[Federal Register Volume 86, Number 68 (Monday, April 12, 2021)]
[Proposed Rules]
[Pages 18901-18921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06853]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 86, No. 68 / Monday, April 12, 2021 / 
Proposed Rules  

[[Page 18901]]



DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2021-BT-STD-0003]
RIN 1904-AF13


Energy Conservation Program for Appliance Standards: Procedures, 
Interpretations, and Policies for Consideration in New or Revised 
Energy Conservation Standards and Test Procedures for Consumer Products 
and Commercial/Industrial Equipment

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

ACTION: Notice of proposed rulemaking and request for comment.

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

SUMMARY: The U.S. Department of Energy (``DOE'' or the ``Department'') 
proposes to revise the Department's ``Procedures, Interpretations, and 
Policies for Consideration of New or Revised Energy Conservation 
Standards and Test Procedures for Consumer Products and Certain 
Commercial/Industrial Equipment'' (``Process Rule''), revising the 
process the Department follows to develop energy conservation standards 
and test procedures for covered products and equipment. The proposed 
revisions are consistent with longstanding DOE practice and would 
remove unnecessary obstacles to DOE's ability to meet its statutory 
obligations under the Energy Policy and Conservation Act (``EPCA'').

DATES: Comments: DOE will accept comments, data, and information 
regarding all aspects of this notice of proposed rulemaking on or 
before May 27, 2021. DOE will hold a webinar on Friday, April 23, 2021, 
from 10:00 a.m. to 3:00 p.m. See section V, ``Public Participation,'' 
for webinar registration information, participant instructions, and 
information about the capabilities available to webinar participants. 
If no participants register for the webinar, it will be cancelled.

ADDRESSES: Interested persons are encouraged to submit comments using 
the Federal eRulemaking Portal at http://www.regulations.gov/docket/EERE-2021-BT-STD-0003. Follow the instructions for submitting comments. 
Alternatively, interested persons may submit comments by email to the 
following address: [email protected]. Include ``2021 
Process Rule NOPR'' and docket number EERE-2021-BTD-STD-0003 and/or RIN 
number 1904-AF13 in the subject line of the message. Submit electronic 
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and 
avoid the use of special characters or any form of encryption.
    Although DOE has routinely accepted public comment submissions 
through a variety of mechanisms, including postal mail and hand 
delivery/courier, the Department has found it necessary to make 
temporary modifications to the comment submission process in light of 
the ongoing Covid-19 pandemic. DOE is currently accepting only 
electronic submissions at this time. If a commenter finds that this 
change poses an undue hardship, please contact Appliance Standards 
Program staff at (202) 586-1445 to discuss the need for alternative 
arrangements. Once the Covid-19 pandemic health emergency is resolved, 
DOE anticipates resuming all of its regular options for public comment 
submission, including postal mail and hand delivery/courier.
    No telefacsimiles (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on the 
rulemaking process, see section V (Public Participation) of this 
document.
    Docket: The docket for this rulemaking, which includes Federal 
Register notices, 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: http://www.regulations.gov/docket/EERE-2021-BT-STD-0003. The docket web page contains instructions 
on how to access all documents, including public comments, in the 
docket.

FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC 
20585-0121. Email: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of Proposal
II. Authority and Background
    A. Authority
    B. Background
III. Discussion of Proposed Revisions to the Process Rule
    A. Restoring the Department's Discretion To Depart From the 
Process Rule's General Guidance
    B. Significant Energy Savings Threshold
    C. Determinations of Economic Justification
    D. Adoption of Industry Test Standards
    E. Finalization of Test Procedures Prior to Issuance of a 
Standards Proposal
    F. Direct Final Rules
    G. Negotiated Rulemaking
IV. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act of 1995
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Consistent With OMB's Information Quality Bulletin for 
Peer Review
V. Public Participation
    A. Participation in the Webinar
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Webinar
    D. Submission of Comments
VI. Approval of the Office of the Secretary

I. Summary of Proposal

    On February 14, 2020, the United States Department of Energy 
(``DOE'' or ``the Department'') published a final rule (``February 2020 
Final Rule'') in the Federal Register that made significant revisions 
to its ``Procedures, Interpretations, and Policies for

[[Page 18902]]

Consideration of New or Revised Energy Conservation Standards for 
Consumer Products'' found in 10 CFR part 430, subpart C, appendix A. 85 
FR 8626. DOE also published a companion final rule on August 19, 2020 
(``August 2020 Final Rule''), that clarified how DOE would conduct a 
comparative analysis across all trial standard levels when determining 
whether a particular trial standard level was economically justified. 
See 85 FR 50937. These rules collectively modified the Process Rule 
that DOE had originally issued on July 15, 1996 \1\ into its current 
form. See 10 CFR part 430, subpart C, appendix A (2021). While the 1996 
Process Rule acknowledged that the guidance would not be applicable to 
every rulemaking and that the circumstances of a particular rulemaking 
should dictate application of these generally applicable practices,\2\ 
the revisions made in the February 2020 Final Rule sought to create a 
standardized rulemaking process that was binding on the Department. 85 
FR 8626, 8634. In creating this one-size-fits-all approach, the 
February 2020 Final Rule and the August 2020 Final Rule also added 
additional steps to the rulemaking process that are not required by any 
applicable statute.
---------------------------------------------------------------------------

    \1\ ``Procedures, Interpretations and Policies for Consideration 
of New or Revised Energy Conservation Standards for Consumer 
Products,'' 61 FR 36974 (July 15, 1996) (``1996 Process Rule'').
    \2\ Id. at 36979.
---------------------------------------------------------------------------

    Subsequent events have caused DOE to reconsider the merits of a 
one-size-fits-all rulemaking approach to establishing and amending 
energy conservations standards and test procedures. Two of these events 
are particularly salient. First, on October 30, 2020, a coalition of 
non-governmental organizations filed suit under EPCA alleging that DOE 
has failed to meet rulemaking deadlines for 25 different consumer 
products and commercial equipment.\3\ On November 9, 2020, a coalition 
of States filed a virtually identical lawsuit.\4\ In response to these 
lawsuits, DOE has had to reconsider whether the benefits of a one-size-
fits-all rulemaking approach outweigh the increased difficulty such an 
approach poses in meeting DOE's statutory deadlines and obligations 
under EPCA. As mentioned previously, the 1996 Process Rule allowed for 
``case-specific deviations and modifications of the generally 
applicable rule.'' \5\ This allowed DOE to tailor rulemaking procedures 
to fit the specific circumstances of a particular rulemaking. For 
example, under the 1996 Process Rule, minor modifications to a test 
procedure would not automatically result in a 180-day delay before DOE 
could issue a notice of proposed energy conservation standards. 
Eliminating these unnecessary delays would better enable DOE to meet 
its obligations and deadlines under EPCA. Further, the sooner new or 
amended energy conservation standards eliminate less-efficient covered 
products and equipment from the market, the greater the resulting 
energy savings and environmental benefits.
---------------------------------------------------------------------------

    \3\ Natural Resources Defense Council v. DOE, Case No. 20-cv-
9127 (S.D.N.Y. 2020).
    \4\ State of New York v. DOE, Case No. 20-cv-9362 (S.D.N.Y. 
2020).
    \5\ 61 FR 36974, 36979.
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    Second, on January 20, 2021, the White House issued Executive Order 
13990, ``Protecting Public Health and the Environment and Restoring 
Science to Tackle the Climate Crisis.'' 86 FR 7037 (Jan. 25, 2021). 
Section 1 of that Order lists a number of policies related to the 
protection of public health and the environment, including reducing 
greenhouse gas emissions and bolstering the Nation's resilience to 
climate change. Id. at 86 FR 7037, 7041. Section 2 of the Order 
instructs all agencies to review ``existing regulations, orders, 
guidance documents, policies, and any other similar agency actions 
(agency actions) promulgated, issued, or adopted between January 20, 
2017, and January 20, 2021, that are or may be inconsistent with, or 
present obstacles to, [these policies].'' Id. Agencies are then 
directed, as appropriate and consistent with applicable law, to 
consider suspending, revising, or rescinding these agency actions and 
to immediately commence work to confront the climate crisis. Id. Under 
that same section, for certain explicitly enumerated agency actions, 
including the February 2020 and the August 2020 Final Rules, the Order 
directs agencies to consider publishing for notice and comment a 
proposed rule suspending, revising, or rescinding the agency action 
within a specific time frame. Under this mandate, DOE is directed to 
propose any major revisions to these two rules by March 2021, with any 
remaining revisions to be proposed by June 2021. Id. at 7038. DOE 
believes today's proposed revisions will help the United States meet 
the goals in section 1 of Executive Order 13990 by allowing DOE to 
fulfill its responsibilities under EPCA to issue energy conservation 
standards that result in significant conservation of energy and are 
technologically feasible and economically justified in a more timely 
and effective manner, thereby allowing for more rapid realization of 
energy savings and reductions in greenhouse gas emissions through 
future energy conservation standards.
    In light of these events, DOE has identified several aspects of the 
February 2020 and the August 2020 Final Rules (together, representing 
the current Process Rule) that present obstacles to DOE's ability to 
meet its obligations under EPCA, and thus appear to merit revision. 
Revision of the Process Rule would also support the goals in section 1 
of Executive Order 13990. In accordance with the time frame specified 
in that Executive Order, DOE proposes major revisions to the current 
Process Rule in this document and may propose additional revisions in a 
subsequent NOPR.
    In this document, DOE proposes to: (1) Restore DOE's discretion to 
depart from the Process Rule's general guidance; (2) remove the 
recently-added threshold for determining when the significant energy 
savings criterion is met; (3) remove the recently-added requirement to 
conduct a comparative analysis in addition to DOE's analysis of 
economic justification under the factors listed in 42 U.S.C. 
6295(o)(2)(B)(i); (4) revert to DOE's 1996 guidance regarding 
completion of test procedure rulemakings prior to issuance of a NOPR 
for an energy conservation standards rulemaking; (5) clarify that DOE 
may make modifications to industry test procedure standards to comply 
with the requirements of EPCA, as well as for certification, 
compliance, and enforcement purposes; (6) revert to DOE's prior 
practice on direct final rules; and (7) clarify that DOE will conduct 
negotiated rulemakings in accordance with the Negotiated Rulemaking 
Act. These revisions are summarized in the following table.

