the efficiency
level as compared to the Federal efficiency level. (A.O. Smith, No. 127
at p. 7)
In response, if ASHRAE maintained the existing regulating metric
that serves as the basis for current Federal energy conservation
standard (without changing those levels), DOE would not consider the
addition of another metric to be a triggering event. However, if ASHRAE
were to substitute a new metric and eliminate the existing metric
entirely, DOE would need to, at a minimum, conduct a crosswalk to the
existing metric to see if the changed ASHRAE Standard 90.1 levels would
be more stringent than the current Federal standards, in which case DOE
would be triggered for those equipment classes where ASHRAE established
a higher standard. (DOE expects this latter scenario to likely be
theoretical, as substantial market turmoil would conceivably accompany
a wholesale exchange of metrics without the maintenance of a
transitional metric.) Nonetheless, DOE would need to consider as a
policy matter the appropriateness of transitioning to the new metric
which ASHRAE has incorporated into Standard 90.1. If DOE determines
that there is a sound scientific, technical, and policy basis for
changing the metric underlying the Federal standard, it would pursue
such change through notice-and-comment rulemaking.
Next, A.O. Smith stated that if the Department were to interpret
the provisions as separate requirements under the statute, it could
foresee a future where the Department is conducting two separate
rulemakings (i.e., one under EPCA's ASHRAE authority and another under
EPCA's 6-year-lookback authority), which carry different processes
under the proposed Process Rule, different analyses, and different
compliance dates. According to A.O. Smith, this would be a very
burdensome and costly interpretation
[[Page 8646]]
because it would require double the resources spanning many years to
comply with the uncoordinated requirements for the different equipment
classes within a given covered product. For example, the commenter
stated that there are currently 10 equipment classes of commercial
packaged boilers, each with a different energy conservation standard
for which compliance is required. A.O. Smith asked, if ASHRAE Standard
90.1 adopts a more-stringent standard for only one of those ten
equipment classes and the Department subsequently adopts that standard,
would the Department continue to be triggered by the six-year lookback
to conduct a regular review of the other 9 equipment classes within the
covered equipment? If this is the case, A.O. Smith strongly urged the
Department to revisit its narrowly-defined interpretation of the ASHRAE
trigger due to the potential burdens associated with misaligned review
cycles arising from the separate grants of authority under EPCA. (A.O.
Smith, No. 127 at pp. 7-8)
On its face, A.O. Smith's comment makes what appears to be a
reasonable argument. However, the Department emphasizes that all other
commenters on this issue opposed the idea of shifting the ASHRAE
trigger from the equipment class level to an equipment category or
equipment type level. In addition to individual companies (BWC and
Lennox), a Joint Comment by 10 major trade associations (ACCA, AHRI,
AMCA International, ALA, AHAM, HARDI, HPBA, NAFEM, NEMA, and PMI)--
representing hundreds of corporate members-- all supported DOE's
proposal and in opposition to the change suggested by A.O. Smith to
remedy ``misaligned review cycles.'' DOE has concluded that there are
regulatory burdens separate from participation in the rulemaking
process that these commenters deem to outweigh the ones identified by
A.O. Smith. Perhaps the Joint Commenters see some benefit in spacing
out rulemakings and associated compliance expenditures. Regardless, DOE
reasons that there are other avenues in appropriate cases to alleviate
the concerns expressed by A.O. Smith.
As noted previously, DOE believes that its approach provides the
best reading of the statutory provisions at issue, because if ASHRAE
were to change the standard for a single equipment class, but DOE then
considered itself triggered at the equipment category level or
equipment type level, the process would arguably no longer comport with
the statutory scheme. In such cases, DOE would be addressing certain
classes of ASHRAE equipment for which standards had not changed, so it
would be impossible for DOE to adopt the ASHRAE level as the statute
envisions (as, in most cases, it would already be the same as the
existing Federal standard). Instead, DOE could only consider adoption
of more-stringent standard levels. Such interpretation would arguably
run counter to the ``follow ASHRAE'' statutory structure set in place
by Congress. Equipment classes which ASHRAE has decided to leave
unchanged would remain subject to review under the statute's 6-year-
lookback provision. Whether to consolidate ASHRAE trigger and 6-year-
lookback rulemakings will likely hinge on the facts of a given
situation. For example, if ASHRAE amends 9 out of 10 commercial
packaged boiler equipment classes, it may make sense to immediately
commence a 6-year-lookback rulemaking and to consolidate the
rulemakings. However, the answer may conceivably be very different if
ASHRAE acts to amend only one equipment class. Fortunately, DOE's
amended Process Rule provides ample opportunity for stakeholders to
weigh in on such issues through the prioritization process, an early
assessment, or through comments on the ASHRAE NODA analyzing potential
energy savings in response to an ASHRAE trigger. Through such
mechanisms, DOE believes that it is possible to minimize, if not
eliminate, the types of regulatory burdens about which A.O. Smith
expressed concern.
Earthjustice challenged as unsupported DOE's statement in the NOPR
that ``ASHRAE not acting to amend Standard 90.1 is tantamount to a
decision that the existing standard remain in place.'' (84 FR 3910,
3916 (Feb. 13, 2019)). The commenter argued that DOE has not explained
why that is a reasonable interpretation of ASHRAE's failure to amend a
standard, or why that interpretation of ASHRAE inaction is consistent
with the intent of Congress, which it argues has repeatedly amended 42
U.S.C. 6313(a)(6) to make clear that ASHRAE cannot shield covered
equipment from strengthened DOE standards (compare 42 U.S.C.
6313(a)(6)(C) (2010) (requiring DOE's review ``[n]ot later than 6 years
after issuance of any final rule establishing or amending a standard,
as required for a product under this part''), with 42 U.S.C.
6313(a)(6)(C) (2019) (requiring DOE's review ``Every 6 years'' and
establishing a deadline for action on equipment ``as to which more than
6 years has elapsed since the most recent final rule establishing or
amending a standard'')). (Earthjustice, No. 134 at p. 3)
In response to Earthjustice, DOE reasons that if ASHRAE acts to
amend standards for certain equipment classes for an equipment category
in Standard 90.1, that organization would have at a minimum reviewed
the entirety of that equipment category. It would be illogical,
confusing, and misleading to cherry-pick only select equipment classes
within a category without reviewing the complete category, particularly
since that could impose unnecessary burdens on industry and State code
enforcement officials. Consequently, presuming this assumption is
correct, in most cases, ASHRAE would be making an active decision to
the extent it did not modify certain equipment classes within an
equipment category. However, the matter is largely a philosophical
debate, because such characterization of ASHRAE's action (or, in this
case, non-action) does not have any impact on the subsequent steps DOE
is required to take under EPCA. Where ASHRAE has not acted, DOE remains
obligated to review the need for amended standards under DOE's 6-year-
lookback authority. (42 U.S.C. 6313(a)(6)(C)) Pursuant to that
statutory provision, DOE must adopt amended standards more stringent
than the current standards, if there is clear and convincing evidence
showing that such amended standards would result in significant
additional conservation of energy and are technologically feasible and
economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II); 42 U.S.C.
6313(a)(6)(B)(ii); 42 U.S.C. 6313(a)(6)(C)(i)(II)) Because DOE must
follow its legal obligations under EPCA, ASHRAE cannot shield covered
equipment from potential amended energy conservation standards in the
manner Earthjustice suggests.
Southern Company argued that DOE should (but has not always)
examine the totality of ASHRAE actions in setting equipment standards,
because there may be associated usage standards which are also part of
the equation (e.g., requiring occupancy sensors to limit the time lamps
are on, which may justify a higher energy use per watt but save more
energy overall). According to Southern Company, DOE needs to look at
the totality of how equipment would be used under ASHRAE Standard 90.1,
not just looking at a particular piece of equipment in isolation and
judging that by DOE's rules, ASHRAE should have chosen a higher
standard. (Southern Company, March 21, 2019 Public
[[Page 8647]]
Meeting Transcript, No. 87 at pp. 102-103)
In response, DOE acknowledges that ASHRAE action in Standard 90.1
may sometimes employ a suite of complementary provisions intended to
provide operational and energy savings benefits. In doing so, ASHRAE is
not bound by the legal constraints of EPCA, so the organization is free
to approach issues from a more purely technical perspective, rather
than a regulatory one. In contrast, DOE must meet its legal obligations
under the statute--particularly 42 U.S.C. 6313(a)(6)(A)-(C) and
applicable definitions under 42 U.S.C. 6311--in considering new or
amended standards for ASHRAE equipment, whether acting under the ASHRAE
trigger or 6-year-lookback. In general, DOE must adopt the levels set
forth in ASHRAE Standard 90.1, unless DOE finds, supported by clear and
convincing evidence, that more-stringent standards would result in
significant additional energy savings and are technologically feasible
and economically justified. Consequently, in conducting rulemakings for
ASHRAE equipment, DOE must live within the parameters set forth in the
statute.
PG&E argued there needs to be some form of verification of ASHRAE
test procedures to ensure that they produce representative results. The
company cited an example where through its own research, it was able to
determine that an ASHRAE test procedure was producing results that were
as much as 50 percent off, so the commenter recommended that a process
be put in place to ensure that similar problems do not arise going
forward. (PG&E, March 21, 2019 Public Meeting Transcript, No. 87 at pp.
123-124)
DOE agrees that there should be a robust assessment of industry
consensus test procedures prior to adoption as Federal test procedures,
as contemplated by the statute. EPCA clearly contemplates that the test
procedures for ASHRAE equipment ``shall be those generally accepted
industry test procedures or rating procedures developed or recognized
by [AHRI or ASHRAE] as referenced in ASHRAE/IES Standard 90.1.'' The
statute also directs that, when those industry test procedures are
amended, DOE should amend the Federal test procedures to be consistent.
The statute does require that such amended test procedures remain
reasonably designed to produce test results that reflect the energy
efficiency, energy use, and estimated operating costs of a type of
industrial equipment (or class thereof) during a representative average
use cycle and shall not be unduly burdensome to conduct. If the test
procedure is a procedure for determining estimated annual operating
costs, such amended procedure must continue to provide that such costs
shall be calculated from measurements of energy use in a representative
average-use cycle, and from representative average unit costs of the
energy needed to operate such equipment during such cycle. (42 U.S.C.
6314(a)(2), (3), (4)(A)-(B)) If the amended industry consensus test
procedures fail to meet these requirements, DOE may establish its own
test procedure that meets the requirements of the statute. (42 U.S.C.
6314(a)(4)(C))
It is DOE's standard practice to undertake a review of amended
industry consensus test procedures referenced in ASHRAE Standard 90.1
before proposing conforming amendments to the corresponding Federal
test procedures. As part of the process, DOE seeks public comment on
its proposed test procedures, and all substantive comments must be
addressed prior to adoption of a test procedure final rule. DOE
believes that thorough vetting by both the Department and the
interested public offers a sound practice that satisfies these express
statutory requirements, as demonstrated by the case in PG&E's example.
Southern Company argued that the proposed 0.5 quad threshold for
significant energy savings should not apply to individual equipment
lines in ASHRAE's standards (given that many involve equipment with
smaller overall energy usage). The point was that for those equipment
types, the threshold level may never be reached, so DOE would be left
once again to await ASHRAE action, despite that fact that Congress had
adopted a 6-year-lookback provision for ASHRAE. (Southern Company,
March 21, 2019 Public Meeting Transcript, No. 87 at p. 122)
In response, DOE notes that while Southern Company made the
argument at the March 21, 2019 public meeting that certain categories
of ASHRAE equipment may have small shipments, energy consumption, or
both, such that the energy savings potential would be limited and
potentially never meet the proposed 0.5 quad threshold for significant
energy savings, the commenter did not provide any further detail, data,
or other evidence to support its claim. Southern Company then asserts
that DOE's proposed threshold would prevent such equipment from ever
being subject to the 6-year-look back at 42 U.S.C. 6313(a)(6)(C),
thereby ceding too much control to ASHRAE.
If, for the sake of argument, DOE were to assume Southern Company's
assessment of the market for ASHRAE equipment to be correct, the
Department believes that the commenter has failed to consider all of
the relevant provisions of EPCA, as well as the impact that the
percentage savings prong of the energy savings threshold would have in
such situations. First, in the ASHRAE context, Congress did include a
requirement that more-stringent standards be supported by clear and
convincing evidence showing that such standards would result in
``significant additional conservation of energy'' and be
technologically feasible and economically justified (42 U.S.C.
6313(a)(6)(A)(ii)(II)), a provision which comes into play under both
the ASHRAE trigger and the 6-year-lookback. By including such
requirement for significant additional energy savings, Congress not
only acted consistently with its overall approach of deferring to
ASHRAE but also to explicitly point out that some equipment may have
energy savings that are too small to justify the imposition of
standards. The implication of Southern Company's argument would be to
have DOE read the ``significant additional energy savings'' requirement
out of the statute for at least some subset of ASHRAE equipment. DOE is
not at liberty to follow that suggestion, but instead must give effect
to all applicable statutory provisions.
Nonetheless, DOE is sensitive to the concern that such equipment
not be put beyond the reach of energy conservation standards without
proper consideration of the potential for significant additional energy
savings. That is why DOE has also proposed to include a percentage
energy savings prong as part of its significant energy savings
threshold test. Under that prong, if covered ASRAE equipment could
achieve a substantial energy savings improvement (i.e., 10% reduction
in energy use), such equipment would pass the test even though the quad
threshold may never be reached. In summary, DOE has concluded that its
approach properly addresses all of the relevant statutory provisions
for adopting standard levels for ASHRAE equipment, including the
requirement for significant additional energy savings. DOE's approach
permits an assessment of each category of ASHRAE equipment, accords
ASHRAE the deference it is due under the statute, and permits the
adoption of more-stringent standards, supported by clear and convincing
evidence, in appropriate cases.
D. Priority Setting
Previously, the Process Rule at 10 CFR part 430, subpart C,
Appendix A,
[[Page 8648]]
section 3(d) outlines DOE's priority-setting analysis, which considers
ten factors: (1) Potential energy savings; (2) potential economic
benefits; (3) potential environmental or energy security benefits; (4)
applicable deadlines for rulemakings; (5) incremental DOE resources
required to complete the rulemaking process; (6) other relevant
regulatory actions affecting products; (7) stakeholder recommendations;
(8) evidence of energy efficiency gains in the market absent new or
revised standards; (9) status of required changes to test procedures;
and (10) other relevant factors. The Process Rule also previously
required that the results of this analysis be used to develop
rulemaking priorities and proposed schedules for the development and
issuance of all rulemakings which would then be documented and
distributed for review and comment. 10 CFR part 430, subpart C,
Appendix A, section 3(a). The 1996 Process Rule also stated that each
Fall, DOE would issue, simultaneously with the Administration's
Regulatory Agenda, a final set of rulemaking priorities, the
accompanying analysis, and the schedules for all priority rulemakings
that it anticipated within the next two years. (Id. at section 3(c).)
In the February 13, 2019 NOPR, DOE proposed revising this process.
DOE proposed that stakeholders would have the opportunity to provide
input on prioritization of rulemakings through a request for comment as
DOE begins preparation of its Regulatory Agenda each spring. In
particular, DOE would point interested parties to the Regulatory Agenda
posted to www.reginfo.gov the previous Fall and would request input
concerning which rulemaking proceedings should be in particular action
categories in the spring Regulatory Agenda and request comment on the
timing of such rulemakings. If stakeholders believe that the Department
is pursuing a rule that should not be prioritized, they would have the
opportunity to use this mechanism to so inform DOE. If stakeholders
believe DOE should act more quickly on another rulemaking they could
make that point as well. DOE has concluded that increased stakeholder
input early in the rulemaking process, combined with the public
availability of the Regulatory Agenda, would meet the same objectives
as DOE's previous priority-setting analysis. (84 FR 3910, 3916)
(February 13, 2019)
In response to DOE's NOPR, stakeholders provided mixed reviews of
the proposal. Several stakeholders supported DOE's proposed
prioritization process to invite early stage comments. (Acuity, No. 95,
at p. 2; AHAM, March 21, 2019 Public Meeting Transcript, No. 87, at p.
136; AHRI, March 21, 2019 Public Meeting Transcript, No. 87, at p. 135;
AGA, No. 114, at p. 11; BWC, No. 103 at p. 2; CTA, No. 136 at p. 2;
Edison Electric Institute, March 21, 2019 Public Meeting Transcript,
No. 87, at pp. 133-34; GM Law, No. 105 at p. 2; Joint Commenters, No.
112 at p. 3; NEMA, March 21, 2019 Public Meeting Transcript, No. 87, at
p. 134; NPCC, No. 94, at p. 5; NPGA, No. 110 at p. 1; BHI, No. 135, at
p. 4)
Others commenters stated that EPCA deadlines take precedence over
the Department's policy preferences in determining DOE's agenda. For
instance, ASE questioned whether DOE's prioritization proposal is
needed. ASE argued that DOE's proposal is potentially duplicative of
existing procedures based on statutory and regulatory requirements. ASE
argued that Congress has already set deadlines for DOE, either by a
date specific or through the 6-year-lookback provision (for energy
conservation standards) or 7-year-look-back provision (for test
procedures). Furthermore, ASE stated that DOE already reports its
priorities through contributions to the Regulatory Agenda. However, ASE
suggested that using requests for information (RFIs) to gather
stakeholder input could help prioritize new product coverage and
publicize statutory deadlines. ASE recommended that DOE issue a revised
proposal to better reconcile its statutory and regulatory duties with
its plan for priority setting. (ASE, No. 108 at p. 3) ASAP stated that
a provision for priority-setting should not be in the Process Rule.
(ASAP, March 21, 2019 Public Meeting Transcript, No. 87, at p. 137,
139) ASAP, et al. stated that existing statutory deadlines will largely
determine the sequencing of DOE's work on standards and test
procedures. Further, requesting input on prioritization would seem to
be duplicative of the ``early assessment'' for each product since
stakeholders will have the opportunity to provide input at the
beginning of each rulemaking regarding whether DOE should proceed.
(ASAP, et al., No. 126 at pp. 2, 5)
CT-DEEP, CEC, and Cal-IOUs, and Earthjustice agreed with other
commenters that DOE should not prioritize rulemakings based on anything
other than the sequencing already required by statute. (CT-DEEP, No.
93, at p. 2; CEC, No. 121, at p.3; Cal-IOUs, No. 124, at p.6;
Earthjustice, No. 134, at p. 3) As Earthjustice summarized, the Process
Rule cannot authorize a delay or suspension of work that would lead to
or exacerbate the violation of a statutory deadline. (Earthjustice, No.
134, at p. 3)
The Cal-IOUs also indicated that it did not understand the specific
details of this aspect of DOE's proposal or how it would ensure that
DOE would adhere to its schedules. The Cal-IOUs acknowledged that
providing stakeholder input on DOE's priorities seems positive, but it
warned that this added input would create additional burden through the
imposition of new steps to the current process. (Cal-IOUs, No. 124, at
p. 6). Also, Energy Solutions questions how priority setting would
supersede EPCA requirements. (Energy Solutions, March 21, 2019 Public
Meeting Transcript, No. 87, at p. 132)
As for the 10 existing priority-setting factors, the CEC supports
the continued application of the 10 existing priority-setting factors
to DOE's priority-setting process and supports streamlining how the DOE
notifies the public of its priorities by eliminating duplicative
processes and using the Regulatory Agenda as the means for distributing
the Agency's plans for upcoming efficiency regulations. (CEC, No. 121,
at p. 3) Another commenter, AGA, stated that the Department should
focus on two of the 10 existing priority-setting factors, the potential
energy savings and the potential economic benefits as an initial screen
for prioritization. The focus on these two factors is important because
if the Department determines the proposed regulatory activity does not
provide sufficient energy savings or is not cost effective, there is no
need to review the other factors. (AGA, No. 114, at p. 11)
Although stakeholders have given DOE's prioritization proposal
mixed reviews, DOE is implementing this revised priority-setting
process because increased stakeholder input early in the rulemaking
process, combined with the public availability of the Regulatory
Agenda, is additional input that could better inform the Department in
its decision-making process concerning priority-setting and would meet
the same objectives as DOE's previous priority-setting analysis in the
current Process Rule.
E. Coverage Determinations
In its proposal, DOE explained that EPCA provides DOE with the
discretionary authority to classify additional types of consumer
products and industrial/commercial equipment as ``covered'' within the
meaning of EPCA. See 42 U.S.C. 6292(b) (providing authority for
establishing coverage over consumer products) and 42 U.S.C.
[[Page 8649]]
6295(l) (setting criteria for setting standards for consumer products);
see also 42 U.S.C. 6312(c) (providing authority for establishing
coverage over specified commercial and industrial equipment). This
authority allows DOE to consider regulating additional products/
equipment that would further the goals of EPCA to conserve energy for
the Nation--as long as the statutory threshold requirements are met.
DOE proposed to initiate the process through which it would add
coverage of a particular product or equipment by publishing a notice of
proposed determination to address solely the merits of covering that
product or equipment. The notice would explain how the coverage of the
item would meet the relevant statutory requirements and why coverage is
``necessary or appropriate'' to carry out the purposes of EPCA. (84 FR
3910, 3916 (Feb. 13, 2019). See also 42 U.S.C. 6292(b)(1) (detailing
criteria for classifying a consumer product as a covered product). In
cases involving commercial/industrial equipment, DOE follows the same
process, except that the Department need only show the coverage
determination is ``necessary'' to carry out the purposes of EPCA. See
42 U.S.C. 6312(b) (providing that the Secretary of Energy ``may, by
rule, include a type of industrial equipment as covered equipment if he
determines that to do so is necessary to carry out the purposes of
[Part A-1 of EPCA]''). DOE's authority to add coverage over commercial
equipment is more limited than its coverage authority for consumer
products because Congress specified the particular types of equipment
that could be added. (42 U.S.C. 6311(2)(B)) Stakeholders would then be
given 60 days to submit written comments to DOE on the proposed
determination notice. Subsequently (and in a change from DOE's past
practice), DOE would assess the written comments and then publish its
final decision on coverage as a separate notice, an action which would
be completed prior to the initiation of any rulemaking for related test
procedures or energy conservation standards. If the final decision
determines that coverage is warranted, DOE would proceed with its
typical rulemaking process for both test procedures and standards,
applying the requirements of the Process Rule, as amended. See
generally, 84 FR 3910, 3916 (Feb. 13, 2019).
Comment Summary
DOE received a variety of comments responding to its proposal,
which would, at its core, emphasize the need for clearly establishing
coverage over the relevant product/equipment prior to taking any
additional steps, such as engaging with the public on matters involving
potential test procedures or possible energy conservation standards.
Commenters responded both in support of the proposal and against it.
Supporters of DOE's proposal included manufacturers, trade
associations, and utility companies.
Acuity agreed with the proposal, stating that it makes sense to
solicit public input and determine coverage prior to considering
potential standards for products/equipment. (Acuity, No. 95, at pp. 2-
3.) It added that a bifurcated approach like the one proposed by DOE
would save both DOE and stakeholders significant resources if there
should be a ``no coverage'' determination. (Acuity, No. 95, at p. 3.)
Acuity also agreed with DOE's proposal to identify newly covered
products in a limited fashion and to narrowly and clearly define any
new designations involving products. (Acuity, No. 95, at p. 3.)
BWC agreed with DOE's proposal to finalize a coverage determination
at least six months prior to publication of a test procedure proposal,
but it cautioned that the scope of coverage should be narrowly defined
so as to prevent any unintended consequences. (BWC, No. 103 at p. 2)
Westinghouse Lighting stressed that as a small manufacturer, it
does not have the bandwidth to quickly examine the impacts of a sudden
``last minute'' expansion in product coverage. It also emphasized that
the coverage determination process ``cannot go back to square one'' but
needs to have clear ``exit ramp options'' along the way to enable the
agency to drop or add a product that no one had considered earlier in
the process. (Westinghouse Lighting, March 21, 2019 Public Meeting
Transcript at pp. 161-162.)
AGA supported DOE's proposal to limit any expansion of coverage to
those narrow circumstances that satisfy the statutory requirements and
purpose of EPCA. (AGA, No. 114, at 13)
NEMA stressed that it preferred to have determinations of
rulemaking scopes of coverage, along with the completion of
accompanying test procedures, completed early during DOE's rulemaking
efforts. (NEMA, March 21, 2019 Public Meeting Transcript at p. 157)
The Joint Commenters also supported DOE's coverage determination
proposal. In their view, finalizing coverage determinations before the
initiation of any labeling, standards, or test procedure rulemakings
(by six months prior to the start of a test procedure rulemaking) is
necessary because it is impossible to address substantive issues until
the products at issue have been clearly and specifically defined.
(Joint Commenters, No. 112 at p. 3) They also asserted that any
proposed covered products/equipment should be narrowly defined with
sufficient clarity so that the proposed coverage corresponds to what is
intended to be covered. In their view, following the proposed approach
would avoid unnecessary confusion, the wasting of resources, and
failures to address relevant and critical issues. They also asserted
that finalizing coverage determinations first would ensure that both
stakeholders and DOE know what products/equipment are at issue in the
substantive rulemakings. The Joint Commenters also supported DOE's
proposal to initiate a new coverage determination process (and to
complete that process prior to moving forward either with a standards
or test procedure rulemaking) if DOE finds it necessary to expand or
reduce the scope of coverage during the substantive rulemaking process.
(Joint Commenters, No. 112 at pp. 3-4)
HPBA stressed that unless a given product is ``covered'' by DOE,
the Agency may not prescribe standards for that product (and only under
certain circumstances)--and before DOE considers proposing a standard,
there must be the possibility of a ``substantial improvement'' in that
product's energy efficiency and DOE must first consider whether
labeling requirements would be effective. (HPBA, No. 128, at pp. 1-2.)
HPBA elaborated that, with respect to labeling, the question is not
whether a labeling rule would achieve the same energy savings that a
mandatory standard would achieve but whether such a rule would be
insufficient ``to induce manufacturers to produce and consumers and
other persons to purchase'' products capable of achieving the highest
level of efficiency that would be technologically feasible and
economically justified. (HPBA, No. 128, at p. 2 (quoting from 42 U.S.C.
6295(l)(D)).) HPBA stressed that DOE's consideration of potential new
standards should occur only after the potential products for coverage
have been clearly identified but before any standards development has
begun and only after the criteria for issuing standards for newly
covered products under 42 U.S.C. 6295(l) (i.e., newly covered products)
have been satisfied. (HPBA, No. 128, at p. 2.)
EEI viewed the proposal as ``a good first step.'' (Edison Electric
Institute, March 21, 2019 Public Meeting Transcript at pp. 147)
HPBA suggested that DOE codify the predicate conditions for
substantive
[[Page 8650]]
regulations in the Process Rule and stressed that DOE must (1) be clear
as to what products are at issue, while determining that it is
necessary to regulate them and (2) settle the issue of finality for
judicial review to avoid having disputes over coverage before a
decision is made on whether to impose standards. To address the latter
of these, HPBA suggested characterizing the determination of coverage
as a ``preliminary determination of coverage.'' (HPBA, March 21, 2019
Public Meeting Transcript at pp. 148-49) Following this suggested
approach would lead to a final determination once standards are
adopted. (HPBA, March 21, 2019 Public Meeting Transcript at p. 149)
Responding to concerns during the March 2019 Public Meeting about
having to restart the whole process every time there is an error in the
coverage determination, Spire argued that it is necessary for the
process to restart to help ensure that manufacturers have an
opportunity to be involved in the process. (HPBA, March 21, 2019 Public
Meeting Transcript at pp. 153, 158)
Finally, GM Law supported what it regarded as DOE's proposal to
limit its ability to recognize new covered products. In its view, the
proposed approach would allow all interested parties to focus on the
most effective conservation measures. (GM Law, No. 105 at p. 3)
Commenters who expressed concerns about DOE's proposal, like those
who supported it, represented a variety of different interests. These
interested parties included energy efficiency advocacy groups, States,
and utilities.
Earthjustice expressed concern that DOE would not gather standards-
related information prior to finalization of the coverage
determination. (Earthjustice, March 21, 2019 Public Meeting Transcript
at p. 156)
NPCC disagreed with the proposed use of a separate coverage
determination process. In its view, having notice and comment on
coverage adds unnecessary burden and time to the standards process.
(NPCC, No. 94, at p. 5.)
ACEEE argued that requiring a final coverage determination prior to
initiating a test procedure or standard rulemaking, and a final test
procedure 180 days before a standards NOPR, will weaken coordination of
DOE's rulemaking process. In its view, these restrictions will prolong
the rulemaking process and prevent subsequent proceedings from
informing earlier ones, resulting in worse coverage and test procedure
decisions or years-long delays as the earlier rulemakings are repeated.
(ACEEE, No. 123, at p. 2) ACEEE also indicated that it generally
supported an approach that would result in completion of test
procedures well before the end of the comment period on the
accompanying energy conservation standard rulemaking for the affected
product, while leaving an ability to fix problems that may become
apparent later. (ACEEE, No. 123, at p. 2)
ASAP, like HPBA, supported the idea of settling the issue of
finality regarding a given coverage determination for judicial review
purposes and suggested that having a ``preliminary determination''
would help avoid the prospect of restarting the analytical process by
moving back to a coverage determination analysis for the entire product
or equipment type at issue. It envisioned a process where DOE could
continue to move forward on those products/equipment that were already
addressed by the earlier ``preliminary'' determination. (ASAP, March
21, 2019 Public Meeting Transcript at pp. 151-152) As proposed, ASAP
expressed concern that the coverage determination process would be
restarted whenever a problem with coverage is detected, which would
result in DOE being unable to produce a rule within a reasonable
timeframe, particularly if test procedures and coverage determinations
are not being addressed in parallel with each other. To avoid this
potential outcome, ASAP suggested that DOE adopt an approach that would
address coverage determination and test procedures simultaneously.
(ASAP, March 21, 2019 Public Meeting Transcript at pp. 167-168)
In jointly-filed comments, ASAP, et al. argued that the Process
Rule should not require that a coverage determination be completed
prior to initiating a rulemaking. These groups criticized DOE's
proposal as not reflecting the fact that information learned during the
rulemaking process for both test procedures and standards can, and
should, inform the coverage determination. (ASAP, et al., No. 126 at p.
2) They cautioned that the proposal would result in potentially adding
steps to the process and unnecessarily delaying rulemakings and pointed
to the miscellaneous refrigeration products rule to illustrate how
information that is learned during the rulemaking process can
ultimately inform the determination of coverage. (ASAP, et al., No. 126
at pp. 5-6)
The State AGs contended that DOE's proposal to issue final coverage
determinations six months prior to initiating a test procedure or
standards rulemaking would improperly delay the promulgation of
beneficial and necessary standards that are in the public interest.
They worried that a standards-setting rulemaking would be significantly
delayed if DOE determined that a coverage determination should be
modified after finalizing coverage. They also worried that the need to
restart the coverage determination process could act as a disincentive
to modifying coverage determinations, even when warranted by new
information obtained during the rulemaking process. In their view, the
current approach followed by DOE readily permits changes to the scope
of coverage as the process unfolds, while DOE's proposed approach would
require re-noticing of the coverage determination, re-finalization, and
restarting the 6-month clock for a standards rulemaking, all of which
could impact DOE's ability to meet statutory deadlines. (AGs Joint
Comment, No. 111 at pp. 8-9) The State AGs also contended that DOE's
proposed ``limited'' approach to identifying new covered products is
contrary to what they view as Congress's intent for DOE to continue
expanding covered products. (AGs Joint Comment, No. 111 at p. 4)
Finally, the State AGs noted that since coverage determinations allow
DOE to regulate previously unregulated products, a delay at this stage
would delay the potentially significant benefits that could accrue from
regulating these new products, contrary to EPCA's objective of
propelling the market for new efficient consumer and industrial
technologies. (AGs Joint Comment, No. 111 at pp. 8-9)
The CEC also made a variety of broad points in its public meeting
statements and comments. It stated its belief that it did not view the
issuance of a coverage determination to have a preemptive effect until
standards are set for the product at issue. (CEC, March 21, 2019 Public
Meeting Transcript at p. 165) It also argued that DOE must retain
flexibility to modify the applicable scope of coverage in response to
new information developed as part of the rulemaking process. (CEC, No.
121, at p. 4 (pointing to DOE's actions during its battery charger
rulemaking that resulted in moving backup battery chargers into a
separate rulemaking proceeding)) In its view, DOE's proposal to restart
its entire standard-setting process if it needs to revise the scope of
coverage would effectively prevent any appliances from becoming newly
covered products, regardless of the potential for energy savings, the
maturity of the test procedure, or the readiness for standards. (CEC,
No. 121, at p. 4.) The CEC added that, at best,
[[Page 8651]]
DOE's proposal would result in delayed standards without increasing
stakeholder participation or providing consumer benefits. (CEC, No.
121, at p. 4.)
CT-DEEP argued that the proposal's coverage determination provision
would generate an unnecessary and increased number of steps to the
rulemaking process in cases where DOE finds it necessary to modify the
scope of coverage during a rulemaking. (CT-DEEP, No. 93, at p. 2.) In
its view, to prevent unnecessary delays, DOEs should not require a
completed coverage determination prior to initiating a rulemaking. (CT-
DEEP, No. 93, at p. 2.)
The Cal-IOUs noted during the March 2019 public meeting that it
agreed with HPBA's suggestions--i.e., that DOE must codify the
predicate conditions for substantive regulations in the process rule,
which would involve (1) not only being clear as to what products are at
issue but also to determine that it is necessary to regulate them and
(2) making this decision final for judicial review purposes to avoid
having a dispute over coverage. (Cal-IOUs and HPBA, March 21, 2019
Public Meeting Transcript at pp. 148-150) (To the latter of these
points, Spire suggested the use of a ``preliminary determination of
coverage.'' (HPBA, March 21, 2019 Public Meeting Transcript at p. 149))
The Cal-IOUs were also concerned with whether the proposed process
would preempt State regulatory efforts. In their view, preemption
should not apply until the relevant test procedure and standards are
established. (Cal-IOUs, March 21, 2019 Public Meeting Transcript at pp.
155-156.) In their written comments, the Cal-IOUs again asserted that
final coverage determinations should be established only after
standards have been finalized for the product that is subject to that
determination. (Cal-IOUs, No. 124, at p. 6.) In their view, publishing
a final determination before establishing standards could be
problematic if modifications to the product scope are necessary during
the rulemaking process. (Cal-IOUs, No. 124, at p. 6.) They argued that
without the flexibility to readily modify the scope of coverage without
pausing a rulemaking to solicit public comment on the coverage
determination before moving forward, the rulemaking burden would
increase both on DOE and stakeholders. (Cal-IOUs, No. 124, at pp. 6-7
(alluding to various comments from the March 2019 Public Meeting
regarding potential problems with the proposed finalization of coverage
determination before establishing standards))
Finally, individual commenter Linda Steinberg provided a general
wholesale rejection of the proposal. (Steinberg, No. 90, at 1)
Response to Comments
DOE has carefully considered the comments it received from all
interested parties. While DOE has decided to largely continue with its
proposed approach, it is making certain clarifications to address the
concerns expressed in response to the proposal.
As a preliminary matter, DOE notes that without settling the
fundamental question of what product or equipment to regulate, all
other aspects of its regulatory framework--i.e. test procedures and
energy conservation standards--stand on infirm ground. By ensuring that
the scoping of a particular product or equipment type is appropriately
set, the necessary details regarding how to evaluate the efficiency of
that product/equipment can be discussed and evaluated. Once there is an
agreed-upon means on how to evaluate the energy efficiency of a
product/equipment, only then can there be a meaningful analytical
discussion regarding what the appropriate energy conservation standards
should be. And without completing the test procedure prior to issuing a
proposal on potential standards (and providing industry with time to
familiarize itself with the test procedure itself), the analytical
process in evaluating those potential standards would be more prone to
confusion and error in ensuring that an appropriate standard is set.
The approach that DOE is adopting in this final rule is consistent with
what DOE has done in the past, and the agency seeks to adhere to this
analytical sequence to help ensure that the framework that it applies
to newly covered products and equipment will stand on firm technical
and legal grounds.
Further, while DOE will seek to ensure that its coverage
determination is as complete as possible, the agency emphasizes that
coverage of a product/equipment type is necessarily broad in nature.
DOE does not anticipate many changes to the scope of coverage of a
product or equipment type once it finalizes a coverage determination
but it recognizes that there may be issues involving which classes of
products or equipment to regulate and how to regulate them. In DOE's
view, these timing and policy questions are separate from the issue of
determining coverage and can be addressed within the context of an
ongoing test procedure or standards rulemaking, as appropriate. By way
of a hypothetical example, if, after finalizing a coverage
determination for ``handheld or worn mobile communication-capable
computing devices'' that specifically includes smartphones, tablets,
and smartwatches, DOE discovers that another group of devices should
also have been covered--e.g., smartglasses--DOE would be able to
address that issue separately from the question of what testing method
or standard would apply to the remaining classes of products within
this product type. The question of coverage in this instance would be
handled separately, as would questions concerning the appropriate test
procedure and standards to apply. Once coverage is established, DOE may
opt to regulate certain classes of a particular product type and defer
regulating other classes for another time as appropriate.
DOE appreciates the concern expressed by Earthjustice regarding the
importance of obtaining sufficient data prior to making a final
decision regarding product or equipment coverage. This sentiment for
ensuring that DOE has sufficient information before making any final
coverage decision, as indicated in the earlier summary, was shared by
others as well. DOE notes that in performing its analysis to determine
whether to extend coverage over a particular product or equipment, it
would, as it routinely has in the past, collect as much information as
possible through its own analysis and research--including through
careful reviews of responses to DOE's requests for information to the
public. DOE is also hopeful that, given this apparently universally-
held belief in the importance of ensuring that the agency has
sufficient information on which to base its coverage determinations,
interested parties will endeavor to provide DOE with as much relevant
information as possible to help inform the decision-making process.
DOE also appreciates the concerns expressed by ACEEE to ensure that
coverage determinations are properly set. DOE agrees that this factor
is a critical consideration in the context of its test procedure and
standards rulemakings. A coverage determination is the foundational
step that serves as the stepping stone upon which an entire rulemaking
will stand--and without a strong foundation on which to build, the
framework of the rulemaking will be prone to difficulties in
implementation and potentially vulnerable to a legal challenge. DOE
wishes to avoid these and similar issues going forward to ensure that
its regulations are appropriately scoped and implemented.
Regarding the notion of continuing with an ongoing test procedure
or standards rulemaking if a problem with
[[Page 8652]]
a finalized coverage determination is found, DOE notes that the
addition (or removal) of a given product/equipment class as part of the
overall coverage of a product/equipment would be treated and analyzed
separately from the other classes already being examined and agreed
upon as appropriate for inclusion as part of an ongoing test procedure
or standards rulemaking. To the extent that a given coverage
determination is so defective that the determination itself needs
reevaluating--such as from the reliance on inaccurate energy use data--
DOE would pause its pending rulemakings to examine what aspects of its
rulemakings need modifying in light of the new information. That
process may very well involve seeking public comment and input to
assist DOE in addressing any deficiencies in its analysis and related
determination. DOE believes that the prospect of having to re-initiate
the coverage determination process--and the attendant regulatory
uncertainty and overall unpredictability that will follow--will serve
as sufficient incentive for all interested parties to participate fully
in the coverage determination process and provide DOE with
comprehensive and relevant data to consider as part of the Agency's
analysis when it first initiates a coverage determination for a product
or equipment type. When applied in this manner, DOE does not believe
that a ``preliminary determination,'' as suggested by HPBA and others,
is necessary to ensure the validity of coverage determinations or that
the rulemaking process is able to proceed in a timely fashion.
Accordingly, DOE is declining to adopt the suggested preliminary
determination approach. DOE may revisit this issue if circumstances
suggest that such a change is needed.
DOE notes that examples of coverage determination changes cited by
ASAP, et al. (miscellaneous refrigeration products) and the CEC
(battery chargers), reflect approaches that could still be followed
with respect to the addressing of any fundamental problems with
coverage. In the example of miscellaneous refrigeration products
(MREFs), DOE settled questions regarding coverage by eliminating
icemakers from the potential rulemaking's scope after initiating a
negotiated rulemaking. DOE does not anticipate that this process of
addressing coverage questions prior to setting out the framework for
related test procedures and standards would be altered by the
provisions adopted in this final rule. DOE also notes that because it
initiated a negotiated rulemaking to address test procedure- and
standards-related issues, the agency was able to address its various
regulatory framework issues through a mutually agreed-on negotiated
rulemaking process allowing the handling of these issues. See 80 FR
17355 (April 1, 2015). DOE agrees that the concurrent publication of
DOE's test procedure final rule and coverage determination for these
products, when following the normal course set out in this final rule,
would unfold differently than in the negotiated rulemaking process as
used in the MREF proceeding. See 81 FR 46768 (July 18, 2016).
Regarding the CEC's concerns, DOE first notes that it disagrees
with the CEC's suggestion that the proposed coverage determination
provision would prevent DOE from issuing any standards in the future.
Since EPCA separates the determination of coverage from the setting of
standards and test procedures, unless the problems with an earlier
coverage determination were defectively fatal, DOE does not anticipate
that the coverage determination provision being adopted in this final
rule will necessarily prevent the agency from issuing future standards.
Instead, it will help ensure that the scope of coverage that DOE sets
is appropriate and sets out a firm foundation for future rulemakings.
With respect to the backup battery charger situation cited by the
CEC, DOE notes that the removal of that class of products from the
battery charger rulemaking to a different product type's rulemaking
would still be possible, as no overall change to the product type
itself--i.e., battery chargers--was made. See 81 FR 38266, 38275 (June
13, 2016). Applying this final rule's approach would allow a finalized
coverage determination to continue to remain intact provided that the
removal of a given class of products would not affect DOE's ability to
demonstrate that the coverage criteria under 42 U.S.C. 6295(l) would
still be met. If, however, DOE can no longer demonstrate that these
criteria are satisfied, the prior coverage determination would need to
be re-evaluated and analyzed as appropriate.
As for the CEC's statements regarding preemption, DOE notes that
the scope of preemption is already covered by 42 U.S.C. 6297 and, as
applicable, 42 U.S.C. 6295(ii). In DOE's view, test procedure rules
would preempt any similar requirements imposed at the local level--
irrespective of whether standards for the products/equipment at issue
have been set. With respect to standards, any newly covered product for
which DOE sets coverage and standards would be addressed under 42
U.S.C. 6295(ii). DOE agrees with the CEC that under this scenario,
where DOE is setting standards for a newly covered consumer product
type for the first time, preemption of any pre-existing standards would
not occur until the compliance date for the relevant DOE standards is
reached. See 42 U.S.C. 6295(ii)(1). With respect to industrial
equipment for which DOE adds coverage, DOE believes that the provisions
of 42 U.S.C. 6297(b) do not require that a Federal standard must first
be effective in order for preemption to apply. This provision, which
preempts State and local regulations until such time that a Federal
standard becomes effective, provides an exception for those products
that were already addressed by regulations prescribed or enacted before
January 8, 1987 and applies to products before January 2, 1988.
(Special provisions applicable to certain types of lighting products
also apply.) Exceptions are also provided for a variety of other
regulations but have no bearing on the industrial equipment over which
DOE has authority to add coverage. See 42 U.S.C. 6297(b)(2)-(7).
With respect to the concerns expressed by the State AGs, DOE's
responsibility is to ensure that it establishes legally defensible
standards for newly covered products--in effect, to perform a balancing
test regarding the benefits of energy savings, the costs of producing
those savings, and the policy considerations inherent in making the
final decision on standards. This means that the standards that DOE
promulgates must produce significant energy savings that are
economically justified and technically feasible. DOE acknowledges
EPCA's goal of improving energy efficiency, and also emphasizes that
DOE must ensure that those standards are produced with the benefit of
full participation from interested parties to help it ascertain whether
the requisite criteria for setting standards in a given scenario are
met. DOE believes that the measured approach being adopted in this rule
will enable it to continue to do so in a manner that addresses the
concerns noted earlier by interested parties regarding the
predictability and transparency of DOE's process while ensuring that a
proper scope is used to set economically justified levels of energy
efficiency that will benefit the Nation as a whole.
If DOE determines to initiate the coverage determination process,
it will first publish a notice of proposed determination, limited to
the issue of coverage, in which DOE will explain how such products/
equipment that it seeks to designate as ``covered'' meet the
[[Page 8653]]
statutory criteria for coverage and why such coverage is ``necessary or
appropriate'' to carry out the purposes of EPCA. (42 U.S.C. 6292(b)(1))
In the case of commercial/industrial equipment, DOE follows the same
process, except that the Department need only show the coverage
determination is ``necessary'' to carry out the purposes of EPCA. (42
U.S.C. 6312) DOE's authority to add commercial equipment is more
limited than its authority to add consumer products because Congress
specified the particular types of equipment that could be added. (42
U.S.C. 6311(2)(B)) Stakeholders would then be given 60 days to submit
written comments to DOE on the proposed determination notice.
Subsequently (and in a change from DOE's past practice), DOE would
assess the written comments and then publish its final decision on
coverage as a separate notice, an action which would be completed prior
to the initiation of any rulemaking for related test procedures or
energy conservation standards. If the final decision determines that
coverage is warranted, DOE will proceed with its typical rulemaking
process for both test procedures and standards, applying the
requirements of the Process Rule, as amended. Specifically, DOE would
not issue any RFIs, notices of data availability (``NODAs''), or any
other mechanism to gather information for the purpose of initiating a
rulemaking to establish a test procedure or energy conservation
standard for the proposed covered product prior to finalization of the
coverage determination. DOE will also finalize coverage for a product
at least six months prior to publication of a proposed rule to
establish a test procedure. And, DOE will complete the test procedure
rulemaking at least six months prior to publication of a proposed
energy conservation standard. This timing does not present any legal
issue because adding coverage for a product and establishing test
procedures and standards is a purely discretionary act without legal
deadline.
The Joint Commenters, citing to 42 U.S.C. 6292(b)(1)(A), argued
that DOE should exercise its authority to identify new ``covered
products'' in a limited fashion, extending only to those products for
which EPCA regulation is ``necessary or appropriate'' to the
achievement of EPCA's purposes. They further argued that DOE's
authority to identify new ``covered products'' is limited to products
that consume at least enough energy to satisfy a stated minimum energy
consumption criterion. The Joint Commenters urged that coverage
determinations be made on a product-specific basis with each new
covered product being defined separately with sufficient clarity to
ensure that products serving different purposes are not treated as a
single covered product. They added that each product should
individually satisfy the minimum energy consumption requirement and
qualify as a ``necessary or appropriate'' target for regulation. The
Joint Commenters advocated that the Process Rule should be amended to
require that proposed and final coverage determinations under 42 U.S.C.
6292(b) specifically identify each of the products at issue and provide
a separate justification for the coverage of each. They further added
that DOE has failed to satisfy these requirements in the past.
Moreover, the Joint Commenters recommended that a final coverage
determination be in place before substantive rulemaking on test
procedures or energy conservation standards commences so that the
public clearly understands which products are covered, thus avoiding
unnecessary confusion, wasted resources, and the failure to address
critical issues. Lastly, the Joint Commenters suggested that the 1996
Process Rule requires a reopening of comment on the justification for a
coverage determination during the first rulemaking in which substantive
regulation is imposed and if broader coverage is required, a new
coverage determination must be proposed and finalized before initiating
a rulemaking to regulate the broader range of products. (Joint Comment,
No. 51 at pp. 9-10) Whirlpool and Lutron expressed support for these
views. (See Whirlpool, No. 76 at p. 1; Lutron, No. 50 at p. 2)
DOE agrees with the points raised by the Joint Commenters,
discussed previously, that DOE should exercise its authority to
identify new ``covered products'' in a limited fashion. To this end,
DOE proposes to extend coverage only to: (1) Those consumer products
for which EPCA regulation is ``necessary or appropriate'' to the
achievement of EPCA's purposes and which meet statutory consumption
criterion, and (2) to that commercial/industrial equipment for which
EPCA regulation is ``necessary'' to the achievement of EPCA's purposes.
DOE agrees that any proposed new covered products/equipment should be
narrowly defined with sufficient clarity so that the proposed coverage
corresponds to that which is intended.
DOE does not agree with the Joint Commenters' suggestion that all
coverage determinations must be reopened as a matter of course in the
first substantive rulemaking on the newly covered product/equipment.
After completing notice and comment on a proposed coverage
determination and issuing a final determination, DOE believes it is
appropriate to accord such process finality. However, if during the
substantive rulemaking proceeding DOE finds it necessary and
appropriate to expand or reduce the scope of coverage, the Department
agrees with the Joint Commenters' that a new coverage determination
process at that point should be initiated and finalized prior to moving
forward with the test procedure or standards rulemaking.
