Energy Conservation Program for Appliance Standards: Procedures for Use in New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Commercial/Industrial Equipment, 8626-8711 [2020-00023]

Agencies

• DEPARTMENT OF ENERGY

[Federal Register Volume 85, Number 31 (Friday, February 14, 2020)]
[Rules and Regulations]
[Pages 8626-8711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00023]



[[Page 8625]]

Vol. 85

Friday,

No. 31

February 14, 2020

Part II





 Department of Energy





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10 CFR Parts 430 and 431





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 Energy Conservation Program for Appliance Standards: Procedures for 
Use in New or Revised Energy Conservation Standards and Test Procedures 
for Consumer Products and Commercial/Industrial Equipment; Final Rule

Federal Register / Vol. 85, No. 31 / Friday, February 14, 2020 / 
Rules and Regulations

[[Page 8626]]


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DEPARTMENT OF ENERGY

10 CFR Parts 430 and 431

[EERE-2017-BT-STD-0062]
RIN 1904-AD38


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

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

ACTION: Final rule.

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SUMMARY: The U.S. Department of Energy is updating and modernizing 
aspects of its current rulemaking method for considering new or revised 
energy conservation standards for consumer products and certain types 
of industrial equipment. The rule clarifies the process DOE will follow 
with respect to its application to these items, makes the specified 
rulemaking procedures binding on DOE, and revises certain provisions to 
bring consistency with existing statutory requirements. Other changes 
include expanding early opportunities for public input on the Appliance 
Program's priority setting and rulemaking activities, setting a 
significant energy savings threshold for updating standards, 
establishing a window between test procedure final rules and standards 
proposals, and delineating procedures for rulemaking under the separate 
direct final rule and negotiated rulemaking authorities.

DATES: The effective date of this rule is April 14, 2020.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at https://www.regulations.gov. All documents in the docket are 
listed in the https://www.regulations.gov index. However, not all 
documents listed in the index may be publicly available, such as 
information that is exempt from public disclosure.
    The docket web page can be found at:
    https://www.regulations.gov/docket?D=EERE-2017-BT-STD-0062. The 
docket web page contains instructions on how to access all documents, 
including public comments, in the docket.

FOR FURTHER INFORMATION CONTACT: Ms. Francine Pinto, U.S. Department of 
Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue 
SW, Washington, DC 20585. Telephone: (202) 586-7432. Email: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Summary of the Final Rule
II. Introduction
    A. Authority
    B. Background on the Process Rule
    C. General Comments on DOE's Process Rule Proposal
III. Discussion of Specific Revisions to the Process Rule
    A. The Process Rule Will Be Binding on the Department of Energy
    B. The Process Rule Will Apply to Both Consumer Products and 
Commercial Equipment
    C. The Application of the Process Rule to ASHRAE Equipment
    D. Priority Setting
    E. Coverage Determinations
    F. Early Stakeholder Input To Determine the Need for Rulemaking
    a. Early Assessment Review
    b. Other Avenues for Early Stakeholder Input in the Rulemaking 
Process
    G. Decision-Making Process for Issuing a Determination Not To 
Issue a New or Amended Energy Conservation Standard or an Amended 
Test Procedure
    H. Significant Savings of Energy Threshold
    1. Comments on the Proposed Threshold Approach
    A. Comments Supporting the Proposed Threshold Approach
    B. Comments Opposing the Proposed Threshold Approach
    C. Comments Regarding DOE's Notice of Data Availability
    2. Response to Comments on the Proposed Thresholds
    A. Response to Comments Supporting the Proposed Threshold 
Approach
    B. Response to Commenters Opposing DOE's Proposed Use of 
Thresholds
    C. Response to Comments on the Notice of Data Availability
    I. Finalization of Test Procedures Prior to Issuance of a 
Standards NOPR
    J. Adoption of Industry Standards
    K. Direct Final Rules
    1. DOE's Authority Under the DFR Provision
    2. Interested Persons Fairly Representative of Relevant Points 
of View
    3. Adverse Comments
    L. Negotiated Rulemaking
    M. Other Revisions and Issues
    1. DOE's Analytical Methodologies, Generally
    a. Peer Review
    b. Walk-Down
    c. Other
    2. Cumulative Regulatory Burden
    3. Should DOE conduct retrospective reviews of the energy 
savings and costs of energy conservation standards?
    4. Certification, Compliance, and Enforcement (CCE)-Related 
Issues
    5. Other Issues
IV. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under Executive Orders 13771 and 13777
    C. Economic Analysis
    D. Review Under the Regulatory Flexibility Act
    E. Review Under the Paperwork Reduction Act of 1995
    F. Review Under the National Environmental Policy Act of 1969
    G. Review Under Executive Order 13132
    H. Review Under Executive Order 12988
    I. Review Under the Unfunded Mandates Reform Act of 1995
    J. Review Under the Treasury and General Government 
Appropriations Act, 1999
    K. Review Under Executive Order 12630
    L. Review Under the Treasury and General Government 
Appropriations Act, 2001
    M. Review Under Executive Order 13211
    N. Review Consistent With OMB's Information Quality Bulletin for 
Peer Review
    O. Congressional Notification
V. Approval of the Office of the Secretary

I. Summary of the Final Rule

    The United States Department of Energy (``DOE'' or, in context, 
``the Department'') generally uses the procedures set forth in its 
``Procedures, Interpretations, and Policies for Consideration of New or 
Revised Energy Conservation Standards for Consumer Products'' 
(``Process Rule''), see 10 CFR part 430, subpart C, appendix A, when 
prescribing energy conservation standards for both consumer products 
and commercial equipment pursuant to the Energy Policy and Conservation 
Act of 1975 (Pub. L. 94-163, codified at 42 U.S.C. 6291, et seq.), as 
amended (``EPCA''). In this document, DOE is updating and modernizing 
its Process Rule in the following major topics: (1) Requiring that the 
procedures outlined in the Process Rule are binding on the agency; (2) 
formalizing DOE's past practice of applying the Process Rule to both 
consumer products and commercial equipment; (3) clarifying the Process 
Rule's application with regard to equipment covered by ASHRAE Standard 
90.1; (4) expanding the Process Rule to include test procedure 
rulemakings, as well as energy conservation standards rulemakings; (5) 
committing to both an ``early look'' process and other robust methods 
for early stakeholder input; (6) defining a significant energy savings 
threshold that must be met before DOE will update an energy 
conservation standard; (7) clarifying DOE's commitment to publish a 
test procedure six months before a related standards NOPR; (8) 
articulating DOE's authority under the Negotiated Rulemaking Act and 
EPCA's direct final rule (``DFR'') provision, while clarifying that 
negotiated rulemakings and DFRs are two separate processes with their 
own

[[Page 8627]]

sets of requirements; and (9) addressing other miscellaneous issues.
    At this time DOE is not finalizing its prior proposal concerning 
the process by which DOE selects among alternative energy efficiency 
standards under EPCA (also known as the ``walk-down'' approach). In a 
separate but related action, DOE is publishing in this issue of the 
Federal Register, a proposed rule to amend this process, such that 
those standards achieve the ``maximum improvement in energy efficiency, 
or in the case of showerheads, faucets, water closets, or urinals, 
water efficiency, which the Secretary determines is technologically 
feasible and economically justified.'' (42 U.S.C. 6295(o)(2)(A)). In 
response to the concerns and requests for further explanation related 
to the economically rational consumer mentioned in DOE's prior 
proposal, DOE is: (1) Clarifying how impacts are considered in 
determining economic justification through the seven factors specified 
in EPCA; and (2) explaining that the requirement to determine economic 
justification based on comparisons across the full range of trial 
standard levels (TSLs) is consistent with EPCA. This proposal will 
respond to public comments requesting further clarity on DOE's initial 
proposal that in making the determination of economic justification, 
DOE would choose one TSL over other feasible TSLs after considering all 
relevant factors, including, but not limited to, energy savings, 
efficacy, product features, and life-cycle costs.
    DOE continues to contemplate additional topics regarding its 
process for undertaking appliance standards rulemakings that may lead 
to additional rulemaking proceedings to update the Process Rule. In 
particular, DOE continues to think about potential changes to its 
analytical methodologies and models for assessing the costs and 
benefits of appliance standards rulemakings.

II. Introduction

A. Authority

    In overview, the Department of Energy's Process Rule was developed 
to guide implementation of the Appliance Standards Program, which is 
conducted pursuant to Title III, Part B \1\ of the Energy Policy and 
Conservation Act (``EPCA'' or ``the Act''), Public Law 94-163 (42 
U.S.C. 6291-6309, as codified), for consumer products, and Part C \2\ 
for certain industrial equipment (42 U.S.C. 6311-6317, as codified), 
added by Public Law 95-619, Title IV, Sec.  441(a).\3\
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    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part C was redesignated Part A-1.
    \3\ All references to EPCA in this document refer to the statute 
as amended through America's Water Infrastructure Act of 2018, 
Public Law 115-270 (Oct. 23, 2018).
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    Under EPCA, DOE's energy conservation program for covered products 
consists essentially of four parts: (1) Testing; (2) labeling; (3) the 
establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. The Federal Trade Commission 
(``FTC'') is primarily responsible for labeling, and DOE implements the 
remainder of the program. Subject to certain criteria and conditions, 
DOE is required to develop test procedures to measure the energy 
efficiency, energy use, or estimated annual operating cost of each 
covered product and covered equipment. (42 U.S.C. 6293 and 42 U.S.C. 
6314) Manufacturers of covered products and covered equipment must use 
the prescribed DOE test procedure as the basis for certifying to DOE 
that their products and equipment comply with the applicable energy 
conservation standards adopted under EPCA and when making any other 
representations to the public regarding the energy use or efficiency of 
those products. (42 U.S.C. 6293(c), 42 U.S.C. 6295(s), 42 U.S.C. 
6314(a), and 42 U.S.C. 6316(a)) Similarly, DOE must use these test 
procedures to determine whether the products comply with standards 
adopted pursuant to EPCA. Id.
    In addition, pursuant to EPCA, any new or amended energy 
conservation standard for covered products (and at least certain types 
of equipment) must be designed to achieve the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6316(a)) Furthermore, 
the new or amended standard must result in a significant conservation 
of energy (42 U.S.C. 6295(o)(3)(B), 42 U.S.C. 6313(a)(6), and 42 U.S.C. 
6316(a)), and comply with any other applicable statutory provisions.

B. Background on the Process Rule

    DOE conducted a formal effort between 1995 and 1996 to improve the 
process it follows to develop energy conservation standards for covered 
appliance products. This effort involved many different stakeholders, 
including manufacturers, energy-efficiency advocates, trade 
associations, state agencies, utilities, and other interested parties. 
The result was the publication of a final rule on July 15, 1996, 
titled, ``Procedures, Interpretations and Policies for Consideration of 
New or Revised Energy Conservation Standards for Consumer Products.'' 
(61 FR 36974) This document was codified at 10 CFR part 430, subpart C, 
appendix A,\4\ and became known colloquially as the ``Process Rule.''
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    \4\ This final rule that amends the Process Rule is a 
legislative rule and therefore subject to the notice and comment 
requirements in the APA. (5 U.S.C. 553) Accordingly, DOE has 
conducted a ``notice and comment'' proceeding as evidenced by two 
public meetings and webinars and a robust period for written 
comments.
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    The Process Rule was designed to provide guidance to stakeholders 
as to how DOE would implement its rulemaking responsibilities under 
EPCA for the Appliance Program. As part of this enhanced process, 
supplementing the traditional notice-and-comment rulemaking process 
under the Administrative Procedure Act \5\ (APA), DOE has invited and 
promoted extensive stakeholder involvement in its energy conservation 
standards and test procedure rulemakings. An important legacy of the 
Process Rule has been both to educate and learn from the many 
stakeholders who participate in DOE's appliance rulemaking efforts. 
Some of the successes that have resulted from the Process Rule include: 
(1) Greater involvement from a wider variety of stakeholders in DOE's 
appliance rulemaking process; (2) improved technical analyses in 
support of the appliance rules due to enhanced input from stakeholders 
at an early stage of the rulemaking process; (3) improved solutions to 
issues and problems because of increased stakeholder involvement; and 
(4) more open dialogue and improved relationships between stakeholders 
and also between stakeholders and DOE.
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    \5\ 5 U.S.C. 551 et seq.
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    While there have been many positive results from the Process Rule, 
DOE came to understand through the intervening years that the Appliance 
Program might benefit from additional improvements to the Process Rule, 
as reflected in this document. These amendments address: (1) Processes 
that may no longer track the current legal requirements of EPCA; (2) 
processes that do not take into account the maturation of DOE's 
appliance program to the point that modernization is necessary; (3) 
that in many instances DOE has not rigorously followed the Process 
Rule; (4) the need for regulatory reform to reduce the costs and 
burdens of rulemaking; and (5) the need to clarify that the Process 
Rule applies to commercial/industrial equipment. In evaluating and 
seeking to

[[Page 8628]]

expand the positive impacts of the Process Rule, as well as remedying 
the above-described negative developments, this final rule addresses 
the changed landscape of the rulemaking process under EPCA, and 
endeavors to modernize the Process Rule.\6\
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    \6\ In November 2010, DOE also issued a statement intended to 
expedite its rulemaking process. The statement is currently 
available at https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf. As reflected 
in this final rule, DOE has undertaken a thorough review of its 
Process Rule to determine the procedures it will follow in 
considering new or amended energy conservation standard and test 
procedures. As a result, this final rule supersedes those portions 
of the November 2010 statement pertaining to the elimination of 
these early rulemaking steps. DOE will revise its statement so as to 
conform to the amendments contained in this final rule.
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    On December 18, 2017, DOE issued an RFI (December 2017 RFI) to 
address potential improvements to the Process Rule so as to achieve 
meaningful burden reduction while continuing to achieve the 
Department's statutory obligations in the development of appliance 
energy conservation standards and test procedures. (82 FR 59992) 
Originally, the comment period for this RFI was scheduled to end on 
February 16, 2018. However, several stakeholders requested a 30-day 
extension to file comments.\7\ Consequently, DOE extended the comment 
period until March 2, 2018. (83 FR 5374 (Feb. 7, 2018)) Subsequently, 
DOE posted a notice on its website on March 2, 2018, which stated that 
the comment period was further extended until March 5, 2018, due to a 
brief closure of the Federal government in the Washington, DC area.
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    \7\ See letter dated January 29, 2018 from Air-Conditioning, 
Heating, and Refrigeration Institute (``AHRI''), the Association of 
Home Appliance Manufacturers (``AHAM''), and the National Electrical 
Manufacturers Association (``NEMA''), to John Cymbalsky, U.S. 
Department of Energy, Office of Energy Efficiency and Renewable 
Energy, Buildings Technologies Program. [EERE-2017_BT-STD-0096, No. 
17, p. 1]
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    To explore the issues in the December 2017 RFI, DOE convened a 
public meeting on January 9, 2018, which was attended by a wide range 
of stakeholders. The Department also simultaneously hosted a webinar, 
which was attended by approximately 150 additional persons.
    After carefully reviewing the numerous public comments submitted on 
the December 2017 RFI and the issues raised at the January 2018 public 
meeting, DOE published a notice of proposed rulemaking (``NOPR'') 
regarding the Process Rule in the Federal Register on February 13, 
2019. (84 FR 3910) This document responded to the RFI comments and 
proposed amendments to the Process Rule in a variety of areas, as 
discussed subsequently. Comments on the Process Rule NOPR were due by 
April 15, 2019.
    To facilitate discussion of the issues in the February 2019 NOPR, 
DOE held a public meeting on March 21, 2019 in Washington, DC. The 
meeting was widely attended, both in person and via webinar. At the 
public meeting, numerous topics were discussed, including, but not 
limited to: (1) Making the Process Rule binding on DOE; (2) making the 
Process Rule applicable to both consumer products and commercial/
industrial equipment; (3) explaining application of the Process Rule to 
ASHRAE equipment; (4) priority-setting; (5) the process for coverage 
determinations; (6) early assessment review for energy conservation 
standard and test procedure rulemakings; (7) consideration of a 
significant savings of energy threshold; (8) finalizing test procedures 
180 days before issuance of a standards NOPR; (9) adoption of consensus 
standards as DOE test procedures; (10) direct final rules; (11) 
negotiated rulemakings; (12) analytical methodologies and peer review; 
(13) potential changes to the ``walk-down approach'' for assessing 
standard levels; (14) cumulative regulatory burden; (15) retrospective 
reviews of energy savings and costs for past standards; (16) 
certification, compliance, and enforcement issues, and (17) any other 
issues or topics raised by stakeholders. However, due to the large 
number of matters to be addressed and the significant public interest, 
DOE determined it necessary to carry over the public meeting to a 
second day and to extend the public comment period, actions which were 
announced in a Federal Register notice published on April 2, 2019. (84 
FR 12527) Accordingly, a continuation of the NOPR public meeting was 
held on April 11, 2019, and the comment period on the NOPR was extended 
to May 6, 2019.
    Overall, DOE experienced a high level of engagement from 
stakeholders and the interested public regarding potential changes to 
the Process Rule. Such comments provided important input to DOE's final 
rule to modernize and refine the Process Rule. The issues raised in the 
NOPR public comments are addressed subsequently in this document. 
Through the amendments adopted in this final rule, DOE expects that its 
revised Process Rule will increase transparency, foster public 
engagement, and achieve meaningful burden reduction, while at the same 
time continuing to meet the Department's statutory obligations under 
EPCA.
    Commenters who provided written comments in response to DOE's NOPR 
consisted of the following parties:

                           Table of Commenters
------------------------------------------------------------------------
                                                           Acronym,
          Commenter(s)                Affiliation         identifier
------------------------------------------------------------------------
A.O. Smith......................  Manufacturer......  A.O. Smith.
Acuity Brands...................  Manufacturer......  Acuity.
Air-Conditioning, Heating, and    Manufacturer Trade  AHRI.
 Refrigeration Institute.          Group.
Alliance to Save Energy.........  Advocacy Group....  ASE.
American Council for an Energy    Advocacy Group....  ACEEE.
 Efficient Economy.
American Efficient..............  Energy Efficiency   AE.
                                   Consultancy.
American Gas Association........  Utility Trade       AGA.
                                   Group.
American Lighting Association...  Manufacturer Trade  ALA.
                                   Group.
American Public Gas Association.  Utility Trade       APGA.
                                   Group.
American Public Power             Utility Trade       APPA.
 Association.                      Group.
American Society of Heating,      Technical Society.  ASHRAE.
 Refrigeration, and Air
 Conditioning Engineers.
Appliance Standards Awareness     Advocacy Group....  ASAP, et al.
 Project.
(Joint Comments filed with
 ACEEE, Consumer Federation of
 America, Consumer Reports,
 National Consumer Law Center,
 NRDC, and NEEA).

