Energy Efficiency: Long-standing Problems with DOE's Program for 
Setting Efficiency Standards Continue to Result in Forgone Energy
Savings (31-JAN-07, GAO-07-42). 				 
                                                                 
The Department of Energy (DOE) sets energy efficiency standards  
through the rulemaking process for certain consumer product	 
categories, such as kitchen ranges, and industrial equipment,	 
such as distribution transformers. Congress reported in 2005 that
DOE was late in setting standards and required DOE to report	 
every 6 months on the status of the backlog. GAO examined (1) the
extent to which DOE has met its obligations to issue rules on	 
minimum energy efficiency standards for consumer products and	 
industrial equipment and (2) whether DOE's plan for clearing the 
backlog will be effective or can be improved. Among other things,
GAO convened an expert panel on energy efficiency standards to	 
identify causes and effects of delays and assess DOE's plans.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-42						        
    ACCNO:   A65468						        
  TITLE:     Energy Efficiency: Long-standing Problems with DOE's     
Program for Setting Efficiency Standards Continue to Result in	 
Forgone Energy Savings						 
     DATE:   01/31/2007 
  SUBJECT:   Accountability					 
	     Commercial products				 
	     Energy costs					 
	     Energy efficiency					 
	     Federal regulations				 
	     Policy evaluation					 
	     Reporting requirements				 
	     Schedule slippages 				 
	     Standards						 
	     Strategic planning 				 

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GAO-07-42

   

     * [1] 

          * [2]Results in Brief
          * [3]Background
          * [4]DOE Has Missed All Rulemaking Deadlines at a Cost of Billion

               * [5]DOE Has Not Met Any of Its Rulemaking Obligations on Time
               * [6]Delays Resulted in Forgone Energy Savings of at Least $28
                 Bi

          * [7]Effectiveness of DOE's Catch-Up Plan Is Uncertain

               * [8]DOE's Plan Lays Out an Approach to Clearing the Backlog,
                 but
               * [9]DOE's Plan Lacks Critical Elements of Effective Project
                 Mana

          * [10]Conclusions
          * [11]Recommendations for Executive Action
          * [12]Agency Comments and Our Evaluation

     * [13]Appendix I: Status of the Department of Energy's Model Build

          * [14]DOE Has Completed One of Three Commercial Building Code Dete
          * [15]DOE Has Completed Four of Five Residential Building Code Det
          * [16]DOE Tracks States' Building Codes

     * [17]Appendix II: Objectives, Scope, and Method
     * [18]Appendix III: Rulemakings and Delays for Consumer Products a
     * [19]Appendix IV: Participants in Energy Efficiency Standards Del
     * [20]Appendix V: Comments from the Department of Energy
     * [21]Appendix VI: GAO Contact and Staff Acknowledgments

          * [22]GAO Contact
          * [23]Staff Acknowledgments

               * [24]Order by Mail or Phone

Contents

Letter 1

Results in Brief 5
Background 6
DOE Has Missed All Rulemaking Deadlines at a Cost of Billions in Forgone
Energy Savings 9
Effectiveness of DOE's Catch-Up Plan Is Uncertain 13
Conclusions 19
Recommendations for Executive Action 20
Agency Comments and Our Evaluation 20
Appendix I Status of the Department of Energy's Model Building Code
Determinations 23
DOE Has Completed One of Three Commercial Building Code Determinations 25
DOE Has Completed Four of Five Residential Building Code Determinations 26
DOE Tracks States' Building Codes 27
Appendix II Objectives, Scope, and Method 29
Appendix III Rulemakings and Delays for Consumer Products and Industrial
Equipment with Deadlines That Have Passed 31
Appendix IV Participants in Energy Efficiency Standards Delphi Panel 33
Appendix V Comments from the Department of Energy 36
Appendix VI GAO Contact and Staff Acknowledgments 40

Tables

Table 1: Actions DOE Is Required to Take for Consumer Product and
Industrial Equipment Categories with Rulemaking Deadlines 8
Table 2: Timeliness of DOE Rulemakings That Have Come Due 9
Table 3: Status of Efficiency Standards for Consumer Products and
Industrial Equipment with Rulemaking Deadlines That Have Passed 10
Table 4: Status of Required Industrial Equipment Standards Revisions
without Deadlines 11
Table 5: Status of DOE's Review of ASHRAE Standard 90.1 Revisions 26
Table 6: Status of DOE's Review of MEC and IECC Revisions 26

Abbreviations

ASHRAE American Society of Heating, Refrigerating and Air- Conditioning
Engineers
Btu British thermal unit
CABO Council of American Building Officials
DOE Department of Energy
DOT Department of Transportation
EPAct 2005 Energy Policy Act of 2005
EPCA Energy Policy and Conservation Act
ICC International Code Council
IECC International Energy Conservation Code
LBNL Lawrence Berkeley National Laboratory
MEC Model Energy Code
PMF Presidential Management Fellows
PNNL Pacific Northwest National Laboratory

This is a work of the U.S. government and is not subject to copyright
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separately.

United States Government Accountability Office

Washington, DC 20548

January 31, 2007

The Honorable John D. Dingell
Chairman
Committee on Energy and Commerce
House of Representatives

The Honorable Rick Boucher
Chairman
Subcommittee on Energy and Air Quality
Committee on Energy and Commerce
House of Representatives

The Honorable Edward J. Markey
House of Representatives

Recent energy cost increases and concerns about global warming are leading
to a new national focus on reducing U.S. energy consumption. Household and
commercial products that are regulated by the U.S. Department of Energy
(DOE) will account for about 30 percent of estimated total U.S. energy
consumed in 2006, according to DOE's Lawrence Berkeley National
Laboratory. Increasing the energy efficiency of these kinds of products
could produce significant energy savings. Not surprisingly, therefore,
Congress has long been interested in improving energy efficiency. In 1975,
under the Energy Policy and Conservation Act (EPCA), Congress required DOE
to set target minimum energy efficiency standards for manufacturers of
specified categories of consumer products such as refrigerators,
dishwashers, furnaces, and hot water heaters. Congress has amended the
statute to include additional consumer product categories such as
fluorescent lamps and plumbing products, as well as industrial equipment
categories such as steam boilers and electric motors. Minimum efficiency
standards for consumer product and industrial equipment categories are
designed to eliminate the least efficient products from the market.^1

1DOE's energy efficiency standards program is separate from the Energy
Star program, which is a joint DOE-Environmental Protection Agency
voluntary labeling program that identifies and promotes the products that
meet the most efficient energy conservation standards.

EPCA, as amended, also reflects manufacturers' and states' interest in
having uniform federal standards for energy-efficient products, rather
than a patchwork of state standards. It prohibits states and localities
from setting more stringent standards than the federal standards for
covered products unless the states obtain waivers from DOE. When the act
was passed, several states were setting their own energy efficiency
standards, and stakeholders, including states and manufacturers, generally
believed that uniform federal standards would result in lower costs for
manufacturing and, hence, lower prices for consumers, as well as saving
energy overall.

Under EPCA amendments, Congress mandated deadlines for DOE to issue rules
that set minimum energy efficiency standards for most consumer product
categories. Congress also made manufacturers' compliance with the
standards mandatory. The statute also requires DOE to set and revise
standards through the federal rulemaking process. This process calls for
analyzing the technical and economic issues associated with setting energy
efficiency standards for each category, proposing a standard through
public notification, soliciting comments on the standard, revising the
rule, and issuing the final rule. DOE program staff in Washington develop
these rules, using analysis by experts--such as staff at Lawrence Berkeley
National Laboratory (LBNL) and other contractors--on the technical and
economic aspects. The rules undergo legal and policy reviews within the
department before they are issued.

Most of the categories with deadlines require at least two rules--either
to set an initial standard and later update it or to update a
congressionally set standard and then update it again about 5 years after
the first deadline. For categories without deadlines, DOE must first
review revisions that nongovernmental standard-setting entities make to
their model standards and, generally, issue a rule announcing whether it
will adopt these revised model standards or reject them and issue its own
standards.

In 1993, we reported that while DOE had issued rules for some of the
product categories with passed deadlines, these had always been issued
late, and the others had not been issued yet. We cited inadequate
resources as a major reason for delays.^2 Congressional action in 2005
reflected continuing concerns about DOE's ability to issue rules for
energy-efficient consumer products and industrial equipment. The Energy
Policy Act of 2005 (EPAct 2005) required DOE to report to Congress by
February 8, 2006, and again every 6 months following the submission of
that report, on its plans to clear its backlog of standards that need to
be set or considered for revision. In its first report, submitted in
January 2006,^3 DOE reported a backlog of required rulemakings for many
consumer product and industrial equipment categories but made a
commitment, from the Secretary on down, to take a number of steps to clear
the backlog by 2011.^4 Twenty of these consumer product and industrial
equipment categories have statutory deadlines that have passed and involve
34 different product rules.^5

2GAO, Energy Conservation: Appliance Standards and Labeling Programs Can
Be Improved, [25]GAO/RCED-93-102 (Washington, D.C.: March 1993).