F. Early Stakeholder Input To Determine the Need for Rulemaking
In the February 2019 NOPR, DOE proposed to adopt provisions in the
revised Process Rule detailing the steps DOE would take prior to
issuing a notice of proposed rulemaking, including a proposed
determination not to amend an energy conservation standard or test
procedure. The proposed revisions focused on two main areas: (1)
Establishing an early assessment review of potential test procedure and
energy conservation standard rulemakings; and (2) clarifying what steps
DOE will take, and the corresponding opportunities stakeholders will
have to comment, after the early assessment review and before issuance
of any notice of proposed rulemaking. (84 FR 3910, 3917)
a. Early Assessment Review
In order to ensure that DOE maximizes the benefits of its
rulemaking efforts, DOE proposed to revise the Process Rule to include
an early assessment review of the suitability of further rulemaking.
Id. at 84 FR 3917. This purpose of this review is to limit the
resources, from both DOE and stakeholders, committed to rulemakings
that will not satisfy the requirements in EPCA that a new or amended
energy conservation standard save a significant amount of energy, and
be economically justified and technologically feasible; and that an
amended test procedure more accurately measure energy (or water) use
during a representative average use cycle, or reduce testing burden.
(42 U.S.C. 6295(o)(3)(B); 42 U.S.C. 6293(b)) Therefore, as the first
step in any proceeding to consider establishing or amending an energy
conservation standard or amending a test procedure, DOE would publish a
notice in the Federal Register announcing that DOE is considering
initiation of a proceeding, and as part of that notice, DOE would
request submission of related comments, including data and information
showing whether any new or amended standard
[[Page 8654]]
would satisfy the relevant requirements in EPCA for a new or amended
energy conservation standard or an amended test procedure. Based on the
information received in response to the notice and its own analysis,
DOE would determine whether to proceed with a rulemaking for a new or
amended energy conservation standard or an amended test procedure. If
DOE determines that a new or amended standard or amended test procedure
would not meet the applicable statutory criteria, DOE would engage in
notice and comment rulemaking to make that determination. If DOE
receives sufficient information suggesting it could justify a new or
amended standard or the information received is inconclusive with
regard to the statutory criteria, DOE would undertake the preliminary
stages of a rulemaking to issue or amend an energy conservation
standard. Beginning such a rulemaking, however, would not preclude DOE
from later making a determination that a new or amended energy
conservation standard or amended test procedure cannot satisfy the
requirements in EPCA. (84 FR 3910, 3917, 3921)
In response, several commenters supported the addition of an early
assessment review. For example, Acuity stated that early determinations
at these stages will save regulated parties and the Department
countless hours and valuable resources by cutting off what have become
virtually automatic rulemakings to update standards and test
procedures--updates that no longer produce meaningful energy savings
and divert attention and resources from pro-consumer innovation, R&D,
etc. (Acuity, No. 95, at p. 3) Similarly, Joint Commenters stated that
early assessment improves and streamlines the Department's approach to
rulemaking by identifying early in the process how DOE should use its
resources. (Joint Commenters, No. 112, at p. 4)
DOE also received comments expressing various concerns with the
proposed early assessment review process. Several commenters were
concerned that the addition of the early assessment review would
increase the length of the rulemaking process and make it more
difficult for DOE to meet applicable statutory deadlines. For instance,
CEC stated that the early assessment review should be completed in
sufficient time for DOE to meets its statutory deadlines under EPCA, as
delays caused by adding new procedures are not sufficient to change
those Congressional mandates. (CEC, No. 121, at p. 5)
In response, DOE notes that the purpose of the early assessment
review is to reduce the length of the rulemaking process when issuing a
determination that a new or amended energy conservation standard or
amended test procedure is not warranted under the applicable statutory
criteria. And, while DOE acknowledges that the early assessment review
adds an additional step to rulemaking processes, this step will allow
DOE to focus more resources on rulemaking activities that result in a
new or amended energy conservation standard or amended test procedure.
As a result, DOE believes the increase in available resources will
offset, in part or whole, the extra time spent conducting an early
assessment review.
Commenters, such as ASAP, et al. and ASE, also expressed concern
that the early assessment review process is unnecessarily duplicative
of DOE's current process regarding preliminary rulemaking activities.
(ASAP, et al., No. 126, at p. 7; ASE, No. 108, at p. 5) In response,
DOE notes that the early assessment review is not just an earlier
version of DOE's normal rulemaking analysis. The goal of the early
assessment review is to conduct a more focused, limited analysis of a
specific set of facts or circumstances that would allow DOE to
determine that, based on one or more statutory criteria, a new or
amended energy conservation standard or amended test procedure is not
warranted.
Some commenters expressed concern that the early assessment review
would shift the burden of determining whether to proceed with a
rulemaking to stakeholders. For instance, NPGA disagreed with placing
the onus on stakeholders to demonstrate that new regulatory action is
not necessary, and CEC stated that DOE will simply defer to commenters
about whether a test procedure amendment is necessary, without
conducting its own analysis, and then make a determination not to amend
a test procedure without an opportunity for the public to comment on
the reasoning behind that determination. (NPGA, No. 110, at p. 2; CEC,
No. 121, at p. 6) Additionally, Cal-IOUs stated that an early
assessment review creates a heavy stakeholder burden to review,
research, test, and validate all aspects of a test procedure in the
typical 30-day comment period because after the early assessment, DOE
could decide a more thorough review of the test procedure is not
required based on stakeholder comments in this limited window, ending
the rulemaking process. (Cal-IOUs, No. 124, at pp. 11-12) In response,
DOE clarifies that the revisions to the Process Rule do not affect
DOE's responsibility to determine whether a rulemaking satisfies
applicable statutory criteria under EPCA. DOE has always solicited
input from stakeholders during the rulemaking process, but that has
never changed the fact that it is DOE's responsibility to determine
whether an energy conservation standard or test procedure is
promulgated in accordance with the criteria and procedures laid out in
EPCA.
b. Other Avenues for Early Stakeholder Input in the Rulemaking Process
In a November 6, 2010, policy statement, DOE stated that while the
framework document and preliminary analysis provide useful information,
there are more efficient ways of gathering data. Accordingly, in
appropriate cases, the Department will gather the needed preliminary
data informally and begin the public rulemaking process with the
issuance of a proposed rule for public comment.\13\ In the February
2019 NOPR, DOE proposed to revise this process to ensure stakeholders
have the opportunity to comment prior to issuance of a proposed energy
conservation standard or test procedure rule. Assuming the early
assessment review process does not result in DOE issuing a
determination that a new or amended energy conservation standard or
amended test procedure is not warranted, DOE would issue a framework
document and preliminary analysis or an ANOPR. These documents, as
opposed to ``informal'' data gathering, would provide the necessary
robust analysis to determine whether to move forward with a proposed
standard. RFIs and NODAs could be issued, as appropriate, in addition
to these analytical documents. (84 FR 3910, 3918, 3921)
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\13\ The November 6, 2010 Policy Statement is available at
https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf.
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In general, commenters were in favor of ensuring stakeholders have
to opportunity to comment prior to issuance of a proposed rule. For
instance, ASAP, et al. supports providing an opportunity for early
stakeholder input prior to the publication of a NOPR, and CTA stated
that greater opportunities for early stakeholder input is a step that
would make more efficient use of government and private sector
resources. (ASAP, et al., No. 126, at p. 2; CTA, No. 136, at p. 3) GWU
stated that the proposed revisions to the Process Rule would improve
opportunities for public
[[Page 8655]]
participation by committing the agency to procedures for early
stakeholder input, thereby strengthening DOE's decision-making process
and aligning with good regulatory practices. (GWU, No. 132 at pp. 3, 6)
With regard to specific vehicles for early stakeholder input, CEC
supported the elimination of ANOPRs ``in favor of flexibility in
determining the appropriate document for early stakeholder input,''
while AGA supported the continued use of the ANOPR process. (CEC, No.
121, at p. 6; AGA, No. 114, at p. 16) AGA also stated that DOE should
explain its rationale for choosing a particular vehicle for early
stakeholder input. (AGA, No. 114, at p. 16)
In response to these comments, DOE agrees that there are a variety
of approaches that can achieve the goal of early information gathering
in the rulemaking process. The ANOPR might be preferable in a given
proceeding. Alternatively, an RFI or Notice of Data Availability would
also allow for early stakeholder input through a request for comments
in circumstances where DOE may not have sufficient information to
develop an ANOPR. DOE might issue a Framework Document and Preliminary
Analysis where DOE received information in response to the early look
that might have been inconclusive with regard to the need for a new or
amended standard, and DOE seeks additional input to help make that
determination. These alternate tools equally promote transparency in
DOE's process and allow for early information exchange. As such, DOE
does not believe it is necessary to establish guidelines or scenarios
for utilizing a specific form of early stakeholder input. In all cases,
DOE will provide for some form of preliminary data gathering and public
comment process, including either an ANOPR or Framework Document and
Preliminary Analysis, prior to issuing a proposed rule.
G. Decision-Making Process for Issuing a Determination Not To Issue a
New or Amended Energy Conservation Standard or an Amended Test
Procedure
In the February 2019 NOPR, DOE proposed to adopt provisions in the
revised Process Rule detailing DOE's decision-making process when
determining whether a new or amended energy conservation standard or an
amended test procedure is warranted under the relevant provisions in
EPCA. In determining whether to move forward with a given energy
conservation standards rulemaking, DOE stated it would address a series
of issues that, while more expeditious than a complete rulemaking
analysis, would nonetheless be supported by a thorough analysis to
ensure that DOE proceeds with only those rulemakings that may yield a
significant conservation of energy and be technologically feasible and
economically justified. (84 FR 3910, 3920) For instance, if DOE is able
to determine that a new or amended standard would not meet the
threshold for significant energy savings, DOE would issue a proposed
determination not to issue a new or amended standard without conducting
additional analyses to determine whether a standard would also be
technologically feasible and economically justified. DOE stated that it
would apply a similar process for test procedure rules in order to
determine whether an amended test procedure would more accurately
measure the energy or water use of a covered product during a
representative average use cycle or reduce testing burden. (84 FR 3910,
3921)
Joint Commenters, along with several others, noted that EPCA grants
DOE authority to issue determinations of no new amended standards after
considering three factors: Significant energy savings, technological
feasibility, and cost effectiveness. (Joint Commenters, No. 112, at p.
6) CEC stated that DOE should replace the term ``economically
justified'' with ``cost effective'' throughout the early assessment
process, instead of adding new considerations that are not permitted
under the statute. (CEC, No. 121, at p. 6)
In response, DOE notes that there are two situations in which DOE
will issue determinations of no new amended standards. First, as
commenters have pointed out, DOE has authority to issue determinations
of no new amended standards based on three factors: Significant energy
savings, technological feasibility, and cost effectiveness. (42 U.S.C.
6295(m)(1)(A) and 42 U.S.C. 6295(n)(2)) However, DOE is also only
authorized to issue an amended standard if the standard would result in
significant conservation of energy and would be technologically
feasible and economically justified. (42 U.S.C. 6295(m)(1)(B) and 42
U.S.C. 42 6295(o)) If an amended standard does not satisfy these
criteria, DOE will issue a determination that an amended standard is
not warranted. As a result, DOE has revised the Process Rule to reflect
DOE's statutory obligation to consider both cost effectiveness and
economic justification when issuing a determination not to amend a
standard.
H. Significant Savings of Energy Threshold
1. Comments on the Proposed Threshold Approach
The December 2017 RFI raised a number of issues for which DOE
sought comment with respect to how the Process Rule might be improved.
Among these issues was whether (and if so, how) to give a more
definitive meaning to the statutory phrase used in EPCA: --
``significant conservation of energy'' (or stated more generically,
``significant energy savings''). In response to numerous comments to
the RFI urging DOE to address this larger issue of what level of
potential energy savings would be appropriate for purposes of
satisfying EPCA, DOE proposed using a two-step threshold for
determining whether setting energy conservation standards for a given
product or equipment type would be likely to lead to a significant
conservation of energy. See 84 FR 3910, 3921 (Feb. 13, 2019). See also
42 U.S.C. 6295(o)(3)(B) (prohibiting DOE from prescribing an amended or
new standard for a type or class of covered product if the Secretary
determines that the standard ``will not result in significant
conservation of energy'' or that the standard is not ``technologically
feasible or economically justified.'')
Under the first step of this proposed approach, the projected
energy savings from a potential maximum technologically feasible
(``max-tech'') standard would be evaluated against a set numerical
threshold. This initial step would be performed to ascertain whether a
potential standard level would enable DOE to avoid setting a standard
that ``will not result in significant conservation of energy,'' as
provided under 42 U.S.C. 6295(o)(3)(B). (84 FR 3910, 3923) DOE proposed
a quad-based threshold of 0.5 quad for this first step. (Id. at 84 FR
3924) Under the second step of the proposed approach, if the projected
max-tech energy savings failed to meet or exceed this initial numerical
threshold (with any lower level expected to achieve even less energy
savings), those max-tech savings would then be compared to the total
energy usage of the product/equipment to calculate a potential
percentage improvement in energy efficiency/reduction in energy usage.
(Id. at 84 FR 3923) DOE had proposed a percentage threshold of 10
percent, meaning that if the difference between the projected max-tech
savings and the total energy usage of the product/equipment was under
the 10 percent threshold, the analysis would end, and DOE would
determine that no
[[Page 8656]]
significant energy savings would likely result from setting new or
amended standards. (See Id. at 84 FR 3923-3924). This step would ensure
that DOE will promulgate those standards that are most likely to confer
substantial benefits to consumers and the Nation and eliminate from
further consideration those potential standards that are projected to
result in substantially lower energy savings below those generated
under the relevant threshold. (Id. at 84 FR 3923)
Satisfying either of these thresholds would trigger DOE to analyze
whether a standard can be prescribed that produces the maximum
improvement in energy efficiency that is both technologically feasible
and economically justified (and still constitutes significant energy
savings at the level determined to be economically justified). See 42
U.S.C. 6295(o)(2)(A). Because technological feasibility is already
determined through the max-tech analysis, DOE would then focus on
performing an economic justification analysis under the seven criteria
in 42 U.S.C. 6295(o)(2)(B)(i). DOE is issuing a proposal elsewhere in
this issue of the Federal Register to amend the previous process for
determining whether and what standard can satisfy the criteria under
EPCA. Id.
As DOE explained in the preamble to its proposal, in performing
this analysis, the Agency would consider the total amount of energy
savings at issue at each trial standard level (``TSL''). Assuming that
DOE uses a minimum numerical threshold and a separate percentage
threshold, the projected savings for any given TSL would be measured
against these two thresholds. DOE would perform its economic analysis
to determine whether an economically justified level (producing the
maximum amount of energy savings possible) can be reached that meets or
exceeds either of these thresholds. The analysis would proceed to
compare that projected savings against the amount that the examined
product/equipment consumes at each TSL. (84 FR 3910, 3923)
Unsurprisingly, DOE's proposed significant energy savings threshold
approach generated substantial interest from commenters. These comments
came during both of DOE's two separate public meetings to discuss its
proposal as well as in written submissions. Commenters generally fell
into one of two groups--those who supported the use of a threshold
(including those who suggested modifications to the proposed approach)
and those who opposed the use of a threshold.
A. Comments Supporting the Proposed Threshold Approach
Commenters who supported the idea of applying a threshold for
significant energy savings included AHAM, AHRI, AGA, BWC, CTA, GEA, GMU
Law, GWU, the Joint Commenters, Lutron, NAFEM, NEMA, Regal-Beloit,
Rheem, Samsung, Signify, Southern Co., Spire, and BHI. Among these
commenters, AHAM, BWC, the Joint Commenters, and Samsung, preferred
that a threshold level different from the proposed levels be used.
Regal-Beloit suggested that, in addition to the proposed thresholds,
DOE supplement its approach to include the use of a ratio of quads over
cost impacts (in dollars). The company asserted that using this method
would enable DOE to help ensure that it could still avail itself of
energy savings opportunities in those cases where a free or low cost
opportunity to achieve additional energy savings is possible--but would
not meet the proposed 0.5 quad threshold. (Regal Beloit Corp., March
21, 2019 Public Meeting Transcript at p. 291) EEI also suggested that
an exception or different threshold for ASHRAE equipment as well as
those products and equipment with smaller markets be used. (Edison
Electric Institute, March 21, 2019 Public Meeting Transcript, No. 87 at
p. 268)
Regarding specific issues raised by commenters favoring the use of
thresholds, AHRI supported the use of a definition for significant
energy savings and did not agree with criticisms that DOE's proposal
was arbitrary, arguing instead that DOE's approach was based on a
reasoned analysis. (AHRI, March 21, 2019 Public Meeting Transcript, No.
87 at p. 242)
AGA supported DOE's premise that the setting of a significant
conservation of energy threshold should be non-trivial and that each
candidate standard considered should result in significant energy
savings. In its view, the thresholds set should illustrate a problem
large enough to justify a regulation or rule. It asserted that DOE's
proposal establishes a mechanism to evaluate whether a new standard is
appropriate based on the significance of the energy savings, the
technological feasibility of a given standards proposal and the
economic effect of a proposed standards rule. It suggested that
whatever methodology adopted by DOE should consider a combination of
the anticipated percentage reduction of energy consumption for the
covered product compared to the existing standard, along with the
impact of overall energy consumption in the market sector. (AGA, No.
114 at pp. 19-20) In its view, reviewing a proposed standards
rulemaking under the proposal's approach would indicate if a standard
merits amending--for example, AGA asserted that a new standard for a
consumer product ``may not be needed if it could achieve a 20% increase
in efficiency, but only negligibly contribute to a reduction in overall
residential energy consumption.'' (AGA, EERE-2017-BT-STD-0062, No. 114
at p. 20)
CTA agreed that DOE should apply a threshold with respect to
whether the projected energy savings for a given standard would be
significant for purposes of satisfying the statutory requirements under
EPCA. Without a specific numerical threshold, it argued,
interpretations of what is ``significant'' will vary by stakeholder and
administration. In its view, such a threshold would also support
priority-setting to help DOE in managing its periodic rulemaking
obligations and related accumulated backlog of rulemaking activities.
It asserted that establishing a threshold for significant energy
savings, as well as having a formal consideration of diminishing
returns and non-regulatory alternatives, are necessary for
prioritization and the effective use of public resources. (CTA, No. 136
at p. 3)
Coupled with its belief that the proposal will help alleviate
unnecessary regulatory burdens on the regulated entities as well as
DOE, GEA asserted that it was particularly important for DOE to
establish a requirement to demonstrate significant energy savings will
occur before a revised standard is set. (GEA, No. 125 at p. 2)
GMU Law also favored the adoption of a minimum threshold for
``significant'' energy savings as a way to increase predictability and
reduce regulatory uncertainty. (GMU Law, No. 105 at p. 3) In its view,
DOE's proposal not only did not contradict the Herrington opinion, it
reflected the type of cost-benefit analysis that the Herrington court
expected DOE to perform, but which DOE had not done in the case before
it. (GMU Law, No. 105 at pp. 7-8) GMU Law added that DOE's previous
reading of the term ``significant'' as meaning ``non-trivial'' was
based on a misreading of the Herrington decision and that DOE is
permitted to conclude that the small energy savings benefits from a
potential standard may be outweighed by the costs involved. (GMU Law,
No. 105 at p. 7)
GWU supported a threshold-based analysis to avoid marginally
effective revisions to standards whose benefits are outweighed by their
costs. (GWU,
[[Page 8657]]
No. 132 at p. 8) However, GWU argued that because expected energy
savings are based on projections, DOE should also conduct ex-post
evaluations to determine the accuracy of the savings estimates of
standards that are implemented. Furthermore, GWU stated that a
threshold-based analysis should not be used as the sole determinant of
whether a standards rulemaking should proceed with notice and comment,
but instead be used to filter out standards where decreasing marginal
returns to energy savings likely exist. To this point, GWU argued that
in some cases, standards with benefits that do not outweigh their costs
may still reach the threshold, which is why economic justification
analysis is needed. GWU stated that DOE should ensure that standards
undergo economic justification analysis before issuing a NOPR. (GWU,
No. 132 at p. 8)
Lutron indicated that setting a threshold for significant energy
savings is critical to adding clarity to, and planning for, future
rulemakings, which would result in reducing burden by reducing
regulatory uncertainty. (Lutron, No. 137 at p. 2)
NAFEM supported the development of objective thresholds for
determining what constitutes ``significant energy savings.'' It
suggested that rather than use the proposed 0.5 quad threshold, that
DOE instead analyze the 57 standards examined under the proposal using
the Pareto philosophy, where 80 percent of the deliverables would come
from 20 percent of the activities. NAFEM asserted that since the Pareto
analysis is consistently used in quality control and pertinent business
research, DOE should consider using it in determining significant
energy savings to provide a more grounded and defensible threshold.
(NAFEM, No. 122 at p. 4)
NEMA supported the proposed threshold, noting that it provided DOE
with a means to determine whether the potential energy savings in a
given scenario are worth pursuing. It asserted that without a clearly
defined path, the answer to the question of whether to set a more
stringent standard would always be yes. (NEMA, March 21, 2019 Public
Meeting Transcript, No. 87 at p. 244)
During the March 2019 public meeting, Rheem initially indicated
that while it was unsure whether the proposed 0.5 quad threshold was
``the right number,'' it suggested that DOE consider the impact to the
consumer. In other words, if going forward with a particular standard
for a given item would result in the consumer paying significantly more
to purchase that item, that standard would not be a good option for DOE
to select. Rheem supported the idea of having guidelines for DOE to
follow and expressed reluctance over a ``one-size fits all'' approach.
(Rheem, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 263-
264) Rheem's written comments supported DOE's proposed changes to its
significant energy savings analysis and the definition of significant
energy savings without elaborating further. (Rheem, No. 101 at p. 1)
Signify supported the setting of minimum threshold energy savings
requirements and it asserted that such an approach would help DOE with
prioritization and in focusing on the right energy savings
opportunities. (Signify, No. 116 at p. 1)
Southern Co., like some other commenters, was unsure whether the
proposed 0.5 quad threshold was the appropriate value to apply. It
asserted that there is value in setting a formalized threshold value,
since what DOE has considered ``significant'' has varied in the past.
(Southern Company, March 21, 2019 Public Meeting Transcript, No. 87 at
p. 246) Southern Co. also suggested that the threshold be a presumption
and not mandatory. In its view, DOE should develop a procedure that
offers an avenue for exceptions instead of having only a hard rule.
(Id. at 266.) Southern Co. also echoed EEI's suggestion with respect to
ASHRAE equipment and stated that the significant energy thresholds
under consideration by DOE should not apply when DOE is conducting
rulemakings under the ASHRAE-related provisions. It argued that not all
of the different equipment types that are addressed by ASHRAE have the
potential of yielding energy savings at the proposed threshold levels.
Consequently, in its view, applying the proposed thresholds within the
context of DOE's ASHRAE rulemakings under 42 U.S.C. 6313(a)(6) is not
needed. (Southern Co., March 21, 2019 Public Meeting Transcript, No. 87
at p. 122)
Spire indicated during the March 2019 public meeting that DOE
should clarify certain aspects of its proposal. In particular, it
suggested that DOE include definitions for ``quad,'' ``site,''
``source,'' ``discount rates,'' and other related terms used in the
proposal. (Spire, March 21, 2019 Public Meeting Transcript, No. 87 at
p. 284) Spire offered further observations as part of its written
comments. First, it asserted that DOE needs to specify the metric being
used, and -- it suggested the use of ``source'' or ``primary'' energy
and that the value used should include energy losses upstream of power
plants. (Spire, No. 139 at p. 10.) Second, it suggested, consistent
with DOE's proposal, that the Process Rule be made enforceable to
mitigate the risk of litigation. (Spire, No. 139 at p. 11.) Spire
indicated its support for DOE's proposed threshold-based approach
provided that these two conditions are met. (Id.)
BHI supported the concept of a significant energy savings threshold
as a means for DOE to deploy its rulemaking resources on products with
the greatest energy saving potential. With respect to the proposed 0.5
quad threshold, BHI offered no specific comments other than to state
that it expected DOE to set an initial level compatible with its
objective to assign adequate resources for effective rulemaking
processes. It added that it expected future rulemakings could amend the
initial level as specific energy conservation standards reach points of
diminishing returns (or [are] no longer eligible for an amended
standard) and/or as the availability of the Department's resources
fluctuates. (BHI, No. 135 at p. 3)
Some supporters of DOE's proposed approach also suggested applying
different threshold levels. AHAM suggested that the quad threshold
should be higher than the proposed 0.5 quad but offered no particular
alternative or explanation as to why. (AHAM, March 21, 2019 Public
Meeting Transcript, No. 87 at p. 223) BWC suggested that DOE consider a
threshold of 1 quad, which it argued would justify a standard on a per-
household basis but remain consistent with the threshold discussed in
the Herrington case. Regarding the proposed percentage threshold, BWC
questioned whether this level was appropriate, particularly in the
context of products that have previously been regulated or may be
nearing the maximum available technology--but it did not offer a
specific alternative for DOE to consider. BWC added that it had no
objections to the general concept of a threshold test using a hybrid
approach for an overall level of energy savings and a certain
percentage of efficiency improvement. (BWC, No. 103 at p. 3) The Joint
Commenters supported DOE's approach as well as the proposed threshold
levels. They added, however, that their own analysis for 21 past
rulemakings demonstrated that a 1.0 quad threshold over 30 years could
be more appropriate.\14\ With respect to the
[[Page 8658]]
proposed percentage increase in efficiency, the Joint Commenters
supported the proposed 10-percent level as appropriate. They also
supported having a bright-line rule for significant energy savings as
it would provide certainty and predictability. (Joint Commenters, No.
112 at p. 7) Samsung, however, criticized the proposed 0.5 quad
threshold as unnecessarily high and could hinder the advancement of
energy efficiency standards for newly covered products. It asserted
that energy efficiency standards have incentivized innovation in
various product categories and have resulted in significant cost
savings for consumers and environmental benefits. In spite of its
concerns regarding the proposed quad-based threshold, Samsung
nonetheless supported the proposed threshold for a 10-percent increase
in energy efficiency/energy use reduction. (Samsung, No. 129 at p. 2)
---------------------------------------------------------------------------
\14\ For support, the Joint Commenters cited to a June 30, 2014,
submission from the National Electrical Manufacturers Association
regarding a proposed rulemaking addressing general fluorescent lamps
and incandescent reflector lamps. That submission showed, among
other things, the projected savings over 30 years (in quads) over
the estimated industry net present value impacts for these two
lighting equipment types when compared to the overall average
projected energy savings for DOE's appliance efficiency rulemakings
completed between 2008 and the date of the submission--2.156 quads.
See NEMA, EERE-2011-BT-STD-0006, No. 54 at p. 4.
---------------------------------------------------------------------------
B. Comments Opposing the Proposed Threshold Approach
Commenters who opposed DOE's proposal to use a significant energy
savings threshold included A.O. Smith, ACEEE, the AG Joint Commenters,
American Efficient, ASAP, ASE, Bosch, CEC, CT-DEEP, Earthjustice,
Energy Solutions (on behalf of the Cal-IOUs during both public
meetings), Ingersoll Rand, NYU Law, NEEA, NPCC, NRDC, Ms. Linda
Steinberg, and PG&E (in conjunction with all Other Cal-IOUs in written
comments). These commenters contended that applying a threshold was not
only unnecessary but conflicted with EPCA.
DOE notes that one comment written on a single postcard expressed
general dissatisfaction with the entirety of DOE's proposal. (Linda
Steinberg, No. 90 at p. 1)
A.O. Smith was concerned about having what it viewed as defining
``significant energy savings'' by an arbitrary number. It argued that
DOE should only consider the cost effectiveness of a given standard and
that it did not understand why DOE needed to set a threshold. (A.O.
Smith, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 28,
237.) A.O. Smith also posed the question of how DOE would treat a
consensus agreement that presented potential energy savings that fell
shy of the proposed quad threshold--i.e. whether the agreement would
also be bound to the minimum threshold in order for DOE to move forward
with a DFR on that agreement. (Id. at 239-241.)
ASE argued that there is an inherent arbitrariness and
inflexibility to setting any threshold, including when stakeholders may
reach a consensus on an alternate path towards potential standards. ASE
suggested that DOE instead examine whether energy savings from
standards are cost-effective both in terms of the amount of energy
saved and other benefits. ASE also criticized DOE for considering a
significant energy savings threshold when it should be focused on
meeting statutory deadlines. (ASE, No. 108 at p. 5)
ACEEE pointed out during the public meeting that DOE needed to
clarify whether the proposed threshold was based on source or site
energy. It also argued that having a hard threshold would prevent DOE
from setting a national standard that benefits both manufacturers and
consumers. (ACEEE, March 21, 2019 Public Meeting Transcript, No. 87 at
p. 277) ACEEE also asserted its belief that while a standard threshold
is not needed, if DOE were to set one, the threshold should not only be
at a much lower level but also be a rebuttable presumption rather than
an inflexible requirement. It asserted that without having some
flexibility in the treatment of the threshold, DOE may be prevented
from considering consensus agreements, thus leaving manufacturers
subject to a patchwork of State standards on a product. ACEEE also
argued that requiring a threshold could also prevent DOE from
considering a standard that would have a large impact on peak electric
load or on a specific fuel. In its view, DOE should have the
flexibility to consider these types of impacts. (ACEEE, No. 123 at p.
3)
During the March 2019 public meeting, ASAP argued that
``significance'' cannot be determined as a proportion of a figure but
is an absolute value. (ASAP, March 21, 2019 Public Meeting Transcript,
No. 87 at pp. 256-57) It also sought clarity regarding when DOE's
proposed ``significance analysis would be conducted in relation to
other steps in the proposed revisions to the rulemaking process. (Id.
at 260.) Additionally, ASAP, et al. argued that DOE should maintain its
current interpretation of significant energy savings, which, it
asserted, has been to view significant energy savings under the statute
as savings that are not ``genuinely trivial.'' ASAP, et al. stated in
written comments that DOE's proposal would establish arbitrary
thresholds for defining significant savings that could result in large
lost savings for consumers and businesses and prohibit the adoption of
consensus agreements. It asserted, without providing supporting
evidence, that energy savings of 0.5 quad are equivalent to electricity
bill savings of about $7 billion and that DOE's proposal would
sacrifice billions of dollars in potential savings for consumers and
businesses. ASAP, et al. also asserted that the proposal is not
consistent with Herrington or Congress' intent. (ASAP, et al., EERE-
2017-BT-STD-0062, No. 126 at pp. 2, 9)
Further, ASAP, et al. did not agree with DOE's justification for
the 0.5 quad threshold. In their view, the fact that a subset of rules
comprises a relatively small portion of total savings does not mean
that the savings from those rules are not significant. These commenters
highlighted language cited in Herrington in which the Chairman of the
House Sub-Committee on Energy and Power, Representative John Dingell,
explained that ``conservation must be approached on a nickel and dime
basis'' and that ``the cumulative impact of a series of conservation
initiatives, which in themselves might appear insignificant, could be
enormous.'' (ASAP, et al., No. 126 at p. 9) ASAP, et al. did not
believe that the proposed thresholds reflected the intent of Congress,
pointing in particular to Herrington's discussion regarding the annual
energy use threshold of 4.2 billion kWh established by Congress for
prescribing standards for a newly-covered product. (ASAP, et al., No.
126 at p. 9 (citation omitted)). Using figures cited in the proposal,
the commenters argued that for a product consuming 1.45 quads over 30
years, achieving 0.5 quad of savings would require a reduction in
energy use of about 33%. ASAP stated that DOE appears to recognize that
in proposing a 10% savings threshold, it is not reasonable to assume
that Congress intended that a 33% reduction in energy use for a product
consuming 4.2 billion kWh would be necessary in order for the savings
in quads to be considered ``significant.'' Citing Herrington, the
commenters stated that ``Congress knew that standards for some covered
products would produce quite modest incremental gains in efficiency and
consequently in energy conserved.'' (Id. at 10 (citation omitted)) ASAP
added that DOE's proposal would foreclose the possibility of pursuing a
standard that did not meet the thresholds even if there would be no
first-cost impact and gave some examples of potential scenarios where
such rules would have been prohibited by the proposed threshold.
[[Page 8659]]
(See id.) ASAP added that the determination that a new or amended
standard would constitute ``significant'' energy savings is not a
determination that such a standard is economically justified. In its
view, DOE's proposed thresholds for determining significant savings
would eliminate DOE's ability to even consider whether a standard that
would not meet the thresholds would be economically justified. (Id. at.
2, 9-11)
The AG Joint Commenters also criticized DOE's proposed significant
energy savings threshold (which the commenters believed would short-
circuit the standard-setting process) as a contravention of
congressional intent, as expressed through EPCA, to save energy
whenever technologically feasible and economically justified. (AGs
Joint Comment, No. 111 at p. 4) They argued that setting a bright-line
requirement for an energy savings threshold is an unlawful
interpretation of EPCA that is both arbitrary and contrary to the APA.
In their view, the proposal provided no substantive justification for
the thresholds chosen or how these thresholds are appropriate in light
of congressional intent, particularly how they strike an appropriate
balance between lost energy savings and reduced regulatory burden,
consistent with EPCA. They further asserted that DOE failed to explain
whether the reduction in regulatory burden would outweigh the reduction
in benefits that would be lost from the foregone standards, and warned
that the proposal risks misinterpreting EPCA's significant energy
savings provision in the same manner the agency had done in the run-up
to the Herrington case. (AGs Joint Comment, No. 111 at pp. 9-11) The
commenters argued that DOE must evaluate standards for a given product
or equipment type unless the energy savings are ``genuinely trivial,''
so as to avoid foregoing cost-free benefits, and stressed that failing
to conduct an economic justification analysis would mean that DOE
cannot answer this fundamental question from Herrington. They added
that the proposed use of a threshold could preclude regulations that,
while producing small benefits individually, would result in
substantial benefits cumulatively. The commenters suggested that only
by combining the significant energy savings threshold with the seven
factors for economic justification can DOE ensure that it is
promulgating standards that substantially benefit the public. They
reasoned that it would be more appropriate to assess significant energy
savings later in the process when more information has been gathered on
the record related to the seven factors for economic justification, of
which energy savings is one. (AGs Joint Comment, No. 111 at pp. 10-11)
In addition, the AG Joint Commenters argued that DOE has not
explained how its proposal would encourage gradual efficiency
improvements without mandatory regulatory requirements. The commenters
argued that DOE appears to be benefitting an entrenched industry at the
expense of the public good and innovation. (AGs Joint Comment, No. 111
at p. 12) They also stated that significance thresholds can be subject
to gaming, such as might occur if DOE were to divide rulemakings to
only cover certain product classes (rather than all classes for a given
product type) so as to keep the total anticipated energy savings below
the significance threshold. The commenters argued that the proposal did
not address this possibility or establish any safeguards to prevent
such scenarios. They added that, were this to occur, it would frustrate
the intent of Congress and EPCA. (AGs Joint Comment, No. 111 at p. 12)
For all of the above reasons, the AG Joint Commenters concluded that
DOE's proposed significance thresholds are arbitrary, capricious, and
inconsistent with EPCA. (AGs Joint Comment, No. 111 at p. 12)
Bosch opposed the proposed thresholds, believing their application
would produce results with far fewer energy efficiency gains, which
would ultimately put U.S. manufacturers at a competitive disadvantage
with its global competitors. It asserted, without citing or providing
supporting evidence or data, that such a threshold would inadvertently
pose a barrier to achieving small and incremental gains in efficiency,
which Bosch claimed is the general way technology advances. Bosch
sought additional clarity regarding DOE's methodology in selecting the
proposed threshold levels, as well as a better understanding if and
when DOE would allow for an exception to this threshold. (Bosch, No.
113 at pp. 4-5)
During the April 2019 public meeting, the CEC noted its opposition
to the proposed thresholds. In its view, the statutory criteria were
already adequate to allow for DOE to determine that no amended
standards were needed in a given scenario and that setting an arbitrary
minimum savings threshold would not relieve DOE from its statutory
obligations to regularly review standards and, when required, to
prescribe standards. It further asserted that any non-zero amount of
technically feasible energy savings must be evaluated to determine its
cost effectiveness and economic justification. (CEC, April 11, 2019
Public Meeting Transcript, No. 92 at pp. 230-231) The CEC elaborated on
its views in written comments, asserting that the determination of
significant energy savings must be made on a case-by-case basis. (CEC,
No. 121 at p. 7) It further argued that applying a broadly defined
threshold of 0.5 quad over 30 years or a 10 percent improvement in
energy efficiency may not be appropriate for every appliance--such as
in instances where potential energy (or water) savings have no
incremental cost, where the potential savings accrue primarily in a few
states where sales or use of the appliance at issue are more
significant, or where the appliance currently has a small market share
that makes a savings estimate small, but has the potential to balloon
into a larger market share as a result of non-standards. (CEC, No. 121
at pp. 7-8) The CEC added that, in its view, DOE's failure to pursue
standards for products that do not meet the applicable threshold
``misses an opportunity to make incremental improvements to an
appliance rather than dramatic overhauls'' and argued that incremental
improvements can yield significant energy savings improvements while
minimizing manufacturer burdens. By setting a high threshold for a
rulemaking to start, the CEC argued that DOE would be eliminating the
opportunity for creating incremental improvements that Congress viewed
as appropriate through its inclusion of regular review provisions in
EPCA. CEC also asserted that the proposed thresholds would result in
``no-standard'' standards at the national level while preempting States
from acting to set their own standards. (CEC, No. 121, at p. 8)
While CT-DEEP commended DOE for considering modifications to the
current Process Rule to help moderate the burdens on industry and
manufacturers, it too argued that the proposed significant energy
savings threshold would eliminate enormous energy savings potential. It
asserted that the energy savings from rules that would have fallen
under DOE's proposed 0.5 quad threshold have collectively saved the
equivalent of over 10% of commercial and residential building energy
use annually--which CT-DEEP stated was equal to ``41.5 million MMBTU''
of annual energy savings. DEEP-CT argued that the proposed quad-based
threshold would have significant impacts on energy savings nationwide
and urged DOE to continue to interpret ``significant energy savings''
[[Page 8660]]
as defined by NRDC v. Herrington. (CT-DEEP, No. 93 at p. 3)
Like the AG Joint Commenters, Earthjustice noted its concern about
how the proposed thresholds would apply in the context of the ASHRAE
rulemakings that DOE conducts for certain categories of commercial/
industrial equipment. In its view, DOE has discretion in sorting
products for rulemaking, including ASHRAE equipment, but the proposal
would be leaving to ASHRAE the determination of whether a product is
going to meet the significance threshold. (Earthjustice, March 21, 2019
Public Meeting Transcript, at pp. 250-251) (See also id. at 252-253)
Energy Solutions (on behalf of the Cal-IOUs) argued that cost
effective energy savings to a consumer is cost effective and in its
view, 0.5 quad of energy use comprises a substantial amount of savings
on the overall grid. It asked that DOE clarify the basis for its
proposal by publishing the analysis for the 57 standards cited in the
NOPR preamble and it added that it was unclear how DOE's max-tech
analysis would differ from what would happen during the proposed pre-
rulemaking stage. (Energy Solutions, March 21, 2019 Public Meeting
Transcript, at pp. 228-29) Energy Solutions questioned the use of the
lower end of the range over the higher or middle ranges in the
analysis, (id. at 253) as well as the origins of the proposed 10%
threshold. (Id. at 269)
Ingersoll Rand opposed the proposed thresholds and suggested that
DOE continue to use its own discretion, after carefully weighing
stakeholder input, as to whether potential cumulative energy savings
are significant enough to proceed with a standards rulemaking. The
company noted that 0.5 quad of energy could be significant, cost-
effective, and technically justified for some product classes or sub-
classes, which would, in its view, be appropriate to capture through
appliance standards. It argued further that the proposed 10-percent
improvement backstop was not appropriate, as this level of improvement
could represent a significant leap for many covered products that is
simply impossible to achieve, and may not be technically feasible. As a
result, Ingersoll Rand argued that the proposed thresholds could
prevent DOE from revising appliance standards when mature market
conditions demonstrate that they would be appropriate, and leave cost-
effective energy savings on the table. (Ingersoll Rand, No. 118, at p.
3)
Of additional concern to Ingersoll Rand is the potential unintended
consequence of DOE having the inability to limit the stringency and/or
scope of a standard in response to manufacturer feedback--or
negotiations between affected stakeholders--in order to focus a
potential appliance standard on the most optimal requirements in cases
where projected savings would not meet the proposed thresholds.
Ingersoll Rand cited a recent example of this issue, wherein DOE
proposed one TSL for commercial and industrial air compressors but
indicated it was ``strongly considering'' both a more stringent one and
an expanded scope to include additional classes and size ranges of air
compressors. The air compressor industry urged DOE to set standards
using the more limited scope and stringency, which would have yielded
correspondingly lower energy savings, as this was the more cost-
justified level and aligned closely with familiar product testing
methods. Under DOE's proposal for setting a threshold for significant
energy savings, this discretion would not have been possible, but could
have resulted in DOE pursuing standards more burdensome to
manufacturers if they are also found to be technologically feasible and
economically justified. (Ingersoll Rand, No. 118, at p. 3)
NYU Law asserted that DOE's proposed thresholds for defining
whether energy savings are ``not . . . significant'' are arbitrary and
that ``significance'' should instead be weighed by considering all
important costs and benefits.'' (NYU Law, No. 119, at p. 1) In its
view, whether the amount of energy savings is ``significant'' is
relative and no single numerical threshold can determine significance
in every situation. Instead, it argued, determining significance
implicitly calls for the balancing of factors. It stressed that
comparative terms that ``admit[ ] of degree'' like ``significant,''
``minimize,'' or ``reasonable'' typically should be employed to compare
the costs and benefits, because ``whether it is `reasonable' to bear a
particular cost may well depend on the resulting benefits.'' (NYU Law,
No. 119, at p. 2)
Similarly, NEEA objected to the proposed quad threshold as
arbitrary and argued that it should be lower. (NEEA, March 21, 2019
Public Meeting Transcript, No. 87 at p. 245) It also suggested that DOE
determine whether a given level of energy efficiency is ``cost-
effective to the consumer'' rather than using the proposed 0.5 quad as
the relevant metric. (NEEA, March 21, 2019 Public Meeting Transcript,
No. 87 at p. 276)
NPCC and NRDC also disagreed with DOE's proposal to set a threshold
and argued that EPCA required the consideration of seven factors (not
just one) when determining whether to adopt a standard. NPCC indicated
that if Congress intended to establish a savings threshold it would
have done so in EPCA. (NPCC, March 21, 2019 Public Meeting Transcript
No. 87 at pp. 23-24, 249) In NPCC's view, the proposal is inconsistent
with EPCA and that applying a threshold before a standard can be
proposed and evaluated against the criteria under EPCA risks losing
substantial savings from standards that simply do not pass the
threshold but that EPCA would otherwise allow. Citing estimates from
ASAP, NPCC asserted that a third of the standards adopted by DOE
between 2009 and 2017 would not have met the proposed threshold, which
means that these proposed standards (and their combined savings) would
not have been realized under DOE's current proposal. It added that
setting a threshold that prejudges a proposal based on only its
proposed savings--and not a ``balanced consideration of the overall
benefits and costs''--conflicted with DOE's statutory obligations.
(NPCC, No. 94, at p. 6.)
NRDC argued that the issue of applying a threshold number for
significant energy savings had been settled in Herrington and that, if
implemented as proposed, would forego substantial energy savings. (See
NRDC, March 21, 2019 Public Meeting Transcript, No. 87 at p. 248) In
its view, the proposal to set a threshold for significant energy
savings is arbitrary and contrary to both EPCA and the Herrington
decision and should be withdrawn. NRDC asserted that it would be
difficult or impossible to develop a threshold that is sufficiently
responsive to the unique characteristics of each covered product and
that does not unnecessarily reject savings. It added that the proposal
would not account for the importance of saving energy at different
times of day, such as at times of peak grid demand. NRDC also argued
that DOE failed to explain whether its thresholds for significant
energy savings were based on site energy consumption, source energy
consumption, or some other method of calculation, which left
stakeholders unable to effectively comment. NRDC also asserted that DOE
has not explained how it will apply the threshold when aggregating
savings from product/equipment classes and expressed concern (like
Earthjustice and State AGs) that DOE could game the system by examining
a subset of classes which fail to meet the threshold, even though a
combined rule examining multiple product classes would meet it.
[[Page 8661]]
(NRDC, No. 131 at pp. 5-7) Pointing to the comments of ASAP, at al.,
NRDC argued that some of DOE's energy conservation standards could be
considered ``cost-free,'' such as those for pre-rinse spray valves, and
as a result, the proposed threshold would effectively prevent DOE from
adopting such standards in violation of Herrington. (NRDC, No. 131 at
p. 8)
NRDC stated that DOE's proposed significant energy savings
threshold repeats the same mistake DOE made in Herrington, namely by
arguing that 23 rulemakings adding up to 4.24 quads of savings were not
worth the effort. NRDC argued that standards with smaller amounts of
energy savings can add up to larger savings. Although it acknowledged
that the Herrington court left open the possibility that an energy
savings threshold could be set, NRDC asserted that DOE failed to show
any awareness of the range of energy savings that Congress considered
worth pursuing. In its view, this failure provides another reason for
why DOE should withdraw its proposal. (NRDC, No. 131 at p. 9)
To highlight this point and to help illustrate the potential
conflict between Congressional intent and the proposed thresholds
regarding new energy conservation standards for various regulated
products and equipment, NRDC identified three sets of statutory
standards set by Congress for residential boilers, dehumidifiers, and
electric motors, which over 30 years were projected to save 0.16 quads,
0.17 quads, and 0.14 quads, respectively. Under DOE's proposed
significant energy savings threshold, NRDC argued that none of these
energy conservation standards would have been set, although Congress
clearly thought them worth adopting. (NRDC, No. 131 at p. 10)
NRDC also criticized DOE's proposal for failing to mention how the
agency would determine a significant savings of water (which is
required under 42 U.S.C. 6295(o)(3)(B) for showerheads, faucets, water
closets, and urinals). It urged DOE to address how water-consuming
products would be addressed under the Process Rule. (NRDC, No. 131 at
p. 10)
Finally, PG&E stated that grid reliability must be considered when
discussing significant energy savings and worried that it would not be
if a contemplated rulemaking action ends because DOE's early assessment
``off-ramp'' is taken (i.e. the proposed thresholds are not met and no
proposed rulemaking follows). PG&E noted that it would be unrealistic
for it to submit comments to DOE during the proposed early assessment
period since it would be difficult to assess grid impacts within the
short amount of time allotted under the proposed time frame. (PG&E,
March 21, 2019 Public Meeting Transcript, No. 87 at pp. 214-15) With
respect to the proposed thresholds themselves, PG&E (in conjunction
with the other Cal-IOUs) ultimately opposed them, indicating that any
``non-zero'' amount of technically feasible energy savings should be
considered significant by DOE. To this end, it argued that DOE should
interpret ``significant energy savings'' as meaning ``not genuinely
trivial.'' (Cal-IOUs, No. 124, at pp. 7-8)
The Cal-IOUs criticized DOE's proposal, characterizing the
justification for the proposed threshold values as vague, including
what the commenters described as a lack of clarity as to whether the
proposal relied on site versus source energy. (Cal-IOUs, No. 124, at p.