[[Page 8629]]

 
Appliance Standards Awareness     Advocacy Groups...  ASAP, et al. 2.
 Project 2.
(Joint Comments filed with
 ACEEE, the California Energy
 Commission, Consumer Federation
 of America, Consumer Reports,
 National Consumer Law Center
 (on behalf of its low-income
 clients), and NEEA).
Attorneys General of California,  State, Local        AG Joint
 Colorado, Connecticut,            Governments.        Commenters.
 Illinois, Maine, Maryland,
 Michigan, Minnesota, New York,
 North Carolina, Oregon,
 Vermont, Washington, the
 Commonwealth of Massachusetts,
 the District of Columbia, and
 the City of New York.
Bradford White Corporation......  Manufacturer......  BWC.
Burnham Holdings, Inc. (dba U.S.  Manufacturer......  BHI.
 Boiler Company).
California Energy Commission....  State.............  CEC.
California Investor-Owned         Utilities.........  Cal-IOUs.
 Utilities.
Connecticut Department of Energy  State.............  CT-DEEP.
 & Environmental Protection.
Consumer Technology Association.  Manufacturer Trade  CTA.
                                   Group.
Earthjustice....................  Advocacy Group....  Earthjustice.
GE Appliances...................  Manufacturer......  GEA.
George Mason University--Antonin  Academic            GMU Law.
 Scalia Law School,                Institution.
 Administrative Law Clinic.
George Washington University--    Academic            GWU.
 Regulatory Studies Center.        Institution.
Hearth Products and Barbecue      Manufacturer Trade  HPBA.
 Association.                      Group.
Ingersoll Rand..................  Manufacturer......  Ingersoll Rand.
Joint Industry Commenters.......  Manufacturer Trade  Joint Commenters.
                                   Groups.
Lennox International............  Manufacturer......  Lennox.
Lutron..........................  Manufacturer......  Lutron.
Manufactured Housing Association  Manufacturer Trade  MHARR.
 for Regulatory Reform.            Group.
Manufactured Housing Institute..  Manufacturer Trade  MHI.
                                   Group.
New Buildings Institute.........  Advocacy Group....  NBI.
New York University School of     Academic            NYU Law.
 Law--Institute for Policy         Institution.
 Integrity.
North American Association of     Manufacturer Trade  NAFEM.
 Food Equipment Manufacturers.     Group.
National Electrical               Manufacturer Trade  NEMA.
 Manufacturers Association.        Group.
National Propane Gas Association  Utility Trade       NPGA.
                                   Group.
Natural Resources Defense         Advocacy Group....  NRDC.
 Council.
Northwest Power and Conservation  Interstate Compact  NPCC.
 Council.
Northwest Energy Efficiency       Advocacy Group....  NEEA.
 Alliance.
Rheem...........................  Manufacturer......  Rheem.
Robert Bosch, LLC...............  Manufacturer......  Bosch.
Samsung.........................  Manufacturer......  Samsung.
Sierra Club.....................  Advocacy Group....  Sierra Club.
Signify.........................  Manufacturer......  Signify.
Southern Co.....................  Utility...........  Southern.
Spire, Inc......................  Utility...........  Spire.
Steinberg, Linda................  None..............  Steinberg.
United Cool Air.................  Manufacturer......  UCA.
Zero Zone.......................  Manufacturer......  Zero Zone.
------------------------------------------------------------------------

C. General Comments on DOE's Process Rule Proposal

    As explained in further detail in section II.B of this final rule, 
DOE's Process Rule was originally designed to provide guidance to 
stakeholders as to how DOE would implement its rulemaking 
responsibilities under EPCA for the Appliance Standards Program, 
including extensive opportunities for stakeholder involvement in energy 
conservation standards and test procedure proceedings. While many 
benefits arose from the 1996 Process Rule, DOE determined that further 
improvements are possible since circumstances have changed since it was 
developed 25 years ago, as reflected in the agency's proposal. DOE's 
intent in proposing an updated Process Rule was to increase 
transparency and public engagement and achieve meaningful burden 
reduction, while at the same time continuing to meet DOE's statutory 
obligations under EPCA. (84 FR 3910, 3911-3912 (Feb. 13, 2019)) Not 
surprisingly, DOE's proposal was met with a wide variety of viewpoints. 
The paragraphs that follow summarize these stakeholder comments,\8\ 
followed by DOE's response.
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    \8\ When submitting their own individual comments, a number of 
organizations also explicitly signaled their endorsement of the 
comments prepared by others. Specifically, the ALA stated that it 
supports the detailed comments provided by the Joint Commenters. 
(ALA, No. 104 at p. 1) GEA expressed support for the comments of the 
Joint Commenters and incorporated them by reference into its own 
comments. (GEA, No. 125 at p. 1) NEMA stated that it supports the 
detailed Joint Comments of AHAM, AHRI, NEMA, and others. (NEMA, No. 
107 at p. 2) Rheem supported the detailed comments provided by AHRI 
and the Joint Commenters. (Rheem, No. 101 at p. 1) NRDC stated that 
it signs onto and supports the comments submitted by the Appliance 
Standards Awareness Project and Earthjustice. (NRDC, No. 131 at p. 
3)
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    A number of commenters expressed general support for DOE's Process 
Rule proposal. (Zero Zone, No. 102 at p. 1; Rheem, No. 101 at pp. 1-2; 
APGA, No. 106 at p. 2; BWC, No. 103 at p. 1) More specifically, AHRI 
praised DOE's responsiveness to stakeholder comments and adherence to 
the statutory principles of EPCA that it believes the agency had 
previously set aside. (AHRI, April 11, 2019 Public

[[Page 8630]]

Meeting Transcript at pp. 234) APGA stated that DOE's comprehensive and 
transparent proposal would improve the way the Department fulfills its 
responsibilities under EPCA. (APGA, No. 106 at p. 2) BWC suggested that 
DOE's proposed Process Rule changes have the potential to make the 
rulemaking process more objective and improve its execution. (BWC, No. 
103 at p. 1)
    According to GEA, the proposed Process Rule should help alleviate 
many unnecessary regulatory burdens on both the regulated community and 
the DOE. GEA suggested that the following portions of the proposed 
Process Rule are of particular importance: (1) That all processes in 
the rule are binding on DOE; (2) the proposed early assessment process; 
and (3) the requirement to demonstrate significant energy savings 
before a revised standard is set. (GEA, No. 125 at p. 2)
    In their overall assessment, the Administrative Law Clinic at 
George Mason University's Antonin Scalia Law School (GM Law) found the 
proposed changes to DOE's Process Rule to be consistent with good 
regulatory principles and all governing law. GM Law supported the 
proposal as sound regulatory policy by promoting stakeholder input, 
predictability, and transparency. Furthermore, GM Law found DOE's 
proposal to comport with the D.C. Circuit's decision in NRDC v. 
Herrington, 768 F.2d 1355, 1372-73 (D.C. Cir. 1985), and it 
characterized other commenters' suggestions to the contrary as 
unfounded. (GM Law, No. 105 at pp. 1-2)
    The Joint Commenters expressed support for DOE's proposal as 
representing the Department's renewed commitment to sound procedural 
practices that will increase regulatory efficiency, provide all 
interested stakeholders with a common understanding regarding DOE 
regulatory process, and ensure appropriate and reasonable investment of 
resources into DOE's important energy efficiency initiatives. Overall, 
the Joint Commenters offered support for the goal of EPCA's appliance 
efficiency program (i.e., maximizing improvements in energy savings 
that are technologically feasible and economically justified). However, 
to succeed, these commenters stated that DOE should act on a consistent 
and predictable procedural basis and have an analytical structure that 
accounts for practical and technological realities, while ensuring 
regulatory transparency, consistency, and rationality. The Joint 
Commenters stated their belief that the proposed rule will provide 
greater certainty, transparency, and predictability in DOE's 
promulgation of test procedures and amended rules, a point echoed by 
Rheem. (Joint Commenters, No. 112 at p. 1; Rheem, No. 101 at pp. 1-2)
    NEMA stated its understanding that the Process Rule NOPR did not 
add any steps to the rulemaking process, and added that concerns raised 
by certain other stakeholders about meeting deadlines can be addressed 
by appropriate project management solutions. (NEMA, No. 107 at p. 2)
    Finally, while supporting the Process Rule proposal generally, 
Lennox expressed concern that the proposed Process Rule revisions may 
have weakened certain protections against regulations that are not 
economically justified. The commenter stated that in the prior version 
of the Process Rule, presumptions had existed against regulations such 
as those that: (1) Result in a negative return on investment for the 
industry or would significantly reduce the value of the industry; (2) 
would be the direct cause of plant closures, significant losses in 
domestic manufacturer employment, or significant losses of capital 
investment by domestic manufacturers; or (3) would have a significant 
adverse impact on the environment or energy security. Lennox argued 
that these presumptions against regulation have been eliminated in the 
revised Process Rule, which now only identifies these as 
``considerations.'' (Compare ``Considerations in assessing economic 
justification'' in current Process Rule section 5(e)(3)(i)(A)-(C) 
versus proposed Process Rule section 7(e)(2)(i)(A)-(C)). Lennox 
recommended that these presumptions against regulation should be re-
instituted and protections strengthened for avoiding these obviously 
deleterious impacts, because doing so provides valuable transparency 
and regulatory predictability regarding DOE decision-making. (Lennox, 
No. 133 at p. 8)
    Other commenters opposed DOE's proposed Process Rule changes for a 
variety of reasons. For example, while ASE acknowledged that there are 
some improvements associated with the Process Rule NOPR, it stated that 
most of the proposed changes would likely complicate the program, add 
redundancy, remove flexibility, and make it more difficult to comply 
with statutory deadlines. More specifically, ASE expressed concerns 
that many of the proposed provisions of the Process Rule NOPR could 
have the effect of making it more difficult for DOE to follow the law, 
because they would likely slow the program down, remove flexibility to 
respond to stakeholders and make course corrections during rulemakings, 
and remove the prospect of negotiations leading to direct final rules. 
Instead, ASE stressed the need for a program that is transparent, 
predictable, robust, steady, and meets its statutory deadlines. (ASE, 
No. 108 at pp. 1-2)
    The AGs Joint Comment opposed DOE's Process Rule proposal, arguing 
that it would unlawfully impede DOE's energy conservation standards 
rulemakings and frustrate the purpose of EPCA. Furthermore, the AGs 
Joint Comment stated that DOE's proposed revisions to the Process Rule 
are unnecessary, counterproductive, and likely to slow or halt energy 
efficiency rulemakings, while exposing DOE to frequent litigation. The 
AGs then argued that in its proposal, DOE has misinterpreted factors 
which EPCA requires DOE to consider and has favored elements of 
industry which oppose energy efficiency standards. These commenters 
also stated that DOE's allocation of resources to an unnecessary 
Process Rule NOPR, which introduces obstacles and new procedural 
hurdles to meeting EPCA's core statutory requirements in a timely 
manner, is contrary to the statute because it puts the agency further 
behind on its statutorily-mandated deadlines for energy conservation 
standards. The AGs Joint Comment also argued that the Process Rule NOPR 
proposes to add unnecessary procedural steps for the establishment of 
standards and adding administrative barriers which make it more 
difficult to complete the rulemaking process. These commenters found 
this to be particularly troubling when DOE is already behind on so many 
rulemakings. Consequently, the AGs recommended that DOE withdraw its 
proposal. (AGs Joint Comment, No. 111 at pp. 1-2, 4-5)
    Overall, NRDC's comments opposed DOE's proposed revisions to the 
Process Rule as jeopardizing issuance of cost-effective energy 
conservation standards. NRDC stated that although all stakeholders 
agree that the standards process should be transparent, predictable, 
and flexible, DOE's proposal does not advance those goals. (NRDC, No. 
131 at p. 2) Instead, NRDC stated that the proposed changes to the 
Process Rule, when considered together, would make it substantially 
more difficult for DOE to set standards. The commenter argued that DOE 
has not shown why additional steps are necessary, how they would 
improve the program, or how the extended process could be completed in 
the timeframe required by law, particularly in light of the number of 
statutorily-mandated

[[Page 8631]]

rulemaking deadlines that the Department has already missed. (NRDC, No. 
131 at pp. 3-4) Along the same lines, the Cal-IOUs posed two key 
questions for DOE to address: (1) How will adopting these [proposed] 
Process Rule provisions help DOE meet EPCA requirements, specifically 
with respect to rulemaking timelines? (2) How do the provisions in the 
NOPR regarding industry test procedures help DOE independently assess 
the representativeness and enforceability of DOE test procedures? (Cal-
IOUs, No. 124 at p. 2)
    NRDC argued that it is premature and inappropriate for DOE to move 
forward with the Process Rule because its proposal was unclear on a 
number of key issues (e.g., ordering and timeframe for various 
rulemaking steps, how DOE would comply with statutory deadlines, how 
test procedures would be established, details around the significant 
energy savings threshold, and changes to the ``walk-down'' 
methodology), thereby depriving NRDC and others an adequate opportunity 
to comment. (NRDC, No. 131 at p. 3) Similarly, PG&E argued that it is 
premature for DOE to move to a final rule, because the Process Rule 
NOPR poses too many unknowns and has sparked too much confusion, a 
situation which could lead to litigation. Instead, PG&E urged DOE to 
provide further clarification and an additional opportunity for 
stakeholders comment on the clarified proposal in order to allow for 
meaningful input. (PG&E, April 11, 2019 Public Meeting Transcript at p. 
227)
    Southern California Edison encouraged DOE to use its discretion to 
see what to improve, but it also stated that it does not want DOE to 
lose its flexibility. (Southern California Edison, April 11, 2019 
Public Meeting Transcript at pp. 222-223) ACEEE stated that it was 
surprised that the revised Process Rule does not incorporate regulatory 
review requirements from Congress, and it also suggested that any 
general rulemaking timeline envisioned by DOE should include test 
procedures as well as standards. (ACEEE, March 21, 2019 Public Meeting 
Transcript at p. 143, 206)
    In response, DOE appreciates the many comments expressing a deep 
interest in its Process Rule proposal, through which the Department 
strives to simultaneously increase transparency and predictability, 
foster public participation, reduce unnecessary burdens, and conserve 
scarce public and private resources, all while ensuring compliance with 
applicable statutory requirements. DOE acknowledges the many comments 
suggesting that the Department's Process Rule proposal makes 
substantial progress in advancing these objectives, gains which the 
agency seeks to fully realize through promulgation of this final rule. 
DOE proposed these changes to address identified shortfalls in its 
implementation of the Process Rule in recent years. Consequently, as 
NEMA pointed out, DOE did not add a host of cumbersome new steps to its 
rulemaking process, but it is instead adopting a narrowly tailored 
update to the Process Rule. In its only new procedural step, DOE has 
added an early assessment provision to gauge whether there are 
sufficiently changed circumstances to justify moving forward with an 
energy conservation standards or test procedure rulemaking. The early 
assessment process would add, at most, one brief additional comment 
period, but in cases where technologies and costs have not 
significantly changed since the last rulemaking, there is the potential 
to obviate the need for additional rulemaking, thereby allowing 
resources to be rapidly channeled to other rulemakings where 
economically justified and significant energy savings are possible. 
Otherwise, this final rule largely reflects a faithful implementation 
of provisions already in place, albeit with certain modifications 
intended to facilitate operation of the Appliance Standards Program and 
to address changes in the statute since the original Process Rule was 
promulgated.
    For the reasons that follow, DOE finds the concerns raised by 
opponents of the Process Rule NOPR to be theoretical, and unpersuasive. 
DOE needs a clear and effective process to facilitate execution of its 
statutory mandate for energy conservation standards and test procedures 
under EPCA. Many commenters have expressed the need for updates to 
DOE's Process Rule, a position the agency has acknowledged and with 
which it agrees. For example, in recent years, DOE frequently failed to 
meet the Process Rule's guidance that ``[f]inal, modified test 
procedures will be issued prior to the NOPR on proposed standards.'' 
(See section 7(c) of 10 CFR part 430, subpart C, appendix A) There is 
general agreement that the preferred regulatory approach in this 
context is to have a final test procedure in place to inform the 
accompanying standard-setting rulemaking, but DOE has frequently 
deviated from the Process Rule and conducted test procedure and 
standards rulemakings concurrently. Likewise, while the Process Rule 
applied only to rulemakings for consumer products, there has been 
little opposition to DOE's past application of the Process Rule to 
covered commercial and industrial equipment. Moreover, DOE has gained 
significant rulemaking experience under the Appliance Standards Program 
over the past 25 years since the Process Rule was first adopted. 
Accordingly, amendments to the Process Rule present a natural and 
logical evolution of DOE's rulemaking process.
    DOE likewise does not agree with comments that the Department's 
Process Rule proposal would complicate or add redundancy to the 
regulatory process. With the exception of the early assessment and 
associated comment period, the amended Process Rule reflected in this 
final rule contains the same basic elements found in the 1996 Process 
Rule. Take again, the example of ensuring that a test procedure change 
is finalized prior to issuance of an energy conservation standards 
NOPR, which was also a provision in the previous Process Rule. While 
some commenters might consider that a complication, others could 
rightly call that an important procedural safeguard. As explained in 
detail elsewhere in this document, the procedural changes to the 
Process Rule adopted in this final rule are intended to address 
identified problems, not to complicate or unnecessarily delay DOE's 
rulemaking process.
    Although several commenters asserted that the proposed changes to 
DOE's Process Rule would negatively impact the agency's ability to 
complete rulemakings and meet statutory deadlines, DOE disagrees. DOE 
is cognizant of its legal obligations under EPCA, and the Department 
anticipates being able to fulfill the requirements of both the statute 
and the Process Rule. The amended Process Rule has the potential to 
streamline DOE's rulemaking through the use of the early assessment, 
which can better enable the Department to satisfy its statutory time 
constraints. By meeting its obligations within the allotted timeframes, 
DOE would not need commenters' recommended flexibility to waive the 
procedural safeguards of the Process Rule. Thus, commenters' arguments 
that DOE's Process Rule proposal would cause the Department to miss 
statutory deadlines and improperly delay rulemakings are speculative, 
at best.
    In response to the AGs Joint Comment that DOE has misinterpreted 
the statute, the Department disagrees and has addressed specific claims 
to that effect at appropriate places elsewhere in this document. 
Regarding the AGs Joint Comment's assertion that the Process

