[Federal Register Volume 86, Number 236 (Monday, December 13, 2021)]
[Rules and Regulations]
[Pages 70892-70931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25725]



[[Page 70891]]

Vol. 86

Monday,

No. 236

December 13, 2021

Part II





 Department of Energy





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





10 CFR Part 430





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; Final Rule

  Federal Register / Vol. 86 , No. 236 / Monday, December 13, 2021 / 
Rules and Regulations  

[[Page 70892]]


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

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: Final rule.

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

SUMMARY: The U.S. Department of Energy (``DOE'' or the ``Department'') 
is revising 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.'' The 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: This rule is effective January 12, 2022.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, comments, and other supporting documents/materials, 
is available for review at www.regulations.gov. All documents in the 
docket are listed in the 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: 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].
    Mr. Pete Cochran, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585. 
Telephone: (202) 586-9496. Email: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule
II. Authority and Background
    A. Authority
    B. Background
III. Discussion of Specific Revisions to Appendix A
    A. Restoring the Department's Discretion To Depart From the 
General Guidance in Appendix A
    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
    H. Other Topics
IV. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866
    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
    M. Congressional Notification
V. Approval of the Office of the Secretary

I. Summary of the Final Rule

    In July of 1996, the United States Department of Energy (``DOE'' or 
``the Department'') issued a final rule that codified DOE's 
``Procedures, Interpretations and Policies for Consideration of New or 
Revised Energy Conservation Standards for Consumer Products'' at 10 CFR 
part 430, subpart C, appendix A (``appendix A''). 61 FR 36974 (July 15, 
1996) (``July 1996 Final Rule''). The July 1996 Final Rule acknowledged 
that the guidance contained in appendix A would not be applicable to 
every rulemaking and that the circumstances of a particular rulemaking 
should dictate application of these generally applicable practices. 61 
FR 36979.
    On February 14, 2020, DOE published a final rule (``February 2020 
Final Rule'') in the Federal Register that made significant revisions 
to 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. Contrary to the July 1996 
Final Rule, 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.
    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.\1\ On November 9, 2020, a coalition 
of States filed a virtually identical lawsuit.\2\ In response to these 
lawsuits, DOE has reconsidered 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 July 1996 Final Rule allowed 
for ``case-specific deviations and modifications of the generally 
applicable rule.'' \3\ This allowed DOE to tailor rulemaking procedures 
to fit the specific circumstances of a particular rulemaking. For 
example, under the July 1996 Final 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 clear 
this backlog of missed rulemaking deadlines in a timely manner and meet 
future obligations and deadlines under EPCA while not affecting the 
ability of any interested person, including small entities, to 
participate in DOE's rulemaking process. Further, the sooner new or 
amended energy conservation standards eliminate less-efficient covered 
products and equipment from the market, the

[[Page 70893]]

greater the resulting energy savings and environmental benefits.
---------------------------------------------------------------------------

    \1\ Natural Resources Defense Council v. DOE, Case No. 20-cv-
9127 (S.D.N.Y. 2020).
    \2\ State of New York v. DOE, Case No. 20-cv-9362 (S.D.N.Y. 
2020).
    \3\ 61 FR 36974, 36979.
---------------------------------------------------------------------------

    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 86 FR 7038.
    In light of these events, DOE has identified several aspects of the 
February 2020 and the August 2020 Final Rules that present obstacles to 
DOE's ability to expeditiously clear the backlog of missed rulemaking 
deadlines while meeting future obligations under EPCA. In accordance 
with E.O. 13990, DOE proposed major revisions to appendix A in a notice 
of proposed rulemaking (NOPR) that was published on April 12, 2021 
(``April 2021 NOPR''). 86 FR 18901. DOE proposed additional revisions 
to appendix A in a second NOPR that was published on July 7, 2021 
(``July 2021 NOPR''). 86 FR 35668. DOE is addressing the proposed 
revisions from the April 2021 NOPR in this document. DOE will address 
the additional revisions proposed in the July 2021 NOPR in a separate 
final rule.
    In this document, DOE is: (1) Restoring DOE's discretion to depart 
from the general guidance in appendix A; (2) removing the recently-
added threshold for determining when the significant energy savings 
criterion is met; (3) removing the recently-added requirement to 
conduct a comparative analysis as part of DOE's analysis of economic 
justification under the factors listed in 42 U.S.C. 6295(o)(2)(B)(i); 
(4) reverting to DOE's 1996 guidance regarding completion of test 
procedure rulemakings prior to issuance of a NOPR for an energy 
conservation standards rulemaking; (5) clarifying 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) reverting to DOE's prior practice on direct 
final rules; and (7) clarifying that DOE will conduct negotiated 
rulemakings in accordance with the Negotiated Rulemaking Act (``NRA''), 
Public Law 104-320 (5 U.S.C. 561, et seq.). These revisions are 
summarized in the following table.

                   List of Revisions in This Document
------------------------------------------------------------------------
                               Proposed revisions
           Section             in April 2021 NOPR      Final revisions
------------------------------------------------------------------------
1. Objectives...............  Revise language to    Revise language to
                               be consistent with    be consistent with
                               the newly proposed    new Section 3;
                               Section 3.            revise paragraph
                                                     (g) to specifically
                                                     reference consensus
                                                     recommendations
                                                     developed through
                                                     negotiated
                                                     rulemakings.
2. Scope....................  No revisions          No revisions in this
                               proposed in this      document.
                               document.
3. Mandatory Application of   Replace with new      Replace with new
 the Process Rule.             Section 3,            Section 3,
                               ``Application''.      ``Application.''
4. Setting Priorities for     No revisions          No revisions in this
 Rulemaking Activity.          proposed in this      document.
                               document.
5. Coverage Determination     Eliminate the 180-    Eliminate the 180-
 Rulemakings.                  day period in         day period in
                               paragraph (c)         paragraph (c)
                               between               between
                               finalization of DOE   finalization of DOE
                               test procedures and   test procedures and
                               issuance of a NOPR    issuance of a NOPR
                               proposing new or      proposing new or
                               amended energy        amended energy
                               conservation          conservation
                               standards.            standards.
6. Process for Developing     Eliminate paragraph   Eliminate paragraph
 Energy Conservation           (b), ``Significant    (b), ``Significant
 Standards.                    Savings of Energy''.  Savings of
                                                     Energy.''
7. Policies on Selection of   Eliminate text in     Eliminate text in
 Standards.                    paragraph (e)(2)(i)   paragraph (e)(2)(i)
                               requiring DOE to      requiring DOE to
                               conduct a             conduct a
                               comparative           comparative
                               analysis when         analysis when
                               determining whether   determining whether
                               a proposed standard   a proposed standard
                               level is              level is
                               economically          economically
                               justified.            justified.
8. Test Procedures..........  Clarify in paragraph  Clarify in paragraph
                               (c) that DOE may      (c) that DOE may
                               revise consensus      revise consensus
                               industry test         industry test
                               procedure standards   procedure standards
                               for compliance,       for compliance,
                               certification, and    certification, and
                               enforcement           enforcement
                               purposes; eliminate   purposes; revise
                               the 180-day period    application of the
                               in paragraph (d)      180-day period in
                               between               paragraph (d).
                               finalization of DOE
                               test procedures and
                               issuance of a NOPR
                               proposing new or
                               amended energy
                               conservation
                               standards.
9. ASHRAE Equipment.........  No revisions          No revisions in this
                               proposed in this      document.
                               document.
10. Direct Final Rules......  Revise section to     Revise section to
                               clarify that DOE      clarify that DOE
                               will implement its    will implement its
                               direct final rule     direct final rule
                               authority on a case-  authority on a case-
                               by-case basis.        by-case basis.
11. Negotiated Rulemaking     Eliminate section...  Eliminate section.
 Process.
12. Principles for            No revisions          No revisions in this
 Distinguishing Between        proposed in this      document.
 Effective and Compliance      document.
 Dates.
13. Principles for the        No revisions          No revisions in this
 Conduct of the Engineering    proposed in this      document.
 Analysis.                     document.

[[Page 70894]]

 
14. Principles for the        Eliminate incorrect   Eliminate incorrect
 Analysis of Impacts on        cross reference.      cross reference.
 Manufacturers.
15. Principles for the        No revisions          No revisions in this
 Analysis of Impacts on        proposed in this      document.
 Consumers.                    document.
16. Consideration of Non-     No revisions          No revisions in this
 Regulatory Approaches.        proposed in this      document.
                               document.
17. Cross-Cutting Analytical  No revisions          No revisions in this
 Assumptions.                  proposed in this      document.
                               document.
------------------------------------------------------------------------
* As part of the revisions, sections and subsections have been
  renumbered as required.

II. Authority and Background

A. Authority

    Title III, Parts B \4\ and C \5\ 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.\6\ 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))
---------------------------------------------------------------------------

    \4\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \5\ Part C was added by Public Law 95-619, Title IV, section 
441(a). For editorial reasons, upon codification in the U.S. Code, 
Part C was redesignated Part A-1.
    \6\ 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. As part of this effort, DOE reached out to many 
different stakeholders, including manufacturers, energy-efficiency 
advocates, trade associations, State agencies, utilities, and other 
interested parties for input on the procedures, interpretations, and 
policies used by DOE in considering whether to issue new or amended 
energy conservation standards. This process resulted in publication of 
the July 1996 Final Rule which codified these procedures, 
interpretations, and policies in appendix A. The goal of the July 1996 
Final 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 appendix A. 82 FR 59992. DOE 
subsequently published a NOPR regarding appendix A in the Federal 
Register on February 13, 2019. 84 FR 3910. On July 26, 2019, DOE 
subsequently issued a notice of data availability (``NODA'') in the 
Federal Register. 84 FR 36037 (``July 2019 NODA''). After considering 
the comments it received DOE then published a final rule in the Federal 
Register on February 14, 2020, which significantly revised appendix A. 
85 FR 8626.
    While DOE issued the July 1996 Final 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 with notice and comment. For several reasons, as stated 
throughout the April 2021 NOPR and this document, DOE believes appendix 
A is best described and utilized not as a legislative rule but instead 
as generally applicable guidance that may guide, but not bind, the 
Department's rulemaking process. The revisions finalized in this 
document are intended to clarify this point. In accordance with 
Executive Order 13990, DOE used a notice and comment process to revise 
appendix A. 86 FR 7037. DOE held a public webinar for the April 2021 
NOPR on April 23, 2021.

[[Page 70895]]

    In response to the April 2021 NOPR and public webinar, DOE received 
comments from the following parties:

                           Table of Commenters
------------------------------------------------------------------------
                                                           Acronym,
          Commenter(s)                Affiliation         identifier
------------------------------------------------------------------------
A.O. Smith......................  Manufacturer......  A.O. Smith.
Air-Conditioning, Heating, and    Manufacturer Trade  AHRI.
 Refrigeration Institute.          Group.
Air-Conditioning, Heating, and    Manufacturer Trade  Joint Industry
 Refrigeration Institute (AHRI),   Groups.             Commenters.
 AMCA International (AMCA),
 American Lighting Association
 (ALA), Association of Home
 Appliance Manufacturers (AHAM),
 Consumer Technology Association
 (CTA), Hearth, Patio & Barbecue
 Association (HPBA), Heating,
 Air-conditioning &
 Refrigeration Distributors
 International (HARDI),
 Information Technology Industry
 Council (ITI), International
 Sign Association (ISA),
 Manufactured Housing Institute
 (MHI), National Association of
 Manufacturers (NAM), National
 Electrical Manufacturers
 Association (NEMA), North
 American Association of Food
 Equipment Manufacturers
 (NAFEM), Power Tool institute,
 Inc. (PTI), and Plumbing
 Manufacturers International
 (PMI).
American Gas Association,         Utility Trade       AGA.
 American Public Gas               Group.
 Association, Spire, Inc., and
 Spire Missouri, Inc.
American Lighting Association...  Manufacturer Trade  ALA.
                                   Group.
Americans for Prosperity........  Advocacy Group....  AFP.
Anonymous.......................  Individual........
Anonymous.......................  Individual........
Appliance Standards Awareness     Advocacy Group....  Joint Advocacy
 Project.                                              Commenters.
(Joint Comments filed with the
 American Council for an Energy-
 Efficient Economy, Consumer
 Federation of America, and
 National Consumer Law Center).
Attorneys General of California,  State, Local        State Commenters.
 Colorado, Connecticut,            Governments.
 Illinois, Maine, Maryland,
 Michigan, Minnesota, Nevada,
 New Jersey, New York, Oregon,
 Pennsylvania, Vermont,
 Washington, the Commonwealth of
 Massachusetts, the District of
 Columbia, and the City of New
 York.
Bradford White Corporation......  Manufacturer......  BWC.
California Energy Commission....  State.............  CEC.
California Investor-Owned         Utilities.........  Cal-IOUs.
 Utilities.
John Cannon.....................  Individual........
Carrier Corporation.............  Manufacturer......  Carrier.
Crown Boiler Company............  Manufacturer......  Crown Boiler.
Edison Electric Institute.......  Utility Trade       EEI.
                                   Group.
GE Appliances...................  Manufacturer......  GEA.
Goodman Manufacturing Company,    Manufacturer......  Goodman.
 L.P.
Grundfos Americas Corporation...  Manufacturer......  Grundfos.
Ahmed Ahmed Hamdi...............  Individual........
Hoshizaki America, Inc..........  Manufacturer......  Hoshizaki.
Hussmann Corporation............  Manufacturer......  Hussmann.
Hydraulic Institute.............  Manufacturer Trade  HI.
                                   Group.
Hydronic Industry Alliance--      Manufacturer Trade  HIA.
 Commercial.                       Group.
Institute for Policy Integrity--  Academic            IPR.
 New York University School of     Institution.
 Law.
Lennox International............  Manufacturer......  Lennox.
Lutron..........................  Manufacturer......  Lutron.
Manufactured Housing Institute..  Manufacturer Trade  MHI.
                                   Group.
New Yorker Boiler Company, Inc..  Manufacturer......  New Yorker Boiler.
North American Association of     Manufacturer Trade  NAFEM.
 Food Equipment Manufacturers.     Group.
National Propane Gas Association  Utility Trade       NPGA.
                                   Group.
Natural Resources Defense         Advocacy Groups...  Joint
 Council, Earthjustice & Sierra                        Environmentalist
 Club.                                                 Commenters.
Nortek Global HVAC, LLC.........  Manufacturer......  Nortek.
Northwest Power and Conservation  Advocacy Group....  NPCC.
 Council.
Northwest Energy Efficiency       Advocacy Group....  NEEA.
 Alliance.
Signify.........................  Manufacturer......  Signify.
Small Business Administration     Federal Government  SBA Office of
 (SBA) Office of Advocacy.         Agency.             Advocacy.
Southern Company................  Utility...........  Southern.
Sullivan-Palatek, Inc...........  Manufacturer......  Sullivan-Palatek.
Sara Taylor.....................  Individual........
Trane Technologies..............  Manufacturer......  Trane.
Unico, Inc......................  Manufacturer......  Unico.
U.S. Boiler Company.............  Manufacturer......  U.S. Boiler.
Weil-McLain Company.............  Manufacturer......  Weil-McLain.
Westinghouse Lighting             Manufacturer......  Westinghouse.
 Corporation.
Whirlpool Corporation...........  Manufacturer......  Whirlpool.
Zero Zone, Inc..................  Manufacturer......  Zero Zone.
------------------------------------------------------------------------


[[Page 70896]]

III. Discussion of Specific Revisions to Appendix A

A. Restoring the Department's Discretion To Depart From the General 
Guidance in Appendix A

    One of the most significant changes made to appendix A 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. In contrast, 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. However, in the 
July 1996 Final Rule, 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. 61 FR 36974, 36979.
    In making appendix A binding, DOE made a policy determination at 
the time it issued the February 2020 Final Rule that ``promot[ing] 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 appendix A could conflict with 
DOE's statutory obligations under EPCA (e.g., rulemaking deadlines), 
DOE stated its policy view that the February 2020 Final Rule had been 
drafted to closely follow and implement EPCA. Id. at 85 FR 8634.
    As noted in its April 2021 proposal, DOE is reconsidering its 
policy judgment in weighing the predictability of a one-size-fits-all 
approach against the negative effects that a mandatory application of 
appendix A would have on DOE's ability to meet the statutory deadlines 
established under EPCA and other applicable requirements. Under EPCA, 
DOE is required to review energy conservation standards for covered 
products and equipment at least once every six years to determine 
whether 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 whether 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. Consequently, DOE has often been unable to 
meet its rulemaking deadlines, and with the February 2020 Final Rule 
mandating procedural steps that make the rulemaking process lengthier 
than EPCA requires, implementation of this binding process would make 
it even more difficult to clear the existing backlog of missed 
rulemaking deadlines in a timely manner and meet future rulemaking 
deadlines.
    Among the steps that EPCA does not require--but the February 2020 
Final Rule does--is for DOE to issue rulemaking documents in advance of 
a NOPR. The February 2020 Final Rule mandates use of an early 
assessment RFI and either an advanced notice of proposed rulemaking 
(``ANOPR'') or a framework document with a preliminary analysis. While 
DOE recognizes the importance of gathering early stakeholder input and 
has proposed to maintain opportunities for pre-NOPR input in the July 
2021 NOPR,\7\ such input may not be necessary or useful in all cases. 
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 and for which there has been negligible change to the 
market and relevant technology, a pre-NOPR publication may provide 
limited value. Thus, DOE may be able to directly issue a notice of 
proposed determination that standards do not need to be amended. 
Stakeholders would still have the opportunity to comment on the 
proposed determination. And, in the event that DOE receives new 
information in response to the notice of proposed determination, DOE 
can issue supplemental rulemaking documents before proceeding to a 
final rule or determination.
---------------------------------------------------------------------------

    \7\ 86 FR 35668, 35669.
---------------------------------------------------------------------------

    The February 2020 Final Rule also required that DOE finalize test 
procedure rulemakings establishing methodologies used to evaluate 
proposed energy conservation standards at least 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. DOE acknowledges the importance of 
established methodologies for measuring energy use and energy 
efficiency when evaluating potential amendments to the energy 
conservation standards. Whether a potential energy conservation 
standard is technologically feasible and economically justified will be 
dependent, in part, on how the energy use of a product is measured. As 
discussed in section III.E of this document, DOE is requiring that new 
test procedures and amended test procedures that impact measured energy 
use or efficiency be finalized at least 180 days prior to the close of 
the comment period for: (i) A NOPR proposing new or amended energy 
conservation standards; or (ii) a notice of proposed determination that 
standards do not need to be amended. However, this 180-day period may 
not always be necessary. For example, DOE will typically use an 
industry test procedure as the basis for a new DOE test procedure. If 
DOE adopts the industry test procedure without modification, 
stakeholders should already be familiar with the test procedure. In 
such cases, requiring the new test procedure to be finalized 180 days 
prior to the close of the comment period for a NOPR proposing new 
energy conservation standards would offer little benefit to 
stakeholders while delaying DOE's promulgation of new energy 
conservation standards.
    These examples illustrate what was clearly understood in the July 
1996 Final Rule--that the procedures, interpretations, and policies 
laid out in appendix A that are generally applicable to DOE's 
rulemaking program should be determined on a case-by-case basis based 
on the individual circumstances of a given rulemaking. 61 FR 36974, 
36979. Accordingly, in the April 2021 NOPR, the Department proposed 
reverting back to the original, non-binding status of appendix A. DOE 
requested comments, information, and data on whether appendix A should 
be non-binding or, alternatively, whether the rule should remain 
binding but with revised provisions.
    In addition, consistent with its proposal to revert appendix A back 
to non-binding guidance, DOE's April 2021 NOPR also proposed clarifying 
that appendix A does not create legally enforceable rights. DOE does 
not intend for departures from the generally

[[Page 70897]]

applicable guidance contained in appendix A to serve as the basis for 
potential procedural legal challenges. DOE's proposed clarification, 
like the general approach contained in the July 1996 Final 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 sought comment on this proposed 
clarification as well. 86 FR 18901, 18905.
Comments in Favor of DOE's Proposal To Restore the Non-Binding Nature 
of Appendix A
    A number of commenters favored DOE's proposed approach. For 
example, the Joint Environmentalist Commenters reasoned that it is 
impossible for DOE to create a binding, one-size-fits-all procedure 
that would adequately address all the unique situations and 
requirements of DOE's myriad rulemakings. In their view, neither the 
Administrative Procedure Act (APA) nor EPCA compel such a rigid 
approach. They argued that the rulemaking process created by the 
February 2020 Final Rule is more onerous and more time consuming than 
the one enacted by Congress or adopted in the July 1996 Final Rule. 
These commenters argued that DOE cannot afford to waste time in 
addressing its statutory mandate and rulemaking backlog, and they 
supported DOE's attempt to restore flexibility to appendix A by 
returning it to non-binding guidance, thereby allowing DOE to respond 
appropriately to the unique circumstances of a particular rulemaking. 
(Joint Environmentalist Commenters, No. 31 at p. 2) \8\
---------------------------------------------------------------------------

    \8\ The parenthetical reference provides a reference for 
information located in the docket of this rulemaking. (Docket No. 
EERE-2021-BT-STD-0003, which is maintained at www.regulations.gov). 
The references are arranged as follows: (Commenter name, comment 
docket ID number, page of that document).
---------------------------------------------------------------------------