8.) Referring to text from the Herrington case and comparing it to the
proposal, the Cal-IOUs posed three questions/issues to DOE to address:
(1) Can DOE provide a current site-to-power plant energy use factor, so
that stakeholders can better interpret Herrington in the current
landscape? (2) Given that the proposed 0.5 quad threshold represents a
35 percent source energy savings based on the 1982 site-to-power plant
energy use factor, and the Herrington court noted that ``Congress
plainly thought that saving some part of the energy consumed by an
appliance operating at those levels would be significant,'' DOE should
elaborate on its interpretation of this adjudicated decision to
interpret ``some part'' to mean 35 percent. (3) In light of the absence
of a reference to a ten-percent energy savings threshold in the
Herrington decision, DOE should elaborate on the logic and legal
justification for the proposed threshold. (Cal-IOUs, No. 124, at pp. 8-
9.) The Cal-IOUs also stressed that the proposal, by eliminating 23
rulemaking standards (as indicated in the NOPR's preamble discussion),
would also have eliminated 4.24 quads of energy savings over 30 years,
which the commenters viewed as a significant amount of savings. In
their view, this approach would conflict with Herrington and with DOE's
stated concern about limiting the first-cost impacts to consumers since
the proposed threshold would not allow DOE to consider truly cost-free
opportunities. (Cal-IOUs, No. 124, at p. 9.) The Cal-IOUs further noted
that, as proposed, DOE would have removed multiple products/equipment
from being considered for more efficient standards. The commenters
cited DOE's rulemakings for circulator pumps and dedicated-purpose pool
pumps as examples of the types of rulemaking activities that would have
ceased prior to the initiation of an ASRAC working group. Since both
rulemakings originated with the commercial and industrial pumps rule
(which had a projected savings of 0.29 quads), the Cal-IOUs argued that
neither of these rules would have survived DOE's proposed threshold--
commercial and industrial pumps would have been dropped because it
would not have satisfied the 0.5 quad threshold, which would also have
ended the examination of potential standards for dedicated-purpose pool
pumps. In the view of the Cal-IOUs, the savings projected for these two
rulemakings (which the group stressed would be 4.51 quads) would have
been lost under DOE's proposal. (Cal-IOUs, No. 124 at p. 9)
The Cal-IOUs were also critical of the information released by DOE
regarding how the thresholds would be implemented as part of the
Process Rule. They asserted that there were inconsistencies between
flow diagrams released as part of the proposal and during the April
2019 meeting, with the latter document noting that the thresholds would
apply at three different points--(1) during the early assessment
review, (2) during the preliminary stage review, and (3) during the
NOPR review, while being compared against technological feasibility and
economic justification at each step. (Cal-IOUs, No. 124 at p. 10) The
Cal-IOUs viewed this approach as ``particularly troublesome'' during
the early stages of the review process because DOE did not indicate
whether it would conduct a thorough analysis to provide a reasonable
savings comparison against a quantitative savings threshold. In their
view, DOE should specify that a DOE-led thorough analysis will be
conducted at each stage and that a suggested (rather than mandatory)
threshold be applied at earlier stages of the review process. (Cal-
IOUs, No. 124 at p. 10)
The Cal-IOUs further noted that the published flow chart contained
in the NOPR (unlike the revised one handed out during the April 2019
meeting) indicated that the savings threshold would first be considered
during the preliminary stage of review while acknowledging that the
early assessment will consider whether significant energy savings can
be achieved in accordance with EPCA's economically justified and
technologically feasible tests. In their view, these statements are in
conflict and that DOE should elaborate in detail how and when the
proposed
[[Page 8662]]
quantitative threshold will be applied. They added that DOE should also
explain what information will inform the analysis throughout the
rulemaking process and how the thresholds would be applied in those
cases where a product type has multiple product classes. (Cal-IOUs, No.
124 at p. 10) The Cal-IOUs also criticized the proposal by asserting
that the use of a threshold would ignore real-world implications and
the additional value provided by more efficient products, citing as
examples reduced energy generation and reducing and managing energy
demand during peak hours. (Cal-IOUs, No. 124 at pp. 10-11)
C. Comments Regarding DOE's Notice of Data Availability
DOE received fourteen (14) comments responding to its July 2019
NODA. In addition to reiterating or expanding on earlier points made in
response to the NOPR, these comments also highlighted the potential
challenges and disadvantages that DOE may face if it were to adopt an
energy savings threshold based on site energy use compared to primary
source or full fuel cycle (``FFC'') energy use. Commenters also raised
issues regarding the sufficiency of DOE's data as support for the
proposal and alleged that the particulars regarding the thresholds
remained unclear.
A.O. Smith asserted that the NODA and its associated analysis fell
short in providing enough analytical, technical, and factual
justification to support DOE's proposed energy savings threshold. It
argued that the materials provided no actual methodology or explanation
on how DOE arrived at a 0.5 quad energy savings threshold. In its view,
the NODA and accompanying data did not support the proposed energy
savings threshold conclusion or provide a sound methodology to recreate
the actual value proposed in the NOPR to enable the public to
understand how the threshold conclusion was reached and cannot be
relied on to justify this aspect of DOE's proposal. (A.O. Smith, No.
153, at pp. 1-2) It added that basing a threshold using site energy
savings would not present a ``full picture of the total energy use used
by the building (or the appliances in it) because the process of
generating electricity incurs substantial losses associated with
delivering fuel (e.g. gas, electricity, oil) to the site In its view,
source energy is the most equitable metric for evaluating national
energy savings comparisons among buildings and appliances since it
considers different fuels and provides a more neutral foundation to
assess total energy savings. It further argued that relying on site
energy ``severely undervalues'' electricity savings compared to gas or
oil savings and noted that there is a three-fold difference between
site and primary/FFC electricity savings when accounting for all
transmission and distribution losses. A.O. Smith contended that such a
threshold would place electric and gas/oil appliances on an unequal
footing with each other, distort DOE's national energy savings
analyses, and negatively impact consumers and U.S. manufacturers by
permitting the importation of less efficient products. (A.O. Smith, No.
153, at p. 2).
A.O. Smith also criticized the information disclosed in the NODA
because DOE did not acknowledge or consider that each rulemaking
included an analytical methodology that was appropriate for the
particular covered product in question. For example, not all of the
examined rulemakings use the same analysis period (i.e. length of
time), leading to a mismatched comparison. (A.O. Smith, No. 153, at p.
2) Further, it noted that the U.S. Energy Information Administration
continuously updates the Annual Energy Outlook with changes in the
economy and energy supply/generation, which may deviate from earlier
estimates published by the Department. It asserted that to account for
the changes in methodology across this time period, DOE would need to
convert each energy savings estimate from published final rules to
allow for an accurate comparison. (A.O. Smith, No. 153, at pp. 2-3) It
also suggested that DOE should evaluate the impacts of a significant
energy savings threshold using the most recent version of DOE's
analysis of energy and economic impacts from energy and water
conservation standards, which would allow for cross comparisons of
savings across rulemakings. (A.O. Smith, No. 153, at p. 3)
Finally, A.O. Smith asserted that the NODA included the energy
savings from four remanded rulemakings in error--2001 central air
conditioners and central heat pumps (replaced by a 2002 rule with lower
national energy savings), 2010 direct heating equipment (unrealized
energy savings from remanded portion of the rule for hearth products),
2011 central air conditioners, central heat pumps, and furnaces
(unrealized energy savings from remanded portion of rule regarding
furnaces); and 2014 walk-in coolers and freezers (double-counting of
energy savings of some products vacated from the 2014 rule and
subsequently covered by the replacement 2017 rule). (A.O. Smith, No.
153, at p. 3)
A.O. Smith also noted that DOE failed to consider the historical
context of the appliance standards program and the implementation of
energy conservation standard regulations over time. In its view, the
initial standards rulemakings conducted by DOE amounted to ``lower-
hanging fruit'' with regard to improvements in energy efficiency and,
as a result, yielded much higher energy savings than subsequent ``more
incremental'' standards rulemakings. Consequently, A.O. Smith argued
that DOE's inclusion of the projected energy savings from these earlier
initial rulemakings was erroneous and that DOE should have excluded
these initial savings when developing an energy savings threshold.
(A.O. Smith, No. 153, at p. 3)
A.O. Smith further asserted that EPCA already prescribes a method
for determining whether a given standard would be too costly (or
technologically infeasible) for DOE to adopt. As a result, A.O. Smith
viewed the need for a significant energy savings threshold value as
unnecessary. (A.O. Smith, No. 153, at p. 4)
AGA urged DOE to rely on FFC energy use rather than site energy use
for developing energy savings thresholds and in calculating energy
savings projections for new or amended energy conservation standards.
(AGA, No. 157, at p. 2) It stressed that under 42 U.S.C. 6295(o), DOE
may use full FFC energy use when determining whether a given level of
energy savings constitutes ``significant'' energy savings. (AGA, No.
157, at pp. 5-6) AGA also pointed to DOE's prior policy statement
regarding the use of full fuel cycle energy use metrics. (AGA, No. 157,
at pp. 6-7) AGA also argued that site energy use does not account for
upstream energy savings impacts from standards or permit comparisons
across fuel types. (AGA, No. 157, at pp. 7-8) By adopting an approach
that eliminates all upstream energy consumption and associated
emissions required to deliver fuel to its point of use, AGA argued that
DOE's significant energy thresholds would provide an incomplete picture
regarding the potential impacts of a standard. (AGA, No. 157, at pp. 8-
9). AGA also noted that the National Academy of Sciences recommended
that DOE use a FFC metric and that other agencies, such as the EPA,
supported that approach. (AGA, No. 157, at pp. 9-11). AGA added that
source energy--used by the GREET model \15\--excludes
[[Page 8663]]
extraction and production losses but could be readily converted to a
FFC measure of energy consumption. (AGA, No. 157, at p. 11). AGA was
also concerned that DOE's potential reliance on a site energy-based
approach would ignore the benefit that FFC energy use would provide by
accounting for a broader range of energy impacts and would depart from
the Agency's past practice. (AGA, No. 157, at p. 12) It added that the
public would benefit from the use of a FFC energy metric and asserted
that such a metric would provide ``the most efficient and equitable
characterizations'' of energy usage across competing fuels. Further, it
noted EPA's reliance on full fuel cycle energy data as part of their
ENERGY STAR program for commercial buildings. (AGA, No. 157, at p. 13)
---------------------------------------------------------------------------
\15\ Sponsored by the U.S. Department of Energy's Office of
Energy Efficiency and Renewable Energy (EERE), Argonne National Lab
developed a full life-cycle model called GREET (Greenhouse gases,
Regulated Emissions, and Energy use in Transportation) to allow
researchers and analysts to evaluate various vehicle and fuel
combinations on a full fuel-cycle/vehicle-cycle basis. This model is
used by DOE to help ascertain potential impacts related to DOE's
standards rulemakings.
---------------------------------------------------------------------------
In addition, AGA reiterated its support for the use of significant
energy savings thresholds and reiterated its earlier recommendation
that the thresholds consider a combination of the anticipated overall
energy consumption savings along with the percentage reduction of
energy consumption for the covered products compared to the applicable
existing standard. (AGA, No. 157, at p. 14) AGA suggested that DOE
should take into account a combination of the possible quad reductions
and the anticipated percentage reduction of energy consumption so that
it is not ``one or the other.'' (AGA, No. 157, at p. 15)
AGA offered an example to illustrate one way to use its suggested
threshold approach:
If DOE established a threshold of 0.5 quads of energy savings and a
10 percent reduction in the energy consumption of the covered product,
as referenced in the NODA, and if a new standard was projected to save
0.25 quads of energy (a level below the energy savings threshold) but
result in a 20 percent reduction in energy consumption for the covered
product (two times the percent threshold), the rulemaking process could
proceed since the two thresholds were proportionately achieved.
However, if in the above example, the new standard would have only
achieved a 10 percent reduction in energy consumption for the covered
product, it would not proportionately meet the combined thresholds and
the rulemaking process would not proceed. (AGA, No. 157, at pp. 14-15)
AGA also suggested that all DOE benefit and cost calculations be
fully documented, subject to public review prior to their use in any
rulemaking analyses, and peer reviewed prior to final publication.
(AGA, No. 157, at pp. 15-16) It suggested that DOE establish consistent
national average energy conversion factors that reflect consensus views
of transitions to renewable electricity generation operating
contribution, captured energy from renewables, and more realistic
electricity grid considerations. It pointed to the use of source energy
conversions published by the Pacific Northwest National Laboratory
(``PNNL'') in May 2019. \16\ (AGA, No. 157, at pp. 16-17)
---------------------------------------------------------------------------
\16\ See also PNNL, Preliminary Energy Savings Analysis: 2018
IECC Residential Requirements.
---------------------------------------------------------------------------
In addition, AGA suggested that analyses of products should include
an analysis of competing product markets and penetrations flowing from
efficiency standards proposals, particularly with respect to competing
fuel types--which would collectively include estimated responses among
manufacturers and their competing product lines, including fuel choice
considerations, more realistic fuel switching considerations, and
public review of fuel choice and switching methodologies. (AGA, No.
157, at p. 17) Consumer baseline decisions should also presume rational
decision making. Under this approach, AGA contended that DOE should
model consumers as preferring the product model providing the greatest
consumer surplus relative to all covered product models available in
the absence of new minimum standards. (AGA, No. 157, at pp. 17-18). It
also suggested that once a covered product analysis begins, DOE should
better characterize end-user markets. Specifically, AGA suggested that
DOE define these markets in public workshops directed at identifying
key customer classes and building types, and achieve consensus on how
the standards analysis would apply to these differentiated markets.
(AGA, No. 157, at p. 18)
APGA continued to support DOE's goal of establishing a metric that
best estimates climate impacts and supports the interests of the
public. (APGA, No. 151, at p. 2) It expressed concern, however, with
the prospect of DOE's adoption of a site-based energy use metric.
Citing to earlier work from the National Academy of Sciences and DOE's
subsequent adoption of a policy statement agreeing to use FFC metrics,
APGA urged DOE to continue to follow this FFC-based approach when
measuring energy consumption. (APGA, No. 151, at pp. 2-3) Pointing to
data comparing energy costs and CO2 emissions across
different electric-powered and natural gas appliances, APGA highlighted
the lower annual operating costs, lower energy usage and lower
CO2 emissions of natural gas appliances relative to
electric-powered ones. (APGA, No. 151, at p. 3)
APPA supported the use of site energy when determining whether the
proposed energy use thresholds were met. (APPA, No. 154, at p. 2) In
its view, site energy is credible, reliable, replicable, transparent,
and an actual metric that can be verified while source energy is an
estimate that can be calculated in a variety of ways, have a variety of
values, and does not account for significant regional differences in
the U.S. (APPA, No. 154, at pp. 2-3). APPA also suggested that DOE
clarify which thresholds it would use. It sought clarification on how
DOE would treat a scenario where a 10% reduction in energy use occurs
over 30 years. If the reduction were based on site energy use, in
APPA's view, the threshold requirement should be based on a minimum
percentage reduction in appliance/equipment site energy consumption per
year over a 30-year analysis period (or require an X% reduction in
annual site energy consumption over a 30-year analysis period). (APPA,
No. 154, at p. 3 (emphasis in original)). Regarding those instances
where DOE presents a potential range of savings over a 30-year analysis
period, APPA suggested that DOE use the mid-point value of the range to
improve the understandability and technical accuracy of the analysis
being used. (APPA, No. 154, at p. 4)
In joint comments responding to the NODA, ASAP and its fellow joint
commenters re-stated concerns with the proposed energy savings
threshold and asserted that DOE has not made a clear proposal regarding
those potential thresholds. The commenters were also concerned that DOE
would consider using site energy use when evaluating potential energy
savings from energy conservation standards and they asserted that DOE
has still not provided an ``apples-to-apples'' comparison of energy
savings from historical rulemakings. (ASAP, et al. 2, No. 158 at p. 1)
The commenters urged DOE not to adopt a significant energy savings
threshold and highlighted examples where DOE analyses have identified
efficiency improvements with no first-cost impacts. They argued that
setting a threshold would potentially deny the
[[Page 8664]]
benefits of these energy savings to consumers and businesses. (ASAP, et
al. 2, No. 158 at p. 2)
The commenters also asserted that DOE's proposal and subsequent
NODA have not yet offered a clear proposal regarding the potential
thresholds for determining whether significant energy savings were
present in a given situation. They noted that it was unclear whether
DOE would be applying an approach based on site, source, or full fuel
cycle energy use--in spite of the NODA's presentation of past energy
savings in terms of site energy use. The commenters added that DOE has
not clearly defined the 30-year period that would apply and that the
proposal continued to remain unclear with respect to the 10 percent
threshold--specifically, whether it would amount to a reduction in
energy usage or an improvement in energy efficiency. (With respect to
the last of these, it highlighted an example of the practical
difference between a reduction in energy use and an increase in
efficiency.) (ASAP, et al. 2, No. 158 at pp. 2-3)
Additionally, with the NODA's presentation of past rulemaking
energy savings in site energy use, the commenters were concerned about
relying on site energy, which would, in their view, deviate from prior
DOE practice of using source or full fuel cycle energy use. It noted
two problems in particular. First, site energy savings do not
accurately reflect the total impact of standards on national energy
consumption since associated losses in electricity generation,
transmission and distribution are not included--in addition to the
absence of considering energy used to extract, process, and transport
the fuels that are consumed to produce that electricity. Second,
relying solely on site energy use would not provide a fair comparison
between electricity savings and natural gas savings for the reasons
noted. They asserted that FFC energy savings from a standard that saves
electricity produces (i.e. accounts for) roughly three times as much in
energy savings than from site energy use measurements alone--a standard
saving natural gas, by comparison, would yield only 10% more in savings
over site energy savings. (ASAP, et al. 2, No. 158 at p. 3).
Finally, the commenters contended that even with the publication of
the NODA and the release of its accompanying data, DOE has not provided
an ``apples-to-apples'' comparison. They noted that the projected
energy savings from certain rules presented in DOE's data provided
different analytical periods. Second, the commenters stated that the
projected savings of two standards were calculated differently: the
small electric motors rule was based on a reduction in energy losses,
while the electric motors rule was based on a reduction in energy
usage. These different approaches can yield different results. Finally,
the commenters noted that relying on site energy usage does not provide
an ``apples-to-apples'' comparison when evaluating rules that affect
both electric and natural gas products. (ASAP, et al. 2, No. 148, at
pp.3-4)
ASAP, et al. 2 provided an example of how this discrepancy could
impact the calculated energy savings. For example, the site energy
savings listed in the document referenced in the NODA would suggest
that the 2016 rule for residential boilers will save more energy (0.137
quads) than the 2016 rule for dehumidifiers (0.100 quads). But in fact,
the total energy savings (reported as full-fuel-cycle energy savings in
each rule) for dehumidifiers (0.30 quads) are about twice as great as
those for residential boilers (0.16 quads). (ASAP, et al. 2, No. 158,
at pp. 3-4 (footnotes omitted))
The Cal-IOUs suggested that DOE issue a supplemental notice of
proposed rulemaking to provide additional details and respond to
various comments. They asserted that the NODA raised a number of issues
and that the NODA was unclear whether DOE was proposing to use site or
source energy as the basis for the proposed thresholds. They also
asserted that the NODA did not provide a uniform set of data to enable
a comparison of historical rulemakings since the data unfairly compared
the energy savings from gas and electric equipment standards and
provided a misleading picture of the savings from gas and electric
standards. The Cal-IOUs also expressed confusion over the ``statutorily
required measure'' referenced by DOE in the NODA's preamble. (Cal-IOUs,
No. 155, at p. 2) Further, the Cal-IOUs reiterated certain questions it
raised in response to the proposal itself: (1) How and when will the
quantitative energy savings threshold be applied, and what information
will inform that analysis? (2) How would the threshold apply to
products with multiple product classes? (3) How did DOE arrive at the
conclusion that to apply a 0.5 quad threshold in light of the
Herrington decision's discussion regarding aggregate source energy? (4)
What is the basis for DOE's 10% threshold? (Cal-IOUs, No. 155, at pp.
2-3)
The Joint Commenters indicated that DOE could adopt a higher quad-
based threshold of up to 0.75 quad or a percentage-based reduction of
ten percent--which would achieve the same energy savings as the
proposed 0.5 quad threshold. (Joint Commenters, No. 159 at pp. 1-2)
They noted that the NODA's data showed that 34 of the 57 rules analyzed
would have met the proposed significant energy savings thresholds when
applying a quad threshold range of 0.40 to 0.75 quad or ten percent
reduction in energy use and emphasized that among the remaining rules
that did not meet the proposed threshold, which comprised nearly half
of the analyzed rules, the energy savings achieved by these rules
amounted to a little over 6% of the total projected energy savings of
DOE's standards rulemakings. (Joint Commenters, No. 159, at 2)
They also stressed that with the passage of time between since
Herrington, DOE has developed a robust dataset and a voluminous record
of energy conservation standards. The Joint Commenters also asserted
that DOE's interpretation of the term ``significant'' conservation of
energy in the aftermath of Herrington did not track that decision,
which counseled that it was unlikely that Congress intended for DOE to
ignore a cost-free chance to save energy unless the amount of energy
saved was genuinely trivial. (Joint Commenters, No. 159, at pp. 3-4)
They further emphasized that the Herrington court noted that if it were
truly obvious, without the extended investigation appropriately
undertaken as part of the inquiry into economic justification, that the
value of saving small amounts of energy was outweighed by the cost and
trouble of undertaking any appliance program at all, DOE might be
justified in determining that those small savings were not significant.
(Joint Commenters, No. 159, at p. 4 (quoting Herrington, 768 F.2d at
1373, n. 19)) The Joint Commenters also noted that recent case law
suggests that the meaning of the word ``significant'' means something
``important, notable'' as opposed to being ``more than trivial or of no
importance.'' (Joint Commenters, No. 159, at pp. 4-5 (quoting Kaufman
v. Allstate N.J. Ins. Co. 561 F.3d 144, 157 (3rd Cir. 2009)) They
further noted that in determining whether a given level of energy
savings is significant, DOE necessarily must compare the aggregate site
energy savings achieved by rulemakings that were able to achieve a
potential energy savings threshold against those savings that do not.
In their view, recognizing every incremental increase in energy savings
without limit would effectively read the word ``significant'' out from
EPCA. Consequently, the Joint Commenters
[[Page 8665]]
argued that the statute should be read as providing DOE with the
discretion to establish a significance threshold based on a balancing
approach such as the one that DOE has conducted in comparing the
projected energy savings from rulemakings that meet a given threshold
against the savings from rulemakings that do not. (Joint Commenters,
No. 159 at pp. 5-6) To this end, using historical energy savings to
determine a potential threshold level is, in the view of the
commenters, reasonable. (Joint Commenters, No. 159 at pp. 6-9)
MHARR repeated its earlier assertions regarding the various alleged
procedural defects affecting the unrelated rulemaking in which DOE is
currently considering potential energy conservation standards for
manufactured housing and again urged DOE to adopt the same type of
procedural protections and safeguards set forth in the NOPR for
manufactured homes. (MHARR, No. 149, at p. 2.) MHARR argued that DOE's
approach with respect to setting energy use thresholds for determining
whether a given standard would produce significant energy savings
should apply equally to DOE's manufactured housing rulemaking--and that
DOE should issue an entirely new rulemaking in light of the alleged
defects. (MHARR, No. 149, at pp. 3-4)
NBI cautioned that the use of site energy would result in distorted
information becoming the foundation of standards setting at DOE. (NBI,
No. 150, at p. 1). It noted that jurisdictions both within and outside
of the U.S. have relied on source-based, primary energy use rather than
site energy, and if DOE were to adopt a site energy-based approach, the
Agency would become increasingly divergent from the policies and rules
being set at local, State, and international levels. (NBI, No. 150 at
p. 1)
NRDC repeated its opposition to the adoption of an energy savings
threshold and argued that when applying the projected energy savings
presented with the NODA to the proposed thresholds, DOE's approach
would make the proposed quad threshold more stringent than if it were
based on source or FFC energy use. (NRDC, No. 156 at pp. 1-2) It
further argued that the proposed threshold is invalid and contrary both
to EPCA and Herrington, asserting that DOE's proposal (and subsequent
NODA) fails to address the question of rejecting ``no-cost standards''
that would result in additional energy savings and urged DOE to
evaluate the issue of significant energy savings on a standard-by-
standard basis and to consider the aggregate savings of energy
involved. (NRDC, No. 156 at pp. 2-3) In addition, NRDC stressed that,
in light of the Herrington court's discussion of potential source
energy-based savings, DOE should consider thresholds at or above the
level of 1.45 quads of source energy as ``clearly legally
impermissible.'' \17\ (NRDC, No. 156 at p. 4) When applied to a site
energy-based approach, NRDC asserted that DOE's proposed 0.5 quad
threshold is equivalent to a 1.5 quad source energy threshold, which,
in its view, would run afoul of the upper bound discussed in
Herrington. (NRDC, No. 156 at 4) NRDC added that it would not consider
a threshold below the 1.45 quad source energy level discussed in
Herrington as necessarily reasonable or permissible and it urged DOE to
withdraw its proposal in its entirety. (NRDC, No. 156, at 4-5)
---------------------------------------------------------------------------
\17\ The figure of 1.45 quads is based on the D.C. Circuit's
discussion of the energy consumption that must be present to permit
DOE to issue a discretionary energy conservation standard for a
consumer product--i.e. an annual energy consumption of 0.014335
quad, which is equivalent to 0.0483 quad of annual site energy
usage. Projected over a 30-year period would yield 1.449 quads (i.e.
1.45 quads when rounded up). See generally Herrington, 768 F.2d at
1374.
---------------------------------------------------------------------------
NYU Law contended that DOE's proposal would set arbitrary
thresholds in violation of EPCA and noted that at least one recent
court decision indicated that a ``'very small portion' of a
`gargantuan' total effect'' may still create a ``gargantuan'' effect of
its own--suggesting that DOE's proposed thresholds would exclude a
large amount of future energy savings as being insignificant. (NYU Law,
No. 148, at p. 1) In the commenter's view, DOE's percentage approach
can create a misleading impression and is subject to manipulation.
Consequently, the energy savings from the various standards that would
not have satisfied DOE's proposed thresholds--in addition to avoided
carbon emissions--would be sacrificed in the future if the proposed
thresholds were adopted. (NYU Law, No. 148, at pp. 1-2)
Samsung reiterated its earlier view (without providing additional
support) that the proposed 0.5 quad threshold is too large and may
hinder advancement of energy efficiency standards for newly covered
products. (Samsung, No. 161, at p. 2) It also repeated its support for
DOE's proposed percentage threshold of 10 percent increase in energy
efficiency/reduction in energy usage for covered products as a trigger
for new standard levels. (Samsung, No. 161, at p. 2)
In joint comments responding to the NODA, Sierra Club and
Earthjustice expressed concern over what it perceived as a ``dramatic
shift'' by DOE to move away from relying on source energy or FFC energy
consumption to site energy use when projecting potential energy savings
of a given standard. (Sierra Club & Earthjustice, No. 160, at p. 1) In
their view, adopting a site energy-based approach would ignore DOE's
own past findings that site energy measurements do not account for the
inefficiencies present in electric generation. (Sierra Club &
Earthjustice, No. 160, at pp. 1-2) If adopted without acknowledging and
addressing DOE's own record with respect to the deficiencies of site
energy and providing a reasoned explanation for the change, the
commenters contended that such a move would be unlawful. (Sierra Club &
Earthjustice, No. 160, at p. 2) They also asserted that EPCA does not
compel that site energy be the basis for the Agency's analyses
performed with respect to determining the impacts of a given energy
conservation standard and it emphasized that DOE's past and
longstanding use of source and FFC energy as part of prior standards
rulemakings reflected the Agency's own conclusion regarding the partial
picture presented by site energy usage. That conclusion, the commenters
continued, was further buttressed by the work performed by the National
Academy of Sciences, which recommended that DOE use FFC energy
consumption when assessing the national and environmental impacts from
energy conservation standards. (Sierra Club & Earthjustice, No. 160, at
pp. 2-3)
They further asserted that even if DOE were permitted to establish
a threshold for significant energy savings--which they stressed it
could not--shifting DOE's energy savings calculations to site energy
would result in setting a threshold that far exceeds the level of
energy savings Congress viewed as significant when it amended EPCA to
require DOE's adoption of standards. (Sierra Club & Earthjustice, No.
160, at p. 3) Citing to Herrington, the commenters again emphasized
that Congress could not have intended for DOE to not adopt a standard
that imposed ``absolutely no burdens at all'' and that it was unlikely
that Congress had intended for DOE to throw away a cost-free chance to
save energy unless the amount of energy saved was genuinely trivial.
(Sierra Club & Earthjustice, No. 160, at p. 3 (citing Herrington, 768
F.2d at 1373)) Sierra Club and Earthjustice also stressed that when the
Herrington court examined the specific figures inserted into EPCA by
Congress, including the prerequisites found in 42 U.S.C. 6295(l) for
prescribing standards for newly covered
[[Page 8666]]
products, it concluded that Congress had viewed 0.014335 quad of site
energy use as significant--while DOE's proposed threshold would not.
(Sierra Club & Earthjustice, No. 160, at p. 3)
With respect to the application of a percentage threshold, the
commenters noted that the standards at issue in Herrington provided for
efficiency increases of 5 percent or less, which, in their view,
supported the notion that Congress sought to provide for incremental
improvements in energy efficiency--and thereby constraining DOE's
ability to treat equivalent efficiency improvements as insignificant.
(Sierra Club & Earthjustice, No. 160, at pp. 3-4) The commenters argued
further that prior amendments to EPCA--particularly, the National
Appliance Energy Conservation Act of 1987, Public Law 100-12 (March 17,
1987), demonstrated (through its adoption of water heater standards
that would yield efficiency increases of less than 10 percent and
potential energy savings for some standards as being under 0.03 quad
per year) that Congress had viewed marginal improvements in efficiency
as ``worth seizing'' through efficiency standards. Accordingly, Sierra
Club and Earthjustice argued that history counsels against adopting a
significance threshold that would foreclose the adoption of standards
yielding comparable energy savings. (Sierra Club & Earthjustice, No.
160, at pp. 3-4)
Spire supported the concept of adopting an energy savings threshold
but claimed that a threshold based on site energy use would not
appropriately measure the efficiency of fuel utilization from the point
of extraction--thereby leading to misleading information regarding the
efficiency of gas-fueled vs. electric-powered appliances. It asserted
that reliance on site energy would distort the market for appliances
and ultimately reduce competition, which would lead to higher costs for
consumers. While Spire stated that source energy is a better metric for
measuring energy savings than site energy, it also viewed that metric
as flawed since the amount of energy lost from the point of fuel
extraction to the input of an electric power plant is not considered
for purposes of measuring the `source' efficiency of an electric
appliance. (Spire, No. 152, at p. 2) Instead, Spire suggested that DOE
adopt an approach based on the FFC, which would, in its view, readily
show that gas appliances ``significantly'' out-perform electric-based
options with respect to CO2 emissions and when examining
consumer marginal energy use rates. (Spire, No. 152, at pp. 2-3)
2. Response to Comments on the Proposed Thresholds
After evaluating comments received from both those who supported
the use of a threshold--including those who suggested that a different
quad threshold be applied--and those who objected to one, DOE revisited
its approach. In response to comments seeking clarification regarding
the type of energy use on which the quad and percentage thresholds were
based, DOE re-examined its data and published a Notice of Data
Availability (``NODA'') to present its energy savings data in terms of
site energy usage. See 84 FR 36037 (July 26, 2019). After taking a
second careful look at its data and applying a uniform approach with
respect to the energy usage examined, DOE has adjusted its thresholds
to account for the concerns raised by commenters.
DOE has divided its responses to the comments on this issue into
two parts--one to address comments that generally supported the use of
the proposed thresholds and one to address comments that opposed them.
A. Response to Comments Supporting the Proposed Threshold Approach
As a preliminary matter, DOE emphasizes that its application of its
thresholds will apply when it first examines whether to initiate a
standards rulemaking, during the early assessment phase and throughout
the rulemaking process. If DOE engages in a standards rulemaking, these
thresholds will also be applied at the different steps of that
rulemaking--i.e., Early Assessment, Preliminary Stage, NOPR,
supplemental NOPR (if applicable), and final rule. In effect, these
thresholds will apply throughout the rulemaking process to ensure that
the statutory requirement of achieving significant energy savings is
achieved with any standards final rule that DOE promulgates. (For a
visual illustration of how this would apply, see Figure III.1,
presented later in this discussion.)
In response to commenters who suggested that the proposed 0.5 quad
threshold be raised higher (AHAM, AHRI, BWC, and the Joint Commenters)
to 1.0 quad, DOE notes that it recognizes that there is the potential
for additional burden reduction and related manufacturer cost savings
from increasing the magnitude of the quad-based threshold. The data
examined by DOE, however, suggest that doing so in the context of the
57 standards final rules that were examined in the NOPR would
significantly decrease the amount of potential energy savings that
could be obtained. (See 84 FR 36037, 36038 (July 26, 2019)) When
comparing that value to the suggested 1.0 quad offered by commenters
and applying the same percentage threshold that DOE had proposed, the
level of energy savings would decrease by approximately 3% from 94% v.
91%. Following this approach would also eliminate a little over half of
these standards rulemakings. (See id. at 84 FR 36038-36039.) In DOE's
view, raising the quad threshold in the manner suggested would have a
severe impact on the potential energy savings that could be obtained
from future rulemakings. DOE is not adopting this suggestion due to
this fact, along with the absence of any supporting data or analysis
from the proponents of this approach to increase the quad-based
threshold. As for Samsung's separate suggestion that the 0.5-quad
threshold may be too high, DOE has addressed this concern--along with
similar ones raised by other commenters--by modifying the quad-based
threshold, which is discussed elsewhere in this document.
Regarding suggestions from both EEI and Southern Co. to apply an
exception or different threshold for ASHRAE equipment, as explained
elsewhere in this document, DOE is treating ASHRAE equipment in a
manner consistent with the specific provisions laid out in 42 U.S.C.
6313(a)(6). As explained elsewhere in this discussion, the threshold
framework will apply in those instances where DOE intends to adopt
standards that exceed the stringency of those set by ASHRAE. DOE notes
that the ``significant conservation of energy'' requirement for
standards, that is woven into 42 U.S.C. 6295(o)(3)(B) for consumer
products and non-ASHRAE equipment, does not apply to ASHRAE equipment
when DOE is following the statutory command to establish the national
minimum efficiency standard at the level set by ASHRAE. In setting a
more stringent standard for this equipment, DOE must have ``clear and
convincing evidence'' that doing so ``would result in significant
additional conservation of energy'' in addition to being
technologically feasible and economically justified. 42 U.S.C.
6313(a)(6)(A)(ii)(II). This language indicates that Congress had
intended for DOE to ensure that, in addition to the savings from the
ASHRAE standards, DOE's standards would yield additional energy savings
that are significant. In DOE's view, these two statutory provisions
share the requirement that ``significant conservation of energy'' must
be present--and supported with ``clear and convincing evidence''--to
permit DOE to set a more stringent
[[Page 8667]]
requirement than ASHRAE. Accordingly, in examining these potential
impacts, DOE believes that Congress intended for standards more
stringent than ASHRAE to achieve significant conservation of energy in
addition to the savings already projected under the ASHRAE standards.
The variety of equipment that are encompassed by the ASHRAE equipment
classes, the intense amount of scrutiny already applied by technical
experts in adjusting any potential standards for ASHRAE equipment
through the ASHRAE standards review process, and the nearly identical
statutory language imposing that ``significant additional conservation
of energy'' used by Congress with respect to DOE-initiated standards
for this equipment, all favor treating ASHRAE equipment in a manner
that recognizes the particular nature of this equipment relative to all
other products and equipment that are not similarly subject to the same
level of technical scrutiny and review. In other words, the statutory
language and factual circumstances surrounding ASHRAE equipment
indicate that DOE must determine that adopting a more stringent
standard than ASHRAE will produce a significant amount of energy
savings above what would be achieved by simply adopting the level set
by ASHRAE. As a result, to be consistent with this established
framework, DOE is applying the thresholds in this final rule to the
standards rulemaking process of 42 U.S.C. 6313(a)(6) governing ASHRAE
equipment.
As for EEI's suggestion that an exception or different threshold be
applied to those other products and equipment with smaller markets--DOE
does not believe that such changes, absent more concrete and definitive
information, are necessary, particularly in light of the other changes
that are being incorporated into this final rule in response to
commenter concerns. In DOE's view, the fact that the footprint of a
given product or equipment is small suggests that Federal intervention
in the form of mandatory standards may not be the appropriate means at
that time to improve the efficiency of that product. See, e.g., Battery
Chargers Standards Final Rule, 81 FR 38266, 38281-38282 (June 13, 2016)
(refraining from including wireless chargers within the scope of the
battery charger standards rulemaking to avoid the ``loss of utility and
performance likely to result from the promulgation of a standard for a
nascent technology such as wireless charging.''). In addition, the 10
percent energy savings threshold enables the application of more
stringent standards to products with a ``small footprint'' that would
otherwise be unable to meet the criteria for saving a significant
amount of energy.
With respect to AGA's suggested imposition of an overall reduction
in residential energy use test, DOE notes that such an approach would
be similar to the one explicitly rejected in Herrington, which would
not only present a legal problem under existing case law but also link
improvements to energy efficiency from a standard for a given
individual product/equipment type solely to the amount of savings from
that standard relative to the entirety of residential energy usage.
(See Herrington, 768 F.2d at 1375-1378 (rejecting DOE's significance
tests that, among other things, relied on the overall reduction in
energy use when evaluating the energy savings potential that a
particular standard could achieve)) Aside from the conflict with
current case law, this approach would effectively eviscerate the
Agency's ability to amend its standards. In DOE's view, AGA's
suggestion presents an overbroad approach that fails to consider the
requisite balancing that Congress had instructed DOE to undertake--that
of determining whether a given standard that produces significant
energy savings for a given product or equipment type is both
technologically feasible and economically justified--in order to
produce a more precisely calibrated result to improve the energy
efficiency of consumer products and (specifically identified)
industrial equipment. See 42 U.S.C. 6201(5) and 42 U.S.C. 6312(a).
Similarly, NAFEM's suggestion that DOE apply a Pareto analysis
approach to the thresholds presents another alternative that DOE is
also declining to adopt. This approach may result in cases where DOE
would forego energy savings in cases where one of the two thresholds is
met since it would involve applying a more stringent threshold (i.e.,
determine which 20 percent of rulemakings produce 80% of the energy
savings) that would likely remove additional standards that would
produce significant energy savings from further consideration. While
DOE seeks to improve the efficiency of its own process in developing
and finalizing energy conservation standards for its regulated products
and equipment, it must also ensure that the statutory criteria can be
achieved under the balancing performed under EPCA. See 42 U.S.C.
6295(o)(2)(A) (standards must be designed to achieve ``the maximum
improvement in energy efficiency'') and 42 U.S.C. (o)(2)(B)(i)
(detailing factors for determining whether a given standard is
economically justified). Applying NAFEM's suggested approach, would
make it unlikely for DOE to meet this requirement since it would raise
the probability of prematurely eliminating standards rulemakings for
those products and equipment that may still produce significant
conservation of energy.
Regarding Regal-Beloit's suggestion that DOE supplement its
thresholds with the use of a ratio of quads over cost impacts, DOE,
after careful consideration of this suggested change, is declining to
add this step to its threshold approach at this time. To the extent
that any ``cost-free'' energy savings are possible, DOE believes that
the modified levels being adopted in this final rule will be sufficient
to ensure that it is able to capture the maximum amount of energy
savings while limiting the potential financial burdens manufacturers or
consumers may face provided the energy savings result in significant
conservation of energy. As a result, DOE has decided to retain the
general framework of its proposed thresholds without adding this
suggested change.
As to GWU's concerns about the analytical process that DOE would
follow once a significant energy savings determination is made, DOE
notes that it would continue to perform the routine economic
justification analysis for any potential rulemaking standard that
satisfies the applicable threshold. Analyzing whether a potential
standard is economically justified is a prerequisite to determining
whether the economic justification prong under 42 U.S.C.
6295(o)(2)(B)(i) is met and DOE must complete this step prior to
finalizing its rulemaking determination. Consequently, DOE does not
anticipate making any changes to this aspect of its rulemaking process.
DOE also took into account Rheem's concerns regarding whether 0.5
quad was ``the right number'' for a quad-based threshold. Under the
revised approach detailed in this final rule, DOE believes that these
revisions establish an appropriate quad threshold--namely, 0.3 quads of
site energy over 30 years-- that satisfies DOE's legal obligations in
implementing EPCA. As DOE explains elsewhere in this document, the
approach adopted in the rule will apply appropriate quad and percentage
thresholds to ensure that those energy savings meriting further
analysis are not ignored and receive due consideration for adoption as
a standard. And regarding Rheem's urging that DOE consider consumer
impacts, DOE notes that consumer impacts remain an
[[Page 8668]]
integral part of DOE's routine energy conservation standards analysis
and the Department does not anticipate any changes to this approach.
(See, e.g., 42 U.S.C. 6295(o)(2)(B)(i)(I) (instructing DOE when
determining whether a standard is economically justified to consider
``the economic impact of the standard on the manufacturers and on the
consumers of the products subject to such standard.''))
Regarding BHI's comments regarding the potential amendment of the
threshold levels in the future, DOE notes that while it does not
anticipate making changes to these levels, any amendments would be made
as part of a notice and comment rulemaking regarding the Process Rule
similar to the one that DOE initiated for this final rule. DOE does not
anticipate amending the threshold levels as part of individual energy
conservation standards rulemaking efforts.
Finally, as suggested by Spire and numerous other commenters,
including those opposed to the use of thresholds, DOE is clarifying the
basis for its proposed thresholds and making adjustments to the values
being adopted as part of this final rule. While DOE's proposal was
based on a calculated value that used both site- and source-based
energy savings, this final rule bases the adopted threshold levels on
site energy-based savings. DOE's July 2019 NODA on this very topic laid
out a variety of threshold scenarios based on site energy usage to
illustrate their potential impacts using a combination of different
threshold values. See 84 FR 36037, 36038-36039 (July 26, 2019)
(detailing the impacts of a variety of quad-based and percentage-based
threshold combinations based on site energy use). This approach will
serve as the basis for DOE's significant energy use thresholds and is
consistent with EPCA's definition for ``energy use'' (i.e., ``the
quantity of energy directly consumed by a consumer product at point of
use'') and the process followed by DOE when determining whether to
apply energy conservation standards to other covered products (i.e.,
applying ``average per household energy use'' when determining whether
to prescribe standards). See 42 U.S.C. 6291(4) (defining ``energy
use'') and 42 U.S.C. 6295(l)(1) (detailing qualifying criteria DOE must
consider prior to prescribing standards for newly covered products).
B. Response to Commenters Opposing DOE's Proposed Use of Thresholds
In reviewing and considering the arguments forwarded by commenters
who opposed the use of thresholds for determining whether a potential
standard would produce significant conservation of energy, DOE gave
careful thought to the concerns and potential problems that they
identified. After considering these specific concerns, DOE has taken a
number of steps to address them and has made some adjustments to the
proposed approach as part of this final rule. These adjustments include
providing further explanation of the supporting data (as presented in
the July 2019 NODA) and modifying the quad-based threshold level that
DOE initially considered adopting. As indicated in DOE's NODA regarding
the various threshold combinations it examined, DOE sought additional
feedback from the public regarding what might be appropriate levels to
use by providing the projected energy savings for the examined
standards final rules in a uniform manner using site energy.
As a preliminary matter, in response to the commenters who opposed
the proposed thresholds because of the lack of clarity concerning the
basis for the proposed levels or out of concern for the level of the
proposed thresholds themselves (ACEEE, Bosch, CT-DEEP, Ingersoll-Rand,
and NEEA), DOE has since clarified the basis of these threshold levels.
See 84 FR 36037 (July 26, 2019) (presenting and explaining data
regarding projected impacts on number of rulemakings and percentage of
energy savings retained relative to applying no threshold under various
quad/percentage improvement scenarios using primary source energy use).
That NODA explained that DOE re-examined its data and discovered that
its proposed 0.5 quad threshold was based on the use of source- and
site-based energy. As a result, DOE released a set of tables to
illustrate the potential energy savings related to the 57 different
standards rulemakings that were examined and the impacts that various
quad/percentage efficiency threshold combinations would have had on
those rulemakings. These revised tables present the energy savings
involved uniformly in terms of site energy usage and DOE's use of these
data is consistent with the manner discussed elsewhere in this
document. And while DOE acknowledges Energy Solutions' (i.e. the Cal-
IOU's) objections to the proposed thresholds, Energy Solutions offered
no data or substantive analysis in support of its views.
Consistent with these clarifications, DOE notes that it will
determine whether the threshold levels are met by relying on site
energy use values, which, as indicated earlier, is consistent with
EPCA's treatment of energy use and procedures for prescribing standards
for those covered products not already explicitly addressed under the
statute. DOE will also continue to follow its policy of using FFC
analyses as part of the Department's energy conservation standards
program when analyzing overall impacts, including emissions, from a
given rulemaking standard. See 76 FR 51281 (Aug. 18, 2011) (announcing
DOE's statement of policy to use FFC analysis in its standards
rulemakings). See also 77 FR 49701 (Aug. 17, 2012) (amending DOE's FFC
policy by specifying that DOE's National Energy Modeling System rather
than the Greenhouse Gases, Regulated Emissions, and Energy Use in
Transportation model). In DOE's view, this approach maintains
consistency with both its statutory obligations and its policy of
ensuring that its analyses address the full range of potential savings
and costs that flow from examining the FFC energy use of a given
product or equipment.
Regarding the CEC's concern that the application of any thresholds
would preempt States from enacting their own standards for a Federally-
covered product or equipment type, DOE agrees that EPCA contains
explicit preemption provisions that apply both in general for covered
products and as specified in particular circumstances. See 42 U.S.C.
6295(ii) and 42 U.S.C. 6297 (detailing specific circumstances in which
limitations on Federal preemption of State standards applies).
With respect to Ingersoll-Rand's and NEEA's concerns over the use
of thresholds--specifically, that they may be arbitrary and too high,
with the proposed 10 percent threshold posing too steep a level of
improvement for many covered products and equipment to achieve--DOE
notes that it has modified its quad threshold after reviewing its data
and relevant comments. The modified thresholds adopted in this final
rule, which are based on analyses of projected energy savings from
final rules previously adopted by DOE, ensure that those rulemakings
that produce energy conservation standards also produce, as urged by
NEEA, cost-effective savings to consumers while reducing the burdens
that accompany repeated cycles of rulemakings to eke out more limited
potential energy savings. While the final selected level of energy
efficiency may be influenced by a variety of factors specific to a
given case, DOE must rely on its available data and analyses in
determining what level--if any--to set for energy savings. Using data
from its past analyses and rulemakings, and weighing its obligations
under the statute to account for a variety of factors,
[[Page 8669]]
DOE has determined that applying the thresholds detailed in this final
rule set out an approach consistent with its legal obligations and
policy to continuously improve energy efficiency that is economically
justified.
In DOE's view, the adjustments made to the final threshold levels
should be sufficient to address both NEEA's and Ingersoll-Rand's
initial concerns about their magnitudes. DOE notes that, given the
increasing number of products and equipment that it is either directly
regulating or over which it currently has coverage but is not yet
regulating, the Agency's oversight responsibilities are extensive--and,
based on prior Congressional actions, are expected to continue to grow.
See, e.g. Energy Policy Act of 2005, Public Law 109-58 (Aug. 8, 2005)
(adding battery chargers and external power supplies as products for
DOE to regulate), Energy Independence and Security Act of 2007, Public
Law 110-140 (Dec. 19, 2007) (adding walk-in cooler and freezer
equipment for DOE to regulate and revising the scope of electric motor
coverage), American Energy Manufacturing Technical Corrections Act,
Public Law 112-210 (Dec. 18, 2012) (making a series of amendments
affecting a variety of procedural and scoping-related provisions
regarding regulated consumer products and industrial equipment), and
EPS Improvement Act of 2017, Public Law 115-115 (Jan. 12, 2018)
(setting out procedures for DOE to follow in the event that solid state
lighting power supply circuits, drivers, or devices are treated by DOE
as covered equipment). Without a more efficient way of managing and
prioritizing its limited resources to address these increasing
regulatory activities, DOE runs an increased risk of falling further
behind in fulfilling its statutory obligations, reducing the quality
and comprehensiveness of its analyses, or, adopting statutory
interpretations that, while potentially providing an expedient solution
for a given issue, may inadvertently undermine the careful
consideration that Congress required DOE to perform when evaluating
potential efficiency standards for the numerous consumer and industrial
appliances that DOE oversees.
As to those commenters (A.O. Smith, AG Joint Commenters, ASAP, et
al., Cal-IOUs, CEC, NPCC, NRDC, and NYU Law) who opposed the use of any
thresholds, most took that position out of the belief that EPCA only
permits the use of an individual case-by-case analysis in every
instance where DOE is considering whether to amend or establish a
standard for a particular product or equipment. We note the fact that
EPCA specifically states the Secretary may not prescribe an amended or
new standard under this section for a type (or class) of covered
product if the Secretary determines, by rule, that the establishment of
such standard will not result in significant conservation of energy, or
that the establishment of such standard is not technologically feasible
or economically justified. See 42 U.S.C. 6295(o)(3)(B).