[[Page 8632]]

Rule proposal has incorporated provisions favoring industry, DOE once 
again disagrees. In many ways, DOE has merely updated the Process Rule 
to better reflect its current practice, and in other areas, it has made 
modifications to faithfully meet the requirements of the statute, to 
increase public participation, and to institute procedural safeguards 
to the benefit of all stakeholders.
    Regarding assertions of that commenters' confusion necessitates 
further proceedings, DOE notes that most commenters on the Process Rule 
NOPR did not make such claims in response to the agency's proposal. 
Instead, such confusion was limited to a small number of commenters who 
generally opposed DOE's proposal. DOE published a Process Rule RFI, 
convened an interactive public meeting on the RFI, published a Process 
Rule NOPR, convened two interactive public meetings on the NOPR, 
published a Notice of Data Availability (``NODA'') on the topic of its 
significant energy savings calculations, and accepted public comments 
through all of those mechanisms. In total, the Department has hosted 
three public meetings and solicited public comments for 197 days (i.e., 
longer than 6 months) on potential changes to the Process Rule. DOE 
believes it articulated clearly the changes to the Process Rule that it 
was proposing and finds that there has been thorough discussion and 
opportunity for comment on virtually all the subjects mentioned by NRDC 
and PG&E.\9\ In fact, the lengthy and detailed comments on all of the 
topics raised in the proposed Process Rule submitted by the very 
parties claiming confusion belie that assertion. DOE recognizes that it 
may never be possible to explain its proposals to the complete 
satisfaction of every stakeholder, but given its numerous publications 
and opportunities for public engagement on the Process Rule, as well as 
the detailed nature of the comments received, the agency has concluded 
that stakeholders were afforded an adequate opportunity to comment on 
the topics contained in this final rule.
---------------------------------------------------------------------------

    \9\ The one exception involved the proposed changes to the 
``walk-down'' methodology. DOE agrees that that topic will require 
further study before making a decision to move forward.
---------------------------------------------------------------------------

    Regarding comments that DOE's amended Process Rule would invite 
increased litigation, the Department believes the opposite to be true. 
By having a transparent process with increased opportunity for public 
input that operates on a predictable schedule (e.g., completion of test 
procedure prior to proposing standards), DOE anticipates a decreased 
incidence of litigation. And rather than frustrating the purpose of 
EPCA, DOE believes that this Process Rule final rule advances the 
purpose of EPCA by having better and more efficient procedures in place 
that allow the Department to better target its resources to those 
rulemakings which are technologically feasible, economically justified, 
and save a significant amount of energy.
    Regarding the particular point made by Lennox about the Process 
Rule's considerations in assessing economic justification, DOE notes 
that in reorganizing the regulatory text, it did not intend to make 
substantive changes in this area regarding the analysis of economic 
justification criteria, nor did it discuss such action in the NOPR. DOE 
maintained the substance of those criteria, but it deleted a clear 
statement of the consequences that would flow from situations 
implicating those criteria (i.e., deleting language stating ``that 
standard level will be presumed not to be economically justified unless 
the Department determines that specifically identified expected 
benefits of the standard would outweigh this and any other expected 
adverse effects''). Although DOE's streamlined version of the 
regulatory text was not proposing to change how those criteria are 
applied, the Department understands that the absence of the deleted 
language could be misinterpreted as indicating a substantive change in 
approach. Accordingly, DOE is reinserting the regulatory text language 
raised by Lennox in its comments.
    In response to ACEEE's suggestion that DOE incorporate regulatory 
review requirements from Congress in its proposal, the agency believes 
that a detailed and comprehensive recitation of applicable statutory 
requirements in the Process Rule is unnecessary. Those statutory 
requirements are a given, so instead, DOE endeavored to focus on the 
procedures it will follow to meet those requirements. Regarding ACEEE's 
suggestion that any general rulemaking timeline envisioned by DOE 
should include test procedures as well as standards, DOE believes that 
the regulatory text of the Process Rule adequately addresses the topic 
of test procedures, and DOE has already made clear the key timing 
provision that any test procedure rulemaking is to be completed prior 
to publication of a standards NOPR. Consequently, DOE has determined 
that no further clarifications are required on these topics.
    In sum, DOE has determined that the changes to the Process Rule 
adopted in this final rule will provide for a program that is 
transparent, predictable, robust, steady, and which meets its statutory 
deadlines, just as ASE suggested.

III. Discussion of Specific Revisions to the Process Rule

A. The Process Rule Will Be Binding on the Department of Energy

    In the December 2017 RFI, DOE asked stakeholders whether DOE should 
make compliance with the Process Rule mandatory. (82 FR 59992, 59997) 
At the January 9, 2018, Process Rule public meeting, most stakeholders 
agreed that the Process Rule should be binding on the Department, that 
is, the Department should be held accountable for complying with its 
own procedures so that the public will have confidence in the 
transparency and fairness of DOE's regulatory process. Others 
recommended that any amended Process Rule retain flexibility for DOE so 
that the agency is not restricted in its ability to respond to the 
circumstances of each rulemaking and to avoid increased litigation 
risk.
    Similarly, in response to the NOPR, most commenters support DOE's 
inclusion of a provision providing for the mandatory nature of the 
Process Rule to the Department to hold DOE accountable to its own 
procedures, thereby increasing public confidence in the fairness of the 
regulatory process. Those commenters are as follows: AHAM March 21, 
2019 Public Meeting Transcript, No. 87, at pp. 68-69; AHRI, March 21, 
2019 Public Meeting Transcript, No. 87 at p.10; AGA, March 21, 2019 
Public Meeting Transcript, No. 87, at pp. 18-19; AGA, No. 114, at pp. 
7-8; ALA, No. 104 at p. 2; APGA, March 21, 2019 Public Meeting 
Transcript, No. 87, at p. 14; APGA, No. 106 at p. 3; ASHRAE, No. 109 at 
p. 3; BWC, No. 103 at p. 1; CTA, No. 136 at p. 2; Danfoss, March 21, 
2019 Public Meeting Transcript, No. 87, at p. 40; GEA, No. 125 at p. 2; 
GM Law, No. 105 at pp. 2, 4; GWU, No. 132 at p. 3; Joint Commenters, 
No. 112 at p. 2; Lennox, No. 133, at p. 2; Lutron, No. 137 at p. 2; 
NPCC, No. 94, at p. 4; NPGA, No. 110 at pp. 1-2; Rheem, No. 101 at p. 
1; Southern Company, March 21, 2019 Public Meeting Transcript, No. 87, 
at p. 70; Southern Company, April 11, 2019 Public Meeting Transcript, 
No. 92, at p.233; Spire, March 21, 2019 Public Meeting Transcript, No. 
87, at p. 37; Spire, No. 139, at p. 2; BHI, No. 135, at p. 1; and 
Westinghouse, March 21, 2019 Public Meeting Transcript, No. 87, at pp. 
72-75; CTA, No. 136 at p. 2) Specifically, APGA added that if DOE 
merely makes changes to the ``voluntary'' guidelines, there is no

[[Page 8633]]

change to the status quo in which there are no consequences for not 
following the Process Rule. (APGA, No. 106 at p. 3)
    Conversely, also in response to the NOPR, other stakeholders oppose 
requiring that the Process Rule be mandatory to the Department for 
three reasons. First, commenters state that such a provision would 
deprive the Department of needed flexibility during the rulemaking 
process; second, commenters state that such a provision could lead to 
additional litigation, thereby causing delay in the rulemaking process, 
and third, commenters state that there may be cases where adherence to 
the Process Rule creates a conflict with the statute.
    For those commenters concerned that the Department would lose 
flexibility during the rulemaking process, some recommended a ``limited 
or good cause exception'' that the Department could use in certain 
circumstances. For instance, A.O. Smith stated the a ``limited 
exception'' clause would grant the Department limited authority to 
deviate from its Process Rule under certain criteria such as: Consensus 
agreements; negotiated rulemakings; test procedure rulemakings 
addressing clarifications necessary to provide clarity to the market, 
reduce uncertainty, and provide a level playing field; and rulemakings 
completed to fix errors. A.O. Smith recommended that such criteria be 
proposed in a supplemental notice of proposed rulemaking. Furthermore, 
A.O. Smith explained that this limited exception would not be meant to 
circumvent the integrity of the rulemaking process but recognize 
circumstances where process deviations are necessary and expediting the 
process is reasonable. (A.O. Smith, No. 127, at p. 2)
    Another commenter, ASE opposed making the Process Rule binding, 
because it would take away DOE's flexibility to respond to unforeseen 
developments during the rulemaking process and leave the Department 
vulnerable to lawsuits filed by stakeholders opposed to standards based 
upon real or perceived departures from procedure. ASE seemed to favor 
adoption of a ``good cause'' exception to the Process Rule to provide 
the agency with some flexibility. ASE also suggested that DOE consider 
documenting any deviations from the Process Rule for public comment 
throughout the rulemaking process, particularly but not limited to when 
a statutory deadline was set to be missed. (ASE, No. 108 at pp. 2-3)
    Furthermore, ASAP, et al. states that making the Process Rule 
binding would take away important flexibility that benefits all 
stakeholders and increases the potential for litigation. ASAP stated 
that at a minimum, it should include a ``good cause'' exception as was 
included in DOE's draft NOPR provided to OIRA. However, any ``good 
cause exception'' should not be restricted but should provide DOE with 
the necessary flexibility to address specific situations that arise. 
(ASAP, et al., No. 126 at pp. 1-3) Other commenters, including ACEEE 
(ACEEE, No. 123, at p. 3) and CT-DEEP (CT-DEEP, No. 93, at p. 2) agreed 
that a ``good cause exception'' should be included in the Process Rule 
if it is a mandatory requirement. Earthjustice suggested that if the 
Process Rule is going to be binding, there should be a procedure to 
deviate from the Process Rule. (Earthjustice, March 21, 2019 Public 
Meeting Transcript, No. 87, at p. 76) Westinghouse took the position 
that the Process Rule should be mandatory but also that flexibility 
should be provided. (Westinghouse, March 21, 2019 Public Meeting 
Transcript, No. 87, at pp. 72-75)
    Several additional stakeholders voiced their concern that mandatory 
application of the Process Rule to the Department will generate 
additional litigation, which could create uncertainty in the market. 
(A.O. Smith, No. 127, at p. 2; ACEEE, No. 123, at p. 3; ASE, No. 108 at 
pp. 2;; ASAP, et al., No. 126 at pp. 1-2; AGs Joint Comment, No. 111 at 
pp. 5-6; CEC, April 11, 2019 Public Meeting Transcript, No. 92, at pp. 
232-233; CEC, No. 121, at pp. 2-3; Cal-IOUs, No. 124, at pp. 3-4; 
Earthjustice, No. 134, at p. 2) Earthjustice believes that a mandatory 
Process Rule gives new leverage for parties seeking judicial review. 
(Earthjustice, No. 134, at p. 2) Further, Energy Solutions added that 
DOE would lose its discretion with mandatory binding requirements and 
wouldn't be able to address ``one-off'' issues. (Energy Solutions, 
March 21, 2019 Public Meeting Transcript, No. 87, at p. 72)
    More specifically, the AGs Joint Comment argued that such 
litigation would not only delay completion of the rulemaking process, 
but simultaneously. It would frustrate DOE's stated objectives of 
increasing predictability and consistency, and likely deprive consumers 
and businesses the full and timely benefits of energy and cost savings 
associated with standards. (AGs Joint Comment, No. 111 at pp. 5-6)
    Another commenter, the CEC states that if DOE continues to move 
forward with a binding process rule, it should include provisions that 
allow for substantial compliance with the Process Rule. (CEC, April 11, 
2019 Public Meeting Transcript, No. 92, at pp. 232-233) In CEC's 
opinion, making the Process Rule binding will prevent DOE from 
responding quickly and effectively when it is in the interest of all 
stakeholders to do so and may make DOE more vulnerable to litigation 
challenges. (CEC, No. 121, at p. 2) Pointing to other instances where 
DOE needed to make modifications to its processes, the CEC noted that 
these changes brought about more effective means for gathering 
stakeholder input--e.g. shifting from using an ANOPR to other vehicles 
such as RFIs, Framework Documents, and NODAs. (CEC, No. 121, at p. 2) 
The CEC emphasized that DOE needs this flexibility to fit the 
appropriate process to the appliance standard or test procedure at 
issue. (CEC, No. 121, at p. 2) By making the Process Rule binding, the 
CEC asserted that DOE would be inviting stakeholders who are opposed to 
regulations to sue DOE for procedural violations that would not have 
changed the outcome of DOE's determination related to a given 
efficiency standard--which will in turn lead to delays in implementing 
the standard, lost energy savings to consumers, and regulatory 
uncertainty for manufacturers, distributors, and retailers. (CEC, No. 
121, at pp. 2-3) To the contrary, the Joint Commenters disagree that 
binding DOE to the Process Rule will result in excessive litigation 
disrupting the goals of certainty and expediency. Most litigation stems 
from substantive defects caused by shortcutting the process and a 
binding process will reduce procedural litigation and result in better 
rules. (Joint Commenters, No. 112 at p. 2) AHRI also disagrees that a 
mandatory Process Rule would result in more litigation. (AHRI, March 
21, 2019 Public Meeting Transcript, No. 87 at p. 10)
    Next, ASAP, et al., the AG's Joint Comment, and Cal-IOUs raised the 
issue as to how to reconcile a mandatory Process Rule and DOE's 
adherence to the statutory requirements in EPCA. ASAP, et al. states 
that DOE compliance with the statute must take precedence over the 
Department's self-imposed restrictions in the Process Rule. (ASAP, et 
al., No. 126 at pp. 1-3) ASAP does not believe DOE is clear on how it 
would resolve a conflict between the Process Rule and the statute. 
(ASAP, March 21, 2019 Public Meeting Transcript, No. 87, at pp. 53, 62-
63) Moreover, the AGs Joint Comment stated strong opposition to making 
the Process Rule binding, as opposed to guidance, because that would 
preclude DOE from having the procedural flexibility to take a different 
course of