    Similarly, the CA IOUs urged DOE to return appendix A to its 
previous status as non-binding guidance, which they argued would 
restore predictability and certainty to the rulemaking process. These 
commenters argued that each DOE rulemaking is unique, making the 
inflexible blanket approach followed in the February 2020 Final Rule 
one that could result in missed opportunities for increased energy and 
water efficiency and delay DOE's timely completion of its statutory 
obligations (including elimination of the current backlog of 
rulemakings). Furthermore, the CA IOUs argued that a binding appendix A 
opened DOE up to additional avenues of legal challenge, first on the 
basis of appendix A itself and then on the potentially conflicting 
requirements of appendix A and EPCA. They suggested that a binding 
appendix A increases uncertainty and reduces the ability for all 
parties to plan for the future, so they encouraged DOE to expand its 
reasoning for this rulemaking action to clarify DOE's position for 
future Administrations. However, in the interest of transparency, the 
CA IOUs also recommended that DOE should alert stakeholders and 
document when the agency finds it necessary to deviate from the 
guidance embodied in appendix A; however, the commenters stated that 
even this provision should be non-binding. (CA IOUs, No. 34 at pp. 1, 
2, 6)
    The CEC also agreed with DOE's proposal to return appendix A to a 
non-binding status as a means to enable DOE to retain the flexibility 
to adapt to the unique circumstances of each rulemaking. It argued 
generally that unless DOE adopted its proposed approach, following the 
February 2020 Final Rule would lead to worse air pollution, higher 
greenhouse gas emissions, unnecessary consumption of water, less-
efficient products, and higher energy bills. It further argued that 
DOE's proposal would ensure necessary flexibility while providing the 
regulated community with sufficient certainty, encouraging innovation, 
saving consumers money, improving efficiency, making progress on the 
backlog of missed deadline rulemakings, and limiting unnecessary 
greenhouse gas emissions. (CEC, No. 35 at pp. 1-2, 11)
    Furthermore, the CEC asserted that the self-imposed administrative 
barriers in the February 2020 Final Rule would lead to continued 
delays, market uncertainty, lost energy savings, and harm to consumers. 
Although the CEC encouraged DOE to be as transparent, consistent, and 
predictable as possible in its rulemakings, it cautioned that strict 
adherence to all of the February 2020 Final Rule's required elements 
will lead to further delay regarding already overdue energy 
conservation standards and test procedure rulemakings. It reasoned that 
a mandatory appendix A would provide additional opportunities for 
procedural challenges, which would create additional costs and 
unnecessary market uncertainties that would limit innovation and 
undermine achievable energy savings. In its view, EPCA's mandatory 
procedures regarding the setting of standards and test procedures 
control, and to the extent that any appendix A provisions conflict with 
EPCA, those regulatory requirements would be unlawful. For all these 
reasons, the CEC stated that appendix A should be returned to guidance 
status. (CEC, No. 35 at p. 3)
    The Joint Advocacy Commenters also favored returning appendix A to 
general guidance and restoring DOE's discretion to depart from that 
guidance in appropriate cases. These commenters recognized the 
importance of having a predictable process for industry stakeholders 
and encouraged DOE to strive to adhere to the procedures set forth in 
appendix A, while stressing the need for DOE to have the flexibility to 
adjust the process to cover the range of issues which may arise in 
individual rulemakings. According to the Joint Advocacy Commenters, 
departing from appendix A's general practice may sometimes be necessary 
to avoid uncertainty for manufacturers and/or to avoid unnecessary 
delays. As an example, they noted how appendix A details the analytical 
practices DOE uses in rulemaking and argued that DOE should not need to 
go through rulemaking to change appendix A each time it wishes to 
modify its analytical processes to reflect best practices. They also 
expressed concern that the February 2020 Final Rule's binding 
provisions could conflict with statutory requirements and increase 
litigation solely on the issue of whether DOE has followed the 
prescribed procedures. For these reasons, the commenters argued that 
applying these guidelines to a specific rulemaking should be determined 
on a case-by-case basis and that appendix A should be returned to its 
original, non-binding status. (Joint Advocacy Commenters, No. 38 at pp. 
1-2; Joint Advocacy Commenters (Appendix I), No. 38 at pp. 1, 2)
    The State Commenters argued that application of appendix A should 
be determined on a case-by-case basis so that DOE is accorded the 
latitude and discretion to pursue the most appropriate approach to 
gathering, analyzing, and synthesizing stakeholder input for different 
standards. In their view, this procedural flexibility will help ensure 
that DOE is able to fulfill its statutory mandates as efficiently as 
possible and with minimal delay and litigation risk. (State Commenters, 
No. 29 at p. 8) The commenters also noted that making appendix A 
binding on all rulemakings--including where doing so conflicts with 
EPCA--exposes DOE to increased litigation that would further delay 
promulgation of final standards

[[Page 70898]]

on statutorily mandated timelines. (State Commenters, No. 29 at p. 8)
    NPCC and NEEA supported DOE's April 2021 proposal, noting that the 
current version of appendix A contains unnecessary obstacles to DOE's 
ability to meet its obligations under EPCA. (NPCC, No. 12 at pp. 1-2; 
NEEA, No. 43 at p. 2) NEEA also asserted that many of the changes in 
the 2020 Final Rule were unclear and confusing and that they 
handicapped DOE's ability to effectively and efficiently adopt 
standards and test procedures so as to achieve maximum economic and 
environmental benefits for the Nation--thereby making it more difficult 
for DOE to meet rulemaking deadlines, and resulting in less national 
energy savings. (NEEA, No. 43 at pp. 1-2) NPCC supported DOE's effort 
to revert back to non-binding guidance and to restore the flexibility 
that DOE once had under the 1996 version of appendix A. (NPCC, No. 12 
at p. 3) Similarly, NEEA supported DOE's ability to address each 
rulemaking individually, but in furtherance of transparency, it urged 
DOE to clearly state in a particular rulemaking when it intended to 
depart from the procedures outlined in appendix A, along with the 
reasons for that departure. (NEEA, No. 43 at p. 2)
Comments Opposing DOE's Proposal
    DOE also received a number of comments opposing its proposed 
removal of the mandatory application of appendix A. In AHRI's and BWC's 
views, appendix A should remain mandatory so as to provide certainty, 
transparency, and consistency in the rulemaking process DOE uses to 
implement its energy conservation standards program. (AHRI, No. 25 at 
p. 1-2; BWC, No. 24 at p. 1) AHRI also asserted that the Department's 
proposal fails to address or acknowledge DOE's stated reason for making 
the February 2020 Final Rule binding--namely that of promoting a 
predictable and consistent rulemaking environment where all 
stakeholders know what to expect during the rulemaking process--and 
DOE's proposal does not provide any explanation as to why the record 
before the agency no longer warrants ensuring that it provide a 
predictable and consistent rulemaking process. (AHRI, No. 25 at p. 7)
    AFP also argued that appendix A should remain binding. It dismissed 
DOE's stated reasons for making appendix A non-binding--namely to aid 
in meeting deadlines and to allow it to meet unspecified ``statutory 
obligations''--noting that with over two decades of rulemakings, DOE 
has rarely met its statutory deadlines even when appendix A was non-
binding. In AFP's view, DOE offered no justification in its proposal as 
to why this situation would change now. (AFP, No. 36 at p. 2) AFP 
asserted that the three examples offered by DOE in favor of making 
appendix A non-binding were flawed. It argued that with respect to 
DOE's ability to meet its statutory deadlines and ``other applicable 
requirements,'' DOE offered no explanation as to what comprised the 
latter. (AFP, No. 36 at pp. 2-3) It also argued that although DOE 
stated that changes or additions to EPCA's procedural requirements may 
affect DOE's ability to meet the relevant rulemaking deadlines, DOE 
failed to show how a non-binding appendix A will either help in meeting 
these statutory requirements or what will be different from DOE's 
historic practices. AFP offered similar criticisms with respect to 
DOE's statements regarding how the mandatory application of appendix 
A's requirements for early assessment RFIs and ANOPRs may affect DOE's 
ability to meet statutory deadlines and how having a binding appendix A 
would also make it more difficult to meet those statutory obligations. 
(AFP, No. 36 at pp. 2-3)
    AFP also referenced DOE's statements to Congress regarding the 
Department's ability to satisfy the requisite statutory deadlines, in 
which DOE explained that the Appliance Standards Program has 
historically had difficulties in meeting its statutorily-required 
rulemaking obligations, including when appendix A was non-binding. 
(AFP, No. 36 at p. 3) The commenter asserted that the proposal did not 
explain how making appendix A non-binding will yield results different 
from the past, and that DOE should hold itself accountable for 
complying with its own procedures to ensure that the public will have 
confidence in the transparency and fairness of DOE's rulemaking 
process. (AFP, No. 36 at pp. 3, 5)
Commenters Favoring a Mandatory Appendix A Coupled With Well-Defined 
Exceptions
    Additionally, there were also commenters who favored the use of 
limited, well-defined exceptions to appendix A while maintaining its 
overall mandatory approach. A number of manufacturers favored an 
approach that would retain the mandatory nature of appendix A (along 
with the certainty and predictability it offered), while building in 
additional flexibility for DOE, and objected to returning appendix A to 
its prior status as guidance. (Carrier, No. 26 at pp. 1-2; Nortek, No. 
19 at p. 2; GEA, No. 20 at pp. 2-3; Lennox, No. 18 at p. 2; A.O. Smith, 
No. 27 at p. 2; Goodman, No. 22 at p. 2; Trane, No. 23 at p. 2) Nortek 
and GEA added that if Appendix A becomes non-binding, DOE should add 
both a mandatory public notice and comment provision that must be 
followed whenever the agency intends to deviate from appendix A and a 
rule-specific explanation for the deviation, followed by an opportunity 
for public comment before the agency proceeds with such deviation. 
(Nortek, No. 19 at p. 2; GEA, No. 20 at pp. 2-3; see also Goodman, No. 
22 at p. 2 (asserting that DOE should explain its deviation)) Carrier, 
Lennox, A.O. Smith, and Trane offered that if DOE required more 
flexibility (such as making more expeditious, non-material, technical 
adjustments to test procedures), DOE should tailor those provisions of 
appendix A where that added flexibility is needed, rather than making 
Appendix A non-binding. (Carrier, No. 26 at p. 4; Lennox, No. 18 at p. 
2; A.O. Smith, No. 27 at p. 3; Trane, No. 23 at p. 20). A.O. Smith 
suggested that DOE should propose to add a clear ``exception clause'' 
that would permit DOE to deviate from appendix A when certain criteria 
are met, namely: (1) Consensus agreements; (2) negotiated rulemakings; 
and (3) test procedure rulemakings that are addressing clarifications 
necessary to provide clarity to the market, reduce uncertainty, and 
provide a level playing field. (A.O. Smith, No. 27 at p. 2) In A.O. 
Smith's view, this limited exception would recognize those 
circumstances where deviations from appendix A are necessary and the 
expediting of the rulemaking process is reasonable. (A.O. Smith, No. 27 
at pp. 2-3) Carrier suggested that DOE should retain its current early 
assessment requirement (i.e., that an early assessment be conducted 
prior to the issuance of a standards NOPR) but that the current rule be 
modified to permit DOE the ability to use the most efficient early 
assessment method available. (Carrier, No. 26 at p. 1) The commenter 
offered a similar approach with respect to the current 180-day buffer 
period between the finalizing of a test procedure rule and the proposal 
for new or amended energy conservation standards. (Carrier, No. 26 at 
p. 2)
    AGA objected to DOE's proposal to make appendix A non-binding and 
noted that because the 1996 version of appendix A had not been binding 
on DOE, it held little value. The commenter stated that in 2016, DOE 
frequently ignored appendix A, and its non-binding nature effectively 
conflicted with the need for an orderly and predictable regulatory 
process. (AGA,

[[Page 70899]]

No. 33 at pp. 3-4) Reversing the February 2020 Final Rule's mandatory 
nature would, in its view, be a serious mistake in light of AGA's past 
experience with having a non-binding version of appendix A in place. 
(AGA, No. 33 at p. 4) AGA argued that concerns over the rigidity of the 
February 2020 Final Rule--which AGA acknowledged to be the case with 
respect to some requirements--can be addressed through the revision of 
those requirements or by providing exceptions in appropriate 
circumstances, all without resorting to making appendix A non-binding. 
(AGA, No. 33 at pp. 4-5)
    NPGA stated that while DOE's April 2021 NOPR has identified a 
number of rulemaking scenarios where different procedures may be 
beneficial, the agency's ability to make unilateral decisions about 
when and how to implement different rulemaking procedures lacks 
transparency. (NPGA, No. 15 at p. 2) It stressed the importance of 
getting stakeholder input regarding the potential feasibility and 
energy savings of rulemaking actions as soon in the process as 
possible. For that reason, NPGA supported the continued use of the 
``early look'' provisions to solicit public comments on new regulatory 
actions. However, it agreed with DOE that different rulemaking 
approaches may be better suited in some cases for soliciting 
stakeholder input, so in the alternative, NPGA suggested that DOE 
should propose a new structure or minimum requirements that must be 
satisfied to justify an agency decision to deviate from appendix A and 
seek stakeholder information in response. (NPGA, No. 15 at pp. 2, 3) 
NPGA also argued that businesses need regulatory predictability and 
that DOE's proposal to largely operate on a case-by-case basis would 
make it difficult for manufacturers to have confidence in such 
rulemakings. It urged DOE to prepare and finalize regulations in an 
orderly fashion with a fair opportunity for all stakeholders to share 
information with the agency. (NPGA, No. 15 at p. 3)
    Crown Boiler (along with fellow boiler manufacturers U.S. Boiler 
and New Yorker Boiler who both filed nearly identical responses) 
opposed DOE's proposed change to make appendix A non-binding. Although 
Crown Boiler acknowledged that in some cases it may make sense for DOE 
to have flexibility in adapting the rulemaking process to different 
situations, the commenter asserted that when DOE did have such 
discretion in the past, the Department abused it. Crown Boiler argued 
that where deviation from appendix A is necessary, DOE should be 
required to justify such deviation in writing after soliciting 
stakeholder input. If DOE is deviating frequently from appendix A, 
Crown Boiler stated that further amendments to appendix A may be 
required, but the solution should not be to scrap the binding nature of 
the process. (Crown Boiler, No. 10 at pp. 2-3; U.S. Boiler, No. 11 at 
p. 3; and New Yorker Boiler, No. 13 at pp. 2-3)
    ALA urged DOE to retain the binding aspects of appendix A but 
recognized that a one-size-fits-all approach may not always be 
practical. It argued that retaining the binding aspects of the February 
2020 Final Rule will allow DOE to meet its statutory obligations and 
eliminate time-wasting negotiations on process and procedures. (ALA, 
No. 28 at p. 2) ALA suggested that if appendix A becomes non-binding, 
DOE should ensure consistency such as through applying at least a 180-
day period between finalizing a test procedure and proposing standards 
when major changes affecting energy consumption measurements are at 
issue, although the commenter concluded that a shorter time frame may 
be warranted for changes that do not impact measured energy 
performance. In its view, this change will ensure the best outcome in 
setting appropriate standards and reduce undue burden--particularly on 
small business entities who have limited resources with which to fully 
participate in DOE's rulemakings. (ALA, No. 28 at 2)
    Lutron stated that it understands DOE's desire to increase 
flexibility and improve efficiency by restoring DOE's discretion to 
depart from appendix A's general guidance. It did not oppose such 
changes as a general matter, but the company argued that certain 
aspects should remain mandatory, specifically: (1) Test procedures must 
be finalized before energy conservation standards are proposed; (2) New 
test procedures or test procedure amendments that impact measured 
energy must have an adequate lead time between finalization of that 
test procedure and a new or amended standards proposal; and (3) There 
should be some form of stakeholder engagement before issuance of a 
notice of proposed rulemaking for energy conservation standards. 
(Lutron, No. 16 at p. 2) Lutron suggested that DOE should revert to the 
language in section 14(a) of the July 1996 Final Rule, which required 
DOE to make a finding that it is necessary and appropriate to deviate 
from the procedure specified in appendix A, to explain why, and to 
provide interested parties an opportunity to comment. The commenter 
also argued that DOE should clarify that any such deviations will be 
rule-specific and done on a case-by-case basis, rather than being 
broadly applicable. (Lutron, No. 16 at p. 2)
    Both Grundfos and HI disagreed with DOE's proposal to return 
appendix A to guidance and noted that manufacturers are held to the 
strict requirements of the regulations, so DOE should likewise be 
expected to define a clear and consistent method for how it intends to 
manage its process to create/update those regulations, thereby 
providing stakeholders with needed predictability and consistency--as 
well as a means of enforcing those provisions through legally 
enforceable rights. They did not favor a case-by-case approach and 
stressed that such an approach would be at odds with the need for 
consistency, predictability, and transparency in DOE's regulatory 
process. However, these commenters also offered a middle ground, 
suggesting that appendix A should be binding, but with clear, 
thoughtful, and well-constructed flexibility to ensure DOE can meet the 
applicable requirements of EPCA. (Grundfos, No. 37 at pp. 1, 2; HI, No. 
42 at pp. 1, 2)
    The SBA Office of Advocacy stated that appendix A should remain 
binding while allowing for exceptions in certain instances. (SBA Office 
of Advocacy, No. 14 at p. 4) It stated that, among other things, 
without clear-cut processes for how the agency will promulgate 
standards, small businesses are not able to participate meaningfully in 
commenting and are not able to provide the types of substantive 
technical comments necessary to determine whether a particular test 
procedure is feasible. (SBA Office of Advocacy, No. 14 at p. 4)
    NAFEM opposed restoring DOE's discretion to depart from appendix 
A's general provisions and asserted that if DOE is concerned about 
unnecessary delays, the Department could amend the rule by including 
the option of using a NODA for early assessment instead of relegating 
the whole appendix A to being optional guidance. (NAFEM, No. 30 at p. 
4) NAFEM added that the April 2021 NOPR makes clear that DOE is seeking 
additional insulation from having to follow any rule or having any 
provisions that would impinge on its unbridled discretion by removing 
any legal impediment to its actions. (NAFEM, No. 30 at p. 4) In NAFEM's 
view, removing accountability and allowing for unlimited discretion 
will not provide economic stability or efficiency in the EPCA 
rulemaking process. (NAFEM, No. 30 at p. 4)
    The Joint Industry Commenters also strongly opposed DOE's proposal 
to eliminate the mandatory nature of the

[[Page 70900]]

February 2020 Final Rule. (Joint Industry Commenters, No. 40 at p. 4) 
They suggested instead that DOE should ensure the rule is tailored to 
its needs and provides the needed flexibility such that the agency can 
follow it regularly. (Joint Industry Commenters, No. 40 at p. 5). If 
DOE reverts back to a non-binding version of appendix A, the Joint 
Industry Commenters suggested DOE consider adding the following: (1) 
Provide parties with notice and explanation of why a deviation from 
appendix A is necessary and appropriate; (2) clarify that deviations 
can only be established on a case-by-case basis; (3) provide 
stakeholders with the opportunity to comment on the need for the 
deviation; and (4) maintain the mandatory nature of the rule for 
certain provisions, including: (a) A requirement to finalize test 
procedures before issuing proposed energy conservation standards with a 
180-day lead-in period for new test procedures or amended test 
procedures that impact measured energy use or efficiency, and (b) an 
opportunity for early stakeholder input prior to issuance of proposed 
energy conservation standards. (Joint Industry Commenters, No. 40 at 
pp. 6-7)
DOE's Response to Comments
    DOE first notes that the majority of commenters, both in support of 
and against restoring the Department's discretion to depart from the 
general guidance in Appendix A, have noted the merits of providing DOE 
with some measure of flexibility in its rulemaking processes. (See, 
e.g., Carrier, No. 26 at pp. 1-2 (favoring a more flexible application 
of the procedures in appendix A); Nortek, No. 19 at p. 2 (suggesting 
DOE provide rule-specific explanations when deviations are needed); 
A.O. Smith, No. 27 at p. 3 (preferring a binding process with 
reasonable exceptions over the current rigid approach); AGA, No. 33 at 
pp. 4-5 (noting that the rigidity imposed by the current requirements 
can be mitigated by providing for exceptions in certain circumstances); 
State Commenters, No. 29 at p. 8 (noting that procedural flexibility 
will help ensure that DOE is able to fulfill its statutory mandates as 
efficiently as possible with minimal delay and litigation risk); Joint 
Environmentalist Commenters, No. 31 at p. 2 (discussing the importance 
of allowing DOE to respond appropriately to the unique circumstances of 
a particular rulemaking)) Where commenters differ is on how to 
implement this flexibility. Some commenters, such as the Joint 
Environmentalist Commenters, support making appendix A non-binding to 
allow DOE the necessary flexibility to respond to the unique 
circumstances of a particular rulemaking, while other commenters, such 
as the Joint Industry Commenters, support retaining the current, 
binding nature of appendix A with modifications to ensure procedures 
are tailored to DOE's needs and provide the needed flexibility such 
that DOE can follow it regularly. (Joint Environmentalist Commenters, 
No. 31 at p. 2; Joint Industry Commenters, No. 40 at p. 5)
    After carefully considering these comments, DOE is finalizing the 
proposal from the April 2021 to revert appendix A back to its original 
status as non-binding guidance. That being said, DOE recognizes the 
merits in both approaches and believes the revisions to appendix A 
finalized in this document represent the best combination of these two 
approaches. Accordingly, DOE is also modifying appendix A to reduce the 
need for departures from the generally-applicable guidance by 
accounting for specific circumstances surrounding a rulemaking. For 
example, in section III.E of this document, DOE is implementing 
guidance on when a 180-day period between finalization of a test 
procedure and the end of the comment period for an associated standards 
proposal is warranted. These changes will result in fewer departures 
from the procedures laid out in appendix A. However, as noted 
previously, 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. Further these covered products and equipment encompass a 
wide variety of industries. For certain covered products and equipment, 
such as commercial package air conditioning and heat pumps, there are 
established trade organizations that represent a majority of 
manufacturers and that are able to compile comprehensive datasets. 
External power supplies, on the other hand, are used in a wide range of 
products and do not fall neatly into a single trade organization. As a 
result, DOE may need to tailor its rulemaking approach to account for 
the lack of consolidated information for a given covered product. This 
is just one example of how DOE has had to adapt its rulemaking process 
due to varying circumstances across covered products/equipment. 
Consequently, it is simply not feasible to anticipate every instance of 
when flexibility or an exception to the generally applicable procedures 
of appendix A would be warranted for the more than 60 categories of 
covered products and equipment that DOE regulates. As such, in addition 
to the specific instances where DOE is incorporating flexibility into 
appendix A, DOE believes it is imperative that the Department have the 
discretion to depart from the generally-applicable guidance in appendix 
A.
    Several commenters expressed concern that reverting to the prior, 
longstanding use of appendix A as non-binding guidance would reduce 
certainty, transparency, and consistency in the rulemaking process DOE 
uses to implement its Appliance Standards Program. (See, e.g., AHRI, 
No. 25 at p. 1-2; BWC, No. 24 at p. 1) NAFEM went so far as to state 
that a non-binding appendix A would allow for unbridled discretion in 
the rulemaking process by removing any legal impediment to DOE's 
actions. (NAFEM, No. 30 at p. 4) In response, DOE notes that reverting 
appendix A to non-binding guidance has no effect on the procedures that 
are already required under EPCA. DOE will continue to follow those 
statutory requirements and strive to continue to meet the related 
deadlines that EPCA prescribes. For example, EPCA requires that a test 
procedure or standards proposal be published for public comment, that 
comment periods be of specified minimum durations, and that notice of 
determinations be subject to notice and comment before DOE publishes a 
final determination not to amend a given set of standards for covered 
products and equipment. (See 42 U.S.C. 6293(b)(2) (prescribing minimum 
comment period for test procedure proposed rulemakings); 42 U.S.C. 
6295(m)(2) (prescribing minimum comment period for proposed 
determinations); and 42 U.S.C. 6295(p)(2) (prescribing minimum comment 
period for standards proposed rulemakings)) Further, DOE will continue 
to ensure new or amended energy conservation standards and test 
procedures meet applicable statutory criteria in EPCA (e.g., standards 
result in the maximum improvement in energy efficiency that is 
technologically feasible and economically justified). Taken together, 
all of these requirements establish a consistent, predictable 
rulemaking process. NAFEM's concerns about unbridled discretion and a 
lack of any legal impediment to DOE's actions are unfounded. As 
discussed above, EPCA restrains DOE's discretion in several areas and 
specifies a more detailed rulemaking process than that laid out in the 
Administrative Procedure Act.
    As for comments regarding the transparency of DOE's rulemaking