DOE has carefully considered these arguments and re-examined the
Herrington opinion. The statutory test for establishing or revising an
energy conservation standard contains three separate and distinct
determinations. EPCA makes clear that DOE cannot establish or amend a
standard unless all three are met. To comply with EPCA requirements DOE
is unable to simply decide that any savings of energy that is
technologically feasible and economically justified per se saves a
significant savings of energy or that the savings from a number of
energy conservation standards will add up to a significant amount of
energy. Separate from a determination regarding economic justification
or technological feasibility, the Secretary is explicitly prohibited
from prescribing an amended or new standard that will not result in
significant conservation of energy. Any other position would write out
of the statute the discrete determination the language requires about
the significance of the energy savings. In explaining its proposal, DOE
noted its concern with the direct economic impacts that are likely to
flow from imposing standards that are projected to yield relatively
lower energy savings--standards that may produce little in overall
benefits in energy and cost savings for consumers when compared to the
costs related to the manufacture and purchase of products and equipment
meeting these kinds of standards. (84 FR 3910, 3922 (Feb. 13, 2019))
DOE elaborated on the basis for its proposal, noting that this
[proposed] approach gives effect to the Herrington court's reference to
not forego energy savings that are ``cost-free.'' However, it would
also limit the first-cost impacts to consumers to those instances where
a given rulemaking is expected to generate significant energy savings
and other substantial benefits. (84 FR 3910, 3922 (Feb. 13, 2019))
And as DOE previously pointed out in its preamble to the proposal,
see 84 FR 3910, 3922 (Feb. 13, 2019), EPCA, despite using it in
multiple statutory sections, does not define the term ``significant
conservation of energy'' nor does it specify any particular criteria or
specific guidance as to the term's meaning. See 42 U.S.C. 6295(n)
(specifying that DOE shall grant a petition for an amended standard if
the petition contains evidence that, if no other evidence were
considered, provides an adequate basis that amended standards will
result in significant conservation of energy) and (o) (providing that
DOE may not prescribe an amended standard if the establishment of that
standard will not result in significant conservation of energy). See
also 42 U.S.C. 6313(a)(6)(A)(ii)(II) (requiring DOE to demonstrate with
clear and convincing evidence that adoption of a standard more
stringent than those set by ASHRAE would result in ``significant
additional conservation of energy''). The fact that this term, despite
its prominent place in key provisions related to DOE's standards-making
authority remains undefined, indicates that Congress had intended for
DOE to make this determination of what level(s) of energy use savings
(if any) would satisfy this term. Under such circumstances, case law is
clear that an agency, where gaps are present in the statute, must
necessarily fill those gaps as appropriate. See Chevron v. Natural
Resources Defense Council, 467 U.S. 837, 843-44 (1984) (``If Congress
has explicitly left a gap for the agency to fill, there is an express
delegation of authority to the agency to elucidate a specific provision
of the statute by regulation.'') (Stevens, J.) See also Herrington, 768
F.2d at 1372-1373 (noting that DOE has ``substantial discretion to set
specific levels of significance'' so long as the levels selected are
``consistent with the express terms and underlying congressional
intentions of [EPCA].''). Significantly, the Herrington court did not
attempt to dictate the meaning of ``significant conservation of
energy,'' deferring instead to those specific provisions Congress
prescribed in the enacted legislation to discern a reasonable meaning
for ``significance.'' See Herrington, 768 F.2d at 1373-1374.
Further, the use of thresholds for determining significance was
clearly contemplated under the Herrington decision. The Herrington
court did not shy from applying a threshold--it sought only to
determine what would be a reasonable one in light of the various
provisions laid out in EPCA. Using the threshold that Congress already
set for prescribing an energy conservation standard for which DOE has
added coverage, the Herrington court determined that Congress must have
viewed the prescribed level of energy savings (0.014335 quad per year
of household energy consumption for a
[[Page 8670]]
given product, which translates into a source energy use of 0.0483 quad
per year) as being significant. See id. (When calculated over 30 years,
this source energy use value reaches 1.449 quads and the site value
reaches 0.43 quads. These values clearly exceed the max-tech quad
threshold of 0.5 quad that DOE had earlier proposed and the 0.3 site
energy quad that DOE is finalizing here, respectively.) \18\ The
Herrington court even went as far to emphasize that in those instances
where the threshold for significance was not reached, DOE must not
issue a standard even in the face of the prospect of forfeiting savings
that would impose no burdens. See 768 F.2d at 1373 (stressing that
``DOE may not issue a standard it has disqualified under the
significance provision even if that standard imposes absolutely no
burdens at all.'') (emphasis in original). Determining significance is
a decision that rests with DOE. In making this judgment, the Department
balanced competing considerations and its limited resources. DOE notes
that while the commenters object to the use of thresholds, their past
actions in other rulemaking contexts have demonstrated a willingness to
accept no changes in a standard for specific product classes where the
projected energy savings would be small. See, e.g. ASAP, December 16,
2015 Central Air Conditioner and Heat Pumps Working Group Meeting,
EERE-2014-BT-STD-0048 at pp. 90-91 (ASAP stating its willingness to
leave the standards for single-packaged air conditioners and heat pumps
unchanged when the projected energy savings over 30 years were
calculated to be 0.2 quad)
---------------------------------------------------------------------------
\18\ DOE notes that in the case of industrial equipment, which
DOE began regulating after the Herrington decision, the population
of potential commercial/industrial equipment over which DOE could
add coverage is limited solely to those equipment types listed under
42 U.S.C. 6311(2)(B). DOE may include such equipment types as
covered equipment if the Secretary ``determines that to do so is
necessary to carry out the purposes of this part.'' 42 U.S.C.
6312(b). While this provision, unlike its counterpart for consumer
products (found in 42 U.S.C. 6295(l)), does not specify a minimum
energy use threshold to establish coverage or to set standards, an
appropriate threshold based on similar energy consumption use could
also apply. Accordingly, DOE may use its discretion in setting
initial threshold requirements for adding regulatory coverage of
commercial/industrial equipment.
---------------------------------------------------------------------------
Further, DOE notes that EPCA itself does not use the phrase
``genuinely trivial'' when describing the amount of energy savings that
a given standard must achieve. The Herrington court used that phrase in
an attempt to give substance to the concept of significance but, like
``significant energy savings,'' never defined that phrase. While DOE
may have treated ``genuinely trivial'' as the test to apply when
determining whether to adopt a standard, DOE is now applying the test
from the statute itself--i.e. whether the standard produces significant
energy savings.
Finally, DOE points out that the Herrington court expressed concern
not with the use of thresholds but the manner in which those thresholds
were developed and justified. In that case, the court viewed DOE's
effort at defining ``significant energy savings'' as problematic in
light of the agency's inability to sufficiently explain why its three
tests for significant conservation of energy were valid in light of
other provisions contained in EPCA. The tests that DOE attempted to use
to define the contours of significant energy savings effectively
prevented DOE from issuing the discretionary energy conservation
standards that Congress had intended for DOE to promulgate. See
Herrington, 768 F.2d at 1375-76. The Herrington court sought evidence
demonstrating that DOE's definition of significance showed ``some
awareness of the range of energy savings Congress thought worth
pursuing.'' Herrington, 768 F.2d at 1377.
In this rule, DOE has taken a much more tailored approach to
account for the concerns noted in Herrington and the issues raised by
commenters regarding the potential impacts from using thresholds. It
has not erected a series of tests that would pose an insurmountable
barrier that would effectively bar it from promulgating efficiency
standards going forward. To the contrary, DOE's approach, which relies
on the past experiences, data, and information from dozens of standards
rulemakings completed over three decades, has been designed to not only
ensure that economically justified energy conservation standards are
developed but to also provide a reasonable level of predictability to
DOE's rulemaking process as numerous commenters have repeatedly asked
DOE to follow. These thresholds will also enable DOE to focus its
rulemaking efforts and enable DOE to efficiently manage the finite
resources it currently has with respect to overseeing the standards and
test procedures for the products and equipment it regulates.
Further, DOE notes that technological innovation occurs on a
constant basis, which means that the product and equipment efficiency
levels and cumulative energy savings potential from new or revised
standards for a given product are not static. This potential for
continuous improvement is driven by technological innovation and
product development which are a function of time. Designs that DOE
previously analyzed as max-tech prototypes, and which failed the
screening criteria 20 years ago, are today's baseline models. As a
result, DOE does not anticipate that the thresholds being adopted in
this rule will present an insurmountable barrier to achieve further
energy savings in the future.
In light of the balancing of interests that DOE continues to
perform with respect to evaluating potential energy conservation
standards, DOE is also mindful of its past rulemakings when setting new
or amended standards for regulated products and equipment, and believes
its extensive regulatory past is the best guide to its future actions.
As DOE previously explained, it selected a level that accounted for the
concerns noted in the Herrington decision by considering the level of
savings to apply against the thresholds discussed in that decision and
prescribed in EPCA. See 84 FR 3910, 3922-3924 (Feb. 13, 2019). In so
doing, DOE initially determined that a 0.5 quad threshold applied to
the projected max-tech savings, when compared against the sizable
number of completed rulemakings that produced new or amended standards
for regulated products and equipment, would help DOE to continue to
ensure that the vast majority of future energy savings from its
rulemakings would be preserved.
Additionally, DOE's proposed approach included a second step to
ensure that it would be able to capture energy savings even in those
cases where less than 0.5 quad of savings were projected under the max-
tech analysis. That second step--applying a percentage-based increase
in efficiency, also projected under the max-tech analysis--was intended
to provide DOE with a backstop that would help better account for the
energy efficiency potential of the individual product or equipment at
issue. DOE notes that by applying these thresholds to the max-tech
analysis, DOE will be able to assess the technological feasibility of
whether significant energy savings is possible at an early stage of its
analysis. Once it makes this determination, DOE will also be positioned
to evaluate whether a standard for this level of energy savings is
economically justified. Accordingly, under DOE's approach, decisions
regarding whether and how to proceed with a given standard can be made
in a more transparent and predictable manner consistent with the
statute.
While commenters have expressed concerns regarding the potential of
inadvertently missing cost-free opportunities for higher energy
efficiency-related savings from a standard, those savings must in the
first instance be significant, since Congress
[[Page 8671]]
did not intend for DOE to continually set standards irrespective of the
magnitude of those potential savings. See Herrington, 768 F.2d at 1378
(noting that ``DOE is right to think that under [42 U.S.C. 6295(o)],
standards for each product type must result in significant
conservation.''). See also id. at 1373 (stressing that ``DOE may not
issue a standard it has disqualified under the significance provision
even if that standard imposes absolutely no burdens at all.'')
(emphasis in original). DOE believes that its revised process as
outlined in this final rule will encourage interested parties to
provide substantive input that will assist DOE in readily addressing
those potential areas where rulemaking will be most beneficial and
yield the greatest amount of energy savings without imposing the
economic burdens from multiple additional rulemakings yielding only
marginal benefits. By conducting an early assessment of the max-tech
energy savings from potential new or amended standards for a given
product or equipment type as described in this final rule, DOE expects
that interested parties will provide as much information as early as
possible to help supplement any information already being evaluated by
DOE to ascertain whether either of the thresholds is met. And in those
cases where DOE must make decisions regarding the scope of a particular
set of standards, the Agency will apply a cleaner--and broader--
approach by evaluating each product/equipment type as a whole rather
than dividing a particular product/equipment type into multiple classes
or subclasses. DOE does not expect such a circumstance to arise, but
should the Department proceed with a standards rulemaking applicable to
only a segment of a covered product, it will evaluate the potential
energy savings across all product classes. While DOE may ultimately
decide not to set standards for every conceivable class within a
product or equipment type, DOE anticipates that the potential max-tech
standards it will use to evaluate each product and equipment type as a
whole at the early assessment stage will enable DOE to reasonably
determine whether a new or amended standard for a given product or
equipment type merits further evaluation. And should DOE initially view
new or amended standards as not being warranted for having not met
either threshold, interested parties would have the opportunity to
weigh in with additional information and data as part of the notice of
proposed determination process required under 42 U.S.C. 6295(m)(1)-(3).
See Figure III.1 at the end of this discussion section.
In the case of those rulemakings where standards have been
characterized by commenters as having been cost-free (i.e. those
involving commercial clothes washers, pre-rinse spray valves,
dehumidifiers, and hugger fans), DOE refers back to Herrington, which
stressed that a standard must not be set unless there are significant
energy savings to be had. And as to the specific rulemakings
highlighted by commenters, DOE notes that the preamble discussions from
the cited rules noted that certain efficiency levels that DOE
considered for certain classes of the products or equipment at issue
were not projected to yield net costs, not that these standards would
have been cost-free (an amended standard would necessarily involve
costs for manufacturers to implement through new compliance-related
costs).\19\ Regarding water savings, DOE notes that the significant
energy (water) savings requirement does not apply to pre-rinse spray
valves, which would mean that even if DOE had developed specific water
savings thresholds, as it has the authority to do, such thresholds
would not apply to this particular equipment type. See 42 U.S.C.
6295(o)(3)(B) (specifying significant conservation of water for only
``showerheads, faucets, water closets, or urinals''). In any event,
even if DOE could consider adopting standards that it believed did not
produce significant energy savings, those standards cannot be
accurately characterized as ``cost-free.''
---------------------------------------------------------------------------
\19\ See 79 FR 74492 (Dec. 15, 2014) (final rule amending
standards for commercial clothes washers); 81 FR 4748 (Jan. 27,
2016) (final rule amending standards for commercial prerinse spray
valves); 81 FR 38338 (June 13, 2016) (final rule amending standards
for dehumidifiers); and 82 FR 6826 (Jan. 19, 2017) (final rule
amending standards for ceiling fans).
---------------------------------------------------------------------------
As to concerns of potential conflicts between the quad savings
levels achieved by Congressionally-enacted standards and the quad
threshold being set by DOE in this rule, DOE notes that
Congressionally-enacted standards are independent of DOE's analysis of
what qualifies as ``significant'' and can be determined on a case-by-
case basis. As a result, Congressionally-enacted standards are always
open to any level that Congress deems appropriate. It does not follow,
however, that DOE would, without explicit statutory language to the
contrary, set a standard without first determining whether significant
energy conservation of energy could be achieved. By leaving the meaning
of this term undefined, Congress has permitted DOE to define the
meaning of this term--and DOE's reliance on a reasonable threshold that
accounts for the savings of prior rulemakings in no way conflicts with
the ability of Congress to unilaterally set a standard that may differ
from the thresholds that DOE applies through this Process Rule. As
indicated elsewhere, DOE's approach can permit standards that fall
below the quad threshold through its second prong if the facts
supported a rulemaking based on the projected reduction in energy use
from a standard.
Regarding Earthjustice's concerns of potential gaming by DOE if a
threshold is set, DOE notes generally that when examining all products
and equipment within a particular type (or in the case of ASHRAE
equipment, equipment category) for purposes of determining whether the
projected energy savings would satisfy the significance thresholds, DOE
will examine product and equipment types in a manner that makes the
most sense and not selectively examine classes or sub-classes of
products and equipment simply for the purposes of projecting whether
potential energy savings would satisfy the applicable thresholds.
Similarly, in the case of ASHRAE equipment, which are addressed by a
separate statutory provision, if DOE is triggered to examine the
standards for certain classes within a particular equipment type, DOE
will also examine all of the remaining classes within that same
equipment category consistent with its current obligations under the
six-year review cycle under 42 U.S.C. 6313(a)(6)(C). Accordingly, in
light of the concerns expressed by Earthjustice, DOE has adjusted its
regulatory text under Section 6(b) to explicitly spell out this
approach.
Regarding water efficiency, DOE acknowledges that its proposed
thresholds do not encompass a particular level for the specific water-
consuming products identified in 42 U.S.C. 6295(o)(2)(B). In DOE's
view, with sufficient data and analysis, a water savings threshold may
be possible in the future. However, the absence of a proposed threshold
was due at least in part to the fewer number of data points with
respect to water savings. With this data situation remaining the same
since the publication of DOE's proposal, DOE is opting not to set any
threshold levels related to water savings at this time.
DOE also acknowledges the concerns raised by the Cal-IOUs. While
grid reliability issues are a critical concern in the overall context
of energy usage, these issues are best addressed within a separate
effort focusing on these issues. DOE also notes that the Cal-IOUs did
not indicate whether the magnitude of
[[Page 8672]]
the proposed max-tech threshold levels--let alone those thresholds that
DOE is adopting today--would have any appreciable impact to grid
reliability and if so, by how much. Nevertheless, DOE notes that, to
the extent that these issues become a major factor in a given
rulemaking, DOE will address them within the context of that particular
rulemaking action.
Regarding the Cal-IOUs assertion that the proposed thresholds would
eliminate 4.24 quads of energy savings, DOE believes that the adopted
approach presents a careful and reasonably balanced method of ensuring
that significant energy savings are produced while limiting the overall
burdens associated with implementing and following the necessary
regulations for complying with new or amended standards. Moreover,
under the proposed thresholds, DOE would still have achieved over 100
quads of energy savings (with 54.64 quads of site energy savings). (See
84 FR 3910, 3923 (Feb. 13, 2019) (noting that applying a 0.5 quad
threshold would yield 109 quads of energy savings based on an
examination of prior DOE standards rulemakings) and 84 FR 36037, 36038
(July 26, 2019) (noting site energy savings of 54.64 quads) (See also
84 FR 36037, 36038-36039 (July 26, 2019) (noting that 34 of the
examined 57 standards rules produced nearly 94% of the total energy
savings--and would be roughly equivalent to 51.3 quads of site energy
savings)). In addition, the 4.24 quads of savings that the commenters
cite translate to 3.29 quads of site energy. Moreover, according to
EIA, the United States consumed approximately 100 quads of energy in
2018.\20\ The 0.3 site energy quad threshold for a significant
conservation of energy established in this revision to the Process Rule
is savings over a 30-year period and, therefore, is an extremely low
bar when considered against approximately 3000 quads of consumed energy
in the same timeframe (holding 2018 energy consumption constant).
---------------------------------------------------------------------------
\20\ https://www.eia.gov/energyexplained/us-energy-facts/.
---------------------------------------------------------------------------
As for the concern raised by the Cal-IOUs of the possibility that
DOE's thresholds may inadvertently close off potential rulemakings that
may unlock substantially more energy savings than had been initially
anticipated as part of DOE's early look process, DOE is unsure what the
Cal-IOUs are suggesting. However, DOE notes that a properly scoped
rulemaking effort from the beginning will minimize the risk of
foregoing energy savings. The example cited by the Cal-IOUs--pumps--
involved a broad array of products and equipment that fell within that
particular category, within which were classes with different
potentials for energy savings. When examining the particular pumps at
issue in that rulemaking, DOE projected that the max-tech energy
savings involved 1.28 quads primary source energy use (and 1.34 full-
fuel cycle energy use)--easily well in excess of the 0.3 site energy
quad threshold established in this revision to the Process Rule.
With respect to the timing of DOE's application of the thresholds,
DOE notes that these thresholds would be applied continuously
throughout its various rulemaking steps. DOE would apply these
thresholds as part of the early assessment in addition to when weighing
the merits of a particular proposal. DOE anticipates that all
interested parties will assist the Agency's decision-making process to
ensure that any potential energy savings are not unnecessarily foregone
and that no rulemaking will be initiated until the appropriate
conditions are met--i.e. when sufficient energy savings under the
thresholds are satisfied through DOE's examination and analyses of
potential max-tech energy savings. Accordingly, while DOE appreciates
the concerns raised by the Cal-IOUs, the framework detailed under this
rule should provide adequate incentives to ensure that DOE receives and
analyzes sufficient information to enable the Agency to determine
whether a given rulemaking merits further action at that particular
point in time. Given that DOE is obligated to review its determinations
to not amend a standard within a relatively short (three-year) window,
additional opportunities to review the max-tech energy savings
potential for a particular product or equipment will continuously
present themselves. (See 42 U.S.C. 6295(m)(1)-(3) (detailing the
process by which a notice of determination to not amend a standard will
occur and specifying that such notice will provide an opportunity for
written comment and for public review of DOE's analysis.))
As for A.O. Smith's concern regarding the treatment of DFRs within
the context of DOE's significant energy threshold, DOE notes that any
DFR agreement submitted to DOE must conform to the statute. As
explained elsewhere in this final rule, the DFR provision is
procedural, and in no way provides an authority to take an action not
in compliance with the rest of EPCA. Thus, a DFR submitted to DOE would
need to satisfy the provisions detailed in EPCA in order for DOE to
move forward with that submission. In addition, consistent with the
approach detailed elsewhere in this discussion of the final rule, any
projected energy savings from the standards contained in a consensus
agreement presented to DOE pursuant to the DFR provision would need to
satisfy the thresholds in this final rule.
Finally, both ASE and Ms. Steinberg appeared to wholly oppose the
thresholds out of principle. As to these commenters, DOE refers back to
the arguments and explanations presented earlier. Regarding ASE's view
that the setting of any threshold is arbitrary and inflexible, and that
DOE should instead focus on meeting its statutory deadlines, DOE
believes that the thresholds being established in this final rule are
based on a careful consideration of available data regarding energy
savings that were projected to accrue from these standards. In turn,
DOE believes that the adoption of these thresholds will enable DOE to
more readily 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 benefit 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 thresholds will allow DOE to better focus on standards
that ``provide for improved energy efficiency of . . . major appliances
and certain other consumer products.'' 42 U.S.C. 6201(5).
BILLING CODE 6450-01-P
[[Page 8673]]
[GRAPHIC] [TIFF OMITTED] TR14FE20.000
BILLING CODE 6450-01-C
[[Page 8674]]
C. Response to Comments on the Notice of Data Availability
Site Energy
The term ``energy use'' is defined under EPCA as ``the quantity of
energy directly consumed by a consumer product at point of use'' and as
determined under the test procedure promulgated pursuant to DOE's
authority under 42 U.S.C. 6293. (42 U.S.C. 6291(4)) See also 42 U.S.C.
6311(4) (defining ``energy use'' for industrial/commercial equipment as
``point of use'' energy). An energy conservation standard is defined as
either (1) a performance standard that prescribes a minimum level of
energy efficiency or a maximum quantity of energy use (or in the case
of certain water products, water use) or (2) a design requirement with
respect to certain specified products. (See 42 U.S.C. 6291(6). See also
42 U.S.C. 6311(18) (applying similar criteria for industrial/commercial
equipment energy conservation standards)) Further, when establishing
coverage for a product under DOE's limited discretionary authority
under EPCA, DOE must first evaluate the average ``annual per-household
energy use'' for the product at issue against a prescribed statutory
threshold. (See 42 U.S.C. 6292(a)(20) (specifying that a covered
product includes ``[a]ny other type of consumer product which the
Secretary classifies as a covered product under [42 U.S.C. 6292(b)]'')
and 42 U.S.C. 6292(b) (permitting the Secretary to classify a product
as a covered product if it is ``necessary or appropriate to carry out
the purposes of this chapter'' and where products of such type are
likely to exceed an average annual per-household energy use of 100
kilowatt-hours or its Btu equivalent)) EPCA also clarifies that in
determining whether the 100 kilowatt-hour threshold for coverage is
met, DOE must take the estimated aggregate annual energy use of the
product type at issue that is used by households in the United States,
divided by the number of such households which use products of such
type. (42 U.S.C. 6292(b)(2))
Similarly, when determining whether it can set an energy
conservation standard for a product added for coverage under 42 U.S.C.
6292(b), DOE must determine whether additional criteria, including
thresholds based on household energy use, are satisfied. (See 42 U.S.C.
6295(l)) In particular, DOE may prescribe an energy conservation
standard for a product covered under 42 U.S.C. 6292(b) provided that
the Secretary determines that: (1) The ``household energy use of
products of that type (or class) exceeded 150 kilowatt-hours (or its
Btu equivalent) for any 12-month period ending before such
determination; (2) the aggregate ``household energy use within the
United States by products of such type (or class) exceeded
4,200,000,000 kilowatt-hours (or its Btu equivalent) for any such 12-
month period; (3) substantial improvement in the energy efficiency of
the product is technologically feasible; and (4) applying a labeling
rule is unlikely to be sufficient to induce manufacturers to produce,
and consumers and others to purchase, covered products of such type (or
class) that would achieve the maximum level of energy efficiency that
is technologically feasible and economically justified. (See 42 U.S.C.
6295(l)(1)(A)-(D))
Accordingly, since ``household energy use'' refers to the point of
use energy consumption, these statutory provisions, when read together,
indicate that the standards promulgated by DOE must be based on the
site energy use of the products at issue. Consistent with this
framework, DOE presented its supporting data for the NODA with this
structure in mind.
Further, in contrast to the assertions made by some of the
commenters, adhering to a site-based approach is also consistent with
the framework developed under DOE's FFC Policy Statement when the
Agency considered the question of using the FFC within the context of
its energy conservation standards analyses. (See 76 FR 51281 (August
18, 2011) (DOE Statement of Policy for Adopting Full-Fuel-Cycle
Analyses Into Energy Conservation Standards Program)) While the Policy
Statement noted that using FFC measures would help provide more
complete information about the total energy use and greenhouse gas
emissions associated with a specific energy efficiency level, the
Agency also stressed that EPCA requires that its measures used to
determine the energy efficiency of its covered products be based solely
on the energy consumed at the point of use. (76 FR 51281, 51282) DOE
pointed out that although EPCA does not mandate the use of ``point-of-
use'' measures in each of its analyses in support of a given standard--
and DOE ultimately decided to include FFC energy measures were included
as part of DOE's national impact analyses and environmental assessments
for standards rulemakings--DOE made clear its view that the final
energy conservation standard chosen ``must be expressed as a point-of-
use measure.'' (76 FR 51281, 51284 (citing to 42 U.S.C. 6291(4)-(6),
6311(3)-(4), (18)) DOE also considered the question of whether it
should establish a policy to calculate and use full fuel cycle measure
in future rulemakings in instances where a fuel choice is present--but
ultimately concluded that these additional measures would only provide
a rough indicator of the impacts of possible fuel switching on total
energy savings and emissions and, therefore, would not enhance current
DOE estimates of the direct impacts of alternative standard levels on
fuel choice, energy savings, emissions and other factors. (76 FR 51281,
51285)
The adoption of a full fuel cycle approach by other entities and
jurisdictions (as indicated by a number of commenters) does not change
the fact that DOE has its own, Congressionally-mandated requirements to
follow--which require that DOE base its standards on site-based energy
use. DOE also notes that the determination of a threshold for
significant energy savings is a separate question from whether a given
standard is economically justified. Accordingly, consistent with its
statutory obligations and with its past practice and policy statements,
when determining whether a given standard is economically justified,
DOE will apply FFC measures to evaluate the given standard level but
continue to base its energy conservation standards on site energy use.
Calculation Methodology
DOE appreciates the various suggestions offered by commenters on
possible ways to modify DOE's supporting analysis, such as by modifying
the analysis to account for changes in EIA-related numbers, accounting
for different methods for setting standards (e.g., reduction in losses
v. increased energy efficiency), excluding first-round rulemakings, and
others. However, the purpose of DOE's analysis was not to go back and
verify or improve the energy savings analyses from these rules.
Instead, DOE conducted this analysis in response to Herrington, which
stated that the ``cumulative savings possible from the appliance
program as a whole is certainly relevant to whether the conservation
that standards for a particular product type might achieve should be
deemed significant.'' 768 F.2d 1355, 1378 (1985). DOE's goal was to
determine how much the proposed threshold would have reduced the
projected, cumulative energy savings from its prior rules. As the
proposed threshold would have preserved 94 percent of the projected,
cumulative energy savings, DOE believes it is a
[[Page 8675]]
reasonable threshold for significant energy savings.
In future rules, DOE will quantify the quads of site energy saved
using the same methodology it has used for previous rulemakings to
ensure that standards meet the 0.3 quad threshold over 30 years
outlined in this rule. As noted elsewhere in this document, DOE will
continue to use FFC energy savings to calculate emissions reductions.
As an alternate threshold, DOE will assess the energy savings
percentage by assessing the quads of energy saved relative to the
baseline. DOE notes that, using this method, the percentage of energy
savings would be identical whether quads are assessed at the site
energy or primary energy level. In this way, use of a percentage energy
threshold in addition to the site energy threshold addresses some
commenters' concerns regarding whether a site energy threshold would
skew how the Department will treat standards for gas-using versus
electric appliances.
Quad and Percentage Thresholds
Regarding the various comments in favor and against the proposed
thresholds in light of the supplemental data furnished by the NODA and
related docketed materials, DOE continues to believe that it has the
authority to establish threshold levels for determining significant
energy savings. Nevertheless, DOE has revisited its proposed threshold
levels in light of the comments it received in response to the NODA.
After reviewing the quad site energy savings from past energy
conservation standards rulemakings, DOE has determined to revise its
proposed 0.5 quad threshold. The 0.5 quad threshold was not based on a
consistent evaluation of energy use across rules. When the energy
savings of all rules are evaluated on a site energy basis, the primary
goals of the proposed threshold are best achieved at 0.3 quads of site
energy. Namely, this threshold clearly distinguishes between the
standards that accomplish the vast majority of total energy savings and
those that accomplish purely incremental savings at the same level of
administrative burden. When considered in this light, DOE has decided
to adopt a threshold for significant energy savings at 0.3 quads of
site energy or, if that level is not met, a 10 percent reduction in
site energy use.
As a preliminary matter, DOE notes that the NODA data were intended
to present the projected energy savings from past rulemakings in a
uniform manner consistent with the framework established by Congress to
illustrate the relative savings achieved by DOE's prior rulemakings
when setting energy conservation standards. As A.O. Smith noted, the
rulemakings listed in the NODA do not all have the same analytical
period. However, DOE clearly specifies in this rule that for future
rulemakings energy savings will be assessed over a 30-year analytical
period, which clearly provides a uniform approach across rulemakings.
With respect to the energy usage threshold that Congress imposed as
a mandatory prerequisite before permitting DOE to set standards for a
given product using its discretionary authority under 42 U.S.C.
6295(l), that threshold is equivalent to 0.014335 quad of site energy
use on an annual basis. When extrapolated over 30 years, that total
amount of quad savings--0.43005 quad--would exceed the site energy-
based equivalent level adopted in this final rule. With the site
energy-based approach adopted in this rule, DOE has decided to lower
its quad-based threshold to 0.3 quad.
DOE notes that in those instances where even this amount of savings
may prove too high a hurdle to surmount, DOE would apply its percentage
threshold, which was intended to be a measure that would be better
tailored to accommodate the particular energy savings potential of the
product/equipment under consideration. With respect to applying the
percentage threshold, DOE notes that it has further examined its
proposed 10 percent level. Under DOE's proposed thresholds,
approximately 95% of the total savings from the 57 final rule would
have been retained. Given the concerns raised by the commenters, DOE
adjusted its quad-based threshold but has chosen to retain the proposed
10 percent threshold for this final rule. In DOE's view, these
thresholds together create a fair trade-off to ensure that energy
savings achieved by DOE's rulemaking efforts produce results that are
consistent with the balancing required under EPCA--i.e. to produce
significant energy savings that are technologically feasible and
economically justified. This result is consistent with EPCA's goal of
improving energy efficiency while also ensuring that those energy
savings achieved are significant in the first instance. See generally
42 U.S.C. 6201(5) and 42 U.S.C. 6295(o)(3)(B). See also Herrington, 768
F.2d at 1376 (noting that DOE may set levels of significance as a
percentage of energy consumed by a product ``provided that the levels
selected reasonably accommodate the policies of the Act.'') In DOE's
view, the adjustments it is making in this final rule to establish
thresholds for significant energy savings attempts to reduce the
overall potential regulatory burdens in the form of reduced rulemakings
while retaining the vast majority of energy savings (over 95%) when
viewed against past rulemakings. (See 84 FR 36037, 36038 (July 26,
2019)).
Further, use of a percentage threshold addresses commenters'
concerns regarding the ways in which a site energy threshold could
cause appliances with different fuel sources to be treated differently,
because the percentage change remains constant regardless of which
energy metric is selected. See generally 42 U.S.C. 6201(5) and 42
U.S.C. 6295(o)(3)(B). See also Herrington, 768 F.2d at 1376 (noting
that DOE may set levels of significance as a percentage of energy
consumed by a product ``provided that the levels selected reasonably
accommodate the policies of the Act.'' The 10 percent level being
adopted in this rule accounts for potentially lower reductions in
energy savings that may occur as DOE continues to incrementally amend
the standards for regulated products and equipment.
As DOE previously explained, its purpose in setting thresholds for
significant energy savings was to take a middle ground when determining
significant savings of energy to improve the predictability and
transparency of its standards rulemakings. (See 84 FR 3910, 3923 (Feb.
13, 2019)) Further, DOE must also consider ``the overall conservation
possible'' under its program in determining what would meet the
``significant conservation of energy'' requirement prescribed under
EPCA. Herrington, 768 F.2d at 1378. In following this framework, and in
contrast to its past approach of emphasizing whether projected energy
savings were ``genuinely trivial,'' DOE gave careful consideration to
the results of its past rulemaking actions and is now seeking to better
balance the potential savings and potential burdens involved to help
ensure that DOE produces rulemakings that achieve significant energy
conservation as required under EPCA while reducing the overall burdens
in achieving those savings.
Regarding requests that DOE clarify whether it is adopting a max-
tech percentage threshold based on a reduction in energy use or an
improvement in energy efficiency, DOE has decided, as indicated
earlier, to adopt the former. In addition to the differences noted by
commenters, DOE believes that adopting a percentage threshold based on
the reduction in energy use is preferable given that it
[[Page 8676]]
more closely tracks the statutory framework to directly address energy
use and to reduce that usage to the extent possible within the limits
prescribed by EPCA. See generally 42 U.S.C. 6291.
Other Comments
With respect to MHARR's suggestion to apply the Process Rule's
provisions to the separate rulemaking on manufactured housing that is
currently underway, while DOE appreciates this suggestion, we note that
the statutory authorities for manufactured housing and the appliance
standards that are addressed by this final rule are in separate
chapters within Title 42 of the U.S. Code and have no relationship with
each other--aside from applying generally to DOE. Consequently, DOE is
declining to adopt this suggestion.
As for suggestions that DOE issue a supplemental notice of proposed
rulemaking, DOE is also declining this suggestion. In DOE's view, the
proposal, related public meetings, and subsequent NODA (and
accompanying data), provided a sufficient opportunity for interested
parties to meaningfully comment on the proposed rulemaking. Given the
detailed feedback provided by commenters, and the nearly 200 days in
total that stakeholder have had to submit comments on these topics, DOE
does not believe that a supplemental notice is necessary. Should DOE
decide, however, to amend the process rule at a later point in time, a
new notice of proposed rulemaking would be issued and published.
Regarding how and when the quantitative thresholds would be
applied, as noted elsewhere, these thresholds would be applied at the
initiation of a review of potential standards for a given product or
equipment. Assuming that the max-tech-based threshold for significant
energy savings is met, DOE would evaluate potential standards under
consideration against that threshold and whether those standards would
be economically justified--with technological feasibility already being
addressed under the initial max-tech analysis. This review would be
conducted in a manner consistent with the approach outlined in Figure
III-1. Relevant information collected by and submitted to DOE at each
respective step will be used to assess any potential standards under
consideration. In applying these thresholds to multiple product classes
belonging to a particular product type, as stated elsewhere in this
document, the significant energy thresholds would apply to the product
type as a whole, not simply to a particular class of that product type.
DOE has added language to the regulatory text to mitigate the risk of
potential manipulation of classes (or subclasses) for the purposes of
attempting to solely satisfy (or not satisfy) the thresholds.
I. Finalization of Test Procedures Prior to Issuance of a Standards
NOPR
Currently, the Process Rule states that DOE will propose any
modifications to a test procedure prior to issuing an ANOPR for energy
conservation standards and finalize those modifications prior to
issuing a NOPR for energy conservation standards. However, DOE has
deviated from this schedule in the past and conducted test procedure
and standards rulemakings concurrently.
DOE recognizes that a finalized test procedure allows interested
parties to provide more effective comments on proposed standards.
Further, if the test procedure is finalized sufficiently in advance of
the issuance of proposed standards, interested parties will have
experience using the new test procedure, which may provide additional
insights into the proposed standards. As a result, in its February 13th
NOPR, DOE proposed to require that test procedures used to evaluate new
or amended standards will be finalized at least 180 days before
publication of a NOPR proposing new or amended standards. (84 FR 3910,
3926) In this final rule, DOE has adopted this proposal.
Most commenters are in general agreement that test procedures
should be finalized before DOE proposes new or amended standards.
Commenters agreeing include: CTA, No. 136 at p. 3; A.O. Smith, March
21, 2019 Public Meeting Transcript, No. 87, at p. 27; Acuity, No. 95,
at p.5; AHAM, April 11, 2019 Public Meeting Transcript, No. 92, at p.
36; AHRI, March 21, 2019 Public Meeting Transcript, No. 87, at p. 12;
AHRI, April 11, 2019 Public Meeting Transcript, No. 87, at p. 49; ASE,
No. 108 at p. 5; AGA, March 21, 2019 Public Meeting Transcript, No. 87,
at p. 20; Joint Commenters, No. 112, at p.8; AGA, No. 114, at pp. 20-
21; ALA, No. 104 at p. 2; APGA, March 21, 2019 Public Meeting
Transcript, No. 87, at pp. 14-15; APGA, No. 106 at p. 4; ASAP, April
11, 2019 Public Meeting Transcript, No. 92, at p. 43; BWC, No. 103 at
p. 3; CTA, No. 136 at p. 3; Joint Commenters, No. 112 at p. 8; Lutron,
April 11, 2019 Public Meeting Transcript, No. 92, at pp. 52-53; Lutron,
No. 137 at p. 2; NEMA, April 11, 2019 Public Meeting Transcript, No.
92, at pp. 47-48; NPGA, No. 110 at p. 2; PG&E, April 11, 2019 Public
Meeting Transcript, No. 92, at pp. 41-42; Rheem, No. 101 at p. 1;
Signify, No. 116 at p. 2; BHI, No. 135, at p. 3; Westinghouse, April
11, 2019 Public Meeting Transcript, No. 92, at p. 38; Zero Zone, No.
102 at p. 2.
Most of the commenters agree that the proposed 180-day time period
is appropriate. Only three would prefer a longer time period: NAFEM
suggesting a 270-day time period (NAFEM, No. 122, at p. 4),
Westinghouse suggesting a longer time period without a specific
proposal (Westinghouse, April 11, 2019 Public Meeting Transcript, No.
92, at p. 38), and ALA offering support for the 180-day, although
suggesting that more time would be beneficial (ALA, No. 104 at p. 2).
Zero Zone argued that test procedures must be finalized before a
standard is developed. Zero Zone emphasized that, due to EPCA's anti-
backsliding provision, energy conservation standards improperly set due
to an incomplete understanding of test procedure amendments cannot be
adjusted downwards. According to Zero Zone, completion of a test
procedure prior to standards initiation would help avoid such problems
and ensure that standards are set at an appropriate level. (Zero Zone,
No. 102 at p. 2) DOE agrees with Zero Zone's comment as another reason
in support of DOE's proposal.
Several commenters believe that the requirement to finalize test
procedures 180-days prior to proposing a related standards rule is too
restrictive. ACEEE stated that such a requirement would not only
prolong the process, but also prevent the later proceedings from
informing the earlier one, thus resulting in worse test procedure
decisions or years-long delays as the earlier rulemakings are repeated.
ACEEE stated that it generally supports completion of test procedures
well before the end of the comment period on the standard NOPR, while
leaving an ability to fix problems that may become apparent later.
(ACEEE, NO. 123, at p. 2) Similarly, the AGs Joint Comment opposed the
requirement for test procedures to be finalized 180 days prior to
issuance of a standards NOPR because it would unnecessarily delay the
rulemaking process by imposing a 180-day waiting period, thereby
threatening DOE's ability to meet EPCA statutory deadlines. It agreed
that DOE should strive to finalize test procedures before a standards
rulemaking commences, but saw no reason to impose an inefficient
waiting period which would be to the detriment of the interests of the
public and other non-manufacturer stakeholders. Furthermore, the AGs
Joint Comment
[[Page 8677]]
argued that manufacturers already have a very significant role in test
procedure rulemakings, because they supply information (e.g., product
expertise and test data), so making the standards rulemaking await
completion of the test procedure rulemaking would give manufacturers
inordinate influence over when such standards rulemaking may begin.
According to the AGs Joint Comment, DOE's proposed approach is contrary
to the spirit of EPCA, which affords diverse stakeholders an equal
opportunity to participate in the process, and any delay on the part of
the manufacturers could render DOE unable to meet its statutory
deadlines. (AGs Joint Comment, No. 111 at p. 7)
DOE disagrees with the proposition from the AG's Joint Comment that
the 180-day waiting period will give manufacturers excessive influence
over the timing of the standards rulemaking process. First, DOE
approaches the rulemaking process expecting that all stakeholders will
act in good faith even while advocating for their particular position.
DOE notes that existing Process Rule, which has been in place for more
than 20 years, has contemplated that the test procedure would be
finalized prior to the publication of the proposed rule in the
standards proceeding and the scenario posited by the AG's Joint Comment
has never materialized. Second, the 180-day period has its own clear
purpose, that is, it is designed to ensure that during the standards
process all parties can rely on the accuracy of the related final test
procedure. Most stakeholders agree with the underlying intent of the
provision even if they disagree with the specific time period.
The CEC asserted that DOE's proposal to insert an interval between
the test procedure and standards rulemakings would introduce
``unnecessary barriers'' to the standards process and would ``do
nothing to advance energy efficiency under the statutory intent of
EPCA'' and harm consumers by delaying the effectiveness of standards
that would otherwise save energy and money. (CEC, No. 121, at pp. 4-5)
CT-DEEP asserted generally that it opposed any changes that would
lengthen the rulemaking process. (CT-DEEP, No. 93, at pp. 1-2) As noted
above, the accuracy of test procedures advances EPCA's goal of energy
efficiency. The standards rulemaking process cannot proceed without
accurate test procedures. Thus, the 180-day period is not an
``unnecessary barrier.''
NPCC supported the goal of developing a test procedure prior to the
issuance of a standards NOPR but it objected to the fixed 180-day time
interval between the test procedure final rule and the publication of
the standards proposal. In its view, this time period is both too long
and removes DOE's flexibility to issue a proposal in a shorter period
of time in order to satisfy a related statutory deadline for a
standards rulemaking. NPCC also objected to the proposed condition that
the test procedure final rule be ``completely `finalized' prior to the
[standards] rulemaking [being initiated NPCC argued that DOE should
continue to allow for flexibility if the rulemaking process reveals a
need to modify the applicable test procedure. (NPCC, No. 94, at p. 6)
Energy Solutions stated that DOE should aim to finalize a test
procedure before issuing a proposal for standards, but it should be
non-binding guidance, not mandatory. If it is mandatory, it could cause
DOE to miss statutory deadlines. (Energy Solutions, April 11, 2019
Public Meeting Transcript, No. 92, at pp. 37-38, 56) Similarly, the
Cal-IOUs support the current guidance approach, which is for DOE to aim
to issue a final test procedure rule prior to a standards NOPR whenever
feasible or practical so that the standards rulemaking can account for
any test procedure updates. (Cal-IOUs, No. 124, at p. 11) By linking a
standards rulemaking directly to a test procedure rulemaking, the Cal-
IOUs worried that this approach would significantly hamper DOE's
ability to meet statutory deadlines. Cal-IOUs, No. 124, at p. 11. ASE
expressed concern that a binding Process Rule would make it impossible
for DOE to resolve test procedure issues which come to light without
losing time and potentially missing statutory deadlines. (ASE, No. 108
at p. 5)
The above comments reflect the concern among several commenters
that DOE needs to retain flexibility during the rulemaking process. To
a large extent, the process of amending the Process Rule arose from
complaints that DOE was exercising too much flexibility during the
rulemaking process and was not following the current Process Rule. A
number of those complaints were situations in which DOE had not
completed a test procedure rulemaking prior to proposing a new or
revised standard. In DOE's experience, not following that step-wise
approach resulted in disputes over data and technical issues that lead
to delays. In response, DOE has examined the issue and has decided to
make the previously existing concept of completing the test procedure
rulemaking prior to proposing a new or revised standard mandatory and
specify a period of time that is of sufficient duration that accurate
data can be produced using that test procedure to inform decisionmaking
in the standards rulemaking process.
One specific issue addressing flexibility on which commenters have
generally expressed concern is how the Department will handle technical
corrections to a finalized test procedure, either discovered during the
standards rulemaking or perhaps, at a time after it becomes final.
Lennox suggested that if such a situation arises, DOE should assess the
best course of action on a case-by-case basis guided by principles
that: (1) Stakeholders have adequate notice and opportunity to comment
on rulemakings; and (2) burdens on regulated-equipment manufacturers,
including the burdens of the rulemaking process itself, are minimized.
Lennox believes that DOE should not automatically be required to re-
propose the standards NOPR if the need for a technical correction is
discovered. (Lennox, No. 133, at pp. 6-7) On this same topic, the AGs
Joint Comment questioned whether the test procedure problem would need
to be resolved first and then have the standards rulemaking start all
over again. According to the AGs Joint Comment, not only would this
approach jeopardize DOE's ability to meet statutory deadlines, but
given the ambiguity of this part of the agency's proposal, stakeholders
have not been afforded adequate notice to allow a meaningful
opportunity to comment. (AGs Joint Comment, No. 111 at pp. 7-8)
Similarly, ASAP raised the concern as to how DOE will make changes
to the test procedure when the problems arise during the standards
process after the test procedure has been finalized. Referring to the
test procedure, ASAP said ``have it done but don't have it so done''
that the Department cannot make changes if needed and still meet
statutory obligations for test procedures. (ASAP, April 11, 2019 Public
Meeting Transcript, No. 92, at pp. 44-46) ASAP urges the Department to
retain flexibility to address test procedure issues because it seems
inevitable that situations will arise that will require deviating from
the general practice. ASAP, et al. believes that the language in the
current Process Rule that ``final, modified test procedures will be
issued prior to the NOPR on proposed standards,'' is sufficient. ASAP,
et al. states that an alternative could be to specify 180 days between
the finalization of a test procedure and the end of the comment periods
on the standards NOPR, which would give manufacturers enough time to
evaluate the impact of any test procedure
[[Page 8678]]
changes on the performance of the products. (ASAP, et al., No. 126, at
pp. 2, 11-12) In response, DOE takes the position that ASAP's
alternative proposed language is too open-ended and vague to create
certainty for stakeholders.
Southern California Edison also expressed its concern as to how
test procedure changes will be handled and is concerned about DOE
giving up its flexibility. (Southern California Edison, April 11, 2019
Public Meeting Transcript, No. 92, at pp. 49-51). One commenter
specifically suggested that if changes to the test procedure are made
after the 180-days, manufacturers will need to re-test to the new
standard and the 180-day period should be reset. (Lutron, April 11,
2019 Public Meeting Transcript, No. 92, at pp. 52-53) The Joint
Commenters recommended that DOE include an opportunity for DOE to
adjust and address test procedure amendments on an expedited basis,
such as a petition from stakeholders. This commenter stated that such a
process would not be intended to address sweeping changes to the method
of test, but could fix errors or address burdensome practical
challenges that had not been anticipated during the rulemaking stage.
(Joint Commenters, No. 112, at p. 8; GEA, No. 125 at pp. 2-3, also
supporting a quick fix process)
Generally speaking, DOE would not expect that as soon as a test
procedure is finalized, DOE and stakeholders would immediately find
significant changes that need to be made to the just-finalized test
procedure. In fact, requiring the test procedure be completed prior to
proposing a new or revised energy conservation standard should ensure
that these issues don't occur and, in the unlikely event that they do,
DOE can make an amendment before getting too far along in the standards
rulemaking or before the statute would require use of the test
procedure to make representations. If it was discovered that small,
technical changes are needed, DOE would hope that all stakeholders
would join together with DOE to allow such minor changes to be made
without revisiting the entire test procedure from the beginning. We
would expect that all stakeholders would join in a common sense,
expeditious solution.
The remote possibility of a worst-case scenario happening, that is,
significant errors being discovered during a standards rulemaking for a
related, recently finalized test procedure, should not diminish the
positive impact of providing for a specific 180-day period, which
coincides with the statutory 180-day period prior to use of the test
procedure for making representations using the test procedure.
Providing a 180-day period between a final test procedure rule and a
proposed standards rule gives stakeholders the opportunity to evaluate
the new or amended test procedure and assess the effects of the test
procedure on upcoming proposed standards within a specified reasonable
time period. As AHAM stated at the April 11, 2019 public meeting,
industry needs to have some opportunity to work with the new or amended
test procedure before standards proposals can be effectively analyzed.
(AHAM, April 11, 2019 Public Meeting Transcript, No. 92, at p. 36) APGA
offered a similar comment stating that finalizing the test procedure
first gives stakeholders the opportunity to work with the test
procedure to help ensure that it is technically correct and produces
repeatable results, and that interested parties can ascertain the
impacts of the test procedure on the current energy efficiency rating
of covered products. APGA argued that unless stakeholders know the
exact and settled procedure for testing, they cannot meaningfully
analyze and comment on the impacts of proposed standards. (APGA, No.
106 at p. 4) And, the Joint Commenters commented that the appropriate
sequencing allows predictability, transparency, and the opportunity for
stakeholders to understand the ramifications of the DOE's rulemaking
proposals. Only after real-world testing can manufacturers, and
indirectly DOE and the public, be comfortable that the implications for
the test procedure's application to a revised standard are fully
understood. (Joint Commenters, No. 112, at p. 8)
Accordingly, in light of the reasons discussed above, DOE is
adopting its proposal to require that test procedures used to evaluate
new or amended standards will be finalized 180 days before publication
of a NOPR proposing new or amended standards.