                                   List of Proposed Revisions in This Document
----------------------------------------------------------------------------------------------------------------
                        Section                                             Proposed revisions
----------------------------------------------------------------------------------------------------------------
1. Objectives..........................................  Revise language to be consistent with the newly
                                                          proposed Section 3.

[[Page 18903]]

 
2. Scope...............................................  No revisions proposed in this document.
3. Mandatory Application of the Process Rule...........  Replace with new Section 3, ``Application of the
                                                          Process Rule.''
4. Setting Priorities for Rulemaking Activity..........  No revisions proposed in this document.
5. Coverage Determination Rulemakings..................  Eliminate the 180-day period in paragraph (c) between
                                                          finalization of DOE test procedures and issuance of a
                                                          NOPR proposing new or amended energy conservation
                                                          standards.
6. Process for Developing Energy Conservation Standards  Eliminate paragraph (b), ``Significant Savings of
                                                          Energy.''
7. Policies on Selection of Standards..................  Eliminate text in paragraph (e)(2)(i) requiring DOE to
                                                          conduct a comparative analysis when determining
                                                          whether a proposed standard level is economically
                                                          justified.
8. Test Procedures.....................................  Clarify in paragraph (c) that DOE may revise consensus
                                                          industry test procedure standards for compliance,
                                                          certification, and enforcement purposes; eliminate the
                                                          180-day period in paragraph (d) between finalization
                                                          of DOE test procedures and issuance of a NOPR
                                                          proposing new or amended energy conservation
                                                          standards.
9. ASHRAE Equipment....................................  No revisions proposed in this document.
10. Direct Final Rules.................................  Revise section to clarify that DOE will implement its
                                                          direct final rule authority on a case-by-case basis.
11. Negotiated Rulemaking Process......................  Eliminate section.
12. Principles for Distinguishing Between Effective and  No revisions proposed in this document.
 Compliance Dates.
13. Principles for the Conduct of the Engineering        No revisions proposed in this document.
 Analysis.
14. Principles for the Analysis of Impacts on            Eliminate incorrect cross reference.
 Manufacturers.
15. Principles for the Analysis of Impacts on Consumers  No revisions proposed in this document.
16. Consideration of Non-Regulatory Approaches.........  No revisions proposed in this document.
17. Cross-Cutting Analytical Assumptions...............  No revisions proposed in this document.
----------------------------------------------------------------------------------------------------------------
* As part of the proposed revisions, DOE will renumber sections and subsections as required.

II. Authority and Background

A. Authority

    Title III, Parts B \6\ and C \7\ of the Energy Policy and 
Conservation Act, as amended, (``EPCA'' or ``the Act''), Public Law 94-
163 (42 U.S.C. 6291-6317, as codified), established the Energy 
Conservation Program for Consumer Products and Certain Industrial 
Equipment.\8\ Under EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) 
certification and enforcement procedures; (3) establishment of Federal 
energy conservation standards; and (4) labeling. Subject to certain 
criteria and conditions, DOE is required to develop test procedures to 
measure the energy efficiency, energy use, or estimated annual 
operating cost of each covered product and covered equipment during a 
representative average use cycle or period of use. (42 U.S.C. 6293; 42 
U.S.C. 6314) Manufacturers of covered products and covered equipment 
must use the prescribed DOE test procedure when certifying to DOE that 
their products and equipment comply with the applicable energy 
conservation standards adopted under EPCA and when making any other 
representations to the public regarding the energy use or efficiency of 
those products. (42 U.S.C. 6293(c); 42 U.S.C. 6295(s); 42 U.S.C. 
6314(a); and 42 U.S.C. 6316(a)) Similarly, DOE must use these test 
procedures to determine whether the products comply with energy 
conservation standards adopted pursuant to EPCA. (42 U.S.C. 6295(s); 42 
U.S.C. 6316(a))
---------------------------------------------------------------------------

    \6\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \7\ Part C was added by Public Law 95-619, Title IV, Sec.  
441(a). For editorial reasons, upon codification in the U.S. Code, 
Part C was redesignated Part A-1.
    \8\ All references to EPCA in this document refer to the statute 
as amended through Energy Act of 2020, Public Law 116-260 (Dec. 27, 
2020).
---------------------------------------------------------------------------

    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); 42 U.S.C. 6316(a)) In determining 
whether a standard is economically justified, EPCA requires DOE, to the 
greatest extent practicable, to consider the following seven factors: 
(1) The economic impact of the standard on the manufacturers and 
consumers; (2) the savings in operating costs, throughout the estimated 
average life of the products (i.e., life-cycle costs), compared with 
any increase in the price of, or in the initial charges for, or 
operating and maintaining expenses of, the products which are likely to 
result from the imposition of the standard; (3) the total projected 
amount of energy, or as applicable, water, savings likely to result 
directly from the imposition of the standard; (4) any lessening of the 
utility or the performance of the products likely to result from the 
imposition of the standard; (5) the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from the imposition of the standard; (6) the need for 
national energy and water conservation; and (7) other factors DOE finds 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)) Furthermore, the new or amended 
standard must result in a significant conservation of energy (42 U.S.C. 
6295(o)(3)(B); 42 U.S.C. 6313(a)(6); and 42 U.S.C. 6316(a)) and comply 
with any other applicable statutory provisions.

B. Background

    DOE conducted an effort between 1995 and 1996 to improve the 
process it follows to develop energy conservation standards for covered 
appliance products. This effort involved reaching out to many different 
stakeholders, including manufacturers, energy-efficiency advocates, 
trade associations, State agencies, utilities, and other interested 
parties for input. The result was the publication of a final rule in 
the Federal Register on July 15, 1996, titled, ``Procedures, 
Interpretations and Policies for Consideration of New or Revised Energy 
Conservation Standards for Consumer

[[Page 18904]]

Products'' (``1996 Process Rule''). 61 FR 36974. This document was 
codified at 10 CFR part 430, subpart C, appendix A, and it became known 
colloquially as the ``Process Rule.'' The goal of the Process Rule was 
to elaborate on the procedures, interpretations, and policies that 
would guide the Department in establishing new or revised energy 
conservation standards for consumer products. The rule was issued 
without notice and comment under the Administrative Procedure Act's 
(``APA'') exception for ``interpretative rules, general statements of 
policy, or rules of agency organization, procedure, or practice.'' (5 
U.S.C. 553(b)(A))
    On December 18, 2017, DOE issued a request for information 
(``RFI'') on potential revisions to the Process Rule. 82 FR 59992. DOE 
subsequently published a NOPR regarding the Process Rule in the Federal 
Register on February 13, 2019. 84 FR 3910. After considering the 
comments it received DOE then published a final rule in the Federal 
Register on February 14, 2020, which significantly revised the Process 
Rule. 85 FR 8626.
    While DOE issued the 1996 Process Rule without notice and comment 
as an interpretative rule, general statement of policy, or rule of 
agency organization, procedure, or practice, the February 2020 Final 
Rule was issued as a legislative rule subject to notice and comment. 
For several reasons, as stated throughout this document, DOE believes 
the Process Rule is best described and utilized as generally applicable 
guidance that may guide, but not bind, the Department's rulemaking 
process. The revisions proposed in this document are intended to 
clarify this point. In accordance with Executive Order 13990, DOE is 
using a notice and comment process to propose revisions to the Process 
Rule. 86 FR 7037.

III. Discussion of Proposed Revisions to the Process Rule

    The following sections discuss the proposed revisions to the 
Process Rule and request comment on those proposals. In addition to 
those specific requests for comment, DOE requests comment, data, and 
information regarding all aspects of this notice of proposed 
rulemaking.