[[Page 70901]]

process, DOE notes that appendix A is an agency construction--a 
provision that was developed not only to address how DOE will conduct 
energy conservation standards and test procedure rulemakings but also 
to provide transparency to DOE's rulemaking process. As stated 
throughout this rulemaking, DOE is making appendix A non-binding in 
recognition of the fact that DOE should be able to tailor its 
rulemaking process to best fit the unique circumstances of a particular 
rulemaking, not to reduce transparency in its rulemaking process. That 
being said, DOE recognizes that deviations from appendix A without 
notice or explanation are not conducive to a transparent rulemaking 
process. Accordingly, DOE is modifying its proposed approach from the 
April 2021 NOPR to more closely match the original appendix A by 
providing the public with notice and an explanation of any deviations 
to the generally applicable guidance of appendix A. These deviations 
will be narrowly tailored to the individual rulemaking at issue and 
will not be applied on an across-the-board basis.
    In response to those commenters who criticized DOE's proposal and 
noted the Department's past inability to meet statutory deadlines even 
under a non-binding appendix A, DOE acknowledges the difficulties it 
has had in meeting these requirements in the past. DOE will continue to 
strive to meet these deadlines, and the removal of the mandatory 
provisions imposed by the 2020 February Final Rule (which tended to 
lengthen the rulemaking process) will provide DOE with a greater chance 
of success in doing so. Reserving this discretionary flexibility will 
aid in DOE's ability to focus its various resources in meeting the 
deadlines imposed under EPCA (or any other potential deadlines, such as 
those imposed pursuant to court order). Furthermore, DOE's past 
difficulty in meeting these deadlines when appendix A's provisions were 
not mandatory only further highlights the need for the agency to have 
more flexibility in carrying out a given rulemaking, not less, as the 
February 2020 Final Rule dictates.
    Finally, DOE agrees with those commenters who suggested that the 
removal of the binding nature of appendix A would reduce the overall 
scope of DOE's litigation risk and avoid scenarios where appendix A 
requirements may conflict with statutory requirements in EPCA. Reducing 
litigation risk, among other things, provides added certainty to DOE's 
rulemaking process. DOE also notes that removing the potential for 
procedural challenges stemming from a set of self-imposed requirements 
does not affect the ability of interested parties to bring substantive 
legal challenges under the relevant statutory provisions, such as the 
APA and EPCA. This change should contribute to DOE's ability to satisfy 
its statutory obligations in a timely manner.
    For the aforementioned reasons, DOE is finalizing the proposal from 
the April 2021 NOPR to restore DOE's discretion to depart from the 
generally-applicable guidance of appendix A, subject to the 
modification discussed above requiring notice and explanation for each 
deviation.

B. Significant Energy Savings Threshold

    As DOE noted in the preamble to the April 2021 NOPR, 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 Final 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 a significant conservation of energy.
    In a departure from this practice, the February 2020 Final Rule 
added a numerical threshold for significant conservation of energy that 
currently applies to all energy conservation standards rulemakings for 
both covered products and equipment. That threshold requires an energy 
conservation standard to result in either: (1) A 0.30 quad reduction in 
site energy use over a 30-year analysis period or (2) a 10-percent 
reduction in site energy use over that same period. DOE explained in 
the February 2020 Final Rule its expectation that the threshold would 
ensure that economically-justified standards would be developed, while 
also making the rulemaking process more predictable. 85 FR 8626, 8670.
    As DOE explained in its April 2021 proposal, the Department is 
reconsidering its policy views on whether this numerical threshold 
allows DOE to fully consider whether an energy conservation standard 
would result in significant conservation of energy. 86 FR 18901, 18905. 
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.
    As noted in the April 2021 NOPR, a uniform numerical threshold for 
site energy savings does not 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. 
Id. 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). For example, 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). 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.\9\ Thus, FFC effects present a more complete 
picture of the impacts of potential energy conservation standards, 
including greenhouse gas emissions, and would allow DOE to more fully 
consider the impacts of potential energy conservation standards during 
its rulemaking processes. This is especially important in light of the 
fact that the United States has now rejoined the Paris Agreement and 
will exert leadership in confronting the climate crisis.\10\
---------------------------------------------------------------------------

    \9\ See Coughlin, K. Projections of Full-Fuel-Cycle Energy and 
Emissions Metrics. (2013). LBNL-6025E; Energy information 
Administration Annual Energy Outlook 2021 (available at: https://www.eia.gov/outlooks/aeo).
    \10\ See Executive Order 14008, ``Tackling the Climate Crisis at 
Home and Abroad,'' 86 FR 7619 (Feb. 1, 2021).
---------------------------------------------------------------------------

    Additionally, DOE pointed out in the April 2021 NOPR that some 
covered products and equipment have most of their energy consumption 
occur during periods of peak energy demand--a condition that a uniform 
numerical threshold does not capture. 86 FR 18901, 18905. The impacts 
of these products on the energy infrastructure can be more significant 
than those from products with relatively constant site energy use 
demand. For example, whereas consumer refrigerators operate 24 hours 
per day, 365 days per year, central air conditioners typically operate 
during only part of the year, including periods of peak demand (i.e., 
during the hottest summer days), a factor that is likely to impact grid 
reliability. Thus, reducing energy use

[[Page 70902]]

during periods of peak demand has a more significant impact as it helps 
reduce stress on energy infrastructure. But the current threshold for 
determining whether energy savings are significant does not allow DOE 
to assign greater significance to energy savings that have a greater 
impact on reducing the stress on U.S. energy infrastructure. FFC and 
grid impacts are but two examples of any number of factors that cannot 
be fully accounted for when using DOE's current uniform threshold for 
significant conservation of energy.
    Accordingly, DOE sought comment on whether 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 or on any suggested alternatives. Commenter responses on 
this issue are summarized in the ensuing paragraphs, followed by the 
Department's response.
Comments Supporting Removal of the Significant Energy Savings Threshold
    A number of commenters supported DOE's proposal to remove the 
February 2020 Final Rule's significant energy savings threshold. For 
example, in expressing support for DOE's proposal, NPCC noted its 
initial objection to the threshold when it was first proposed by DOE. 
(NPCC, No. 12 at p. 3) NEEA held a similar view, asserting that the 
threshold was overly prescriptive and would prevent DOE from adopting 
standards that save energy and are economically justified. The 
commenter provided hypothetical examples of what it viewed as anomalous 
results that might occur if the significant energy saving threshold 
were to be used in its current form. (NEEA, No. 43 at p. 2 (noting that 
DOE would be able to implement a standards rulemaking resulting in 0.1 
quads of energy savings if it represented 11% of site energy use but 
would be unable to implement two separate rulemakings resulting in 0.2 
quads and 8% of site energy use reduction each))
    Some commenters also argued that the particular facts and 
circumstances need to be fully considered by DOE before it can make a 
determination regarding the significance of the energy savings 
involved. (State Commenters, No. 29 at p. 8; CEC, No. 35 at p. 5) 
Several Commenters also argued that the current significant energy 
savings threshold is both an unreasonable interpretation of EPCA and in 
conflict with existing case law. (State Commenters, No. 29 at p. 9 
(asserting that the threshold violated EPCA, case law, and 
congressional intent, and would result in lost public benefits); Joint 
Environmentalist Commenters, No. 31 at pp. 3-4) (asserting that the 
threshold violated EPCA and judicial precedent); CEC, No. 35 at pp. 4-5 
(citing NRDC v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985) and 
asserting that energy savings are significant if they are not 
``genuinely trivial'')) The CEC further argued that using a mandatory 
significant energy savings threshold as an initial consideration would 
allow DOE to side-step its obligations to evaluate the costs and 
benefits of any energy conservation opportunity that is not genuinely 
trivial, which is particularly important for technologies that may 
currently have a small market share but which could consume significant 
amounts of energy in the future (e.g., electric vehicle supply 
equipment). It also warned that a static significant energy savings 
threshold could be abused in situations where products could be split 
into numerous categories in order to ensure that no product meets the 
threshold, such that no standards may be established or amended. (CEC, 
No. 35 at pp. 4-5)
    The Joint Environmentalist Commenters characterized the adoption of 
the significant energy savings threshold as a ``harmful change'' that 
is inflexible. They argued that many of DOE's previously adopted energy 
conservation standards would not have met the 2020 February Final 
Rule's threshold, despite providing billions of dollars in utility bill 
savings, avoided health harms, and reduced greenhouse gas emissions. 
These commenters also argued that Congress intended for DOE to apply a 
gradualist approach by requiring the reexamination of standards at 
least every six years, and they reasoned that DOE cannot use a 
significant energy savings threshold to short-circuit this statutory 
requirement to reconsider standards at regular intervals. (Joint 
Environmentalist Commenters, No. 31 at pp. 3-5)
    The Joint Advocacy Commenters argued generally that adoption of the 
proposals contained in the April 2021 NOPR would have the potential to 
achieve very large consumer and climate benefits, while still providing 
ample opportunity for stakeholder input throughout DOE's rulemaking 
process. (Joint Advocacy Commenters, No. 38 at p. 1) Regarding the 
threshold specifically, these commenters favored its removal because, 
in their view, such an arbitrary threshold is inconsistent with the 
relevant case law and congressional intent and has the potential to 
sacrifice large savings for both consumers and businesses since site 
energy savings of 0.30 quads (as provided in the threshold) are 
equivalent to electricity bill savings of about $11 billion. The Joint 
Advocacy Commenters further argued that the numerical threshold would 
prevent DOE from pursuing a standard, even if such standard would 
impose no costs, because the agency would never get to consider that 
level of savings as part of the required analysis of economic 
justification. These commenters also faulted the numerical threshold 
for not allowing DOE to account for factors such as the increased 
significance of energy savings that can reduce greenhouse gas emissions 
or the specific circumstances associated with a given product. They 
agreed with the April 2021 NOPR's arguments that the significant energy 
savings threshold does not allow DOE to account for other relevant 
considerations such as a potential standard's impact on peak demand and 
reduction of stress on the electric grid, and they added that the 
threshold could also prevent the successful conclusion of consensus 
agreements. For these reasons, the Joint Advocacy Commenters 
recommended that DOE should return to considering whether significant 
energy savings are present on a case-by-case basis, as it has 
historically done. (Joint Advocacy Commenters, No. 38 at pp. 2-3; Joint 
Advocacy Commenters (Appendix I), No. 38 at pp. 1, 2, 9-11)
    IPI also supported DOE's proposed removal of the significant energy 
savings threshold and suggested that DOE should also consider other 
factors besides climate effects when determining whether energy savings 
are significant. (IPI, No. 17 at p. 1) In addition to supporting DOE's 
stated reasons for removing the threshold, IPI argued that had the 
threshold been in place when DOE set standards for commercial warm air 
furnaces in 2016, the Nation would have had to forego 12.4 million 
metric tons of CO2 emissions savings, as well as significant 
reductions in criteria pollutants and consumer savings of $1 billion. 
(IPI, No. 17 at p. 2) The commenter asserted that foregoing such 
savings in the future by continuing to use the threshold would 
significantly undermine commitments to U.S. leadership on climate 
change and would bypass the ``cost-free chance[s] to save energy'' that 
courts have said that Congress did not intend for DOE to pass up. (IPI, 
No. 17 at pp. 2-3) In IPI's view, relying solely on numerical 
thresholds is arbitrary (IPI, No. 17 at p. 3), and it agreed with the 
April 2021 NOPR's observation that peak demand has a greater impact on 
U.S. energy infrastructure compared to

[[Page 70903]]

non-peak demand. IPI stated that the timing of energy demand matters 
not only in this context but also with respect to climate, health, and 
consumer impacts, explaining that electricity generators that satisfy 
peak demand can also be among the most-polluting generators and that 
some consumers may experience increased electricity pricing during peak 
demand periods. (IPI, No. 17 at pp. 3-4) As a result, in IPI's view, 
energy savings for appliances that operate during peak demand periods 
can have greater benefits for the climate, human health, and consumers 
than the raw numbers show. For this reason, IPI argued that these 
impacts should be considered when determining whether a given savings 
level is significant. (IPI, No. 17 at p. 4)
    IPI added that climate and health impacts should be incorporated 
into DOE's reasoning for the removal of the current energy savings 
threshold. (IPI, No. 17 at p. 4) In addition to DOE's reasoning that 
the current threshold's link to site energy use does not permit DOE to 
account for differences in primary energy and FFC effects for different 
covered products, IPI contended that a given amount of site energy 
usage will also be associated with different amounts of FFC emissions 
depending on the fuel type used and that those different emissions will 
likewise be associated with different climate and health impacts. The 
commenter argued that these reasons favor DOE's consideration of 
climate and health impacts when assessing the significance of energy 
savings for a given standard and in repealing the February 2020 Final 
Rule's numerical thresholds.\11\ (IPI, No. 17 at p. 4)
---------------------------------------------------------------------------

    \11\ IPI also offered as additional support its comments to 
DOE's prior proposals regarding appendix A in which it opposed the 
use of a threshold for significant energy savings. (IPI, No. 17 
(Attachment 4) (Comments dated March 16, 2020) at pp. 3-4)); IPI, 
No. 17 (Attachment 5) (Comments dated May 6, 2019) at pp. 2-3)
---------------------------------------------------------------------------

    The CA IOUs also supported removal of the significant energy 
savings threshold, arguing that it directly conflicts with DOE's 
ability to set energy conservation standards that achieve the maximum 
energy savings that are technologically feasible and economically 
justified. They characterized it as an ``arbitrary minimum savings 
threshold'' and also faulted it for its potential to prevent DOE from 
setting efficiency standards for emerging technologies that may have 
relatively low market penetration currently but that present large 
savings opportunities for the future. The CA IOUs argued that 
appropriate Federal energy conservation standards could help reduce the 
social cost of such technologies and accelerate their acceptance, and 
accordingly, these commenters recommended that DOE should again 
interpret significant energy savings to mean not ``genuinely trivial'' 
(referencing the Herrington case). (CA IOUs, No. 34 at pp. 2-3)
    Finally, the proposed elimination of the significant energy savings 
threshold was also supported by some manufacturers. A.O. Smith stated 
that it did not believe that appendix A needed to include a significant 
energy savings threshold, as the factors that EPCA requires DOE to 
evaluate include both savings and cost. (A.O. Smith, No. 27 at p. 4) 
Trane noted that, even with the current approach's ``10% improvement 
backstop,'' this level of improvement could represent a significant 
leap for many covered products that is simply impossible to achieve, 
let alone be technically feasible. (Trane, No. 23 at p. 3). Instead, 
Trane favored permitting DOE to use its own discretion, after carefully 
weighing stakeholder input, as to whether potential cumulative energy 
savings are significant enough to proceed with a standards rulemaking. 
(Trane, No. 23 at p. 3)
Comments Opposing Removal of the Significant Energy Savings Threshold
    A number of commenters opposed DOE's proposal to remove the current 
threshold for significant energy savings. For example, in AHRI's view, 
DOE's establishment of the current significant energy savings 
threshold, rather than relying on a case-by-case determination, fell 
within DOE's authority under EPCA. (AHRI, No. 25 at p. 7) Many 
commenters asserted that the use of such a threshold would provide 
consistency, predictability, certainty, stability, or some combination 
of these elements, to regulated entities and stakeholders, and they 
argued that it would ensure that DOE pursues economically-justified 
standards. (AHRI, No. 25 at p. 7; Joint Industry Commenters, No. 40 at 
p. 12; Goodman, No. 22 at p. 3; Lutron, No. 16 at p. 2; Zero Zone, No. 
21 at p. 2; Grundfos, No. 37 at p. 2; HI, No. 42 at p. 2; AGA, No. 33 
at p. 5; MHI, No. 32 at p. 2). The SBA Office of Advocacy made special 
note that the threshold provides certainty to small businesses. (SBA 
Office of Advocacy, No. 14 at p. 5) A number of commenters also 
asserted that focusing on potential standards capable of satisfying the 
threshold would help DOE prioritize its resources and meet its 
statutory deadlines. (AHRI, No. 25 at pp. 7-8; Carrier, No. 26 at p. 2; 
Crown Boiler, No. 10 at p. 2; Nortek, No. 19 at p. 3; BWC, No. 24 at 
pp. 2-3; GEA, No. 20 at p. 3; Joint Industry Commenters, No. 40 at p. 
12; ALA, No. 28 at 2; MHI, No. 32 at p. 2; AFP, No. 36 at pp. 1-2, 4; 
SBA Office of Advocacy, No. 14 at p. 5) (See also U.S. Boiler, No. 11 
at pp. 2-5 and New Yorker Boiler, No. 13 at pp. 2-4) \12\ GEA added 
that if a rule is not going to make a meaningful difference in energy 
consumption, DOE should make no new standard and return to the rule in 
three years, pursuant to EPCA. (GEA, No. 20 at p. 3) NAFEM cautioned 
that removing the threshold and leaving an undefined process will make 
standards rulemakings more contentious and less efficient. (NAFEM, No. 
30 at p. 5)
---------------------------------------------------------------------------

    \12\ The comments from Crown Boiler will serve as the basis for 
discussion of the positions taken by these commenters, as the 
comments provided were essentially identical.
---------------------------------------------------------------------------

    Some commenters also contended that by removing the threshold, DOE 
would improperly be relying on factors outside of its statutory 
authority when considering whether to adopt a given standard (e.g., 
rejoining of the U.S. to the Paris Agreement, reducing stress on energy 
infrastructure, and considering greenhouse gas emissions). (AHRI, No. 
25 at p. 8; AFP, No. 36 at pp. 4-5) These commenters argued that DOE's 
consideration of ``significant conservation of energy'' is limited to 
whether there is a significant conservation of electricity or fossil 
fuels and does not extend to whether that conservation of energy would 
have a significant impact on other DOE priorities such as reducing peak 
demand, limiting stress on electricity infrastructure, or taking action 
on climate change. (AHRI, No. 25 at p. 8; AFP, No. 36 at pp. 4-5). AGA 
faulted DOE for proposing to remove the significant energy savings 
threshold before having even had a chance to use it. (AGA, No. 33 at p. 
5 (noting the same and requesting DOE first analyze previous appliance 
efficiency rulemakings to provide context and a transparent rationale 
for the threshold value (or lack thereof) that DOE would apply to 
future rulemakings.)) ALA disfavored case-by-case determinations, and 
the organization asserted that the economic cost of the regulatory 
process and related testing should be weighed against the potential 
energy savings over a determined period of time. (ALA, No. 28 at p. 2) 
ALA noted its prior support for DOE's efforts to prioritize test 
procedures and standards development to identify categories offering 
consumers the most energy savings, and it argued that following this 
approach would allow DOE to target its limited resources on those 
products consuming the most