The requirement for reports to Congress every 6 months highlights the
importance Congress places on setting energy efficiency standards for
specific consumer products and industrial equipment. The missed deadlines
have meant missed opportunities to reduce (1) consumers' energy costs, (2)
the need for new power facilities, and (3) the level of polluting
emissions such as carbon dioxide, among other things. While some consumers
may choose to buy products that are more efficient without waiting for
federal standards, others may not do so for a number of reasons--because
the more efficient products may cost more at the time of purchase, for
example. If, however, all models in a category have to meet certain
minimum energy efficiency standards, then the potential for savings over
the life of the product, due to lower energy bills, can be significant.
For example, by 2030, for the minimum energy efficiency standards for
consumer products that DOE has set thus far, DOE projects that consumers
will save nearly $125 billion. Enough energy would be saved to operate all
U.S. homes for over 2 years, based on 2006 estimated energy consumption.

As requested, this report examines (1) the extent to which DOE has met its
statutory obligations to issue rules on minimum energy efficiency
standards for consumer products and industrial equipment and (2) whether
DOE's plans are likely to clear the backlog of required rulemakings and
whether these plans could be improved. In addition, you asked us to assess
whether DOE has met statutory deadlines for building code determinations
(see app. I). In future work, GAO plans to evaluate federal agencies'
efforts to provide household consumers with information about energy
savings opportunities for purchases of appliances, lighting, and other
energy consuming products.

^3Department of Energy, Energy Conservation Standards Activities.
(Washington, D.C.: Jan. 31, 2006).

^4The second report, released in August 2006, reiterated the catch-up plan
and reported on DOE's actions toward clearing the backlog. These actions
include making progress on and issuing rules related to the
standards-setting process, but none established new standards for the
products and equipment included in the scope of this report.

^5This reported backlog did not include an additional 17 product
categories added by EPAct 2005 to DOE's mandate for setting energy
efficiency standards, 9 of which have deadlines for DOE rulemakings. These
additional responsibilities were not part of our review.

We reviewed statutes and regulations regarding the requirements and
deadlines for minimum energy efficiency standards for consumer products
and industrial equipment. We interviewed relevant officials from, and
analyzed documentation provided by, DOE, a DOE contractor, energy
organizations, and nongovernmental standard-setting entities; an expert on
regulatory efficiency; and government officials from Canada and
California--governments that are known for their exemplary
standards-setting programs.^6 In addition, we convened a Web-based panel
of 33 energy efficiency standards stakeholders from federal and state
governments, industry, nonprofit organizations, and utilities who are both
widely recognized as knowledgeable about key aspects of energy efficiency
standards and are involved with DOE's standards rulemaking process. We
obtained panel members' views using a modified, Web-based version of the
Delphi method, a systematic process for obtaining individuals' views and
obtaining group members' consensus, if possible, on a problem of interest.
A more detailed description of our objectives, scope, and method is
presented in appendix II. We did not examine the merits of the standards
DOE has set. Although DOE is required to issue rules regarding standards
for plumbing products, we excluded them from this report because they
primarily involve conserving water, rather than energy. In addition, we
did not consider deadlines for the purposes of this report set in EPAct
2005; nor did we examine DOE's activities undertaken since EPAct 2005 that
did not result in a completed standard. We conducted our review from June
2005 through January 2007 in accordance with generally accepted government
auditing standards.

^6California has set standards for products not covered under federal law,
such as commercial clothes washers and external power supplies for
electronic devices such as laptop computers, mobile phones, printers, and
digital cameras.

Results in Brief

DOE has missed all 34 of the deadlines for rulemaking that have come due
for the 20 consumer products and industrial equipment categories with
deadlines that have passed. In addition, it has not revised standards for
one of the six industrial equipment categories that have no deadlines but
for which DOE is obligated to issue new rules. Of the 34 rules with missed
deadlines, 11 were issued late, and the other 23 have not been issued at
all. Delays in meeting deadlines range from about 2 months to 15 years.
Overall, all required rulemakings have been set for only three product
categories with deadlines: (1) refrigerators, refrigerator-freezers, and
freezers; (2) small furnaces; and (3) clothes washers. DOE has yet to set
all required rulemakings for 17 additional categories such as--for
consumer products--kitchen ranges and ovens, dishwashers, clothes dryers,
hot water heaters, and--for industrial equipment--various electric motors
and electric distribution transformers, which reduce the voltage of an
electric utility's power distribution line to the lower voltages suitable
for most equipment, lighting, and appliances. In addition, standards are
up to date for five of the six industrial equipment categories that have
no deadlines but which must have standards set: (1) warm air furnaces, (2)
packaged boilers, (3) storage water heaters, (4) instantaneous water
heaters, and (5) unfired water storage tanks (that store water and have an
external source for heating it). The sixth category--a particular type of
large air conditioner and heat pump--has not had standards set. Our panel
members cited increased energy consumption as one of the most significant
effects of the delays. In fact, according to LBNL, the delays for the four
consumer product categories with the greatest energy savings potential
will cost the nation an estimated $28 billion in forgone savings by 2030.
Our panel also pointed to other potential effects of delays, such as
states attempting to set their own efficiency standards and manufacturers'
and utilities' difficulties in making business plans. Standards that
differ from state to state would be likely to cause higher manufacturer
costs than a single federal standard and, hence, higher costs for
consumers.

It is unclear whether DOE's latest plan for clearing its backlog of
rulemakings will effectively bring its minimum energy efficiency standards
up to date, primarily because DOE cannot be certain it knows the root
causes of the delays, and its catch-up plan lacks critical elements of an
effective project management plan. Specifically:

           o Root causes are uncertain. Neither DOE nor our panel could agree
           on, and we could not definitively determine, the root causes of
           the delays. DOE has not developed the program management data it
           needs to identify bottlenecks in the rulemaking process and
           develop solutions. As a result, we could not determine if the
           corrective actions DOE has proposed will alleviate delays. In
           developing the catch-up plan, the managers relied primarily on
           anecdotal information from program staff to determine the causes
           of delays. In the absence of management information, such as the
           length of each stage of DOE's rulemaking process, we were not able
           to determine which of these causes or combinations of causes
           account for the delays. Some of our panelists raised concerns that
           DOE may not be addressing what they believe are the most relevant
           reasons for delays; for example, DOE may not have allocated
           sufficient funding or assigned adequate technical staff. Unless
           the causes of the delays are known, it is difficult to know
           whether problems have been addressed. But, most of the panelists
           rated the components of DOE's plan highly and expect that it will
           help DOE meet the deadlines of its catch-up schedule if these
           actions are implemented.

           o The plan lacks critical project management elements. According
           to leading project management practices, effective project plans
           have two key components that are lacking in DOE's plan. First,
           plans should hold officials and staff accountable for meeting
           interim and final deadlines. If the officials do not meet these
           deadlines, they should provide legitimate reasons for the delays.
           Second, the plan should include provisions for adequate resources.
           Instead, DOE's plan increases the workload sixfold over that in
           recent years without increasing proportionately the resources it
           will devote to the program. DOE officials told us they plan to
           rely on increased productivity, with only a marginal increase in
           resources, to bring the standards up to date. Furthermore, DOE's
           plan does not include a means of ensuring that staff and reviewers
           are accountable for meeting deadlines.

           To help ensure that DOE reduces or eliminates the backlog, we are
           making recommendations to the Secretary of Energy that DOE revise
           its catch-up plan to incorporate leading management practices. In
           commenting on a draft of this report, DOE did not provide views on
           our recommendations. DOE said it was incorrect to single out any
           official or office for the delays and that the report did not
           reflect many of its standards-setting activities undertaken since
           EPAct 2005. We disagree with DOE's characterization of our
           analysis. We reported several causes of delays in the
           standards-setting process; also, the activities DOE has taken
           since EPAct 2005 that did not result in completed standards are
           outside of the scope of this report.
			  
			  Background

           Under EPCA, as amended, covered product and equipment categories
           may need one or two rulemakings for the following reasons:

           o Most often, if Congress established a standard in the law, DOE
           must publish a rule revising the standard or explaining why a
           revision is not justified. Generally, such statutes require two
           rulemakings: an initial revision and then a second revision,
           usually 5 years later. This type of rulemaking is associated with
           most categories.

           o For several consumer products for which Congress did not set a
           standard in law, DOE must issue two rules--one rule to create a
           standard and a later rule to update the standard.

           o For several industrial equipment categories for which Congress
           established a standard in law, DOE must review amendments to model
           standards set by a specified nongovernmental standard-setting
           entity. Based on DOE's review, it must either publish a rule
           updating the statutory standards to reflect the amended model
           standards, or publish a rule demonstrating that a more stringent
           standard is justified. The statute specifically requires DOE to
           consider the standards set by the American Society of Heating,
           Refrigerating and Air-Conditioning Engineers (ASHRAE).

           o For three other industrial equipment categories, DOE must first
           publish a determination of whether a standard is needed. If DOE
           determines the need for a standard, it must then publish a rule
           setting such a standard 18 months after publishing the
           determination. However, DOE does not have a deadline for making a
           determination.