A. Restoring the Department's Discretion To Depart From the Process 
Rule's General Guidance

    One of the most significant changes made to the Process Rule in the 
February 2020 Final Rule was to turn what had been guidance on usual 
practices for issuing new or amended energy conservation standards and 
test procedures into binding requirements. The July 1996 Final Rule 
contained procedures, interpretations, and policies that DOE believed 
would be appropriate for general use in conducting energy conservation 
standard and test procedure rulemakings. 61 FR 36974, 36979. DOE also 
acknowledged the possibility that the usual practices would not be 
appropriate for every rulemaking and that the circumstances of a 
particular rulemaking should dictate application of these generally 
applicable practices, subject to public notice explaining any such 
deviations. Id.
    In making the Process Rule binding, DOE determined at the time it 
issued the February 2020 final rule that ``promoting a rulemaking 
environment that is both predictable and consistent'' outweighed the 
need for ``flexibility to fit the appropriate process to the appliance 
standard or test procedure at issue.'' February 2020 Final Rule, 85 FR 
8626, 8633-8634. Additionally, in response to comments that mandatory 
application of the Process Rule could conflict with DOE's statutory 
obligations under EPCA (e.g., rulemaking deadlines), DOE stated that 
the Process Rule had been drafted to closely follow and implement EPCA. 
Id. at 8634.
    As discussed earlier in this document, DOE is reconsidering whether 
mandatory application of the Process Rule would have a negative effect 
on DOE's ability to meet the statutory deadlines established under EPCA 
and other applicable requirements. DOE acknowledges it has often been 
unable to meet its rulemaking deadlines. The Process Rule, however, 
mandates procedural steps that make the rulemaking process lengthier 
than EPCA requires. Under EPCA, DOE is required to review energy 
conservation standards for covered products and equipment at least once 
every six years to determine if a more-stringent standard would result 
in significant conservation of energy and is technologically feasible 
and economically justified. (42 U.S.C. 6295(m)(1); 42 U.S.C. 
6313(a)(6)(C); 42 U.S.C. 6316(a)) Similarly, DOE is also required to 
review test procedures for covered products and equipment at least once 
every seven years to determine if improvements can be made. (42 U.S.C. 
6293(b)(1); 42 U.S.C. 6314(a)(1)(A)) DOE currently has energy 
conservation standards and test procedures in place for more than 60 
categories of covered products and equipment and is typically working 
on anywhere from 50 to 100 rulemakings (for both energy conservation 
standards and test procedures) at any one time. As a result, any 
modifications or additions to the procedural requirements laid out in 
EPCA may affect DOE's ability to meet the rulemaking deadlines in EPCA.
    For instance, EPCA does not require DOE to issue any rulemaking 
documents in advance of a NOPR. The February 2020 Final Rule, on the 
other hand, mandates use of an early assessment RFI and either an 
advanced notice of proposed rulemaking (``ANOPR'') or a framework 
document with a preliminary analysis. DOE recognizes the importance of 
gathering early stakeholder input and has used RFIs and ANOPRs in the 
past. But an RFI followed by a ANOPR may not be the most efficient 
method for gathering early stakeholder input in all rulemakings. For 
instance, EPCA requires DOE to revisit a determination that standards 
do not need to be amended within three years. (42 U.S.C. 6295(m)(3)(B)) 
In such cases, particularly with respect to covered products and 
equipment that have gone through multiple rounds of rulemakings, a 
notice of data availability (``NODA'') that updates the analysis from 
the previous determination, as opposed to an early assessment RFI and 
an ANOPR, may be best suited for gathering early stakeholder input and 
establishing an adequate rulemaking record. As a result, mandatory 
application of the Process Rule requirement for early assessment RFIs 
and ANOPRs could in some circumstances make it more difficult for DOE 
to meet its statutory deadlines, while adding little to no value to the 
rulemaking process.
    The February 2020 Final Rule also required that DOE identify any 
necessary modifications to established test procedures prior to 
initiating the standards development process and finalize those 
modifications, if any, 180 days prior to publication of a NOPR 
proposing new or amended energy conservation standards. DOE stated that 
this requirement would allow stakeholders to provide more effective 
comments on the proposed energy conservation standards. 85 FR 8626, 
8676. That being said, this requirement is not found in EPCA, where 
energy conservation standards and test procedures are under different 
review cycles (i.e., six and seven years, respectively). By requiring 
test procedure modifications to be identified and finalized 180 days 
prior to proposing new or amended energy conservation standards, the 
Process Rule has effectively mandated a six-year review cycle for test 
procedures. Further, this requirement would apply regardless of the 
complexity of the modifications made to the test

[[Page 18905]]

procedure. Application of this provision could restrict DOE's ability 
to meet its statutory obligations while offering little benefit in 
situations where DOE makes minor modifications or adjustments to a test 
procedure. This proposed change is discussed in greater detail in 
section III.E.
    These examples illustrate what was clearly understood in the July 
1996 Final Rule. While the procedures, interpretations, and policies 
laid out in the Process Rule are generally applicable to DOE's 
rulemaking program, application of these guidelines to a specific 
rulemaking should be determined on a case-by-case basis. 61 FR 36974, 
36979. Accordingly, DOE proposes to revert the Process Rule back to its 
original, non-binding status. DOE requests comments, information, and 
data on whether the Process Rule should be non-binding or, 
alternatively, whether the rule should remain binding but with revised 
provisions.
    In addition, consistent with this proposal to revert the Process 
Rule back to its original form as non-binding guidance, DOE also 
proposes to clarify that the Process Rule does not create legally 
enforceable rights. DOE does not intend for departures from the 
generally applicable guidance contained in the Process Rule to serve as 
the basis for potential procedural legal challenges. It is noted, 
however, that this proposed clarification, which is similar to the 
general approach contained in the 1996 Process Rule, would not impact 
the ability of a party to raise a challenge regarding the substantive 
merits of a given rulemaking or the procedural steps delineated under 
EPCA or the APA. See 42 U.S.C. 6306 (applying judicial review to EPCA's 
consumer product provisions) and 42 U.S.C. 6316(a)-(b) (extending the 
application of 42 U.S.C. 6306 to commercial and industrial equipment). 
DOE seeks comment on this proposed clarification.

B. Significant Energy Savings Threshold

    EPCA provides that the Secretary of Energy may not prescribe an 
amended or new energy conservation standard if the Secretary determines 
that such standard will not result in significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B); 42 U.S.C. 6313(a)(6)(A)(ii)(II); and 
42 U.S.C. 6316(a)) Congress did not define the statutory term 
``significant conservation of energy,'' and, for several decades prior 
to the February 2020 Process Rule, DOE also did not provide specific 
guidance or a numerical threshold for determining what constitutes 
significant conservation of energy. Instead, DOE determined on a case-
by-case basis whether a particular rulemaking would result in 
significant conservation of energy.
    In a departure from this practice, DOE adopted a numerical 
threshold for significant conservation of energy in the February 2020 
Process Rule, which presently applies to all energy conservation 
standards rulemakings for both covered products and equipment. 
Specifically, the new threshold requires that an energy conservation 
standard result in a 0.30 quad reduction in site energy use over a 30-
year analysis period or a 10-percent reduction in site energy use over 
that same period. In explaining the benefits of the new threshold, DOE 
stated that it would ensure that economically-justified standards would 
be developed, while also making the rulemaking process more 
predictable. 85 FR 8626, 8670.
    DOE is reconsidering whether the numerical threshold established in 
the February 2020 Final Rule allows DOE to fully consider whether an 
energy conservation standard would result in significant conservation 
of energy. In particular, DOE is reevaluating whether the significance 
of energy savings offered by a new or amended energy conservation 
standard can be determined without knowledge of the specific 
circumstances surrounding a given rulemaking. For example, the United 
States has now rejoined the Paris Agreement and will exert leadership 
in confronting the climate crisis.\9\ These actions have placed an 
increased emphasis on the importance of energy savings that reduce 
greenhouse gas emissions, but the threshold established in the February 
2020 Final Rule does not allow DOE to account for the increased 
significance of energy savings that may help mitigate the climate 
crisis. Additionally, some covered products and equipment have most of 
their energy consumption occur during periods of peak energy demand. 
The impacts of these products on the energy infrastructure can be more 
pronounced than products with relatively constant demand. For example, 
consumer refrigerators operate 24 hours per day, 365 days per year. 
Residential air conditioners, on the other hand, typically operate 
during peak demand, e.g., during hot summer days. Reducing energy use 
during periods of peak demand helps reduce stress on energy 
infrastructure. As a result, a 0.3 quad reduction in energy use for 
residential air conditioners will have a greater impact on reducing the 
stress on U.S. energy infrastructure than a 0.3 quad reduction in 
energy use for consumer refrigerators. These differences can also be 
exacerbated by geographical and population differences. Lastly, 
establishing a set, numerical site energy threshold for all covered 
products and equipment does not allow DOE to account for differences in 
primary energy and full-fuel-cycle (``FFC'') effects for different 
covered products and equipment when determining whether energy savings 
are significant. Primary energy and FFC effects include the energy 
consumed in electricity production (depending on load shape), in 
distribution and transmission, and in extracting, processing, and 
transporting primary fuels (i.e., coal, natural gas, petroleum fuels), 
and thus present a more complete picture of the impacts of energy 
conservation standards. For example, according to Annual Energy Outlook 
2021, 1 quad of site electricity energy consumption in 2022 corresponds 
to approximately 3.05 quads of FFC energy consumption (for a generic 
end-use load shape).\10\ By contrast, 1 quad of site natural gas or oil 
energy consumption in 2022 corresponds to 1.11 and 1.17 quads of FFC 
energy consumption, respectively. These are just some examples of any 
number of factors that cannot be fully accounted for when using DOE's 
current, static threshold for significant conservation of energy.
---------------------------------------------------------------------------

    \9\ See Executive Order 14008, 86 FR 7619 (Feb. 1, 2021) 
(``Tackling the Climate Crisis at Home and Abroad'').
    \10\ Available at: https://www.eia.gov/outlooks/aeo/ aeo/.
---------------------------------------------------------------------------

    Accordingly, DOE proposes to eliminate the current threshold for 
determining significant conservation of energy and to revert to its 
prior practice of making such determinations on a case-by-case basis. 
DOE requests comments, information, and data on whether its proposed 
approach is appropriate for determining significant conservation of 
energy or on any suggested alternatives.

C. Determinations of Economic Justification

    Under EPCA, any new or amended standard 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)) To 
ensure that DOE meets this statutory mandate, DOE employs a walk-down 
process to select energy conservation standard levels. As a first step 
in the process, DOE screens out technologies for improving energy 
efficiency that are not feasible. DOE then uses the remaining 
technologies to create a range of trial standard levels (``TSLs''). 
These TSLs typically include:

[[Page 18906]]