[[Page 70904]]

energy, thereby creating a baseline approach. (ALA, No. 28 at pp. 2-3) 
AFP noted that the agency has devoted substantial time and effort to 
rules producing little energy savings, while missing its deadlines 90 
percent of the time. (AFP, No. 36 at pp. 1-2, 4 (citing DOE's own 
finding that 40 percent of the 60 rules it had examined produced 6 
percent of the overall energy efficiency savings))
    While many commenters supported the continued use of the 
significant energy savings threshold, some also recognized the need for 
DOE to have some flexibility in how the threshold would be applied. For 
example, while Carrier thought the threshold would apply in most 
instances, it acknowledged that there may be some instances where 
additional or alternative benefits may exist and suggested that DOE 
revise appendix A to provide the agency with the ability to address 
those unique cases (where appropriate) with notice and explanation. 
(Carrier, No. 26 at p. 2) The Joint Industry Commenters and Nortek 
reasoned that, even if appendix A became non-binding, DOE should retain 
the significant energy savings threshold, because DOE could undertake a 
deviation after giving the public notice and an opportunity for comment 
should other factors lead DOE to conclude that doing so would satisfy 
EPCA. (Joint Industry Commenters, No. 40 at p. 12; Nortek, No. 19 at p. 
3) Goodman also offered alternatives to the complete removal of the 
threshold, suggesting that DOE either: (1) Retain the current threshold 
as a rebuttable presumption that, if met, would be deemed 
``significant'' while savings levels falling under the threshold would 
be presumed ``insignificant'' unless DOE demonstrates otherwise or (2) 
define ``significant energy savings'' to be a value connected to the 
average annual per-household energy use requirement specified in 42 
U.S.C. 6292(b)(1)(B). (Goodman, No. 22 at p. 4) Lutron suggested that 
if the current threshold causes problems in achieving the 
Administration's energy conservation and climate goals, lowering the 
threshold would be preferable to its removal. (Lutron, No. 16 at pp. 2-
3) NAFEM stated that if DOE removes the threshold, appendix A should be 
revised to provide a list of all of the factors DOE may consider when 
making a determination that energy savings are significant. (NAFEM, No. 
30 at p. 5) ALA asserted that there should be some baseline approach to 
setting standards to avoid wasting time and money, but it added that 
using exact thresholds are unlikely to apply to all product types. 
(ALA, No. 28 at p. 2)
    Lennox suggested that DOE should issue a supplemental proposal with 
an analytical basis for its approach to determining significant energy 
savings, if the agency wants to consider eliminating its use of 
``quantitative significance thresholds,'' including why a smaller 
threshold may not be appropriate. (Lennox, No. 18 at p. 9). Lennox went 
on to state that if DOE eliminates the use of thresholds, it should 
restore and strengthen the prior version of appendix A, where 
presumptions had existed against regulations such as those that would: 
(1) Result in a negative return on investment for the industry; (2) 
would significantly reduce the value of the industry; or (3) be the 
direct cause of plant closures, significant losses in domestic 
manufacturer employment, or significant losses of capital investment by 
domestic manufacturers. (Lennox, No. 18 at pp. 9-10) (See also 10 CFR 
part 430, subpart C, appendix A, section 5(e)(3) (2018))
    Crown Boiler--in conjunction with both U.S. Boiler and New York 
Boiler, who both filed essentially identical comments (see U.S. Boiler, 
No. 11 at pp. 2-5 and New Yorker Boiler, No. 13 at pp. 2-4) \13\--made 
a number of arguments, in addition to those noted earlier, in support 
of the significant energy savings threshold. It argued that the 
threshold is an acknowledgement by DOE that there is a point at which 
projected energy (and carbon) savings become too small to be 
statistically significant and its proposed removal would, in its view, 
make appendix A less science-based, an action which would be in 
conflict with Executive Order 13990. (Crown Boiler, No. 10 at p. 2) 
Crown Boiler also stressed that energy efficiency standards have real 
world impacts, including added cost for equipment and potential job 
losses, and the commenter argued that DOE should be required to show a 
degree of energy savings above a de minimis level before setting an 
energy conservation standard. (Crown Boiler, No. 10 at p. 3) It further 
added that there is a direct relationship between fuel consumption and 
carbon emissions, and consequently, insignificant energy savings would 
be expected to also translate into insignificant carbon reductions. 
Crown Boiler reasoned that given these limitations, standards with a 
low-yield potential for energy savings would not justify the imposition 
of heavy regulatory burdens and DOE should avoid setting standards 
simply for purposes of ``international virtue signaling'' and to 
demonstrate leadership in confronting the climate crisis. (Crown 
Boiler, No. 10 at p. 3)
---------------------------------------------------------------------------

    \13\ The comments from Crown Boiler will serve as the basis for 
discussion of the positions taken by these commenters.
---------------------------------------------------------------------------

    Crown Boiler also noted that an insignificant reduction in energy 
savings is highly unlikely to be realized entirely during a peak demand 
period, and the commenter added that DOE itself considered the impact 
that the significant energy savings threshold would have on potential 
reductions in peak demand, but that it determined that it retained the 
ability to consider the impacts of new standards on grid reliability if 
these concerns impacted specific rulemakings. (Crown Boiler, No. 10 at 
p. 3; see also 85 FR 8626, 8672 (Feb. 14, 2020)) Crown Boiler also 
challenged DOE's view that eliminating the threshold would allow DOE to 
consider potential source energy savings by pointing out that DOE had 
noted that it believed it was statutorily obligated to utilize site 
energy use when analyzing energy savings, and it asserted that the 
April 2021 NOPR did not address DOE's ability to consider source energy 
savings in this manner while still complying with EPCA. (Crown Boiler, 
No. 10 at pp. 3-4)
    Additionally, Crown Boiler asserted that DOE's only possible error 
in setting its significant energy savings threshold was reducing it 
from the originally proposed value of 0.5 quad to the 0.3 quad 
threshold ultimately adopted. (Crown Boiler, No. 10 at p. 4) It pointed 
to two energy conservation standard rules--the 2016 rule for 
residential boilers and the 2020 rule for commercial boilers--as 
highlighting the potential for negative impacts in the absence of a 
threshold. The commenter asserted that each of these rules was expected 
to result in only a 0.6 percent improvement in efficiency, for a total 
of 0.16 quads and 0.27 quads over 30 years, respectively. Crown Boiler 
argued that in exchange for these small gains, both gas and oil boilers 
would face a significant reduction in their ability to work properly 
when installed with sub-optimal vent systems. Moreover, Crown Boiler 
argued that such boilers face an increased risk of reliability problems 
that could reduce efficiency in the field over time, and that 
manufacturers experienced a drain on engineering resources that would 
have otherwise been allocated to more productive uses (such as research 
into new technologies capable of operating on a higher concentration of 
renewable fuels). Crown Boiler viewed these outcomes as real losses 
that were traded for theoretical energy savings so low that it

[[Page 70905]]

raises questions as to whether DOE can credibly claim these predicted 
saving as accurate. (Crown Boiler, No. 10 at p. 4)
DOE's Response to Comments
    In response to these comments, DOE first notes that several 
commenters discussed DOE's authority to establish a threshold for 
determining whether energy savings are significant. As discussed in the 
April 2021 NOPR, DOE proposed to remove the current numerical threshold 
for determining whether energy savings are significant because it did 
not allow DOE to consider the specific circumstances surrounding a 
given rulemaking, not because DOE lacked the statutory authority to 
establish a threshold. 86 FR 18901, 18905. As evidenced by the court's 
decision in Herrington, it is clear that DOE may choose to establish a 
numerical threshold as long as the threshold is consistent with the 
policies behind the program. See Herrington, 768 F.2d at 1376 (``we do 
not hold that the Act forbids DOE to set levels of significance for 
each product type as a percentage of the energy consumed by that 
product type, provided that the levels selected reasonably accommodate 
the policies of the Act.''). However, while establishing a threshold is 
permissible under EPCA, DOE does not believe it is the best course of 
action. As discussed previously, a set numerical threshold does not 
allow DOE to consider the specific circumstances (e.g., electric 
infrastructure impacts, FFC effects, and greenhouse gas emissions) 
surrounding a given rulemaking when determining whether energy savings 
are significant.
    As for the argument that DOE's determinations of significance for 
energy savings should be limited to whether there is a significant 
conservation of electricity or fossil fuels and that it should not 
extend to the impacts of those energy savings, commenters seem to 
suggest that the significance of energy savings can be determined 
without consideration of the broader impacts of those savings. DOE does 
not agree with this position, nor does EPCA compel such an approach. As 
noted in Herrington, determining whether energy savings are significant 
should be informed by the underlying policies of the Appliance 
Standards Program. Id. DOE's Appliance Standards Program was created in 
the 1970's in response to an energy supply crisis. See EPCA (noting in 
the Act's description the law's intention ``[t]o increase domestic 
energy supplies and availability; to restrain energy demand; to prepare 
for energy emergencies; and for other purposes.'')
    Congress expanded further on the intended policies underlying the 
Appliance Standards Program in subsequent amendments to EPCA. For 
example, the Energy Policy Act of 2005, Public Law 109-58 (Aug. 8, 
2005), which, among other things, amended EPCA to establish energy 
conservations standards for additional consumer products, was enacted 
to ``ensure jobs for our future with secure, affordable, and reliable 
energy.'' The Energy Independence and Security Act of 2007, Public Law 
110-140 (Dec. 19, 2007), which similarly amended EPCA to establish new 
energy conservation standards for consumer products and commercial 
equipment, was enacted to ``move the United States toward greater 
energy independence and security, to increase the production of clean 
renewable fuels, to protect consumers, to increase the efficiency of 
products, buildings, and vehicles, to promote research on and deploy 
greenhouse gas capture and storage options, and to improve the energy 
performance of the Federal Government, and for other purposes.'' Energy 
conservation achieved through the Appliance Standards Program helps 
achieve many of these policy objectives. For example, energy 
conservation standards can increase grid reliability by decreasing peak 
demand. Energy conservation standards also protect consumers by 
reducing greenhouse gas and other pollutant emissions. As a result, and 
in accordance with the court in Herrington, DOE believes any 
determination of whether energy savings are significant should involve 
some consideration of the potential impact of those energy savings on 
the policy objectives underlying the Appliance Standards Program. Thus, 
rather than being constrained in the manner suggested by these 
commenters--i.e., that DOE is limited to determining significance 
solely in terms of the amount of projected electricity or fossil fuel 
energy savings--DOE is guided by the underlying policy objectives of 
EPCA, as amended, governing the Appliance Standards Program when 
determining whether potential energy savings are significant.
    DOE also received several other comments disagreeing with DOE's 
decision to consider the potential impacts of energy savings when 
determining whether those energy savings are significant. Crown Boiler 
commented that DOE itself had noted it was statutorily obligated to 
utilize site energy use when analyzing energy savings. (Crown Boiler, 
No. 10 at pp. 3-4) Crown Boiler also commented that DOE had determined 
in the February 2020 Final Rule that it could address the impacts of 
new standards on grid reliability in individual rulemakings.
    In response, DOE first notes that Crown Boiler's claim that DOE 
stated it was obligated to use site energy savings mischaracterizes 
DOE's position in the February 2020 Final Rule. In that rule, DOE 
stated that use of site energy savings was consistent with EPCA's 
definition for ``energy use'' and the process followed by DOE when 
determining whether to apply energy conservation standards to other 
covered products. 85 FR 8626, 8668. But, even if Crown Boiler's claim 
had been accurate, DOE did not propose to remove the threshold because 
the use of site energy savings itself is problematic. Instead, DOE 
proposed to remove the uniform numerical threshold because relying 
solely on the threshold itself does not account for the specific 
circumstances surrounding a given rulemaking. Nowhere is this 
deficiency more evident than in the consideration of FFC effects for 
electricity and natural gas where 1 quad of site electricity energy 
consumption corresponds to approximately 3.05 quads of FFC energy 
consumption, while 1 quad of site natural gas energy consumption 
corresponds to 1.11 quads of FFC energy consumption. DOE will continue 
to calculate potential site energy savings for energy conservation 
standards. But DOE will determine the significance of those site energy 
savings based on their impact, which may include impacts on FFC 
savings, grid reliability, and greenhouse gas emissions. Crown Boiler's 
second argument similarly misses the mark. DOE agrees that the impact 
of new standards on grid reliability can be addressed during individual 
rulemakings. But, that can only occur if the February 2020 Final Rule 
threshold has been met.
    In response to comments that eliminating a uniform numerical 
threshold will reduce certainty and predictability in DOE's rulemaking 
process (see, e.g., AHRI, No. 25 at p. 7; Joint Industry Commenters, 
No. 40 at p. 12; Goodman, No. 22 at p. 3) or lead to an undefined 
process that will make standards rulemakings more contentious and less 
efficient (NAFEM, No. 30 at p. 5), DOE notes that elimination of the 
numerical threshold will not change its rulemaking process. DOE will 
continue to collect information and conduct analyses to determine if 
new or amended standards would result in significant conservation of 
energy and are technologically feasible and economically justified. If 
these statutory criteria are met, DOE will propose new

[[Page 70906]]

or amended standards. Stakeholders will then have the opportunity to 
comment on the proposed new or amended standards, including whether the 
potential energy savings are significant. If new or amended standards 
are subsequently issued in a final rule, manufacturers will typically 
have between 3 and 5 years to come into compliance with the new or 
amended standards. (See 42 U.S.C. 6295(m)(4)) This is a consistent 
process based on well-established methodologies that have been 
extensively used over the long lifetime of DOE's Appliance Standards 
Program. As for claims that elimination of the uniform numerical 
threshold will lead to less predictable rulemakings, DOE does not issue 
new or amended energy conservation standards based solely on whether 
the potential energy savings are significant. Any new or amended 
standard must also be technologically feasible and economically 
justified. Further, DOE only makes these determinations after 
conducting a full analysis of all available information, including 
information obtained during the rulemaking process. And, while DOE 
acknowledges that a uniform numerical threshold makes for less 
complicated significance determinations, it does so by ignoring the 
very real differences, e.g., FFC effects and electrical grid impacts, 
between energy savings across different rulemakings. DOE believes that 
any benefits of this approach are more than outweighed by its failure 
to account for the specific facts and circumstances surrounding an 
individual rulemaking.
    As for commenters such as ALA and AFP that asserted the uniform 
numerical threshold would help DOE prioritize its resources and meet 
its statutory deadlines, DOE notes that having a threshold can only 
constrain DOE's ability to prioritize its resources. As discussed 
previously, a uniform numerical threshold does not account for the 
differences across covered products and equipment rulemakings, e.g., 
FFC effects. For example, under the threshold established in the 
February 2020 Final Rule, DOE would not be able to prioritize a rule 
that saves 0.25 quad of site energy and 0.6 quad of FFC energy over a 
rule that saves 0.30 quad of site energy and 0.4 quad of FFC energy. 
DOE assumes commenters also meant that the threshold would result in 
more rulemakings resulting in determinations that standards do not need 
to be amended, which would free up DOE resources. But, in many cases 
the process for issuing a new or amended standard, in terms of the 
number of Federal Register publications and opportunities for public 
comment, is very similar to the process for issuing a final 
determination not to amend a standard. Both typically involve the 
issuance of pre-NOPR documents where DOE collects information and data 
in order to determine whether a new or amended standard would satisfy 
the relevant criteria in EPCA. DOE then uses these data and information 
to prepare a proposal on whether a new or amended standard is 
warranted. After reviewing public comments on the proposal, DOE issues 
a final document that either establishes a new or amended standard or 
determines that a new or amended standard is not warranted. Finally, a 
determination not to amend standards must be revisited within 3 years, 
while a decision to issue new or amended standards must be revisited 
within 6 years. (42 U.S.C. 6295(m)) DOE believes the other revisions to 
appendix A finalized in this document and the additional revisions that 
were proposed in the July 2021 NOPR will have a much greater impact on 
DOE's ability to meet its statutory deadlines.
    As for the commenters who proposed a modified threshold, e.g., a 
rebuttable presumption of significance or a lower threshold value, DOE 
notes these approaches pose the same problem as the threshold set in 
the February 2020 Final Rule. Namely, they assume on some level that 
the significance of energy savings can be determined without 
considering the specific circumstances surrounding a given rulemaking. 
Additionally, DOE notes that it has never stated the threshold for 
determining the significance of energy savings established in the 
February 2020 Final Rule is too high. Rather, the issue is that any set 
threshold ignores the very real differences in energy savings across 
different rulemakings.
    Several commenters discussed the potential economic impacts on 
industry and consumers of DOE's proposal to remove the threshold for 
determining whether energy savings are significant. DOE notes that a 
determination that energy savings are significant is but one step in 
the process of issuing new or amended standards. EPCA still requires, 
among other things, that a new or amended standard be economically 
justified, which includes the consideration of economic impacts on 
manufacturers and consumers. (See 42 U.S.C. 6295(o)(2)(B)(i)(I)) DOE 
will continue to follow these provisions and to perform the required 
analyses to demonstrate and ensure that the relevant statutory criteria 
are satisfied before setting (or amending) energy conservation 
standards or deciding not to amend them.
    With regards to Lennox's comment that, assuming the threshold is 
eliminated, DOE should restore and strengthen prior provisions from the 
July 1996 Final Rule, DOE will address these comments and the 
additional revisions proposed in the July 2021 NOPR in a separate final 
rule.
    Finally, DOE does not agree with AGA's statement faulting the 
Department for proposing to remove the significant energy savings 
threshold before having even had a chance to use it. The effects of the 
threshold established in the February 2020 Final Rule on the 
Department's rulemaking processes were readily apparent on issuance of 
the rule. As discussed throughout this document, the February 2020 
Final Rule, including the significant energy savings threshold, does 
not allow DOE to account for the particular circumstance of individual 
rulemakings, e.g., FFC and electrical grid impacts.
    Accordingly, for the aforementioned reasons, DOE has concluded that 
determinations of significance for energy savings should be made on a 
case-by-case basis. As a result, DOE is removing the significant energy 
savings threshold.

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); 42 
U.S.C. 6316(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: (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

[[Page 70907]]

seven factors described in 42 U.S.C. 6295(o)(2)(B)(i). (See also 42 
U.S.C. 6313(a)(6)(B)(ii) (applying the seven factors to ASHRAE 
equipment); 42 U.S.C. 6316(a) (applying the seven factors to non-ASHRAE 
equipment)). 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 an approach would allow for more 
reliable determinations that a specific TSL is economically justified. 
Id. at 85 FR 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 concern 
among several stakeholders 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. DOE's statement in the August 2020 Final 
Rule 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'' added further confusion 
to how DOE would use the comparative analysis in determining whether a 
TSL is economically justified. 85 FR 50937, 50939 (emphasis added).
    In light of the confusion and uncertainty around whether a 
comparative analysis would result in DOE choosing the TSL that 
maximizes net benefits as opposed to the TSL that represents the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified, DOE proposed to eliminate the 
requirement to conduct a comparative analysis when determining whether 
a specific TSL is economically justified in the April 2021 NOPR. 86 FR 
18901, 18906. DOE received numerous comments on this proposal with some 
commenters in favor of eliminating the comparative analysis and others 
arguing that it should be retained.
Comments Supporting DOE's Proposal To Eliminate the Requirement To 
Conduct a Comparative Analysis in Determining Economic Justification
    In support of DOE's proposal to remove the requirement to conduct a 
comparative analysis, several commenters expressed concern that the 
comparative analysis could lead to DOE selecting a TSL that does not 
represent the maximum improvement in energy efficiency that is 
technologically feasible and economically justified. (See e.g., Joint 
Advocacy Commenters, No. 38 at p. 3; Grundfos, No. 37 at p. 3; CEC, No. 
35 at p. 6; State Commenters, No. 29 at p. 9) Some commenters were 
particularly concerned that the comparative analysis would result in 
DOE choosing a TSL that maximizes net benefits instead of energy 
savings. (Joint Environmentalist Commenters, No. 31 at p. 5; CA IOUs, 
No. 34 at pp. 2-3) IPI commented that the approach would not be 
transparent and allow DOE to define what is ``economically justified'' 
on any subset of adverse impacts to which DOE may happen to arbitrarily 
assign controlling weight--a result that it asserted would be 
inconsistent with statutory requirements and rational decision making. 
(IPI, No. 17 (Attachment 4 (Comments dated March 16, 2020) at pp. 2-3; 
IPI, No. 17 (Attachment 5 (Comments dated May 6, 2019) at pp. 3-4)
Comments Opposing DOE's Proposal To Eliminate the Requirement To 
Conduct a Comparative Analysis in Determining Economic Justification
    Other commenters opposed DOE's proposal to remove the requirement 
to conduct a comparative analysis. For example, several commenters 
stated the comparative analysis will ensure DOE, when faced with TSLs 
with comparable savings, chooses the trial standard level with a less 
severe negative impact. (See, e.g., MHI, No. 32 at p. 2; Lutron, No. 16 
at p. 3; Joint Industry Commenters, No. 40 at pp. 12-13) NAFEM 
commented that removal of the comparative analysis requirement could 
result in energy conservation standards that save more energy at the 
expense of product differentiation, refinement, and end-use 
flexibility. (NAFEM, No. 30 at p. 5) SBA Office of Advocacy commented 
that EPCA does not expressly prohibit an analysis of net benefits and 
DOE does not provide justification as to why a net benefits approach is 
inaccurate or otherwise prohibited, and instead merely states that the 
elimination of the comparative analysis is to reduce uncertainty. (SBA 
Office of Advocacy, No. 14 at p. 6) SBA Office of Advocacy also stated 
that engaging in a comparative analysis would ensure that DOE is 
considering the full scope of impacts of a particular standard and 
would help DOE in moving towards better compliance with the Regulatory 
Flexibility Act. (SBA Office of Advocacy, No. 14 at p. 7) Zero Zone 
stated that DOE should retain the comparative analysis for standard 
level selection, because the Department has not provided any evidence 
of an actual problem using that approach. (Zero Zone, No. 21 at p. 2) 
Finally, BWC stated that the comparative analysis would help DOE and 
stakeholders better assess the TSLs against the applicable statutory 
criteria. (BWC, No. 24 at p. 3)
DOE's Response to Comments
    DOE first notes that both commenters in favor of the proposal to 
eliminate the comparative analysis and those against its removal stated 
that the comparative analysis could lead to the Department forgoing 
energy savings in favor of increased economic benefits. (See, e.g., 
Joint Advocacy Commenters, No. 38 at p. 3; MHI, No. 32 at p. 2) Based 
on these comments, it is clear that the comparative analysis generated 
significant confusion and uncertainty about whether the process would 
result in DOE selecting the TSL that results in the maximum improvement 
in energy efficiency that is technologically feasible and economically 
justified or a TSL that saves less energy but imposes lower costs on 
manufacturers and consumers.
    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that DOE determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) In deciding whether a 
proposed standard is economically justified, DOE must determine whether 
the benefits of the standard exceed its burdens. (42 U.S.C. 
6295(o)(2)(B)(i)) DOE must make this determination after receiving 
comments on the proposed standard, and by considering, to the greatest 
extent practicable, the seven statutory factors, which allow DOE to 
consider the full breadth of impacts including benefits and costs, 
along with other factors the Secretary considers relevant. In practice, 
DOE determines an appropriate energy conservation