[[Page 8634]]

action when necessary to meet statutory requirements, and a rigid 
application of the Process Rule would jeopardize DOE's ability to meet 
its legal obligations under EPCA. The AGs Joint Comment opposed what it 
categorized as unnecessary and time-consuming procedural steps (e.g., 
coverage determination or test procedure restart requirements) that 
could further jeopardize DOE meeting its EPCA mandates. The AGs Joint 
Comment argued that because DOE's proposal failed to address how the 
Process Rule could be made mandatory while meeting its statutory 
duties, it has failed to provide sufficient detail to allow for 
meaningful and informed comment, as required under the APA. (AGs Joint 
Comment, No. 111 at p. 6) The AGs Joint Comment stated that if DOE does 
proceed to make the Process Rule binding, it should include a good 
cause waiver, particularly for use in cases where the Process Rule 
requirements would conflict with the text or purposes of EPCA. (AGs 
Joint Comment, No. 111 at p. 7)
    The Cal-IOUs argued that the 1996 Process Rule had intended to be 
used as guidance and urged that DOE be mindful of this approach with 
respect to any new provisions or the ``modernization'' of the Process 
Rule, particularly with respect to any conflict between it and EPCA. 
(Cal-IOUs, No. 124, at p. 3) Another commenter, PG&E stated that making 
the Process Rule mandatory will impose added burdens on DOE and 
stakeholders which could prevent DOE from meeting its statutory 
obligations. PG&E urged DOE to use its resources to first catch-up on 
rulemakings that are past due and finalize pre-publication or consensus 
term sheets before introducing new procedures that will limit agency 
discretion and create more regulatory burden. (PG&E, March 21, 2019 
Public Meeting Transcript, No. 87, at pp. 21-22; PG&E, April 11, 2019 
Public Meeting Transcript, No. 92, at p. 228)
    DOE has carefully considered all the comments on this matter and 
has determined that requiring mandatory compliance on the part of DOE 
with its own Process Rule would clearly promote a rulemaking 
environment that is both predictable and consistent (i.e., one where 
all stakeholders know what to expect during the rulemaking process). In 
the past, DOE has been criticized by stakeholders for not following its 
Process Rule, and instead exercising its discretion on a case-by-case 
basis on procedural matters during the rulemaking process. Today, DOE 
is affirming language in the amended Process Rule to make clear that 
its provisions are binding on the agency. DOE believes that this 
approach will promote confidence, consistency, clarity, and 
transparency in the rulemaking process that some feel has been lacking 
in the past. Moreover, it has been the rare instance, if at all, where 
all parties in a rulemaking proceeding agreed that deviating from the 
Process Rule was advisable. Rather, it is DOE's experience that 
deviations from normal process has resulted in one or more parties 
raising issues that have slowed the regulatory process. Even on 
rulemaking matters DOE thought to be relatively simple and straight-
forward, the same parties suggesting in comment that the Process Rule 
should provide for flexibility have sought more procedural steps and 
raised issues of DOE proceeding too quickly and without appropriate 
stakeholder interaction. Making the Process Rule binding on DOE should 
result in no party arguing that the process used by DOE was unfair or 
lacking. Furthermore, DOE believes that the argument that a binding 
Process Rule will generate increased litigation is highly speculative 
and, accordingly, is not an appropriate basis to reject the mandatory 
application of the amended Process Rule. Clearly, it is in the best 
interests of all stakeholders to work together during the rulemaking 
process so that DOE efforts to establish economically justified and 
technologically feasible energy conservation standards and promote 
meaningful burden reduction in the context of standards setting, 
compliance, and testing requirements can be achieved. And lastly, the 
amended Process Rule has been drafted to closely follow and implement 
EPCA. As such, following the Process Rule will mean that DOE will 
conduct its rulemaking activities to comply with all EPCA requirements.
    After years of debate as to the nature of DOE's compliance with the 
current Process Rule, DOE believes it appropriate to increase public 
confidence in the fairness and predictability of the rulemaking 
process. Accordingly, DOE is adopting language in this final rule 
making the application of the Process Rule mandatory to the Department.

B. The Process Rule Will Apply to Both Consumer Products and Commercial 
Equipment

    By its terms (and specifically by its title), the 1996 Process Rule 
applies only to consumer products. However, in practice, DOE has 
routinely followed the procedures set forth in the Process Rule when 
establishing standards for commercial equipment. In its December 2017 
RFI, DOE requested comment as to whether the agency should amend the 
Process Rule to clarify that it is equally applicable to the 
consideration of standards for commercial equipment. (82 FR 59992, 
59996) At the January 9, 2018, Process Rule public meeting, DOE also 
asked stakeholders how the agency should treat equipment covered by the 
American National Standards Institute (``ANSI'')/American Society of 
Heating, Refrigerating, and Air-Conditioning Engineers (``ASHRAE'')/
Illuminating Engineering Society of North America (``IESNA'') Standard 
90.1 (``ASHRAE Standard 90.1''), if DOE were to amend the Process Rule 
to include commercial equipment. DOE pointed out that EPCA provides a 
separate set of procedural requirements and timelines for ASHRAE 
equipment that are different than those in the Process Rule. (DOE, 
January 9, 2018 Public Meeting Transcript at pp. 183-184)
    Commenters agree with the principle that the Process Rule 
procedures should explicitly apply to both new and amended energy 
conservation standards for both covered consumer products and 
industrial and commercial covered equipment, but with modified 
provisions specific to ASHRAE equipment. (Acuity, No. 95, at p. 2; 
AHRI, March 21, 2019 Public Meeting Transcript, No. 87, at p. 87; ASE, 
No. 108 at p. 3; ACEEE, No. 123, at p. 1; AGA, No. 114, at pp. 8-9; 
ASAP, March 21, 2019 Public Meeting Transcript, No. 87, at p. 88; ASAP, 
et al., No. 126 at pp 1, 3; BWC, No. 103 at p. 1-2; CEC, No. 121, at p. 
3; Edison Electric Institute, March 21, 2019 Public Meeting Transcript, 
No. 87, at p. 87; GM Law, No. 105 at p. 3; GWU, No. 132 at p. 3; Joint 
Commenters, No. 112 at p. 2; Lennox, No. 133, at p. 2; NAFEM, No. 122, 
at p. 2; NPCC, No. 94 at p. 4; NPGA, No. 110 at p.1; Cal-IOUs, No. 124, 
at p. 4; Rheem, No. 101 at p. 1; Spire, No. 139, at p. 24; BHI, No. 
135, at p. 2) Only one commenter, the Cal-IOUs, supported expanding the 
scope of the Process Rule to include covered commercial and industrial 
equipment as long as the Process Rule is not binding. (Cal-IOUs, No. 
124, at p. 4) This commenter did not explain the rationale for its 
position.
    DOE agrees with commenters that a modernized Process Rule should 
apply to both consumer products and industrial and commercial 
equipment, and that the Process Rule must contain language that 
clarifies this coverage. Historically, DOE has applied the Process Rule 
to both consumer and industrial and commercial rulemakings. The final 
rule makes clear that this practice will continue. To promote a

[[Page 8635]]

consistent process that reduces the regulatory burden of the rulemaking 
process, DOE will apply the same procedures in the Process Rule to both 
consumer products and industrial and commercial equipment rulemakings, 
except as discussed in section III.C for ASHRAE equipment. The Joint 
Commenters clearly articulated the rationale for such a decision as 
follows, there are no cogent reasons for treating the rulemaking 
process for commercial equipment differently than for consumer 
products. The benefits of a well-defined, consistent process apply 
regardless of product or equipment type. ASHRAE equipment holds unique 
status in EPCA and therefore must be considered separately. (Joint 
Commenters, No. 112 at p. 2)
    Accordingly, DOE has concluded that formally applying the Process 
Rule to commercial and industrial equipment will enhance the 
consideration of such equipment by ensuring that there is proper time 
and information before the agency prior to promulgation of new or 
amended regulations.

C. The Application of the Process Rule to ASHRAE Equipment

    In the February 13, 2019 Process Rule NOPR, DOE explained its 
proposed approach as to how the agency should treat ASHRAE equipment 
subject to ASHRAE Standard 90.1, Energy Standard for Buildings Except 
Low-Rise Residential Buildings, in the event DOE were to amend the 
Process Rule so as to formally apply to commercial equipment. (84 FR 
3910, 3914-3916) As statutory background, EPCA provides, in relevant 
part, that ASHRAE equipment is subject to unique statutory requirements 
and its own set of timelines. More specifically, pursuant to EPCA's 
statutory scheme for covered ASHRAE equipment, DOE is required to 
consider amending the existing Federal energy conservation standards 
for certain enumerated types of commercial and industrial equipment 
(generally, commercial water heaters, commercial packaged boilers, 
commercial air-conditioning and heating equipment, and packaged 
terminal air conditioners and heat pumps) when ASHRAE Standard 90.1 is 
amended with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) For 
each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is 
amended, DOE must adopt amended energy conservation standards at the 
new efficiency level in ASHRAE Standard 90.1 as the uniform national 
standard for such equipment, unless DOE determines by rule, and 
supported by clear and convincing evidence, that a more-stringent 
standard would result in significant additional conservation of energy 
and is technologically feasible and economically justified. (42 U.S.C. 
6313(a)(6)(A)(ii)(I)-(II)); 84 FR 3910, 3914 (Feb. 13, 2019)
    The Process Rule NOPR examined numerous topics, including the need 
to address ASHRAE equipment explicitly in the Process Rule, the level 
of deference to be accorded to ASHRAE (and the openness of that 
process), the ``clear and convincing evidence'' standard for 
establishing standard levels more stringent than those adopted in 
ASHRAE Standard 90.1, and DOE's interpretation of EPCA's ASHRAE trigger 
provisions (and related implementation). In response to the NOPR, 
several stakeholders expressed their views as to how DOE should handle 
ASHRAE equipment, including concerns regarding each of the topics 
raised in the NOPR. Each of these matters will be addressed in the 
paragraphs that follow, including public comments received and DOE's 
responses.
The Need for ASHRAE Equipment To Be Addressed Separately
    In the Process Rule NOPR, DOE stated that it tentatively determined 
that the amended Process Rule will contain a new section that clearly 
delineates the procedure DOE will follow for evaluating amendments to 
ASHRAE Standard 90.1 and conducting related rulemakings. DOE noted that 
it would first reiterate its statutory obligations for ASHRAE equipment 
in this new section of the Process Rule. In the event that DOE 
determines that it is appropriate to conduct a rulemaking seeking to 
adopt standards for ASHRAE equipment more stringent than those in 
ASHRAE Standard 90.1, all of the Process Rule requirements would apply. 
However, for the typical situation wherein DOE is adopting the ASHRAE 
Standard 90.1 level(s), DOE would follow the EPCA statutory 
requirements rather than the Process Rule requirements. (84 FR 3910, 
3915 (Feb. 13, 2019))
    Many commenters supported (or did not object to) DOE's proposal to 
have the Process Rule separately and specifically address ASHRAE 
equipment. (AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at 
pp. 10, 95; Spire, March 21, 2019 Public Meeting Transcript, No. 87 at 
pp. 100-101; Rheem, No. 101 at p. 1; NRDC, No. 131 at pp. 14-15; Spire, 
No. 139 at p. 5; BHI, No. 135 at p. 2) For example, ASHRAE expressed 
support for the clarification in DOE's proposal regarding the extent to 
which it would rely on ASHRAE Standard 90.1, an outcome which the 
commenter suggested would achieve the clear statutory intent of EPCA 
and would result in a less costly and burdensome rulemaking process. 
(ASHRAE, April 11, 2019 Public Meeting Transcript, No. 92 at pp. 224, 
226) The CEC also supported the inclusion of a means to facilitate the 
adoption of ASHRAE 90.1 levels for commercial equipment. (CEC, No. 121 
at p. 3) Similarly, the AGA expressed support for the Process Rule 
NOPR's proposal that in the event that DOE conducts a rulemaking to 
establish more-stringent standards for covered ASHRAE equipment, DOE 
would follow the procedures established in the Process Rule, while 
still complying with EPCA's ASHRAE-specific deadlines. AGA also agreed 
with the Department's proposal in the NOPR to add a section into the 
Process Rule to clearly define the process used to adopt ASHRAE 90.1 
equipment standards and also define a mechanism when a more-stringent 
equipment efficiency standard over the ASHRAE level can be pursued. 
(AGA, No. 114 at p. 10) The Joint Commenters also supported the 
Department's proposed approach to rulemakings for ASHRAE equipment, 
agreeing that the Process Rule should apply to commercial equipment 
covered by ASHRAE 90.1 standards only in the case where standards 
rulemakings for ASHRAE equipment are prompted by a six-year review or 
where DOE proposes standard levels more stringent than those in ASHRAE 
Standard 90.1. (Joint Commenters, No. 112 at p. 2)
    ASHRAE expressed support for DOE's inclusion of a new section in 
its proposed Process Rule that clearly delineates the procedure DOE 
will follow for evaluating amendments to ASHRAE Standard 90.1 and 
conducting related rulemakings with respect to equipment covered by 
ASHRAE Standard 90.1. ASHRAE lauded DOE's decision to follow EPCA's 
mandate and adopt the revised ASHRAE levels, except in very limited 
circumstances. It also agreed with DOE's assessment that adopting the 
amended ASHRAE Standard 90.1 levels as its regular practice will result 
in reduced regulatory burden on stakeholders and will promote 
consistency and simplicity when DOE is addressing ASHRAE equipment. 
(ASHRAE, No. 109 at pp. 2-3)
    However, several parties sought clarification as to how DOE's 
proposal would alter the agency's historical treatment of ASHRAE 
equipment and expressed concern that the Department would deviate from 
the relevant statutory requirements. For example, Danfoss argued that 
the Process Rule

[[Page 8636]]

should not apply to ASHRAE equipment when DOE is adopting the standard 
levels in Standard 90.1 because the ASHRAE process already has 
requirements for fairness and transparency, but if DOE should decide 
that a more-stringent standard is warranted, then the Process Rule 
should apply. (Danfoss, March 21, 2019 Public Meeting Transcript, No. 
87 at p. 40)
    Lennox stated that the Process Rule should apply to commercial 
equipment except when it would conflict with special statutory 
provisions specific to commercial equipment rulemaking, such as 
provisions for adopting ASHRAE 90.1 industry standards. Although it 
found section 2 of the proposed Process Rule to be generally consistent 
with this principle, Lennox nonetheless urged DOE to clarify this 
point. For commercial equipment covered by ASHRAE Standard 90.1, Lennox 
noted that DOE must adopt the industry standard unless ``clear and 
convincing evidence'' dictates otherwise (i.e., by supporting more-
stringent standards). If DOE simply adopts ASHRAE 90.1 standards, 
Lennox stated that the additional provisions in the Process Rule are 
not necessary. However, Lennox suggested that additional Process Rule 
processes and transparency enhancements may apply to commercial 
equipment covered by ASHRAE 90.1 standards where: (1) Energy 
conservation standard rulemakings for such ASHRAE products are prompted 
by a six-year review or (2) DOE proposes standard levels over-and-above 
those in ASHRAE 90.1, albeit in either case subject to the ``clear and 
convincing evidence'' standard. Again, Lennox stated that although this 
structure is consistent with section 9 of the proposed Process Rule and 
DOE should clarify this in the final rule preamble. For instance, 
Lennox stated that in the ``very limited circumstances'' when DOE seeks 
to go beyond standards established by ASHRAE 90.1 for equipment covered 
by those standards, relevant Process Rule provisions may include many 
of those in Process Rule section 1 (Objectives) and sections 6 and 7 
(which provide details on selecting standards, albeit these would apply 
only in those ``very limited circumstances'' when DOE considers going 
beyond ASHRAE standards and would be subject to the ``clear and 
convincing evidence'' standard). Lennox also argued for the potential 
continued applicability of section 8 (e.g., finalizing a test procedure 
in advance of considering any amended energy conservation standard), 
sections 10 and 11 (on DFRs and negotiated rulemakings), and sections 
13 to 17 (on engineering analyses, assessment of impacts on 
manufacturers and consumers, considering non-regulatory approaches, and 
cross-cutting analytical assumptions, all again subject to the ``clear 
and convincing evidence'' standard). Because of the potentially broader 
applicability of other Process Rule provisions beyond the ASHRAE-
specific section 9, the Process Rule should include a clause whereby, 
or otherwise clarify, the Process Rule applies to ASHRAE equipment: (1) 
Except when doing so would conflict with the ASHRAE-specific provisions 
and (2) in the two limited circumstances mentioned above when DOE might 
go beyond ASHRAE-specified levels for ASHRAE products (albeit subject 
to the ``clear and convincing evidence'' standard). (Lennox, No. 133 at 
p. 3)
    Bosch stated that the DOE proposal to adopt the revised ASHRAE 
levels for standards as its regular practice, except in limited 
circumstances, represents a significant change to the current 
rulemaking process, as DOE would be deferring a considerable portion of 
its rulemaking work to a non-governmental organization. Instead, Bosch 
countered that DOE has a clear and statutory obligation to conduct a 
full and sufficient evaluation of proposed ASHRAE amendments and not to 
simply defer to a separate industry standards organization. The 
commenter argued that instead of reducing regulatory burden, DOE's 
proposal to defer to ASHRAE would create new burdens for manufacturers 
by requiring companies to devote significant time and resources to 
engaging in the ASHRAE process. Also, Bosch stated that the proposal 
does not adequately address whether the levels set through the ASHRAE 
standards-setting process are sufficient or are updated within an 
appropriate period of time, unlike the six-year EPCA look-back review, 
thereby hindering regulatory certainty. Based upon the foregoing 
reasoning, Bosch requested that DOE reconsider this portion of its 
proposal. (Bosch, No. 113 at pp. 3-4) Along these same lines, the CA 
IOUs indicated that DOE's proposal with respect to deferring to 
industry standards--such as those promulgated by ASHRAE--would have the 
effect of the agency ignoring its statutory mandate to critically 
assess whether a given test procedure requires amending. (CA IOUs, No. 
124 at p. 5) The AGs Joint Comment similarly argued that DOE's proposed 
modifications to its approach to regulating ASHRAE equipment amounts to 
an abdication of its duties to assess Standard 90.1 and engage in 
related rulemaking. (AGs Joint Comment, No. 111 at p. 12)
    In contrast, the Joint Commenters expressed strong support for the 
expectation that DOE would adopt revised ASHRAE levels except in ``very 
limited circumstances,'' because they argued that historically, when 
DOE has exceeded the ASHRAE proposed levels, it has imposed 
disproportionate harm on industry segments in pursuit of 
inconsequential energy efficiency benefits. (Joint Commenters, No. 112 
at p. 2)
    Ingersoll Rand stated that it supports alignment of overlapping 
product energy efficiency requirements between ASHRAE Standard 90.1 and 
DOE appliance standards, in terms of both stringency and effective 
dates. However, Ingersoll Rand acknowledged that EPCA grants DOE some 
limited discretion when considering amending appliance standards under 
42 U.S.C. 6313(a)(6)(A). Consequently, the commenter agreed with the 
Department's proposal that if standards established under ASHRAE 
Standard 90.1 are adopted by DOE, the rulemaking does not need to 
follow the Process Rule, but if the Department analyzes whether there 
is clear and convincing evidence to justify more-stringent standards, 
such rulemaking would need to abide by the Process Rule. However, 
Ingersoll Rand disagreed with the Department's interpretation that 
ASHRAE not acting to amend the energy efficiency requirements for DOE-
covered products is tantamount to a decision that the existing 
standards remain in place. Ingersoll Rand stated that in this scenario, 
DOE has proposed to hold revisions to appliance standards under 42 
U.S.C. 6313(a)(6)(C) to the same ``very high bar'' as if ASHRAE had 
revised the energy efficiency standards for these products in Standard 
90.1. The commenter stated the while it expects ASHRAE to update these 
standards when it is economically justified and technologically 
feasible to do so, it is also conceivable that this process could be 
delayed for procedural reasons, given the nature of the ASHRAE 
consensus-based standards process. If the review of these standards is 
triggered by the 6-year-lookback provision at 42 U.S.C. 
6313(a)(6)(C)(i), Ingersoll Rand encouraged DOE to consider standards 
for the appropriate equipment as it would any other standard under the 
Process Rule. Ingersoll Rand reasoned that such approach would ensure 
that any new appliance standards remain technologically feasible and 
economically justified per DOE's analysis (and including any ASHRAE 
analysis), without further delaying the