           Overall, DOE is required to determine that revisions to standards
           achieve the maximum improvement in energy efficiency that is
           "technologically feasible and economically justified." In
           determining whether a standard is economically justified, DOE must
           consider the economic impacts of the revision on manufacturers and
           consumers, the savings in operating costs throughout the life of
           the product, the total projected amount of energy savings likely
           to result from the standard, and whether the standard would result
           in a product that is less useful or does not perform as well.
           Table 1 shows the number of deadlines and types of actions
           required for consumer product and industrial equipment categories
           with deadlines that have passed. In addition, DOE is obligated to
           issue rules adopting revised standards for another six industrial
           equipment categories: packaged terminal air conditioners and
           packaged terminal heat pumps; warm air furnaces; packaged boilers;
           storage water heaters; instantaneous water heaters; unfired water
           storage tanks. DOE has no mandated deadlines for issuing these
           rules.

Table 1: Actions DOE Is Required to Take for Consumer Product and
Industrial Equipment Categories with Rulemaking Deadlines

                                                         Number of rulemaking 
      Action required for consumer product or        deadlines that have come 
      industrial equipment categories                                     due 
      Consumer products                                                       
      Issue a rule revising a standard or explaining                          
      why a revision is not justified                                         
1  Clothes washers                                                       2 
2  Refrigerators, refrigerator-freezers, and                             2 
      freezers                                                                
3  Small furnaces                                                        1 
4  Central air conditioners and heat pumps                               2 
5  Clothes dryers                                                        2 
6  Dishwashers                                                           2 
7  Fluorescent lamp ballasts                                             2 
8  Room air conditioners                                                 2 
9  Water heaters                                                         2 
10 Direct heating equipment                                              2 
11 Furnaces                                                              1 
12 General service fluorescent lamps and                                 2 
      incandescent reflector lamps                                            
13 Additional general service fluorescent and                            1 
      general service incandescent lamps                                      
14 Kitchen ranges and ovens                                              2 
15 Mobile home furnaces                                                  1 
16 Pool heaters                                                          2 
      Subtotal--number of consumer product rules                           28 
      required                                                                
      Industrial equipment                                                    
      Issue a rule revising a standard or explaining                          
      why a revision is not justified                                         
17 Electric motors not requiring national                                2 
      certification                                                           
18 Electric motors requiring national                                    2 
      certification                                                           
      Issue a determination of whether a revision is                          
      justified, and, if so, issue a rule setting                             
      the standard                                                            
19 Distribution transformers                                             1 
20 Small electric motors                                                 1 
      Subtotal--number of industrial equipment rules                        6 
      required                                                                
      Total--number of rules required for consumer                         34 
      products and industrial equipment                                       

Source: GAO analysis of DOE data.

Note: The numbers in the column on the left represent the number of
product categories.

DOE Has Missed All Rulemaking Deadlines at a Cost of Billions in Forgone Energy
Savings

DOE has missed all 34 of the rulemaking deadlines that have come due for
the 20 product categories with deadlines, completing 11 of these rules
late and not yet completing the remaining 23. DOE has also not revised
standards for one of the six industrial equipment categories that require
updates but have no deadlines. LBNL estimates that delays in setting
minimum energy efficiency standards for four categories of consumer
products that DOE believes use the most energy will cost the nation at
least $28 billion in forgone energy savings by 2030. Our panel members
identified two additional significant effects of the delays: states
attempting to set their own standards and businesses and utilities having
difficulty in making business decisions and planning for the future.

DOE Has Not Met Any of Its Rulemaking Obligations on Time

As table 2 shows, none of the 34 rules with passed deadlines was completed
on time. For rules that have been completed, delays ranged from less than
1 year to about 10 years; and incomplete rules are as much as 15 years
late.

Table 2: Timeliness of DOE Rulemakings That Have Come Due

Status                        Completed rulemakings Incomplete rulemakings 
On time                                           0                      0 
Less than 1 year late                             2                      1 
1 year to less than 5 years                       4                      2 
late                                                                       
5 years to less than 10 years                     5                      8 
late                                                                       
10 years to 15 years late                         0                     12 
Total                                            11                     23 

Source: GAO analysis of DOE data.

Table 3 shows the status of rules completed for consumer product and
industrial equipment categories with deadlines that have passed. As the
table shows, only three product or equipment categories--clothes washers;
refrigerators, refrigerator-freezers, and freezers; and small
furnaces--have had all their rules completed. As the table also shows,
some categories have had one of two required rules completed, and others
have had no rules completed.

Table 3: Status of Efficiency Standards for Consumer Products and
Industrial Equipment with Rulemaking Deadlines That Have Passed

                                               Number of                      
                                              rulemaking  Status and number   
      Consumer product or industrial      deadlines that  of completed rules  
      equipment category                   have come due  (in parentheses)    
      Consumer products                                                       
1  Clothes washers                                  2  All rules completed 
                                                          (2).                
2  Refrigerators,                                   2  All rules completed 
      refrigerator-freezers, and freezers                 (2).                
3  Small furnaces^a                                 1  All rules completed 
                                                          (1).                
4  Central air conditioners and heat                2  First rule          
      pumps                                               completed (1).      
5  Clothes dryers                                   2  First rule          
                                                          completed (1).      
6  Dishwashers                                      2  First rule          
                                                          completed (1).      
7  Fluorescent lamp ballasts                        2  First rule          
                                                          completed (1).      
8  Room air conditioners                            2  First rule          
                                                          completed (1).      
9  Water heaters                                    2  First rule          
                                                          completed (1).      
10 Direct heating equipment                         2  No rules completed. 
11 Furnaces                                         1  No rules completed. 
12 General service fluorescent lamps                2  No rules completed. 
      and incandescent reflector lamps                                        
13 Additional general service                       1  No rules completed. 
      fluorescent and general service                                         
      incandescent lamps^a                                                    
14 Kitchen ranges and ovens                         2  No rules completed. 
15 Mobile home furnaces^a                           1  No rules completed. 
16 Pool heaters                                     2  No rules completed. 
      Industrial equipment                                                    
17 Electric motors-not requiring                    2  No rules completed. 
      national certification                                                  
18 Electric motors-requiring national               2  No rules completed. 
      certification                                                           
19 Distribution transformers^a                      1  No rules completed. 
20 Small electric motors^a                          1  No rules completed. 
      Total                                           34  (11)                

Source: GAO analysis of DOE data.

Note: The numbers in the column on the left represent the number of
product categories.

aOnly one rulemaking required.

Appendix III provides additional information on the deadlines for these
product and equipment categories.

Furthermore, for the six industrial equipment categories that do not have
deadlines, DOE has completed rules for five and has begun, but not
completed, the rulemaking process for the remaining category, as table 4
shows.

Table 4: Status of Required Industrial Equipment Standards Revisions
without Deadlines

                                           Date of ASHRAE                     
Industrial equipment category           revision       DOE action          
Packaged terminal air conditioners and  1999           Rule not completed. 
heat pumps                                                                 
Warm air furnaces                       1999           Rule completed.     
Packaged boilers                        1999           Rule completed.     
Storage water heaters                   1999           Rule completed.     
Instantaneous water heaters             1999           Rule completed.     
Unfired water storage tanks             1999           Rule completed.     

Source: GAO analysis of DOE data.

Delays Resulted in Forgone Energy Savings of at Least $28 Billion and Create
Problems in Other Areas

DOE does not have estimates of the energy savings lost because of delays
in completing rules. However, LBNL staff provided us with estimates of
delays for the four categories of consumer products that DOE believes use
the most energy--refrigerators and freezers, central air conditioners and
heat pumps, water heaters, and clothes washers. According to these
estimates, the nation would have saved at least $28 billion in energy
costs, even after paying higher equipment costs, by 2030 if these
standards had been put in place when required--that is, 2.1 quadrillion
British thermal units (Btu) of natural gas and 1.4 quadrillion Btus of
electricity. Historically, LBNL, under contract to DOE, has performed most
of the technical and economic analyses for proposed standards rulemakings.
To estimate the cost of delays, LBNL staff used the estimates of savings
they developed to support proposed standards for the four consumer
products. According to our analysis, LBNL took steps to ensure the
estimates were reasonably accurate by considering such factors as whether
the technologies used for the analysis would have been available at the
time of the deadlines for setting standards. The total forgone energy
savings is equal to the annual primary energy consumption of approximately
20 million U.S. households. In addition, the delays will also result in 53
million tons of carbon dioxide emissions, an amount equivalent to about 1
percent of total estimated U.S. carbon dioxide emissions in 2004. Our
panelists noted that they consider increased energy consumption to be one
of the two most significant effects of DOE's delays in revising efficiency
standards.