[[Page 70908]]

standard level for adoption by conducting a ``walk-down'' analysis of 
the trial standard levels (TSLs) considered in the proposal, after 
reviewing any public comments. DOE starts by analyzing the maximum 
technologically feasible (max-tech) level to see whether the statutory 
criteria for significant energy savings, technological feasibility, and 
economic justification have been met. If the max-tech TSL fails to meet 
any of these statutory criteria, DOE determines that it cannot adopt 
that level, and it then moves to the next highest TSL and conducts the 
same analysis. The agency continues in this manner until it reaches a 
TSL that meets all of the statutory criteria. Once DOE arrives at such 
level (if any), DOE is required under EPCA to choose that TSL because 
it represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified. (See 42 U.S.C. 
6295(o)(2)(A); 42 U.S.C. 6316(a))
    With respect to the SBA Office of Advocacy's comments, DOE would 
like to clarify two issues. First, DOE did not state in the April 2021 
NOPR that conducting an analysis of net benefits is inaccurate or 
otherwise prohibited by EPCA. The concern with the comparative 
analysis, as discussed previously, is that the process would result in 
the maximization of net benefits instead of energy savings that are 
technologically feasible and economically justified, which is contrary 
to the statute. As for ensuring DOE considers the full scope of impacts 
of a particular TSL, the comparative analysis did not change the scope 
of impacts considered by DOE for a particular TSL. The analysis 
required DOE to compare the benefits and burdens of a TSL against the 
benefits and burdens of the baseline case and all other TSLs. 85 FR 
50937. But, as stated in the August 2020 Final Rule, the vast majority 
of DOE's analytical work involves evaluating the seven factors for each 
TSL (e.g., life-cycle costs, manufacturer impacts, total energy 
savings). 85 FR 50937, 50941. For example, DOE performs a manufacturing 
impact analysis to identify and quantify the impacts of any new or 
amended energy conservation standards on manufacturers. As part of this 
analysis, DOE uses the Government Regulatory Impact Model (``GRIM'') to 
calculate cash flows using standard accounting principles and changes 
in industry net present value (INPV) between the no-new-standards case 
and each proposed TSL. The difference in INPV between the no-new-
standards case and each TSL represents the financial impact of the new 
or amended energy conservation standard on manufacturers. The addition 
of a comparative analysis has no effect on DOE's analysis of 
manufacturing impacts.
    The comments received in response to the April 2021 NOPR have 
solidified DOE's concerns regarding the use of the comparative 
analysis. DOE has no desire to create a situation where stakeholders 
will question, and potentially challenge, whether the Department is 
choosing a TSL that maximizes net benefits instead of the TSL that 
represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified as required under 
EPCA. Further, the process and criteria laid out in 42 U.S.C. 
6295(o)(2)(B)(i) and 42 U.S.C. 6313(a)(6)(B)(ii) for determining 
economic justification are already sufficiently robust, and any 
potential, incremental improvement that may result from the use of a 
comparative analysis is outweighed by the uncertainty it casts over 
DOE's fulfillment of its statutory obligations under EPCA. As a result, 
DOE is eliminating the requirement in appendix A to conduct a 
comparative analysis when determining whether a TSL is economically 
justified. Consistent with EPCA and past practice, DOE will determine 
whether a TSL is economically justified after determining, based on the 
factors listed in 42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 
6313(a)(6)(B)(ii), whether the benefits of the standard exceed its 
burdens.

D. Adoption of Industry Test Standards

    The February 2020 Final Rule amended appendix A to require 
adoption, without modification, of consensus industry test 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 
industry consensus test standard, with the input of stakeholders and 
the interested public, to: (1) Determine that the EPCA criteria are met 
and use the consensus test standard as the Federal test procedure; (2) 
modify the standard so that it complies with the statutory criteria, or 
(3) reject the standard 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 consensus industry test standards without meaningful 
review. That was not DOE's intention, and accordingly, the Department 
proposed to clarify in the April 2021 NOPR that while DOE will first 
consider applicable consensus industry test standards, such test 
standards must first undergo a thorough agency review to ensure that 
they meet the requirements of the statute and are compatible with DOE's 
compliance, certification, and enforcement (``CC&E'') regulations. 86 
FR 18901, 18907.
Comments Supporting DOE's Clarification of Its Process for Adopting 
Consensus Industry Standards
    The majority of commenters generally supported or had no objections 
to DOE's proposal to clarify that the Department will amend consensus 
industry test standards as necessary to ensure compliance with both the 
statutory requirements in EPCA and DOE's CC&E regulations. (See, e.g., 
State Commenters, No. 29 at p. 10; Lutron, No. 16 at p. 3; NEEA, No. 43 
at p. 3; Joint Environmentalist Commenters, No. 31 at p. 6; Joint 
Industry Commenters, No. 40 at p. 10) In citing their support for DOE's 
proposal, several commenters stated that consensus industry test 
standards are not generally designed for regulatory purposes and, as 
such, modifications to ensure compliance with EPCA and DOE's CC&E 
regulations are often necessary. (See, e.g., CA IOUs, No. 34 at p. 5; 
Joint Advocacy Commenters, No. 38 at pp. 3-4) The CA IOUs and Joint 
Environmentalist Commenters also favored DOE's proposal because it 
would relieve stakeholders of the burden of having to participate in 
both industry and DOE test procedure development processes. (CA IOUs, 
No. 34 at p. 5; Joint Environmentalist Commenters, No. 31 at p. 6)
    Aside from expressing their support for DOE's proposal, Lutron and 
the Joint Industry Commenters also asked DOE to clarify in the 
regulatory text of appendix A that industry test standards are 
consensus test procedures, which usually involve more than just 
industry stakeholders. (Lutron, No. 16 at p. 3; Joint Industry 
Commenters, No. 40 at p. 10)
Comments Opposing DOE's Clarification of Its Process for Adopting 
Consensus Industry Standards
    Other commenters supported DOE's adoption of consensus industry 
test standards with little or no modification. (See, e.g., Signify, No. 
41 at p. 1; Lennox, No. 18 at p. 5; New Yorker Boiler, No. 13 at p. 5) 
These commenters expressed a variety of reasons for

[[Page 70909]]

advocating for the adoption of consensus industry test standards. For 
example, Crown Boiler and BWC stated that most consensus industry test 
standards are developed by all interested stakeholders, including 
manufacturers, industry advocates, regulators (including DOE), and 
certification agency laboratories. (Crown Boiler, No. 10 at p. 5; BWC, 
No. 24 at p. 3) Crown Boiler also noted that the committee members tend 
to have decades of experience and that DOE should rely on these 
committees to develop the test procedures. (Crown Boiler, No. 10 at p. 
5) Some commenters stated that adopting consensus industry test 
standards would reduce burden on both DOE and stakeholders. (See BWC, 
No. 24 at p. 3 (stating that deviating from consensus industry test 
procedures will add unnecessary workload for DOE staff); Signify, No. 
41 at p. 1 (stating that changes to consensus industry test procedures 
create unnecessary burden for industry and test laboratories)) Several 
commenters also stated that adoption of consensus industry test 
procedures would expedite DOE's test procedure rulemaking process and 
allow stakeholders to address standards rulemakings sooner. (See, e.g., 
U.S. Boiler, No. 11 at pp. 5-6; GEA, No. 20 at p. 3) Finally, GEA 
stated that adopting consensus industry test procedures would reduce 
the likelihood of litigation over test procedures. (GEA, No. 20 at p. 
3)
    In order to avoid the need to make modifications to consensus 
industry test procedures, several commenters encouraged DOE to 
participate in the industry test standards development process as a way 
to ensure that consensus industry test standards are compatible with 
EPCA and DOE's CC&E regulations. (See, e.g., Signify, No. 41 at p. 1; 
ALA, No. 28 at p. 3) Additionally, with regards to compatibility with 
DOE's CC&E regulations, Lennox stated that DOE should consider ``the 
potential need to modify the applicable CC&E requirements, not the 
industry test procedure.'' (Lennox, No. 18 at p. 5).
DOE's Response to Comments
    As an initial matter regarding the request that DOE clarify that 
industry test standards are ``consensus'' test standards, DOE uses the 
term ``consensus'' broadly to indicate a process in which multiple 
stakeholders develop and finalize the industry test standard. The use 
of the term ``consensus'' is not intended as an assessment of the 
representativeness of those stakeholders involved in the process. In 
certain cases, industry test standards were not developed by a group 
that is fully representative of DOE's rulemaking stakeholders, 
including energy-efficiency advocacy organizations, utilities, States, 
consumer groups, etc. DOE notes that under section 301 of the 
Department of Energy Organization Act (Pub. L. 95-91; 42 U.S.C. 7101), 
DOE must comply with section 32 of the Federal Energy Administration 
Act of 1974, as amended by the Federal Energy Administration 
Authorization Act of 1977. (15 U.S.C. 788; ``FEAA'') Section 32 
essentially provides in relevant part that, where a proposed rule 
authorizes or requires use of commercial standards, DOE must inform the 
public of the use and background of such standards. DOE must also 
evaluate these standards as to whether they fully comply with the 
requirements of section 32(b) of the FEAA (i.e., whether they were 
developed in a manner that fully provides for public participation, 
comment, and review). In addition, section 32(c) requires DOE to 
consult with the Attorney General and the Chairman of the Federal Trade 
Commission concerning the impact of the commercial or industry 
standards on competition.
    In response to the remaining comments, DOE first notes that 
commenters have raised several valid points about the benefits of 
adopting consensus industry test standards with little to no 
modification (e.g., reducing test procedure development cost). That 
said, these benefits cannot be realized at the expense of DOE's 
statutory obligations. In accordance with EPCA, DOE must ensure that a 
consensus industry test standard is reasonably designed to produce test 
results that measure energy efficiency or use during a representative 
average use cycle or period of use without being unduly burdensome to 
conduct. (42 U.S.C. 6293(b)(3)) As a result, DOE has often found it 
necessary to make modifications to an applicable consensus industry 
test standard to ensure compliance with these statutory requirements. 
For example, the DOE test procedure for dehumidifiers requires reduced 
indoor ambient temperature conditions as compared to those specified in 
the referenced industry test standard as DOE determined that the 
reduced conditions are more representative of the product's average use 
cycle as required by EPCA. 80 FR 45801, 45807 (July 31, 2015). As 
another example, the DOE test procedure for portable air conditioners 
includes several modifications to the industry test method that DOE 
determined would provide results that are representative of typical 
use. Specifically, in comparison to the industry test procedure, the 
DOE test procedure requires a different set of indoor and outdoor test 
conditions; an additional test condition for units with a dual-duct 
configuration; and additional provisions to account for heat 
transferred to the indoor conditioned space from the ducts and any 
infiltration air from unconditioned spaces, which are not accounted for 
in the industry test method. 81 FR 35241, 35250, 35248, 35253 (June 1, 
2016).
    Additionally, DOE notes that consensus industry test standards are 
often designed to support industry certification programs with the goal 
of verifying ratings within a tolerance specified by industry. DOE's 
CC&E regulations, on the other hand, are designed to ensure, in 
accordance with EPCA, that all products and equipment distributed in 
commerce in the United States comply with applicable Federal energy and 
water conservation standards. Furthermore, DOE's CC&E regulations seek 
to establish a level playing field amongst industry participants and to 
also help ensure that the utility bill savings that consumers expect 
from energy and water conservation standards are being realized. For 
example, in the past, DOE has had to specify airflow tolerances for 
certain industry standard test conditions that are referenced for the 
testing of certain categories of small, large, and very large air-
cooled commercial package air conditioners and heating equipment after 
having determined that such tolerances are necessary to address 
potential variation in the measured efficiency and cooling capacity of 
the equipment. 80 FR 79655, 79659-79660 (Dec. 23, 2015). DOE also notes 
that industry representatives and other stakeholders are welcome to 
participate in the development and modification of the Department's 
CC&E regulations.\14\ In fact, some of DOE's existing CC&E regulations 
were developed by a negotiated rulemaking that resulted in a consensus 
agreement amongst the Department, industry, and many diverse 
stakeholders over, among other things, the allowance of simulations to 
develop ratings under specific circumstances for commercial heating, 
ventilation, and air-conditioning equipment; commercial water heaters; 
and commercial refrigeration equipment. 80 FR 144 (Jan. 5, 2015).
---------------------------------------------------------------------------

    \14\ For example, DOE recently asked for comment on a proposal 
to amend the certification and reporting provisions for several 
covered products and equipment. 86 FR 43120 (August 6, 2021).
---------------------------------------------------------------------------

    DOE may also modify consensus industry test standards for other

[[Page 70910]]

reasons. For example, DOE is not required to adopt or align its test 
procedures with sections of the consensus industry test standard that 
are not necessary for the method of test for metric(s) included in the 
DOE test procedure. For instance, sections of the industry test 
procedure regarding selection of models for testing under an industry 
certification program, verification of represented values and the 
associated tolerances, and operational requirements need not be 
referenced or aligned with under the DOE test procedure. This is 
consistent with the Department's longstanding practice to only include 
sections that are relevant to the method of test for metric(s) included 
in the DOE test procedure, or that provide clarifications that help 
promote understanding amongst regulated entities. Another instance 
where DOE may need to deviate from a consensus industry test standard 
is to address issues identified through DOE's test procedure waiver 
process. For example, a manufacturer may seek a test procedure waiver 
for a covered product that incorporates a new, innovative technology 
that was not contemplated by the consensus industry test standard or 
where some other deficiency in the test procedure forestalls successful 
testing. In such cases, DOE is required to update the Federal test 
procedure to eliminate the need for such a waiver. 10 CFR 430.27(l); 10 
CFR 431.401(l).
    Finally, although DOE has explained why the Department is often 
required to modify consensus industry test standards, DOE agrees with 
commenters that consensus industry test standards should serve as the 
basis for Federal test procedures whenever possible.\15\ As a result, 
DOE wishes to underscore the importance of the consensus industry test 
procedure development process, including the need to ensure that a 
broad cross-section of stakeholder interests are represented in the 
development of such consensus industry standards. DOE believes that 
consensus test standards that represent a consensus across all 
stakeholders, not just industry, will be more likely to meet the 
statutory requirements in EPCA and DOE's CC&E regulations. To that end, 
DOE is committed to supporting the consensus industry standards 
development process by participating on relevant industry standards 
committees. However, DOE reiterates that the industry test standard 
development process cannot supplant the Department's test procedure 
rulemaking process, because DOE must still ensure that potential 
Federal test procedures meet applicable statutory requirements in EPCA 
and are compatible with DOE's CC&E regulations.
---------------------------------------------------------------------------

    \15\ The National Technology Transfer and Advancement Act of 
1995 (``NTTA''), Public Law 104-113, and the Office of Management 
and Budget (``OMB'') Circular A-119, Federal Participation in the 
Development and Use of Voluntary Consensus Standards and in 
Conformity Assessment Activities, both direct Federal agencies to 
adopt voluntary consensus standards unless they are inconsistent 
with applicable law or otherwise impracticable.
---------------------------------------------------------------------------

    Accordingly, for the aforementioned reasons, DOE is clarifying in 
appendix A that consensus industry test standards must undergo a 
thorough review to ensure that they meet the requirements of EPCA and 
are compatible with DOE's CC&E regulations before being adopted as a 
Federal test procedure.

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

    In the February 2020 Final Rule, DOE adopted at section 8(d) of 
appendix A, a requirement that Federal test procedures establishing 
methodologies used to evaluate new or amended energy conservation 
standards be finalized at least 180 days prior to publication of a NOPR 
proposing new or amended energy conservation standards. 85 FR 8626, 
8678, 8708. DOE explained that this approach would allow stakeholders 
time to gain familiarity with the new or amended test procedure prior 
to commenting on any proposed standards.
    Upon further review, DOE has determined that, similar to other 
provisions in the February 2020 Final Rule, a one-size-fits-all 
requirement to finalize new or amended test procedures 180 days before 
proposing standards does not allow DOE to account for the particular 
circumstances of a rulemaking and may result in unnecessary delays. For 
instance, as noted in the April 2021 NOPR, some test procedure 
amendments may involve only minor modifications that do not change the 
measured energy efficiency of a covered product or equipment. 86 FR 
18901, 18907-18908. As a result, DOE proposed to remove this 180-day 
spacing requirement and revert to the approach previously followed in 
the July 1996 Final Rule that test procedure rulemakings be finalized 
prior to publication of an energy conservation standards proposal, 
which permitted DOE to appropriately adjust the length of time between 
the test procedure final rule and an energy conservation standards 
proposal. Id. DOE also sought comment on any alternatives to its 
proposal, including whether DOE should retain a set period between 
finalization of a test procedure and issuance of a standards NOPR. Id.
Comments Supporting DOE's Proposal To Eliminate the Requirement That 
Test Procedures Be Finalized at Least 180 Days Prior to Issuance of a 
Standards NOPR
    Several commenters expressed their support for DOE's proposal in 
the April 2021 NOPR. These commenters stated that the 180-day 
requirement may not be necessary for all rulemakings and that DOE 
should have the flexibility to determine the appropriate period between 
finalization of new or amended test procedures and issuance of proposed 
standards. (See, e.g., Joint Advocacy Commenters, No. 38 at pp. 4-5; 
NEEA, No. 43 at pp. 3-4; CA IOUs, No. 34 at pp. 1, 3-4) Some of the 
commenters cited negotiated rulemakings, where test procedures and 
energy conservation standards are often considered and issued in 
parallel, as an area where the 180-day requirement delays 
implementation of consensus standards without providing a corresponding 
benefit. (See, e.g., Joint Advocacy Commenters, No. 38 at pp. 4-5; 
NEEA, No. 43 at pp. 3-4) Commenters also argued that minor 
modifications to a test procedure may not warrant a lengthy delay 
before issuance of a standards proposal. (See, e.g., NEEA, No. 43 at 
pp. 3-4; Joint Environmentalist Commenters, No. 31 at p. 2) Finally, 
Joint Advocacy Commenters expressed concern that the 180-day 
requirement could lead to DOE foregoing certain test procedure 
corrections in order to avoid delaying rulemakings. (Joint Advocacy 
Commenters, No. 38 at pp. 4-5)
Comments Supporting the Requirement That Test Procedures Be Finalized 
at Least 180 Days Prior to Issuance of a Standards NOPR
    Several commenters asserted that the 180-day period is necessary to 
allow stakeholders the opportunity to conduct testing and gain 
familiarity with the new or amended test procedure so as to better 
inform their understanding of the impacts of a proposed energy 
conservation standard. (See, e.g., AHRI, No. 25 at p. 9; ALA, No. 28 at 
p. 3; AGA, No. 33 at p. 5; BWC, No. 24 at p. 2) These commenters also 
expressed a variety of other reasons for opposing removal of the 180-
day period between finalization of a test procedure and issuance of a 
standards proposal. For instance, Zero Zone opposed eliminating the 
180-day spacing between test procedure and energy conservation 
standards rules, stating that DOE has not documented any