J. Adoption of Industry Standards
As part of its February 13th NOPR, DOE proposed to amend the
Process Rule to require adoption, without modification, of industry
standards as test procedures for covered products and equipment unless
such standards do not meet the EPCA statutory criteria for test
procedures. (84 FR 3910, 3927) This Process Rule requirement would
apply to covered products and equipment where use of an industry
standard is not mandated by EPCA. In effect, this requirement is merely
a codification of DOE established practice.\21\
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\21\ Throughout this discussion, DOE will use the terminology
``consensus standards'' as opposed to ``industry standards'' due to
the fact that the National Technology Transfer and Advancement Act
(NTTAA) and OMB Circular A-119 address the use of private sector
standards, developed by private, consensus organizations to meet
Federal agency needs in standards development activities.
There was some debate during the course of this rulemaking as
to the meaning of ``consensus.'' NRDC specifically states that these
standards should not be rebranded as something they are not. (NRDC,
April 11, 2019 Public Meeting Transcript at pp 79-80) Consensus
means different things in different context. (NRDC, April 11, 2019
Public Meeting Transcript at p. 87) EEI stated that the term
consensus is more than a simple majority but less than unanimity.
(EEI, April 11, 2019 Public Meeting Transcript at p. 82)
Westinghouse requested that DOE change terminology from industry
standards to consensus standards. (Westinghouse, April 11, 2019
Public Meeting Transcript at pp. 39-40)
---------------------------------------------------------------------------
DOE's established practice has been to routinely adopt industry
standards as DOE test procedures and in cases where the industry
standard does not meet EPCA statutory criteria for test procedures make
modifications to these standards as the DOE test procedure. These
modifications have always been handled during the individual notice and
comment rulemaking proceeding for the test procedure at issue. As noted
in the NOPR, DOE recognizes that modifications to these standards
impose a burden on industry (i.e., manufacturers face increased costs
if the DOE modifications require different testing equipment or
facilities).
Several commenters, CTA, the Joint Commenters, and NEMA point to
the fact that U.S. law and policy, that is, the National Technology
Transfer and Advancement Act (NTTAA) and OMB Circular A-119, ``Federal
Participation in the Development and Use of Voluntary Consensus
Standards and in Conformity Assessment Activities,'' together direct
Federal agencies to adopt voluntary, private sector, consensus
standards to meet agency needs during standards development activities,
thereby supporting the use of technical standards that are developed or
adopted by voluntary, private sector, consensus standards bodies
(rather than government-unique standards), unless such standards are
inconsistent with applicable law or otherwise impractical. (National
Technology Transfer and Advancement Act of 1995, Pub. L. 104-113,
Section 12 (March 7, 1996) and revised Circular A-119, 81 FR 4673
(January 27, 2016)) The NTTAA codified the policies in OMB Circular A-
119. The 2016 revised version of OMB Circular A-119 is available and
can be accessed via PDF download at https://www.whitehouse.gov/omb/information-for-agencies/circulars/.
[[Page 8679]]
Together, the commenters explain that several public policy
objectives underlie the NTTAA and OMB Circular A-119. These objectives
include the intention to enhance technological innovation for
commercial public purposes, to promote the adoption of technological
innovations, to encourage long-term growth for U.S. enterprises, to
promote efficiency and economic competition through harmonization of
standards, and to eliminate the cost to the Federal government of
developing its own standards and decrease the burden of complying with
agency regulation. CTA also points out that it believes governmental
use of consultants to develop test procedures is not only costly, but
is less transparent and open than the consensus standards development
process. It states that such standards development organizations are
accredited by national bodies and are open to all interested parties.
(CTA, No. 136, at pp. 2-3) NEMA added that by adopting such industry
test procedures as Federal test procedure, it is likely to facilitate
expedited compliance with DOE legally mandated test procedures. Also,
NEMA states that these consensus test procedure standards are likely to
meet the EPCA requirement that a test procedure not be ``unduly
burdensome to conduct'' as they are likely already in use. (NEMA, No.
107, at p. 6) And finally, the Joint Commenters point out that DOE's
proposal aligns with decades-old executive and Congressional policy
goals and agrees with NEMA that this policy enables more rapid
compliance. The Joint Commenters add that it also promotes confidence
in the adoption of energy conservation standards by regulated parties.
(; NEMA, No. 107, at pp. 5-6, and the Joint Commenters, No. 112, at pp.
9-10) Accordingly, putting DOE's proposal in context, on its face, this
proposal explicitly implements and is consistent with the NTTAA and OMB
Circular A-119.
Lastly, with respect to the NTTAA, Atlas Copco suggested that
language be added to DOE's proposal requiring procedural compliance
with section 12(d)(3) of the NTTAA. (Miles & Stockbridge on behalf on
Atlas Copco, No. 100, at p. 2-3) In order for DOE to consider adding
new language to its proposal at this time, DOE would need to issue a
supplemental notice of proposed rulemaking (SNOPR) and re-open the
comment period. Rather than delay finalizing this rule, DOE will take
this recommendation under advisement and decide at a later date if
further amendment to the Process Rule is required.\22\
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\22\ Atlas Copco also proposed additional changes to the amended
Process Rule that relate to its rulemaking petition concerning the
Rotary Air Compressor Test Procedure. This petition was submitted in
response to DOE's request that stakeholders identify existing test
procedures that should be modified to conform to existing industry
test procedures. (Miles & Stockbridge, on behalf of Atlas Copco, No.
100, at pp. 1-6) These matters will be addressed during the DOE
rulemaking that considers Atlas Copco's petition.
---------------------------------------------------------------------------
DOE also strongly agrees with stakeholders that the Department has
a fundamental obligation to apply all EPCA statutory requirements when
it promulgates any and all test procedures for covered consumer
products and commercial and industrial equipment. For certain covered
products and equipment, EPCA specifically mandates that DOE adopt
certain consensus standards, subject to certain conditions as specified
in EPCA. This latter category is not the subject of this discussion.
Instead, the following discussion applies only to covered products and
equipment where use of consensus standards is not mandated by EPCA.
In order to adopt any such test procedure, the Department must
apply certain EPCA statutory criteria. These criteria are contained in
two sections of EPCA, that is, 42 U.S.C. 6293(b)(3), and (4), or 42
U.S.C. 6314(a)(2) and (3), depending upon the specific covered product
or covered commercial equipment to which the test procedure would
apply. Both of these sections contain similar language describing two
statutory criteria for the promulgation of a test procedure: (1) That
the test procedure shall be reasonably designed to produce test results
which measure energy efficiency, energy use, water use, or estimated
annual operating cost of a covered product during a representative
average use cycle or period of use, as determined by the Secretary, and
(2) that the test procedure shall not be unduly burdensome to
conduct.\23\
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\23\ The language in 42 U.S.C. 6314 (a)(2) and (3) differs
slightly from its parallel sections in 42 U.S.C. 6293(b)(3) and (4).
42 U.S.C. 6314(a)(2) reads as follows: ``(2) Test procedures
prescribed in accordance with this section shall be reasonably
designed to produce test results which reflect energy efficiency,
energy use, and estimated operating costs of a type of industrial
equipment (or class thereof) during a representative average use
cycle (as determined by the Secretary), and shall not be unduly
burdensome to conduct.
Subparagraphs (3) for each of these two statutory provisions
referenced above address test procedures for determining estimated
annual operating costs have similar language but are not identical
in order to reflect differences in criteria for covered products and
covered commercial equipment.
---------------------------------------------------------------------------
Accordingly, when DOE considers promulgating either a new or
amended test procedure, DOE will evaluate the applicable consensus
standard to determine whether such consensus standard meets the
applicable above-referenced EPCA requirements. If the consensus
standard does not meet both of the two criteria in the applicable
section of EPCA, DOE will not adopt the consensus standard ``as is.''
Stated another way, the consensus standard under consideration must
meet the EPCA statutory criteria for it to be used verbatim. If it does
not meet the statutory criteria, it will then be necessary for DOE and
stakeholders, during the notice and comment rulemaking process, to
determine what specific modifications will bring the consensus standard
into compliance with the statutory criteria in order for it to be the
basis for a final DOE test procedure. Logically speaking then, if the
applicable consensus standard under consideration fully meets both
statutory criteria, then DOE will adopt it pursuant to this provision
in the amended Process Rule. If, on the other hand, the consensus
standard cannot be modified to meet the statutory criteria, DOE will
not use it and will need to craft its own test procedure from the
beginning. As with all test procedure rules and as we stated above, all
of these issues, including whether the consensus standard meets the
EPCA statutory criteria, will be discussed and decided in the regular
notice and comment rulemaking process.
DOE hopes that the above discussion clarifies the application of
DOE's proposal to the adoption of consensus standards. In reviewing the
many comments concerning this proposal, DOE observes that many
commenters misunderstood DOE's proposal. Many commenters objected to
the proposal, stating in various ways, that DOE should not have a
mandatory rule to rely on, or give deference to, consensus test
procedures. These commenters state that they do not want DOE to
abdicate its responsibility for reviewing and revising consensus test
procedures since modifications may be necessary. Generally, commenters
want DOE to retain its independence and flexibility when setting test
procedures. It would appear that these commenters generally believe
that the DOE proposal does not require application of the EPCA
statutory criteria to the consensus standard under consideration. (A.O.
Smith, March 21, 2019 Public Meeting Transcript at p. 28; A.O. Smith,
No. 127, at pp. 3-4; ASE, No. 108 at p. 5; AGA, No. 114, at pp. 21-22;
ASAP, April 11, 2019 Public Meeting Transcript at pp. 70-71; ASAP, et
al., No. 126 at pp. 2, 12-13; ACEEE, No. 123, at p. 3; NPCC,
[[Page 8680]]
March 21, 2019 Public Meeting Transcript at p. 24; NPCC, No. 94, at pp.
6-7; NRDC, No. 131 at pp. 11-12; PG&E, April 11, 2019 Public Meeting
Transcript at pp. 228-229; Cal-IOUs, No. 124, at pp. 6, 12-13; Southern
California Edison, April 11, 2019 Public Meeting Transcript at p. 65)
One commenter, Energy Solutions, stated that outsourcing the test
procedure development process to industry is problematic. (Energy
Solutions, April 11, 2019 Public Meeting Transcript at p. 74) Whereas
another commenter, CEC characterizes DOE's proposal as a ``blanket
approach'' to adopting industry test procedures without providing
reasoning that such test procedures meet EPCA's requirements. (CEC,
April 11, 2019 Public Meeting Transcript at pp. 231-232; CEC, No. 121,
at p. 9-10) Another commenter, the Cal-IOUs, questioned how the
provisions in the NOPR regarding industry test procedures help DOE
independently assess the representativeness and enforceability of DOE
test procedures. (Cal-IOUs, No. 124, at p. 2). As we have explained
previously, DOE has determined that it will use industry test
procedures as the initial basis for a DOE test procedure, but that is
only the first step in the process. Most importantly, DOE must assess
whether the industry standard under consideration specifically meets
the EPCA statutory criteria for the establishment of a test procedure.
So, in response to the Cal-IOUs above-stated question, DOE is applying
two separate principles; one does not support or help the other.
According to NRDC, DOE's proposed approach would conflict with
EPCA, because unlike commercial equipment, Congress did not explicitly
point DOE toward industry consensus standards for consumer products.
But NRDC agrees that industry test procedures can serve as a useful
starting point for discussions, even though they often require
modification, for instance, to account for power consumption of new
features or to address loopholes. NRDC states a preference for DOE's
current approach to test procedures, whereby DOE acts as a neutral
convener for discussion of test procedure issues. (NRDC, No. 131 at pp.
11-12) While it is true that EPCA does not require the use of consensus
standards for certain test procedures for certain equipment, it does
not prohibit such use and the NTTAA and OMB Circular A-119 favors the
use of consensus standards by agencies, unless there is a conflict with
applicable law or it is otherwise impractical. Clearly, nothing in EPCA
prevents DOE from using consensus standards in test procedure
rulemakings as long as DOE can demonstrate that these consensus
standards meet the EPCA statutory criteria. Moreover, DOE believes that
whether it uses consensus standards or not in any given situation, it
can act as a neutral convener for the discussion and promulgation of
test procedures during the rulemaking process.
Moreover, Earthjustice argues that the NOPR fails to consider the
implication of Congress's decision to explicitly require DOE to adopt
industry test methods for specific products (i.e., many types of
commercial equipment, thus limiting its discretion to a narrow review
of industry standards for specific products). (Earthjustice, No. 134,
at p. 4) As we stated above in response to NRDC, nothing in EPCA
prevents DOE from using consensus standards in its test procedure
rulemakings, as long as DOE can demonstrate that these consensus
standards meet the EPCA statutory criteria. All commenters agree that
DOE must meet the EPCA statutory criteria for the establishment of test
procedures and most, if not all agree that consensus standards are a
logical foundation to begin the test procedure process. Furthermore,
the NTTAA and OMB Circular A-119 provide a context for the use of
consensus standards to meet agency needs. Accordingly, DOE finds that
this proposal implements both the underlying purpose of EPCA with
respect to test procedures, and the NTTAA and OMB Circular A-119 with
respect to consensus standards and ultimately, is a reasonable exercise
of the agency's discretion in its test procedure rulemaking activity.
ACEEE also argued that consensus test procedures are not generally
developed for regulatory purposes. ACEEE added that in developing and
implementing mandatory standards, a lack of clarity or different
interpretations of the test procedures may surface. It believes that a
failure to address these issues results in an uneven playing field for
manufacturers as well as inconsistent efficiency levels for consumers.
New metrics or requirements may require additional test procedures.
This commenter, and others, states that the Department should have the
ability to ensure its test procedures serve the purposes of the
program, and not be required to adopt industry procedures without
modification. (ACEEE, No. 123, at p. 3) DOE agrees with ACEEE that the
agency should be able to modify the consensus standards. As we have
already discussed, and will reiterate throughout this discussion, if
the EPCA statutory criteria are not met, DOE will not adopt the
consensus standard under consideration verbatim and modifications will
be made to the consensus standard, if possible, so that it will meet
the statutory criteria. If this latter result cannot be achieved, DOE
must develop a whole new test procedure.
Another commenter, ASAP, believes that DOE's proposal favors
manufacturers. ASAP believes that DOE is turning away from consumer
needs for a representative test procedure and the Department's need to
set standards that are representative of actual energy use in the real
world. (ASAP, April 11, 2019 Public Meeting Transcript at pp. 67-68) As
with other commenters, it agrees that it is reasonable for DOE to start
with existing test procedures (regardless of whether they are
``industry'' test procedures). (ASAP, April 11, 2019 Public Meeting
Transcript at p. 68) ASAP further states their concern that the NOPR
document emphasizes a test procedure without modification and it does
not want DOE to tie its hands. (ASAP, April 11, 2019 Public Meeting
Transcript at p. 71) ASAP, et al. further states that any reference in
the Process Rule to the criteria that DOE will use in adopting test
procedures should simply refer to the statutory criteria. (ASAP, et
al., No. 126 at pp. 12-13) In response to ASAP, DOE points out that
this proposal requires DOE to unequivocally apply the statutory
criteria, with representativeness being part of that evaluation.
Moreover, the regulatory text for section 8(c), Adoption of Industry
Test Methods, contains the statutory criteria that DOE must satisfy.
Next, the AGs Joint Comment faulted DOE's proposed approach for
using industry consensus test procedures, because it finds the approach
to be overly deferential to industry and without sufficient weight
given to DOE's own analysis and determination. This commenter states
that by making a presumption in favor of consensus test procedures,
DOE's flexibility would be unnecessarily limited and it would hinder
DOE's ability to satisfy EPCA's test procedure requirements, as well as
expose the Department to considerable litigation risk. It states that
DOE cannot presume that industry test procedures satisfy EPCA's
requirements. (AGs Joint Comment, No. 111 at pp. 4, 14) In response to
the AGs Joint Comment, DOE can only reassure this commenter, and others
who are similarly concerned, that DOE takes its regulatory
responsibility seriously and will analyze the appropriate consensus
standards in light of the EPCA statutory criteria to
[[Page 8681]]
ensure that EPCA is not undermined. DOE agrees with the AGs Joint
Comment, and others like it, that DOE should not presume that the
consensus test procedures meet the EPCA requirements; it will not do
so.
According to the Attorneys General, the biggest problem with DOE's
proposed approach is that it would impose a duty on DOE to adopt the
industry test procedure unless the Department makes a contrary
determination. The AGs Joint Comment argued that DOE would need to make
an affirmative finding that the industry test procedures would need to
be modified prior to adoption, and that finding would be subject to
litigation in which the Department would bear the burden of proof that
the industry test procedure did not meet EPCA's requirements. (AGs
Joint Comment, No. 111 at p. 14) With respect to this point, DOE
believes that the AGs Joint Comment has superimposed requirements that
do not exist, and has inserted steps into the process that are
unnecessary. DOE will proceed with its established practice to analyze
the appropriate consensus standards, and with the input of stakeholders
either determine that the EPCA statutory criteria are met and use it as
the DOE test procedure, modify it so that it complies with the
statutory criteria, or reject it and develop an entirely new test
procedure. Stakeholders will have ample opportunity to comment on DOE's
ultimate approach for any given test procedure under consideration.
The AGs Joint Comment also argued that industry test procedures are
generally not created to measure energy efficiency and are likely not
appropriate under EPCA. It alleges that industry interests hostile to
stronger efficiency standards may try to manipulate the industry test
procedures to their own advantage. (AGs Joint Comment, No. 111, at p.
14) While DOE appreciates the AGs perspective, we believe that this
point of view is speculative at best.
The AGs Joint Comment also points out that some products may have
multiple industry test procedures which could apply, but that the
Process Rule NOPR does not explain how DOE would determine which
procedure to adopt in those cases. (AGs Joint Comment, No. 111 at p.
14) Similarly, the CEC contends that the blind adoption of industry
test procedures would create confusion where multiple procedures exist
for a given product since it would be unclear as to which procedure to
use. (CEC, No. 121, at p. 11) With respect to its criticism of DOE's
approach, the CEC also argued that, in many cases, industry test
procedures contain optional test requirements, multiple test set-ups,
instances where testing requirements are not specified and left to the
testing lab's discretion, or unclear or overlapping definitions. As a
result, the CEC states that test results would vary between test labs
(affecting reproducibility) and tested products (affecting
comparability, and leave open the potential for gaming by
manufacturers. As a result the CEC argues that consumers would not
receive the expected level of efficiency from their products,
manufacturers would not be held to the same efficiency standard for the
same products, and DOE would be unable to enforce its standards
effectively. (CEC, No. 121, at p. 10) Because, as one might expect,
consensus test procedures vary widely, DOE takes the position that
these hypothetical scenarios, if and when they materialize, must be
addressed on a case-by-case basis during the specific rulemaking
proceeding.
CEC further asserted that where EPCA requires DOE to affirmatively
determine that amended test procedures are reasonably designed to
produce test results that measure the energy use or operating costs of
appliances and is not unduly burdensome to conduct, DOE cannot require,
by regulation, the public instead to prove to DOE that an industry test
procedure does not meet these goals. (CEC, No. 121, at p. 10) DOE's
proposal does not shift the burden of proof to stakeholders to
demonstrate that the applicable consensus standard should not apply.
During the rulemaking process, DOE will analyze the consensus standard
and make a determination as to whether the statutory criteria are met.
Stakeholders will have the opportunity to give their comments.
As DOE explained at the beginning of this discussion, this proposal
is merely codifying DOE established practice concerning the use of
consensus standards as DOE test procedures. Commenters are incorrect
that DOE is proposing mandatory use of consensus standards without
providing for an evaluation as to whether the EPCA statutory criteria
are met. This proposal does not require the absolute adoption of
consensus standards verbatim in all circumstances. If the EPCA
statutory criteria are not met, in order to use the appropriate
consensus standard, modifications will need to be made so that the
consensus standard meets the EPCA statutory criteria. Such
modifications will be vetted during the notice and comment rulemaking
process so that all interested stakeholders can give DOE feedback. DOE
follows this same analytical process now and will continue to do so.
Commenters need not worry that consensus standards will be
automatically adopted as DOE test procedures. As a matter of fact,
commenters generally agree that using consensus standards as a basis to
begin considering the substance of new or amended DOE test procedures
is appropriate. At least one commenter, AHAM, recognized and agreed
that DOE's proposal on this matter is not a departure from DOE's
current, established process, and gave its support. (AHAM, April 11,
2019 Public Meeting Transcript at pp. 63-64)
Other commenters generally support DOE's proposal, without
specifically acknowledging that it is not a change from its current
practice. (Acuity, No. 95, at p. 4; BWC, No. 103 at pp. 3-4; CTA, No.
136 at pp. 2-3; GM Law, No. 105 at p. 3; Joint Commenters, No. 112 at
p. 9; Lutron, No. 137 at pp. 2-3; NAFEM, No. 122, at p. 5; NEMA, No.
107 at pp. 5-6; Rheem, No. 101 at p. 1; Signify, No. 116 at p.1;
Westinghouse, April 11, 2019 Public Meeting Transcript at pp. 72,74) In
support of the proposal, AHRI stated that this proposal reflects
renewed adherence to the statutory requirements and makes sense from
the perspective of a cost-benefit analysis. (AHRI, March 21, 2019
Public Meeting Transcript at p.12; AHRI, April 11, 2019 Public Meeting
Transcript at pp 65-66)
In addition, many commenters support DOE working with consensus
standards development organizations to address issues that would ensure
that relevant consensus standards can be used as Federal test
procedures. (AHRI, April 11, 2019 Public Meeting Transcript at p. 76;
EEI, April 11, 2019 Public Meeting Transcript, at p. 82; BWC, No. 103
at pp. 3-4; Signify, No. 116 at p. 2; Southern Company, April 11, 2019
Public Meeting Transcript at p. 78) Acuity specifically urged DOE to
work with the appropriate industry standards development organization
to update the relevant standard to minimize any gaps, duplication or
conflicts between testing standards and statutory requirements.
(Acuity, No. 95, at p. 4) AGA stated that the use of industry standards
can minimize regulatory burdens and improve transparency. (AGA, March
21, 2019 Public Meeting Transcript at p. 20; AGA, No. 114, at pp. 21-
22) Similarly, GM Law stated that adoption of existing industry
standards would decrease unpredictability and the burdens of
regulation. (GM Law, No. 105 at p. 3) ASHRAE emphasized that the
standards development process is open to everybody, and its fairness,
due process and transparency are ensured by its
[[Page 8682]]
ANSI accreditation. (ASHRAE, April 11, 2019 Public Meeting Transcript
at pp. 61-63)
BHI supports the adoption of industry test standards, but would
prefer a collaborative process and specifically suggested adding
language to DOE's proposal. BHI states that it disagrees with the
expected comments that the industry technical experts who design and
test the product are the best informed to draft test procedures. It
states that industry technical experts normally design and test
products to specific ANSI, UL or other construction and performance
standards primarily focused on safety and reliability. It specifically
suggested additional language to the DOE proposal to require the active
DOE participation in the consensus standards process and require DOE to
make available, as necessary, the resources of the National Institute
of Standards and Technology (NIST). (BHI, No. 135, at pp. 5-6) While
DOE appreciates BHIs suggestions, DOE does not believe that the
suggested language itself will enhance DOE's participation. DOE
currently participates in the consensus standards-setting process and
already has the statutory authority to utilize NIST resources pursuant
to 42 U.S.C. 6314(e). Accordingly, DOE will not add this language which
it considers duplicative.\24\
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\24\ OMB Circular A-119 encourages agencies to participate fully
in the private standards development process as equal parties. OMB,
however, defers to individual agencies on their policies for
determining to what extent and under what circumstances agency
representatives are authorized to engage in particular activities,
based on agency requirements and priorities. (OMB Circular A-119, at
pp. 7-8)
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Several commenters expressed concern with non-DOE consensus groups.
PG&E voiced its concern that it is difficult to get changes to
consensus standards in these groups, and that the standards do not work
as they should. Mostly, consumers are hurt, according to PG&E. (PG&E,
April 11, 2019 Public Meeting Transcript at pp. 59-61) Another
commenter, the Cal-IOUs believe that DOE would increase stakeholder
burden and reduce transparency by requiring stakeholders to participate
in non-DOE activities--or, in the extreme case, have stakeholder voices
ignored entirely if these non-DOE activities are not administered in a
way to incorporate stakeholder participation or are otherwise headed by
a biased committee. (Cal-IOUs, No. 124, at p. 6) The Cal-IOUs take the
position that EPCA provides a balanced approach to create a repeatable,
reproducible, representative, and enforceable test procedures, while
any given consensus test procedure is produced within organizations
that do not share these same goals. The commenters fear that following
the DOE's proposed approach would reduce transparency and increase
stakeholder burden by requiring stakeholder participation in at least
two test procedure rulemaking processes per product--one led by
standards setting consensus organizations and the other by DOE. (Cal-
IOUs, No. 124, at p. 12)
Moreover, A.O. Smith specifically requested that the Department
issue a supplemental proposal that would consider guidelines to help it
better understand the facts underlying the development of any new or
revised consensus test procedure including: (1) The representation on
the committee; (2) how innovative technologies are addressed; (3) de-
identified test data showing the new or amended industry method is
capable of being run in a laboratory; and (4) the rationale for
associated changes. (A. O. Smith, No. 127, at p. 4) After carefully
considering the request, DOE has determined that the request for a
supplemental NOPR to develop guidelines for use in the consensus
development process is a subject that will not change the outcome of
this specific proposal and would significantly delay implementation of
the amended Process Rule. Accordingly, DOE rejects A.O. Smith's request
at the current time. We also note that enhanced participation by DOE in
the standards development processes, with or without this type of
guidance, would not change DOE's obligation during the rulemaking
process to review each consensus standard for adherence to the EPCA
statutory criteria on a case-by-case basis.
After careful consideration of the many comments related to DOE's
proposal concerning the adoption of consensus standards during the DOE
test procedure rulemaking process, and for the reasons articulated
above, DOE is adopting its proposal in the final rule.
K. Direct Final Rules
The Energy Independence Security Act of 2007 (``EISA 2007'') (Pub.
L. 110-140) amended EPCA, in relevant part, to grant DOE authority to
issue a ``direct final rule'' (i.e. DFR) to establish energy
conservation standards. As amended, EPCA establishes requirements for
when DOE uses this type of rulemaking proceeding for the issuance of
certain actions. Specifically, DOE may issue a DFR adopting energy
conservation standards for a covered product or equipment upon receipt
of a joint proposal from a group of ``interested persons that are
fairly representative of relevant points of view,'' provided DOE
determines the energy conservation standards recommended in the joint
proposal conform with the requirements of 42 U.S.C. 6295(o) or section
342(a)(6)(B) as applicable. (42 U.S.C. 6295(p)(4)(A)) In the February
2019 NOPR, DOE proposed to (1) clarify its authority under the DFR
provision found at 42 U.S.C. 6295(p)(4); (2) provide guidance as to
DOE's interpretation of ``fairly representative,'' and (3) explain
DOE's obligations upon receipt of an adverse comment. (84 FR 3910,
3928)
1. DOE's Authority Under the DFR Provision
The DFR provision is found in EPCA at 42 U.S.C. 6295(p), the
heading and introduction of which state: ``Procedure for prescribing
new or amended standards. Any new or amended energy conservation
standard shall be prescribed in accordance with the following
procedure.'' Given the placement of the DFR provision within EPCA, DOE
sought to clarify in the February 2019 NOPR that 42 U.S.C. 6295(p)(4)
is a procedural process for issuing a DFR and not an independent grant
of rulemaking authority. As such, any standard issued as a DFR must
comply with the provisions of the EPCA subsection under which the rule
was authorized.
In response, AGA stated that the proposed revisions in the revised
Process Rule will help to ensure that the DFR process is used only when
all of the statutory requirements are met. (AGA, No. 114, at p. 24)
Other commenters expressed concerns with DOE's clarification and its
effect on achieving consensus agreements for new standards. For
example, ACEEE stated that flexibility is needed in Direct Final Rules.
DOE has interpreted the Direct Final Rule authority to allow more
flexibility in metrics, requirements, and compliance dates than it
usually takes in setting standards. This flexibility has been crucial
to achieving consensus, allowing more room for negotiation, for example
to trade stringency for lead time in ways that increase savings and
decrease burden on manufacturers. (ACEEE, No. 123, at p. 4) AHRI also
agreed that the ability to make important adjustments, particularly to
compliance timelines, has been a vital aspect of being able to work
together. (AHRI, April 11, 2019 Public Meeting Transcript, at 99) In
addition to concerns about reduced flexibility in reaching consensus
standards, commenters also disagreed with DOE's proposed clarification
that the DFR provision is not an independent grant of
[[Page 8683]]
rulemaking authority. For instance, A.O. Smith stated that DOE did not
provide an additional basis for its legal reinterpretation in the
proposed process rule and A.O. Smith does not believe the
reinterpretation is legally sound. (A.O. Smith, No. 127, at p. 6)
Similarly, the Cal-IOUs stated that DOE's proposed clarification is
``incorrect and inconsistent.'' (Cal-IOU, No. 124, at p. 13)
DOE recognizes that the clarifications made in the Process Rule
mean there is not flexibility in DFRs regarding certain aspects of
energy conservation standards, e.g., compliance periods, energy
efficiency metrics, etc. That being said, EPCA generally has very
specific requirements for compliance periods and other aspects of
energy conservation standards. For example, EPCA mandates either 3 or
5-year compliance periods for standards issued under 42 U.S.C. 6295(m).
EPCA also requires either 3 or 5-year compliance for standards issued
in response to a petition for rulemaking under 42 U.S.C. 6295(n). The
DFR provision in EPCA, on the other hand, is silent regarding
compliance periods and every other aspect of the substantive
requirements applicable to energy conservation standards. In the past,
DOE has interpreted this silence as providing some flexibility
regarding compliance periods and certain other aspects of energy
conservation standards. However, that interpretation assumes that the
DFR provision is an independent grant of rulemaking authority that
outlines its own set of substantive requirements on the establishment
or amendment of an energy conservation standard as opposed to a
procedural option for issuing a standard authorized under another
provision of EPCA, such as 42 U.S.C. 6295(m) or 42 U.S.C. 6295(n).
However, there is no language in EPCA providing statutory support for
that position. As stated previously, the DFR provision is found in EPCA
at 42 U.S.C. 6295(p), the heading and introduction of which state:
``Procedure for prescribing new or amended standards. Any new or
amended energy conservation standard shall be prescribed in accordance
with the following procedure.'' The first three subparagraphs of 42
U.S.C. 6295(p) outline the process the Secretary must follow to propose
and finalize a standard using the ``normal'' rulemaking approach. These
are procedural requirements that apply when DOE is exercising its
rulemaking authority under a separate provision of EPCA. These
subparagraphs could not be interpreted as granting DOE a separate and
independent statutory authority for issuing standards.
Similarly, 42 U.S.C. 6295(p)(4) outlines the procedural
requirements for issuing a standard as a DFR and should also not be
read as independent grant of rulemaking authority. Nor has DOE claimed
that 42 U.S.C. 6295(p)(4) is a separate grant of rulemaking authority
in its prior issuances of DFRs that differed from the requirements in a
substantive provision of EPCA. This is a curious omission in that it
means DOE relied on a substantive provision of EPCA, such as 42 U.S.C.
6295(m), to authorize issuance of an energy conservation standard but
based variance from the requirements in such section on a procedural
provision that says nothing about such variance. Thus, the ``silence''
in 42 U.S.C. 6295(p)(4) regarding compliance periods and other
requirements associated with standards cannot be interpreted as
providing flexibility, but rather as simply the result of these
requirements already being addressed by the statutory provision that
authorizes issuance of the standard, e.g., 42 U.S.C. 6295(m). Moreover,
there is no limitation on a variance authorized by silence. That is,
the logic of the argument expressed by commenters in favor of
``flexibility'' could be used to, for example, exempt all domestic
manufacturers from compliance with a standard or permit backsliding on
an existing standard. Such positions would surely make reaching
consensus on a measure more enticing to some parties, but would be
antithetical to the purposes of the statute. DOE cannot take a legal
position that statutory silence has authorized it to pick and choose
with interested parties the parts of the statute to negotiate away. The
revised Process Rule clarifies that the DFR provision in 42 U.S.C.
6295(p) is not an independent grant of rulemaking authority and DOE
will not accept or issue as a DFR a submitted joint proposal that does
not comply with all pertinent parts of EPCA, including those product
specific requirements included in the provision that authorizes
issuance of the standard.
2. Interested Persons Fairly Representative of Relevant Points of View
As part of the DFR process, DOE must determine if a proposed
standard has been ``submitted jointly by interested persons that are
fairly representative of relevant points of view (including
representatives of manufacturers of covered products, States, and
efficiency advocates). (42 U.S.C. 6295(p)(4)(A)) In the February 2019
NOPR, DOE proposed that at a minimum, ``fairly representative of
relevant points of view'' must include businesses, including small
businesses in the regulated industry/manufacturer community, energy
advocates, energy utilities, as appropriate, consumers, and States. DOE
also stated that it would be necessary to determine whether a proposal
was submitted by interested persons that are ``fairly representative of
relevant points of view'' on a case-by-case basis, subject to the
circumstances of a particular rulemaking. In order to assist DOE in
making this case-by-case determination, upon receipt of a joint
statement recommending energy conservation standards, DOE proposed to
publish in the Federal Register the statement, as submitted to DOE, in
order to obtain feedback as to whether the joint statement was
submitted by a group that is fairly representative of relevant points
of view. (84 FR 3910, 3929)
DOE received several comments on these proposals. First, with
regards to DOE's explanation of what it means for a DFR to be
``submitted jointly by interested persons that are fairly
representative of relevant points of view,'' Acuity stated that any DFR
proposal should reflect a reasonable balance of representation and
support from key stakeholders. (Acuity, No. 95, at p. 5) Spire stated
that representation of manufacturers of the covered products at issue,
suppliers of the energy used by such products, and efficiency advocates
should always, at a minimum, be required. (Spire, No. 97, at p. 2) AGA
and APGA stated that DOE should specify particular entity types or
interest groups that are relevant to certain categories of proposed
standards, such as gas distribution utilities and their customers for
appliances that use gas. (AGA, No. 114, at pp. 24-25; APGA, No. 106, at
p. 8) AGA and APGA also stated that the DFR process was intended to be
used only in circumstances in which representatives of all relevant
interests jointly submit a proposed energy conservation standard for a
product, i.e., when there is a clear consensus. (AGA, No. 114, at p.
24; APGA, No. 106, at p. 6) The Joint Commenters and Lennox, on the
other hand, encouraged DOE to avoid an interpretation where every
possible point of view must be represented for a DFR to proceed. (Joint
Commenters, No. 112, at p. 11; Lennox, No. 133, at p. 5) Lennox also
commented that ``DOE should not mandate the need for separate
`consumer' representation for a joint proposal.'' (Lennox, No. 133, at
p. 5)
As for DOE's proposal to determine, after seeking public comment
through a
[[Page 8684]]
Federal Register notice, whether a DFR was submitted by parties ``that
are fairly representative of relevant points of view'' on a case-by-
case basis, CEC and Signify agreed that the determination should be
made on a case-by-case basis. (CEC, No. 121, at p. 12; Signify, No.
116, at p. 2) CEC, however, opposed the addition of a public comment
period as it would add process and delay without adding any meaningful
opportunity for input. (CEC, No. 121, at p. 12) NPCC commented that
there may not always be a need for a public comment period and
encouraged DOE to assess the need for that step on a case-by-case
basis. (NPCC, No. 94, at p. 7)
In response, DOE notes that any concerns about whether a DFR was
submitted by parties ``that are fairly representative of relevant
points of view'' can be raised during the public comment period on the
DFR. DOE will raise this issue as a specific topic on which it seeks
input in the Federal Register notice publishing for public comment on
any DFR. After receiving public comment DOE will determine if the
submitting parties include, at a minimum, businesses, including small
businesses, in the regulated industry/manufacturer community, energy
advocates, energy utilities, as appropriate, consumers, and States. As
for specific comments on which parties must be represented in a DFR,
DOE agrees with AGA, APGA, and Spire that suppliers of the energy used
by a covered product/equipment must be included, in relevant instances.
This is reflected in DOE's list of mandatory parties to a DFR, which
includes ``energy utilities, as appropriate.'' DOE does not agree with
Lennox's comment that separate consumer representation is not necessary
in a DFR. Consumer concerns do not necessarily overlap with those of
manufacturers, efficiency advocates, or any of the other parties
discussed previously. Finally, as the comment period for determining
representativeness would occur during the time DOE analyzes the
submission for other legal and analytical issues and considers
preparation of a rulemaking document, it would not delay the decision
to publish a DFR.
3. Adverse Comments
Simultaneous with the issuance of a DFR, DOE must also issue a NOPR
containing the same energy conservation standards as in the DFR.
Following publication of the DFR, DOE must solicit public comment for a
period of at least 110 days; then, not later than 120 days after
issuance of the DFR, the Secretary must determine whether any adverse
comments ``may provide a reasonable basis for withdrawing the direct
final rule,'' based on the rulemaking record. (42 U.S.C. 6295(p)(4)(B),
(C)(i)) In the past, to determine whether a comment was sufficiently
``adverse'' so as to provide a reasonable basis for withdrawal of the
direct final rule, DOE weighed the substance of any adverse comment
received against the anticipated benefits of the consensus agreement
and the likelihood that further consideration of the comment would
change the result of the rulemaking (referred to as the ``balancing
test''). This approach was outlined in recent DOE rulemakings, such as
DOE's final rule for energy conservation standards for dishwashers. 77
FR 59712, 59714 (Oct. 1, 2012).
In the February 2019 NOPR, DOE proposed to consider the substance
of adverse comments and not the quantity when determining if there is a
reasonable basis for withdrawing the DFR. For instance, one comment may
present an argument that could lead DOE to conclude that it is an
adverse comment providing a basis for withdrawal of the DFR. Moreover,
in contrast to previous policy, DOE also proposed to consider adverse
comments even if the issue was brought up previously during DOE-
initiated discussions (e.g. publication of a framework or RFI document)
that preceded submission of a joint statement. In short, if DOE
determines that one or more substantive comments objecting to the final
rule provides a sufficient reason to withdraw the DFR, DOE will do so,
and instead proceed with the published NOPR (which could include
withdrawal of that NOPR, as appropriate). (84 FR 3910, 3930)
DOE received numerous comments on the revised approach to
determining whether an adverse comment provides a reasonable basis for
withdrawing a DFR. Acuity and AGA supported the revised approach's
focus on the substance of the adverse comments, as opposed to the
quantity of the adverse comments. (Acuity, No. 95, at p. 5; AGA, No.
114, at p. 25)) AGA also stated that speculative and unsupported
assertions may not warrant the withdrawal of a DFR, but positions
supported by the material submitted in the proceeding and precedent
should be provided sufficient weight when balancing differing
interests. (AGA, No. 114, at p. 25) APGA stated that the bar for
withdrawal is ``very low'' and any serious and substantive objections
to a DFR that are reasonably backed by argument--even if the Secretary
disagrees with them--should be deemed to provide a reasonable basis for
withdrawing the DFR. (APGA, No. 106, at p. 9) Spire commented that DOE
should withdraw a DFR if any interested party submits comment that
opposes the adoption of a DFR as written and provides relevant
information or argument as a basis for such opposition. This approach
would define ''adversity'' in simple, easily-applied terms, and--
consistent with both the statutory language and the principle that
exceptions to notice and comment requirements should be narrowly
construed--it requires that any doubt be resolved in favor of
withdrawal of a DFR when comment reflects substantive opposition.''
(Spire, No. 97, at pp. 2-3) GWU commented that moving away from the
balancing test is a positive development, since DFRs constrain public
input in the rulemaking process. (GWU, No. 132, at p. 9)
The CA IOUs, on the other hand, commented that the balancing test
``for evaluating adverse comments to DFRs was an effective approach and
DOE's language reversal could allow a single commenter to derail the
DFR process, even if that commenter had previous opportunities to
submit adverse comments. The CA IOUs also requested that DOE provide
more clarity on what constitutes a ``substantive'' comment in this
setting, especially in light of DOE reserving the right to consider a
previously-issued adverse comment as ``substantive'' enough to prevent
finalization of a DFR. (CA IOUs, No. 124, at p. 13) The Joint
Commenters and Lennox encouraged DOE to maintain flexibility in
determining the quantity and quality of comments considered
``adverse.'' (Joint Commenters, No. 112, at p. 11; Lennox, No. 133, at
p. 5) CEC opposed DOE's proposal to withdraw the DFR upon receiving any
substantive adverse comment that provides a ``sufficient reason'' to
withdraw the DFR, even if that comment raises issues previously
considered by DOE and resolved. CEC further commented that this
approach does not offer any clarity on what DOE considers to be
`substantive' or `adverse,' and could result too easily in
ideologically opposed stakeholders commenting on DFRs, using the exact
arguments considered and rejected in earlier comment periods, to ensure
that the DFRs are withdrawn. (CEC, No. 121, at p. 12)
In response, DOE notes that the focus on the substance, as opposed
to quantity, of adverse comments, is designed to ensure that DOE
considers adverse comments that may provide a reasonable basis for
withdrawing a DFR. Thus, numerous speculative and unsupported
assertions will not constitute a reasonable basis for
[[Page 8685]]
withdrawing a DFR, while one, well-supported comment may provide a
reasonable basis for withdrawing a DFR. With regards to issues
previously raised during the rulemaking process (e.g., in response to a
framework document or RFI), DOE recognizes that facts and circumstances
may change or new information may come to light, and, as a result, DOE
will not foreclose consideration of adverse comments that address
issues previously raised during the rulemaking process.
L. Negotiated Rulemaking
Negotiated rulemaking is a process by which an agency attempts to
develop a consensus proposal for regulation in consultation with
interested parties, thereby addressing salient comments from
stakeholders before issuing a proposed rule.\25\ Consequently, when
done properly, negotiated rulemaking can yield better decisions, while
conserving time and resources of both the agency and interested
parties. To facilitate potential negotiated rulemakings, DOE
established the Appliance Standards and Rulemaking Federal Advisory
Committee (i.e., ASRAC) to comply with the Federal Advisory Committee
Act (``FACA''), Public Law 92-463 (1972) (codified at 5 U.S.C. App. 2).
As part of the DOE process, working groups have been established as
subcommittees of ASRAC, from time to time, for specific products, and
one member from the ASRAC committee attends and participates in the
meetings of a specific working group. Ultimately, the working group
reports to ASRAC, and ASRAC itself votes on whether to make a
recommendation to DOE to adopt a consensus agreement. The negotiated
rulemaking process allows real-time adjustments to the analyses as the
working group is considering them. Furthermore, it allows parties with
differing viewpoints and objectives to negotiate face-to-face regarding
the terms of a potential standard. Additionally, it encourages
manufacturers to provide data for the analyses in a more direct manner,
thereby helping to better account for manufacturer concerns. While
negotiated rulemaking is not a topic directly addressed by the current
Process Rule, the Process Rule does recognize the value and encourage
submission of joint stakeholder recommendations.
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\25\ This process is conducted in accordance with the
requirements of the Negotiated Rulemaking Act (``NRA''), Public Law
104-320 (5 U.S.C. 561-570).
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In the February 2019 NOPR, DOE proposed to include a section on
negotiated rulemaking in the updated Process Rule. In the proposed
section on negotiated rulemaking, DOE stated that negotiated
rulemakings would go through the ASRAC process outlined above, and that
the appropriateness of a negotiated rulemaking for any given rulemaking
would be determined on a case-by-case basis. In making this
determination, DOE proposed to use a convener to ascertain, in
consultation with relevant stakeholders, whether review for a given
product or equipment type would be conducive to negotiated rulemaking,
with the agency evaluating the convener's recommendation before
reaching a decision on such matter. DOE also proposed that the
following five factors would weigh in favor of a negotiated rulemaking:
(1) Stakeholders commented in favor of negotiated rulemaking in
response to the initial rulemaking notice; (2) the rulemaking analysis
or underlying technologies in question are complex, and DOE can benefit
from external expertise and/or real-time changes to the analysis based
on stakeholder feedback, information, and data; (3) the current
standards have already been amended one or more times; (4) stakeholders
from differing points of view are willing to participate; and (5) DOE
determines that the parties may be able to reach an agreement. If a
negotiated rulemaking is initiated, DOE proposed to have a neutral and
independent facilitator, who is not a DOE employee or consultant,
present at all ASRAC working group meetings. Additionally, DOE proposed
to set aside a portion of each ASRAC working group meeting to receive
input and data from non-members of the ASRAC working group. Finally,
DOE stated that a negotiated rulemaking in which DOE participates under
the ASRAC process will not result in the issuance of a DFR. Further,
any potential term sheet upon which an ASRAC working group reaches
consensus must comply with all of the provisions of EPCA under which
the rule is authorized. (84 FR 3910, 3950)
In response, several commenters expressed their support for the
negotiated rulemaking process and its inclusion in the Process Rule.
(See, e.g., A.O. Smith, No. 127, at p. 5; AGA, No. 114, at p. 26; CEC,
No. 121, at p. 13) In supporting the inclusion of negotiated rulemaking
in the Process Rule, CEC stated that negotiated rulemakings open up the
discussion between interested parties on challenging but resolvable
issues in potential standards or test procedures, reduce the risk of
litigation on the rule, allow for public input, and reduce DOE's burden
in having to prepare multiple regulatory documents through the ordinary
rulemaking process. (CEC, No. 121, at p. 13) GWU, on the other hand,
commented that notice-and-comment procedures are more likely to produce
meaningful public participation at a more effective time in the process
than a negotiated rulemaking process. (GWU, No. 132, at 10).
DOE recognizes that, as GWU alluded, a negotiated rulemaking puts
the onus on the public to participate in the rulemaking process in a
different manner than through traditional notice-and-comment
rulemaking. However, DOE believes that this concern is greatly
mitigated by the benefits to the data gathering and analytical process
that are accomplished through face-to-face discussion of complex
technical issues that occur through negotiated rulemaking. The agency
is committed to setting aside a portion of each ASRAC working group
meeting to receive input and data from non-members (i.e., the public).
Further, DOE agrees with the benefits cited by CEC and the Process Rule
is amended to include a section on negotiated rulemaking.
With regards to appointing a convener, AGA commented that the
Process Rule should make clear that, prior to initiating a negotiated
rulemaking, DOE will, pursuant to the APA, appoint a convener to: (i)
Identify persons who will be significantly affected by a proposed rule;
and (ii) conduct discussions with such persons to identify their issues
of concern and to ascertain whether the establishment of a negotiated
rulemaking committee is feasible and appropriate in the particular
rulemaking. (AGA, No. 114, at pp. 26-27) CEC was neutral on whether to
engage a convener, but cautioned DOE against using a process that would
result in unnecessary delays. (CEC, No. 121, at p. 14) NPCC commented
that a convener is not needed in all cases. (NPCC, No. 94, at p. 8)
Lennox sought revision of section 11(a)(3) that, independent of the
convener's report, DOE can still proceed with a negotiated rulemaking
based on the five proposed criteria. (Lennox, No. 133, at pp. 3-4)
As for the five factors DOE listed previously that would weigh in
favor of a negotiated rulemaking, the Joint Commenters reiterated their
support for the factors, while CEC recommended that the five factors be
used as a balancing test rather than as a strict set of requirements
for whether a negotiation would work. (Joint Commenters, No. 112, at p.
11; CEC, No. 121, at p. 14) CEC and the CA IOUs also recommended
excluding the criterion limiting negotiated rulemakings to
[[Page 8686]]
products/equipment that have already undergone one or more rounds of
rulemaking. (CEC, No. 121, at p. 14; CA IOUs, No. 124, at p. 14)
DOE notes that these five factors are not a required check-list for
convening a negotiated rulemaking. Rather, they are simply additional
factors (to the convener's report) that will help DOE determine if a
negotiated rulemaking is appropriate. With regards to comments that DOE
should eliminate the factor limiting negotiated rulemakings to
products/equipment that have already undergone one or more rounds of
rulemaking, DOE notes that this factor is not a requirement and it does
not exclude newly covered products from being the subject of a
negotiated rulemaking. Further, DOE believes that there is an advantage
to focusing negotiated rulemakings on products/equipment that already
have standards as DOE will already have a good grasp on which parties
should be included in the working group and manufacturers will already
be familiar with DOE's regulatory scheme. On the other hand, if DOE
engages in negotiated rulemaking for newly covered products, DOE may be
able to gather data and information about the product and vet issues
applicable to such product more effectively than through traditional
notice and comment rulemaking. This is why these factors are listed as
considerations rather than requirements.