Similarly, delays for one type of industrial equipment, electric
distribution transformers, have resulted in significant forgone energy
savings. Distribution transformers reduce the voltage of an electric
utility's power distribution line to the lower voltages suitable for most
equipment, lighting, and appliances. Nine years ago, DOE determined that
standards for distribution transformers were warranted as technologically
feasible and economically justified and were likely to result in
significant savings. However, DOE did not publish proposed standards for
distribution transformers in the Federal Register until August 2006.^7
According to DOE, the energy savings from the proposed distribution
transformer standards would eliminate the need for approximately 11 new
400-megawatt power plants by 2038, enough to provide a sufficient flow of
electricity to about 3 million homes.^8

These estimates account for only a portion of the forgone savings from the
lack of timely rules for consumer products and industrial equipment;
however, no estimates of the forgone savings are available for the
remaining product and equipment categories. Equally important, because
many energy-using products and equipment have long service lives, delays
in setting standards lead to years of using the products and equipment
that are less energy efficient than they could be, compounding the loss of
the energy efficiency. For example, electric distribution transformers
have a typical service life of about 30 years. With about 50 million
transformers in the United States, each year of delay until a rule setting
standard is completed means that more of these transformers will be
replaced at the present energy efficiencies, rather than the proposed
level, leading to many additional years of forgone savings.

Other, nonquantifiable effects have also resulted, or can result, from
delays in issuing energy efficiency rules. Our panel members noted the
possibility that states would attempt to set their own appliance
efficiency standards as the other most significant effect of delays.
Indeed, states are dissatisfied with DOE's delays. In 2005, 15 states and
New York City sued DOE for "foot-dragging [that] results in greater ---and
avoidable--energy use." The states cited, among other effects, high energy
costs, increased environmental harm, and burdens on the electricity grid
from DOE's delays as justification for their actions. The suit was settled
recently, with DOE agreeing to eliminate its backlog by 2011, the same
date set in its report to Congress. According to officials from the
California Energy Commission, California has begun to press Congress to
lift the preemption that prevents the states from readily setting their
own standards. While states had expressed dissatisfaction with the pace of
rulemaking and before 1987 had petitioned DOE for waivers, the 1987
amendment to EPCA made it considerably more difficult to obtain a waiver,
according to DOE officials. Since then, DOE has received only one petition
for a waiver. Panel members commented that if states obtain waivers and
pass individual standards, the result could be a patchwork of state
standards, preventing economies of scale in manufacturing and raising
costs for both consumers and manufacturers.

^7Before DOE published proposed distribution transformer standards, the
Energy Policy Act of 2005 established energy conservation standards for
low-voltage, dry-type distribution transformers. Pub. L. No. 109-58
S135(c)(3) (codified at 42 U.S.C. S 6295(v)). Consequently, DOE's proposed
standards do not apply to these types. 71 Fed. Reg. 44,356, 44,357 (Aug.
4, 2006).

^8A megawatt is a measure of a flow of electricity; 1,000 megawatts is a
sufficient flow of electricity to power about 750,000 homes.

Panel members also pointed out that delays make business planning
difficult for manufacturers and utilities, which could also increase their
costs and, therefore, costs to consumers. As one panel member noted,
"Product manufacturers don't know when new standards will take effect in
advance, making it difficult to plan product redesigns and thereby
increasing cost of compliance." According to another panelist, "An
uncertain future regulatory environment makes it very difficult for
appliance and equipment manufacturers to make investment decisions." For
example, a manufacturer may be reluctant to invest large sums in a new
technology if the new technology may be made obsolete by new federal
efficiency standards or if new standards might not allow the manufacturer
to gain a hoped-for competitive advantage via new technology. To minimize
such uncertainty and its attendant risks, manufacturers want DOE to make
regulatory decisions on time."

Effectiveness of DOE's Catch-Up Plan Is Uncertain

DOE has developed a catch-up plan to resolve the backlog of delayed energy
efficiency standards. However, since DOE has not completely identified the
root causes for the delays and because the plan lacks critical elements of
an effective management approach, the likelihood of success is not clear.

DOE's Plan Lays Out an Approach to Clearing the Backlog, but It Is Unclear
Whether the Plan Is Addressing Root Causes of Delays

According to DOE's January 2006 report to Congress, the department has
identified four causes of delays in its efficiency standards rulemaking:
(1) an overly ambitious schedule set in statute; (2) the sequential nature
of the rulemaking process; (3) the consequences of the Process Rule, which
the report states that DOE adopted in 1996 to address concerns about its
analyses and stakeholder involvement; and (4) DOE's internal document
review and clearance process. Specifically:

           o An ambitious statutory schedule. According to the report,
           Congress's rulemaking schedule was "rigorous." As a result, the
           program staff were unable to meet the deadlines from the
           beginning. These delays were exacerbated when Congress increased
           the number of products that required rulemakings. In 1994, DOE
           attempted to address the backlog by proposing standards for eight
           products in one rulemaking. However, according to DOE, this
           rulemaking effort met with strong opposition from industry,
           drawing over 5,000 responses during the comment period, and DOE
           withdrew the proposal. Following this experience, Congress imposed
           a 1-year moratorium on new or amended standards. The moratorium
           further exacerbated the backlog, according to DOE.

           o Sequential nature of the rulemaking process. The elements of a
           rulemaking must occur sequentially, and, according to DOE, "this
           sequence-dependent nature of the analyses makes it vulnerable to
           un-recoverable delays." The standards rulemaking process includes
           many overlapping requirements from EPCA, as amended; Executive
           Orders; and the Process Rule, which create a complex analytical
           and procedural challenge, according to the report. The standards
           rulemaking process typically consists of three stages--an advance
           notice of proposed rulemaking, a notice of proposed rulemaking,
           and a final rule--and each of these stages includes internal and
           external review and comment periods, as well as technical analyses
           that build on previous analyses. Most of these tasks cannot be
           done concurrently, so when delays occur, often the time lost
           cannot be made up because of these rigid requirements.

           o Consequences of the Process Rule. Under DOE's 1996 "Process
           Rule,"^9 the potential energy savings, rather than statutory
           deadlines, determine which standards should be set first.
           Consequently, DOE reported to Congress, it analyzed the likely
           impacts of all pending energy efficiency rulemakings and used this
           analysis to categorize each rulemaking as high-, medium-, or
           low-priority, depending on energy-savings potential. Regardless of
           deadlines, high-priority rules received the bulk of the resources,
           medium-priority rules received some resources, and low-priority
           rules were not addressed at all. The Process Rule also called for
           increased stakeholder input and expert review, which added time to
           the rulemaking, according to DOE's report. Finally, according to
           DOE's 2006 report, the Process Rule increased the complexity of
           the technical analysis required, adding more time.

           o Internal document review and clearance process. The quality of
           draft rulemaking documents was inconsistent, according to DOE's
           2006 report, which made the internal review process time
           consuming. In addition, reviews by the Office of General Counsel,
           Office of Policy and International Affairs, and other internal
           reviewers were not always managed effectively, according to the
           report. Consequently, issues were not identified and resolved
           early in the process, and draft rules often did not receive the
           timely reviews needed to approve them for issuance.

           While DOE identified these causes for rulemaking delays in its
           January 2006 report, DOE staff we spoke with did not agree on the
           causes. Program staff told us General Counsel's legal reviews were
           excessively long, while General Counsel officials attributed their
           lengthy review to the poor quality of documents, which required
           extensive non-legal editing. DOE lacks program management data
           that would enable it to identify with specificity where in the
           agency's internal review process delays are occurring. In
           addition, LBNL staff disagreed with the report's contention that
           the Process Rule required more time for technical analysis.
           Rather, they said, the Process Rule's requirement for more complex
           analysis and for more systematic stakeholder involvement addressed
           those parts of the rulemaking process earlier than before but took
           about the same amount of time.

           Our panel members, based on their past involvement or familiarity
           with standards rulemaking, agreed that the internal review process
           was problematic. Specifically, the most frequently cited cause for
           delays in developing energy efficiency standards were delays in
           the General Counsel review process. One panel member stated that
           the General Counsel review process was "one of the lengthiest and
           most opaque elements of the standards process." In addition, about
           half of our panelists said the low priority historically given to
           the program, not only by DOE but by the Administration and
           Congress as well, was a great cause of delay in issuing the
           standards. Finally, panel members identified two additional major
           causes of delay that DOE did not, namely inadequate budget and
           insufficient technical staff.