[[Page 70911]]

delays that would be caused if the 180-day waiting period were to be 
applied. The SBA Office of Advocacy noted that small businesses have 
limited resources and staff, and in many instances, they do not have 
the ability to test their products on-site. According to the SBA Office 
of Advocacy, small businesses must instead either hire an outside 
laboratory to test the products and report back or pull employees from 
other tasks to conduct such testing in-house. (SBA Office of Advocacy, 
No. 14 at p. 5) BWC argued that the benefits of having a finalized test 
procedure far outweigh any delay in complying with statutory deadlines, 
particularly in light of EPCA's anti-backsliding provisions. (BWC, No. 
24 at p. 2)
Comments Supporting Alternatives to DOE's Proposal
    Numerous commenters recognized that a 180-day period between 
finalization of a test procedure and issuance of a standards NOPR is 
not always necessary. However, these commenters did not agree with 
DOE's proposal to eliminate the 180-day period and determine the 
appropriate period on a case-by-case basis. Instead, these commenters 
suggested a variety of approaches for determining an appropriate length 
of time between finalization of a test procedure and issuance of a 
standards proposal. For instance, several commenters suggested revising 
the relevant section of appendix A to allow DOE to shorten the 180-day 
period through some formal mechanism, which would include an 
opportunity for stakeholder input. (See, e.g., Carrier, No. 26 at p. 3; 
Crown Boiler, No. 10 at pp. 4-5) Other commenters suggested that DOE 
should list the limited circumstances under which it would deviate from 
the 180-day period. (A.O. Smith, No. 27 at p. 4; Lennox, No. 18 at p. 
4) Similarly, if DOE eliminates the requirement for a standardized 180-
day period, ALA requested that DOE provide clear and specific guidance 
on when the 180-day period would be warranted. (ALA, No. 28 at p. 4) 
Several other commenters urged DOE to retain the 180-day period when 
the test procedure is new or makes significant changes that will impact 
measured energy use or efficiency. (See, e.g., Lutron, No. 16 at pp. 2, 
3-4, Joint Industry Commenters, No. 40 at p. 9; EEI, No. 9 at pp. 64-
65) Nortek acknowledged that there are situations where 180 days is not 
necessary (e.g., minor technical corrections to a longstanding test 
procedure), and in those cases, the company stated that it would be 
supportive of a 90-day minimum. (Nortek, No. 19 at p. 3) Grundfos 
recommended that DOE: (1) Include a proposed timeline in each test 
procedure NOPR/final rule for input from stakeholders, and (2) conduct 
a mandatory webinar for related input to be heard. The company reasoned 
that such approach would provide DOE with the flexibility it desires, 
while preventing DOE from defining arbitrary timelines without 
negotiation. (Grundfos, No. 37 at pp. 1-2) While Goodman expressed 
support for retaining the 180-day requirement, Goodman also stated 
that, if DOE chooses to modify the 180-day period, the Department 
should define the 180-day period as preferred but not mandatory in 
appendix A and articulate with specificity and on the record its 
reasons for choosing a lesser time period. (Goodman, No. 22 at p. 3)
    DOE also received an alternative joint proposal from AHAM, ALA, 
Hearth Patio and Barbecue Association (HPBA), NEMA, Plumbing 
Manufacturers International (PMI), ASAP, and ACEEE. These stakeholders 
suggested that DOE provide a 180-day time period between the 
finalization of a new or amended test procedure and the end of the 
comment period on the proposed standard. They also specified that DOE 
could deviate from the 180-day requirement for negotiated rulemakings 
and test procedure changes that are limited to calculation changes 
(e.g., use factor or adder) (AHAM et al. Submission, No. 74 at pp. 2-3)
DOE Response to Comments
    Commenters uniformly expressed support for finalizing test 
procedures prior to proposing new or amended standards. (See, e.g., 
Carrier, No. 26, at p. 3; Lutron, No. 16 at pp. 2, 3-4; CA IOUs, No. 34 
at pp. 1, 3-4; NEEA, No. 43 at pp. 3-4; Joint Industry Commenters, No. 
40 at p. 8; Whirlpool, No. 9 at p. 36) For example, the CA IOUs 
encouraged DOE to complete test procedure final rules before 
publication of a NOPR for new or amended energy conservation standards 
whenever possible (due to generally better outcomes in both 
proceedings). (CA IOUs, No. 34 at pp. 1, 3-4) Where commenters differed 
was on the minimum length of time between finalization of a test 
procedure and issuance of a standards proposal--and under what 
circumstances, if any, that period of time should be shortened (or 
lengthened).
    With respect to the comments in favor of DOE retaining the 180-day 
requirement for all test procedure rulemakings, DOE agrees with the 
majority of commenters who recognized that a 180-day period is not 
necessary for all test procedure rulemakings (e.g., minor technical 
corrections and negotiated rulemakings). As stated throughout this 
rulemaking, DOE is amending appendix A to avoid situations where an 
inflexible process lengthens a rulemaking without providing a 
corresponding benefit. Thus, DOE is not establishing a minimum period 
of time between finalization of a test procedure and issuance of a 
standards proposal that would be applied across all of the Department's 
rulemakings.
    Nevertheless, while the majority of commenters recognized that the 
180-day period was not necessary for every rulemaking, a large number 
of commenters wanted more guidance on circumstances under which DOE 
would provide stakeholders with sufficient time to become familiar with 
a new or amended test procedure prior to having to comment on a 
standards proposal. These commenters typically cited new test 
procedures or test procedure amendments that impact measured energy use 
as instances necessitating that DOE provide some period of time for 
stakeholders to gain familiarity with the test procedure prior to 
commenting on any proposed standards. (See, e.g., Joint Industry 
Commenters, No. 40 at p. 9; Trane, No. 23 at p. 2)
    In response to these comments, DOE first notes that it already 
acknowledged in the April 2021 NOPR that there may be circumstances 
where a longer rulemaking timeline is necessary to allow stakeholders 
time to become familiar with a new or amended test procedure. See 86 FR 
18901, 18908. Further, DOE's proposal to revert to the guidance 
provided in the 1996 version of Appendix A that test procedures be 
finalized prior to issuance of a standards proposal does not prevent 
DOE from finalizing test procedures well in advance (i.e., 180 days or 
more) of proposing new or amended energy conservation standards.
    However, recognizing the importance of this issue to stakeholders, 
DOE believes a modified version of its proposal from the April 2021 
NOPR can meet the Department's goal of avoiding the inefficiencies and 
unnecessary delays of a one-size-fits-all rulemaking approach while 
assuring stakeholders they will have sufficient time to gain 
familiarity with a new or amended test procedure prior to commenting on 
a standards proposal. As such, DOE is adopting the proposal from the 
April 2021 NOPR that test procedures be finalized prior to issuing a 
standards proposal. However, in response to comments, DOE is also 
adopting a

[[Page 70912]]

requirement that new test procedures or significant test procedure 
amendments that impact measured energy use or efficiency be finalized 
at least 180 days before the end of the comment period of a proposal 
for new or amended standards. DOE will state in the test procedure 
final rule whether this 180-day provision applies and why--i.e., 
because the test procedure is either new or the amendments impact 
measured energy use or efficiency. While DOE is adopting the 180-day 
period as requested by several commenters, DOE is tying the 180 days to 
the end of the comment period instead of the issuance of the standards 
proposal. DOE believes this is a better approach for two reasons. 
First, it recognizes that the comment period, which is at least 60 
days, also provides stakeholders with an opportunity to gain 
familiarity with the new or amended test procedure. And second, it 
provides DOE with more flexibility in issuing standards proposals, 
which can benefit both DOE and stakeholders. For instance, if DOE needs 
to meet a statutory deadline for issuing a standards NOPR, the 
Department could choose to issue a standards NOPR with a longer comment 
period in order to more quickly issue that NOPR after finalizing a new 
or amended test procedure. In addition to helping DOE meet a statutory 
deadline, the longer comment period would also give stakeholders more 
time to comment on aspects of the standards proposal that are not 
directly related to the test procedure. Finally, as suggested in the 
AHAM et al. proposal, DOE is adopting exceptions to the 180-day 
requirement for negotiated rulemakings and test procedure amendments 
that only result in a calculational change. In the first instance, 
stakeholders can determine the appropriate period between finalization 
of the test procedure and issuance of a standards NOPR as part of their 
negotiations. With regards to the second instance, calculational 
changes do not require stakeholders to conduct new tests to determine 
the effect of the test procedure change on measured energy use or 
efficiency.
    For the aforementioned reasons, DOE is finalizing the proposal from 
the April 2021 NOPR that test procedures be finalized prior to issuance 
of a standards proposal, subject to the modifications discussed above 
establishing a minimum period of 180 days between the finalization of a 
test procedure and the end of the standards NOPR comment period for, 
with certain exceptions: (1) New test procedures; and (2) amended test 
procedures that impact measured energy use or efficiency.

F. Direct Final Rules

    As discussed in the April 2021 NOPR (see 86 FR 18901, 18908-18909), 
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 42 U.S.C. 
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 (i.e., the ``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., compliance period). 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 February 2020 Final 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.
    In the April 2021 NOPR, DOE explained that it is reconsidering 
whether these clarifications regarding the DFR process are appropriate 
or necessary, for the reasons set forth subsequently. This 
reconsideration begins with the language of the statute. The language 
in 42 U.S.C. 6295(p)(4) is clear that DOE may issue standards 
recommended by interested persons that are fairly representative of 
relative points of view as a DFR when the 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 consistent 
with 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 are intended to give 
manufacturers sufficient lead 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, pursuant to EPCA, DOE 
receives a written determination from the Attorney General as to the 
potential anti-competitive effects from any proposed energy 
conservation standard. (See 42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii))

[[Page 70913]]

    Issuing standards through a consensus agreement among stakeholders 
is different than DOE's normal rulemaking process. 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 has proposed to eliminate the rigid 
requirement that DFR submittals identify a separate rulemaking 
authority and instead 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).
    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).\16\ 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.
---------------------------------------------------------------------------

    \16\ 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.
    For these reasons, DOE considered 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 
proposed to add ``where appropriate'' to clarify that DOE retains the 
discretion to determine what ``fairly representative'' means for a 
given DFR submission on a case-by-case basis. Regardless of whether the 
DFR section in appendix A is retained, deleted, or revised, DOE stated 
that it will continue to evaluate DFR proposals in accordance with 42 
U.S.C. 6295(p)(4).
    DOE requested 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. Additionally, DOE sought comment regarding small business 
perspectives and related impacts as to the proposed application of the 
DFR provision of EPCA.
    In response to the April 2021 NOPR, DOE received a considerable 
number of comments on its proposal related to DFRs, which were 
overwhelmingly supportive of DOE's proposed return to the Department's 
historic approach to DFRs that was in place before adoption of the 
February 2020 Final Rule. (Hamdi, No. 7 at p. 1; NPCC, No. 12 at p. 5; 
Carrier, No. 26 at p. 3; A.O. Smith, No. 27 at p. 5; MHI, No. 32 at pp. 
3-4; Nortek, No. 19 at p. 4; Joint Environmentalist Commenters, No. 31 
at pp. 6-7; CA IOUs, No. 34 at p. 4; CEC, No. 35 at p. 7; Grundfos, No. 
37 at p. 3; Joint Advocacy Commenters, No. 38 at pp. 5-6; Joint 
Advocacy Commenters (appendix I), No. 38 at pp. 1, 2, 13-14; NEEA, No. 
43 at p. 4; Lennox, No. 18 at p. 7; Goodman, No. 22 at p. 4; Trane, No. 
23 at p. 3; Joint Industry Commenters, No. 40 at p. 16) However, there 
were a few commenters who opposed DOE's proposal and instead supported 
retention of the approach to DFRs contained in the February 2020 Final 
Rule. (AGA, No. 33 at p. 6; AFP, No. 36 at p. 2; Anonymous, No. 39 at 
p. 1) These comments and their rationale are discussed in further 
detail in the paragraphs that follow.
Comments in Support of DOE's Proposal To Return to Its Prior Practice 
Regarding the Use of the DFR Provision in EPCA
    A number of commenters argued that a return to DOE's prior 
interpretation of EPCA's DFR provisions are authorized by and 
consistent with the statute's requirements. (Joint Environmentalist 
Commenters, No. 31 at pp. 6-7; CEC, No. 35 at p. 7; Joint Advocacy 
Commenters, No. 38 at p. 6; A.O. Smith, No. 27 at p. 5) On this point, 
the Joint Environmentalist Commenters made the case that EPCA's DFR 
provision at 42 U.S.C. 6295(p)(4) expressly authorizes DOE to accept a 
proposed standard negotiated by a representative group of stakeholders, 
provided that the proposal complies with 42 U.S.C. 6295(o) (residential 
products) or 42 U.S.C. 6313(a)(6)(B) (commercial and industrial 
products). The Joint Environmentalist Commenters disagreed with DOE's 
interpretation in the February 2020 Final Rule that 42 U.S.C. 
6295(p)(4) confers no independent grant of rulemaking authority upon 
DOE, and, as a result DFRs must satisfy the statutory requirements 
associated with another rulemaking authority, e.g., 42 U.S.C. 6295(m) 
or 42 U.S.C. 6295(n). Instead, these commenters favored a return to 
DOE's prior flexibility in this area (e.g., consideration of different 
compliance timelines). (Joint Environmentalist Commenters, No. 31 at 
pp. 6-7) Similarly, the CEC supported DOE's proposed interpretation in 
the April 2021 NOPR that the direct final rule provision at 42 U.S.C. 
6295(p)(4) grants the agency rulemaking authority separate and distinct 
from its general authority to adopt energy conservation standards. The 
commenter argued that the interpretation of that statutory provision 
contained in the February 2020 Final Rule is inconsistent with the 
language of the statute and congressional intent to facilitate DFRs. 
Consequently, the CEC encouraged DOE to move forward with its proposal. 
(CEC, No. 35 at p. 7)
    The NPCC reasoned that the direct final rule provision enacted by 
Congress was designed with the intent to streamline mutually agreed 
upon standards. The NPCC stated that the current rule's requirement 
that DOE first identify a separate and independent basis for a given 
standards rulemaking adds unnecessary steps and requirements to the 
direct final rule process. Consequently, the NPCC supported the removal 
of this provision. (NPCC, No. 12 at p. 5) Likewise, Nortek stated that 
it disagrees with DOE's decision in the February 2020 Final Rule to 
define DFRs as a procedural tool and to eliminate the use of DFRs in 
negotiated rulemaking. (Nortek, No. 19 at p. 4) Trane and Lennox also 
agreed with DOE's proposal to eliminate the requirement for a separate 
rulemaking

[[Page 70914]]

authority and to implement its DFR authority on a case-by-case basis, 
evaluating consensus proposal submissions based on the criteria laid 
out in 42 U.S.C. 6295(p)(4). (Trane, No. 23 at p. 3; Lennox, No. 18 at 
p. 6)
    Most of the commenters favored a return to DOE's prior approach to 
DFRs because of the increased flexibility that approach provided. 
(Joint Environmentalist Commenters, No. 31 at pp. 6-7; CA IOUs, No. 34 
at p. 4; Joint Advocacy Commenters, No. 38 at p. 6; Joint Advocacy 
Commenters (Appendix I), No. 38 at pp. 1, 2, 13-14) For example, 
Carrier characterized DOE's earlier direct final rule process as an 
efficient, cost-effective regulatory process for both the government 
and stakeholders, a point echoed by MHI and NEEA. (Carrier, No. 26 at 
p. 3; MHI, No. 32 at pp. 3-4; NEEA, No. 43 at p. 4) A.O. Smith stated 
that applying the DFR authority in a flexible manner, so as to permit 
consideration of measures such as alternative compliance dates, dual 
metrics, phased-in compliance by product/equipment class, and two-
tiered standards, is both permitted under EPCA and essential to 
maintain as part of the Program's structure. The company supports the 
use of the DFR authority in this manner because it affords 
manufacturers with flexibility for consensus-based or negotiated 
solutions. (A.O. Smith, No. 27 at p. 5) The CA IOUs made a similar 
point, arguing that DOE's pre-2020 Final Rule guidance for direct final 
rules may lead to more nuanced and detailed approaches to test 
procedures and energy conservation standards through utilization of the 
mechanisms cited by A.O. Smith. (CA IOUs, No. 34 at p. 4) MHI added the 
DFRs can incentivize the consensus process. (MHI, No. 32 at pp. 3-4)
    Citing the ability to utilize those same mechanisms, the Joint 
Advocacy Commenters reasoned that many of the other EPCA requirements 
beyond those included in 42 U.S.C. 6295(o) and 42 U.S.C. 6313(a)(6)(B) 
are for the benefit of stakeholders, but they are arguably unnecessary 
in the context of DFRs. For example, the Joint Advocacy Commenters 
stated that other EPCA provisions specify lead times for compliance so 
as to provide manufacturers with sufficient time to comply with a new 
standard, but such considerations are not necessary when manufacturers 
negotiate an agreement subjecting themselves to a different compliance 
date. (Joint Advocacy Commenters, No. 38 at pp. 5-6; Joint Advocacy 
Commenters (Appendix I), No. 38 at pp. 1, 2, 13-14)
    There was considerable discussion and overlap of issues between 
appendix A's DFRs and negotiated rulemaking provisions, because in the 
past, most DFRs have arisen out of that type of rulemaking proceeding. 
A number of commenters stressed that in contrast to the restriction in 
the February 2020 Final Rule, negotiated rulemakings should once again 
be permitted to result in a consensus recommendation that leads to a 
DFR. (Grundfos, No. 37 at p. 3; NEEA, No. 43 at p. 4; Lennox, No. 18 at 
p. 7) Generally, commenters pointed to the statutory protections 
associated with both DFRs and negotiated rulemaking as adequate to 
ensure the fairness, transparency, and integrity of the process, as 
explained subsequently.
    For example, NEEA noted how the DFR provisions already provide 
several safeguards, including a requirement that the consensus 
recommendation for standards be fairly representative of relevant 
points of view and the potential for a DFR to be withdrawn upon receipt 
of one or more adverse comments (leading to further notice and comment 
rulemaking). Particularly where there is a consensus agreement, NEEA 
argued that further comment beyond that provided by the DFR would be 
redundant. (NEEA, No. 43 at p. 4) Similarly, MHI asserted that the 
interested persons that are fairly representative of relevant points of 
view who participate in that process will have taken the time during or 
in advance of the rulemaking to exchange views and reach a common or 
joint understanding of what level of energy efficiency or energy use 
will reasonably strike a balance between benefits and burdens. (MHI, 
No. 32 at pp. 3-4). Consequently, MHI argued that DOE should give 
substantial weight to the consensus views of these participants in 
light of their competing interests. (MHI, No. 32 at p. 4) Furthermore, 
the Joint Industry Commenters stated that, ``[a]t a minimum, the 
`relevant points of view' are likely to reflect the views of the 
persons who will bear the heaviest burden of implementing the 
regulatory mandate and the responsibility for certifying compliance 
(manufacturers, specifically those who make and use the covered 
product), the persons who are active in promoting the maximum 
improvement in energy savings (energy efficiency advocates), and 
representatives of the country's citizens who are expected to realize 
net benefits from a mandatory rule (States).'' (Joint Industry 
Commenters, No. 40 at p. 16)
    However, the Joint Advocacy Commenters cautioned that the February 
2020 Final Rule's additional guidance regarding what constitutes a 
``fairly representative'' group of stakeholders and its clarification 
regarding adverse comments may be overly prescriptive, a position in 
agreement with DOE's April 2021 NOPR. (Joint Advocacy Commenters, No. 
38 at pp. 5-6; Joint Advocacy Commenters (appendix I), No. 38 at pp. 1, 
2, 13-14) Along these lines, Lennox also warned that appendix A should 
not go further than the statutory language regarding participants 
(i.e., manufacturers, States, and efficiency advocates) to also include 
``energy utilities, consumers,'' per the February 2020 Final Rule. 
Instead, Lennox stated that it supports amending appendix A to include 
the language ``where appropriate'' regarding parties, thereby avoiding 
any unnecessary constraints to the DFR process. (Lennox, No. 18 at pp. 
6-7)
    In a more neutral posture, NAFEM took the position that this is not 
a critical issue, arguing that it is not overly concerned either with 
DOE maximizing its use of DFR when issues are routine and non-
controversial, or even to reflect the results of a well-conducted 
negotiated rulemaking, so long as DOE can overcome the other statutory 
issues it identifies with such negotiated rulemakings. (NAFEM, No. 30 
at pp. 6-7)
    A few commenters provided suggestions for potential process 
improvements. For example, although Grundfos supported DOE's proposal 
that a negotiated rulemaking may culminate in a term sheet recommending 
a DFR, the commenter suggested that before such recommendation is 
accepted, DOE should be required to publish a determination (with 
supporting reasoning) that the Appliance Standards and Rulemaking 
Federal Advisory Committee (ASRAC) Working Group meets the EPCA 
requirement to be ``fairly representative of relevant points of view.'' 
(Grundfos, No. 37 at p. 3)
    The Joint Advocacy Commenters stated that although they have no 
qualms about retaining the DFR section of appendix A with the 
modifications proposed, they alternatively support removal of that 
section, because the statute already provides sufficient guidance 
regarding DOE's DFR authority. (Joint Advocacy Commenters, No. 38 at p. 
6)
Comments Opposing DOE's Proposal To Return To Its Prior Practice 
Regarding the Use of the DFR Provision in EPCA
    Three commenters provided dissenting views in opposition to DOE's 
proposal regarding DFRs as set forth in the April 2021 NOPR. (AGA, No. 
33 at p. 6; AFP, No. 36 at p. 2; Anonymous,

[[Page 70915]]