[[Page 8637]]

appropriate updates to these standards. (Ingersoll Rand, No. 118 at p. 
2)
    Other commenters were more skeptical of DOE's proposed approach to 
ASHRAE equipment in the Process Rule NOPR and raised a number of 
concerns. ACEEE commented that applying the full Process Rule to ASHRAE 
products is not workable. According to ACEEE, DOE's proposal states 
that all of the Process Rule requirements would apply to a decision to 
go beyond ASHRAE levels, but it does not explain how an analysis and 
public comment period on the ASHRAE levels followed by early 
assessment, framework, full analysis, draft rule, and final rule, 
including three additional public comment periods, would all be 
accomplished within the statutory limit of 30 months (i.e., the 
statutory time limit for adopting more-stringent standards). ACEEE 
argued that ``the law (i.e., EPCA) recognizes that substantial analysis 
and public input occur in the ASHRAE process, and the procedure for 
setting modified requirements should reflect that.'' (ACEEE, No. 123 at 
p. 2) The CA IOUs contended that EPCA prescribed a specific set of 
conditions for DOE to follow with regard to setting standards for 
ASHRAE equipment and commented that DOE is required to follow EPCA. (CA 
IOUs, No. 124 at p. 4-5)
    Finally, ASAP sought clarification as to whether ASHRAE equipment 
would be subject to the early assessment process under the proposed 
Process Rule. (ASAP, April 11, 2019 Public Meeting Transcript, No. 92 
at p. 196)
    In response, DOE recognizes its specific obligations under EPCA 
vis-[agrave]-vis ASHRAE equipment and makes clear that it is 
continually striving to meet those obligations. And, the Department 
must have a process for doing so. As with other commercial equipment, 
DOE has applied the Process Rule to ASHRAE equipment to the extent 
permitted by statute, even though 10 CFR part 430, subpart C, Appendix 
A technically applies to ``consumer products.'' DOE has found the 
principles embodied in the Process Rule to be beneficial to both 
stakeholders and the agency, without distinction as to whether a 
consumer product or commercial/industrial equipment is at issue. After 
considering public comments, in this final rule, DOE has decided to 
make its existing practice more clear and transparent by explicitly 
addressing the applicability of the Process Rule to ASHRAE equipment 
and incorporating the key statutory timelines, as well as to clarify 
how DOE will conduct rulemakings for ASHRAE equipment. To the extent 
DOE can articulate a clear and rational process for implementing 
related statutory requirements, the agency anticipates that it would 
improve consistency across its ASHRAE rulemakings, thereby reducing 
burdens on manufacturers of such equipment and increasing benefits to 
consumers.
    DOE also seeks to make clear that different procedures and 
timelines apply under EPCA, depending upon whether the Department is 
adopting the levels contained in ASHRAE Standard 90.1 or more-stringent 
standards. When ASHRAE 90.1 is amended with respect to the standard 
level or design requirements applicable under that standard to specific 
products enumerated in EPCA, DOE is ``triggered'' to adopt those 
measures as the uniform national standard (unless DOE finds clear and 
convincing evidence that adoption of more stringent levels for the 
product would result in significant additional energy savings and is 
technologically feasible and economically justified). When DOE 
determines to adopt the levels in ASHRAE Standard 90.1 as uniform 
national standards, it will generally follow the specific procedures 
and timelines set forth in the statute (i.e., a truncated process under 
EPCA which directs DOE to adopt ASHRAE's consensus standards within 18 
months). The other Process Rule procedures are generally not applicable 
to that specific case and will not be required. However, where DOE 
finds clear and convincing evidence to support more-stringent standards 
(as required either under EPCA's ASHRAE ``trigger'' or 6-year-lookback 
provisions), the statute's analytical requirements and longer 30-month 
timeline are more akin to DOE's typical rulemaking process, so DOE 
believes it appropriate to apply the Process Rule in such cases. DOE 
has made a clarification to this effect in the Process Rule's 
regulatory text (see sections 2 and 9).
    Specifically in response to ASAP, DOE would not apply the early 
assessment process to ASHRAE trigger rulemakings because DOE must 
undertake such rulemaking pursuant to 42 U.S.C. 6313(a)(6)(A), so the 
early assessment's inquiry as to whether a rulemaking is necessary 
would not be relevant. Under the statutory process for ASHRAE, DOE is 
obligated to publish a NODA presenting potential energy savings from 
the ASHRAE action. DOE plans to use that vehicle to perform the early 
assessment for ASHRAE regarding whether there is potentially clear and 
convincing evidence to adopt a more stringent standard. In addition, 
DOE will conduct an early assessment for rulemakings for ASHRAE 
equipment that are initiated pursuant to the 6-year-lookback under 42 
U.S.C. 6313(a)(6)(C), because in such cases, DOE is not statutorily 
obligated to adopt a level set by ASHRAE and may ultimately determine 
that no new standard is warranted.
    DOE disputes ACEEE's assertion that applying the Process Rule to 
rulemakings that go beyond ASHRAE Standard 90.1 levels is unworkable, 
because DOE has been successfully applying most of those provisions to 
its ASHRAE rulemakings already. The only new step DOE has added to the 
rulemaking process through its revised Process Rule is the ``early 
assessment'' (applicable only to ASHRAE 6-year-lookback rulemakings, 
not ASHRAE ``trigger'' rulemakings). DOE sees no reason why through 
sound management principles and proper scheduling that it cannot 
satisfy the applicable provisions of the Process Rule while meeting 
relevant statutory deadlines. In contrast to ACEEE's view, DOE 
envisions this final rule's process improvements as increasing the 
opportunity for public input and strengthening rulemaking analyses.
    DOE is not deferring its statutory duties for standard setting to 
an outside organization (i.e., ASHRAE) through these Process Rule 
amendments. The Department is committed to undertaking the necessary 
review, consistent with the EPCA timelines, to determine whether more-
stringent standards are appropriate, both under its ASHRAE trigger and 
6-year-lookback authority, as it always has. DOE is making clear that 
in doing so, it must meet the statutory requirement that the more-
stringent standard level be supported by clear and convincing evidence. 
EPCA's statutory structure demonstrates a strong Congressional 
preference for adoption of ASHRAE levels, except in extraordinary cases 
where a high evidentiary hurdle has been surmounted. In this way, 
Congress sought to ensure that more-stringent standards have 
objectively recognized benefits that unquestionably justify their 
costs. DOE simply intends for the Process Rule to reflect these 
statutory requirements, not deviate from them or inappropriately shift 
responsibility to ASHRAE. Consequently, DOE will continue to perform 
all necessary review and analyses consistent with its statutory 
obligations, and stakeholders should not incur any additional 
responsibilities in terms of either the DOE rulemaking or participation 
in the ASHRAE Standard 90.1 process.

[[Page 8638]]

Openness of/Deference to the ASHRAE Standards Development Process
    In the Process Rule NOPR, the Department explained its tentative 
decision that going forward, DOE would anticipate adopting the revised 
ASHRAE levels as contemplated by EPCA, except in very limited 
circumstances. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) DOE reasoned that its 
commitment to adopting the amended ASHRAE Standard 90.1 levels as its 
regular practice would result in reducing the regulatory burden on 
stakeholders and would promote consistency and simplicity when 
addressing ASHRAE equipment. 84 FR 3910, 3915 (Feb. 13, 2019).
    There was considerable difference of opinion as to the openness of 
the ASHRAE standards development process expressed by stakeholders both 
at the March 21, 2019 public meeting and in written comments on the 
Process Rule NOPR. At the March 21, 2019 public meeting, various 
stakeholders debated the level of access to participation in the ASHRAE 
process. (March 21, 2019 Public Meeting Transcript, No. 87 at pp. 99-
108) Some commenters suggested that despite the technical expertise of 
ASHRAE Standard 90.1 committees, there are barriers to participation in 
that process in terms of time and money, which stand in contrast to the 
DOE regulatory process. For example, NEEA argued that although it does 
like certain aspects of the ASHRAE process, on balance, it has not 
found the ASHRAE process to be a viable pathway for bringing forth 
innovative proposals, as they are frequently blocked in committees. In 
contrast, NEEA believes that DOE has an open process which allows all 
interested stakeholders to make a meaningful contribution. 
Consequently, NEEA encouraged DOE to consider alternative processes 
when seeking to regulate ASHRAE equipment. (Northwest Energy Efficiency 
Alliance, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 105-
106)
    Such commenters suggested that while the ASHRAE process may appear 
to be open, the commenter expressed its view that the deck is often 
stacked against their meaningful participation. Along these lines, PG&E 
disagreed with DOE's proposed approach, asserting that ASHRAE is 
dominated by the manufacturers that will benefit by test procedures 
made by that organization. (PG&E, March 21, 2019 Public Meeting 
Transcript, No. 87 at p. 93) The CA IOUs indicated that ASHRAE 
decisions are based on a simple majority vote and that industry 
representative members are typically the most vocal and have the most 
influence over whatever test procedures (or standards) are ultimately 
adopted by ASHRAE. (CA IOUs, No. 124 at p. 5) PG&E added that ASHRAE 
``enforcement'' requirements are less rigorous than DOE enforcement 
requirements in terms of the tolerances put around the requirements in 
an ASHRAE test procedure versus a DOE test procedure. (PG&E, March 21, 
2019 Public Meeting Transcript, No. 87 at pp. 93-94)
    Energy Solutions stated that when there is an open ASHRAE Standard 
90.1 process or when there is an opportunity for public review of 
related documents, DOE should notify stakeholders of the Appliance 
Standards Program so that interested parties will be better aware of 
such activities. (Energy Solutions, March 21, 2019 Public Meeting 
Transcript, No. 87 at p. 105)
    Other stakeholders offered a vigorous defense of the openness, 
fairness, and transparency of the ASHRAE process. ASHRAE itself stated 
that it stands behind its standards development process and believes 
that the results generated by this process are robust. According to 
ASHRAE, all proposed changes to ASHRAE Standard 90.1 are open for 
public review, which allows interested parties to provide input into 
development of the standard and reach consensus, thereby ensuring 
publication of a document that has been rigorously examined, 
questioned, and defended. The organization defended its consensus 
process as ensuring buy-in and reflecting input from energy advocates, 
building owners, design professionals, utilities, manufacturers, and 
representatives from DOE, and other materially-affected and interested 
parties. ASHRAE refuted the criticism that DOE's use of privately-
developed consensus standards such as ASHRAE's relies too heavily on 
industry, which may create potential conflicts of interest. With 
respect to this criticism, ASHRAE emphasized that one does not need to 
be an ASHRAE member to participate in the ASHRAE standards development 
process. In addition, the organization argued that the 47 voting 
members on the Standing Standards Project Committee (SSPC) 90.1 have 
broad representation, and of the 19 industry voting members, only nine 
come from industries that have a material interest in equipment covered 
by potential DOE regulations. (ASHRAE, No. 109 at pp. 2-3)
    ASHRAE further pointed out that the National Technology Transfer 
and Advancement Act of 1995 (Pub. L. 104-113) has directed Federal 
agencies to adopt voluntary industry consensus standards unless 
inconsistent with the law or impracticable. According to ASHRAE, since 
1998, the Executive Office of the President has supported this statute 
through issuing and re-issuing Office of Management and Budget (OMB) 
Circular A-119, which mandates that administrative agencies rely on 
consensus standards. ASHRAE concluded that EPCA and DOE's proposal are 
consistent with these directives. (ASHRAE, No. 109 at p. 3)
    BWC expressed support for DOE's adoption of revised standard levels 
set by ASHRAE, as that organization is a consensus body that permits a 
variety of stakeholders to participate. (BWC, No. 103 at p. 2) 
Similarly, BHI expressed support for the Department's approach to 
rulemakings for ASHRAE Standard 90.1 equipment, as consistent with the 
statutory requirements of 42 U.S.C. 6313. BHI also recommended adding a 
clear statement to the Process Rule indicating that a DOE 
representative will attend all ASHRAE 90.1 committee meetings to: (1) 
Avoid unnecessary delays in publishing the analysis of the potential 
energy savings of the amended energy conservation standard, or (2) 
advocate for a more-stringent standard when the Department has clear 
and convincing evidence of significant additional conservation of 
energy that is technically feasible and technologically justified, or 
(3) avoid delays in publishing a no-new-standard notification if ASHRAE 
90.1 is not amended. (BHI, No. 135 at p. 2)
    AGA stated that national codes and standards activities conducted 
by organizations such as ASHRAE and the International Code Council, 
among others, are very important to the natural gas industry. In recent 
history, the commenter pointed out that DOE has become more involved in 
these non-governmental organizations, such as by participating in 
standards and code body proceedings as advocates of requirements and 
generally becoming more active in these types of organizations. 
Although AGA acknowledged that DOE's governing statute permits the 
Department to be involved in such organizations, it argued that such 
participation should be limited to the presentation of peer-reviewed 
research/analysis and the review of codes. For example, it is 
appropriate for DOE to evaluate and analyze codes, such as when the 
International Energy Conservation Code issues codes to improve energy 
efficiency in buildings, but such evaluations and related 
determinations may appear less than arm's length if the Department has 
had a role in creating the codes. In other words, AGA argued