           While some of these identified causes are beyond DOE's control,
           such as the statutory deadlines, DOE reported that it could take
           actions to clear the backlog by 2011. DOE plans to do the
           following to ensure that rulemakings are more timely:

           o Make the rulemaking process more efficient. DOE plans to stagger
           the start of rulemakings in order to make the best use of staff
           time and resources. In the past, DOE staff worked on one rule at a
           time. Under DOE's plan, staff will work on several rules
           simultaneously, which should enable the staff to make better use
           of their time when drafts are out for review. In addition, DOE
           plans to combine several products with related technical and
           policy characteristics--such as water heaters, pool heaters, and
           direct heating equipment--into a single rulemaking, which should
           expedite the rulemaking process.

           o Adhere to the deadline for closing public comments. DOE reported
           that it will only consider comments received before their
           deadlines in its current analysis. In the past, DOE continued to
           consider comments after the closing date stated in the Federal
           Register and responded to those comments with additional analysis,
           which delayed the issuance of the final rulemaking.

           o Simplify the analysis for each rulemaking. Senior management
           officials are expected to approve the staff's analytical approach
           and scope of effort earlier in the rulemaking process. In the
           past, rulemaking staff conducted their analysis for a product
           category without ensuring that senior management approved of their
           approach. As a result, according to the plan, management often
           called for a different approach when reviewing a draft analysis,
           which required significantly more time. In addition, DOE plans to
           conduct less exhaustive analysis for some rules, rather than
           conducting the same level of analysis for all rules. If all the
           stakeholders agree that a product category does not require DOE's
           usual complex analysis, which would be the case when the key
           issues are clearly understood, DOE will perform less extensive
           analysis. DOE expects this change to shorten rulemaking times.

           o Better ensure the quality of the proposed rulemaking and
           accountability of all staff and reviewers. DOE plans to take four
           actions toward this goal: (1) train staff in how to meet all
           regulatory procedural requirements and provide readily available
           comprehensive guidance in order to avoid procedural mistakes that
           lead to delays, (2) contract with a national laboratory to
           maintain a data management system for tracking rulemaking progress
           and use the resulting data to identify problems for quicker
           resolution, (3) match skill levels with tasks so that resources
           are used most efficiently, and (4) encourage stakeholders to
           negotiate a proposed standard in return for an expedited
           rulemaking process.

           o Improve the document review and clearance process. DOE plans to
           emphasize better document quality so that reviewers can focus
           their efforts on legal and policy issues rather than on basic
           editorial issues. In the past, formats, styles, and approaches of
           documents were not consistent, which slowed down the review
           process. DOE has issued a style guide and a template for documents
           to better ensure consistency. In addition, DOE plans to have
           different reviewers examine the proposed rulemaking concurrently,
           rather than sequentially, throughout the rulemaking process.

           o Adhere to a 36-month timetable for completing a rule. DOE will
           allocate approximately 16 months for analysis, 6 months for public
           review and comment, 8 months for its internal review, and 6 months
           for review by the Office of Management and Budget. In the past,
           while DOE had a 3-year limit for rulemaking, it virtually never
           issued rules within that period.

           Most panelists rated the components of DOE's catch-up plan highly
           and expect that, if followed, it will likely help DOE meet its
           schedule for completing rules. The panelists particularly favored
           the parts of DOE's catch-up plan to reform its internal review
           process, use an expedited process when stakeholders recommend
           standards on which they have reached consensus, and stagger
           rulemakings. They also emphasized the importance of having the
           Secretary of Energy and the administration provide more management
           attention and priority to the program. Finally, most agreed that
           certain aspects of DOE's current rulemaking process should not be
           changed. Specifically, DOE should continue to perform complete
           technical and economic analyses and explain its justification for
           the standards it selects, include the public and stakeholders
           throughout the rulemaking process, and ensure that the process and
           analyses are transparent.

           Despite these favorable views, some panelists expressed concern
           that DOE might not have addressed what they consider the most
           relevant causes of delay. For example, according to one panelist's
           observations, "the delays are an internal management problem at
           DOE, and the department's internal procedures are a black box. It
           is hard to know with any assurance what the real problem is and
           whether the issue is budget or staffing or bureaucratic
           procedures." According to another panelist's review of DOE's plan,
           the plan "focused too much on reducing analytical complexity and
           controlling stakeholder participation--neither of which were major
           contributors to delays--and too little on internal process
           improvements, without which delays will continue."

           Although many of DOE's actions appear reasonable, we agree that
           DOE may not have identified the root causes of its rulemaking
           delays. Consequently, DOE risks expending resources on the wrong
           factors or emphasizing minor or irrelevant causes. DOE has not
           developed the program management data it needs to identify
           bottlenecks in the rulemaking process. Even though DOE has work
           logs that compile limited data on some parts of the rulemaking
           process, such as the amount of time taken for internal reviews,
           the data are not detailed enough to identify the source of delays.
           Furthermore, DOE does not have data on the length of all stages of
           its rulemaking process. Because DOE managers lacked data to
           determine causes, they said they compiled information about
           possible causes during discussions with staff. Despite the
           problems with their data, managers told us that they believe that
           they have identified the root causes of delay.
			  
			  DOEï¿½s Plan Lacks Critical Elements of Effective Project Management

           According to our work on leading performance management practices
           and the work of a government regulatory process expert, management
           plans should contain specific strategies to resolve problems and
           help congressional decision makers understand how the agency plans
           to improve its performance.^10 Such plans also provide a basis for
           accountability. While DOE's plan includes elements intended to
           make the rulemaking process more efficient, it lacks two critical
           elements to help ensure success of the plan--assurance of
           accountability and management's allocation of adequate resources.
           Specifically:

           o Assurance of accountability. While DOE has laid out a schedule
           for clearing its rulemaking backlog for standards, its past poor
           performance calls into question whether it is likely to be
           accountable to the schedule in the catch-up plan. According to an
           Assistant General Counsel who manages and tracks the regulatory
           process for the Department of Transportation (DOT), an agency with
           very extensive and effective electronic regulatory management, a
           successful rulemaking process holds its management and staff
           accountable to interim and final deadlines. For example, DOT
           publishes its deadlines on its Web site, making the agency's
           actions to meet the deadlines transparent to all stakeholders.
           While DOT's deadlines are target dates only, this transparency
           puts pressure on each participant to carry out his or her
           responsibilities on time or to provide legitimate reasons for any
           delays. DOE publishes a schedule of deadlines for some
           standard-setting rulemaking, including the interim deadlines, in
           its Semiannual Regulatory Agenda.^11 However, when DOE misses
           these deadlines, it generally does not explain why, or how it
           plans to make up the lost time when it publishes revised
           deadlines. The catch-up plan does not ensure that the pattern of
           missing deadlines will be broken.

           o Adequate resources. As far back as 1993 we reported that
           insufficient resources were a primary cause of DOE's delays in
           updating energy efficiency standards. This may still be the case.
           While the DOE plan calls for a sixfold increase in workload, it
           does not increase program staffing and contractor budgets in the
           same proportion. Program managers told us they generally have had
           7 to 14 staff working on energy efficiency rules, with 7 on the
           job as of fiscal year 2006. They plan to add 2 full-time staff and
           1 from the Presidential Management Fellows (PMF) program, a
           nonpermanent position, for an increase to 10 staff in fiscal year
           2007.^12 Similarly, from fiscal years 2000 through 2006, DOE's
           budget for contractor staff has averaged about $10 million per
           year. For fiscal year 2007, DOE requested $12 million for
           contractors, a 20 percent resource increase. DOE expects these
           limited resource increases to cover a 600 percent increase in
           workload. In the absence of further increasing resources, DOE said
           in its January 2006 report it plans to meet the increased workload
           by improving productivity.
			  
			  Conclusions

           DOE's program for energy efficiency standards has been plagued by
           delays for decades. Although many steps in DOE's most recent
           January 2006 plan to address these delays appear to be reasonable,
           DOE does not definitively know whether the plan will address root
           causes and clear the backlog. Furthermore, DOE's plan lacks
           important elements of effective management practices that would
           help assure success. Consequently, it is unclear whether DOE can
           carry out the ambitious schedule it has set for itself to update
           energy efficiency standards. If DOE does not succeed in clearing
           its backlog, the nation and consumers will continue to forgo the
           benefits of more energy-efficient consumer products and industrial
           equipment. The loss of such benefits will make the nation depend
           even more on imported energy. The continuing commitment of DOE's
           top management to make standards rulemaking a top organizational
           priority is essential to DOE's success in completing all energy
           efficiency rules.
			  
^9Procedures for Consideration of New or Revised Energy Conservation
Standards for Consumer Products, Final Rule, 61 Fed. Reg. 36,973 (July 15,
1996).

^10GAO, Agencies' Annual Performance Plans Under the Results Act,
GAO/GGD/AIMD-10.1.18 (Washington, D.C.: February 1998).

^11The Unified Agenda (also known as the Semiannual Regulatory Agenda),
published twice a year in the Federal Register, summarizes the rules and
proposed rules that each federal agency expects to issue during the next 6
months.

^12The PMF program is a 2-year paid government fellowship sponsored by the
[26]Office of Personnel Management for recent graduate students who seek a
professional experience in the U.S. government.			  
			  
			  Recommendations for Executive Action

           To increase the likelihood that DOE's plan for updating minimum
           energy efficiency standards is successfully implemented, we
           recommend that the Secretary of Energy take the following actions:

           o Employ the elements of leading management practices, including
			  
                        o expediting the efforts DOE has begun to establish a
                        tracking system to gather data that may be used to
                        identify and address causes of delays to more
                        effectively manage the rulemaking process;

                        o ensuring that the interim goals and time frames are
                        transparent to all stakeholders, and that all
                        internal stakeholders, including reviewers and
                        program staff, are held accountable to the time
                        frames; and

                        o allocating adequate resources within DOE's
                        appropriation.
								