No. 39 at p. 1) These commenters largely supported the approach to DFRs 
presented in the February 2020 Final Rule, for the reasons that follow.
    AFP supported the reasoning DOE provided in its 2020 Final Rule 
indicating that the DFR statutory provision does not provide an 
independent grant of rulemaking authority (i.e., outlining its own set 
of substantive requirements when establishing or amending a standard) 
but is instead only a procedural process for issuing a standard 
authorized under another provision of EPCA. In AFP's view, nothing in 
EPCA permits DOE to interpret the DFR provision as a means to evade 
EPCA's requirements with respect to compliance periods, energy 
efficiency metrics, or other factors. (AFP, No. 36 at p. 2) An 
anonymous commenter expressed similar views, quoting extensively from 
that portion of the February 2020 Final Rule final rule making the case 
that the DFR provision does not create any additional flexibility with 
regard to such statutory requirements. (Anonymous, No. 39 at p. 1)
    AGA stated that the February 2020 Final Rule contains appropriate 
and necessary clarifications and requirements to help ensure that 
negotiated rulemakings and direct final rules are treated distinctly 
from each other and not conflated. (AGA, No. 33 at p. 6) Rather than 
making a broad change, AGA suggested that it would be preferable for 
DOE to allow for divergences from the current set of requirements where 
the need for such divergences is appropriately substantiated by DOE. It 
added that a DFR and its accompanying process should be consistent with 
EPCA and the APA and that since a DFR is issued without prior notice 
and comment, the process for these rules should only be used when DOE 
has deemed that rule to be routine or noncontroversial in accordance 
with the relevant statutory requirements. (AGA, No. 33 at p. 6)
DOE Response to Comments
    After careful consideration of these comments, DOE has decided to 
adopt the identified changes to its DFR process along the lines 
proposed in the April 2021 NOPR. In essence, DOE has concluded that it 
is appropriate to return to its historic practice for DFRs in place 
prior to the February 2020 Final Rule. DOE agrees with the commenters 
who argued that the February 2020 Final Rule's interpretation of EPCA's 
DFR provision (i.e., as a purely procedural one) is not the best 
reading of the statute, and DOE disagrees with those commenters such as 
AFP and AGA, who support the opposite statutory reading. Instead, DOE 
is reverting to its longstanding interpretation that the DFR provision 
conveys upon DOE a substantive grant of rulemaking authority, thereby 
allowing stakeholders to negotiate over more aspects of the energy or 
water conservation standard, e.g., compliance periods, so long as the 
requirements of 42 U.S.C. 6295(o) (and 42 U.S.C. 6313(a)(6)(B), as 
applicable) are met.
    DOE has determined that the February 2020 Final Rule imposed 
certain unnecessary restrictions upon the use of DFRs, thereby limiting 
DOE's flexibility, program efficiency, and the usefulness of this 
important regulatory tool provided by Congress. In the past, DFRs--
arising from both consensus agreement submissions and negotiated 
rulemakings--have frequently utilized measures such as alternative 
compliance dates, dual metrics, phased-in compliance by product/
equipment class, and two-tiered standards. These measures have 
typically resulted in greater overall energy savings more quickly, an 
outcome which the Department finds consistent with the energy-saving 
purposes of EPCA, and DOE agrees with MHI that the Department should 
give such consensus recommendations appropriate weight.
    In providing a streamlined process for DFRs, Congress built in 
certain safeguards in the relevant statutory provision, namely the 
requirement that a joint statement recommending an energy or water 
conservation standard must be ``fairly representative of relevant 
points of view (including representatives of manufacturers of covered 
products, States, and efficiency advocates)'' and the potential for 
withdrawal of a DFR upon receipt of one or more adverse comments. (42 
U.S.C. 6295(p)(4)(A) and (C)) However, because each rulemaking 
proceeding is different (in terms of both issues and stakeholders), DOE 
has concluded that it is beneficial for the agency to assess 
representativeness and any adverse comments on a case-by-case basis. 
For example, if there are no small business manufacturers producing a 
certain covered product, that should not preclude consideration of a 
consensus agreement or a negotiated rulemaking leading to a DFR. 
Unfortunately, in seeking to clarify DOE's DFR process, the February 
2020 Final Rule inadvertently imposed a one-size-fits-all regime that 
may not be appropriate for all proceedings.
    DOE is not adopting the suggestion of Grundfos that before such a 
consensus recommendation is accepted, the Department should be required 
to publish a determination (with supporting reasoning) that an ASRAC 
Working Group meets the EPCA requirement to be ``fairly representative 
of relevant points of view.'' If an interested party has concerns as to 
representativeness, this issue may be addressed in a comment on the DFR 
(potentially as an ``adverse'' comment). Particularly given the 
numerous statutory deadlines DOE faces for energy conservation 
rulemakings, the agency does not find it reasonable to put in place a 
separate comment opportunity for this narrow issue, as a consolidated 
comment opportunity would suffice and serve the same purpose.
    Thus, in this final rule, DOE is retaining the expanded list of 
potentially representative parties (i.e., beyond the statutorily 
required manufacturers, States, and efficiency advocates) but adding 
``where appropriate'' in recognition of the fact that there is no set 
group of relevant points of view across all rulemakings. DOE 
anticipates that such an approach will encourage consensus agreement 
and DFRs, consistent with the requirements of EPCA. Similarly, DOE is 
removing discussion of adverse comments from appendix A, so as not to 
limit the Department's ability to consider the merits of such comments 
on a case-by-case basis.
    In addition, DOE is also returning to its historic practice that a 
negotiated rulemaking may result in a term sheet with recommendations 
culminating in a DFR. (For further discussion of negotiated rulemaking, 
see section G of this final rule.) The Department has concluded that 
the contrary position taken in the February 2020 Final Rule was an 
overly restrictive interpretation not compelled by EPCA or the NRA. 
Upon further consideration, DOE now sees the applicable provisions of 
these two statutory sources can be read in harmony to allow for DFRs to 
arise from such proceedings, a result consistent with 5 U.S.C. 561, 
Purpose, of the NRA which 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.'' DOE does not agree with the 
more restrictive approach recommended by the AGA, because it could 
unnecessarily limit use of the provision Congress placed in statute. 
Consequently, DOE is clarifying that a negotiated rulemaking can result 
in a DFR.
    DOE notes that even if the position taken in the February 2020 rule 
was not erroneous, as a matter of policy, a

[[Page 70916]]

negotiated rulemaking can still result in a direct final rule. DOE's 
independent (and separate) authority to initiate a direct final rule 
does not preclude the possibility that it may be the product of a 
negotiated rulemaking. The consensus agreement contemplated under DOE's 
authority under 42 U.S.C. 6295(p)(4) only requires that DOE receive a 
joint statement from specified interested parties and that the 
recommended standard(s) be in accordance with 42 U.S.C. 6295(o) or 42 
U.S.C. 6313(a)(6)(B), as applicable.
    For the aforementioned reasons, DOE is finalizing its proposed 
revisions to the DFR section of appendix A, thereby restoring 
flexibility to the process and allowing the Department to tailor its 
approach to the needs of individual energy conservation standard or 
test procedure rulemakings on a case-by-case basis. DOE concludes that 
retention of a revised DFR section as part of appendix A will provide 
additional clarity for interested parties.

G. Negotiated Rulemaking

    As discussed in the April 2021 NOPR (see 86 FR 18901, 18909-18911), 
the Department adopted a new section 11, Negotiated Rulemaking Process, 
in the February 2020 Final Rule 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 
that 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 comments from 
stakeholders before issuing a proposed rule. This process is conducted 
in accordance with the requirements of the NRA. 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 (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 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 
recognizes the value of this process and encourages submission of joint 
stakeholder recommendations.
    The February 2020 Final Rule also discussed the following key 
points related to negotiated rulemaking at 85 FR 8626, 8685:
     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 tentatively determined in the 
April 2021 NOPR that further changes to its approach to negotiated 
rulemaking are necessary and appropriate. Although section 11 of 
appendix A 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 proposed in the April 
2021 NOPR to make certain modifications to the process articulated in 
that section. On a number of points, DOE proposed to revert to the 
approach it employed prior to promulgation of the February 2020 Final 
Rule. The following paragraphs outline the proposed changes from the 
April 2021 NOPR.
    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 left to 
agency discretion and is not required under the NRA (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 proposed 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 proposed that the list of factors militating in favor 
of a negotiated rulemaking, as currently articulated at section 
11(a)(3) of appendix A, 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 appendix A may not 
be appropriate in all cases, DOE proposed

[[Page 70917]]

to no longer be bound by this list when determining whether it is 
appropriate to convene a negotiated rulemaking. Instead, the Department 
proposed 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 proposed 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 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 proposed to revert to its 
prior position on this topic.
    In light of these proposed modifications, DOE tentatively concluded 
that section 11 of the revised appendix A would become largely 
redundant of the NRA requirements to which the agency is already 
subject, and therefore, the Department found section 11 to be 
unnecessary and proposed its removal. DOE noted, however, that its 
proposal to remove this section from appendix A in no way reflected 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 was 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 requested comments on the merits of this 
proposed approach including comments regarding the proposed complete 
removal of section 11, as well as any alternatives to this proposal, 
such as amendments or revisions to the section or retention of aspects 
of section 11. See generally April 2021 NOPR 86 FR 18901, 18909-18911.
    In response to the April 2021 NOPR, DOE received a considerable 
number of comments on its proposal related to the topic of negotiated 
rulemaking, which like the comments on the proposed DFR provisions, 
were overwhelmingly supportive of both the negotiated rulemaking 
mechanism itself and DOE's proposal to return to the Department's 
historic approach to such rulemakings that was in place before adoption 
of the February 2020 Final Rule. (Hamdi, No. 7 at p. 1; NPCC, No. 12 at 
p. 5; Carrier, No. 26 at p. 3; ALA, No. 28 at p. 4; CEC, No. 35 at p. 
7; Joint Advocacy Commenters, No. 38 at p. 7; Joint Advocacy Commenters 
(appendix I), No. 38 at pp. 1, 2, 15; NEEA, No. 43 at p. 4; Lennox, No. 
18 at pp. 8-9; Goodman, No. 22 at p. 3; Nortek, No. 19 at p. 4; CEC, 
No. 35 at p. 7; CA IOUs, No. 34 at p. 4) A small minority of commenters 
either favored the approach to negotiated rulemaking contained in the 
February 2020 Final Rule or otherwise expressed concern with the 
proposal set forth in the April 2021 NOPR. (AGA, No. 33 at p. 6; MHI, 
No. 32 at pp. 1-2) All of these comments and their rationale are 
discussed in further detail in the paragraphs that follow.
Comments in Support of DOE's Proposal Regarding Negotiated Rulemaking
    Commenters generally agreed that DOE's use of negotiated 
rulemakings has yielded substantial benefits. For example, ALA stated 
that negotiated rulemakings implemented through DOE's ASRAC process 
have produced significant energy savings by allowing a collaborative 
effort among interested parties that can be faster, more transparent, 
and less contentious than the normal rulemaking process. (ALA, No. 28 
at p. 4)
    A number of commenters favored a return to DOE's prior practice 
regarding negotiated rulemaking because of the increased flexibility 
that approach provided. On this point, the Joint Environmentalist 
Commenters generally opposed what they characterized as the 
unnecessarily strict limits and restrictions related to negotiated 
rulemaking in the February 2020 Final Rule, beyond the requirements of 
the NRA, so these commenters expressed support for returning 
flexibility to the process for negotiated rulemakings. (Joint 
Environmentalist Commenters, No. 31 at pp. 6-7; CA IOUs, No. 34 at p. 
4) The CA IOUs argued that the use of negotiated rulemaking (in 
combination with DFRs) offers flexibility and can lead to more nuanced 
and detailed approaches to test procedures and standards, such as 
staged standards, different compliance dates, and multiple efficiency 
standards. The CA IOUs added that it has been their experience that 
direct negotiations between stakeholders has resulted in energy 
conservation standards that are quicker and easier for industry to 
implement and that save more energy overall than would have been 
achievable through the conventional rulemaking process. (CA IOUs, No. 
34 at p. 4) The CEC added that a reversion back to DOE's prior, 
effective negotiated rulemaking practice is based on and consistent 
with the requirements of the NRA. (CEC, No. 35 at p. 7) GEA described 
negotiated rulemaking with direct final rules as a powerful tool for 
fast progress that reduce the use of DOE resources. GEA added that 
negotiated rulemaking offers all stakeholders an opportunity for 
increased control, decreases the likelihood of litigation, and provides 
an opportunity for solutions outside the scope of EPCA's analytical 
framework and for the consideration and resolution of standards and 
test procedures for multiple products at once. (GEA, No. 20 at p. 3) 
NEEA also stated that negotiated rulemakings (in combination with DFRs) 
can lead to more efficient rulemaking. (NEEA, No. 43 at p. 4)
    As discussed previously, there was considerable discussion and 
overlap of issues between appendix A's DFR and negotiated rulemaking 
provisions, because in the past, most DFRs arose out of that type of 
rulemaking proceeding. A number of commenters stressed that in contrast 
to the restriction in the February 2020 Final Rule, negotiated 
rulemakings should once again be permitted to result in a term sheet 
with a consensus recommendation that leads to a DFR. (NPCC, No. 12 at 
p. 5; Carrier, No. 26 at p. 4; MHI, No. 32 at p. 3; Nortek, No. 19 at 
p. 4; Joint Environmentalist Commenters, No. 31 at pp. 6-7; Joint 
Advocacy Commenters, No. 38 at p. 7; Joint Advocacy Commenters 
(appendix I), No. 38 at pp. 1, 2, 15; NEEA, No. 43 at p. 4; NAFEM, No. 
30 at p. 7; Joint Industry Commenters, No. 40 at p. 15) On this point, 
A.O. Smith argued that the

[[Page 70918]]

approach contained in the February 2020 Final Rule undermines DOE's own 
authority under EPCA. In A.O. Smith's view, DOE's past application of 
the DFR provision to permit a DFR to result from a negotiated 
rulemaking has ensured that the DFR's ``fairly representative'' 
requirement has been met, and the commenter asserted that the 
negotiated rulemaking process has been an important advancement and 
addition to the Appliance Standards Program, and for these reasons, its 
use should continue. A.O. Smith also asserted that applying the DFR 
provision in this manner meets the goal of Congress to promote 
consensus agreements that reflect broad input from interested parties 
who can fashion agreements that best promote the aims of the statute. 
It added that when DOE receives a consensus agreement consistent with 
the DFR process, that act alone is sufficient to satisfy the statute so 
long as 42 U.S.C. 6295(o) (or 42 U.S.C. 6313(a)(6)(B) as applicable) 
are met. (A.O. Smith, No. 27 at p. 5)
    Commenters also addressed the individual proposed changes regarding 
negotiated rulemakings that DOE presented in the April 2021 NOPR. On 
the topic of convenors and facilitators, most stakeholders expressed 
support for DOE's proposal to make their use discretionary in 
appropriate cases. (NPCC, No. 12 at p. 5; Carrier, No. 26 at p. 3; 
Grundfos, No. 37 at p. 3) Commenters offered the following views. The 
Joint Industry Commenters agreed that a convenor and a facilitator may 
not be necessary in every negotiated rulemaking, and the Joint Advocacy 
Commenters added that use of facilitators and convenors is not required 
under the NRA. (Joint Industry Commenters, No. 40 at p. 15; Joint 
Advocacy Commenters, No. 38 at p. 7) Similarly, NAFEM stated that 
although it generally acknowledges the benefits of facilitators in 
appropriate cases, DOE and stakeholders have experience as to when 
engagement of facilitators would be helpful. (NAFEM, No. 30 at p. 7) 
However, Grundfos argued that DOE has sufficient experience with these 
roles to clearly define in appendix A when their use would be 
warranted. (Grundfos, No. 37 at p. 3)
    Once again, DOE proposed in the April 2021 NOPR to clarify that the 
list of factors militating in favor of a negotiated rulemaking, as 
currently articulated at section 11(a)(3) of appendix A, are neither 
mandatory nor exclusive. Because the specified factors may not be 
appropriate in all cases, DOE reasoned that it should no longer be 
bound by this list when determining whether it is appropriate to 
convene a negotiated rulemaking, but instead proposed 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. In response, commenters offered the following input. Carrier 
and the Joint Advocacy Commenters agreed that the factors favoring a 
negotiated rulemaking currently listed in Section 11(a)(3) of appendix 
A are not exclusive, and the Joint Advocacy Commenters also pointed out 
that they are not mandatory. (Carrier, No. 26 at pp. 3-4; Joint 
Advocacy Commenters, No. 38 at p. 7) The Joint Industry Commenters 
likewise stated that they have no objection to DOE eliminating the list 
of factors in appendix A militating in favor of a negotiated 
rulemaking, and, instead considering the factors under 5 U.S.C. 563(a). 
(Joint Industry Commenters, No. 40 at p. 15)
    Among commenters who generally supported DOE's proposal regarding 
negotiated rulemaking, there was mixed reaction as to how best to 
address section 11 of appendix A (Negotiated Rulemaking Process). Some 
commenters recommended that section 11 should be eliminated (as the 
Department proposed in the April 2021 NOPR). (NPCC, No. 12 at p. 5; 
Joint Advocacy Commenters, No. 38 at p. 7; NEEA, No. 43 at p. 4) Other 
commenters recommended that section 11 should be retained with 
revisions. (Carrier, No. 26 at p. 4; Grundfos, No. 37 at p. 3; Joint 
Industry Commenters, No. 40 at pp. 14-15; Lennox, No. 18 at pp. 8-9)
    Commenters favoring removal of section 11 offered the following 
reasoning in support of their position. The Joint Advocacy Commenters 
agreed that DOE's proposal complies with the requirements of the NRA 
and that given the existing NRA requirements, section 11 of the 
February 2020 Final Rule is unnecessary and should be removed. (Joint 
Advocacy Commenters, No. 38 at p. 7) NEEA stated its agreement with 
DOE's proposal to remove the language related to negotiated rulemaking 
from appendix A, arguing that the NRA already sufficiently specifies 
that process. The commenter asserted that the negotiated rulemaking 
provisions of the February 2020 Final Rule did not clarify that process 
and that it may have added unnecessary burden in some cases. (NEEA, No. 
43 at p. 4)
    Commenters who favored retention of section of 11 with revisions 
offered the following reasoning in support of that view, including any 
specific language offered. Grundfos argued that a modified version of 
section 11 of appendix A should be allowed to remain in the regulation, 
because it assists stakeholders in understanding how that process will 
work under the NRA. (Grundfos, No. 37 at p. 3) Along those same lines, 
Carrier suggested that DOE should expressly state its modified process 
for negotiated rulemakings by updating the current text of section 11 
to: (1) Provide the flexibility to determine whether a convener or 
facilitator is needed; (2) provide the flexibility to consider factors 
beyond those currently listed in Section 11(a)(3); and (3) allow the 
promulgation of a direct final rule from a negotiated rulemaking. 
(Carrier, No. 26, at p. 4) Finally, the Joint Industry Commenters also 
stated that DOE should reinsert several aspects of the July 1996 Final 
Rule, which include the following: First, DOE should include the 
following statement from the July 1996 Final Rule: ``[u]nder the 
guidelines in this appendix, DOE will support the development and 
submission of consensus recommendations for standards by representative 
groups of interested parties to the fullest extent possible.'' Second, 
DOE should indicate that it will consider deferring its rulemaking 
analysis while a representative group of interested parties works to 
develop joint recommendations on standards. Third, DOE should propose a 
consensus recommendation submitted by a breadth of interested parties 
so long as it met the applicable statutory criteria. Lastly, DOE should 
give substantial weight to consensus recommendations. (Joint Industry 
Commenters, No. 40 at pp. 14-15) MHI recommended inclusion of nearly 
identical language as that suggested by the Joint Industry Commenters. 
(MHI, No. 32 at p. 3)
    While Lennox is generally supportive of DOE's clarifications 
regarding the negotiated rulemaking process, the company suggests 
retaining an abbreviated version of appendix A's section on negotiated 
rulemaking. (Lennox, No. 18 at p. 8). Lennox offered the following 
suggested modifications. First, Lennox stated that DOE could retain the 
substance of the first two sentences in section 11(a)(1) indicating 
``In those instances where negotiated rulemaking is determined to be 
appropriate, DOE will comply with the requirements of the Negotiated 
Rulemaking Act (NRA) (5 U.S.C. 561-570) and the requirements of the 
Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2). To facilitate 
potential negotiated rulemakings, and to comply with the requirements 
of the NRA and the FACA, DOE established the Appliance Standards and 
Rulemaking

[[Page 70919]]

Federal Advisory Committee (ASRAC).'' Similarly, Lennox argued that DOE 
could retain some or all of section 11(a)(4) whereby ``DOE will provide 
notice in the Federal Register of its intent to form an ASRAC working 
group (including a request for nominations to serve on the committee), 
announcement of the selection of working group members (including their 
affiliation), and announcement of public meetings and the subject 
matter to be addressed.'' Furthermore, according to Lennox, DOE has not 
explained why it is deleting appendix A subsections 11(b) and (c), and 
the commenters believes these subsections seem appropriate. For 
instance, Lennox pointed out that subsection 11(c) merely states ``A 
negotiated rulemaking may be used to develop energy conservation 
standards, test procedures, product coverage, and other categories of 
rulemaking activities.'' Lennox opined that retaining this language 
seems a helpful clarification on the potential scope of negotiated 
rulemaking. Subsection 11(b) states ``DOE's role in the negotiated 
rulemaking process is to participate as a member of a group attempting 
to develop a consensus proposal for energy conservation standards [and 
the commenter noted that `test procedures or other rulemaking 
activities' should be added here] for a particular product/equipment 
and to provide technical/analytical advice to the negotiating parties 
and legal input where needed to support the development of a potential 
consensus recommendation in the form of a term sheet.'' Again, Lennox 
argued that this language seems to be a helpful clarification, and the 
commenter asserted that DOE does not explain the reasons for deleting 
this particular subsection. Moreover, Lennox argued that appendix A 
should affirmatively indicate a negotiated rulemaking (e.g., through 
ASRC) can lead directly to a DFR. (Lennox, No. 18 at pp. 8-9)
Comments Opposing DOE's Proposal Regarding Negotiated Rulemaking
    Finally, some commenters expressed opposition to or concern about 
the April 2021 NOPR's proposed changes to the negotiated rulemaking 
section of appendix A. Specifically, AGA stated that although it 
supports the use of negotiated rulemakings, it had previously sought to 
include provisions in appendix A to promote and require full 
participation. In AGA's view, DOE's current proposal to remove appendix 
A's provisions regarding negotiated rulemakings should not be adopted 
because the current set of requirements are critical elements to help 
ensure full participation in the negotiated rulemaking process. (AGA, 
No. 33 at p. 6) Furthermore, MHI asserted that the negotiated 
rulemaking process that it experienced as part of its efforts to assist 
in the development of energy conservation standards for manufactured 
homes resulted in certain stakeholders having an outsized influence, 
which led to skewed outcomes. In MHI's view, the proposed rule that 
resulted from that negotiated rulemaking would have had a detrimental 
impact on the ability of consumers to afford a manufactured home. MHI 
argued that any DOE standard-setting process should be transparent, 
allow for input from all affected stakeholders, and provide a 
reasonable cost-benefit analysis before engaging in a rulemaking that 
can have significant impacts on industry and consumers. (MHI, No. 32 at 
pp. 1-2)
DOE's Response to Comments
    After careful consideration of these comments, DOE has decided to 
adopt the identified changes to its negotiated rulemaking process along 
the lines proposed in the April 2021 NOPR. In essence, DOE has 
concluded that it is appropriate to return to its historic practice for 
negotiated rulemaking in place prior to the February 2020 Final Rule. 
DOE agrees with the commenters who argued that in attempting to codify 
DOE's existing practice, appendix A provisions in section 11, 
Negotiated Rulemaking Process, imposed certain unnecessary restrictions 
that were beyond the requirements of the NRA, thereby limiting DOE's 
flexibility and the usefulness of this important regulatory tool. 
Consequently, through this final rule, DOE is restoring its flexibility 
in the context of the negotiated rulemaking process, thereby allowing 
the Department to tailor its approach to the needs of individual energy 
conservation standard or test procedure rulemakings on a case-by-case 
basis.
    To be clear, DOE hereby reiterates its strong support for 
negotiated rulemakings and consensus agreements in appropriate cases, 
and the Department acknowledges the substantial benefits of such 
mechanisms mentioned by commenters. DOE and many stakeholders have 
considerable experience with negotiated rulemakings, including those 
conducted under the auspices of ASRAC. DOE is familiar with the 
circumstances under which a negotiated rulemaking is most likely to 
have the potential to be successful, and the Department is also aware 
when the services of a convenor or facilitatory would be useful. 
Consequently, rather than having a mandatory but non-exhaustive list of 
factors for consideration for initiation of a negotiated rulemaking, 
DOE believes that it is better for the Department to be able to 
consider all relevant circumstances, so it has decided that the 
February 2020 Final Rule's list of factors is unnecessary and overly 
restrictive, and therefore, it should be eliminated. Similarly, because 
of limited resources and the need for rulemaking efficiency, DOE has 
decided to eliminate the required use of convenors and facilitators as 
part of every negotiated rulemaking, but to instead employ such 
individuals on a case-by-case basis when the agency determines it 
appropriate.
    DOE also agrees with the vast majority of commenters that, 
consistent with the agency's historic approach, it should be 
permissible for a negotiated rulemaking to result in a term sheet with 
recommendations that culminate in a DFR. DOE has concluded that 
contrary provisions in the February 2020 Final Rule were driven by an 
interpretation of EPCA not compelled by the statute. For the reasons 
explained in the April 2021 NOPR, DOE has once again concluded that the 
DFR provision at 42 U.S.C. 6295(p)(4) constitutes substantive authority 
which offers DOE some flexibility for rulemakings with consensus 
agreements, as long as the requirements of 42 U.S.C. 6295(o) (or 42 
U.S.C. 6313(a)(6)(B) as applicable) are met. When the negotiated 
rulemaking process has been combined with a DFR, it has been possible 
to implement agreements with staged standards, different compliance 
dates, and multiple efficiency standards. Typically, such process has 
achieved greater energy savings, done so more expeditiously, and 
reduced the risk of litigation. DOE agrees with AGA and MHI as to the 
importance of public participation in its negotiated rulemaking 
process, and that is why ASRAC meetings are open to the public with 
opportunities for non-Working Group member input. DOE does not agree 
with MHI that members of any ASRAC negotiating committee have more 
influence than others, given the balance of various points of view that 
is required by ASRAC. DOE also notes that EPCA itself imposes a 
requirement that any joint statement recommending an energy 
conservation standard must be fairly representative of relevant points 
of view (see 42 U.S.C. 6295(p)(4)(A)). DOE has concluded that these 
measures provide adequate safeguard in terms of public participation.
    As for the suggestion from Joint Industry Commenters that DOE 
reinsert several statements regarding negotiated