(1) The most-stringent TSL that is technologically feasible (i.e., the 
``max-tech'' standard); (2) the TSL with the lowest life-cycle cost; 
(3) a TSL with a payback period of not more than three years; and (4) 
any TSLs that incorporate noteworthy technologies or fill in large gaps 
between efficiency levels of other TSLs. Beginning with the max-tech 
TSL, DOE then determines whether a specific TSL is economically 
justified. In making that determination, DOE determines, after 
reviewing public comments and data, whether the benefits of the 
standard exceed its burdens by, to the greatest extent practicable, 
considering the seven factors described in 42 U.S.C. 6295(o)(2)(B)(i). 
If DOE determines that the max-tech TSL is economically justified, the 
analysis ends, and DOE adopts the max-tech TSL as the new or amended 
standard. However, if DOE determines that the max-tech TSL is not 
economically justified, DOE walks down to consider the next-most-
stringent TSL. This walk-down process continues until DOE determines 
that a TSL is economically justified or that none of the TSLs are 
economically justified.
    In the August 2020 Final Rule, DOE modified this process to require 
that determinations of economic justification include a comparison of 
the benefits and burdens of the selected TSL against the benefits and 
burdens of the baseline case and all other TSLs. 85 FR 50937, 50944. 
DOE stated its belief that such approach would allow for more reliable 
determinations that a specific TSL is economically justified. Id. at 
50939. While the requirement to conduct a comparative analysis affected 
DOE's process for determining whether a TSL is economically justified, 
it did not dictate any particular outcome or require DOE to modify its 
general approach of walking down from the max-tech TSL.
    DOE's decision to add a comparative analysis to the process for 
determining whether a TSL is economically justified generated 
considerable confusion amongst DOE's stakeholders. Perhaps the greatest 
confusion stemmed from whether the requirement to conduct a comparative 
analysis would conflict with DOE's statutory mandate to select the TSL 
that results in the maximum improvement in energy efficiency that is 
technologically feasible and economically justified. Several 
stakeholders were concerned that DOE would use the comparative analysis 
to select a TSL that maximizes net benefits, as opposed to the TSL that 
maximizes energy savings and is technologically feasible and 
economically justified. Id. While DOE reiterated its commitment to 
follow the requirements in EPCA in the August 2020 Final Rule, the 
Department also stated that ``the purpose of EPCA's seven factors is 
not to select the standard that achieves the maximum improvement in 
energy efficiency, no matter how minute an estimated cost savings.'' 85 
FR 50937, 50939 (emphasis added). In retrospect, DOE has come to 
understand that these statements are somewhat contradictory and 
generate uncertainty regarding how DOE would use a comparative analysis 
to determine whether a specific TSL is economically justified.
    In light of this uncertainty, DOE proposes to eliminate the 
requirement to conduct a comparative analysis when determining whether 
a specific TSL is economically justified. DOE has tentatively concluded 
that the process and criteria laid out in 42 U.S.C. 6295(o)(2)(B)(i) 
for determining economic justification is already sufficiently robust. 
And, any improvement to that process that may result from the use of a 
comparative analysis is outweighed by the uncertainty it casts over 
DOE's statutory obligation to select a standard that results in the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified and the additional burden the 
comparative analysis imposes on DOE. DOE requests comments, 
information, and data on whether this proposal offers an appropriate 
approach for determining whether a TSL is economically justified.

D. Adoption of Industry Test Standards

    The February 2020 Final Rule amended 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. 85 FR 8626, 
8678-8682, 8708. In essence, DOE sought to explain and codify its 
established practice, which is to analyze the appropriate consensus 
standard, with the input of stakeholders and the interested public, to: 
(1) Determine that the EPCA statutory criteria are met and use it as 
the Federal test procedure; (2) modify it so that it complies with the 
statutory criteria, or (3) reject it and develop an entirely new test 
procedure.
    On further review, DOE has come to see that its attempt at 
clarification may have had the opposite effect, creating the false 
impression that DOE had put in place a new presumption for an ``as-is'' 
adoption of industry consensus standards without meaningful review. The 
resulting confusion led to complaints that DOE was being overly 
deferential to industry and abdicating its responsibilities under the 
statute to ensure that any industry consensus standards adopted as 
Federal test procedures comport with the relevant requirements of EPCA. 
Such outcome was never DOE's intention, and accordingly, the Department 
proposes to clarify that while DOE will first consider applicable 
industry consensus standards, such standards must first undergo a 
thorough agency review to ensure that they meet the requirements of the 
statute, either with or without modification. The following discussion 
explains DOE's process for consideration of industry consensus 
standards as Federal test procedures. See 85 FR 8676-8682.
    As an initial matter, the requirement at section 8(c) of the 
Process Rule applies to covered products and equipment where use of a 
specific consensus standard is not otherwise mandated by EPCA. In all 
other cases, it has been DOE's established practice to routinely adopt 
consensus standards as Federal test procedures, which is consistent 
with both EPCA and other relevant statutory provisions. However, in 
order to adopt any such test procedure, the Department must apply 
certain statutory criteria contained in two provisions of EPCA--42 
U.S.C. 6293(b)(3)-(4) or 42 U.S.C. 6314(a)(2)-(3), depending upon the 
specific covered product or covered 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.\11\
---------------------------------------------------------------------------

    \11\ The language in 42 U.S.C. 6314(a)(2)-(3) differs slightly 
from its parallel sections in 42 U.S.C. 6293(b)(3)-(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.
---------------------------------------------------------------------------

    Furthermore, the National Technology Transfer and Advancement Act 
(``NTTAA'') and OMB Circular A-119,

[[Page 18907]]

``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/. These provisions seek to promote a 
number of public policy objectives, including 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. DOE agrees that 
consideration of industry consensus standards furthers these objectives 
and also facilitates compliance and reduces burdens, because the 
regulated industry is already familiar with these procedures.
    While it is true that EPCA does not require the use of consensus 
standards for test procedures for certain equipment, neither does it 
prohibit such use, and again, the NTTAA and OMB Circular A-119 favor 
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. Consensus standards are a 
logical foundation from which to begin the Federal test procedure 
process. Accordingly, DOE finds that the current Process Rule 
implements both the underlying purpose of EPCA with respect to test 
procedures, as well as the NTTAA and OMB Circular A-119 with respect to 
consensus standards, and ultimately, it is a reasonable exercise of the 
agency's discretion in its test procedure rulemaking activity. As such, 
DOE is not proposing to change this aspect of the Process Rule.
    Turning from DOE's authority to consider industry consensus 
standards to the Department's process for considering such standards as 
a Federal test procedure, DOE notes that because industry consensus 
test procedures are not generally developed for regulatory purposes, a 
careful review by the agency is necessary and appropriate to ensure 
that the relevant statutory criteria are met, with modifications as 
necessary. 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. DOE will also assess 
whether an industry consensus standard would generate consistent and 
repeatable results that are compatible with the Department's 
compliance, certification, and enforcement (``CC&E'') regulations. 
Failure to generate such results would render such test procedure 
impractical for regulatory purposes, a key consideration under both the 
NTTAA and OMB Circular A-119.
    If the consensus standard does not meet both relevant statutory 
criteria (as detailed earlier) and CC&E requirements, DOE will not 
adopt the consensus standard without modification. It will then be 
necessary for DOE and stakeholders, during the notice and comment 
rulemaking process, to determine what specific modifications, if any, 
will bring the consensus standard into compliance with the statutory 
criteria and CC&E requirements. If the consensus standard cannot be 
modified to meet the statutory criteria and CC&E requirements, DOE will 
not use it and will need to craft its own test procedure. As with all 
test procedure rules, 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. To 
the extent that modifications to these industry consensus standards 
impose costs on industry (i.e., DOE modifications require different 
testing equipment or facilities), DOE must weigh whether such costs 
present an undue burden on manufacturers. (42 U.S.C. 6293(b)(3); 42 
U.S.C. 6314(a)(2))
    While DOE believes that the above discussion should dispel any 
lingering confusion regarding the application of the Process Rule to 
DOE's consideration of industry consensus standards in setting Federal 
test procedures and that no modifications to the current text are 
necessary, DOE remains open to providing further clarification. In that 
vein, DOE proposes to include additional language at paragraph 8(c) of 
the Process Rule, stating that DOE may also make further modifications 
as necessary to ensure industry test standards are compatible with the 
relevant statutory requirements, as well as DOE's compliance, 
certification, and enforcement requirements.
    DOE invites comment and suggestions on this aspect of its proposal.

E. Finalization of Test Procedures Prior to Issuance of a Standards 
Proposal

    In the February 14, 2020 Final Rule, DOE adopted at section 8(d) of 
the Process Rule, a requirement that Federal test procedures 
establishing methodologies used to evaluate new or amended standards 
will be finalized at least 180 days before publication of a NOPR 
proposing new or amended energy conservation standards. 85 FR 8626, 
8678, 8708. DOE explained that this approach would allow interested 
parties to gain some experience with such test procedure, thereby 
allowing additional insight into and effective comments on proposed 
standards. One commenter (Zero Zone) also cautioned 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. DOE also acknowledged past deviations 
from this preferred, sequential approach in which it conducted test 
procedure and standards rulemakings concurrently. 85 FR 8626, 8676.
    After further reflection, DOE has determined that while sequencing 
of test procedure and energy conservation standards rulemakings may be 
sensible, competing considerations call into doubt the agency's 
decision to require an inflexible 180-day pause between those 
rulemaking activities. Accordingly, for the reasons that follow, DOE 
proposes to remove the requirement for a 180-day pause between 
completion of a test procedure final rule and proposal of an energy 
conservation standard and revert to the guidance used in the 1996 
Process Rule, i.e., that test procedure rulemakings ``will be finalized 
prior to publication of a NOPR proposing new or amended energy 
conservation standards,'' thereby providing the agency flexibility in 
individual rulemaking proceedings. DOE seeks comment on whether there