In regards to DOE's proposal that an independent, neutral
facilitator (who cannot be a DOE employee) be present at all ASRAC
working group meetings, several commenters expressed their support. For
example, Acuity stated that a neutral, qualified facilitator is
essential for a successful negotiated rulemaking process. A facilitator
helps ensure that processes are followed and that all participants have
an equal opportunity to contribute to the discussion. (Acuity, No. 95,
at p. 6) Similarly, BWC commented that use of an experienced
facilitator will enable the working group to . . . work towards an
amenable consensus. (BWC, No. 103, at p. 4) DOE agrees with these
comments as it has found independent, neutral facilitators to be
essential in moving working group discussions along and reaching
consensus.
With respect to DOE's proposal that a dedicated portion of each
ASRAC working group meeting will be set aside to receive input and data
from non-members of the ASRAC working group, AGA commented that
allowing for public comment before the working group will help ensure
the participation of all relevant interests in the process. (AGA, No.
114, at p. 27). DOE agrees with this comment.
Finally, DOE received numerous comments on its proposal that any
negotiated rulemaking in which DOE participates under the ASRAC process
will not result in the issuance of a DFR, but instead a proposed rule
that complies with the provisions of EPCA, under which the rule is
authorized. The majority of commenters opposed this proposal. For
example, ACEEE stated that a negotiated rulemaking should be able to
result in a Direct Final Rule. If the outcome of a formal negotiated
rulemaking meets the statutory requirements for a Direct Final Rule,
the Department should be able to use that process to issue the
standard. Banning it makes a consensus agreement less likely. (ACEEE,
No. 123, at p. 2) The Joint Commenters generally agreed with DOE's
negotiated rulemaking proposals with the exception of DOE's proposed
discontinuance of DFRs. (Joint Commenters, No. 112, at p. 11) NPCC
commented that abandoning the use of direct final rules in all cases--
rather than retaining the flexibility to use DFRs when appropriate
following a negotiated rulemaking--will simply result in prolonging the
agency process, increasing the agency's own costs often to no useful
end, and increasing the regulatory process burden on manufacturers and
other stakeholders rather than reducing it. (NPCC, No. 94, at p. 8)
Some commenters did express support for DOE's proposed plan to separate
DFRs and negotiated rulemakings. GWU commented that the decision to
separate DFRs and negotiated rulemaking and establish that the outcome
of negotiated rulemaking would be a proposed rule are positive
developments. (GWU, No. 132, at p. 10) AGA also supports DOE separating
DFRs from negotiated rulemakings and requiring that the outcome of a
negotiated rulemaking be a proposed rule, subject to a comment period.
(AGA, No. 114, at p. 27)
As stated in the February 2019 NOPR, DOE is modifying its
negotiated rulemaking process to be more consistent with the NRA which
contemplates that the committee will transmit to the agency a report
containing a proposed rule (or more applicable in DOE's use of the
process, a term sheet specifying the potential standard levels to be
incorporated into a proposed rule). If the Department determined to act
on the term sheet, it would be in the form of a proposed rule open for
notice and comment rather than a direct final rule.
M. Other Revisions and Issues
1. DOE's Analytical Methodologies, Generally
After considering the many comments on its analytical methodology
in the Process Rule RFI, DOE explained in the Process Rule NOPR its
plan to convene an expert independent peer review (consistent with
OMB's Information Quality Bulletin for Peer Review \26\) of its
assumptions, models, and methodologies to ensure that its approach is
designed to provide projections that are sufficiently rigorous for
their intended use. 84 FR 3910, 3936-3938 (Feb. 13, 2019). The goals of
the peer review are to assess whether any changes are needed to the
agency's analytical methodologies and potentially to the Process Rule.
In order to ensure that the analytical models and approaches that DOE
regulatory uses are as up-to-date and accurate as possible, DOE
committed to undertaking a recurring peer review of the Department's
analytical methods at least once every 10 years. DOE tentatively
concluded that the investment of resources in both immediate and long-
term peer review by the Department and interested parties would help
improve the overall rulemaking process and ensure the credibility and
validity of the results of that process. DOE also committed to making
its peer review available to the public, and during its initial peer
review meeting on November 19-20, 2019, provided the public with an
opportunity to observe and raise issues for peer reviewers'
consideration. The Process Rule NOPR went on to identify and discuss 12
potential focus areas for the peer review, including:
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\26\ 70 FR 2664 (Jan. 14, 2005) (Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2005/m05-03.pdf).
Analytical time horizon(s)
Baseline efficiency estimates
Consumer choice model
Emissions analysis
Fuel switching analysis
Indirect employment effects
Marginal manufacturer mark-up
Product price forecasts
Product performance
Subgroup analysis
Use of proprietary data
Welfare analysis and deadweight loss
DOE requested comments and other relevant information on these
topics, as well as other related issues which stakeholders wish to
raise. The Department explained that any potential changes to the
Process Rule that might be appropriate based on the results of the peer
review and any methodological
[[Page 8687]]
updates would be addressed in a subsequent proceeding. (For a more
detailed discussion of DOE's past and planned peer reviews, please
consult the relevant discussion in the February 13, 2019 Process Rule
NOPR at 84 FR 3910, 3936-3938.)
In response to the Process Rule NOPR, DOE received a variety of
comments from approximately 22 discrete commenters regarding its
analytical methodologies, with recommendations that, in many cases,
that are both detailed and specific. These submissions generally fell
into one of several discrete areas--peer review, DOE's analytical
methodologies generally (e.g., transparency of models and assumptions,
public access to data, discount rates, marginal energy prices, life-
cycle cost and payback period issues, the screening analysis, use of
proprietary data, the Social Cost of Carbon), and the walk-down
approach to standard-setting.
For the reasons discussed subsequently, DOE has decided as part of
this final rule to move forward with a peer review of its analytical
methodologies, models, and assumptions, so DOE will summarize and
respond to the peer review comments it received on the Process Rule
NOPR in the paragraphs below. Likewise, DOE will summarize and respond
to the comments on its proposed walk-down approach to standard setting,
because any upcoming energy conservations standards rulemaking would
confront that part of the rulemaking process and require a path
forward. However, the Department is not addressing the other
substantive comments on and critiques of its analytical methodologies
and models in this final rule, because those are the types of issues
that will be addressed during the course of the peer review and
stakeholders will have a separate opportunity to weigh in on that
proceeding. Relevant comments on those topics submitted to the docket
for this rulemaking will be referred to the independent expert peer
reviewers to be addressed as part of their charge in that separate
proceeding.
a. Peer Review
As noted previously, peer review was a topic of discussion in the
Process Rule NOPR, because DOE identified that approach as a suitable
and effective way to evaluate the concerns raised by various
stakeholders about the agency's analytical methodologies. 84 FR 3910,
3936-3938 (Feb. 13, 2019). The Department foresees both an immediate
peer review of its analytical methodologies, as well as recurring peer
review over a longer term (e.g., every 10 years). Overall, commenters
on the Process Rule NOPR expressed support for DOE's plans to conduct a
peer review of it analytical methodologies, although one commenter
(Spire) expressed some misgivings as to the Department's ability to
conduct such review in a fair and effective fashion. The following
comments focused on the peer review itself (rather than the subject
matter to be addressed by the peer review).
A number of commenters expressed general support for DOE's planned
peer review of its analytical methodologies, including Acuity and
NAFEM. (Acuity, No. 95, at p. 6; NAFEM, No. 122 at p. 7) APGA also
expressed support for a peer review, which it believes will allow
stakeholders to have assurance that the standards development process
is based on sound scientific and economic data and methods. (APGA,
March 21, 2019 Public Meeting Transcript at p. 15) Likewise, Energy
Solutions stated that it supports DOE's plans for peer review,
suggesting that product price forecasts should be one of the focus
areas for that review. (Energy Solutions, April 11, 2019 Public Meeting
Transcript at p. 156)
Other commenters stated support for DOE's planned peer review and
followed up with additional thoughts and recommendations regarding that
process. Some of those commenters focused on the peer review to be
conducted in the near term, while others concentrated on the long-term,
recurring peer review, and some addressed both.
Focusing on the need for an immediate peer review, AGA recommended
that DOE conduct a peer review of its assumptions, models, and
methodologies as soon as possible to ensure that its processes are
current. By not conducting peer reviews in a timely manner, AGA argued
that the Department deprives the public of certain regulatory
protections--such as standards based on current scientific information
that has been tested impartially and deemed appropriate and reliable by
a group of relevant experts. For example, the commenter stated that the
regulatory guidelines established by the Office of Management and
Budget (OMB) require a peer review of any changes to scientific data
and/or methodologies used in the development of rules or regulations.
Specifically, AGA noted that OMB's Final Information Quality Bulletin
for Peer Review requires each Federal agency to conduct a peer review
of all influential scientific information that the agency intends to
disseminate. Because the Technical Support Documents (TSDs) that the
Department relies on when issuing a proposed and final standard contain
influential scientific information that DOE has disseminated, AGA
concluded that such information should be peer reviewed and up-to-date.
AGA also considered the long term and expressed support for the
Department conducting a peer review, at least once every ten years, of
its assumptions, models, and methodologies to ensure that its approach
is designed to provide reasonable, accurate projections. (AGA, No. 114
at pp. 28-29)
Likewise focusing on the immediate peer review, the Joint
Commenters and AHRI strongly urged DOE not to delay in commencing its
peer review of its analytical methodologies. (Joint Commenters, No. 112
at p. 12; AHRI, April 11, 2019 Public Meeting Transcript at p. 157) The
Joint Commenters asserted that the current DOE methodologies are
seriously flawed. Furthermore, the Joint Commenters stated that a sound
peer review process should be conducted by a third-party panel, not by
DOE. (Joint Commenters, No. 112 at p. 12) In furtherance of this point,
the Joint Commenters suggested several principles to guide the peer
review process including: (1) The composition of the peer review panels
must include people who are technically competent to review economic,
cost, energy, and other matters. The composition of the panels should
be determined in a public process with advice and comment from the
public on the panels' composition; (2) The members of the peer review
panels should conform to the standards for ``Highly Influential
Scientific Assessments;'' (3) The peer review panels should not be
constrained by the twelve topics identified by DOE, but these should
instead be viewed as a minimum scope. The peer review panels should
look at DOE's analytical processes with a clean slate. Additional
topics for consideration may include consumer discount rates, the use
of learning and experience curves in projecting future product prices,
mark-ups across the total chain from factory to consumer, and the
definition of maximum technically feasible product configuration; (4)
The peer review panels should hold hearings to help guide them in
determining which topics they should pursue and what alternatives they
should consider; and (5) The peer review panels should present their
tentative findings for public review and comment prior to finalizing
their reports. (Joint Commenters, No. 112 at p. 13-14)
[[Page 8688]]
Lennox and AHRI echoed some of the points raised by the Joint
Commenters. Lennox commented that DOE's peer review should be
transparent, with stakeholders such as industry allowed to provide
input, and peer review panels should present their tentative findings
for public review and comment prior to finalizing their reports.
(Lennox, No. 133 at pp. 8-9) Although commending DOE on beginning a
peer review process, AHRI made a similar point urging the Department to
open up the process of selecting a peer review panel by getting
interested parties to comment on the charter and the candidates for the
peer review panel. AHRI added that it does not agree that one of the 12
focus areas should be incremental margins at the manufacturer level, a
concept which it believes is flawed and should be removed. (AHRI, April
11, 2019 Public Meeting Transcript at pp. 146-148) Instead, AHRI
recommended that peer review should look at the whole modeling effort.
(AHRI, April 11, 2019 Public Meeting Transcript at p. 158)
Regarding long-term peer review, APGA stated that it is in favor of
a recurring peer review of DOE's analytical assumptions, models, and
methodologies, at least once every 10 years, so as to ensure that such
analyses are based on sound scientific and economic data. The commenter
stated that such approach is consistent with OMB's regulatory
guidelines and its Final Information Quality Bulletin for Peer Review.
However, APGA reiterated its belief that DOE's models are too complex
and burdensome and urged replacing the current complicated life-cycle
cost analysis with a simple payback analysis based on real numbers''.
(APGA, No. 106 at pp. 10-12)
Finally, Spire's comments reflected some skepticism of DOE's
efforts to conduct a peer review of its analytical methodologies and
urged caution to ensure a fair and balanced outcome. More specifically,
one representative of Spire criticized peer review as a useless
appendage of the past. (Spire, April 11, 2019 Public Meeting Transcript
at p. 145) However, another Spire representative expressed mixed
feelings about peer review, suggesting that it can be helpful with some
types of issues but stating that there are a lot of issues where it is
not suitable. (Spire, April 11, 2019 Public Meeting Transcript at pp.
149-150) Spire indicated that a peer review within the context of
setting standards for regulated appliances continues to be problematic
when DOE selects ``experts'' whose interests are already aligned with
EERE's ``clean energy'' mission. As a result, the commenter suggested
that DOE should eliminate peer reviews until fundamental changes are
made, such as reconvening its general purpose advisory board as laid
out in the 1996 Process Rule. (Spire, No. 139 at p. 7) (DOE notes that
it is unclear what Spire is referring to here.) Spire argued that the
peer review process under DOE's current approach would not have
identified in a timely manner the means by which DOE uses to justify a
given standard through its LCC analyses. (Spire, No. 139 at p. 8) Spire
added that the multiple adverse effects it identified in its comments
would have cumulative impacts on consumers as the time period between
peer reviews lengthens. Rather than conduct periodic peer reviews,
Spire recommended that DOE should adopt a ``Continual Improvement
Process'' to change the frequency of reviews and reconsider the make-up
of its advisory committee, given what the commenter characterizes as
ASRAC's current lack of ``requisite diversity.'' (Spire, No. 139 at pp.
9-10) As part of its suggestion that DOE apply a continuous improvement
approach, Spire stressed that there should be independent review of the
agency's ``misuse'' of Monte Carlo simulations, as well as other DOE
methodologies that Spire alleged distort the Department's
determinations and drive unwarranted increases in energy efficiency.
(Spire, No. 139 at p. 10)
In response, DOE appreciates the many thoughtful comments it
received on peer review of its analytical methodologies, models, and
assumptions. The Department agrees with the commenters as to the
importance of using the best available scientific, technical, and
economic data that contribute to it decision-making when setting energy
conservation standards. Because such standards typically generate
significant public benefits and costs to the regulated community, it is
incumbent upon DOE to utilize the best available data and practices in
developing such standards. Given the passage of time since the last
peer review of the Appliance Standards Program, DOE has commenced a new
peer review, but it also plans to conduct an ongoing, periodic peer
review on a 10-year cycle. Because the technical support documents for
energy conservation standards rulemakings contain influential
scientific/technical/economic information that underpins DOE's
standards, it is crucial that such information be current, validated,
and of high quality. Although it is DOE's position that its data,
methods, and models already meet the requirements of OMB Circular A-4
\27\ and the Information Quality Act,\28\ the Department is committed
to ensuring that its analytical models and methodologies continue to
meet a high standard of integrity and to be based on sound scientific
methods and principles. DOE believes that peer review advances this
objective and is consistent with the principles of good government, and
consequently, the agency is moving expeditiously to commence its next
review. Such action should also satisfy DOE's obligations under OMB's
Final Information Quality Bulletin for Peer Review.
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\27\ Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
\28\ Section 515 of Public Law 106-554. OMB issued final
guidelines to implement the Information Quality Act on February 22,
2002 (67 FR 8452) (available at: https://www.govinfo.gov/content/pkg/FR-2002-02-22/pdf/R2-59.pdf).
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DOE further agrees with commenters that this peer review should be
part of an open and transparent process, with opportunities for public
input and public availability of the recommendations made by the
reviewers. The Department also agrees that the peer review should be
conducted by independent, third-party experts drawn from the relevant
disciplines. DOE would make clear that the peer reviewers are not
limited to consideration of the 12 topic areas mentioned in the Process
Rule NOPR, but they instead have license to conduct a comprehensive
review of the models, methodologies, and assumptions used in DOE's
rulemakings. Those peer reviewers would be free to consider relevant
subjects presented by DOE, public comments, and other stakeholder
input, as well as those identified by their own initiative. DOE will
also ensure that there is an opportunity for public engagement with the
peer reviewers as part of this process. The Department believes that
such approach will ensure that it is receiving an objective and
unbiased assessment of its analytical methodologies and models, while
inspiring public confidence along those same lines. To this end, DOE
has contracted with the National Academy of Sciences (NAS) to
independently conduct its peer review. All information and
announcements regarding this peer review, including the group's
charter, topics to be addressed, announcements of public meetings, and
availability of the final peer review report, are available via the NAS
website. Any necessary changes to the Process Rule arising from the
peer review and methodological updates will be addressed in a separate
proceeding.
[[Page 8689]]
DOE disagrees with Spire as to the value of a peer review of DOE's
analytical methodologies, and the agency expects that an independently
conducted peer review, as DOE envisions and presents here, will
alleviate many of Spire's concerns. In addition, DOE notes that it is
not officially adopting Spire's recommendation for a ``continual
improvement process,'' although the Department is always open to
constructive feedback about its processes. Interested parties are free
to raise methodological issues as part of their public comments on
various rulemakings or to bring the matter to DOE's attention through
other correspondence. DOE will carefully consider such comments, and in
appropriate cases where the agency finds merit, it may take action
outside the normal 10-year peer review cycle. In such cases, options
might include immediate corrective action, initiation of rulemaking, or
early commencement of the next peer review cycle.
b. Walk-Down
In the Process Rule NOPR, DOE specifically sought comment on its
``walk-down'' approach to assessing different potential standards. DOE
explained that using this approach, DOE starts from the most stringent
choice to determine both economic justification and technological
feasibility by ``walking-down'' through the available choices by
stringency until arriving at the first choice that meets all of the
statutory criteria. In the proposal, DOE noted that economic theory
suggests that the most logical way to determine if a particular option
is ``economically justified'' is to compare it to the full range of
available choices, rather than just one baseline. Applying economic
theory, DOE proposed at 10 CFR part 430, subpart C, appendix A, sec.
(7)(e)(2)(G) to require the Secretary to determine whether a candidate/
trial standard level would be economically justified when compared to
the full range of other feasible TSLs. The proposal stated that in
making this determination, the Secretary is to consider whether an
economically rational consumer would choose a product meeting the
candidate/trial standard level over products meeting the other feasible
TSLs levels after considering all relevant factors, including but not
limited to, energy savings, efficacy, product features, and life-cycle
costs. If an economically rational consumer would not choose the
candidate TSL after considering these factors, it would be rejected as
economically unjustified. This approach would recognizes that the
``economic justification'' of any particular option depends on a
broader comparison of economic attributes relative to other available
options, rather than relative to just one baseline, particularly one
that is likely to be of little relevance to a consumer when choosing
which product(s) are economically justified for their purchase. Rather
that person is likely to be focused on the set of actually available
products at the time of purchase, rather than some hypothetical
baseline representing the set of products that would have been
available in the absence of the standard (including perhaps the model
currently being replaced). DOE sought public comment on its proposal to
refine the ``walk-down'' approach to require determinations of economic
justification to consider comparisons of economically relevant factors
across TSLs, consistent with both economic theory and the actual
purchasing behavior of rational consumers. (84 FR 3910, 3938)
DOE received a substantial amount of comment on its proposal
related to the walk-down and as a consequence is issuing a notice of
proposed rulemaking published elsewhere in this issue of the Federal
Register to further clarify amendments to the walk-down approach.
Although one commenter supported DOE's proposal as presented (APGA),
the rest of the comments on this topic generally ranged from neutral
(citing a lack of information necessary to comment and move forward) to
strongly negative (arguing that the proposed approach would be illegal
under EPCA). These comments are summarized below, followed by DOE's
response.
Alone among the commenters, APGA expressed unqualified support for
DOE's proposal to modify its walk-down approach to standard setting.
The commenter explained how it has long complained that DOE uses a
materially-flawed analysis which the commenter argued overstates
potential benefits of standards and underestimates their costs, thereby
failing to meet EPCA's requirements for economic justification. APGA
stated that in order to determine whether a potential standard is
economically justified, it should be compared to the full range of
available consumer choices reflected by the entire suite of TSLs.
(APGA, No. 106 at pp. 12-13)
A number of other commenters expressed varying degrees of
theoretical support for potential modifications to DOE's walk-down but
concluded that the Process Rule NOPR did not present enough detail or
explanation to support a change at this time. Among this group, AHAM
stated that because DOE's walk-down proposal was not sufficiently clear
and fully articulated, it was not in a position to comment at this
time, but it added that the concept should not be discarded. However,
AHAM concluded that just because the walk-down proposal is not fully
developed, that should not slow down consideration and finalization of
the rest of the Process Rule proposal. (AHAM, April 11, 2019 Public
Meeting Transcript at p. 169) Similarly, a representative for AHAM,
AHRI, and the Joint Commenters stated that it is impossible to evaluate
DOE's walk-down proposal and that commenters would need more
information before they could do so, such as by the agency publishing
an example as to how the revised process would work. (Everett Shorey,
April 11, 2019 Public Meeting Transcript at p. 174)
NYU Law stated that DOE's proposed replacement of its walk-down
approach with an ``economically rational consumer'' test is
insufficiently defined and inadequately justified. NYU Law noted the
following reasons to support its opinion: The Department vaguely
alludes to ``economic theory'' but provides no citations; it does not
detail how it is defining a ``rational consumer'' or how the test will
be conducted; it does not explain whether or how the new test will
weigh important social externalities; and it does not provide any
illustrations or guidance on how the new test will compare to the old
one. Accordingly, the commenter concluded that DOE has failed to
sufficiently justify its proposal and has not provided the public with
enough information to offer meaningful comments. (NYU Law, No. 119, at
p. 1)
Likewise, NAFEM stated that it is not expressing any view as to the
proposed ``walk-down'' approach specifically. However, NAFEM commented
generally that it does support approaches that evaluate customer choice
based on models that are economically viable with commercially
available technologies contemporaneously with the review, rather than
purely theoretical models based on technologies that may or may not be
available in the future. (NAFEM, No. 122 at p. 7)
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
[[Page 8690]]
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, No. 107 at pp. 7-8)
Southern Company characterized the Process Rule NOPR's walk-down
proposal as a major improvement, particularly since it deemed consumer
discount rates to have been significantly underestimated in the past.
(Southern Company, April 11 Public Meeting Transcript at p. 162)
However, Southern Company ventured that the topic of the walk-down
proposal is likely to be very intertwined with methodological issues
that are being handled in a separate proceeding, and the commenter
added that it would like to see a separate proceeding conducted every
three or four years on the economic assumptions that are being used in
different rulemakings. (Southern Company, April 11 Public Meeting
Transcript at pp. 170) Spire expressed support for these comments of
Southern Company, echoing the need for further details and perhaps a
definition of ``economically rational consumer.'' \29\ (Spire, April
11, 2019 Public Meeting Transcript at p. 163) Nonetheless, Spire viewed
DOE's proposal as an attempt to improve the status quo which has
prevailed for many years. (Spire, April 11, 2019 Public Meeting
Transcript at p. 168)
---------------------------------------------------------------------------
\29\ Although the transcript shows the commenter referring to an
``environmentally-rational consumer,'' DOE assumes that Spire meant
to say ``economically-rational consumer'' in this context.
---------------------------------------------------------------------------
Similarly, AHRI stated that it would be interested to see what DOE
comes up with and what it thinks is advisable to consider in terms of
the walk-down proposal. The trade association concluded that the walk-
down proposal does not currently provide enough information to allow it
to offer meaningful comment, although the organization noted that it
looks forward to subsequently seeing the agency's analysis and a more
formal proposal. (AHRI, April 11, 2019 Public Meeting Transcript at pp.
165-166) AHRI commented that it does not think the walk-down approach
is statutorily mandated, and it also pointed out that the language
``maximum improvement in energy efficiency that is technologically
feasible and economically justified'' only applies to consumer
products, not to commercial equipment. Thus, AHRI suggested that DOE
has more flexibility with commercial equipment and that it has the
authority to reconsider its economic justification analysis. (AHRI,
April 11, 2019 Public Meeting Transcript at pp. 172-173)
The Joint Commenters expressed their support for a full
consideration of the consumer choice frameworks used by the DOE,
including both the current ``walk-down'' and alternatives, as well as
the random assignment of base-case efficiencies currently used in the
life-cycle costing analysis. These commenters made clear that they are
not taking a position on the proposed ``walk-down'' approach and
alternatives until all possible approaches have been reviewed in the
context of how they would affect particular analyses. According to the
Joint Commenters, the complexity and subtlety of translating
theoretical approaches to practical situations are high and fraught
with unintended consequences. Thus, the Joint Commenters suggested that
this subject should be addressed during the peer review process. (Joint
Commenters, No. 112 at p. 14)
The balance of the comments opposed DOE's walk-down proposal to
move from its current analytical methodology and walk-down standards
selection process to an ``economically rational consumer'' test, as
presented in the Process Rule NOPR, for a variety of reasons. (ASE, No.
108 at pp. 6-7; ACEEE, April 11, 2019 Public Meeting Transcript at pp.
171-172; ASAP, et al., No. 126 at pp. 15-16; AGs Joint Comment, No. 111
at pp. 15-16; Earthjustice, No. 134 at p. 5; NRDC, No. 131 at pp. 15-
17; NPCC, No. 94 at p. 8; Cal-IOUs, No. 124 at p. 14; PG&E, April 11,
2019 Public Meeting Transcript at pp. 164-165; Southern California
Edison, April 11, 2019 Public Meeting Transcript at p. 222; CEC, No.
121 at p. 14; CT-DEEP, No. 93 at p. 4)
More specifically, many commenters were concerned that DOE did not
define the term ``economically rational consumer'' in the NOPR. (ASE,
No. 108 at pp. 6-7; ACEEE, April 11, 2019 Public Meeting Transcript at
pp. 171-172) ASAP (and others) argued that particularly because DOE did
not define that key term, it is unclear precisely what DOE is proposing
for a revised walk-down methodology, so the organization does not know
how to comment. (ASAP, April 11, 2019 Public Meeting Transcript at pp.
166-167; AGs Joint Comment, No. 111 at pp. 15-16; NRDC, No. 131 at pp.
15-17) ACEEE added that if DOE were to choose to move forward with this
concept, a supplemental NOPR would be required. (ACEEE, April 11, 2019
Public Meeting Transcript at pp. 171-172)
Even if the term ``economically rational consumer'' were to be
defined, some of the commenters expressed concerns with any such
attempt. For example, ASAP, et al. argued that seeking to define who a
``rational consumer'' is and to assess what choices such a person would
make would be fraught with problems, and the commenter reminded DOE
that the NOPR provided no information about how DOE would make such
determinations. (ASAP, et al., No. 126 at pp. 15-16) The AGs Joint
Comment likewise stated that there is widespread skepticism surrounding
the concept of the ``economically rational consumer'' because
economists and social scientists recognize that many times consumers
act irrationally, so this theory may not reflect real-world conditions.
(AGs Joint Comment, No. 111 at pp. 15-16) NRDC argued that there are
varying academic opinions regarding the decisions consumers make,
whether an economically rational consumer exists, and the value of such
a construct, so much energy and money could be lost if a standard is
rejected simply because a consumer were to make an irrational choice
under such test. (NRDC, No. 131 at pp. 17) Furthermore, NRDC asserted
that the Process Rule NOPR's efforts to advance the concept of an
economically rational consumer overlook the fact that not all consumers
purchase their appliances or equipment (i.e., renters), so the
commenter questioned how, under this type of approach, DOE would
account for the benefits of standards to low-income people or renters
who would not necessarily be making purchasing decisions. (NRDC, April
11, 2019 Public Meeting Transcript at p. 164) Similarly, CT-DEEP
opposed DOE's proposal walk-down approach based on what it
characterized as a hypothetical and arbitrary `economically rational
consumer,' arguing that modern economic theory suggests that such
consumer does not truly exist. (CT-DEEP, No. 93 at p. 4)
PG&E stated that the concept of a rational consumer is a difficult
one to quantify and that it could potentially contribute error to DOE's
analyses. More specifically, PG&E argued that the proposed change to
the walk-down would add complexity to the analysis, and with more
complexity would come the possibility of more mistakes. Furthermore,
the commenter ventured that the relevant information may be unknown and
would then require estimation. (PG&E, April 11, 2019 Public Meeting
Transcript at pp. 164) Southern California Edison made a similar point
that the proposal
[[Page 8691]]
surrounding the rational consumer looks very difficult to quantify,
which runs counter to the goal of making DOE's process more
transparent. (Southern California Edison, April 11, 2019 Public Meeting
Transcript at p. 222)
Several commenters in this group questioned how DOE could meet its
statutory obligations under EPCA while following this new approach. ASE
and ACEEE argued that Congress has mandated that the Department set
standards at the maximum level that is technologically feasible and
economically justified, and has specified seven considerations to be
balanced in determining what is economically justified; the statute
does not direct DOE to choose the most economically justified level.
(ASE, No. 108 at pp. 6-7; ACEEE, April 11, 2019 Public Meeting
Transcript at pp. 171-172; ACEEE, No. 123 at p. 4) ASAP, et al.
explained its understanding of how DOE has implemented the current
process by first looking at the ``max-tech'' level and evaluating
whether that level is economically justified; if DOE concludes that
that level is not economically justified, it proceeds to the next-
highest level and makes the same evaluation until reaching a level (if
any) that the Department determines is economically justified. The
commenter expressed its opinion that the process used to date
implements what the statute requires. Specifically, by starting at the
``max-tech'' level and working its way down, ASAP, et al. argued that
the Department ensures that it does in fact adopt the maximum level
that is technologically feasible and economically justified. (ASAP, et
al., No. 126 at pp. 15-16) In contrast, ASAP and ASAP, et al.
questioned that fact that the NOPR leaves unclear how DOE's proposed
approach would fit with the statutory requirement to consider the seven
factors in determining whether a standard is ``economically
justified,'' except maybe factor 7 (i.e., other factors the Secretary
considers relevant). (ASAP, April 11, 2019 Public Meeting Transcript at
pp. 166-167; ASAP, et al., No. 126 at pp. 15-16) ASAP stated that it
cannot find a legal justification for the agency's proposed change to
the walk-down or how one would conduct such revised walk-down from a
process point of view, expressing unease with what appears to be DOE's
suddenly reworking of how the entire standards process has been
conducted for over 30 years. (ASAP, April 11, 2019 Public Meeting
Transcript at pp. 166167) NPCC recommended that because the current
walk-down approach (as described in the Process Rule NOPR) is
consistent with the statutory directive that standards must be set at
the maximum level of efficiency that is technically feasible and
economically justified, no further refinement of this aspect of DOE's
existing rulemaking process is needed. (NPCC, No. 94 at p. 8)
ACEEE argued that the current walk-down approach has a clear
process of choosing the maximum improvement level required under the
statute, but once the current process is abandoned in favor of a
rational consumer approach, the commenter asserted that the Department
would be ignoring the law, because the ``preferred'' level is not what
is in the statute. (ACEEE, April 11, 2019 Public Meeting Transcript at
pp. 171-172) On this point, ASAP, et al. similarly stated that DOE's
proposed approach, as presented, would appear to instead hinge on
whether an ill-defined ``economically rational consumer'' would choose
a product meeting a certain efficiency level. (ASAP, et al., No. 126 at
pp. 16) ACEEE expressed its view that the Department has not made clear
how selection of a consumer's preferred level, among all the options,
would yield the maximum level that meets the statutory criteria.
Moreover, ACEEE argued that it is even less clear how consideration of
a single consumer would incorporate, or would be incorporated with, the
seven required considerations. As the Department has provided no
information on how the rational consumer would make their choice, ACEEE
opined that DOE's walk-down proposal also would introduce significant
uncertainty and potentially arbitrary decisions for manufacturers and
consumers (e.g., What rational consumer will be considered, based on
what financial situation, with what economic utilities? How will this
be determined?). These considerations shaped ACEEE's view that the
``economically rational consumer,'' while well-studied in the economics
literature, does not appear to be a concept in current Federal law,
and, thus, it is a likely subject for litigation, if adopted.
Consequently, ACEEE concluded that a theoretical, economically rational
consumer cannot be used to choose an energy conservation standard
level. (ACEEE, No. 123 at p. 4)
Still others characterized DOE's proposed walk-down approach more
strongly; arguing either that the proposed approach is impermissible
and illegal under EPCA or arguing that the current approach is legally
mandated by EPCA. (AGs Joint Comment, No. 111 at pp. 15-16;
Earthjustice, No. 134 at p. 5; NRDC, No. 131 at pp. 15-16; CEC, No. 121
at p. 14) Among this group, the AGs Joint Comment strongly disfavored
DOE's use of an ``economically rational consumer,'' as arbitrary and
capricious and inconsistent with EPCA. According to the AGs Joint
Comment, DOE has failed to describe how it would conceive this
purported rational consumer or detail how this approach would be put
into practice. According to the AGs, DOE may only consider an
``economically rational consumer'' consistent with EPCA's payback
presumption in 42 U.S.C. 6295(o)(2)(B)(iii), and diverging from that
presumption in favor of a hypothetically economically rational consumer
would violate EPCA. Furthermore, the AGs Joint Comment argued that EPCA
already explains how consumer interests are to be addressed as one of
the seven factors for economic justification, a consideration to be
weighed but not to be valued predominantly or exclusively. (AGs Joint
Comment, No. 111 at pp. 15-16)
Although Earthjustice suggested that the Process Rule NOPR's
proposed changes shifting the focus of DOE's economic justification
inquiry to a hypothetical ``economically rational consumer'' are not
clearly explained in the NOPR, the commenter stated that any such
change abandoning the walk-down approach the Department has long used
to assess the economic justification for each TSL under consideration
would be impermissible. Earthjustice stated that as the D.C. Circuit
has explained, EPCA ``establishes a clear decision-making procedure''
that applies when DOE selects energy conservation standard levels
(citing NRDC v. Herrington, 768 F.2d 1355, 1391 (D.C. Cir. 1985)).
Specifically, the commenter stated that DOE must first identify, for
all product types or classes, the maximum improvement in energy
efficiency that is technologically feasible, and if a standard at that
level would be economically justified, DOE must set the standard there.
Earthjustice added that if a standard requiring the maximum
technologically feasible level would not be economically justified, DOE
must set the standard at the next highest level that is both
technologically feasible and economically justified. In that event,
Earthjustice stated that EPCA requires DOE to explain specifically why
a standard achieving the maximum technologically feasible improvement
in efficiency was rejected (citing Id. at 1391-1392 (citations
omitted)). To the extent the NOPR would substitute a different
approach, the commenter
[[Page 8692]]
argued that that proposal is unlawful. Earthjustice stated that if that
is not what DOE intended, the Department must provide stakeholders with
a clear understanding of how the reliance on an ``economically rational
consumer'' would change DOE's evaluation of whether a TSL is
economically justified. (Earthjustice, No. 134 at p. 5) NRDC's comments
used much the same logic as Earthjustice in opposing DOE's proposed
``walk-down'' approach, because in its view, such approach is
prohibited by EPCA. According to NRDC, basing such decisions on an
``economically rational consumer'' is problematic for a number of
reasons, particularly since EPCA does not permit DOE to prioritize an
``economically rational consumer'' test higher than other factors the
agency is required to consider for economic justification. (NRDC, No.
131 at pp. 15-17)
In objecting to DOE's proposed change to the current walk-down
analytical approach, the CEC argued that the factors for economic
justification are described in, and limited to, those in EPCA, which
makes no mention of an ``economically rational consumer'' for purposes
of DOE's required analysis. Moreover, the CEC added that practical
experience and results over decades of implementing the appliance
efficiency program show that there is a need for efficiency standards
to overcome information barriers, cost barriers, and corporate inertia
that stymie the otherwise rational economic consumer. (CEC, No. 121 at
p. 14)
Finally, BWC and the Cal-IOUs offered some suggestions as to other
alternatives DOE might consider when revising its walk-down approach.
BWC stated that it does not support DOE's proposed revised ``walk-
down'' approach, but instead favors a ``walk-up'' approach that looks
at the TSL just above the current standard (i.e., the baseline). From
there, BWC suggested that each level would be compared independently to
the baseline. According to BWC, such approach would better reflect its
experience that most consumers want the least expensive option that
provides them the same utility as their current appliance. (BWC, No.
103 at p. 4)As an alternative to DOE's potential use of an
``economically rational consumer'' as part of the agency's analytical
process (to which they objected), the Cal-IOUs instead suggested that
DOE should align its approach with the one already in use in
California--where energy efficiency measures are evaluated using the
current standard as the baseline and to factor in natural market
adoption in the measured case to prevent double-counting. (Cal-IOUs,
No. 124 at p. 14)
In response, DOE recognizes that its walk-down proposal, as
presented in the Process Rule NOPR, could be viewed as a fundamental
shift in the way the Department has historically selected energy
conservation standards for adoption. Some 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. Those
commenters were clear that, while they believed DOE should look into
the issues presented by the walk-down proposal, they were opposed to
delaying the remainder of the Process Rule's improvements while that
work was done. Others not only questioned the workability and academic
underpinnings of DOE's proposal but flatly challenged the legal basis
for the agency's proposed approach (citing both the statute and case
precedent), suggesting that it would invite litigation.
Upon further reflection and after reviewing the public comments
received on the matter, DOE has come to understand that its walk-down
proposal would benefit from further elaboration and opportunity for
public comment. Accordingly, DOE has decided not to finalize its
proposed revised walk-down approach in this rule. Instead, elsewhere in
this issue of the Federal Register, DOE has proposed revisions to its
existing walk-down methodology together with added explanation to
address some of the concerns raised by stakeholders. This supplemental
proposal will revise 10 CFR part 430, subpart C, appendix A, sec.
(7)(e) of the Process Rule. Specifically, the proposal clarifies that
the process by which DOE selects among alternative energy efficiency
standards under EPCA, satisfies the requirement that standards achieve
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 response to the
concerns and requests for further explanation related to the
economically rational consumer mentioned in DOE's prior proposal, DOE
is: (1) Clarifying 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 trail standard levels
(TSLs) is consistent with EPCA. This proposal will respond to public
comment requesting further clarity on DOE's initial proposal that in
making the determination of economic justification, DOE would choose a
TSL over other feasible TSLs after considering all relevant factors,
including, but not limited to, energy savings, efficacy, product
features, and life-cycle costs.
DOE encourages interested parties to review DOE's proposal and
provide comment for consideration.
c. Other
In commenting on DOE's analytical methodologies, Lutron suggested
that as part of the Department's analysis, DOE should assess the
impacts on customers related to the potential elimination of desirable
product features. According to the commenter, DOE should not promulgate
rules that would eliminate features that are highly valued by customer
subgroups. (Lutron, No. 137 at p. 3) In response, DOE notes that EPCA
specifically addresses this issue, stating at 42 U.S.C. 6295(o)(4) that
DOE may not prescribe an amended or new standard if it finds (and
publishes such finding) that interested persons have established by a
preponderance of the evidence that the 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
DOE's finding. Thus, in keeping with its statutory mandate, DOE
routinely evaluates the effects its potential energy conservation
standards would have on identified product features and takes action
consistent with 42 U.S.C. 6295(o)(4). (These same principles apply to
covered commercial and industrial equipment through operation of 42
U.S.C. 6313(a)(6)(B)(iii)(II)(aa), 42 U.S.C. 6313(a)(6)(C)(i), and 42
U.S.C. 6316(b).)
2. Cumulative Regulatory Burden
In the Process Rule NOPR, DOE acknowledged that its past treatment
of cumulative regulatory burdens faced by regulated entities may have
lacked the comprehensiveness sought by some industry stakeholders.
However, DOE attempted to address these burdens in a consistent manner
to ensure that it accounts for them in each of DOE's energy
conservation standards rulemakings. DOE committed to improving its
assessments of the potential burdens (i.e., costs) faced by industry in
implementing potential standards by improving its analysis. As
[[Page 8693]]
part of this effort, DOE stated that it will attempt to account for
these potential costs through its modeling approaches, but the
Department welcomed constructive feedback on particular steps it should
take (consistent with its legal obligations) that would help improve
its evaluation of the cumulative regulatory burdens faced by regulated
entities within the energy conservation standards context. 84 FR 3910,
3939 (Feb. 13, 2019).
In response to the Process Rule NOPR, DOE received several comments
on the topic of cumulative regulatory burden, primarily from individual
companies and industry trade associations. Most of these commenters
supported DOE's proposal to strengthen its analysis of cumulative
regulatory burden, often reiterating their view of the perceived
problem, stressing the importance of addressing it, and sometimes
offering suggestions for how the Department can improve its process.
For example, Rheem expressed strong support for DOE's efforts to
improve the Department's consideration of cumulative regulatory burden
and to reduce complexity as part of the standards rulemaking process.
(Rheem, No. 101 at pp. 1-2) MHI expressed a similar sentiment, stating
that it is critical that the process by which DOE sets rules for energy
standards must carefully consider the cost impacts and work together
with other Federal agencies so that cumulative regulatory costs are
accounted for in the rulemaking process. (MHI, No. 130 at p. 3) These
comments are discussed in the paragraphs immediately below, along with
DOE's response.
As noted, DOE's past practices (and in some cases its NOPR
proposal) regarding cumulative regulatory burden were criticized by a
number of the commenters on the Process Rule NOPR. For example, Lennox
faulted DOE's actions in recent energy efficiency rulemakings for what
it characterized as the agency's consistent failure to undertake a
meaningful analysis of the cumulative impacts of multiple regulations,
beyond merely listing factors such as the industry conversion costs of
separate rulemakings in isolation (citing DOE's supplemental notice of
proposed rulemaking for residential furnaces at 81 FR 65720, 65824-
65825 (Sept. 23, 2016) as an example). According to Lennox, DOE's
cumulative regulatory burden analysis has often been a perfunctory
exercise, identifying harms to industry and lost jobs, but failing to
meaningfully weigh these harms and instead emphasizing energy saved
without properly assessing whether a standard is economically
justified. Lennox argued that while DOE actions impose a significant
burden on manufacturers, several other Federal and State regulations
may also significantly burden manufacturers of the same products. Under
section 10 of the existing Process Rule (now proposed section 14(g)),
DOE is to ``recognize and seek to mitigate the overlapping effects on
manufacturers of new or revised DOE standards and other regulatory
actions affecting the same products.'' However, according to the
commenter, DOE insufficiently considers the impacts of these other
regulations, so the Process Rule should clarify that the cumulative
impacts analysis should include all regulations that impact
manufacturers of DOE-regulated products, including other Federal and
State regulations (particularly regarding those States where
significant volumes of equipment are distributed and regulations are
rapidly evolving, such as California). (Lennox, No. 133 at p. 7)
Further, Southern California Edison stated that in DOE's
rulemakings, the Department has overestimated the burden on
manufacturers and taken a conservative approach. The commenter argued
that manufacturers need to provide cost data to DOE in a methodical and
historical manner, and the Department should consider such data.
(Southern California Edison, April 11, 2019 Public Meeting Transcript
at pp. 178-179) However, in contrast, Westinghouse strongly disagreed
with any suggestion that DOE overestimates the costs of its rulemakings
on industry. The commenter suggested that although manufacturers
routinely provide data through industry associations and confidential
manufacturer interviews, DOE typically underestimates costs and is not
transparent as to where they get their alternate numbers that do not
match those provided by manufacturers. Westinghouse went on record to
state its opinion that DOE has never properly accounted for the costs
of regulations in any of the rulemakings. (Westinghouse, April 11, 2019
Public Meeting Transcript at pp. 179-180)
Other commenters, such as AHAM and AHRI, expressed concerns about
DOE's past cumulative regulatory burden practices but were optimistic
that the Department's proposal could lead to improvements in this area.
AHAM commended DOE's Process Rule proposal for its efforts to make its
analysis of cumulative regulatory burden clear and explicit. DOE should
always consider cumulative regulatory burden (as early in the process
as possible) even if it does not ultimately change the course of
regulatory action, suggesting that this concept offers a way to
prioritize rulemakings in terms of allocating agency and industry
resources. AHAM, April 11, 2019 Public Meeting Transcript at pp. 175-
176) AHRI commenter argued that in the past, DOE has run the numbers
for cumulative regulatory burden, but the Department has failed to make
clear what it is doing with them. (AHRI, April 11, 2019 Public Meeting
Transcript at p. 180) AHRI also stated that it also supports DOE's
proposal regarding cumulative regulatory burden, and it echoed the
comments of AHAM. AHRI advocated that (AHRI, April 11, 2019 Public
Meeting Transcript at pp. 177-178)
Still other commenters either requested further clarification of
DOE's proposal regarding cumulative regulatory burden or offered
specific recommendations as to potential improvements to that process.
Along this line, NAFEM requested that DOE clarify the scope of
regulations it will consider in the cumulative regulatory burden
analysis. The commenter stated that DOE's proposed language provides a
temporal scope (i.e., within three years of the compliance date of
another DOE standard), but argued that there is ambiguity as to whether
DOE will consider non-DOE regulations. As an example of the problems
arising from an inadequate cumulative regulatory burden analysis, NAFEM
challenged the last commercial refrigeration equipment (CRE)
rulemaking, because DOE's analysis included equipment that used
refrigerants that EPA no longer permitted. The commenter stressed that
DOE should set forth procedures for ensuring robust analyses of the
overall burdens and costs on all regulated entities associated with its
various rulemakings. (NAFEM, No. 122 at pp. 7-8)
In response to the Process Rule NOPR, DOE received a number of
recommendations as to the types of information that should be included
in any cumulative regulatory burden analysis conducted by the
Department. For example, Lennox recommended that improvements to the
Process Rule should include an assessment of the generally known
regulatory burdens and systematic analysis of the cumulative impacts of
any new or amended regulation, including economic modelling to show how
multiple regulatory actions impact manufacturers and employment related
to DOE-regulated products. (Lennox, No. 133 at p. 7) More specifically,
BWC urged DOE to consider cumulative regulatory burden from a domestic
standpoint at the Federal, State, and regional/local level. According
to the commenter,
[[Page 8694]]
some of those requirements--such as certain emission limits (e.g.,
Ultra-Low NOX for the California Air Quality Management or
Air Pollution Control Districts)--can significantly affect allocation
of manufacturer resources. BWC also stated that DOE should account for
situations where manufacturers might have multiple rulemakings,
possibly of different product types, going on at the same time. The
commenter added that when manufacturers are forced to spend most of
their limited resources on regulatory changes, it inhibits work on new,
higher-efficiency products. (BWC, No. 103 at p. 4)
NAFEM stated that DOE should include within its burden review the
scope all of the regulations, even from other Federal agencies, that
affect the viability of the equipment DOE is targeting at the TSLs.
Specifically, NAFEM argued that the Regulatory Flexibility Act (RFA)
requires that regulations from other Federal agencies must be reviewed,
noting that the Small Business Administration (SBA) publishes the RFA
Guide as a tool for Federal agencies to use to help ensure compliance
with the RFA and related laws and Executive Orders (providing in
relevant part that ``[r]ules are conflicting when they impose two
conflicting regulatory requirements on the same classes of industry'').
(NAFEM, No. 122 at pp. 7-8)
Commenters also discussed the mechanism for considering the
information obtained through the cumulative regulatory burden analysis.
Relatedly, the Joint Commenters urged DOE to modify its current
rulemaking process so as to incorporate the financial results of the
current cumulative regulatory burden analysis directly into the
Manufacturer Impact Analysis. They suggested that this can be done by
adding the combined costs of complying with multiple regulations into
the product conversion costs in the Government Regulatory Impact
Analysis (GRIM) model. The Joint Commenters argued that this would be
an appropriate approach to include the costs to manufacturers of
responding to and monitoring regulations, noting that in the past, AHRI
has submitted such information to DOE. (Joint Commenters, No. 112 at p.
14)
Energy Solutions stated that although it does not object to DOE's
cumulative regulatory burden analysis, it recommends that such review
should not be included in the life-cycle cost analysis. (Energy
Solutions, April 11, 2019 Public Meeting Transcript at p. 180)
NAFEM also stated that DOE should incorporate a comprehensive
process into its Process Rule that fairly and adequately implements the
RFA, that fosters engagement with the SBA Office of Advocacy, and that
contemplates either different standards or more reasonable compliance
deadlines for small business manufacturers subject to EPCA standards.
(NAFEM, No. 122 at pp. 7-8) AHRI also commented that cumulative
regulatory burden might be included in the Regulatory Flexibility Act
(RFA) analysis, and it urged DOE to consider relevant governmental
actions beyond its own regulations. (AHRI, April 11, 2019 Public
Meeting Transcript at pp. 177-178)
Finally, certain commenters focused on the types of impacted
entities that should be examined under DOE's cumulative regulatory
burden analysis, which has typically focused on manufacturers of the
products/equipment subject to new or amended energy conservation
standards. Spire made the point that regulatory burden is not limited
to manufacturers, and other entities, such as utilities, also face
significant regulatory burdens. Accordingly, Spire cautioned DOE not to
limit its consideration of cumulative regulatory burdens to
manufacturers. (Spire, April 11, 2019 Public Meeting Transcript at p.