           Agency Comments and Our Evaluation

           We provided the Department of Energy with a draft of this report
           for review and comment. Although DOE did not provide views on our
           recommendations, it expressed concerns in two areas. First,
           regarding our discussion of the causes of delays in setting
           standards, DOE stated that it is incorrect to assign blame for
           delays to any one office, official, decision, or process--and
           specifically to the Office of the General Counsel. DOE stated that
           doing so reflects a simplistic and largely incorrect understanding
           of the program's complexity. DOE noted that the delays in setting
           standards have spanned administrations of both parties, several
           Secretaries of Energy, and various DOE offices and personnel;
           also, although DOE work logs may indicate that a specific office
           has a document for a certain period of time, during that time
           multiple individuals from different offices may have been working
           together on the document. We disagree with DOE's characterization
           of our analysis. In establishing the context for our findings, we
           pointed out that the energy efficiency standards-setting process
           was complex and that there were multiple reasons for delays. To
           provide more definitive information on the root causes of the
           extensive delays that have been experienced, we sought data from
           DOE and the opinions of cognizant DOE staff. However, because DOE
           management could not provide data to conclusively document the
           reasons for the substantial delays, or the data provided by DOE as
           contained in internal work logs were inadequate to determine
           causality, and because representatives of the various DOE offices
           could not agree on the root causes, we turned to a well-recognized
           process for identifying causes in complex situations--a Delphi
           panel. Panel members were carefully, objectively selected
           individuals who have been closely involved in DOE's rulemaking
           process for setting standards over an extensive period of time.
           They most frequently cited delays in the General Counsel review
           process as cause for delays in developing energy efficiency
           standards. We believe that our use of this method provided a
           clearer understanding of the causes of delays than DOE has been
           able to provide. As we noted earlier, in DOE's January 2006 report
           to Congress and in our interviews with representatives of the
           offices involved in the standard-setting process, those associated
           with the program generally acknowledged that they could have done
           more but pointed to others as the cause of the delays and
           therefore have not fully accepted responsibility for the program's
           failures. Second, DOE stated that our report did not capture many
           of the recent standards-setting activities undertaken since
           enactment of EPAct 2005. We agree that there has been a flurry of
           standards-related activity, as expressed by DOE in its letter
           commenting on our report, and we have noted this in our report.
           Although we recognize that DOE has taken a number of steps that
           should move the program forward, it has not yet published any
           additional final standards for the product and equipment
           categories included in the scope of our work and our report's
           findings have not changed. DOE's letter commenting on our report
           is presented in appendix V.

           As agreed with your offices, unless you publicly announce the
           contents of this report earlier, we plan no further distribution
           until 30 days from the report date. At that time, we will send
           copies of this report to the Secretary of Energy and other
           interested parties. We will also make copies available to others
           upon request. In addition, the report will be available at no
           charge on the GAO Web site at http://www.gao.gov.

           If you or members of your staff have questions about this report,
           please contact me at (202) 512-3841 or [email protected]. Contact
           points for our Offices of Congressional Relations and Public
           Affairs may be found on the last page of this report. Key
           contributors to this report are listed in appendix VI.

           Jim Wells
			  Director, Natural Resources and Environment
			  
			  Appendix I: Status of the Department of Energyï¿½s Model Building
			  Code Determinations

           States and their subdivisions, such as counties and cities, adopt
           building codes that establish minimum requirements for
           energy-efficient design and construction of commercial and
           residential buildings. The building codes regulate components that
           affect the amount of energy that a building will use, such as the
           building envelope, electrical power, and lighting. These codes
           vary from one state to another and sometimes within a state. They
           may be mandatory or voluntary codes, either requiring builder
           compliance or serving as guidelines. States and local
           jurisdictions may adopt model building codes developed by
           nonprofit organizations, such as the American Society of Heating,
           Refrigerating and Air-Conditioning Engineers' (ASHRAE) Standard
           90.1 and the International Code Council's (ICC) International
           Energy Conservation Code (IECC). Both ASHRAE and ICC publish codes
           for commercial and residential buildings.

           ASHRAE uses a consensus and public hearing process to develop its
           model building codes. It involves the design community, including
           architects and lighting and mechanical designers; the code
           enforcement community, including building code officials and state
           regulatory agencies; building owners and operators; manufacturers
           and utility companies; and representatives from the Department of
           Energy (DOE), energy organizations, and the academic community.
           ICC uses a different process to develop its model building codes.
           Under its process, anyone can propose a code, and the IECC code
           development committee, which includes mostly building code
           officials, votes on the proposals. According to staff at the
           Pacific Northwest National Laboratory (PNNL), which monitors state
           building codes for DOE, although ASHRAE and ICC use different
           processes to develop their model building codes, the two
           organizations incorporate each other's codes into their own when
           they revise them. As a result, ASHRAE and ICC codes that are
           revised at about the same time generally have similar energy
           efficiency provisions.

           The Energy Conservation and Production Act, as amended (the Act),
           directs DOE to evaluate revisions to these model building codes
           and publish its determinations of whether the revision would
           improve energy efficiency. For commercial buildings, defined by
           DOE to include buildings other than low-rise residential
           buildings, the Act directs DOE to evaluate ASHRAE's revisions to
           its Standard 90.1. Each time ASHRAE revises Standard 90.1, DOE has
           12 months to determine whether the revision will improve energy
           efficiency in commercial buildings and publish a notice of that
           determination in the Federal Register. For residential buildings,
           defined by DOE as low-rise residential buildings, the Act directs
           DOE to evaluate revisions the Council of American Building
           Officials (CABO) makes to its Model Energy Code (MEC), or any
           successor to that code. In 1995, the ICC succeeded CABO and, as
           such, the IECC replaced the MEC. Each time the ICC revises the
           IECC, DOE has 12 months to determine whether the revision will
           improve energy efficiency in residential buildings and publish a
           notice of that determination in the Federal Register. The Act does
           not specify what type of revision triggers the start of the
           12-month period for either commercial or residential
           determinations; but, according to DOE officials, the 12-month
           period is triggered by ASHRAE's and ICC's publication of revised
           codes.

           The Act provides that if the Secretary determines that a revision
           to ASHRAE's or ICC's model building code will improve energy
           efficiency--called a positive determination--states "shall" review
           their building codes. For commercial model building codes, each
           state has 2 years after DOE publishes a positive determination on
           a revised ASHRAE model building code to certify to DOE that it has
           reviewed and updated the provisions of its commercial building
           code in accordance with the revised code. For residential model
           building codes, each state also has 2 years after a positive
           determination for certification, but it must certify to DOE that
           it has reviewed the provisions of its residential building code
           and determined whether it is appropriate to update them to meet or
           exceed the revised code. Subsequent to enactment of these
           provisions, the Supreme Court ruled that the constitution does not
           allow Congress to require states to regulate a matter.^1 DOE
           program managers told us that DOE does not require states to
           review their codes following a positive determination.^2 Instead,
           the managers told us, DOE facilitates states' efforts to adopt
           revised codes. PNNL officials told us they assist DOE on all
           aspects of the building code determinations and provide training
           and technical assistance to state and local officials responsible
           for building codes.

           As of August 2006, ASHRAE and ICC have published a combined total
           of nine revisions to their model building codes for DOE to
           evaluate. ASHRAE revised Standard 90.1 three times, and CABO
           revised the MEC twice before it was incorporated into ICC in 1995.
           The ICC issued its first version of the IECC in 1998 and has since
           revised it three times. Deadlines for DOE's determinations have
           come due on all these revisions, except the 2006 IECC revision,
           which will be due in January 2007.

           We were asked to report on (1) whether DOE has met its statutory
           deadlines for determining if states should adopt revised
           commercial model building codes, (2) whether DOE has met its
           statutory deadlines for determining if states should consider
           adopting revisions to the residential model building code, and (3)
           whether and, if so, to what extent DOE tracks states' building
           codes. This appendix contains information about these objectives.

           To address the commercial and residential building code
           determinations DOE has completed, we reviewed the requirements and
           deadlines for building code determinations contained in statute
           and DOE determinations published in the Federal Register. We also
           interviewed and obtained documents from officials at DOE, PNNL,
           ASHRAE, ICC, and the American Council for an Energy Efficient
           Economy. Since DOE program officials use ASHRAE's and ICC's
           revision publication dates as the trigger date for DOE's deadlines
           for making determinations, we used these dates for our analysis.
           We did not attempt to determine why DOE might miss deadlines for
           determinations or why individual states adopt building codes.
			  
			  DOE Has Completed One of Three Commercial Building Code
			  Determinations

           DOE has completed only one of three commercial model building code
           determinations that have come due. DOE issued a positive
           determination for the first of three revisions to ASHRAE's
           Standard 90.1 about 17 months after the deadline. As of December
           2006, DOE had not completed determinations for either of the
           remaining revisions and has decided to combine them. Table 5
           provides details about the revisions' publication dates, the
           deadlines for the determinations, and the status of DOE's reviews.

^1New York v. United States, 505 U.S. 144 (1992) (holding that a provision
of the Low-Level Radioactive Waste Policy Act, requiring states to take
ownership of waste or regulate according to instructions of Congress, was
invalid). The court also stated that Congress may hold out incentives to
the states as a means of encouraging them to adopt suggested regulatory
schemes and offer states the choice of regulating an activity according to
federal standards or having state law preempted by federal regulation.