[[Page 18908]]

are situations where it may be beneficial to maintain a 180-day period, 
or some other timeframe, between finalization of a test procedure and 
issuance of a proposed energy conservation standard.
    Further reflection regarding the implications of following the 
approach set out in the February 2020 Final Rule has led DOE to 
tentatively conclude that the rule inadvertently painted with too broad 
a brush in addressing certain stakeholders' concerns about appropriate 
spacing of test procedure and energy conservation standards 
rulemakings. Not every test procedure rulemaking would be expected to 
involve the same level of complexity. For example, on September 21, 
2018, DOE amended the test procedure for integrated light-emitting 
diode lamps to allow manufacturers to conduct ``time to failure'' 
testing at elevated temperatures. 83 FR 47806. The prior DOE test 
procedure specified that such testing had to be conducted at 25 degrees 
Celsius with a 5 degree tolerance, while the amended test procedure 
stated that manufacturers could continue to test under those conditions 
or use a higher temperature with the same 5 degree tolerance. Id. at 
47809. This was a simple modification to one test condition in the 
entire test procedure. Further, the change in the test procedure did 
not require manufacturers to make any adjustments as they were allowed 
to continue to use the original temperature condition specified in the 
test procedure. In contrast to this simple test procedure modification, 
on December 29, 2016, DOE amended the test procedures for consumer and 
commercial water heaters to translate multiple performance metrics into 
a single uniform efficiency metric, as required by EPCA. 81 FR 96204. 
This test procedure amendment required DOE to develop a mathematical 
conversion, based on test data, that would convert existing energy 
efficiency metrics to the uniform efficiency metric for a wide variety 
of consumer and commercial water heater models. Further, manufacturers 
had to either use this mathematical conversion to recertify their water 
heaters by converting existing efficiency and performance ratings or 
retest their models. Id. at 96227. The February 2020 Final Rule removed 
DOE's ability to effectively distinguish between these two different 
situations, by imposing the same 180-day pause upon a minor technical 
modification as it does on a wholesale test procedure revision. It also 
created new uncertainty surrounding the impact that a later-discovered 
error in the test procedure would have on a related standards 
rulemaking (i.e., must the standards rulemaking be paused until or 
entirely restarted after the requisite test procedure change is made?). 
Once again, DOE has tentatively concluded that it should have 
flexibility to address such situations on a case-by-case basis as they 
arise. DOE's proposed revisions are designed to remove the rigidity of 
a one-size-fits-all approach to the sequencing of test procedure and 
energy conservation standards rulemakings, in favor of an approach that 
allows the agency to move more nimbly as circumstances warrant, while 
still recognizing the importance of resolving test procedure issues in 
advance of a notice of proposed rulemaking for energy conservation 
standards.
    Finally, DOE proposes making these changes regarding the sequencing 
of test procedure and standards rulemakings after reevaluating the 
potential delays that may ensue from the mandatory 180-day spacing 
requirement. DOE currently has a number of outstanding energy 
conservation standards rulemakings subject to statutory or judicial 
deadlines. DOE is sensitive to the negative impact that the rigid 
application of a mandatory 180-day spacing requirement could have in 
certain circumstances, not only upon the Department's ability to 
expeditiously satisfy these legal deadlines, but also in terms of 
EPCA's mandate to pursue significant energy and cost savings for the 
benefit of individual consumers and the Nation, which in those 
circumstances may outweigh the informational and public notice benefits 
the 180-day period offers. As noted previously, there may also be 
circumstances where such data and input may materially inform the 
rulemaking process and in those instances, a longer rulemaking timeline 
may be justified.
    DOE seeks further comment on its proposal to eliminate the required 
180-day period between finalization of a test procedure rulemaking and 
issuance of a standards NOPR. DOE also seeks comments on any 
alternatives that it might consider to balance the interests identified 
in this discussion, including whether DOE should consider retaining a 
set period between the finalization of a test procedure and the 
issuance of a standards NOPR.

F. Direct Final Rules

    The Energy Independence Security Act of 2007, Public Law 110-140 
(Dec. 19, 2007), amended EPCA, in relevant part, to grant DOE authority 
to issue a ``direct final rule'' (``DFR'') to establish energy 
conservation standards in appropriate cases. Under this authority, 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 (including representatives of manufacturers of covered 
products, States, and efficiency advocates),'' provided DOE determines 
the energy conservation standards recommended in the joint proposal 
conform with the requirements of 42 U.S.C. 6295(o) or 6313(a)(6)(B), as 
applicable. (42 U.S.C. 6295(p)(4)(A)) While these two provisions 
contain many of the requirements DOE typically must satisfy in issuing 
an energy conservation standard, such as the prohibition against 
setting less-stringent standards (anti-backsliding requirement), they 
do not adopt all the requirements of a typical energy conservation 
standard rulemaking. For example, 42 U.S.C. 6295(o) does not specify a 
mandatory time period between promulgation of an energy conservation 
standard and the compliance date for that standard (i.e., lead time). 
DOE has looked to the joint proposals to fill in these necessary 
details. This process had been well-received by manufacturers, trade 
organizations, and energy efficiency advocates, as it allowed more room 
for negotiation, which in turn made it easier for stakeholders to reach 
a consensus agreement. February 2020 Final Rule, 85 FR 8626, 8682-8683.
    In a departure from this practice, DOE clarified in the February 
2020 Final Rule that 42 U.S.C. 6295(p)(4) is a procedure for issuing a 
DFR and not an independent grant of rulemaking authority. As such, 
under the current Process Rule, any joint proposal submitted to DOE 
under the DFR provision must identify a separate rulemaking authority 
such as 42 U.S.C. 6295(m) (amendment of standards) or 42 U.S.C. 6295(n) 
(petition for amended standard) and comply with the requirements (e.g., 
compliance periods) listed in that provision. Id. DOE also provided 
additional guidance on the Department's interpretation of ``fairly 
representative'' and obligations upon receipt of an adverse comment. 
Id. at 85 FR 8683-8685.
    DOE is reconsidering whether these clarifications regarding the DFR 
process are appropriate or necessary. This reconsideration begins with 
the language of the statute. The language in 42 U.S.C. 6295(p)(4) is 
clear on when DOE may issue standards recommended by interested persons 
that are fairly representative of relative points of view as a DFR, and 
that is when the

[[Page 18909]]

recommended standards are in accordance with 42 U.S.C. 6295(o) or 42 
U.S.C. 6313(a)(6)(B), as applicable. There are no other requirements 
listed, which is unsurprising considering the unique circumstances of 
rules issued under the DFR provision. DOE's overarching statutory 
mandate in issuing energy conservation standards is to choose a 
standard that results in the maximum improvement in energy efficiency 
that is technologically feasible and economically justified--a 
requirement found in 42 U.S.C. 6295(o).
    Many of the other requirements found in EPCA constrain DOE's 
discretion in setting standards for the benefit of stakeholders. For 
example, mandatory compliance periods give manufacturers enough time to 
design new products and shift manufacturing capacity as necessary. 
Similarly, EPCA provides that manufacturers shall not be required to 
apply new standards to a product with respect to which other new 
standards have been required during the prior 6-year period. (42 U.S.C. 
6295(m)(4)(B)) But, if manufacturers agree to a shorter compliance 
period or two tiers of standards as part of a consensus agreement 
submitted under the DFR provision, it would be odd if DOE were then 
forced to deny such a proposal based upon requirements designed to 
protect the interests of those same manufacturers. That being said, DOE 
will still deny such a proposal if it is not fairly representative of 
manufacturers' points of view. (42 U.S.C. 6295(p)(4)(A)) Similarly, DOE 
will also deny such a proposal if it does not meet applicable criteria 
in 42 U.S.C. 6295(o), which, among other things, require DOE to 
consider the economic impact on manufacturers (including small 
manufacturers) and any possible lessening of competition that may 
result from imposition of the proposed standard. As to this latter 
point, DOE receives a written determination from the Attorney General 
as to the anti-competitive effects from a proposed standard. See 42 
U.S.C. 6295(o)(2)(B)(i)(V) and (ii).
    Issuing standards through a consensus agreement among stakeholders 
is different from DOE's normal rulemaking process. And, there is a 
corresponding difference in the statutory criteria that DOE must apply 
to each process, one that is made clear by the language in 42 U.S.C. 
6295(p)(4). Accordingly, DOE proposes to eliminate the requirement that 
DFR submittals identify a separate rulemaking authority and revert to 
the Department's prior practice of evaluating DFR submittals based on 
the criteria laid out in 42 U.S.C. 6295(p)(4). DOE requests comments, 
information, and data on whether its proposed approach for evaluating 
DFR submittals is appropriate.
    As discussed previously, DOE also provided additional guidance on 
the Department's interpretation of ``fairly representative'' and 
obligations upon receipt of an adverse comment. Upon reconsideration, 
DOE believes that the additional guidance may be overly prescriptive in 
some circumstances. For instance, the February 2020 Final Rule required 
a group submitting a DFR proposal to include larger concerns and small 
businesses in the regulated industry/manufacturer community, energy 
advocates, energy utilities (as appropriate for the given covered 
product or equipment), consumers, and States. 85 FR 8626, 8683. While 
this list may be appropriate for some DFR proposals, it is not 
universally applicable. For instance, some of DOE's regulated 
industries do not have small business manufacturers (e.g., external 
power supplies).\12\ DOE also stated it would publish in the Federal 
Register any DFR proposal to obtain feedback as to whether the proposal 
was submitted by a group that is fairly representative of relevant 
points of view. Id. Once again, this may be good practice for some DFR 
proposals (e.g., those concerning newly covered products or equipment), 
but it may be unnecessary for most DFR proposals. The bulk of DOE's 
covered products and equipment have gone through multiple rounds of 
rulemakings, and DOE has become very familiar with the relevant points 
of view for these covered products and equipment.
---------------------------------------------------------------------------

    \12\ See 85 FR 30636, 30648 (May 20, 2020).
---------------------------------------------------------------------------

    With respect to DOE's discussion of adverse comments in the 
February 2020 Final Rule, DOE largely repeated the requirements listed 
in 42 U.S.C. 6295(p)(4)(C). Namely, DOE will withdraw a DFR if one or 
more adverse comments may provide a reasonable basis for withdrawing 
the rule under 42 U.S.C. 6295(o), 42 U.S.C. 6313(a)(6)(B), or any other 
applicable law. The one clarification DOE offered was that the 
Department may consider comments as adverse, even if the issue was 
brought up previously during the rulemaking process. Id. at 85 FR 8685. 
However, this clarification does not offer any insight into how DOE 
will determine whether an adverse comment provides a reasonable basis 
for withdrawing the rule.
    DOE is considering whether the guidance contained in the February 
2020 Final Rule concerning DFRs is unnecessary or redundant to the 
statutory language in 42 U.S.C. 6295(p)(4) and is proposing to add 
``where appropriate'' to clarify that DOE retains the ability to 
determine what ``fairly representative'' means for a given DFR 
submission on a case-by-case basis. DOE requests comments on the merits 
of its proposed revisions to the DFR section, as well as any 
alternative approaches, such as deletion of or amendments to the 
section or retention of aspects of this section. Regardless of whether 
the DFR section in the Process Rule is retained, deleted, or revised, 
DOE will continue to evaluate DFR proposals in accordance with 42 
U.S.C. 6295(p)(4). Additionally, DOE seeks comment regarding small 
business perspectives and related impacts as to the proposed 
application of the DFR provision of EPCA.