177) NAFEM added that as part of its cumulative regulatory burden
analysis, DOE should ensure that there are no disproportional impacts
on small businesses. (NAFEM, No. 122 at pp. 7-8)
In response, DOE is both cognizant of and sensitive to the
cumulative regulatory burden faced by regulated parties subject to the
Department's energy conservation standards. As DOE fulfills its
statutory mandate under EPCA, it is obligated to consider the economic
impacts of potential standards on manufacturers; however, the
Department's understanding of those impacts is arguably incomplete
unless one assesses the overall regulatory environment facing the
relevant industry. In addition to the energy conservation standard at
issue in a given rulemaking, a manufacturer or industry may be
simultaneously subject to other DOE appliance standards rulemakings,
regulations of other Federal agencies, as well as State and regional/
local regulatory requirements. Assembling and analyzing data relevant
to examining cumulative regulatory burden is a complex task. DOE has
generally sought to examine other appliance standards rulemakings
coming into effect within three years of the anticipated compliance
date of the standard under development, as well as other Federal,
State, and local regulations of which it is aware and which are
expected to have a significant impact. Nonetheless, DOE acknowledges
that its cumulative regulatory burden analysis has not been as
comprehensive nor its impacts as transparent as some might have liked.
The Department also recognizes the negative effects that excessive
regulatory burdens can have on corporate resource allocations. While
DOE avers that cumulative regulatory burden was one of the factors the
agency weighed carefully when considering potential energy conservation
standards, it is committed to working towards the development of a more
robust and transparent approach going forward.
DOE agrees with AHRI that the inquiry into cumulative regulatory
burden should begin as early in the rulemaking process as possible, and
the Department continues to welcome data and information regarding such
burdens during comment opportunities at the various stages of a
standards rulemaking. To NAFEM's point, DOE does strive to carefully
and fully consider the impacts of its rulemakings on small entities
through its analysis under the Regulatory Flexibility Act (RFA) and
related Executive Orders. Although cumulative regulatory burden is
certainly a consideration in that context, it is a matter of more
global concern to all manufacturers subject to the energy conservation
standards at issue. Consequently, DOE does not believe that the RFA
analysis would be the appropriate locus for a broad consideration of
cumulative regulatory burden. In response to NAFEM's other comments
regarding small businesses, DOE notes that it cannot set differentiated
standards under EPCA (e.g., one set of requirements applicable to small
businesses and another set of requirements applicable to large
manufacturers). Any test procedure or energy conservation standard DOE
promulgates must be equitable to all industry participants, meaning
that all participants, regardless of size, must be held to the same
testing and energy conservation standards criteria. However, additional
compliance flexibilities may be available to small businesses through
other means. For example, individual manufacturers may petition DOE for
a waiver of the applicable test procedures. (See 10 CFR 430.27)
Furthermore, EPCA provides that a manufacturer whose annual gross
revenue from all of its operations does not exceed $8,000,000 may apply
for an exemption from all or part of an energy conservation standard
for a period not
[[Page 8695]]
longer than 24 months after the effective date of a final rule
establishing the standard. (See 42 U.S.C. 6295(t); 10 CFR part 430,
subpart E) Additionally, section 504 of the Department of Energy
Organization Act, 42 U.S.C. 7194, provides authority for the Secretary
to adjust a rule issued under EPCA in order to prevent ``special
hardship, inequity, or unfair distribution of burdens'' that may be
imposed on that manufacturer as a result of such rule. Manufacturers
should refer to 10 CFR part 430, subpart E, and 10 CFR part 1003 for
additional details. Regarding NAFEM's comment about engagement with the
SBA Office of Advocacy, DOE notes that that office closely follows and
regularly participates in DOE's appliance standards rulemakings, and
the Department always appreciates SBA's involvement and insights.
As a general path forward, DOE expects that the scope and timeframe
for the cumulative regulatory burden analysis, as well as related
economic models, will be among the topics examined in depth by peer
reviewers. Based upon the results and conclusions of that peer review,
DOE may take further action, as necessary, to modify its processes
accordingly.
The issue of the specific mechanism for considering cumulative
regulatory burden in DOE's standard-setting process is an interesting
question which will likely require further consideration and study. To
date and as noted previously, DOE has considered cumulative regulatory
burden as a factor contributing to the economic impacts on
manufacturers, which is one of the criteria for assessing the economic
justification of a potential energy conservation standard. The Joint
Commenters' suggestion to somehow incorporate a quantitative assessment
of cumulative regulatory burden into the MIA through DOE's GRIM model
will have to be evaluated further. Regarding the cautionary statement
of Energy Solutions not to include assessment of cumulative regulatory
burden as part of the life-cycle cost (LCC) analysis, the Department
agrees that the two are not linked. The LCC analysis estimates of
consumer benefits, whereas cumulative regulatory burden involves
manufacturer costs. Regarding the best mechanism for incorporating
cumulative regulatory burden into DOE's standard-setting process
(including the specific suggestions raised by these commenters), the
Department has once again concluded that this matter would benefit from
examination by the peer reviewers who will be examining the analytical
methodologies underpinning the Appliance Standards Program.
Finally, in response to Spire's comment regarding the cumulative
regulatory impacts on utilities, DOE notes that the Appliance Standards
Program regulates covered products and equipment constructed and/or
imported and certified by manufacturers. DOE's program does not
directly regulate entities such as utilities, although they may
experience some ancillary effects. However, DOE is open to exploring
potential impacts of its Appliance Standards Program on non-
manufacturer third parties as part of the peer review of DOE's
analytical processes and addressing such impacts as necessary and
appropriate.
3. Should DOE conduct retrospective reviews of the energy savings and
costs of energy conservation standards?
At the January 9, 2018 Process Rule RFI public meeting and also in
the Process Rule NOPR, DOE solicited feedback as to whether it should
conduct a retrospective review of the energy savings and costs for its
current standards as well as associated costs and benefits as part of
any pre-rulemaking process that it ultimately adopts. 84 FR 3910, 3939
(Feb. 13, 2019). In responding to the numerous comments on this topic,
DOE acknowledged that a broad and comprehensive retrospective review of
DOE's current and past energy conservation standards could provide
significant data for DOE to consider as part of future standards
rulemakings. The Department stated that while it recognizes the
potential benefits of conducting this type of retrospective review on a
periodic basis, it also recognizes that it faces limits on its own
resources to conduct the broad and comprehensive analyses that would be
needed to collect and analyze this information. Accordingly, DOE stated
that it is continuing to evaluate the prospect of conducting these
types of reviews, including on a longer-term (e.g., 10-year) basis but
has not, as of yet, reached a final decision as to how to proceed. DOE
did note that its proposed early assessment processes do incorporate an
element of retrospective review. That is, by beginning a potential
proceeding to amend existing energy conservation standards or test
procedures for a product by asking if anything has changed since
issuance of the last standard or test procedure, DOE will be seeking
input in what effectively amounts to a retrospective review of the
impact and effectiveness of its most recent regulatory action for the
product at issue. (Id. at 84 FR 3940.)
Commenters on the Process Rule NOPR expressed divergent viewpoints
on the need to conduct a retrospective review in the context of DOE's
appliance standards rulemaking process. The following commenters
supported DOE's use of a retrospective review as a mechanism to improve
the quality and effectiveness of the agency's rulemakings. BWC
recommended that DOE conduct a retrospective review to determine
whether products and markets have materialized as the Department
anticipated in its rulemaking, and if not, that DOE investigate to
understand why its previous analysis was incorrect. (BWC, No. 103 at p.
5) Similarly, Signify expressed support for the concept of
retrospective reviews to see what past rulemakings actually
accomplished and to save time and money by avoiding iterative
rulemakings that are not realizing significant energy savings.
(Signify, No. 116 at p. 2) APGA also supported DOE's use of routine
retrospective reviews generally. (APGA, No. 106 at p. 13)
GWU emphasized retrospective review as essential to making DOE's
standards rulemaking process more effective and transparent. GWU argued
that because DOE relies heavily on assumptions about future prices of
energy and other goods, opportunity costs, and producer and consumer
preferences, it is reasonable for DOE to assess the outcomes and
effects of its past rulemaking so as to better inform its next
rulemaking. According to GWU, such review would allow DOE to measure
the efficacy of its assumptions and to use a real (rather than
hypothesized) baseline in its next set of rulemaking analyses. In
addition to reviewing existing standards and analytical assumptions,
GWU also sees the potential for reviewing how new standards are
established by building in metrics, indicators, and timelines at the
rule's outset. (GWU, No. 132 at pp. 11-12)
AGA expressed its belief that DOE should not commence a new minimum
energy efficiency standards process until the existing standards have
been reviewed. According to AGA, an effective retrospective review
would include objective, verifiable quantification, and if done right,
this sort of retrospective review should enhance DOE's modeling and
analyses and should avoid any material flaws in DOE's current modeling.
If a retrospective review demonstrates that a substantial percentage of
high-efficiency appliances exceeding the current standard within the
type (or class) already exists, the commenter reasoned
[[Page 8696]]
that no new minimum standard would be needed. AGA further stated that
it understands that DOE has limited resources to conduct a
retrospective review and is still evaluating how to effectively
proceed. In the meantime, AGA commented that the retrospective review
can occur during the comment period of the applicable early stakeholder
process. AGA argued that interested parties can and should provide data
demonstrating changes since the issuance of the last standard or test
procedure, and the impact and effectiveness of its most recent
regulatory action for the product at issue. According to AGA, the
Department, as part of the Process Rule, should commit to such
retrospective reviews when data is submitted as part of the stakeholder
process. (AGA, No. 114 at p. 30)
Citing Executive Order 13563 (particularly section 6 of that Order
which contains retrospective review requirements), Spire expressed
support for the idea of DOE performing a retrospective analysis of its
rules. (Spire, April 11, 2019 Public Meeting Transcript at p. 186;
Spire, No. 139 at p. 24) Spire argued that retrospective review should
be conducted almost every time you are considering new efficiency
standards to see how well estimates of claimed consumer savings have
done. (Spire, April 11, 2019 Public Meeting Transcript at p. 182) The
commenter suggested that retrospective reviews should be conducted on a
continuous basis, rather than sporadically. (Spire, No. 139 at p. 10)
Spire also criticized DOE's use of Energy Information Agency (EIA) data
by asserting that these data routinely over-estimate consumer gas price
increases and under-estimates electricity price increases, and it
argued that DOE's reliance on these data should be subject to
retrospective review. Spire also suggested that the appropriate length
of time for analysis should be the useful lifetime of the product under
consideration. (Spire, No. 139 at p. 22)
Other commenters cautioned against the initiation of a
comprehensive retrospective review, which they characterized as a
complex and costly endeavor. However, even these commenters generally
supported the type of more limited retrospective review proposed as
part of the early assessment provisions in DOE's Process Rule NOPR.
Among this group of commenters, the Joint Commenters stated that they
do not support a separate retrospective review process, arguing that
trying to determine what actually happened following the implementation
of standards is an incredibly complicated process and that there is no
public data to support such an analysis. In addition, the Joint
Commenters explained that the cost to manufacturers to develop this
data is very substantial, as the information is not readily available
and is highly proprietary and confidential. (Joint Commenters, No. 112
at p. 15) Along these lines, a consultant to AHAM/AHRI and the Joint
Commenters, alerted any potential peer reviewers that looking at
manufacturer costs is an expensive and difficult process. The commenter
took issue with the notion that DOE's price forecasts are incorrect and
that DOE has underestimated manufacturing costs, arguing that there is
no data to support that conclusion. (Everett Shorey, April 11, 2019
Public Meeting Transcript at pp. 185-186)
However, the Joint Commenters did support a review of what has
changed in the cost or energy savings projections for the design
options considered in previous standards. If nothing or very little has
changed, then the Joint Commenters suggested that the presumption
should be that the existing standards are appropriate, and DOE should
not make a change. These commenters concluded that it should be
determinative that DOE concluded in the previous rulemaking that no
more-stringent standard met its own criteria. (Joint Commenters, No.
112 at p. 15)
Lennox agreed that the Process Rule NOPR's proposed early
assessment for rulemakings already contains an element of retrospective
review and that requiring a formal retrospective review for all
rulemakings would unnecessarily burden DOE and manufacturers alike.
Moreover, Lennox stated that EPCA already requires an extensive
economic justification test (e.g., 42 U.S.C. 6295(o)). As a result,
Lennox reasoned that a full and burdensome retrospective review of
market impacts some six years or more before a rulemaking is not
necessarily relevant to determining whether a standard under
consideration is economically justified, but instead, DOE should make
common sense inquiries such as what, if anything, has changed since a
previous DOE appliance efficiency standards final rule for that product
was adopted. The commenter stated that this seems in line with the
Process Rule NOPR approach on this issue, and to that extent Lennox
concurs. (Lennox, No. 133 at p. 6)
A few other commenters expressed support for a more limited or
targeted form of retrospective review. On this topic, NEMA stated that
it would like to see the models and other forecasting tools put to the
test in order to assess how they performed and how accurate such
forecasting was in actual application. (NEMA, April 11, 2019 Public
Meeting Transcript at p. 184) Southern Company remarked that
retrospective review looks good in theory, but it wondered how it would
work out in practice. Due to statutory cycles (6 and 7 years), Southern
Company reasoned that it is difficult to judge the impact of the last
standard, and it reiterated the need for good documentation of
assumptions made in rulemakings. (Southern Company, April 11, 2019
Public Meeting Transcript at p. 183) Although BHI pointed out that most
project management systems conclude with a lessons learned session to
identify administrative issues that hindered the completion of the
project, the company did not recommend a retrospective review. However,
BHI does recommend reviewing and documenting principles and procedures
that have resulted in effective rulemaking processes. (BHI, No. 135 at
p. 7)
Finally, United Cool Air raised an example of why it presumably
thinks retrospective review would be necessary in the context of DOE
energy conservation standards rulemakings. More specifically, United
Cool Air set forth a number of allegations regarding DOE's past
approaches with respect to the Process Rule. In particular, it
highlighted what it characterized as illegal efforts by DOE to avoid
the current requirements of 10 CFR part 430, subpart C, appendix A. In
its view, that approach resulted in the fabrication of data to enable
DOE to ``rush through'' dozens of new regulations. (UCA-1, No. 96 at p.
1) The commenter cited to what it believed was evidence that DOE did
not have any record of collecting data that the agency purportedly had
collected. (See UCA-1, No. 96, at p. 1 and related attachments
comprising of: (1) A FOIA request to DOE seeking the identities of the
five small businesses that DOE had noted in a published Federal
Register document related to certification requirements for commercial
HVAC, water heater, and refrigeration equipment manufacturers, and (2)
the agency's response stating that no responsive documents were found
(EERE-2017-BT-STD-0062-0096 (``FOIA Request for 5 Small Business
Names'' and ``Final Letter''))) United Cool Air also alleged that small
businesses are not being informed of the new regulations being
developed or having any input into them, which have led to small
businesses being harmed. (UCA-1, No. 96 at p. 1) Furthermore, the
company added that the standards being developed only apply to large
[[Page 8697]]
manufacturers who have greater resources compared to small businesses
(i.e., 1-250 employees). (UCA-1, No. 96 at p. 1)
In response, DOE notes that the comments on retrospective review--
as diverse as they were--all seemed to agree that an understanding of
the impacts of the Department's past regulations (and the predictive
power of the analytical tools employed in support of the adoption of
those regulations) could contribute to more targeted and less
burdensome regulations in the future. The disagreement among commenters
seemed to center on whether it would be feasible to generate the
requisite data for such an analysis (which may be proprietary, if it
exists at all) and to do so in a cost-effective fashion. If those
hurdles are surmounted, further questions arise as to the proper scope
of the retrospective review (e.g., whether to assess the effectiveness
of the Appliance Standards Program as a whole, of an individual
product/equipment type over time, or of a specific, most recent
rulemaking) and the appropriate frequency of such review (e.g., every
ten years, prior to the next round of rulemaking for a given product,
on a continuous basis). However, most commenters appeared to favor an
early assessment analysis of the technological and market developments
since the last standards rulemaking, which would be a limited but
practical form of retrospective review.
DOE is in full accord with such sentiments regarding the potential
benefits of retrospective review. It would be valuable to understand
the impacts of the Department's past regulatory actions and the
predictive power of its analytical tools, thereby enhancing the quality
and effectiveness of DOE's rulemakings and conserving resources by
avoiding iterative rulemakings resulting in standards that do not
realize significant energy savings. The Department also agrees with GWU
that given DOE's reliance on assumptions about future prices of energy
and other goods, opportunity costs, and producer and consumer
preferences, it would be reasonable to assess the outcomes and effects
of its past rulemakings so as to better inform its next rulemaking. As
GWU suggests, such review may allow DOE to measure the efficacy of its
assumptions and to use a real (rather than hypothesized) baseline in
its next set of rulemaking analyses.
After carefully considering these comments, DOE has decided, at
least initially, to bifurcate its approach to retrospective review of
its past appliance standards rulemakings. One aspect of this approach
can be commenced immediately. Namely, through its early assessment
process, the agency believes it is possible to conduct a timely and
useful assessment of developments since the last rulemaking for the
product/equipment in question. To this end, DOE welcomes comments,
data, and other information on costs, prices, shipments, and other
relevant factors, such that the Department might refine its analyses
and models to better prospectively capture the real world impacts of
its standards. Along with this useful feedback, stakeholders may
provide other information to suggest that the technologies, costs, or
energy use profiles for the product/equipment at issue have not
changed, such that amended standards are unlikely to be cost-justified,
or information suggesting just the opposite. (DOE does not agree with
the Joint Commenters that a presumption to this effect is appropriate,
given the variety of relevant data to be considered, but instead, the
Department would undertake such assessment in each individual case
based upon the information before it.) DOE believes that this is a
practical mechanism for the near term, because DOE faces a number of
statutory deadlines for rulemaking actions, so it cannot simply hold
rulemaking in abeyance until a comprehensive retrospective review is
completed, as AGA suggested.
The other, more long-term aspect of DOE's approach to retrospective
analysis will involve consideration of retrospective review as a topic
under the peer review of DOE's analytical methodologies used in the
Appliance Standards Program. The peer reviewers will examine the
feasibility of and options for conducting a comprehensive retrospective
review of the Department's past appliance standards rulemakings, either
at a programmatic or individual product level. Peer reviewers will
consider the scope, costs, and anticipated benefits of such
retrospective review(s) and seek to ensure that results generated are
objective and verifiable to the maximum extent practicable. As GWU
suggested, in addition to reviewing existing standards and analytical
assumptions, peer reviewers might also consider how new standards are
established by building in metrics, indicators, and timelines at a
rule's outset. An examination of the efficacy of DOE's models,
assumptions, forecasting, timeframe for analysis, and the documentation
of principles and procedures all might fall within the ambit of the
peer reviewers' work vis-[agrave]-vis retrospective review. After
carefully considering the results and recommendations coming out of
such peer review, DOE will consider what further actions, if any,
should be undertaken in this area.
Regarding other matters raised by commenters on retrospective
review, DOE does not agree with AGA's suggestion that if a
retrospective review demonstrates that a substantial percentage of
high-efficiency appliances exceeding the current standard within the
type (or class) already exists, then no new minimum standard would be
needed. The criteria for promulgating energy conservation standards are
established under EPCA (i.e., significant energy savings, technological
feasibility, and economic justification) and do not hinge on the
percentage of high-efficiency products in the marketplace. DOE must
follow its statutory mandate for standard setting and may not
substitute other criteria or tests along the lines the commenter
suggests.
DOE likewise does not agree with Spire's criticism of DOE's use of
EIA data in its analyses. Although Spire asserts that these data
overestimate consumer gas price increases and underestimate electricity
price increases, the Department has entertained these arguments in past
rulemakings and found them to be unproven and without merit. EIA data
are based on sound scientific and economic principles, and they are
used on a government-wide basis for a variety of regulatory analyses,
which are not limited to DOE. Thus, DOE does not agree that the
totality of EIA data should be subjected to retrospective review or
that the Department should otherwise be limited in its use of such
data.
Finally, in response to United Cool Air, DOE appreciates the
commenter's interest in the Department's shared goal of increasing the
transparency of its decision-making and public participation through
this revised Process Rule. DOE cannot readily address the particulars
of the commenter's concerns about the prior rulemaking it mentioned,
although the Department suspects that it may have involved proprietary
data obtained under nondisclosure agreement(s), the type of information
which would not be subject to release under FOIA. DOE respectfully
disagrees with United Cool Air's contention that DOE has not considered
small businesses in its rulemakings (as its RFA analysis demonstrates),
and contrary to the commenter's assertions, DOE's energy conservation
standards are applicable to all manufacturers of the covered
[[Page 8698]]
product or covered equipment that is the subject of a rulemaking,
regardless of the size of that manufacturer. DOE's proposals are
published in the Federal Register, and thus, they are publicly
available to all interested stakeholders, including small businesses.
DOE encourages public participation and maintains a transparent process
with open public meetings and the opportunity for public comment on its
proposals and other rulemakings documents which are published in the
Federal Register. DOE fully addresses public comments on its proposal
in the final rule.
4. Certification, Compliance, and Enforcement (CCE)-Related Issues
While certification, compliance, and enforcement (CCE) are
important standards-related matters for DOE, regulated entities, and
other interested stakeholders, DOE's Process Rule NOPR explained in
response to CCE-related comments on its Process Rule RFI that such
matters are largely beyond the scope of the current proceeding.
However, DOE stated that it is willing to evaluate this topic in
further detail through separate rulemaking. (84 FR 3910, 3940) The
Department acknowledged that in 2010-2011 when DOE changed its CCE
requirements for all products in a single rulemaking, that process was
unwieldy, particularly given the level of interest from various parties
and volume of comments received (see 76 FR 38287 (June 30, 2011) \30\).
In the Process Rule NOPR, DOE explained that its plan is to address
changes to its CCE regulations, and related provisions in 10 CFR parts
430 and 431, in separate rulemakings with separate public meetings to
help manage comments and to allow DOE to consider industry-specific
issues in a more focused format. DOE stated that it may ultimately
adopt different provisions for different products based on comments and
would make appropriate changes to regulatory text to be more general or
product-specific in a final rule. (84 FR 3910, 3940 (Feb. 13, 2019))
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\30\ Docket Number EERE-2010-BT-CE-0014, https://www.regulations.gov/docket?D=EERE-2010-BT-CE-0014.
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Despite DOE's pronouncement that the Department would be addressing
CCE-related issues in separate rulemakings, DOE did received a few
further comments on this issue. More specifically, Acuity argued that
DOE should streamline and modernize its CCE processes, as improvements
in these areas will help bolster any improvements to the Process Rule
in terms of reducing unnecessary regulatory burdens and serving the
Program's purposes. (Acuity, No. 95 at p. 7) NEMA similarly encouraged
DOE to continue working on ways to refine the CCE process, including
doing more to ensure that products coming through ports of entry are
compliant. (NEMA, April 11, 2019 Public Meeting Transcript at pp. 189-
190) Finally, at the April 11, 2019 public meeting, AHRI sought
clarification as to whether DOE would do one global rulemaking when
updating its CCE regulations or making changes as individual energy
conservation standards and test procedures are done. In this context,
AHRI expressed support for an industry-by-industry approach to
addressing CCE. (AHAM, April 11, 2019 Public Meeting Transcript at pp.
190-191) At that public meeting, DOE responded that the agency expects
to now examine CCE-related issues on an industry-by-industry basis.
(DOE, April 11, 2019 Public Meeting Transcript at p. 191)
In response, DOE affirms its commitment to continue examining its
CCE regulations and consider amending those regulations, as necessary,
through future rulemaking, and it will reconsider the substance of
these comments in such venues, including the port-of-entry issue raised
by NEMA. In short, however, DOE agrees with Acuity that improvements to
DOE's CCE regulations have the potential to complement the improvement
made to the Process Rule through this final rule. The Department notes
that it expects to address CCE-related issues on an industry-by-
industry basis in the context of individual product/equipment
rulemakings, for the reasons previously stated.
5. Other Issues
DOE also received a number of comments on its Process Rule NOPR
that did not fit neatly into any of the categories discussed
previously, so those issues are set forth and addressed here.
Preemption
Acuity sought a clear statement from DOE on the preemptive effects
of a ``no amended standard'' or ``no new standard'' determination. In
the commenter's view, these situations should trigger Federal
preemption, and States should be prohibited from imposing their own
regulations regarding a given covered product. (Acuity, No. 95 at p. 7)
In response, EPCA explicitly addresses the preemptive effects of
regulatory actions taken by DOE under the Appliance Standards Program,
and DOE acts in accordance with those provisions. Specifically, with
certain limited exceptions, the general rule of preemption for energy
conservation standards, before Federal standards have become effective,
is that no State regulation, or revision thereof, concerning the energy
efficiency, energy use, or water use of the covered product, shall be
effective with respect to such covered product. (42 U.S.C. 6297(b)) In
addition, under 42 U.S.C. 6295(ii), there is a specific preemption
provision that applies to new coverage determinations, certain lamps
(i.e., rough service lamps, vibration service lamps, 3-way incandescent
lamps, 2,601-3,300 lumen general service incandescent lamps, and
shatter-resistant lamps), battery chargers, external power supplies,
and refrigerated beverage vending machines, which provides that the
preemption provisions of 42 U.S.C. 6297 apply to products for which
energy conservation standards are to be established under subsections
(l), (u), and (v) of 42 U.S.C. 6295 beginning on the date on which a
final rule is issued by DOE, but any State or local standard prescribed
or enacted for the product before the date on which the final rule is
issued shall not be preempted until the energy conservation standard
established under subsection (l), (u), or (v) of 42 U.S.C. 6295 for the
product takes effect.
Similarly, with certain limited exceptions, the general rule of
preemption when Federal standards become effective for the product, no
State regulation concerning the energy efficiency, energy use, or water
use of such covered product shall be effective with respect to such
covered product. (42 U.S.C. 6297(c)) DOE may waive Federal preemption
in appropriate cases consistent with the provisions of 42 U.S.C.
6297(d). In addition, the statute also provides that a State (and its
political subdivisions) requiring testing or labeling regarding the
energy consumption or water use of any covered product may do so only
if such requirements are identical to those established pursuant to 42
U.S.C. 6293 and 42 U.S.C. 6294, respectively. These same provisions
generally apply to covered commercial and industrial equipment through
operation of 42 U.S.C. 6316, except for the provisions at 42 U.S.C.
6295(ii) which only apply to consumer products.
Specific Products Recommended for Regulatory Review
AHRI requested that DOE address four regulatory concerns (as set
forth in five exhibits submitted as part of AHRI's written comments) in
future rulemakings or, preferable, by
[[Page 8699]]
interpretive rule. These topics included: (1) Furnace fan test
procedure clarifications; (2) Central air-conditioning and heat pump
test procedure calculation corrections; (3) Water heater recovery
energy efficiency calculations; and (4) Instantaneous water heater test
procedure tolerances. (AHRI, No. 117 at p. 1) In response, DOE
appreciates stakeholder efforts to make the Department aware of
identified problems with its energy conservation standards or test
procedure regulations. The Appliance Standards Program will examine the
exhibits submitted by AHRI to determine what actions, if any, are
necessary.
Effective Date vs. Compliance Date Clarifications
The CEC supported DOE's attempt to distinguish between ``effective
dates'' and ``compliance dates'' but noted that the terms are not
clearly distinguished in the statute. As a result, it asserted that
DOE's efforts could lead to further confusion rather than clarity. The
CEC added that DOE's definition of a compliance date for a test
procedure is inconsistent with EPCA's requirement that newly prescribed
or established test procedures take effect for representation of energy
efficiency or energy use 180 days after that procedure has been
prescribed or established. Consequently, the CEC asserted that DOE's
proposed approach would be invalid under EPCA. (See 42 U.S.C.
6293(c)(2)) (CEC, No. 121 at pp. 14-15) In response, DOE appreciates
that the CEC recognizes the difficulty that the agency, regulated
entities, and other interested stakeholders have had in distinguishing
between ``effective dates'' and ``compliance dates'' under relevant
provisions of EPCA. However, contrary to what the CEC suggests, DOE
does not believe that allowing such confusion to persist should be the
preferred option. Instead, DOE has sought to clarify this matter in the
Process Rule through a dedicated section 12. DOE has received many
questions along these lines over the years, and the Department has
sought to foster a general understanding that the ``effective date'' is
the point at which a rule becomes legally operative after publication
in the Federal Register (typically 60 days after publication) and that
the ``compliance date'' is the point at which regulated entities must
meet the requirements of the rule. DOE's inclusion of such provision in
the Process Rule has not altered the approach the agency has
historically taken when dealing when giving meaning to the somewhat
unclear statutory language. DOE does not agree with the CEC's
assessment that its clarifications run afoul of section 323(c)(2) of
EPCA (42 U.S.C. 6293(c)(2)); instead, section 12 of the Process Rule is
integrally linked to that statutory provision. To be clear, DOE is not
expanding the 180-day timeframe that regulated entities have to begin
making representations consistent with a new or amended test procedure
after publication in the Federal Register. Consequently, DOE is
adopting the proposed Process Rule provisions for distinguishing
between effective dates and compliance dates in this final rule.
Judicial Review
GWU urged DOE to consider strengthening its commitments toward
process improvement by making the agency accountable in court. Although
GWU noted that DOE's proposal removed the prior provision precluding
judicial review, it suggested that the agency should consider an
affirmative statement subjecting itself to judicial review, a step
which studies have shown improves the quality of agency analyses. (GWU,
No. 132 at pp. 3-4) In response, DOE does not believe it necessary to
include a specific judicial review provision in the Process Rule,
because a comprehensive judicial review provision for covered consumer
products already exists at 42 U.S.C. 6306 (which is extended to covered
commercial and industrial equipment through 42 U.S.C. 6316(a) and (b)).
This provision applies to final rules for energy test procedures,
labelling, and conservation standards, and it had been used by
litigants on a number of occasions. Consequently, a separate judicial
review provision in the Process Rule would be largely redundant of the
existing statutory provision. Agencies cannot create judicial review
when Congress has not provided it.
Manufactured Housing
MHAAR requested that in any final Process Rule, DOE expressly apply
all pertinent procedural protections and safeguards set out in its
Process Rule NOPR to any manufactured housing energy conservation
standards or revisions to those standards, or any applicable test
procedures developed pursuant to section 413 (42 U.S.C. 17071) of the
Energy Independence and Security Act of 2007 (EISA 2007). MHAAR pointed
out that DOE's proposal does not specifically reference standards
development and/or testing procedures under section 413 of EISA 2007,
concerning energy conservation standards for Federally-regulated
manufactured homes. The commenter stated that because the proposed
Process Rule applies to DOE's Appliance Standards program and both the
previously proposed June 17, 2016 DOE standards for such homes (81 FR
39756) and the currently pending proposed energy standards for
manufactured homes set forth in the August 3, 2018 NODA (83 FR 38073)
derive directly from a negotiated rulemaking process conducted by and
within the DOE Appliance Standards Program, the pertinent provisions of
the Process Rule should apply. (MHAAR, No. 115 at pp. 2-3)
In response, DOE's authority for manufactured housing is derived
from free-standing authority in EISA 2007, which is separate and apart
from the EPCA provisions governing the Appliance Standards Program.
DOE's Process Rule is strictly focused on the Appliance Standards
Program and related provisions of EPCA. Consequently, DOE does not find
it appropriate to conflate these two programs or the procedures that
apply to them. Furthermore, DOE notes that its manufactured housing
rule is currently the subject of litigation in the U.S. District Court
for the District of Columbia, so the Department does not wish to
undertake any action that would impact its position in that case.
Market-Based Approach to Energy Conservation Standards
Samsung responded to DOE's indication in the Process Rule NOPR that
it would continue to contemplate additional topics to update the
Process Rule. Along those lines, the commenter encouraged DOE to
consider a pilot market-based approach to energy conservation standards
rulemaking when considering other potential revisions to the Process
Rule. Samsung pointed out that in 2018, DOE considered such innovative
approach in the Appliance and Equipment Standards Program Design (82 FR
56181(Nov. 28, 2017), and it urged DOE to further pursue that concept
that allows the market to drive energy efficiency, which helps
consumers save money. (Samsung, No. 129 at p. 2) In response, DOE
appreciates the commenter's suggestion to further consider market-based
approaches to energy conservation standards rulemaking. The Department
is currently reviewing the comments it received on the November 2017
RFI and evaluating potential next steps.
[[Page 8700]]
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). That Order states that the policy of the
Executive Branch is to be prudent and financially responsible in the
expenditure of funds, from both public and private sources. More
specifically, the Order provides that it is essential to manage the
costs associated with the governmental imposition of requirements
necessitating private expenditures of funds required to comply with
Federal regulations. This final rule is considered an E.O. 13771
deregulatory action. Details on the estimated cost savings of this
proposed rule can be found in the rule's economic analysis.
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. Economic Analysis
DOE estimated cost savings for the final Process Rule by
quantifying the reduction in administrative burden that results from
new streamlined rulemaking procedures, namely, the energy savings
threshold. DOE quantified these savings by identifying each of its
previous rulemakings that would not have met the final threshold and
tallying the total administrative burden associated with each. DOE
quantified the average administrative burden per rulemaking and
forecast how many rulemakings per year are likely to be affected in the
future.
In July 2019, DOE published in the Federal Register a notice of
data availability (NODA) outlining the energy savings of each of its
energy conservation standards issued since 1989. DOE used these data,
which were available for public comment, to identify rules that would
be affected by a potential threshold at the max tech and the adopted
standard level. Based on this review, DOE expects that approximately
half of the rulemakings that fail to meet the significant energy
threshold will do so at the outset of rulemaking (i.e. the RFI/NODA
stage) and half will do so at the proposed rule (i.e., the NOPR/NOPD)
stage.
DOE assessed administrative burden by aggregating the key
regulatory documents in each regulatory docket and estimating the
average word count using several samples from each docket. For
regulations that include several different product types, DOE broke out
the portion of the docket attributable to the product in question.
DOE used methodology established by the U.S. Food and Drug
Administration (FDA) to estimate the administrative burden of reading
DOE regulatory documents. DOE additionally estimates the administrative
burden of attending public meetings and submitting comments. The
Department of Health and Human Services provides guidelines regarding
the reading speed of regulation reviewers, which assumes a normal
distribution with a mean of 225 words per minute.\31\ DOE estimated
administrative burden at the mean reading speed and at one standard
deviation to provide a range.
---------------------------------------------------------------------------
\31\ https://aspe.hhs.gov/system/files/pdf/242926/HHS_RIAGuidance.pdf Table 4.1.
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In implementing this guideline, FDA recognizes that due to the
complexity of some rules multiple individuals may read a rule for a
single stakeholder (for example, 2 lawyers for a small firm or 4
lawyers for a large firm).\32\ The National Small Business
Association's (NSBA) 2017 Small Business Regulations Survey further
states that although 72 percent of small firms report having read
through proposed regulations, the majority of those who do so (63
percent) report that they have to comply with the rules they read only
half of the time, or less frequently.\33\ This indicates that the
number of comments submitted on a given rule, or even the number of
affected stakeholders, may not adequately capture the number of people
who bear administrative burden from DOE's rulemakings. In light of the
FDA estimate above and NSBA survey data, DOE conservatively estimates
that 1.75 people read a proposed rule for every comment submitted to
the docket.
---------------------------------------------------------------------------
\32\ U.S. Food & Drug Administration. Premarket Tobacco Product
Applications and Recordkeeping Requirements: Preliminary Regulatory
Impact Analysis; Initial Regulatory Flexibility Analysis; Unfunded
Mandates Reform Act Analysis. Docket No. FDA-2019-N-2854. Page 35.
https://www.fda.gov/about-fda/economic-impact-analyses-fda-regulations/premarket-tobacco-product-applications-and-recordkeeping-requirements-proposed-rule-preliminary.
\33\ 2017 NSBA Small Business Regulations SURVEY. Page 10.
https://www.nsba.biz/wp-content/uploads/2017/01/Regulatory-Survey-2017.pdf.
---------------------------------------------------------------------------
The NSBA survey also provides data on the number of hours it takes
small business to submit comments.\34\ DOE uses the weighted average of
these survey data to estimate the average time it takes a small
business to submit a comment on a DOE regulation. DOE assumes that
other stakeholders, such as trade associations, spend approximately 10
hours on writing and submitting comments (to include time spend
collecting data from members and potential test follow-up).
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\34\ 2017 NSBA Small Business Regulations SURVEY. Page 11.
https://www.nsba.biz/wp-content/uploads/2017/01/Regulatory-Survey-2017.pdf.
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DOE monetizes the cost savings using the cost of labor to represent
the opportunity cost of participating in a rulemaking. For industry
wages, we use 2016 mean wage estimates from the Bureau of Labor
Statistics' National Industry-Specific Occupational Employment and Wage
Estimates for the household appliance manufacturing industry. The table
below shows the mean hourly wages, the fully loaded wages, and the
public meeting and public comment-weighted wages that are used in this
analysis. (For example, DOE assumes that compliance officers are less
involved in attending public meetings than they are in reading and
commenting on regulations.)
[[Page 8701]]
------------------------------------------------------------------------
NAICS Occupation 335200
(Household Appliance Mean hourly wage Fully-loaded
Manufacturing) wage
------------------------------------------------------------------------
Management Occupations............ $63.97 $127.94
Compliance Officers............... 23.90 47.80
Engineers......................... 41.14 82.28
Lawyers *......................... 83.73 167.46
------------------------------------------------------------------------
DOE anticipates that the changes finalized in this rule will reduce
total administrative burdens by between $53.5 million and $59.7 million
(undiscounted) for annualized cost savings of between $0.5 million to
$0.6 million, discounted at 7%.
Table Number--Total and Annualized Cost Savings
----------------------------------------------------------------------------------------------------------------
Low-end Primary estimate High-end
----------------------------------------------------------------------------------------------------------------
Total Savings (2016$):................................. $53,505,672 $56,189,431 $59,698,963
NPV, 3%................................................ 16,907,207 17,755,245 18,864,219
NPV, 7%................................................ 7,634,859 8,017,811 8,518,595
Annualized Savings (7%)................................ 534,440 561,247 596,302
----------------------------------------------------------------------------------------------------------------
D. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by
the Small Business Regulatory Enforcement Fairness Act of 1996)
requires preparation of an initial regulatory flexibility analysis
(IRFA) for any rule that by law must be proposed for public comment and
a final regulatory flexibility analysis (FRFA) for any such rule that
an agency adopts as a final rule, unless the agency certifies that the
rule, if promulgated, will not have a significant economic impact on a
substantial number of small entities. A regulatory flexibility analysis
examines the impact of the rule on small entities and considers
alternative ways of reducing negative effects. Also, as required by
Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the DOE rulemaking process. 68 FR 7990. DOE has made
its procedures and policies available on the Office of the General
Counsel's website at: http://energy.gov/gc/office-general-counsel.
Because this final rule does not directly regulate small entities
but instead only imposes procedural requirements on DOE itself, DOE
certifies that this final 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).
E. 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 final rule, addressing clarifications to the
Process Rule itself, does not contain any collection of information
requirement that would trigger the PRA.
F. Review Under the National Environmental Policy Act of 1969
In this document, DOE revises 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 final 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.
G. 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
[[Page 8702]]
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 final 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.
H. Review Under Executive Order 12988
Regarding the review of existing regulations and the promulgation
of new regulations, section 3(a) of Executive Order 12988, ``Civil
Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on Federal
agencies the general duty to adhere to the following requirements: (1)
Eliminate drafting errors and ambiguity; (2) write regulations to
minimize litigation; (3) provide a clear legal standard for affected
conduct rather than a general standard; and (4) promote simplification
and burden reduction. Regarding the review required by section 3(a),
section 3(b) of Executive Order 12988 specifically requires that
Executive agencies make every reasonable effort to ensure that the
regulation: (1) Clearly specifies the preemptive effect, if any; (2)
clearly specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms; and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
Executive Order 12988 requires Executive agencies to review regulations
in light of applicable standards in sections 3(a) and 3(b) to determine
whether they are met or it is unreasonable to meet one or more of them.
DOE has completed the required review and has determined that, to the
extent permitted by law, the final rule meets the relevant standards of
Executive Order 12988.
I. 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 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 final 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.
J. 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 final 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.
K. 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 final rule will not
result in any takings that might require compensation under the Fifth
Amendment to the U.S. Constitution.
L. 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 final rule under the OMB and DOE
guidelines and has concluded that it is consistent with the applicable
policies in those guidelines.
M. 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
[[Page 8703]]
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 final rule.
N. 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 is committing in this proceeding to engage in a
new peer review of its analytical methodologies.
O. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is not a ``major rule''
as defined by 5 U.S.C. 804(2).
V. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects
10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Incorporation by reference, Intergovernmental relations, Small
businesses, Test procedures.
10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Incorporation by reference, Reporting and recordkeeping
requirements, Test procedures.
Signed in Washington, DC, on December 31, 2019.
Daniel R Simmons,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons stated in the preamble, DOE amends parts 430 and
431 of title 10 of the Code of Federal Regulations as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
1. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
2. Appendix A to subpart C of part 430 is revised to read as follows:
Appendix A to Subpart C of Part 430--Procedures, Interpretations, and
Policies for Consideration of New or Revised Energy Conservation
Standards and Test Procedures for Consumer Products and Certain
Commercial/Industrial Equipment
1. Objectives
2. Scope
3. Mandatory Application of the Process Rule
4. Setting Priorities for Rulemaking Activity
5. Coverage Determination Rulemakings
6. Process for Developing Energy Conservation Standards
7. Policies on Selection of Standards
8. Test Procedures
9. ASHRAE Equipment
10. Direct Final Rules
11. Negotiated Rulemaking Process
12. Principles for Distinguishing Between Effective and Compliance
Dates
13. Principles for the Conduct of the Engineering Analysis
14. Principles for the Analysis of Impacts on Manufacturers
15. Principles for the Analysis of Impacts on Consumers
16. Consideration of Non-Regulatory Approaches
17. Cross-cutting Analytical Assumptions
1. Objectives
This appendix establishes procedures, interpretations, and
policies that DOE will follow in the consideration and promulgation
of new or revised appliance energy conservation standards and test
procedures under the Energy Policy and Conservation Act (EPCA). This
appendix applies to both covered consumer products and covered
commercial/industrial equipment. The Department's objectives in
establishing these procedures include:
(a) Provide for early input from stakeholders. The Department
seeks to provide opportunities for public input early in the
rulemaking process so that the initiation and direction of
rulemakings is informed by comment from interested parties. Under
the procedures established by this appendix, DOE will seek early
input from interested parties in determining whether establishing
new or amending existing energy conservation standards will result
in significant savings of energy and is economically justified and
technologically feasible. In the context of test procedure
rulemakings, DOE will seek early input from interested parties in
determining whether--
(1) Establishing a new or amending an existing test procedure
will better measure the energy efficiency, energy use, water use (as
specified in EPCA), or estimated annual operating cost of a covered
product/equipment during a representative average use cycle or
period of use (for consumer products); and
(2) Will not be unduly burdensome to conduct.
(b) Increase predictability of the rulemaking timetable. The
Department seeks to make informed, strategic decisions about how to
deploy its resources on the range of possible standards and test
procedure development activities, and to announce these
prioritization decisions so that all interested parties have a
common expectation about the timing of different rulemaking
activities. Further, DOE will offer the opportunity to provide input
on the prioritization of rulemakings through a request for comment
as DOE begins preparation of its Regulatory Agenda each spring.
(c) Eliminate problematic design options early in the process.
The Department seeks to eliminate from consideration, early in the
process, any design options that present unacceptable problems with
respect to manufacturability, consumer utility, or safety, so that
the detailed analysis can focus only on viable design options. Under
the procedures in this appendix, DOE will eliminate from
consideration design options if it concludes that manufacture,
installation or service of the design will be impractical, or that
the design option will have a material adverse impact on the utility
of the product, or if the design option will have a material adverse
impact on safety or health. DOE will also eliminate from
consideration proprietary
[[Page 8704]]
design options that represent a unique pathway to achieving a given
efficiency level. This screening will be done at the outset of a
rulemaking.
(d) Fully consider non-regulatory approaches. The Department
seeks to understand the effects of market forces and voluntary
programs on encouraging the purchase of energy efficient products so
that the incremental impacts of a new or revised standard can be
accurately assessed and the Department can make informed decisions
about where standards and voluntary programs can be used most
effectively. DOE will continue to support voluntary efforts by
manufacturers, retailers, utilities, and others to increase product/
equipment efficiency.
(e) Conduct thorough analysis of impacts. In addition to
understanding the aggregate social and private costs and benefits of
standards, the Department seeks to understand the distribution of
those costs and benefits among consumers, manufacturers, and others,
as well as the uncertainty associated with these analyses of costs
and benefits, so that any adverse impacts on subgroups and
uncertainty concerning any adverse impacts can be fully considered
in selecting a standard. Pursuant to this appendix, the analyses
will consider the variability of impacts on significant groups of
manufacturers and consumers in addition to aggregate social and
private costs and benefits, report the range of uncertainty
associated with these impacts, and take into account cumulative
impacts of regulation on manufacturers. The Department will also
conduct appropriate analyses to assess the impact that new or
amended test procedures will have on manufacturers and consumers.
(f) Use transparent and robust analytical methods. The
Department seeks to use qualitative and quantitative analytical
methods that are fully documented for the public and that produce
results that can be explained and reproduced, so that the analytical
underpinnings for policy decisions on standards are as sound and
well-accepted as possible.
(g) Support efforts to build consensus on standards. The
Department seeks to encourage development of consensus proposals for
new or revised standards because standards with such broad-based
support are likely to balance effectively the various interests
affected by such standards.
2. Scope
The procedures, interpretations, and policies described in this
appendix apply to rulemakings concerning new or revised Federal
energy conservation standards and test procedures, and related rule
documents (i.e., coverage determinations) for consumer products in
Part A and commercial and industrial equipment under Part A-1 of the
Energy Policy and Conservation Act (EPCA), as amended, except
covered ASHRAE equipment in Part A-1 are governed separately under
section 9 in this appendix.
3. Mandatory Application of the Process Rule
The rulemaking procedures established in this appendix are
binding on DOE.
4. Setting Priorities for Rulemaking Activity
(a) In establishing its priorities for undertaking energy
conservation standards and test procedure rulemakings, DOE will
consider the following factors, consistent with applicable legal
obligations:
(1) Potential energy savings;
(2) Potential social and private, including environmental or
energy security, benefits;
(3) Applicable deadlines for rulemakings;
(4) Incremental DOE resources required to complete the
rulemaking process;
(5) Other relevant regulatory actions affecting the products/
equipment;
(6) Stakeholder recommendations;
(7) Evidence of energy efficiency gains in the market absent new
or revised standards;
(8) Status of required changes to test procedures; and
(9) Other relevant factors.
(b) DOE will offer the opportunity to provide input on
prioritization of rulemakings through a request for comment as DOE
begins preparation of its Regulatory Agenda each spring.
5. Coverage Determination Rulemakings
(a) DOE has discretion to conduct proceedings to determine
whether additional consumer products and commercial/industrial
equipment should be covered under EPCA if certain statutory criteria
are met. (42 U.S.C. 6292 and 42 U.S.C. 6295(l) for consumer
products; 42 U.S.C. 6312 for commercial/industrial equipment)
(b) If DOE determines to initiate the coverage determination
process, it will first publish a notice of proposed determination,
providing an opportunity for public comment of not less than 60
days, in which DOE will explain how such products/equipment that it
seeks to designate as ``covered'' meet the statutory criteria for
coverage and why such coverage is ``necessary or appropriate'' to
carry out the purposes of EPCA. In the case of commercial equipment,
DOE will follow the same process, except that the Department must
demonstrate that coverage of the equipment type is ``necessary'' to
carry out the purposes of EPCA.
(c) DOE will publish its final decision on coverage as a
separate notice, an action that will be completed prior to the
initiation of any test procedure or energy conservation standards
rulemaking (i.e., DOE will not issue any Requests for Information
(RFIs), Notices of Data Availability (NODAs), or any other mechanism
to gather information for the purpose of initiating a rulemaking to
establish a test procedure or energy conservation standard for the
proposed covered product/equipment prior to finalization of the
coverage determination). If DOE determines that coverage is
warranted, DOE will proceed with its typical rulemaking process for
both test procedures and standards. Specifically, DOE will finalize
coverage for a product/equipment at least 180 days prior to
publication of a proposed rule to establish a test procedure. And,
DOE will complete the test procedure rulemaking at least 180 days
prior to publication of a proposed energy conservation standard.
(d) If, during the substantive rulemaking proceedings to
establish test procedures or energy conservation standards after
completing a coverage determination, DOE finds it necessary and
appropriate to expand or reduce the scope of coverage, a new
coverage determination process will be initiated and finalized prior
to moving forward with the test procedure or standards rulemaking.