[[Page 8639]]

that to maintain the independent nature of DOE's reviews of non-
governmental codes and standards, it would be prudent for the 
Department to step back and not be intimately involved in the creation 
of codes and standards that it may be called on to evaluate. (AGA, No. 
114 at p. 31)
    As these comments reflect, commenters on DOE's Process Rule NOPR 
offered a variety of opinions about the ASHRAE Standard 90.1 review 
committee process. Although the technical expertise of the committee 
members was generally not questioned, there was considerable debate as 
to the openness, fairness, and transparency of the ASHRAE process. 
However, it is not DOE's place to judge that process, because in EPCA 
(see 42 U.S.C. 6313(a)(6)(A)), Congress clearly and explicitly assigned 
ASHRAE a role in that regulatory regime, as discussed previously. 
Consequently, DOE does not have authority to alter ASHRAE's statutory 
role, but instead must follow the relevant statutory requirements, as 
reflected in the Process Rule.
    Specifically, under the statute, DOE must adopt the standard levels 
in ASHRAE Standard 90.1, unless DOE finds clear and convincing evidence 
that adoption of more stringent levels for the equipment would result 
in significant additional energy savings and is technologically 
feasible and economically justified. (42 U.S.C. 6313(a)(6)(A) and 
(C)(i)) Similarly, DOE must adopt the test procedures for ASHRAE 
equipment specified in ASHRAE Standard 90.1, and DOE must update those 
test procedures each time the ASHRAE test procedures are amended, 
unless DOE has clear and convincing evidence to show that such test 
procedure amendments are not reasonably designed to produce test 
results which reflect energy efficiency, energy use, and estimated 
operating costs of a type of industrial equipment (or class thereof) 
during a representative average use cycle (as determined by the 
Secretary) or are unduly burdensome to conduct. (42 U.S.C. 6314(a)(2)-
(4)) DOE notes that the statutory scheme, which directs DOE to adopt 
ASHRAE technical standards and test procedures unless further EPCA 
provisions command otherwise, comports with the requirements of the 
National Technology Transfer and Advancement Act of 1995 and OMB 
Circular A-119.
    DOE understands Energy Solutions' desire for stakeholders of the 
Appliance Standards Program to be made aware of open ASHRAE Standard 
90.1 matters or when there is an opportunity for public review of 
related documents, in order to more effectively participate in 
standard-setting for the ASHRAE equipment subject to DOE regulation. 
Although DOE participates in the ASHRAE committee process, it does not 
control that process and may not always be aware of the complete or up 
to date relevant information, so DOE does not find it feasible to 
assume responsibility for the messaging role suggested by Energy 
Solutions. However, DOE notes that ASHRAE's website offers interested 
parties the opportunity to subscribe to listservers to be automatically 
notified via email when activities and information related to various 
project committees are available. (Available at: https://www.ashrae.org/technical-resources/standards-and-guidelines/options-to-stay-current.) DOE believes that the availability of such listservers 
provides the notice of ongoing ASHRAE activities sought by Energy 
Solutions in its comment.
    DOE agrees with AGA's cautionary statement that the Department must 
be careful to remain impartial in terms of its role in the ASHRAE 
committee process, particularly since DOE is statutorily obligated to 
adopt ASHRAE standards and test procedures, unless they fail to meet 
other applicable statutory requirements. DOE may serve a neutral role 
in ASHRAE proceedings (e.g., analyzing or evaluating--but not 
creating--drafts of ASHRAE standards and test procedures, advising 
committee members as to the requirements and limitations imposed by 
EPCA), and will not inappropriately direct or coerce an outcome.
    Finally, in response to BHI and as noted in the preceding 
paragraphs, DOE participates in the standards review process of the 
ASHRAE Standard 90.1 Committee. Although not required by the statute, 
such participation helps inform DOE's ASHRAE-related rulemakings for 
both standards and test procedures. As a result of its participation, 
the Department does not see a need to formally include such provisions 
in the Process Rule or to prescribe the appropriate participation of 
the DOE representative.
The ``Clear and Convincing Evidence'' Standard for ASHRAE Equipment
    The Process Rule NOPR also tentatively took the position that for 
DOE to utilize its statutory authority to establish more-stringent 
standards than the amendments to ASHRAE Standard 90.1 pursuant to 42 
U.S.C. 6313(a)(6)(A)(ii)(II), DOE will be required to meet a very high 
bar to demonstrate the ``clear and convincing evidence'' threshold that 
is articulated in that subsection. The NOPR stated that when evaluating 
whether it can proceed with a rulemaking to potentially establish more-
stringent standards from those adopted by ASHRAE, DOE will seek, from 
interested parties and the public, data and information to assist in 
making that determination, prior to publishing a proposed rule to adopt 
more-stringent standards. DOE's proposal further stated that ``clear 
and convincing evidence'' would exist only if: Given the circumstances, 
facts, and data that exist for a particular ASHRAE amendment, DOE 
determines there is no substantial doubt that the more-stringent 
standard would result in a significant additional conservation of 
energy and is technologically feasible and economically justified. In 
the Process Rule NOPR, DOE stated that this high bar would mean that 
only in extraordinary circumstances would DOE conduct a rulemaking to 
establish more-stringent standards for covered ASHRAE equipment. 84 FR 
3910, 3915 (Feb. 13, 2019).
    Although the ``clear and convincing evidence'' requirement is 
explicitly set forth in the statute, DOE's proposal in the Process Rule 
NOPR to clarify that evidentiary standard drew considerable discussion 
and debate. A number of commenters welcomed the clarification regarding 
what some had viewed as an opaque process with no indication that a 
higher evidentiary standard had been met. Other commenters were 
concerned about DOE's proposed clarifications regarding ``clear and 
convincing evidence'' and seemed to prefer the Department's prior 
approach of simply assessing the evidentiary basis for amended 
standards more stringent than the levels in ASHRAE Standard 90.1 on a 
case-by-case basis. Still other commenters posed follow-up questions to 
try to better understand how a ``clear and convincing evidence'' 
standard would be applied in this context. These comments are 
summarized and addressed in the following paragraphs.
    As noted, a number of commenters supported the Process Rule NOPR's 
proposed clarification of the ``clear and convincing evidence'' 
standard in the context of DOE's rulemaking process for ASHRAE 
equipment. (AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at 
p. 12; Joint Commenters, No. 112 at pp. 2-3; NAFEM, No. 122 at p. 2; 
AGA, No. 114 at p. 10; ASHRAE, No. 109 at pp. 2-3) On this topic, AHRI 
stated that it agrees that a formal declaration of what ``clear and 
convincing evidence'' means and how it will be implemented increases 
certainty by increasing transparency and reflects the congressional 
intent expressed through EPCA. (AHRI, March 21, 2019 Public Meeting 
Transcript, No. 87 at p. 12)

[[Page 8640]]

Similarly, ASHRAE expressed appreciation for DOE's position that it 
would only consider standards more stringent than the ASHRAE levels if 
such standards can meet a very high bar to demonstrate the ``clear and 
convincing'' evidence threshold mandated by EPCA. (ASHRAE, No. 109 at 
pp. 2-3) The AGA commented that the proposal makes it clear that DOE 
will adopt the action taken by ASHRAE except in those circumstances 
where the Department, pursuant to a defined process and parameters, 
determines a more-stringent standard is appropriate. (AGA, No. 114 at 
p. 10)
    The Joint Commenters and NAFEM concurred with the definition of 
``clear and convincing evidence'' proposed by DOE with one minor edit, 
suggesting to add the word ``specific'' before ``circumstances, facts, 
and data.'' NAFEM sought this addition to clarify that DOE cannot make 
a determination on its general understanding, but instead must base its 
determination upon specific information related to the equipment class 
standards subject to ASHRAE revision. In seeking to justify more 
stringent standards than the ASHRAE level, the Joint Commenters 
expressed a similar rationale in support of an evidentiary standard 
that requires demonstration of specific facts and evidence to support a 
higher standard or that an industry consensus test procedure is 
demonstrably unreasonable. (Joint Commenters, No. 112 at pp. 2-3; 
NAFEM, No. 122 at p. 2)
    Although Spire agreed with the direction of DOE's approach, it 
suggested taking matters a step further. Rather than envisioning the 
possibility that ASHRAE Standard 90.1 levels and more-stringent DOE 
levels could each save a significant additional amount of energy and be 
technologically feasible and economically justified, Spire argued that 
the statute's use of a ``clear and convincing'' standard should be 
interpreted as a presumption that the industry consensus standards are 
going to be adequate, unless there is clear evidence that they are not, 
at which point such presumption is rebutted. (Spire, March 21, 2019 
Public Meeting Transcript, No. 87 at pp. 114-115) In its written 
comments, Spire reiterated its point by suggesting that DOE's approach 
to application of the ``clear and convincing'' standard should be 
modified to clarify that DOE would only go beyond the ASHRAE Standard 
90.1 levels when DOE determines (supported by clear and convincing 
evidence) that ``only'' a more-stringent standard would result in 
significant additional conservation of energy and is technologically 
feasible and economically justified. (Spire, No. 139, at p. 19)
    In contrast to these viewpoints, another group of commenters 
disfavored DOE's proposed approach to applying the ``clear and 
convincing evidence'' standard in the ASHRAE context. A number of 
commenters challenged DOE's attempted clarification as a legal matter, 
characterizing it as an improper reinterpretation of the relevant 
statutory provision. For example, Earthjustice faulted DOE's Process 
Rule NOPR for assert[ing]--without substantiation--that the `clear and 
convincing evidence' threshold is only met when `there is no 
substantial doubt that the more stringent standard would result in a 
significant additional conservation of energy, is technologically 
feasible and economically justified.' 84 FR 3915. According to 
Earthjustice, the cited DOE language is a legal interpretation for the 
statutory requirement for ``clear and convincing evidence,'' but the 
NOPR is devoid of any statutory or case law authority supporting the 
proposition that evidence is only ``clear and convincing'' when it 
leaves ``no substantial doubt.'' The commenter argued that the NOPR's 
failure to provide a clear foundation (e.g., discussing how the term 
``clear and convincing'' has been interpreted in other contexts) 
deprives stakeholders a meaningful opportunity to comment on the 
claimed equivalency. For example, Earthjustice referenced a U.S. Court 
of Appeal for the District of Columbia Circuit case finding ``[t]he 
clear and convincing standard `generally requires the trier of fact, in 
viewing each party's pile of evidence, to reach a firm conviction of 
the truth on the evidence about which he or she is certain.''' Parsi v. 
Daioleslam, 778 F.3d 116, 131 (DC Cir. 2015) (quoting United States v. 
Montague, 40 F.3d 1251, 1255 (DC Cir. 1994)). The commenter questioned 
whether one could arrive at a ``firm conviction'' while recognizing the 
existence of ``substantial doubt.'' Earthjustice argued that the 
Process Rule NOPR does not answer that question and leaves stakeholders 
uncertain as to the extent to which the proposed amendments to the 
Process Rule comply with EPCA. (Earthjustice, No. 134 at p. 2; 
Earthjustice, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 
125-126)
    The AGs Joint Comment also questioned DOE's effort in the NOPR to 
clarify what would constitute ``clear and convincing evidence,'' as 
would justify the adoption of more-stringent standards than those set 
forth in ASHRAE Standard 90.1. Specifically, in the NOPR DOE tried to 
clarify the matter by suggesting that there would be ``no substantial 
doubt'' on the part of the decision-maker that such standards are 
warranted. However, the AGs Joint Comment argued that such description 
is either the same as the statutory ``clear and convincing evidence'' 
standard (in which case it is purposeless and arbitrary) or more 
restrictive (in which case it would be contrary to EPCA and improperly 
cede authority to ASHRAE). (AGs Joint Comment, No. 111 at p. 13) On 
this same point, NRDC stated that in its assessment, DOE's statements 
about ``no substantial doubt'' and going beyond ASHRAE ``only in 
extraordinary circumstances'' appear to be more narrow and restrictive 
than Congress's intent. The commenter stated that it does not find 
DOE's attempts to define ``clean and convincing'' to be either 
necessary or helpful. NRDC also argued that DOE has failed to disclose 
where it got this definition and on which legal authorities it is 
relying, thereby frustrating the public's ability to meaningfully 
comment on the proposal. (NRDC, No. 131 at pp. 14-15) NRDC reminded DOE 
that it does not have the power to redefine ``clear and convincing'' so 
as to make it something closer to a ``beyond a reasonable doubt'' 
standard. (NRDC, March 21, 2019 Public Meeting Transcript, No. 87 at p. 
121)
    The CEC also opposed DOE's attempt to clarify the ``clear and 
convincing'' standard when pursuing standards more stringent than those 
contained in ASHRAE Standard 90.1. In the CEC's view, the ``clear and 
convincing'' standard has already been defined by case law, so further 
regulatory clarification is irrelevant. The CEC also argued that 
raising the evidentiary level to meet this standard--as it alleged that 
DOE has attempted to do--would leave significant, cost-effective, and 
technologically feasible energy savings on the table at a time when 
manufacturers are already redesigning equipment to meet ASHRAE 90.1. 
(CEC, No. 121 at p. 3)
    The CA IOUs claimed that DOE's proposal to interpret the phrase 
``clear and convincing'' to mean ``no substantial doubt'' ignores 
historical context for standard and test procedure improvements to the 
detriment of consumers. (CA IOUs, No. 124 at p. 4) The CA IOUs cited 
the 2016 commercial unitary air conditioners (CUAC) direct final rule 
\10\ (DFR) as an example of how DOE properly applied the clear and 
convincing threshold previously. (CA IOUs, No. 124 at pp. 4-5)
---------------------------------------------------------------------------

    \10\ 81 FR 2420 (Jan. 15, 2016).

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

[[Page 8641]]

    Other commenters focused on the potential practical effects of 
DOE's proposed clarification of the statute's clear and convincing 
evidence requirement in the context of ASHRAE equipment. For example, 
ACEEE criticized DOE's attempt to clarify the term ``clear and 
convincing,'' arguing that a new ``no substantial doubt'' criterion for 
ASHRAE products would add uncertainty. As the commenter correctly 
pointed out, Congress required ``clear and convincing evidence'' for 
the Department to go beyond ASHRAE levels for such equipment. ACEEE 
characterized DOE's change in terminology from a legal term of art to a 
financial term as more of a substitution for, than an interpretation 
of, congressional intent, which would introduce a new term that would 
need to be interpreted, and would likely be subject to litigation. If 
interpreted to be more stringent than the congressional requirement, 
ACEEE argued that it would prevent the Department from adopting 
standards or test procedures that best meet the legal requirements. 
Finally, ACEEE asserted that the Department has failed to demonstrate a 
problem with the legislative language as would justify the need to 
change it. (ACEEE, No. 123 at p. 4)
    ASAP also questioned what it views as the leap from an evidentiary 
requirement of ``clear and convincing'' to ``no substantial doubt,'' 
and the commenter expressed concern that DOE would adopt ASHRAE 
Standard 90.1 levels without consideration of other alternatives, 
thereby eliminating the potential for negotiations and cooperation 
among stakeholders, a point with which NEEA agreed. According to ASAP, 
DOE's proposed language could make the process a ``one way street,'' 
which presumably means that ASHRAE would drive or monopolize DOE's 
standard-setting process. (ASAP, March 21, 2019 Public Meeting 
Transcript, No. 87 at pp. 111-112, 115, 119; NEEA, March 21, 2019 
Public Meeting Transcript, No. 87 at pp. 116-7)
    Instead, ASAP argued that there is no need to interpret the ``clear 
and convincing evidence'' threshold as part of the Process Rule, 
because DOE to date has appropriately interpreted that threshold. 
According to ASAP, DOE's proposal to consider levels beyond the ASHRAE 
levels only in ``extraordinary circumstances'' could sacrifice very 
large energy and economic savings, outcomes which the commenter does 
not believe reflects the intent of Congress. Even though DOE has 
adopted the ASHRAE levels in most cases over the past decade, ASAP, et 
al. offered concern that DOE's proposed changes are attempting to 
severely restrict the Department's ability to consider standards higher 
than the ASHRAE levels, as the agency has appropriately and effectively 
done in the past. (ASAP, et al., No. 126 at pp. 2, 3-5)
    CT-DEEP cautioned DOE from using the ``clear and convincing'' 
standard prescribed by EPCA with respect to setting standards higher 
than those contained in ASHRAE Standard 90.1 as a means ``to avoid the 
responsibility of evaluating the potential for more stringent standards 
by setting the bar at `no substantial doubt that the more stringent 
standard would result in a significant additional conservation of 
energy.''' (CT-DEEP, No. 93 at p. 3)
    NPCC disagreed with DOE''s application of the ``clear and 
convincing evidence'' standard with respect to establishing energy 
conservation standards more stringent than the ones adopted by ASHRAE, 
arguing that such approach would mean that DOE could only set more-
stringent standards in extraordinary circumstances. Instead, NPCC urged 
DOE to use the seven existing EPCA criteria at 42 U.S.C. 6295(o) when 
determining whether to establish more-stringent standards for ASHRAE 
equipment, consistent with the approach to other products. (NPCC, No. 
94 at p. 4; NPCC, March 21, 2019 Public Meeting Transcript, No. 87 at 
pp. 122-123)
    Finally and in contrast to the several commenters who sought to 
validate DOE's current process vis-[agrave]-vis ``clear and convincing 
evidence,'' the AGs Joint Comment asserted that DOE's proposed revision 
improperly applied the clear and convincing evidence standard and 
ASHRAE deference when it is conducting its six-year-lookback review 
under 42 U.S.C. 6313(a)(6)(C). Instead, these commenters suggested that 
a six-year-lookback analysis should be conducted using a preponderance 
of the evidence standard, arguing that DOE has misinterpreted the 
relevant provisions of EPCA and risks failing to promulgate standards 
when they are warranted under the statute. (AGs Joint Comment, No. 111 
at pp. 13-14)
    Similarly, Earthjustice argued that DOE has improperly applied the 
``clear and convincing'' evidence requirement to instances where the 
statute only requires a showing of substantial evidence. Earthjustice 
asserted that ASHRAE's failure to amend the standards applicable to a 
type of covered equipment under ASHRAE/IES Standard 90.1 does not 
justify applying the ``clear and convincing'' standard to DOE's 6-year 
review obligation under 42 U.S.C. 6313(a)(6)(C), a result which it 
argues is foreclosed by the plain text of the statute. According to the 
commenter, EPCA explicitly requires that clear and convincing evidence 
support any determination to adopt a standard more stringent than an 
amended Standard 90.1 requirement (pursuant to 42 U.S.C. 
6313(a)(6)(A)(ii)(II)), but the statute does not apply this unique 
standard outside of that context (see 42 U.S.C. 6306 (applying 
``substantial evidence'' standard to other DOE rules)). Instead, 
Earthjustice argued that when DOE considers amending standards for 
equipment in the absence of ASHRAE action, EPCA requires that DOE apply 
the ``criteria'' imposed under 42 U.S.C. 6313(a)(6)(A) if determining 
that standards do not need to be amended and the ``criteria and 
procedures'' applicable under 42 U.S.C. 6313(a)(6)(B) if proposing 
amended standards. (42 U.S.C. 6313(a)(6)(C)(i)) Accordingly, the 
commenter reasoned that the ``criteria'' governing any determination 
not to amend the current standards for covered equipment are that 
adoption of a more-stringent standard for the equipment would not 
``result in significant additional conservation of energy and [be] 
technologically feasible and economically justified'' (see 42 U.S.C. 
6313(a)(6)(A)(ii)(II)). Under Earthjustice's theory, Congress's 
decision to withhold the procedures applicable under 42 U.S.C. 
6313(a)(6)(A) from any determinations not to amend in the context of a 
6-year review means the evidentiary burden applicable under 42 U.S.C. 
6313(a)(6)(A) does not apply to 6-year reviews. (Earthjustice, No. 134, 
at pp. 2-3)
    In response to these comments on the Process Rule NOPR, DOE 
emphasizes that in discussing the need for ``clear and convincing 
evidence'' in the context of more-stringent standard levels for ASHRAE 
equipment, the Department was simply explaining the existing 
requirements of the statute, rather than seeking to change or 
reinterpret those requirements. Specifically, EPCA provides that in 
order to adopt a more-stringent standard, DOE must determine, by rule 
published in the Federal Register, and supported by clear and 
convincing evidence, that adoption of a uniform national standard more 
stringent than the amended ASHRAE/IES Standard 90.1 for the product 
would result in significant additional conservation of energy and is 
technologically feasible and economically justified. (42 U.S.C. 
6313(a)(6)(A)(ii)(II)) The language of the statute makes clear that 
Congress intended to establish a high bar for DOE to go beyond the 
levels in ASHRAE