G. Negotiated Rulemaking

    As part of the February 2020 Final Rule amending DOE's Process 
Rule, the Department adopted a new section 11, Negotiated Rulemaking 
Process, to set forth the procedures that DOE would follow when using 
negotiated rulemaking under the Appliance Standards Program. 85 FR 
8626, 8708-8709. These provisions discussed DOE's historical use of 
negotiated rulemaking, along with a few modifications to the agency's 
past approach. 85 FR 8626, 8685-8686. As the final rule explained, 
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. This process is conducted 
in accordance with the requirements of the Negotiated Rulemaking Act 
(``NRA''), Public Law 104-320 (5 U.S.C. 561-570). To facilitate 
potential negotiated rulemakings, DOE established the Appliance 
Standards and Rulemaking Federal Advisory Committee (``ASRAC'') to 
comply with the Federal Advisory Committee Act, 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, with one member from the ASRAC 
committee attending and participating in the meetings of the 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

[[Page 18910]]

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. DOE has recognized the 
value of this process and encouraged submission of joint stakeholder 
recommendations. Id.
    The February 2020 Final Rule also discussed the following key 
points related to negotiated rulemaking at 85 FR 8626, 8685 (Feb. 14, 
2020):
     Negotiated rulemakings will go through the ASRAC process 
outlined above, and the appropriateness of a negotiated rulemaking for 
any given rulemaking will be determined on a case-by-case basis.
     In making this determination, DOE will use a convener to 
ascertain, in consultation with relevant stakeholders, whether review 
for a given product or equipment type would be conducive to negotiated 
rulemaking, with the agency evaluating the convener's recommendation 
before reaching a decision on such matter.
     The following five factors militate in favor of a 
negotiated rulemaking: (1) Stakeholders have 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, a neutral and 
independent facilitator, who is not a DOE employee or consultant, shall 
be present at all ASRAC working group meetings.
     DOE will set aside a portion of each ASRAC working group 
meeting to receive input and data from non-members of the ASRAC working 
group.
     Finally, a negotiated rulemaking in which DOE participates 
under the ASRAC process will not result in the issuance of a DFR, and 
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.
    After further consideration, DOE has tentatively determined that 
further changes to its approach to negotiated rulemaking are necessary 
and appropriate. Although section 11 of the Process Rule largely 
mirrors the process DOE has followed when the Department has 
determined, on a case-by-case basis, that such alternative rulemaking 
procedures would be useful to supplement the normal notice-and-comment 
rulemaking process, DOE proposes to make certain modifications to the 
process articulated in that section. On a number of points, DOE seeks 
to revert to the approach it employed prior to promulgation of the 
February 2020 Final Rule. The following paragraphs outline these 
proposed changes.
    First, DOE would clarify that although the Department has 
frequently used facilitators and considered whether to use convenors in 
past negotiated rulemakings, the use of such individuals is not 
required under the Negotiated Rulemaking Act (see 5 U.S.C. 563(b)). A 
``convenor'' performs the task of canvassing various interested parties 
regarding the potential and feasibility of achieving consensus in a 
particular matter. In contrast, a ``facilitator'' helps guide the 
discussion among the participants to a negotiated rulemaking. While DOE 
recognizes the value of using a convenor and/or a facilitator in 
certain cases, there are also instances where DOE can adequately assess 
whether a given situation is ripe for a consensus-based approach 
through negotiated rulemaking. These instances may occur where DOE has 
accumulated years or decades of experience with setting standards with 
a particular product or equipment, or where DOE is approached by 
concerned stakeholders. In those instances, it may not be necessary to 
expend the time and/or resources associated with the use of a convenor. 
Consequently, DOE proposes to eliminate the requirement for use of a 
convenor and a facilitator and to instead retain discretion to utilize 
the services of such individuals in appropriate cases. This change in 
approach would allow the agency to conserve resources and avoid delay 
where such services are not necessary.
    Second, DOE proposes that the list of factors militating in favor 
of a negotiated rulemaking, as currently articulated at section 
11(a)(3) of the Process Rule, are neither mandatory nor exclusive. The 
NRA already sets forth factors for consideration at 5 U.S.C. 563(a). 
Because the factors set forth in section 11(a)(3) of the Process Rule 
may not be appropriate in all cases, DOE proposes to no longer be bound 
by this list when determining whether it is appropriate to convene a 
negotiated rulemaking. Instead, the Department proposes to consider the 
factors articulated under 5 U.S.C. 563(a), as well as any other 
considerations relevant to the specific product/equipment proceeding in 
question.
    Third, DOE proposes to revert to its prior approach, which would 
allow for a negotiated rulemaking to result in a term sheet 
recommending promulgation of a DFR under 42 U.S.C. 6295(p)(4). (See 
section III.F. of this document for a more complete discussion of 
DFRs.) DOE has tentatively concluded that the approach adopted in the 
February 2020 Final Rule (i.e., that a negotiated rulemaking must 
result in a proposed rule followed by a final rule) was an overly 
restrictive reading of the NRA. While 5 U.S.C. 563(a) discusses 
issuance of a proposed rule and a final rule, 42 U.S.C. 6295(p)(4) 
(under EPCA) already mandates publication of a proposed rule 
simultaneously with a DFR--and in the event of an adverse comment that 
may provide a reasonable basis for withdrawal, DOE is required to 
conduct further rulemaking under the proposed rule, proceeding to a 
final rule, if appropriate. (42 U.S.C. 6295(p)(4)(C)(i)(II)) 
Furthermore, at 5 U.S.C. 561, Purpose, the NRA states, ``Nothing in 
this subchapter shall be construed as an attempt to limit innovation 
and experimentation with the negotiated rulemaking process or with 
other innovative rulemaking procedures otherwise authorized by law.'' 
In light of the above, DOE has tentatively concluded that these 
relevant legal authorities can be read in harmony and do not preclude 
the possibility of a negotiated rulemaking that results in a 
recommendation to implement the body's consensus through a DFR. 
Accordingly, DOE proposes to revert to its prior position on this 
topic.
    In light of these proposed modifications, DOE has tentatively 
concluded that section 11 of the revised Process Rule would become 
largely redundant of the NRA requirements to which the agency is 
already subject, and therefore, the Department finds section 11 to be 
unnecessary and proposes its removal. DOE notes, however, that its 
proposal to remove this section from the Process Rule in no way 
reflects a change in the Department's perception of the value of 
negotiated rulemaking or its intention to use negotiated rulemaking in 
appropriate cases. Similarly, this proposal is not expected to affect 
DOE's practice of providing opportunities for public comment and access 
to working group documents and meetings/webinars throughout the 
negotiated rulemaking process. DOE requests comments on the merits of 
this proposed approach including comments regarding the proposed 
complete removal of section 11, as well as any

[[Page 18911]]

alternatives to this proposal, such as amendments or revisions to the 
section or retention of aspects of section 11.

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)(4) 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).
    The revisions contained in this proposed regulatory action are 
procedural changes designed to improve DOE's ability to meet its 
rulemaking obligations and deadlines under EPCA. These proposed 
revisions would not impose any regulatory costs or burdens on 
stakeholders, nor would they limit public participation in DOE's 
rulemaking process. Instead, these proposed revisions would allow DOE 
to tailor its rulemaking processes to fit the facts and circumstances 
of a particular rulemaking for a covered product or equipment.
    DOE currently has energy conservation standards and test procedures 
in place for more than 60 categories of covered products and equipment 
and is typically working on anywhere from 50 to 100 rulemakings (for 
both energy conservation standards and test procedures) at any one 
time. Further, these rulemakings are all subject to deadlines. 
Typically, review cycles for energy conservation standards and test 
procedures for covered products are 6 and 7 years, respectively. (42 
U.S.C. 6295(m)(1); 42 U.S.C. 6293(b)(1)) Additionally, if DOE decides 
not to amend an energy conservation standard for a covered product, the 
subsequent review cycle is shortened to 3 years. (42 U.S.C. 
6295(m)(3)(B)) It is challenging to meet these cyclical deadlines for 
more than 60 categories of covered products and equipment. In fact, as 
previously discussed, DOE is currently facing two lawsuits that allege 
DOE has failed to meet rulemaking deadlines for 25 different consumer 
products and commercial equipment. In order to meet these rulemaking 
deadlines, DOE cannot afford the inefficiencies that come with a one-
size-fits-all rulemaking approach. For example, having to issue an 
early assessment RFI followed by an ANOPR to collect early stakeholder 
input when a NODA would accomplish the same purpose unnecessarily 
lengthens the rulemaking process and wastes limited DOE resources. 
Similarly, having to delay issuance of a proposed energy conservation 
standard for 180 days because of a minor modification to a test 
procedure makes it more difficult for DOE to meet rulemaking deadlines, 
while offering no benefit to stakeholders. The revisions proposed in 
this document would allow DOE to eliminate these types of 
inefficiencies that lengthen the rulemaking process and waste DOE 
resources, while not affecting the ability of the public to participate 
in the rulemaking process. Eliminating inefficiencies that lengthen the 
rulemaking process allows DOE to more quickly develop energy 
conservation standards that deliver the environmental benefits, 
including reductions in greenhouse gas emissions, that DOE is directed 
to implement under E.O. 13990. Further, the sooner new or amended 
energy conservation standards eliminate less-efficient covered products 
and equipment from the market, the greater the resulting energy savings 
and environmental benefits.
    Further, the revisions proposed in this document would not dictate 
any particular rulemaking outcome in an energy conservation standard or 
test procedure rulemaking. DOE will continue to calculate the 
regulatory costs and benefits of new and amended energy conservation 
standards and test procedures issued under EPCA in future, individual 
rulemakings.