6. Process for Developing Energy Conservation Standards
This section describes the process to be used in developing
energy conservation standards for covered products and equipment
other than those covered equipment subject to ASHRAE/IES Standard
90.1.
(a) Early Assessment. (1) As the first step in any proceeding to
consider establishing or amending any energy conservation standard,
DOE will publish a document in the Federal Register announcing that
DOE is considering initiating a rulemaking proceeding. As part of
that document, DOE will solicit submission of related comments,
including data and information on whether DOE should proceed with
the rulemaking, including whether any new or amended rule would be
cost effective, economically justified, technologically feasible, or
would result in a significant savings of energy. Based on the
information received in response to the notice and its own analysis,
DOE will determine whether to proceed with a rulemaking for a new or
amended energy conservation standard or an amended test procedure.
If DOE determines that a new or amended standard would not satisfy
applicable statutory criteria, DOE would engage in notice and
comment rulemaking to issue a determination that a new or amended
standard is not warranted. If DOE receives sufficient information
suggesting it could justify a new or amended standard or the
information received is inconclusive with regard to the statutory
criteria, DOE would undertake the preliminary stages of a rulemaking
to issue or amend an energy conservation standard, as discussed
further in paragraph (a)(2) of this section.
(2) If the Department determines it is appropriate to proceed
with a rulemaking, the preliminary stages of a rulemaking to issue
or amend an energy conservation standard that DOE will undertake
will be a Framework Document and Preliminary Analysis, or an Advance
Notice of Proposed Rulemaking (ANOPR). Requests for Information
(RFI) and Notices of Data Availability (NODA) could be issued, as
appropriate, in addition to these preliminary-stage documents.
(3) In those instances where the early assessment either
suggested that a new or amended energy conservation standard might
be justified or in which the information was inconclusive on this
point, and DOE undertakes the preliminary stages of a rulemaking to
establish or amend an energy conservation standard, DOE may still
ultimately determine that such a standard is not economically
justified, technologically feasible or would not result in a
significant savings of energy. Therefore, DOE will examine the
potential costs and benefits and energy savings potential of a new
or amended energy conservation standard at the
[[Page 8705]]
preliminary stage of the rulemaking. DOE notes that it will,
consistent with its statutory obligations, consider both cost
effectiveness and economic justification when issuing a
determination not to amend a standard.
(b) Significant Savings of Energy. (1) In evaluating the
prospects of proposing a new or amended standard--or in determining
that no new or amended standard is needed--DOE will first look to
the projected energy savings that are likely to result. DOE will
determine as a preliminary matter whether the rulemaking has the
potential to result in ``significant energy savings.'' If the
rulemaking passes the significant energy savings threshold, DOE will
then compare these projected savings against the technological
feasibility of and likely costs necessary to meet the new or amended
standards needed to achieve these energy savings.
(2) Under its significant energy savings analysis, DOE will
examine both the total amount of projected energy savings and the
relative percentage decrease in energy usage that could be obtained
from establishing or amending energy conservation standards for a
given covered product or equipment. This examination will be based
on the applicable product or equipment type as appropriate and will
not be used to selectively examine classes or sub-classes of
products and equipment solely for the purposes of projecting whether
potential energy savings would satisfy (or not satisfy) the
applicable thresholds detailed in this rule. Under the first step of
this approach, the projected energy savings from a potential maximum
technologically feasible (``max-tech'') standard will be evaluated
against a threshold of 0.3 quads of site energy saved over a 30-year
period.
(3) If the projected max-tech energy savings does not meet or
exceed this threshold, those max-tech savings would then be compared
to the total energy usage of the covered product or equipment to
calculate a potential percentage reduction in energy usage.
(4) If this comparison does not yield a reduction in site energy
use of at least 10 percent over a 30-year period, the analysis will
end, and DOE will propose to determine that no significant energy
savings would likely result from setting new or amended standards.
(5) If either one of the thresholds described in paragraphs
(b)(3) or (b)(4) of this section is reached, DOE will conduct
analyses to ascertain whether a standard can be prescribed that
produces the maximum improvement in energy efficiency that is both
technologically feasible and economically justified and still
constitutes significant energy savings (using the same criteria of
either 0.3 quad of aggregate site energy savings or a 10-percent
decrease in energy use, as measured in quads--both over a 30-year
period) at the level determined to be economically justified.
(6) In the case of ASHRAE equipment, DOE will examine the
potential energy savings involved across the equipment category at
issue.
(c) Design options--(1) General. Once the Department has
initiated a rulemaking for a specific product/equipment but before
publishing a proposed rule to establish or amend standards, DOE will
identify the product/equipment categories and design options to be
analyzed in detail, as well as those design options to be eliminated
from further consideration. During the pre-proposal stages of the
rulemaking, interested parties may be consulted to provide
information on key issues through a variety of rulemaking documents.
The preliminary stages of a rulemaking to issue or amend an energy
conservation standard that DOE will undertake will be a framework
document and preliminary analysis, or an advance notice of proposed
rulemaking (ANOPR). Requests for Information (RFI) and Notice of
Data Availability (NODA) could also be issued, as appropriate.
(2) Identification and screening of design options. During the
pre-NOPR phase of the rulemaking process, the Department will
develop a list of design options for consideration. Initially, the
candidate design options will encompass all those technologies
considered to be technologically feasible. Following the development
of this initial list of design options, DOE will review each design
option based on the factors described in paragraph (c)(3) of this
section and the policies stated in section 7 of this Appendix (i.e.
Policies on Selection of Standards). The reasons for eliminating or
retaining any design option at this stage of the process will be
fully documented and published as part of the NOPR and as
appropriate for a given rule, in the pre-NOPR documents. The
technologically feasible design options that are not eliminated in
this screening will be considered further in the Engineering
Analysis described in paragraph (d) of this section.
(3) Factors for screening of design options. The factors for
screening design options include:
(i) Technological feasibility. Technologies incorporated in
commercial products or in working prototypes will be considered
technologically feasible.
(ii) Practicability to manufacture, install and service. If mass
production of a technology under consideration for use in
commercially-available products (or equipment) and reliable
installation and servicing of the technology could be achieved on
the scale necessary to serve the relevant market at the time of the
effective date of the standard, then that technology will be
considered practicable to manufacture, install and service.
(iii) Adverse Impacts on Product Utility or Product
Availability.
(iv) Adverse Impacts on Health or Safety.
(v) Unique-Pathway Proprietary Technologies. If a design option
utilizes proprietary technology that represents a unique pathway to
achieving a given efficiency level, that technology will not be
considered further.
(d) Engineering analysis of design options and selection of
candidate standard levels. After design options are identified and
screened, DOE will perform the engineering analysis and the benefit/
cost analysis and select the candidate standard levels based on
these analyses. The results of the analyses will be published in a
Technical Support Document (TSD) to accompany the appropriate
rulemaking documents.
(1) Identification of engineering analytical methods and tools.
DOE will select the specific engineering analysis tools (or multiple
tools, if necessary to address uncertainty) to be used in the
analysis of the design options identified as a result of the
screening analysis.
(2) Engineering and life-cycle cost analysis of design options.
DOE and its contractor will perform engineering and life-cycle cost
analyses of the design options.
(3) Review by stakeholders. Interested parties will have the
opportunity to review the results of the engineering and life-cycle
cost analyses. If appropriate, a public workshop will be conducted
to review these results. The analyses will be revised as appropriate
on the basis of this input.
(4) New information relating to the factors used for screening
design options. If further information or analysis leads to a
determination that a design option, or a combination of design
options, has unacceptable impacts, that design option or combination
of design options will not be included in a candidate standard
level.
(5) Selection of candidate standard levels. Based on the results
of the engineering and life-cycle cost analysis of design options
and the policies stated in paragraph (c) of this section, DOE will
select the candidate standard levels for further analysis.
(e) Pre-NOPR Stage--(1) Documentation of decisions on candidate
standard selection.
(i) If the early assessment and screening analysis indicates
that continued development of a standard is appropriate, the
Department will publish either:
(A) A notice accompanying a framework document and,
subsequently, a preliminary analysis or;
(B) An ANOPR. The notice document will be published in the
Federal Register, with accompanying documents referenced and posted
in the appropriate docket.
(ii) If DOE determines at any point in the pre-NOPR stage that
no candidate standard level is likely to produce the maximum
improvement in energy efficiency that is both technologically
feasible and economically justified or constitute significant energy
savings, that conclusion will be announced in the Federal Register
with an opportunity for public comment provided to stakeholders. In
such cases, the Department will proceed with a rulemaking that
proposes not to adopt new or amended standards.
(2) Public comment and hearing. The length of the public comment
period for pre-NOPR rulemaking documents will vary depending upon
the circumstances of the particular rulemaking, but will not be less
than 75 calendar days. For such documents, DOE will determine
whether a public hearing is appropriate.
(3) Revisions based on comments. Based on consideration of the
comments received, any necessary changes to the engineering analysis
or the candidate standard levels will be made.
(f) Analysis of impacts and selection of proposed standard
level. After the pre-NOPR stage, if DOE has determined preliminarily
that a candidate standard level is likely to
[[Page 8706]]
produce the maximum improvement in energy efficiency that is both
technologically feasible and economically justified or constitute
significant energy savings, economic analyses of the impacts of the
candidate standard levels will be conducted. The Department will
propose new or amended standards based on the results of the impact
analysis.
(1) Identification of issues for analysis. The Department, in
consideration of comments received, will identify issues that will
be examined in the impacts analysis.
(2) Identification of analytical methods and tools. DOE will
select the specific economic analysis tools (or multiple tools if
necessary to address uncertainty) to be used in the analysis of the
candidate standard levels.
(3) Analysis of impacts. DOE will conduct the analysis of the
impacts of candidate standard levels.
(4) Factors to be considered in selecting a proposed standard.
The factors to be considered in selection of a proposed standard
include:
(i) Impacts on manufacturers. The analysis of private
manufacturer impacts will include: Estimated impacts on cash flow;
assessment of impacts on manufacturers of specific categories of
products/equipment and small manufacturers; assessment of impacts on
manufacturers of multiple product-specific Federal regulatory
requirements, including efficiency standards for other products and
regulations of other agencies; and impacts on manufacturing
capacity, plant closures, and loss of capital investment.
(ii) Private Impacts on consumers. The analysis of consumer
impacts will include: Estimated private energy savings impacts on
consumers based on national average energy prices and energy usage;
assessments of impacts on subgroups of consumers based on major
regional differences in usage or energy prices and significant
variations in installation costs or performance; sensitivity
analyses using high and low discount rates reflecting both private
transactions and social discount rates and high and low energy price
forecasts; consideration of changes to product utility, changes to
purchase rate of products, and other impacts of likely concern to
all or some consumers, based to the extent practicable on direct
input from consumers; estimated life-cycle cost with sensitivity
analysis; consideration of the increased first cost to consumers and
the time required for energy cost savings to pay back these first
costs; and loss of utility.
(iii) Impacts on competition, including industry concentration
analysis.
(iv) Impacts on utilities. The analysis of utility impacts will
include estimated marginal impacts on electric and gas utility costs
and revenues.
(v) National energy, economic, and employment impacts. The
analysis of national energy, economic, and employment impacts will
include: Estimated energy savings by fuel type; estimated net
present value of benefits to all consumers; and estimates of the
direct and indirect impacts on employment by appliance
manufacturers, relevant service industries, energy suppliers,
suppliers of complementary and substitution products, and the
economy in general.
(vi) Impacts on the environment. The analysis of environmental
impacts will include estimated impacts on emissions of carbon and
relevant criteria pollutants, and impacts on pollution control
costs.
(vii) Impacts of non-regulatory approaches. The analysis of
energy savings and consumer impacts will incorporate an assessment
of the impacts of market forces and existing voluntary programs in
promoting product/equipment efficiency, usage, and related
characteristics in the absence of updated efficiency standards.
(viii) New information relating to the factors used for
screening design options.
(g) Notice of Proposed Rulemaking--(1) Documentation of
decisions on proposed standard selection. The Department will
publish a NOPR in the Federal Register that proposes standard levels
and explains the basis for the selection of those proposed levels,
and will post on its website a draft TSD documenting the analysis of
impacts. The draft TSD will also be posted in the appropriate docket
on http://www.regulations.gov. As required by 42 U.S.C. 6295(p)(1)
of EPCA, the NOPR also will describe the maximum improvement in
energy efficiency or maximum reduction in energy use that is
technologically feasible and, if the proposed standards would not
achieve these levels, the reasons for proposing different standards.
(2) Public comment and hearing. There will be not less than 75
days for public comment on the NOPR, with at least one public
hearing or workshop. (42 U.S.C. 6295(p)(2) and 42 U.S.C. 6306).
(3) Revisions to impact analyses and selection of final
standard. Based on the public comments received, DOE will review the
proposed standard and impact analyses, and make modifications as
necessary. If major changes to the analyses are required at this
stage, DOE will publish a Supplemental Notice of Proposed Rulemaking
(SNOPR), when required. DOE may also publish a NODA or RFI, where
appropriate.
(h) Final Rule. The Department will publish a Final Rule in the
Federal Register that promulgates standard levels, responds to
public comments received on the NOPR, and explains how the selection
of those standards meets the statutory requirement that any new or
amended energy conservation standard produces the maximum
improvement in energy efficiency that is both technologically
feasible and economically justified and constitutes significant
energy savings, accompanied by a final TSD.
7. Policies on Selection of Standards
(a) Purpose. (1) Section 5 describes the process that will be
used to consider new or revised energy efficiency standards and
lists a number of factors and analyses that will be considered at
specified points in the process. Department policies concerning the
selection of new or revised standards, and decisions preliminary
thereto, are described in this section. These policies are intended
to elaborate on the statutory criteria provided in 42 U.S.C. 6295 of
EPCA.
(2) The procedures described in this section are intended to
assist the Department in making the determinations required by EPCA
and do not preclude DOE's consideration of any other information
consistent with the relevant statutory criteria. The Department will
consider pertinent information in determining whether a new or
revised standard is consistent with the statutory criteria.
(b) Screening design options. These factors will be considered
as follows in determining whether a design option will receive any
further consideration:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in commercially-viable,
existing prototypes will not be considered further.
(2) Practicability to manufacture, install and service. If it is
determined that mass production of a technology in commercial
products and reliable installation and servicing of the technology
could not be achieved on the scale necessary to serve the relevant
market at the time of the compliance date of the standard, then that
technology will not be considered further.
(3) Impacts on product utility. If a technology is determined to
have significant adverse impact on the utility of the product/
equipment to subgroups of consumers, or result in the unavailability
of any covered product type with performance characteristics
(including reliability), features, sizes, capacities, and volumes
that are substantially the same as products generally available in
the U.S. at the time, it will not be considered further.
(4) Safety of technologies. If it is determined that a
technology will have significant adverse impacts on health or
safety, it will not be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving
a given efficiency level, it will not be considered further, due to
the potential for monopolistic concerns.
(c) Identification of candidate standard levels. Based on the
results of the engineering and cost/benefit analyses of design
options, DOE will identify the candidate standard levels for further
analysis. Candidate standard levels will be selected as follows:
(1) Costs and savings of design options. Design options that
have payback periods that exceed the median life of the product or
which result in life-cycle cost increases relative to the base case,
using typical fuel costs, usage, and private discount rates, will
not be used as the basis for candidate standard levels.
(2) Further information on factors used for screening design
options. If further information or analysis leads to a determination
that a design option, or a combination of design options, has
unacceptable impacts under the policies stated in this Appendix,
that design option or combination of design options will not be
included in a candidate standard level.
(3) Selection of candidate standard levels. Candidate standard
levels, which will be identified in the pre-NOPR documents and on
which impact analyses will be conducted, will be based on the
remaining design options.
(i) The range of candidate standard levels will typically
include:
[[Page 8707]]
(A) The most energy-efficient combination of design options;
(B) The combination of design options with the lowest life-cycle
cost; and
(C) A combination of design options with a payback period of not
more than three years.
(ii) Candidate standard levels that incorporate noteworthy
technologies or fill in large gaps between efficiency levels of
other candidate standard levels also may be selected.
(d) Pre-NOPR Stage. New information provided in public comments
on any pre-NOPR documents will be considered to determine whether
any changes to the candidate standard levels are needed before
proceeding to the analysis of impacts.
(e) Selection of proposed standard. Based on the results of the
analysis of impacts, DOE will select a standard level to be proposed
for public comment in the NOPR. As required under 42 U.S.C.
6295(o)(2)(A), any new or revised standard must be designed to
achieve the maximum improvement in energy efficiency that is
determined to be technologically feasible and economically
justified.
(1) Statutory policies. The fundamental policies concerning the
selection of standards include:
(i) A candidate/trial standard level will not be proposed or
promulgated if the Department determines that it is not
technologically feasible and economically justified. (42 U.S.C.
6295(o)(2)(A) and 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. (42 U.S.C.
6295(o)(2)(B)(i)) A standard level is subject to a rebuttable
presumption that it is economically justified if the payback period
is three years or less. (42 U.S.C. 6295(o)(2)(B)(iii))
(ii) If the Department determines that a standard level is
likely to result in the unavailability of any covered product/
equipment type with performance characteristics (including
reliability), features, sizes, capacities, and volumes that are
substantially the same as products generally available in the U.S.
at the time, that standard level will not be proposed. (42 U.S.C.
6295(o)(4))
(iii) If the Department determines that a standard level would
not result in significant conservation of energy, that standard
level will not be proposed. (42 U.S.C. 6295(o)(3)(B))
(2) Considerations in assessing economic justification.
(i) The following considerations will guide the application of
the economic justification criterion in selecting a proposed
standard:
(A) If the Department determines that a candidate/trial standard
level would result in a negative return on investment for the
industry, would significantly reduce the value of the industry, or
would cause significant adverse impacts to a significant subgroup of
manufacturers (including small manufacturing businesses), that
standard level will be presumed not to be economically justified
unless the Department determines that specifically identified
expected benefits of the standard would outweigh this and any other
expected adverse effects.
(B) If the Department determines that a candidate/trial standard
level would be the direct cause of plant closures, significant
losses in domestic manufacturer employment, or significant losses of
capital investment by domestic manufacturers, that standard level
will be presumed not to be economically justified unless the
Department determines that specifically identified expected benefits
of the standard would outweigh this and any other expected adverse
effects.
(C) If the Department determines that a candidate/trial standard
level would have a significant adverse impact on the environment or
energy security, that standard level will be presumed not to be
economically justified unless the Department determines that
specifically identified expected benefits of the standard would
outweigh this and any other expected adverse effects.
(D) If the Department determines that a candidate/trial standard
level would not result in significant energy conservation, that
standard level will be presumed not to be economically justified.
(E) If the Department determines that a candidate/trial standard
level is not practicable to manufacture or has a negative impact on
consumer utility or safety, that standard level will be presumed not
to be economically justified unless the Department determines that
specifically identified expected benefits of the standard would
outweigh this and any other expected adverse effects.
(F) If the Department determines that a candidate/trial standard
level is not consistent with the policies relating to consumer costs
in paragraph (c)(1) of this section, that standard level will be
presumed not to be economically justified unless the Department
determines that specifically identified expected benefits of the
standard would outweigh this and any other expected adverse effects.
(G) If the Department determines that a candidate/trial standard
level will have significant adverse impacts on a significant
subgroup of consumers (including low-income consumers), that
standard level will be presumed not to be economically justified
unless the Department determines that specifically identified
expected benefits of the standard would outweigh this and any other
expected adverse effects.
(H) If the Department of Energy and the Department of Justice
determine that a candidate/trial standard level would have
significant anticompetitive effects, that standard level will be
presumed not to be economically justified unless the Department of
Energy determines that specifically identified expected benefits of
the standard would outweigh this and any other expected adverse
effects.
(ii) DOE will, consistent with paragraph (f) of this section,
account for the views expressed by the Department of Justice
regarding a given proposal's effects on competition.
(iii) The basis for a determination that triggers any
presumption in paragraph (e)(2)(i) of this section and the basis for
a determination that an applicable presumption has been rebutted
will be supported by substantial evidence in the record and the
evidence and rationale for making these determinations will be
explained in the NOPR.
(iv) If none of the policies in paragraph (e)(2)(i) of this
section is found to be dispositive, the Department will determine
whether the benefits of a candidate standard level exceed the
burdens considering all the pertinent information in the record.
(f) Selection of a final standard. New information provided in
the public comments on the NOPR and any analysis by the Department
of Justice concerning impacts on competition of the proposed
standard will be considered to determine whether issuance of a new
or amended energy conservation standard produces the maximum
improvement in energy efficiency that is both technologically
feasible and economically justified and still constitutes
significant energy savings or whether any change to the proposed
standard level is needed before proceeding to the final rule. The
same policies used to select the proposed standard level, as
described in this section, will be used to guide the selection of
the final standard level or a determination that no new or amended
standard is justified.
8. Test Procedures
(a) General. As with the early assessment process for energy
conservation standards, DOE believes that early stakeholder input is
also very important during test procedure rulemakings. DOE will
follow an early assessment process similar to that described in the
preceding sections discussing DOE's consideration of amended energy
conservation standards. Consequently, DOE will publish a notice in
the Federal Register whenever DOE is considering initiation of a
rulemaking to amend a test procedure. In that notice, DOE will
request submission of comments, including data and information on
whether an amended test procedure rule would:
(1) More accurately measure energy efficiency, energy use, water
use (as specified in EPCA), or estimated annual operating cost of a
covered product during a representative average use cycle or period
of use without being unduly burdensome to conduct; or
(2) Reduce testing burden. DOE will review comments submitted
and, subject to statutory obligations, determine whether it agrees
with the submitted information. If DOE determines that an amended
test procedure is not justified at that time, it will not pursue the
rulemaking and will publish a notice in the Federal Register to that
effect. If DOE receives sufficient information suggesting an amended
test procedure could more accurately measure energy efficiency,
energy use, water use (as specified in EPCA), or estimated annual
operating cost of a covered product during a representative average
use cycle or period of use and not be unduly burdensome to conduct,
reduce testing burden, or the information received is inconclusive
with regard to these points, DOE would undertake the preliminary
stages of a rulemaking to amend the test procedure,
[[Page 8708]]
as discussed further in the paragraphs that follow in this section.
(b) Identifying the need to modify test procedures. DOE will
identify any necessary modifications to established test procedures
prior to initiating the standards development process. It will
consider all stakeholder comments with respect to needed test
procedure modifications. If DOE determines that it is appropriate to
continue the test procedure rulemaking after the early assessment
process, it would provide further opportunities for early public
input through Federal Register documents, including NODAs and/or
RFIs.
(c) Adoption of Industry Test Methods. DOE will adopt industry
test standards as DOE test procedures for covered products and
equipment, unless such methodology would be unduly burdensome to
conduct or would not produce test results that reflect the energy
efficiency, energy use, water use (as specified in EPCA) or
estimated operating costs of that equipment during a representative
average use cycle.
(d) Issuing final test procedure modification. Test procedure
rulemakings establishing methodologies used to evaluate proposed
energy conservation standards will be finalized at least 180 days
prior to publication of a NOPR proposing new or amended energy
conservation standards.
(e) Effective Date of Test Procedures. If required only for the
evaluation and issuance of updated efficiency standards, use of the
modified test procedures typically will not be required until the
implementation date of updated standards.
9. ASHRAE Equipment
(a) EPCA provides that ASHRAE equipment are subject to unique
statutory requirements and their own set of timelines. More
specifically, pursuant to EPCA's statutory scheme for covered ASHRAE
equipment, DOE is required to consider amending the existing Federal
energy conservation standards and test procedures for certain
enumerated types of commercial and industrial equipment (generally,
commercial water heaters, commercial packaged boilers, commercial
air-conditioning and heating equipment, and packaged terminal air
conditioners and heat pumps) when ASHRAE Standard 90.1 is amended
with respect to standards and test procedures applicable to such
equipment. Not later than 180 days after the amendment of the
standard, the Secretary will publish in the Federal Register for
public comment an analysis of the energy savings potential of
amended energy efficiency standards. For each type of equipment,
EPCA directs that if ASHRAE Standard 90.1 is amended, not later than
18 months after the date of publication of the amendment to ASHRAE
Standard 90.1, DOE must adopt amended energy conservation standards
at the new efficiency level in ASHRAE Standard 90.1 as the uniform
national standard for such equipment, or amend the test procedure
referenced in ASHRAE Standard 90.1 for the equipment at issue to be
consistent with the applicable industry test procedure,
respectively, unless--
(1) DOE determines by rule, and supported by clear and
convincing evidence, that a more-stringent standard would result in
significant additional conservation of energy and is technologically
feasible and economically justified; or
(2) The test procedure would not meet the requirements for such
test procedures specified in EPCA. In such case, DOE must adopt the
more stringent standard not later than 30 months after the date of
publication of the amendment to ASHRAE/IES Standard 90.1 for the
affected equipment.
(b) For ASHRAE equipment, DOE will adopt the revised ASHRAE
levels or the industry test procedure, as contemplated by EPCA,
except in very limited circumstances.
With respect to DOE's consideration of standards more-stringent
than the ASHRAE levels or changes to the industry test procedure,
DOE will do so only if it can meet a very high bar to demonstrate
the ``clear and convincing evidence'' threshold. Clear and
convincing evidence would exist only where the specific facts and
data made available to DOE regarding a particular ASHRAE amendment
demonstrates that there is no substantial doubt that a standard more
stringent than that contained in the ASHRAE Standard 90.1 amendment
is permitted because it would result in a significant additional
amount of energy savings, is technologically feasible and
economically justified, or, in the case of test procedures, that the
industry test procedure does not meet the EPCA requirements. DOE
will make this determination only after seeking data and information
from interested parties and the public to help inform the Agency's
views. DOE will seek from interested stakeholders and the public
data and information to assist in making this determination, prior
to publishing a proposed rule to adopt more-stringent standards or a
different test procedure.
(c) DOE's review in adopting amendments based on an action by
ASHRAE to amend Standard 90.1 is strictly limited to the specific
standards or test procedure amendment for the specific equipment for
which ASHRAE has made a change (i.e., determined down to the
equipment class level). DOE believes that ASHRAE not acting to amend
Standard 90.1 is tantamount to a decision that the existing standard
remain in place. Thus, when undertaking a review as required by 42
U.S.C. 6313(a)(6)(C), DOE would need to find clear and convincing
evidence, as defined in this section, to issue a standard more
stringent than the existing standard for the equipment at issue.
10. Direct Final Rules
(a) A direct final rule (DFR), as contemplated in 42 U.S.C.
6295(p)(4), is a procedural mechanism separate from the negotiated
rulemaking process outlined under the Negotiated Rulemaking Act (5
U.S.C. 563). DOE may issue a DFR adopting energy conservation
standards for a covered product provided that:
(1) DOE receives a joint proposal from a group of ``interested
persons that are fairly representative of relevant points of view,''
which does not include DOE as a member of the group. At a minimum,
to be ``fairly representative of relevant points of view'' the group
submitting a joint statement must include larger concerns and small
businesses in the regulated industry/manufacturer community, energy
advocates, energy utilities, as appropriate, consumers, and States.
However, it will be necessary to evaluate the meaning of ``fairly
representative'' on a case-by-case basis, subject to the
circumstances of a particular rulemaking, to determine whether
additional parties must be part of a joint statement in order to be
``fairly representative of relevant points of view.''
(2) This paragraph (a)(2) describes the steps DOE will follow
with respect to a DFR.
(i) DOE must determine whether the energy conservation standard
recommended in the joint proposal is in accordance with the
requirements of 42 U.S.C. 6295(o) or section 342(a)(6)(B) as
applicable. Because the DFR provision is procedural, and not a
separate grant of rulemaking authority, any standard issued under
the DFR process must comply fully with the provisions of the EPCA
subsection under which the rule is authorized. DOE will not accept
or issue as a DFR a submitted joint proposal that does not comply
with all applicable EPCA requirements.
(ii) Upon receipt of a joint statement recommending energy
conservation standards, DOE will publish in the Federal Register
that statement, as submitted to DOE, in order to obtain feedback as
to whether the joint statement was submitted by a group that is
fairly representative of relevant points of view. If DOE determines
that the DFR was not submitted by a group that is fairly
representative of relevant points of view, DOE will not move forward
with a DFR and will consider whether any further rulemaking activity
is appropriate. If the Secretary determines that a DFR cannot be
issued based on the statement, the Secretary shall publish a notice
of the determination, together with an explanation of the reasons
for the determination.
(iii) Simultaneous with the issuance of a DFR, DOE must also
publish a NOPR containing the same energy conservation standards as
in the DFR. Following publication of the DFR, DOE must solicit
public comment for a period of at least 110 days; then, not later
than 120 days after issuance of the DFR, the Secretary must
determine whether any adverse comments ``may provide a reasonable
basis for withdrawing the direct final rule,'' based on the
rulemaking record. If DOE determines that one or more substantive
comments objecting to the DFR provides a sufficient reason to
withdraw the DFR, DOE will do so, and will instead proceed with the
published NOPR (unless the information provided suggests that
withdrawal of that NOPR would likewise be appropriate). In making
this determination, DOE may consider comments as adverse, even if
the issue was brought up previously during DOE-initiated discussions
(e.g. publication of a framework or RFI document), if the Department
concludes that the comments merit further consideration.
11. Negotiated Rulemaking Process
(a)(1) In those instances where negotiated rulemaking is
determined to be appropriate, DOE will comply with the requirements
of
[[Page 8709]]
the Negotiated Rulemaking Act (NRA) (5 U.S.C. 561-570) and the
requirements of the Federal Advisory Committee Act (FACA) (5 U.S.C.
App. 2). To facilitate potential negotiated rulemakings, and to
comply with the requirements of the NRA and the FACA, DOE
established the Appliance Standards and Rulemaking Federal Advisory
Committee (ASRAC). Working groups can be established as
subcommittees of ASRAC, from time to time, and for specific
products/equipment, with one member representative from the ASRAC
committee attending and participating in the meetings of a specific
working group. (Consistent with 5 U.S.C. 565(b), committee
membership is limited to 25 members, unless the agency determines
that more members are necessary for the functioning of the committee
or to achieve balanced membership.) Ultimately, the working group
reports to ASRAC, and ASRAC itself votes on whether to make a
recommendation to DOE to adopt a consensus agreement developed
through the negotiated rulemaking.
(2) DOE will use the negotiated rulemaking process on a case-by-
case basis and, in appropriate circumstances, in an attempt to
develop a consensus proposal before issuing a proposed rule. When
approached by one or more stakeholders or on its own initiative, DOE
will use a convener to ascertain, in consultation with relevant
stakeholders, whether the development of the subject matter of a
potential rulemaking proceeding would be conducive to negotiated
rulemaking, with the agency evaluating the convener's recommendation
before reaching a decision on such matter. A neutral, independent
convenor will identify issues that any negotiation would need to
address, assess the full breadth of interested parties who should be
included in any negotiated rulemaking to address those issues, and
make a judgment as to whether there is the potential for a group of
individuals negotiating in good faith to reach a consensus agreement
given the issues presented. DOE will have a neutral and independent
facilitator, who is not a DOE employee or consultant, present at all
ASRAC working group meetings.
(3) DOE will base its decision to proceed with a potential
negotiated rulemaking on the report of the convenor. The following
additional factors militate in favor of a negotiated rulemaking:
(i) Stakeholders commented in favor of negotiated rulemaking in
response to the initial rulemaking notice;
(ii) The rulemaking analysis or underlying technologies in
question are complex, and DOE can benefit from external expertise
and/or real-time changes to the analysis based on stakeholder
feedback, information, and data;
(iii) The current standards have already been amended one or
more times;
(iv) Stakeholders from differing points of view are willing to
participate; and
(v) DOE determines that the parties may be able to reach an
agreement.
(4) DOE will provide notice in the Federal Register of its
intent to form an ASRAC working group (including a request for
nominations to serve on the committee), announcement of the
selection of working group members (including their affiliation),
and announcement of public meetings and the subject matter to be
addressed.
(b) DOE's role in the negotiated rulemaking process is to
participate as a member of a group attempting to develop a consensus
proposal for energy conservation standards for a particular product/
equipment and to provide technical/analytical advice to the
negotiating parties and legal input where needed to support the
development of a potential consensus recommendation in the form of a
term sheet.
(c) A negotiated rulemaking may be used to develop energy
conservation standards, test procedures, product coverage, and other
categories of rulemaking activities.
(d) A dedicated portion of each ASRAC working group meeting will
be set aside to receive input and data from non-members of the ASRAC
working group. This additional opportunity for input does nothing to
diminish stakeholders' ability to provide comments and ask relevant
questions during the course of the working group's ongoing
deliberations at the public meeting.
(e) If DOE determines to proceed with a rulemaking at the
conclusion of negotiations, DOE will publish a proposed rule. DOE
will consider the approved term sheet in developing such proposed
rule. A negotiated rulemaking in which DOE participates under the
ASRAC process will not result in the issuance of a DFR. Further, any
potential term sheet upon which an ASRAC working group reaches
consensus must comply with all of the provisions of EPCA under which
the rule is authorized. DOE cannot accept recommendations or issue a
NOPR based upon a negotiated rulemaking that does not comply with
all applicable EPCA requirements, including those product- or
equipment-specific requirements included in the provision that
authorizes issuance of the standard.
12. Principles for Distinguishing Between Effective and Compliance
Dates
(a) Dates, generally. The effective and compliance dates for
either DOE test procedures or DOE energy conservation standards are
typically not identical and these terms should not be used
interchangeably.
(b) Effective date. The effective date is the date a rule is
legally operative after being published in the Federal Register.
(c) Compliance date. (1) For test procedures, the compliance
date is the specific date when manufacturers are required to use the
new or amended test procedure requirements to make representations
concerning the energy efficiency or use of a product, including
certification that the covered product/equipment meets an applicable
energy conservation standard.
(2) For energy conservation standards, the compliance date is
the specific date upon which manufacturers are required to meet the
new or amended standards for applicable covered products/equipment
that are distributed in interstate commerce.
13. Principles for the Conduct of the Engineering Analysis
(a) The purpose of the engineering analysis is to develop the
relationship between efficiency and cost of the subject product/
equipment. The Department will use the most appropriate means
available to determine the efficiency/cost relationship, including
an overall system approach or engineering modeling to predict the
reduction in energy use or improvement in energy efficiency that can
be expected from individual design options as discussed in
paragraphs (b) and (c) of this section. From this efficiency/cost
relationship, measures such as payback, life-cycle cost, and energy
savings can be developed. The Department will identify issues that
will be examined in the engineering analysis and the types of
specialized expertise that may be required. DOE will select
appropriate contractors, subcontractors, and expert consultants, as
necessary, to perform the engineering analysis and the impact
analysis. Also, the Department will consider data, information, and
analyses received from interested parties for use in the analysis
wherever feasible.
(b) The engineering analysis begins with the list of design
options developed in consultation with the interested parties as a
result of the screening process. The Department will establish the
likely cost and performance improvement of each design option.
Ranges and uncertainties of cost and performance will be
established, although efforts will be made to minimize uncertainties
by using measures such as test data or component or material
supplier information where available. Estimated uncertainties will
be carried forward in subsequent analyses. The use of quantitative
models will be supplemented by qualitative assessments as
appropriate.
(c) The next step includes identifying, modifying, or developing
any engineering models necessary to predict the efficiency impact of
any one or combination of design options on the product/equipment. A
base case configuration or starting point will be established, as
well as the order and combination/blending of the design options to
be evaluated. DOE will then perform the engineering analysis and
develop the cost-efficiency curve for the product/equipment. The
cost efficiency curve and any necessary models will be available to
stakeholders during the pre-NOPR stage of the rulemaking.
14. Principles for the Analysis of Impacts on Manufacturers
(a) Purpose. The purpose of the manufacturer analysis is to
identify the likely private impacts of efficiency standards on
manufacturers. The Department will analyze the impact of standards
on manufacturers with substantial input from manufacturers and other
interested parties. This section describes the principles that will
be used in conducting future manufacturing impact analyses.
(b) Issue identification. In the impact analysis stage (section
5(d)), the Department will identify issues that will require greater
consideration in the detailed manufacturer impact analysis. Possible
issues may include identification of specific types or groups of
[[Page 8710]]
manufacturers and concerns over access to technology. Specialized
contractor expertise, empirical data requirements, and analytical
tools required to perform the manufacturer impact analysis also
would be identified at this stage.
(c) Industry characterization. Prior to initiating detailed
impact studies, the Department will seek input on the present and
past industry structure and market characteristics. Input on the
following issues will be sought:
(1) Manufacturers and their current and historical relative
market shares;
(2) Manufacturer characteristics, such as whether manufacturers
make a full line of models or serve a niche market;
(3) Trends in the number of manufacturers;
(4) Financial situation of manufacturers;
(5) Trends in product/equipment characteristics and retail
markets including manufacturer market shares and market
concentration; and
(6) Identification of other relevant regulatory actions and a
description of the nature and timing of any likely impacts.
(d) Cost impacts on manufacturers. The costs of labor, material,
engineering, tooling, and capital are difficult to estimate,
manufacturer-specific, and usually proprietary. The Department will
seek input from interested parties on the treatment of cost issues.
Manufacturers will be encouraged to offer suggestions as to possible
sources of data and appropriate data collection methodologies.
Costing issues to be addressed include:
(1) Estimates of total private cost impacts, including product/
equipment-specific costs (based on cost impacts estimated for the
engineering analysis) and front-end investment/conversion costs for
the full range of product/equipment models.
(2) Range of uncertainties in estimates of average cost,
considering alternative designs and technologies which may vary cost
impacts and changes in costs of material, labor, and other inputs
which may vary costs.
(3) Variable cost impacts on particular types of manufacturers,
considering factors such as atypical sunk costs or characteristics
of specific models which may increase or decrease costs.
(e) Impacts on product/equipment sales, features, prices, and
cost recovery. In order to make manufacturer cash-flow calculations,
it is necessary to predict the number of products/equipment sold and
their sale price. This requires an assessment of the likely impacts
of price changes on the number of products/equipment sold and on
typical features of models sold. Past analyses have relied on price
and shipment data generated by economic models. The Department will
develop additional estimates of prices and shipments by drawing on
multiple sources of data and experience including: actual shipment
and pricing experience; data from manufacturers, retailers, and
other market experts; financial models, and sensitivity analyses.
The possible impacts of candidate/trial standard levels on consumer
choices among competing fuels will be explicitly considered where
relevant.
(f) Measures of impact. The manufacturer impact analysis will
estimate the impacts of candidate/trial standard levels on the net
cash flow of manufacturers. Computations will be performed for the
industry as a whole and for typical and atypical manufacturers. The
exact nature and the process by which the analysis will be conducted
will be determined by DOE, with input from interested parties, as
appropriate. Impacts to be analyzed include:
(1) Industry net present value, with sensitivity analyses based
on uncertainty of costs, sales prices, and sales volumes;
(2) Cash flows, by year; and
(3) Other measures of impact, such as revenue, net income, and
return on equity, as appropriate. DOE also notes that the
characteristics of a typical manufacturers worthy of special
consideration will be determined in consultation with manufacturers
and other interested parties and may include: manufacturers
incurring higher or lower than average costs; and manufacturers
experiencing greater or fewer adverse impacts on sales. Alternative
scenarios based on other methods of estimating cost or sales impacts
also will be performed, as needed.
(g) Cumulative Impacts of Other Federal Regulatory Actions. (1)
The Department will recognize and seek to mitigate the overlapping
effects on manufacturers of new or revised DOE standards and other
regulatory actions affecting the same products or equipment. DOE
will analyze and consider the impact on manufacturers of multiple
product/equipment-specific regulatory actions. These factors will be
considered in setting rulemaking priorities, conducting the early
assessment as to whether DOE should proceed with a standards
rulemaking, assessing manufacturer impacts of a particular standard,
and establishing compliance dates for a new or revised standard
that, consistent with any statutory requirements, are appropriately
coordinated with other regulatory actions to mitigate any cumulative
burden.
(2) If the Department determines that a proposed standard would
impose a significant impact on product or equipment manufacturers
within approximately three years of the compliance date of another
DOE standard that imposes significant impacts on the same
manufacturers (or divisions thereof, as appropriate), the Department
will, in addition to evaluating the impact on manufacturers of the
proposed standard, assess the joint impacts of both standards on
manufacturers.
(3) If the Department is directed to establish or revise
standards for products/equipment that are components of other
products/equipment subject to standards, the Department will
consider the interaction between such standards in setting
rulemaking priorities and assessing manufacturer impacts of a
particular standard. The Department will assess, as part of the
engineering and impact analyses, the cost of components subject to
efficiency standards.
(h) Summary of quantitative and qualitative assessments. The
summary of quantitative and qualitative assessments will contain a
description and discussion of uncertainties. Alternative estimates
of impacts, resulting from the different potential scenarios
developed throughout the analysis, will be explicitly presented in
the final analysis results.
(1) Key modeling and analytical tools. In its assessment of the
likely impacts of standards on manufacturers, the Department will
use models that are clear and understandable, feature accessible
calculations, and have clearly explained assumptions. As a starting
point, the Department will use the Government Regulatory Impact
Model (GRIM). The Department will also support the development of
economic models for price and volume forecasting. Research required
to update key economic data will be considered.
(2) [Reserved]
15. Principles for the Analysis of Impacts on Consumers
(a) Early consideration of impacts on consumer utility. The
Department will consider at the earliest stages of the development
of a standard whether particular design options will lessen the
utility of the covered products/equipment to the consumer. See
paragraph (c) of section 6.
(b) Impacts on product/equipment availability. The Department
will determine, based on consideration of information submitted
during the standard development process, whether a proposed standard
is likely to result in the unavailability of any covered product/
equipment type with performance characteristics (including
reliability), features, sizes, capacities, and volumes that are
substantially the same as products/equipment generally available in
the U.S. at the time. DOE will not promulgate a standard if it
concludes that it would result in such unavailability.
(c) Department of Justice review. As required by law, the
Department will solicit the views of the Department of Justice on
any lessening of competition likely to result from the imposition of
a proposed standard and will give the views provided full
consideration in assessing economic justification of a proposed
standard. In addition, DOE may consult with the Department of
Justice at earlier stages in the standards development process to
seek its preliminary views on competitive impacts.
(d) Variation in consumer impacts. The Department will use
regional analysis and sensitivity analysis tools, as appropriate, to
evaluate the potential distribution of impacts of candidate/trial
standard levels among different subgroups of consumers. The
Department will consider impacts on significant segments of
consumers in determining standards levels. Where there are
significant negative impacts on identifiable subgroups, DOE will
consider the efficacy of voluntary approaches as a means to achieve
potential energy savings.
(e) Payback period and first cost. (1) In the assessment of
consumer impacts of standards, the Department will consider Life-
Cycle Cost, Payback Period, and Cost of Conserved Energy to evaluate
the savings in operating expenses relative to increases in purchase
price. The Department also
[[Page 8711]]
performs sensitivity and scenario analyses when appropriate. The
results of these analyses will be carried throughout the analysis
and the ensuing uncertainty described.
(2) If, in the analysis of consumer impacts, the Department
determines that a candidate/trial standard level would result in a
substantial increase in product/equipment first costs to consumers
or would not pay back such additional first costs through energy
cost savings in less than three years, Department will assess the
likely impacts of such a standard on low-income households, product/
equipment sales and fuel switching, as appropriate.
16. Consideration of Non-Regulatory Approaches
The Department recognizes that non-regulatory efforts by
manufacturers, utilities, and other interested parties can result in
substantial efficiency improvements. The Department intends to
consider the likely effects of non-regulatory initiatives on
product/equipment energy use, consumer utility and life-cycle costs,
manufacturers, competition, utilities, and the environment, as well
as the distribution of these impacts among different regions,
consumers, manufacturers, and utilities. DOE will attempt to base
its assessment on the actual impacts of such initiatives to date,
but also will consider information presented regarding the impacts
that any existing initiative might have in the future. Such
information is likely to include a demonstration of the strong
commitment of manufacturers, distribution channels, utilities, or
others to such non-regulatory efficiency improvements. This
information will be used in assessing the likely incremental impacts
of establishing or revising standards, in assessing--where
possible--appropriate compliance dates for new or revised standards,
and in considering DOE support of non-regulatory initiatives.
17. Cross-Cutting Analytical Assumptions
In selecting values for certain cross-cutting analytical
assumptions, DOE expects to continue relying upon the following
sources and general principles:
(a) Underlying economic assumptions. The appliance standards
analyses will generally use the same economic growth and development
assumptions that underlie the most current Annual Energy Outlook
(AEO) published by the Energy Information Administration (EIA).
(b) Analytic time length. The appliance standards analyses will
use two time lengths--30 years and another time length that is
specific to the standard being considered such as the useful
lifetime of the product under consideration. As a sensitivity case,
the analyses will also use a 9-year regulatory time line in
analyzing the effects of the standard.
(c) Energy price and demand trends. Analyses of the likely
impact of appliance standards on typical users will generally adopt
the mid-range energy price and demand scenario of the EIA's most
current AEO. The sensitivity of such estimated impacts to possible
variations in future energy prices are likely to be examined using
the EIA's high and low energy price scenarios.
(d) Product/equipment-specific energy-efficiency trends, without
updated standards. Product/equipment-specific energy-efficiency
trends will be based on a combination of the efficiency trends
forecast by the EIA's residential and commercial demand model of the
National Energy Modeling System (NEMS) and product-specific
assessments by DOE and its contractors with input from interested
parties.
(e) Price forecasting. DOE will endeavor to use robust price
forecasting techniques in projecting future prices of products.
(f) Private Discount rates. For residential and commercial
consumers, ranges of three different real discount rates will be
used. For residential consumers, the mid-range discount rate will
represent DOE's approximation of the average financing cost (or
opportunity costs of reduced savings) experienced by typical
consumers. Sensitivity analyses will be performed using discount
rates reflecting the costs more likely to be experienced by
residential consumers with little or no savings and credit card
financing and consumers with substantial savings. For commercial
users, a mid-range discount rate reflecting DOE's approximation of
the average real rate of return on commercial investment will be
used, with sensitivity analyses being performed using values
indicative of the range of real rates of return likely to be
experienced by typical commercial businesses. For national net
present value calculations, DOE would use the Administration's
approximation of the average real rate of return on private
investment in the U.S. economy. For manufacturer impacts, DOE
typically uses a range of real discount rates which are
representative of the real rates of return experienced by typical
U.S. manufacturers affected by the program.
(g) Social Discount Rates. Social discount rates as specified in
OMB Circular A-4 will be used in assessing social effects such as
costs and benefits.
(h) Environmental impacts. (1) DOE calculates emission
reductions of carbon dioxide, sulfur dioxide, nitrogen oxides,
methane, nitrous oxides, and mercury likely to be avoided by
candidate/trial standard levels based on an emissions analysis that
includes the two components described in paragraphs (h)(2) and (3)
of this section.
(2) The first component estimates the effect of potential
candidate/trial standard levels on power sector and site combustion
emissions of carbon dioxide, nitrogen oxides, sulfur dioxide,
mercury, methane, and nitrous oxide. DOE develops the power sector
emissions analysis using a methodology based on DOE's latest Annual
Energy Outlook. For site combustion of natural gas or petroleum
fuels, the combustion emissions of carbon dioxide and nitrogen
oxides are estimated using emission intensity factors from the
Environmental Protection Agency.
(3) The second component of DOE's emissions analysis estimates
the effect of potential candidate/trial standard levels on emissions
of carbon dioxide, nitrogen oxides, sulfur dioxide, mercury,
methane, and nitrous oxide due to ``upstream activities'' in the
fuel production chain. These upstream activities include the
emissions related to extracting, processing, and transporting fuels
to the site of combustion as detailed in DOE's Fuel-Fuel-Cycle
Statement of Policy (76 FR 51281 (August 18, 2011)). DOE will
consider the effects of the candidate/trial standard levels on these
emissions after assessing the seven factors required to demonstrate
economic justification under EPCA. Consistent with Executive Order
13783, dated March 28, 2017, when monetizing the value of changes in
reductions in CO2 and nitrous oxides emissions resulting
from its energy conservation standards regulations, including with
respect to the consideration of domestic versus international
impacts and the consideration of appropriate discount rates, DOE
ensures, to the extent permitted by law, that any such estimates are
consistent with the guidance contained in OMB Circular A-4 of
September 17, 2003 (Regulatory Analysis).
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
3. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
0
4. Section 431.4 is added to subpart A to read as follows:
Sec. 431.4 Procedures, interpretations, and policies for
consideration of new or revised energy conservation standards and test
procedures for commercial/industrial equipment.
The procedures, interpretations, and policies for consideration of
new or revised energy conservation standards and test procedures set
forth in appendix A to subpart C of part 430 of this chapter shall
apply to the consideration of new or revised energy conservation
standards and test procedures considered for adoption under this part.
[FR Doc. 2020-00023 Filed 2-13-20; 8:45 am]
BILLING CODE 6450-01-P