[[Page 8642]]

Standard 90.1, an intention clearly reflected by its decision to 
require a heightened evidentiary standard. Thus, the statute itself 
demonstrates that Congress intended for DOE to adopt the ASHRAE levels, 
except for in extraordinary circumstances where the ``clear and 
convincing evidence'' standard has been met. In the Process Rule NOPR, 
DOE summarized the relevant ASHRAE-related statutory requirements and 
sought to explain how it implements its legislative mandate. A number 
of commenters supported DOE's clarification efforts as promoting 
transparency, but others mistakenly believed that DOE was proposing 
substantive and inappropriate changes. However, given that DOE proposed 
no change to the existing statutory requirement, nor could it do so, 
commenters were not deprived of any opportunity to comment, contrary to 
what Earthjustice and NRDC suggest. Furthermore, by simply following 
the requirements of the statute regarding the need for clear and 
convincing evidence, DOE does not anticipate that there would be the 
basis for enhanced litigation risk or successful legal challenges.
    In the Process Rule NOPR, DOE offered language to explain its 
understanding of Congress's clear and convincing evidence requirement 
and how the Department has implemented that requirement. Specifically, 
DOE stated that ``clear and convincing evidence'' would exist only if: 
Given the circumstances, facts, and data that exist for a particular 
ASHRAE amendment, DOE determines there is no substantial doubt that the 
more-stringent standard would result in a significant additional 
conservation of energy and is technologically feasible and economically 
justified. Rather than changing the definition in question, DOE has 
found this language consistent with how that term has historically been 
interpreted and defined in the civil context in Federal Circuit and 
District Courts throughout the United States. The Ninth Circuit Court 
of Appeals has defined the ``clear and convincing'' standard as 
requiring the evidence ``to be so clear as to leave no substantial 
doubt [and] sufficiently strong to command the unhesitating assent of 
every reasonable mind.'' Ittella Foods, Inc. v. Zurich Ins. Co., 98 
Fed. Appx. 689, 691 (9th Cir. 2004) (internal citations omitted). 
Similarly, the Eighth Circuit Court of Appeals has defined, ``clear and 
convincing evidence'' as ``leav[ing] no substantial doubt,'' Hunt v. 
Pan American Energy, 540 F.2d 894, 901 (8th Cir. 1976), and the Second 
Circuit Court of Appeals stated, ``[c]lear and convincing proof is 
highly probable and leaves no substantial doubt,'' Dongguk University 
v. Yale University, 734 F.3d 113, 123 (2d Cir. 2013) (internal 
citations omitted).\11\ Further, the Handbook of Federal Evidence, 
which consists of materials designed to aid in understanding Federal 
evidentiary rules, also defines ``clear and convincing evidence'' in 
civil cases as requiring that ``evidence be so clear as to leave no 
substantial doubt'' and describes this standard of proof to only be 
sustained if the evidence induces a reasonable belief that the facts 
asserted are highly probably true. (Handbook of Federal Evidence, Sec.  
301:5 Burden of Persuasion, Incidence and Measure in Civil Cases (8th 
ed., 2018))
---------------------------------------------------------------------------

    \11\ Federal District Courts in circuits around the country have 
provided similar definitions of ``clear and convincing evidence'' in 
the civil context. See Mandel v. Boston Phoenix, Inc., 492 F. Supp. 
2d 26, 29 (D. Mass. 2007) (``The meaning of the term `clear and 
convincing evidence'--evidence so clear as to leave no substantial 
doubt.''), Jersey Const., Inc. v. Pennoni Assoc., Inc., 1993 WL 2999 
(E.D. Pa. 1993) (citing Joseph's v. Pizza Hut of America, Inc., 733 
F. Supp. 222, 223-24 (W.D.Pa.1989), aff'd, 899 F.2d 1217 (3d Cir. 
1990) (``Clear and convincing evidence is evidence that leaves no 
substantial doubt . . . establishes not only that the proposition at 
issue is probable, but also that it is highly probable.''), Hanna 
Coal Co., Inc. v. I.R.S., 218 B.R. 825, 829 fn 2 (W.D. Va. 1997) 
(``Clear and convincing evidence leaves no substantial doubt in your 
mind. It is proof that establishes in your mind, not only [that] the 
proposition at issue is probable, but also that it is highly 
probable.''), Gentry v. Hershey Co., 687 F. Supp. 2d 711, 724 (M.D. 
Tenn. 2010) (``Evidence is clear and convincing when it leaves no 
serious or substantial doubt about the correctness of the 
conclusions drawn.''), Sala v. U.S., 552 F. Supp. 2d 1157, 1162 (D. 
Colo. 2007) (``Clear and convincing evidence leaves no substantial 
doubt in your mind. It is proof that establishes in your mind, not 
only [that] the proposition at issue is probable, but also that it 
is highly probable.''), Tobinick v. Novella, 108 F. Supp. 3d 1299, 
1309 (S.D. Fla. 2015) (``The burden of proof by clear and convincing 
evidence requires a finding of high probability. The evidence must 
be so clear as to leave no substantial doubt. It must be 
sufficiently strong to command the unhesitating assent of every 
reasonable mind.'').
---------------------------------------------------------------------------

    Regarding NRDC's argument that the ``clear and convincing 
evidence'' standard is a term of legal art, of which Congress was aware 
when they adopted the language, and that DOE does not have the power to 
redefine ``clear and convincing evidence'' to make it closer to 
``beyond a reasonable doubt,'' as exhibited in the above paragraph, DOE 
is not redefining the standard, and DOE's provision for ``clear and 
convincing evidence'' is consistent with how it has been regularly 
defined in Federal Courts for many years. Accordingly, DOE agrees with 
NRDC that Congress was cognizant of the common law and accepted 
definition of ``clear and convincing evidence'' when implementing 42 
U.S.C. 6313(a)(6)(A)(ii)(II); the definition of ``clear and convincing 
evidence'' as evidence that is so clear as to leave ``no substantial 
doubt'' can be traced to a 1899 California Supreme Court decision, 
decided far before 42 U.S.C. 6313(a)(6)(A)(ii)(II) was enacted. Sheehan 
v. Sullivan, 126 Cal. 189, 193 (1899) (defining clear and convincing 
evidence as clear, explicit, and unequivocal; so clear as to leave no 
substantial doubt). Again, this language has been reiterated by Federal 
Courts in the many years since.
    Given DOE's commitment to meet its statutory duty to determine 
whether more-stringent standards are appropriate for ASHRAE equipment 
under either the ASHRAE trigger or the 6-year-lookback authority, the 
concerns expressed by CT-DEEP and ASAP that DOE will use the 
requirement for clear and convincing evidence to avoid its 
responsibility to consider whether the criteria for more-stringent 
standards have been met is unfounded. DOE will continue to evaluate the 
potential for more-stringent standards as a routine part of its ASHRAE 
rulemaking process. As part of that process, DOE will ensure that all 
three statutory criteria are met (i.e., that there is clear and 
convincing evidence that a more stringent standard can achieve 
significant additional energy savings, technological feasibility, and 
economic justification); DOE cannot focus on only one factor (economic 
justification criteria), as NPCC suggested, because the statute is 
clear in terms of the criteria that must be considered. By following 
the requirements of the statute, there is no risk of forgone energy and 
economic savings as ASAP suggests, nor harm to consumers as the CEC 
asserts. Moreover, there should not be any impediments in the context 
of negotiated rulemakings, because DOE will always consider alternate 
standard levels, provided they comport with all applicable statutory 
requirements. In light of the tenets of the ASHRAE-related provisions 
Congress wrote into the statute, there is little incentive for 
gamesmanship on the part of ASHRAE, because if that organization fails 
to consider amended standards or only adopts weak standards, DOE's 
obligation to consider more-stringent standards will resolve that 
problem.
    In terms of the technical modification suggested by the Joint 
Commenters and NAFEM--suggesting to add the word ``specific'' to the 
definition of ``clear and convincing evidence'' right before 
``circumstances, facts, and data,'' DOE agrees with these commenters 
that the agency cannot make a determination on its general 
understanding, but instead

[[Page 8643]]

must base its determination upon specific information related to the 
equipment class standards subject to ASHRAE revision. Such specific 
circumstances, facts, and data are necessary to support a finding that 
a standard higher than that contained in ASHRAE Standard 90.1 is 
permitted or that an industry consensus test procedure is demonstrably 
unreasonable. Consequently, DOE is adding the word ``specific,'' as 
recommended by these commenters.
    DOE does not agree with Spire's recommended interpretation of 
``clear and convincing evidence'' so as to provide a presumption that 
the industry consensus standards are going to be adequate, unless there 
is clear evidence that they are not, at which point such presumption is 
rebutted. Again, Spire suggested that DOE's approach to application of 
the ``clear and convincing'' standard should be modified to clarify 
that DOE would only go beyond the ASHRAE Standard 90.1 levels when DOE 
determines (supported by clear and convincing evidence) that ``only'' a 
more-stringent standard would result in significant additional 
conservation of energy and is technologically feasible and economically 
justified. Although the statute presumes that ASHRAE Standard 90.1 
levels are going to be adequate (given the requirement for DOE to adopt 
them when triggered), it also contemplates that a more-stringent 
standard, supported by clear and convincing evidence, could exist which 
would result in significant additional energy savings and be 
technologically feasible and economically justified. Spire would not 
only ask DOE to prove a negative, but also to reject a more-stringent 
standard that meets the statutory criteria on that basis. DOE finds no 
basis in the statute to support such a reading, and consequently, the 
Department declines to adopt Spire's suggested interpretation.
    Finally, DOE would address the comments from the AGs Joint Comment 
and Earthjustice suggesting that the Department should not apply the 
``clear and convincing evidence'' standard and ASHRAE deference when 
the agency is conducting a 6-year-lookback review rulemaking under 42 
U.S.C. 6313(a)(6)(C), but instead use a preponderance of the evidence 
standard. Notwithstanding any past DOE statements to the contrary, the 
plain language of the statute does not support such a reading.
    Under the 6-year-lookback, the statute provides that every six 
years, DOE shall conduct an evaluation of each class of covered 
equipment and shall publish either: (1) A notice of determination that 
standards for the product do not need to be amended, based on the 
criteria established under subparagraph (A) (42 U.S.C. 6313(a)(6)(A)) 
or (2) a notice of proposed rulemaking including new proposed standards 
based upon the criteria and procedures established under subparagraph 
(B) (42 U.S.C. 6313(a)(6)(B)). These commenters focus on the 
distinction that Congress directed DOE to subsection (A) when DOE makes 
a finding that no new standard is warranted (i.e., the provision 
containing the ``clear and convincing evidence'' requirement), but 
directed the agency to subsection (B) when proposing to adopt more 
stringent standards, thereby presuming that an ordinary preponderance 
of evidence standard should apply. The commenters' interpretation is 
difficult to square with the statute on more than one level. First, it 
seems illogical that Congress would hold DOE to two different 
evidentiary standard levels that involve essentially the same standard-
setting decision. Under the commenter's interpretation, DOE would issue 
a notice of determination that a product does not need to be amended 
when there is no clear and convincing evidence to support a more-
stringent standard (applying the criteria of subparagraph (A)), but 
would be able to issue a proposed rule for those same more-stringent 
standards using the preponderance of the evidence standard. Such 
reading seems unworkable in practice. However, Congress arguably 
foreclosed that anomalous result when it directed that the proposed 
rule to amend the standard be based on the criteria and procedures 
established under subparagraph (B). (42 U.S.C 6313 (a)(6)(C)(i)(II)) In 
parsing the economic justification provisions of that subsection, the 
statute prominently states, ``In determining whether a standard is 
economically justified for the purposes of subparagraph (A)(ii)(II), 
the Secretary shall . . . determine whether the benefits of the 
standard exceed the burden of the proposed standard by to the maximum 
extent practicable, considering . . . .'' (42 U.S.C. 6313(a)(6)(B)(ii) 
(Emphasis added)) Thus, in determining whether it is appropriate to set 
a more-stringent standard, 42 U.S.C. 6313(a)(6)(B) clearly references 
42 U.S.C. 6313(a)(6)(A)(ii)(II), which contained the ``clear and 
convincing evidence'' requirement. In other words, 42 U.S.C. 
6313(a)(6)(C) references 42 U.S.C. 6313(a)(6)(B), which references 42 
U.S.C. 6313(a)(6)(A). The explicit language of the statute furthers 
congressional intent that DOE should defer to ASHRAE in most cases when 
setting uniform national standards for covered equipment within that 
organization's purview. Consequently, DOE affirms its understanding 
that the statute's clear and convincing evidence requirement applies in 
the context of both ASHRAE trigger and 6-year-lookback rulemakings.
    A handful of commenters raised other viewpoints regarding the 
``clear and convincing evidence'' standard or questions regarding how 
DOE would implement its proposed clarifications. Among this group, 
Southern Company asked DOE to provide more specificity regarding what 
``high standard for overriding ASHRAE'' means. (Southern Company, March 
21, 2019 Public Meeting Transcript, No. 87 at p. 113) In response to 
this question, DOE refers back to the statutory scheme because the 
Department is not changing the standard for review regarding when it is 
appropriate to adopt levels more stringent than those set forth in 
ASHRAE Standard 90.1 as uniform national standards. Under 42 U.S.C. 
6313(a)(6)(A)(ii)(II), EPCA makes clear that DOE may adopt more-
stringent levels only where the Department determines, supported by 
clear and convincing evidence, that adoption of a more-stringent 
standard would result in significant additional conservation of energy 
and is technologically feasible and economically justified. As 
discussed previously, the case law makes clear that ``clear and 
convincing evidence'' is a level higher than a preponderance of the 
evidence, and as explained in the paragraphs immediately above, the 
statute applies this evidentiary requirement to both ASHRAE ``trigger'' 
and 6-year-lookback rulemakings. Thus, under the statutory scheme, DOE 
believes it reasonable to expect that in most cases, Federal standards 
will be set at a level corresponding to those in ASHRAE Standard 90.1.
    Regarding ``clear and convincing'' evidence, Ingersoll Rand stated 
that it had in the past assumed that DOE would only consider 
alternative energy efficiency requirements if there were clear and 
convincing evidence that such standards would save a significant amount 
of energy, be technologically feasible, and be economically justified 
when compared to both the existing appliance standards and those 
contained in the updated version of ASHRAE Standard 90.1. As part of 
DOE's process under 42 U.S.C. 6313(a)(6), Ingersoll Rand reasoned that 
DOE should review the same analysis developed by the ASHRAE Standard

[[Page 8644]]

90.1 development committee to justify revisions to the energy 
efficiency requirements for these products. The commenter stated that 
it does not interpret the proposed definition for ``clear and 
convincing evidence'' as a departure from this process. (Ingersoll 
Rand, No. 118 at p. 2)
    In response, DOE generally agrees with Ingersoll Rand, in that the 
Department thoroughly considers the existing uniform national standard 
(for both ASHRAE trigger and 6-year-lookback rulemakings) and the 
ASHRAE standard (for trigger rulemakings \12\). In conducting the 
comprehensive review and analysis in support of its rulemaking under 
the ASHRAE trigger, DOE would anticipate examining the work of the 
ASHRAE Standard 90.1 Committee, to the extent it is publicly available.
---------------------------------------------------------------------------