B. 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.
    This proposed rule details generally applicable guidance that may 
guide, but not bind, the Department's rulemaking process. The proposed 
revisions are intended to improve DOE's ability to meet the obligations 
and deadlines outlined in EPCA by allowing DOE to tailor its rulemaking 
procedures to fit the specific facts and circumstances of a particular 
covered product or equipment, while not affecting the ability of any 
interested person, including small entities, to participate in DOE's 
rulemaking process. Because this proposed rule imposes no regulatory 
obligations on the public, including small entities, and does not 
affect the ability of any interested person, including small entities, 
to participate in DOE's rulemaking process, DOE certifies that this 
proposed rule will not have a significant economic impact on a 
substantial number of small entities, and, therefore, no initial 
regulatory flexibility analysis is required. Mid-Tex Elec. Co-Op, Inc. 
v. F.E.R.C., 773 F.2d 327 (1985).

C. 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

[[Page 18912]]

subject to a penalty for failure to comply with, a collection of 
information subject to the requirements of the PRA, unless that 
collection of information displays a currently valid OMB Control 
Number.
    Specifically, this proposed rule, addressing clarifications to the 
Process Rule itself, does not contain any collection of information 
requirement that would trigger the PRA.

D. Review Under the National Environmental Policy Act of 1969

    DOE is analyzing this proposed regulation in accordance with the 
National Environmental Policy Act (NEPA) and DOE's NEPA implementing 
regulations (10 CFR part 1021). DOE's regulations include a categorical 
exclusion for rulemakings interpreting or amending an existing rule or 
regulation that does not change the environmental effect of the rule or 
regulation being amended. 10 CFR part 1021, subpart D, appendix A5. 
DOE's regulations include a categorical exclusion for rulemakings that 
are strictly procedural. 10 CFR part 1021, subpart D, appendix A6. DOE 
anticipates that this rulemaking qualifies for categorical exclusion A5 
and A6 because it is amending a rule and because it is a procedural 
rulemaking, it does not change the environmental effect of the rule and 
otherwise meets the requirements for application of a categorical 
exclusion. See 10 CFR 1021.410. DOE will complete its NEPA review 
before issuing the final rule.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 10, 
1999), imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the necessity for such actions. The Executive Order 
also requires agencies to have an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications. 
On March 14, 2000, DOE published a statement of policy describing the 
intergovernmental consultation process it will follow in the 
development of such regulations. 65 FR 13735. DOE has examined this 
proposed rule and has determined that it will not have a substantial 
direct effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. It will 
primarily affect the procedure by which DOE develops proposed rules to 
revise energy conservation standards and test procedures. EPCA governs 
and prescribes Federal preemption of State regulations that are the 
subject of DOE's regulations adopted pursuant to the statute. In such 
cases, States can petition DOE for exemption from such preemption to 
the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 
6297(d)) Therefore, Executive Order 13132 requires no further action.

F. Review Under Executive Order 12988

    Regarding the review of existing regulations and the promulgation 
of new regulations, section 3(a) of Executive Order 12988, ``Civil 
Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on Federal 
agencies the general duty to adhere to the following requirements: (1) 
Eliminate drafting errors and ambiguity; (2) write regulations to 
minimize litigation; (3) provide a clear legal standard for affected 
conduct rather than a general standard; and (4) promote simplification 
and burden reduction. Regarding the review required by section 3(a), 
section 3(b) of Executive Order 12988 specifically requires that each 
Executive agency make every reasonable effort to ensure that when it 
issues a regulation, the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
sections 3(a) and 3(b) to determine whether they are met or it is 
unreasonable to meet one or more of them. DOE has completed the 
required review and has determined that, to the extent permitted by 
law, the proposed rule meets the relevant standards of Executive Order 
12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. (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 proposed rule according to UMRA and its 
statement of policy and has determined that the rule contains neither 
an intergovernmental mandate, nor a mandate that may result in the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any year. 
Accordingly, no further assessment or analysis is required under UMRA.

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

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

I. Review Under Executive Order 12630

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

[[Page 18913]]

Fifth Amendment to the U.S. Constitution.

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

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

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
at OMB, a Statement of Energy Effects for any proposed significant 
energy action. A ``significant energy action'' is defined as any action 
by an agency that promulgates or is expected to lead to promulgation of 
a final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy; or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that the regulatory action in this 
document, which makes clarifications to the Process Rule that guides 
the Department in proposing energy conservation standards is not a 
significant energy action because it would not have a significant 
adverse effect on the supply, distribution, or use of energy, nor has 
it been designated as a significant energy action by the Administrator 
of OIRA. Therefore, it is not a significant energy action, and, 
accordingly, DOE has not prepared a Statement of Energy Effects for 
this proposed rule.

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

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have or does have a clear and 
substantial impact on important public policies or private sector 
decisions.'' Id. at 70 FR 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report,'' dated February 2007, has been 
disseminated and is available at the following website: http://www1.eere.energy.gov/buildings/appliance_standards/peer_review.html. 
Because available data, models, and technological understanding have 
changed since 2007, DOE has engaged with the National Academy of 
Sciences to review DOE's analytical methodologies to ascertain whether 
modifications are needed to improve the Department's analyses. The 
results from that review are expected later in 2021.

V. Public Participation

A. Participation in the Webinar

    The time and date of the webinar are listed in the DATES section at 
the beginning of this document. If no participants register for the 
webinar, it will be cancelled. Webinar registration information, 
participant instructions, and information about the capabilities 
available to webinar participants will be published on DOE's website: 
https://www.energy.gov/eere/buildings/process-rule. Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has an interest in the topics addressed in this 
proposed rulemaking, or who is representative of a group or class of 
persons that has an interest in these issues, may request an 
opportunity to make an oral presentation at the webinar. Such persons 
may submit requests to speak by email to the Appliance and Equipment 
Standards Program, [email protected]. Persons who 
wish to speak should include with their request a computer file in 
WordPerfect, Microsoft Word, PDF, or text (ASCII) file format that 
briefly describes the nature of their interest in this rulemaking and 
the topics they wish to discuss. Such persons should also provide a 
daytime telephone number where they can be reached.
    Persons requesting to speak should briefly describe the nature of 
their interest in this rulemaking and provide a telephone number for 
contact. DOE requests persons selected to make an oral presentation to 
submit an advance copy of their statements at least two weeks before 
the webinar. At its discretion, DOE may permit persons who cannot 
supply an advance copy of their statement to participate, if those 
persons have made advance alternative arrangements with the Building 
Technologies Office. As necessary, requests to give an oral 
presentation should ask for such alternative arrangements.

C. Conduct of the Webinar

    DOE will designate a DOE official to preside at the webinar and may 
also use a professional facilitator to aid discussion. The meeting will 
not be a judicial or evidentiary-type public hearing, but DOE will 
conduct it in accordance with section 336 of EPCA (42 U.S.C. 6306). A 
court reporter will be present to record the proceedings and prepare a 
transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the webinar. There shall not be discussion of proprietary information, 
costs or prices, market share, or other commercial matters regulated by 
U.S. anti-trust laws. After the webinar and

[[Page 18914]]

until the end of the comment period, interested parties may submit 
further comments on the proceedings and any aspect of the rulemaking.
    The webinar will be conducted in an informal, conference style. DOE 
will present summaries of comments received before the webinar, allow 
time for prepared general statements by participants, and encourage all 
interested parties to share their views on issues affecting this 
rulemaking. Each participant will be allowed to make a general 
statement (within time limits determined by DOE), before the discussion 
of specific topics. DOE will permit, as time permits, other 
participants to comment briefly on any general statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the 
webinar will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for the proper conduct of the webinar.
    A transcript of the webinar will be included in the docket, which 
can be viewed as described in the Docket section at the beginning of 
this NOPR. In addition, any person may buy a copy of the transcript 
from the transcribing reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule no later than the date provided in the DATES section at 
the beginning of this proposed rule. Interested parties may submit 
comments using any of the methods described in the ADDRESSES section at 
the beginning of this document.
    Submitting comments via http://www.regulations.gov. The http://www.regulations.gov web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment or in any documents attached to your comment. 
Any information that you do not want to be publicly viewable should not 
be included in your comment, nor in any document attached to your 
comment. Persons viewing comments will see only first and last names, 
organization names, correspondence containing comments, and any 
documents submitted with the comments.
    Do not submit to http://www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
http://www.regulations.gov cannot be claimed as CBI. Comments received 
through the website will waive any CBI claims for the information 
submitted. For information on submitting CBI, see the Confidential 
Business Information section.
    DOE processes submissions made through http://www.regulations.gov 
before posting. Normally, comments will be posted within a few days of 
being submitted. However, if large volumes of comments are being 
processed simultaneously, your comment may not be viewable for up to 
several weeks. Please keep the comment tracking number that http://www.regulations.gov provides after you have successfully uploaded your 
comment.
    Submitting comments via email. Comments and documents submitted via 
email also will be posted to http://www.regulations.gov. If you do not 
want your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information in a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. No telefacsimiles (faxes) will 
be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, written in English, and free of any defects or 
viruses. Documents should not contain special characters or any form of 
encryption, and, if possible, they should carry the electronic 
signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email two well-marked copies: One copy of the document marked 
``confidential'' including all the information believed to be 
confidential, and one copy of the document marked ``non-confidential'' 
with the information believed to be confidential deleted. DOE will make 
its own determination about the confidential status of the information 
and treat it according to its determination.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

VI. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 430

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

Signing Authority

    This document of the Department of Energy was signed on March 30, 
2021, by Kelly Speakes-Backman, Principal Deputy Assistant Secretary 
and Acting Assistant Secretary for Energy Efficiency and Renewable 
Energy, pursuant to delegated authority from the Secretary of Energy. 
That document with the original signature and date is maintained by 
DOE. For administrative purposes only, and in compliance with 
requirements of the Office of the Federal Register, the undersigned DOE 
Federal

[[Page 18915]]

Register Liaison Officer has been authorized to sign and submit the 
document in electronic format for publication, as an official document 
of the Department of Energy. This administrative process in no way 
alters the legal effect of this document upon publication in the 
Federal Register.