[[Page 70920]]

rulemaking from the July 1996 Final Rule, DOE believes that the 
statements are either unnecessary or potentially in tension with the 
Department's obligations and authority under EPCA. First, the 
Objectives section of appendix A already contains a statement 
encouraging the development of consensus recommendations for new or 
revised standards. DOE has also clarified in the Objectives section 
that this support and encouragement extends to consensus 
recommendations developed in accordance with the NRA. Second, with 
regards to potentially delaying a rulemaking analysis while 
stakeholders work to develop a consensus recommendation, DOE believes 
it would be ill-advised in many situations to curtail its own 
rulemaking analysis in the hopes that stakeholders come to a consensus 
agreement in time to meet a statutory deadline. With respect to 
affording substantial weight to consensus recommendations and issuing 
them as proposals, EPCA already contains criteria for evaluating 
consensus proposals. (See 42 U.S.C. 6295(p)(4)(A)) DOE will determine 
whether to issue a consensus agreement as a proposal in accordance with 
these criteria.
    In light of the changes being adopted for negotiated rulemaking as 
part of this final rule, DOE sees little reason to retain a separate 
section of appendix A dedicated to negotiated rulemaking. What remains 
essentially grants DOE the same level of flexibility accorded to it 
under the NRA, and it is noted that the Department's past attempt to 
clarify its existing process produced some level of confusion. 
Furthermore, DOE's prior, longstanding negotiated rulemaking practice 
has generally been transparent, open to the public, and well understood 
by interested stakeholders. Consequently, for these reasons, DOE has 
concluded that inclusion of a section on negotiated rulemaking in 
appendix A is unnecessary and susceptible to generating further 
confusion, so, therefore, the Department is removing such section 
entirely.

H. Other Topics

    In addition to receiving comments on the proposed revisions to 
appendix A set forth in the April 2021 NOPR, DOE received numerous 
other comments related to appendix A. These comments fall primarily 
into two categories: (1) Comments related to aspects of appendix A not 
addressed in the April 2021 NOPR; and (2) comments challenging the 
basis for the rulemaking. Regarding the first category, DOE will 
address these comments and the additional revisions proposed in the 
July 2021 NOPR in a separate final rule.
    As to the second category, several commenters stated that since the 
February 2020 Final Rule has only been in effect for a limited period 
of time DOE has not had sufficient experience with the rule to 
establish a reasonable basis for determining that modifications are 
needed to help meet the Department's statutory obligations under EPCA. 
(See, e.g., AHRI, No. 25 at p. 7; Crown Boiler, No. 10 at p. 2) DOE 
does not agree with these comments. First, many of the effects of the 
February 2020 Final Rule on the Department's rulemaking processes were 
readily apparent on issuance of the rule. The February 2020 Final Rule 
created a one-size-fits-all rulemaking process that was binding on DOE. 
Further, the February 2020 Final Rule and the August 2020 Final Rule 
added additional, mandatory steps to the rulemaking process that are 
not required by any applicable statute. These mandatory provisions, 
among other things, added steps to the rulemaking process and required 
buffer periods (i.e., delays) between certain rulemaking actions. 
Further, since the February 2020 Final Rule became effective on April 
14, 2020, DOE has had to conduct additional rulemaking steps (early 
assessment RFIs) \17\ and delay other rulemaking actions in accordance 
with the binding provisions of the February 2020 Final Rule. 
Consequently, these provisions increased both the length of the 
rulemaking process and the overall resource burdens on DOE by requiring 
additional steps that may not always be needed under the circumstances 
of a given rulemaking. In addition, as stated throughout the April 2021 
NOPR and this final rule, DOE is not revising appendix A because the 
February 2020 Final Rule revisions offered no policy benefits or were 
otherwise legally deficient. Instead, DOE is revising appendix A 
because it unnecessarily constrains DOE's ability to readily meet its 
considerable statutorily-imposed rulemaking obligations under EPCA. 
From a practical perspective, applying a mandatory, one-size-fits-all 
rulemaking process does not allow the Department to account for the 
specific circumstances of a particular rulemaking. For example, the 
February 2020 Final Rule required that all test procedures be finalized 
at least 180 days prior to issuance of an associated standards 
proposal. DOE recognizes that in certain cases a delay between 
finalization of a test procedure and issuance of a standards proposal 
is necessary for stakeholders to gain familiarity with the new test 
procedure before having to comment on proposed standards. However, that 
is not the case for all of DOE's test procedure rulemakings, such as 
those instances where DOE makes minor, technical amendments to the test 
procedure that do not affect measured energy use or efficiency. In such 
cases, there is no need to delay a standards proposal for 180 days, 
especially when DOE is striving to meet rulemaking deadlines and facing 
lawsuits regarding missed rulemaking deadlines.
---------------------------------------------------------------------------

    \17\ See ``Energy Conservation Program: Energy Conservation 
Standards for Certain Commercial and Industrial Equipment; Early 
Assessment Review; Refrigerated Bottled or Canned Beverage Vending 
Machines,'' 85 FR 35394 (June 10, 2020); ``Energy Conservation 
Program: Test Procedures for Certain Commercial and Industrial 
Equipment; Early Assessment Review; Pumps,'' 85 FR 60734 (Sept. 28, 
2020).
---------------------------------------------------------------------------

    AHRI also disagreed with DOE's statement that appendix A is best 
described and utilized as generally applicable guidance that may guide, 
but not bind, the Department's rulemaking process. AHRI stated that the 
modifications proposed in the April 2021 NOPR are not enough to render 
appendix A as an interpretive rule that is not binding on DOE and does 
not require notice and comment rulemaking procedures. AHRI went on to 
state that appendix A promulgates rules governing specific contexts 
such that it amounts to an exhaustive framework designed to cabin its 
discretion. (AHRI, No. 25 at pp. 11-12)
    DOE disagrees with AHRI's characterization of the revisions made to 
appendix A in this document. As DOE has made clear throughout the April 
2021 NOPR and this document, the purpose of these revisions to appendix 
A is to ensure that DOE is not bound by a rigid, one-size-fits-all 
rulemaking process that does not account for the specific circumstances 
of a rulemaking. This rule does not cabin DOE's discretion. Instead, 
this rule restores DOE's discretion to tailor its rulemaking processes 
to, among things, avoid unnecessary delays and burdens on the 
Department's rulemaking resources.
    Finally, AHRI also argued that DOE's proposal did not consider the 
regulated community's reliance on the February 2020 Final Rule's 
procedures in the context of ongoing proceedings for test procedures 
and energy conservation standards. In its view, the regulated community 
has a significant interest in both the regulations relating to test 
procedures and energy conservation standards that DOE develops, as well 
as the process in promulgating those regulations. These regulatory 
actions, it argued, trigger a complex series of

[[Page 70921]]

business and governance decisions by the regulated community requiring 
precise planning and budgeting to respond to those actions. AHRI argued 
that by proposing to rescind appendix A six months after the rule 
itself took effect and without addressing concerns related to the 
regulated community's efforts to prepare for adjustments related to the 
February and August 2020 Final Rules, DOE has not considered these 
serious reliance interests. (AHRI, No. 25 at p. 12) Citing Nat'l Urban 
League v. Ross, 977 F.3d 770 (9th Cir. 2020), AHRI emphasized that 
there is no specific length of time for which a rule must have been in 
place for serious reliance interests to exist, and in certain cases, a 
shorter period of time may be sufficient to create those interests in 
light of the surrounding circumstances. (AHRI, No. 25 at pp. 12-13) As 
a result, AHRI argued that given the link between test procedures and 
standards--including the process by which DOE develops them--and the 
regulated community's critical organizational and financial obligations 
to achieve compliance, it has clearly demonstrated that the regulated 
entities have serious reliance interests in the February 2020 Final 
Rule. (AHRI, No. 25 at p. 13)
    DOE notes that AHRI's stated reliance interests are general in 
nature, and at no point does AHRI detail with any specificity what 
those specific reliance interests are or their extent. While it is true 
that, at the time of the NOPR's publication, appendix A in its current 
form had been in effect for a six-month period, this fact alone, in 
spite of AHRI's views to the contrary, does not lend itself towards 
establishing a particularly strong reliance interest. When coupled with 
DOE's clearly stated intention to further modify appendix A to enhance 
DOE's flexibility in addressing the considerable rulemaking obligations 
imposed by EPCA, any purported reliance interest that interested 
parties may claim to have regarding the various provisions that DOE 
sought to make in its April 2021 proposal--and that are being finalized 
in this document--are further diminished.\18\
---------------------------------------------------------------------------

    \18\ The effective date for the August 2020 Final Rule was 
October 19, 2020, and a NOPR proposing changes to appendix A was 
published in the Federal Register on April 12, 2021. Consequently, 
while nearly a year has passed since the promulgation of appendix 
A's stricter requirements, the public--including all interested 
industry parties--have been on notice since the release of the April 
2021 NOPR as to DOE's intentions to modify these requirements. As 
such, stakeholders have been accorded lead time to modify their 
expectations and plans regarding the prospective functioning of 
DOE's regulatory process for the Appliance Standards Program and any 
reliance on them have been necessarily diminished.
---------------------------------------------------------------------------

    To elaborate on these points, DOE notes that in establishing its 
reliance interests, AHRI relied upon bare assertions to that effect. 
Thus, DOE has been presented with no credible evidence of the reliance 
interests or impacts at stake as a result of DOE's change to appendix 
A. See, Kiewit Power Construction v. Sec'y, Department of Labor, 959 
F.3d 381, 399 (D.C. Cir. 2020) (noting the absence of reliance concerns 
where a regulation existed for less than four months). Compare, Encino 
Motorcars v. Navarro, 126 S. Ct. 2117, 2126-2127 (2016) (finding 
reliance interests on the part of regulated employers were implicated 
in an agency's attempt to change that agency's decades-old approach in 
an opposite manner). Moreover, to the extent that reliance interests 
may exist, DOE does not believe that, based on the current record, 
these reliance interests were as significant as AHRI claims. If such 
reliance interest did exist and were as significant as AHRI claims, DOE 
expects that the commenter would have demonstrated such reliance with 
some particularity, but AHRI did not. Presumably, reliance interests 
could not form until such time as DOE finalized its changes to appendix 
A; at earliest, the clock could have started February 14, 2020, but 
even then, stakeholders knew that at least one important aspect of 
appendix A (i.e., the comparative analysis of potential standard 
levels) was still undergoing ongoing rulemaking, with such provision 
not being finalized until August 19, 2020. Further, Executive Order 
13990, which directed DOE to consider suspending, revising, or 
rescinding the February and August 2020 Final Rules, was issued on 
January 20, 2021. Given that DOE once again proposed changes to 
appendix A on April 12, 2021, the intervening period arguably left very 
little time for significant reliance interests to develop or strongly 
attach. Furthermore, as evidenced by the earlier review/revision 
process for appendix A, stakeholders were aware that DOE's internal 
procedures are subject to change, and such fact should have tempered 
their reliance expectations.
    DOE also notes that in those instances where rulemakings are 
currently underway, the Department is following the existing 
requirements of appendix A by providing early assessment requests for 
information to the public to help DOE decide its next steps with 
respect to test procedure and energy conservation standard rulemaking 
activities--thereby mitigating any harm to the reliance interests of 
interested parties. DOE also notes that interested parties will have a 
transition period (the 30 days between publication of this final rule 
and its effective date) in which to adjust to the application of the 
version of appendix A being adopted in this final rule. Consequently, 
under the current set of circumstances, DOE has seen no evidence of 
``serious reliance interests'' regarding a rule that governed DOE's 
rulemaking procedures and was only in effect for 6 months. See, FCC v. 
Fox Television, 556 U.S. 502, 514-15 (2009) (noting an agency need not 
conduct a more searching review beyond explaining its reasons for 
reversing course and accounting for any ``serious reliance interests'' 
that may be present). And assuming arguendo that some limited reliance 
interests were found to exist, the agency has clearly stated its 
reasons regarding the need to change course consistent with and in 
light of the Department's EPCA obligations.

IV. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866

    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 final 
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 final regulatory action are 
procedural changes designed to improve DOE's ability to meet its 
rulemaking obligations and deadlines under EPCA. These revisions would 
not impose any regulatory costs or burdens on stakeholders, nor would 
they limit public participation in DOE's rulemaking process. Instead, 
these 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.

[[Page 70922]]

(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 contained in this document 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 contained 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: https://energy.gov/gc/office-general-counsel.
    This final rule details generally applicable guidance that may 
guide, but not bind, the Department's rulemaking process. The 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 final 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 
final rule will not have a significant economic impact on a substantial 
number of small entities, and, therefore, no final 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 subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.
    Specifically, this final rule, addressing clarifications to 
appendix A itself, does not contain any collection of information 
requirement or revisions to existing information collections that would 
trigger the PRA.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has analyzed this proposed action in accordance with NEPA and DOE's 
NEPA implementing regulations (10 CFR part 1021). DOE has determined 
that this rule qualifies for categorical exclusion under 10 CFR part 
1021, subpart D, appendix A5 because it is an interpretive rulemaking 
that does not change the environmental effect of the rule and meets the 
requirements for application of a categorical exclusion. See 10 CFR 
1021.410. DOE has also determined that this rule qualifies for 
categorical exclusion under 10 CFR part 1021, subpart D, appendix A6 
because it is strictly procedural and meets the requirements for 
application of a categorical exclusion. See 10 CFR 1021.410. Therefore, 
DOE has determined that promulgation of this rule is not a major 
Federal action significantly affecting the quality of the human 
environment within the meaning of NEPA, and does not require an 
Environmental Assessment or an Environmental Impact Statement.

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

[[Page 70923]]

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 final rule and has 
determined that it will not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. It will primarily affect the procedure by 
which DOE develops proposed rules to revise energy conservation 
standards and test procedures. EPCA governs and prescribes Federal 
preemption of State regulations that are the subject of DOE's 
regulations adopted pursuant to the statute. In such cases, States can 
petition DOE for exemption from such preemption to the extent, and 
based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) Therefore, 
Executive Order 13132 requires no further action.

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, this final 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 https://www.energy.gov/gc/office-general-counsel under ``Guidance & Opinions'' 
(Rulemaking)) DOE examined this final rule according to UMRA and its 
statement of policy and has determined that the rule contains neither 
an intergovernmental mandate, nor a mandate that may result in the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any year. 
Accordingly, no further assessment or analysis is required under UMRA.

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 final 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 final rule would 
not result in any takings that might require compensation under the 
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 final 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

[[Page 70924]]

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 concluded that the regulatory action in this document, which 
makes clarifications to appendix A 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 final 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: 
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.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is not a ``major rule'' 
as defined by 5 U.S.C. 804(2).

V. Approval of the Office of the Secretary

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

List of Subjects 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 November 
19, 2021 by Kelly J. Speakes-Backman, Principal Deputy 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 
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 November 19, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons stated in the preamble, DOE amends 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
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

[[Page 70925]]

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, 
including proposals developed in accordance with the Negotiated 
Rulemaking Act (5 U.S.C. 561 et seq.), 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

    (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. In those instances where 
the Department may find it necessary or appropriate to deviate from 
these procedures, interpretations or policies, DOE will provide 
interested parties with notice of the deviation and an explanation.
    (b) If the Department concludes that changes to the procedures, 
interpretations or policies in this appendix are necessary or 
appropriate, DOE will provide notice in the Federal Register of 
modifications to this appendix with an accompanying explanation. DOE 
expects to consult with interested parties prior to any such 
modification.
    (c) 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;
    (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.

[[Page 70926]]

    (a) Early assessment--(1) Initiating the rulemaking process. 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) Preliminary rulemaking documents. 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) Continued evaluation of statutory criteria. 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. 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 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) New or amended standards. 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) No new or amended standards. 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

[[Page 70927]]

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. The analysis of impacts on 
competition will include an 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 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. 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. The procedures 
described in this section are intended to assist the Department in 
making the determinations required by EPCA and do not preclude DOE's 
consideration of any other information consistent with the relevant 
statutory criteria. The Department will consider pertinent 
information in determining whether a new or revised standard is 
consistent with the statutory criteria.
    (b) Screening design options. These factors will be considered 
as follows in determining whether a design option will receive any 
further consideration:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in commercially-viable, 
existing prototypes will not be considered further.
    (2) Practicability to manufacture, install and service. If it is 
determined that mass production of a technology in commercial 
products and reliable installation and servicing of the technology 
could not be achieved on the scale necessary to serve the relevant 
market at the time of the compliance date of the standard, then that 
technology will not be considered further.
    (3) Impacts on product utility. If a technology is determined to 
have significant adverse impact on the utility of the product/
equipment to subgroups of consumers, or result in the unavailability 
of any covered product type with performance characteristics 
(including reliability), features, sizes, capacities, and volumes 
that are substantially the same as products generally available in 
the U.S. at the time, it will not be considered further.
    (4) Safety of technologies. If it is determined that a 
technology will have significant adverse impacts on health or 
safety, it will not be considered further.
    (5) Unique-pathway proprietary technologies. If a technology has 
proprietary protection and represents a unique pathway to achieving 
a given efficiency level, it will not be considered further, due to 
the potential for monopolistic concerns.
    (c) Identification of candidate standard levels. Based on the 
results of the engineering and cost/benefit analyses of design 
options, DOE will identify the candidate standard levels for further 
analysis. Candidate standard levels will be selected as follows:
    (1) Costs and savings of design options. Design options that 
have payback periods that exceed the median life of the product or 
which result in life-cycle cost increases relative to the base case, 
using typical fuel costs, usage, and private discount rates, will 
not be used as the basis for candidate standard levels.
    (2) Further information on factors used for screening design 
options. If further information or analysis leads to a determination 
that a design option, or a combination of design options, has 
unacceptable impacts under the policies stated in this Appendix, 
that design option or combination of design options will not be 
included in a candidate standard level.
    (3) Selection of candidate standard levels. Candidate standard 
levels, which will be identified in the pre-NOPR documents and on 
which impact analyses will be conducted, will be based on the 
remaining design options.
    (i) The range of candidate standard levels will typically 
include:
    (A) The most energy-efficient combination of design options;
    (B) The combination of design options with the lowest life-cycle 
cost; and

[[Page 70928]]

    (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) Measurements. 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 statutory requirements, as well as DOE's compliance, 
certification, and enforcement requirements.
    (d) Issuing final test procedure--(1) Process. 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. 
Except as provided in paragraph (d)(2) of this section, new test 
procedures and amended test procedures that impact measured energy 
use or efficiency will be finalized at least 180 days prior to the 
close of the comment period for:
    (i) A NOPR proposing new or amended energy conservation 
standards; or
    (ii) A notice of proposed determination that standards do not 
need to be amended. With regards to amended test procedures, DOE 
will state in the test procedure final rule whether the amendments 
impact measured energy use or efficiency.
    (2) Exceptions. The 180-day period for new test procedures and 
amended test procedures that impact measured energy use or 
efficiency specified in paragraph (d)(1) of this section is not 
applicable to:
    (i) Test procedures developed in accordance with the Negotiated 
Rulemaking Act or by interested persons that are fairly 
representative of relevant points of view (including representatives 
of manufacturers of covered products, States, and efficiency 
advocates), as determined by the Secretary; or
    (ii) Test procedure amendments limited to calculation changes 
(e.g., use factor or adder). Parties submitting a consensus 
recommendation in accordance with paragraph (i) of this section may 
specify a time period between finalization of the test procedure and 
the close of the comment for a NOPR proposing new or amended energy 
conservation standards or a notice of proposed determination that 
standards do not need to be amended.
    (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

[[Page 70929]]

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, including a consensus recommendation developed in 
accordance with the Negotiated Rulemaking Act (5 U.S.C. 561 et 
seq.), 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.

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;

[[Page 70930]]

    (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 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.

[[Page 70931]]

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. 2021-25725 Filed 12-10-21; 8:45 am]
BILLING CODE 6450-01-P