^2A DOE staff member noted that the Energy Conservation and Production
Act, as amended, does not contain a provision authorizing DOE to enforce
these provisions.

Table 5: Status of DOE's Review of ASHRAE Standard 90.1 Revisions

            Revision    DOE           DOE           DOE           State          
  ASHRAE    publication determination determination determination certification  
  revision  date        due date      issue date    status        due date       
  ASHRAE    January 28, January 28,   July 15, 2002 Completed     July 15, 2004  
  Standard  2000        2001                        over 17                      
  90.1-1999                                         months late.                 
  ASHRAE    November 7, November 7,   None          Incomplete    2 years after  
  Standard  2001        2002                        and over 4    DOE issues the 
  90.1-2001                                         years late.   determination. 
  ASHRAE    December    December, 21, None          Incomplete    2 years after  
  Standard  21, 2004    2005                        and over 1    DOE issues the 
  90.1-2004                                         year late.    determination. 

Sources: GAO analysis of ASHRAE, DOE, and Federal Register data.

DOE Has Completed Four of Five Residential Building Code Determinations

DOE has completed four of five residential building code determinations
that have come due. DOE issued determinations for all of these four
CABO/ICC revisions to the MEC/IECC and said the revisions would improve
energy efficiency. DOE completed its first determination on time and
completed the next three from 1 month to over 1 year late. As of December
2006, DOE had not yet completed the determination for the fifth IECC
revision. Table 6 provides details about the revisions' publication dates,
the due dates for the determinations, and the status of DOE's reviews.

Table 6: Status of DOE's Review of MEC and IECC Revisions

            Revision    DOE           DOE           DOE           State          
CABO/ICC publication determination determination determination certification  
revision date        due date      issue date    status        due date       
1993 MEC October 21, October 21,   July 15, 1994 Completed     July 15, 1996  
            1993        1994                        over 3 months                
                                                    early.                       
1995 MEC April 12,   April 12,     December 6,   Completed     December 6,    
            1995        1996          1996          over 7 months 1998           
                                                    late.                        
1998     May 13,     May13, 1999   January 10,   Completed     January 10,    
IECC     1998                      2001          over 1 year   2003           
                                                    late.                        
2000     December    December 30,  January 10,   Completed     January 10,    
IECC     30, 1999    2000          2001          less than 1   2003           
                                                    month late.                  
2003     January 27, January 27,   None          Incomplete, 2 2 years after  
IECC     2003        2004                        years and 11  DOE issues the 
                                                    months late.  determination. 
2006     January 15, January 15,   None          Not yet due.  2 years after  
IECC     2006        2007                                      DOE issues the 
                                                                  determination. 

Sources: GAO analysis of ASHRAE, DOE, and Federal Register data.

DOE Tracks States' Building Codes

DOE and PNNL staff track states' commercial and residential building codes
and publish information about them on DOE's Web site. PNNL staff told us
they e-mail state officials twice a year to confirm that DOE has the most
current information about the states' commercial and residential building
codes and to obtain any updated information. Additionally, they are in
frequent contact with the states and continually update their information
on states' building codes. DOE's Web site reports the type of code adopted
by each state and whether builder compliance with the code is voluntary or
mandatory, and provides limited information about the stringency of the
code, which PNNL staff determines by analyzing the state-provided
information. For example, DOE's Web site reports that Florida has adopted
mandatory codes for both commercial and residential buildings and that the
commercial building code is more stringent than the ASHRAE 90.1 2001, and
the residential building code is more stringent than the 2000 IECC. The
complete list of state commercial and residential building codes for
energy efficiency is available at
http://www.energycodes.gov/implement/state_codes/state_status_full.php
.

Although the information published on DOE's Web site compares the
stringency of state codes with ASHRAE's and ICC's model building codes,
PNNL staff told us the information should not be used to judge the
stringency of state codes relative to the ASHRAE's and ICC codes for which
DOE has made a determination. The staff explained that while more recent
state codes are generally more energy efficient than older state codes,
there are other factors that affect their stringency. For example, states
may adopt DOE's latest determination on ASHRAE's and ICC's codes as their
state building codes, but may amend them to be weaker or stronger. For
example, according to PNNL staff, Georgia adopted the latest DOE
residential determination but amended to it to be more similar to prior
DOE determinations. In other cases, the changes to a revised code may not
affect all states equally; therefore, while a state may not have adopted
the most recent revision, the changes in that revision may not have
applied to that state anyway. For example, PNNL staff told us that,
although Massachusetts did not adopt the 2000 IECC, the differences
between the 2000 IECC and the 1995 MEC, which Massachusetts did adopt, did
not apply to that state. Therefore, PNNL staff consider Massachusetts's
code to be as stringent as the 2000 IECC. Furthermore, PNNL staff told us
that, while some states have adopted model building codes that are more
recent than those for which DOE has issued a determination, these codes
should not be assumed to be more stringent than those for which DOE has
made a determination until PNNL makes a comparable technical analysis.
PNNL staff told us that they have the information and technical capability
to compare the stringency of all the state codes with those for which DOE
has made a determination. However, they said they typically analyze
building codes on a state-by-state basis only at DOE's request and that
they do not currently have a comprehensive analysis of how all states'
codes compare to DOE's latest determinations. As of September 2006, DOE
had not directed PNNL to complete a comprehensive analysis. DOE officials
told us that DOE focuses on facilitating states' efforts to adopt building
codes rather than penalizing them for not meeting DOE building code
determinations and, as such, they do not believe a comprehensive analysis
of which states' building codes are as stringent as those for which DOE
has made a positive determination justifies the resources it would
require.

Appendix II: Objectives, Scope, and Method

Our objectives were to examine (1) the extent to which DOE has met its
statutory obligations to issue rules on minimum energy efficiency
standards for consumer products and industrial equipment and (2) whether
DOE's plans are likely to clear the backlog of required rulemakings and
whether these plans could be improved.

To address these objectives, we reviewed the statutory requirements and
deadlines for developing energy efficiency standards for consumer products
and industrial equipment, program information available on DOE's Web site,
information provided by program staff, and DOE's January 2006 and August
2006 reports to Congress. For the purposes of our review, we did not
include the 17 additional product categories that the Energy Policy Act of
2005 added to DOE's responsibilities, including the one that came due in
August 2006. Although DOE is also required to issue rules regarding
standards for plumbing products, we excluded them from this report because
they primarily involve conserving water, rather than energy. Furthermore,
we did not evaluate the merit of the standards DOE has issued.

We conducted interviews with DOE program officials; officials of the
Office of General Counsel; officials at Lawrence Berkeley National
Laboratory, the National Energy Technology Laboratory, and the
[28]National Institute of Standards and Technology ; and a regulatory
process expert at the Department of Transportation. We also interviewed
officials at the American Council for an Energy Efficient Economy; the
Appliance Standards Awareness Project; the American Society of Heating,
Refrigerating and Air-Conditioning Engineers; the California Energy
Commission; Pacific Gas and Electric Company; and Natural Resources
Canada; and obtained documentation as needed. We analyzed data on DOE's
rulemaking process, estimates of national energy savings from energy
efficiency standards, and program resources.

In addition, we used a Web-based, modified Delphi method to obtain views
from a panel of 33 stakeholders on the causes and effects of delays in
setting standards and on proposed solutions to these delays. The Delphi
method is a systematic process for obtaining individuals' views on a
question or problem of interest and, if possible, obtaining consensus. Our
modified Delphi method had two phases. Phase 1 consisted of a series of
open-ended questions concerning DOE's delays. In Phase 2, panel members
rated the significance or priority of the causes of delays, effects of
delays, and solutions to delays that they had identified in phase 1.

We selected the panel members from a group of stakeholders who were both
widely recognized as knowledgeable about one or more key aspects of energy
efficiency standards, and who were involved or familiar with DOE's
rulemaking process. The group included officials from federal and state
agencies, manufacturers, trade associations, energy efficiency advocacy
groups, consumer interest groups, utilities, and utility associations,
some of whom were previously employed by DOE as participants in the
rulemaking process. We used a variety of methods to determine that the
panelists we selected had the expertise necessary to participate in the
panel. A list of the 33 panel members is included in appendix IV. To
report panel results, when two-thirds or more of the panel agreed, we use
the term "most." When one-half of more of the panel agreed, we use the
term "the majority."

We conducted our review from June 2005 through January 2007 in accordance
with generally accepted government auditing standards.