    Signed in Washington, DC, on March 30, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons stated in the preamble, DOE proposes to amend part 
430 of title 10 of the Code of Federal Regulations as set forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

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

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

0
2. 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. 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. Principles for Distinguishing Between Effective and Compliance 
Dates
12. Principles for the Conduct of the Engineering Analysis
13. Principles for the Analysis of Impacts on Manufacturers
14. Principles for the Analysis of Impacts on Consumers
15. Consideration of Non-Regulatory Approaches
16. Cross-cutting Analytical Assumptions

1. Objectives

    This appendix establishes procedures, interpretations, and 
policies to guide the Department of Energy (``DOE'' or the 
``Department'') 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. DOE will 
be able to 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 be able to 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. DOE 
will be able to 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 be able to eliminate from consideration proprietary design 
options that represent a unique pathway to achieving a given 
efficiency level. This screening will be done at the outset of a 
rulemaking.
    (d) Fully consider non-regulatory approaches. The Department 
seeks to understand the effects of market forces and voluntary 
programs on encouraging the purchase of energy efficient products so 
that the incremental impacts of a new or revised standard can be 
accurately assessed and the Department can make informed decisions 
about where standards and voluntary programs can be used most 
effectively. DOE will continue to be able 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. DOE will be able to 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 be able to 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. Application of the Process Rule

    (a) This appendix contains procedures, interpretations, and 
policies that are generally applicable to the development of energy 
conservation standards and test procedures. The Department may, as 
necessary, deviate from this appendix to account for the specific 
circumstances of a particular rulemaking.
    (b) This appendix is not intended to, and does not, create any 
right or benefit, substantive or procedural, enforceable at law or 
in equity.

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;

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    (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.
    (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 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) 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 
typically 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 
typically 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 (b)(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 (c) 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.
    (c) 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

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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 (b) of this section, DOE will 
select the candidate standard levels for further analysis.
    (d) 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.
    (e) Analysis of impacts and selection of proposed standard 
level. After the pre-NOPR stage, if DOE has determined preliminarily 
that a candidate standard level is likely to produce the maximum 
improvement in energy efficiency that is both technologically 
feasible and economically justified or constitute significant energy 
savings, economic analyses of the impacts of the candidate standard 
levels will be conducted. The Department will propose new or amended 
standards based on the results of the impact analysis.
    (1) Identification of issues for analysis. The Department, in 
consideration of comments received, will identify issues that will 
be examined in the impacts analysis.
    (2) Identification of analytical methods and tools. DOE will 
select the specific economic analysis tools (or multiple tools, if 
necessary, to address uncertainty) to be used in the analysis of the 
candidate standard levels.
    (3) Analysis of impacts. DOE will conduct the analysis of the 
impacts of candidate standard levels.
    (4) Factors to be considered in selecting a proposed standard. 
The factors to be considered in selection of a proposed standard 
include:
    (i) Impacts on manufacturers. The analysis of private 
manufacturer impacts will include: Estimated impacts on cash flow; 
assessment of impacts on manufacturers of specific categories of 
products/equipment and small manufacturers; assessment of impacts on 
manufacturers of multiple product-specific Federal regulatory 
requirements, including efficiency standards for other products and 
regulations of other agencies; and impacts on manufacturing 
capacity, plant closures, and loss of capital investment.
    (ii) Private Impacts on consumers. The analysis of consumer 
impacts will include: Estimated private energy savings impacts on 
consumers based on national average energy prices and energy usage; 
assessments of impacts on subgroups of consumers based on major 
regional differences in usage or energy prices and significant 
variations in installation costs or performance; sensitivity 
analyses using high and low discount rates reflecting both private 
transactions and social discount rates and high and low energy price 
forecasts; consideration of changes to product utility, changes to 
purchase rate of products, and other impacts of likely concern to 
all or some consumers, based to the extent practicable on direct 
input from consumers; estimated life-cycle cost with sensitivity 
analysis; consideration of the increased first cost to consumers and 
the time required for energy cost savings to pay back these first 
costs; and loss of utility.
    (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.
    (f) 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.
    (g) 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 6 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.
    (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

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revised standard is consistent with the statutory criteria.
    (b) Screening design options. These factors will be considered 
as follows in determining whether a design option will receive any 
further consideration:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in commercially-viable, 
existing prototypes will not be considered further.
    (2) Practicability to manufacture, install and service. If it is 
determined that mass production of a technology in commercial 
products and reliable installation and servicing of the technology 
could not be achieved on the scale necessary to serve the relevant 
market at the time of the compliance date of the standard, then that 
technology will not be considered further.
    (3) Impacts on product utility. If a technology is determined to 
have significant adverse impact on the utility of the product/
equipment to subgroups of consumers, or result in the unavailability 
of any covered product type with performance characteristics 
(including reliability), features, sizes, capacities, and volumes 
that are substantially the same as products generally available in 
the U.S. at the time, it will not be considered further.
    (4) Safety of technologies. If it is determined that a 
technology will have significant adverse impacts on health or 
safety, it will not be considered further.
    (5) Unique-pathway proprietary technologies. If a technology has 
proprietary protection and represents a unique pathway to achieving 
a given efficiency level, it will not be considered further, due to 
the potential for monopolistic concerns.
    (c) Identification of candidate standard levels. Based on the 
results of the engineering and cost/benefit analyses of design 
options, DOE will identify the candidate standard levels for further 
analysis. Candidate standard levels will be selected as follows:
    (1) Costs and savings of design options. Design options that 
have payback periods that exceed the median life of the product or 
which result in life-cycle cost increases relative to the base case, 
using typical fuel costs, usage, and private discount rates, will 
not be used as the basis for candidate standard levels.
    (2) Further information on factors used for screening design 
options. If further information or analysis leads to a determination 
that a design option, or a combination of design options, has 
unacceptable impacts under the policies stated in this Appendix, 
that design option or combination of design options will not be 
included in a candidate standard level.
    (3) Selection of candidate standard levels. Candidate standard 
levels, which will be identified in the pre-NOPR documents and on 
which impact analyses will be conducted, will be based on the 
remaining design options.
    (i) The range of candidate standard levels will typically 
include:
    (A) The most energy-efficient combination of design options;
    (B) The combination of design options with the lowest life-cycle 
cost; and
    (C) A combination of design options with a payback period of not 
more than three years.
    (ii) Candidate standard levels that incorporate noteworthy 
technologies or fill in large gaps between efficiency levels of 
other candidate standard levels also may be selected.
    (d) Pre-NOPR Stage. New information provided in public comments 
on any pre-NOPR documents will be considered to determine whether 
any changes to the candidate standard levels are needed before 
proceeding to the analysis of impacts.
    (e)(1) Selection of proposed standard. Based on the results of 
the analysis of impacts, DOE will select a standard level to be 
proposed for public comment in the NOPR. As required under 42 U.S.C. 
6295(o)(2)(A), any new or revised standard must be designed to 
achieve the maximum improvement in energy efficiency that is 
determined to be both technologically feasible and economically 
justified.
    (2) Statutory policies. The fundamental policies concerning the 
selection of standards include:
    (i) A trial standard level will not be proposed or promulgated 
if the Department determines that it is not both technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 
U.S.C. 6295(o)(3)(B)) For a trial standard level to be economically 
justified, the Secretary must determine that the benefits of the 
standard exceed its burdens by, to the greatest extent practicable, 
considering the factors listed in 42 U.S.C. 6295(o)(2)(B)(i). 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 interested persons have 
established by a preponderance of the evidence that a standard level 
is likely to result in the unavailability in the United States of 
any covered product/equipment type (or class) 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 of the determination, 
then 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))
    (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, 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 procedure standards as DOE test procedures for covered products 
and equipment, but only if DOE determines that such procedures would 
not be unduly burdensome to conduct and would 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. DOE may also adopt 
industry test procedure standards with modifications, or craft its 
own procedures as necessary to ensure compatibility with the 
relevant

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statutory requirements, as well as DOE's compliance, certification, 
and enforcement requirements.
    (d) Issuing final test procedure modification. Test procedure 
rulemakings establishing methodologies used to evaluate proposed 
energy conservation standards will be finalized 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

    In accordance with 42 U.S.C. 6295(p)(4), on receipt of a joint 
proposal that is submitted by interested persons that are fairly 
representative of relevant points of view, DOE may issue a direct 
final rule (DFR) establishing energy conservation standards for a 
covered product or equipment if DOE determines the recommended 
standard is in accordance with 42 U.S.C. 6295(o) or 42 U.S.C. 
6313(a)(6)(B) as applicable. To be ``fairly representative of 
relevant points of view'' the group submitting a joint statement 
must, where appropriate, include larger concerns and small 
businesses in the regulated industry/manufacturer community, energy 
advocates, energy utilities, 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 fewer or additional parties must be 
part of a joint statement in order to be ``fairly representative of 
relevant points of view.''

11. 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.

12. 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.

[[Page 18920]]

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

14. 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 (b) 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

[[Page 18921]]

sensitivity analysis tools, as appropriate, to evaluate the 
potential distribution of impacts of candidate/trial standard levels 
among different subgroups of consumers. The Department will consider 
impacts on significant segments of consumers in determining 
standards levels. Where there are significant negative impacts on 
identifiable subgroups, DOE will consider the efficacy of voluntary 
approaches as a means to achieve potential energy savings.
    (e) Payback period and first cost. (1) In the assessment of 
consumer impacts of standards, the Department will consider Life-
Cycle Cost, Payback Period, and Cost of Conserved Energy to evaluate 
the savings in operating expenses relative to increases in purchase 
price. The Department also performs sensitivity and scenario 
analyses when appropriate. The results of these analyses will be 
carried throughout the analysis and the ensuing uncertainty 
described.
    (2) If, in the analysis of consumer impacts, the Department 
determines that a candidate/trial standard level would result in a 
substantial increase in product/equipment first costs to consumers 
or would not pay back such additional first costs through energy 
cost savings in less than three years, Department will assess the 
likely impacts of such a standard on low-income households, product/
equipment sales and fuel switching, as appropriate.

15. 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.

16. 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 timeline 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).

[FR Doc. 2021-06853 Filed 4-9-21; 8:45 am]
BILLING CODE 6450-01-P