Appendix III: Rulemakings and Delays for Consumer Products and Industrial
Equipment with Deadlines That Have Passed

                                First rule                      Second rule
Consumer product or                                                                   
industrial equipment              Actual   Years                   Actual   Years     
category               Due date   date     delayed^a  Due date     date     delayed^a 
Consumer products                                                                     
Clothes washers        01/01/90   05/14/91 1.4        01/01/95     01/12/01 6.0       
Refrigerators,         07/01/89   11/17/89 0.4        07/01/94     04/28/97 2.8       
refrigerator-freezers,                                                                
and freezers                                                                          
Small furnaces         01/01/89   11/17/89 0.9        Included in  N/A      N/A       
                                                      "Furnaces"                      
                                                      deadline^b                      
Central air            01/01/94   01/22/01 7.1        01/01/01     Overdue  6.0       
conditioners and heat                                                                 
pumps                                                                                 
Clothes dryers         01/01/90   05/14/91 1.4        01/01/95     Overdue  12.0      
Dishwashers            01/01/90   05/14/91 1.4        01/01/95     Overdue  12.0      
Fluorescent lamp       01/01/92   09/19/00 8.7        01/01/97     Overdue  10.0      
ballasts                                                                              
Room air conditioners  01/01/92   09/24/97 5.7        01/01/97     Overdue  10.0      
Water heaters          01/01/92   01/17/01 9.0        01/01/00     Overdue  7.0       
Direct heating         01/01/92   Overdue  15.0       01/01/00     Overdue  7.0       
equipment                                                                             
Furnaces               01/01/94   Overdue  13.0       01/01/07     Not due  Not due   
General service        04/24/97   Overdue  9.7        04/24/02     Overdue  4.7       
fluorescent lamps and                                                                 
incandescent reflector                                                                
lamps                                                                                 
Additional general     11/15/98   Overdue  8.1        Included in  N/A      N/A       
service fluorescent                                   general                         
and general service                                   service                         
incandescent lamps                                    fluorescent                     
                                                      lamps and                       
                                                      incandescent                    
                                                      reflector                       
                                                      lamps                           
                                                      deadline^c                      
Kitchen ranges and     01/01/92   Overdue  15.0       01/01/97     Overdue  10.0      
ovens                                                                                 
Mobile home furnaces   01/01/92   Overdue  15.0       Included in  N/A      N/A       
                                                      Furnaces                        
                                                      deadline^b                      
Pool heaters           01/01/92   Overdue  15.0       01/01/00     Overdue  7.0       
Industrial equipment                                                                  
Electric motors-not    10/24/99   Overdue  7.2        10/24/04     Overdue  2.2       
requiring national                                                                    
certification                                                                         
Electric motors-       10/24/01   Overdue  5.2        10/24/06     Overdue  0.2       
requiring national                                                                    
certification                                                                         
Distribution           10/24/96^d Overdue  10.2       N/A          N/A      N/A       
transformers                                                                          
Small electric motors  10/24/96^d Overdue  10.2       N/A          N/A      N/A       

Source: GAO analysis of DOE data.

aCalculations for years delayed for overdue rules are as of December 31,
2006.

bSubsequent updates to standards for the category called Furnaces are
intended to cover updates for mobile home furnaces and small furnaces and
are included in the Furnaces deadlines.

cSubsequent updates to standards for the category called "General service
fluorescent lamps and incandescent reflector lamps" are intended to cover
updates for "Additional general service fluorescent lamps and incandescent
reflector lamps" and are included in the Furnaces deadlines.

dDeadline for setting initial standard following determination of
feasibility (18 months after publication of testing requirements.)

Appendix IV: Participants in Energy Efficiency Standards Delphi Panel

Karim Amrane
Air-Conditioning and Refrigeration Institute

Donald Brundage
Southern Company

David Calabrese
Association of Home Appliance Manufacturers

Thomas Catania
Whirlpool Corporation

Sue Coakley
Northeast Energy Efficiency Partnerships

James Crawford
Trane and American Standard

Andrew deLaski
Appliance Standards Awareness Project

Thomas Eckman
Northwest Power and Conservation Council

Andrew Fanara Environmental Protection Agency

Gary Fernstrom
Pacific Gas and Electric

David Goldstein
Natural Resources Defense Council

Mel Hall-Crawford
Consumer Federation of America

Carl Hiller
Applied Energy Technology

John Holt
National Rural Electric Cooperative Association

Earl Jones
GE Consumer & Industrial

Joseph Mattingly
Association of Appliance & Equipment Manufacturers

James McMahon
Lawrence Berkeley National Laboratory

Deborah Miller
ICF Consulting

Harry Misuriello
Alliance to Save Energy

Jim Mullen
Lennox International Inc.

Steven Nadel
American Council for an Energy-Efficient Economy

Kyle Pitsor
National Electrical Manufacturers Association

James Ranfone
American Gas Association

Priscilla Richards
New York State Energy Research and Development Authority

Michael Rivest
Navigant Consulting, Inc.

Steve Rosenstock
Edison Electric Institute

Michael Sherman
Massachusetts Division of Energy Resources

Doug Smith
Van Ness Feldman

Sriram Somasundaram
Pacific Northwest National Laboratory

David Steiner
Maytag Corporation

Charlie Stephens
Oregon Department of Energy

Tim Stout
National Grid USA

John Wilson
California Energy Commission

Appendix V: Comments from the Department of Energy

Appendix VI: GAO Contact and Staff Acknowledgments

GAO Contact

Jim Wells, (202) 512-3841, [email protected]

Staff Acknowledgments

In addition to the individual named above, Karla Springer, Assistant
Director; Tim Bober; Kevin Bray; Valerie Colaiaco; Janelle Knox; Megan
McNeely; Lynn Musser; Alison O'Neill; Don Pless; Bill Roach; Frank Rusco;
Ilga Semeiks; and Carol Herrnstadt Shulman made key contributions to this
report.

(360605)

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www.gao.gov/cgi-bin/getrpt?GAO-07-42. 

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Highlights of GAO-07-42, a report to congressional requesters

January 2007

ENERGY EFFICIENCY

Long-standing Problems with DOE's Program for Setting Efficiency Standards
Continue to Result in Forgone Energy Savings

The Department of Energy (DOE) sets energy efficiency standards through
the rulemaking process for certain consumer product categories, such as
kitchen ranges, and industrial equipment, such as distribution
transformers. Congress reported in 2005 that DOE was late in setting
standards and required DOE to report every 6 months on the status of the
backlog.

GAO examined (1) the extent to which DOE has met its obligations to issue
rules on minimum energy efficiency standards for consumer products and
industrial equipment and (2) whether DOE's plan for clearing the backlog
will be effective or can be improved. Among other things, GAO convened an
expert panel on energy efficiency standards to identify causes and effects
of delays and assess DOE's plans.

[37]What GAO Recommends

GAO recommends that DOE adopt elements of effective project management in
its standards rulemaking, such as using a more transparent process and
allocating adequate resources within its appropriation. In commenting on
this report, DOE did not respond to the recommendations but said it was
incorrect to single out any official or office for the delays and that the
report did not reflect many of its standards-setting activities since
EPAct 2005. GAO reported several causes of delays; activities since EPAct
2005 were outside this report's scope.

DOE has missed all 34 congressional deadlines for setting energy
efficiency standards for the 20 product categories with statutory
deadlines that have passed. DOE's delays ranged from less than a year to
15 years. Rulemakings have been completed for only (1) refrigerators,
refrigerator-freezers, and freezers; (2) small furnaces; and (3) clothes
washers. DOE has yet to finish 17 categories of such consumer products as
kitchen ranges and ovens, dishwashers, and water heaters, and such
industrial equipment as distribution transformers. Lawrence Berkeley
National Laboratory estimates that delays in setting standards for the
four consumer product categories that consume the most
energy--refrigerators and freezers, central air conditioners and heat
pumps, water heaters, and clothes washers--will cost at least $28 billion
in forgone energy savings by 2030. DOE's January 2006 report to Congress
attributes delays to several causes, including an overly ambitious
statutory rulemaking schedule and a lengthy internal review process. In
interviews, however, DOE officials could not agree on the causes of
delays. GAO's panel of widely recognized, knowledgeable stakeholders said,
among other things, that the General Counsel review process was too
lengthy and that DOE did not allot sufficient resources or make the
standards a priority. However, GAO could not more conclusively determine
the root causes of delay because DOE lacks the program management data
needed to identify bottlenecks in the rulemaking process.

In January 2006, DOE presented to Congress its plan to bring the standards
up to date by 2011. It is unclear whether this plan will effectively clear
DOE's backlog because DOE does not have the necessary program management
data to be certain the plan addresses the root causes. The plan also lacks
critical elements of an effective project management plan, such as a way
to ensure management accountability for meeting the deadlines. Finally,
the plan calls for a sixfold increase in workload with only a small
increase in resources. DOE plans to manage the workload through improved
productivity.

Timeliness of DOE Rulemakings That Have Come Due

References

Visible links
  25. http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-93-102
  26. http://www.opm.gov/
  28. http://www.nist.gov/
  29. file:///home/webmaster/infomgt/d0742.htm#mailto:[email protected]
  30. http://www.gao.gov/
  31. http://www.gao.gov/
  32. http://www.gao.gov/fraudnet/fraudnet.htm
  33. file:///home/webmaster/infomgt/d0742.htm#mailto:[email protected]
  34. file:///home/webmaster/infomgt/d0742.htm#mailto:[email protected]
  35. file:///home/webmaster/infomgt/d0742.htm#mailto:[email protected]
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