    \12\ DOE does not anticipate the need to examine the ASHRAE 
levels in the context of a 6-year-lookback rulemaking, because the 
existing Federal standard already would reflect either the level in 
ASHRAE Standard 90.1 or a more-stringent level supported by clear 
and convincing evidence.
---------------------------------------------------------------------------

    Spire commented that any evidence on which DOE relies in support of 
the adoption of an energy conservation standard--including ASHRAE 
equipment--must be made available for review and public comment during 
the rulemaking process and with adequate time to do so. (Spire, No. 97 
at p. 9; Spire, No. 139 (Attachment C)) In response, DOE strives to 
make as much of the data underlying its appliance standards rulemakings 
publicly available to the greatest extent possible through posting of 
such information to the docket for that rulemaking. However, because it 
is frequently the case that some portion of the relevant data on which 
the agency makes its decision is proprietary in nature, DOE makes such 
data available in aggregated and anonymized form. DOE has determined 
that this approach is sufficient to allow interested stakeholders to 
understand the rationale for DOE's decision while appropriately 
protecting confidential information.
    EEI argued that if DOE is going to revise ASHRAE equipment 
standards, it will publish a proposed rule for public comment, so even 
if the evidentiary bar is raised, there is still an open process with 
the opportunity for parties to suggest changes. (EEI, March 21, 2019 
Public Meeting Transcript, No. 87 at pp. 124-125) In response, DOE 
agrees with EEI's understanding that it is the Department's standard 
practice to issue a proposed rulemaking with an opportunity for public 
comment prior to adopting any new or revised Federal standards for 
covered ASHRAE equipment. However, DOE would once again clarify that it 
may not and is not changing the statute's ``clear and convincing 
evidence'' requirement for adopting levels more stringent than those 
contained in ASHRAE Standard 90.1 as uniform national standards.
Interpretations of the ASHRAE ``Trigger'' Provisions and Other ASHRAE 
Issues
    The Process Rule NOPR also sought to address certain issues of 
statutory interpretation regarding EPCA's ASHRAE trigger provisions. 
Making clear that DOE will adopt the action taken by ASHRAE except in 
rare circumstances raises the question as to when DOE is triggered by 
ASHRAE action in amending Standard 90.1. In the February 13, 2019 
Process Rule NOPR, DOE proposed to clarify its interpretation of the 
ASHRAE trigger provision in this context. For example, if ASHRAE acts 
to amend its standard at the equipment class level for air-cooled 
variable refrigerant flow (VRF) multi-split air conditioners greater 
than or equal to 135,000 Btu/h, is DOE triggered to consider amended 
standards: (1) Only for the specific equipment class(es) actually 
amended in ASHRAE Standard 90.1; (2) for the entire equipment category 
of VRF equipment, or (3) for the entire covered equipment type of small 
commercial package air conditioning and heating equipment? EPCA does 
not specifically define the term ``amended'' in the context of ASHRAE 
Standard 90.1. (84 FR 3910, 3915) Although the statute is not entirely 
clear on this matter, DOE has maintained a consistent position for over 
a decade, at least since it interpreted what would constitute an 
``amended standard'' in a final rule published in the Federal Register 
on March 7, 2007. 72 FR 10038. In that rule, DOE stated that the 
statutory triggering event requiring DOE to adopt uniform national 
standards based on ASHRAE action is for ASHRAE to change a standard for 
any of the equipment listed in EPCA section 342(a)(6)(A)(i) (42 U.S.C. 
6313(a)(6)(A)(i)) by increasing the efficiency level for that 
equipment. Id. at 72 FR 10042. In other words, if the revised ASHRAE 
Standard 90.1 leaves the standard level unchanged or lowers the 
standard, as compared to the level specified by the uniform national 
standard adopted pursuant to EPCA, DOE does not have authority to 
conduct a rulemaking to consider a higher standard for that equipment 
pursuant to 42 U.S.C. 6313(a)(6)(A). DOE subsequently reiterated this 
position in final rules published in the Federal Register on July 22, 
2009 (74 FR 36312, 36313), May 16, 2012 (77 FR 28928, 28937), and July 
17, 2015 (80 FR 42614, 42617).
    However, in the American Energy Manufacturing Technical Corrections 
Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012), Congress modified 
several provisions related to ASHRAE Standard 90.1 equipment. In 
relevant part, DOE must act whenever ASHRAE Standard 90.1's ``standard 
level or design requirements under that standard'' are amended. (42 
U.S.C. 6313(a)(6)(A)(i)) Furthermore, that statutory amendment required 
that DOE must conduct an evaluation of each class of covered equipment 
in ASHRAE Standard 90.1 ``every 6 years.'' (42 U.S.C. 6313(a)(6)(C)(i))
    In practice, DOE's review in making this assessment of ASHRAE's 
actions has been strictly limited to the specific standards for the 
specific equipment for which ASHRAE has made a change (i.e., determined 
down to the equipment class level). In the Process Rule NOPR, DOE 
stated that it believes that this is the best reading of the statutory 
provisions discussed previously, because if ASHRAE were to change the 
standard for a single equipment class, but DOE then considered itself 
triggered at the equipment category level or equipment type level, the 
process would arguably no longer comport with the statutory scheme. 
More specifically, in such cases, DOE would be addressing certain 
classes of ASHRAE equipment for which standards had not changed, so it 
would be impossible for DOE to adopt the ASHRAE level as the statute 
envisions (as, in most cases, it would already be the same as the 
existing Federal standard). Instead, DOE could only consider adoption 
of more-stringent standard levels. Such interpretation would arguably 
run counter to the ``follow ASHRAE'' statutory structure set in place 
by Congress. Furthermore, Congress specifically and recently added a 6-
year-lookback provision for covered ASHRAE equipment at 42 U.S.C. 
6313(a)(6)(C)(i), a provision which instructs DOE in terms of how and 
when to address covered equipment upon which ASHRAE has not acted in a 
timely manner. Furthermore, DOE believes that ASHRAE not acting to 
amend Standard 90.1 is tantamount to a decision that the existing 
standard should remain in place. DOE believes it is reasonable to 
assume that, in revising ASHRAE Standard 90.1, ASHRAE would consider an 
entire equipment category before deciding to adopt a revised standard 
for only one or more classes of equipment in that category.

[[Page 8645]]

Thus, for equipment classes for which it was not triggered, DOE would 
act under its 6-year-lookback authority at 42 U.S.C. 6313(a)(6)(C) to 
issue a standard more stringent than the existing standard for the 
product, provided that there exists clear and convincing evidence, as 
defined above, to support such decision.
    Commenters raised a number of other issues of statutory 
interpretation which would be expected to impact how the revised 
Process Rule would treat ASHRAE equipment, each of which is addressed 
below. Again, consistent with its long-standing interpretation, the 
Department proposed to define the ASHRAE ``trigger'' to be applicable 
only to those equipment classes where ASHRAE Standard 90.1 has adopted 
an increase to the efficiency level as compared to the current Federal 
standard for that specific equipment class. Most commenters supported 
DOE's interpretation regarding EPCA's ASHRAE trigger provision. BWC 
agreed with DOE's proposal to limit its changes to those specific 
equipment classes where ASHRAE has made a change, even though other 
similar equipment types were left untouched. (BWC, No. 103 at p. 2) The 
Joint Commenters also supported DOE's clarification that ASHRAE's 
revision of one equipment class's performance standards or test method 
does not trigger DOE's statutory obligation to initiate a rulemaking on 
all related equipment classes, explaining that DOE is correct to 
decline to initiate additional rulemaking on related products that were 
never considered by the consensus body. (Joint Commenters, No. 112 at 
p. 3) Similarly, Lennox agreed with DOE's clarification that ASHRAE's 
revision of one equipment class's performance standard or test method 
does not trigger DOE's statutory obligation to initiate a rulemaking on 
all related equipment classes. Lennox stated that this clarification 
will avoid the artificial imperative to initiate a rulemaking on a 
product class that was not addressed by ASHRAE. (Lennox, No. 133 at p. 
3)
    However, one commenter appeared to favor a different interpretation 
of the ASHRAE trigger, under which triggering would result in a 
significantly broader rulemaking action. A.O. Smith raised a number of 
questions seeking additional clarification regarding DOE's 
interpretation in the Process Rule NOPR of the statutory provisions 
related to ASHRAE equipment (particularly the ``ASHRAE trigger'' and 6-
year-lookback which would lead to rulemaking action). The commenter's 
inquiries were focused on packaged boilers, storage water heaters, 
instantaneous water heaters, and unfired hot water storage tanks, 
although DOE notes that the issues raised would apply more broadly to 
the full suite of covered ASHRAE equipment. (A.O. Smith, No. 127 at pp. 
7-8)
    First, A.O. Smith asked, if the ASHRAE trigger only applies to 
those specific equipment classes where ASHRAE Standard 90.1 has 
increased the efficiency level, how will the Department handle the 
other equipment classes within the same product category or within the 
same covered product that ASHRAE 90.1 did not address? In other words, 
how does the statutory requirement by which, every six years, the 
Secretary shall conduct an evaluation of each class of covered 
equipment and shall publish either: (a) A notice of the determination 
of the Secretary that standards for the product do not need to be 
amended, based on the criteria established in the statue; or (b) a 
notice of proposed rulemaking including new proposed standards based on 
the criteria and procedures established under subparagraph (B), apply 
to those equipment classes where ASHRAE 90.1 took no action? Would the 
Department conduct a separate ``six-year look back'' rulemaking to 
address those equipment classes where ASHRAE 90.1 took no action, or 
does the Department interpret ASHRAE 90.1 action on a single equipment 
class sufficient to satisfy the statutory requirement for the entire 
category or covered product? (A.O. Smith, No. 127 at p. 7)
    As explained previously, EPCA contains two separate provisions 
pertaining to updating the standards for ASHRAE equipment, one for the 
ASHRAE trigger (see 42 U.S.C. 6313(a)(6)(A)) and another for the 6-
year-lookback (see 42 U.S.C. 6313(a)(6)(C)). Under DOE's 
interpretation, these two statutory provisions act in harmony to ensure 
that the standards for all types of covered ASHRAE equipment are 
reviewed on a periodic basis and updated as appropriate. Although not 
compelled to do so by the statute, DOE may decide in appropriate cases 
to simultaneously conduct an ASHRAE trigger rulemaking (i.e., for those 
equipment classes for which ASHRAE set a higher standard) and a 6-year-
lookback rulemaking (i.e., for those equipment classes where ASHRAE 
left levels unchanged or set a lower standard) so as to address all 
classes of an equipment category at the same time. In other cases, DOE 
may choose to bifurcate the rulemakings and to handle the non-triggered 
equipment classes on a schedule to comply with the requirement to 
review standards every six years. As a general principle, DOE believes 
it appropriate to weigh the benefits of expediency (e.g., consolidated 
rulemaking, potentially earlier energy savings) against the burdens 
(e.g., accelerated compliance and certification costs for non-triggered 
equipment) for any given ASHRAE rulemaking. DOE anticipates stakeholder 
feedback on this preliminary issue in response to publication of the 
ASHRAE NODA following an ASHRAE triggering event.
    Second, A.O. Smith asked, if a metric is changed by ASHRAE Standard 
90.1 for a given equipment class, does this trigger Department action? 
The new metric may or may not result in an increase in the efficiency 
level as compared to the Federal efficiency level. (A.O. Smith, No. 127 
at p. 7)
    In response, if ASHRAE maintained the existing regulating metric 
that serves as the basis for current Federal energy conservation 
standard (without changing those levels), DOE would not consider the 
addition of another metric to be a triggering event. However, if ASHRAE 
were to substitute a new metric and eliminate the existing metric 
entirely, DOE would need to, at a minimum, conduct a crosswalk to the 
existing metric to see if the changed ASHRAE Standard 90.1 levels would 
be more stringent than the current Federal standards, in which case DOE 
would be triggered for those equipment classes where ASHRAE established 
a higher standard. (DOE expects this latter scenario to likely be 
theoretical, as substantial market turmoil would conceivably accompany 
a wholesale exchange of metrics without the maintenance of a 
transitional metric.) Nonetheless, DOE would need to consider as a 
policy matter the appropriateness of transitioning to the new metric 
which ASHRAE has incorporated into Standard 90.1. If DOE determines 
that there is a sound scientific, technical, and policy basis for 
changing the metric underlying the Federal standard, it would pursue 
such change through notice-and-comment rulemaking.
    Next, A.O. Smith stated that if the Department were to interpret 
the provisions as separate requirements under the statute, it could 
foresee a future where the Department is conducting two separate 
rulemakings (i.e., one under EPCA's ASHRAE authority and another under 
EPCA's 6-year-lookback authority), which carry different processes 
under the proposed Process Rule, different analyses, and different 
compliance dates. According to A.O. Smith, this would be a very 
burdensome and costly interpretation

[[Page 8646]]

because it would require double the resources spanning many years to 
comply with the uncoordinated requirements for the different equipment 
classes within a given covered product. For example, the commenter 
stated that there are currently 10 equipment classes of commercial 
packaged boilers, each with a different energy conservation standard 
for which compliance is required. A.O. Smith asked, if ASHRAE Standard 
90.1 adopts a more-stringent standard for only one of those ten 
equipment classes and the Department subsequently adopts that standard, 
would the Department continue to be triggered by the six-year lookback 
to conduct a regular review of the other 9 equipment classes within the 
covered equipment? If this is the case, A.O. Smith strongly urged the 
Department to revisit its narrowly-defined interpretation of the ASHRAE 
trigger due to the potential burdens associated with misaligned review 
cycles arising from the separate grants of authority under EPCA. (A.O. 
Smith, No. 127 at pp. 7-8)
    On its face, A.O. Smith's comment makes what appears to be a 
reasonable argument. However, the Department emphasizes that all other 
commenters on this issue opposed the idea of shifting the ASHRAE 
trigger from the equipment class level to an equipment category or 
equipment type level. In addition to individual companies (BWC and 
Lennox), a Joint Comment by 10 major trade associations (ACCA, AHRI, 
AMCA International, ALA, AHAM, HARDI, HPBA, NAFEM, NEMA, and PMI)--
representing hundreds of corporate members-- all supported DOE's 
proposal and in opposition to the change suggested by A.O. Smith to 
remedy ``misaligned review cycles.'' DOE has concluded that there are 
regulatory burdens separate from participation in the rulemaking 
process that these commenters deem to outweigh the ones identified by 
A.O. Smith. Perhaps the Joint Commenters see some benefit in spacing 
out rulemakings and associated compliance expenditures. Regardless, DOE 
reasons that there are other avenues in appropriate cases to alleviate 
the concerns expressed by A.O. Smith.
    As noted previously, DOE believes that its approach provides the 
best reading of the statutory provisions at issue, because if ASHRAE 
were to change the standard for a single equipment class, but DOE then 
considered itself triggered at the equipment category level or 
equipment type level, the process would arguably no longer comport with 
the statutory scheme. In such cases, DOE would be addressing certain 
classes of ASHRAE equipment for which standards had not changed, so it 
would be impossible for DOE to adopt the ASHRAE level as the statute 
envisions (as, in most cases, it would already be the same as the 
existing Federal standard). Instead, DOE could only consider adoption 
of more-stringent standard levels. Such interpretation would arguably 
run counter to the ``follow ASHRAE'' statutory structure set in place 
by Congress. Equipment classes which ASHRAE has decided to leave 
unchanged would remain subject to review under the statute's 6-year-
lookback provision. Whether to consolidate ASHRAE trigger and 6-year-
lookback rulemakings will likely hinge on the facts of a given 
situation. For example, if ASHRAE amends 9 out of 10 commercial 
packaged boiler equipment classes, it may make sense to immediately 
commence a 6-year-lookback rulemaking and to consolidate the 
rulemakings. However, the answer may conceivably be very different if 
ASHRAE acts to amend only one equipment class. Fortunately, DOE's 
amended Process Rule provides ample opportunity for stakeholders to 
weigh in on such issues through the prioritization process, an early 
assessment, or through comments on the ASHRAE NODA analyzing potential 
energy savings in response to an ASHRAE trigger. Through such 
mechanisms, DOE believes that it is possible to minimize, if not 
eliminate, the types of regulatory burdens about which A.O. Smith 
expressed concern.
    Earthjustice challenged as unsupported DOE's statement in the NOPR 
that ``ASHRAE not acting to amend Standard 90.1 is tantamount to a 
decision that the existing standard remain in place.'' (84 FR 3910, 
3916 (Feb. 13, 2019)). The commenter argued that DOE has not explained 
why that is a reasonable interpretation of ASHRAE's failure to amend a 
standard, or why that interpretation of ASHRAE inaction is consistent 
with the intent of Congress, which it argues has repeatedly amended 42 
U.S.C. 6313(a)(6) to make clear that ASHRAE cannot shield covered 
equipment from strengthened DOE standards (compare 42 U.S.C. 
6313(a)(6)(C) (2010) (requiring DOE's review ``[n]ot later than 6 years 
after issuance of any final rule establishing or amending a standard, 
as required for a product under this part''), with 42 U.S.C. 
6313(a)(6)(C) (2019) (requiring DOE's review ``Every 6 years'' and 
establishing a deadline for action on equipment ``as to which more than 
6 years has elapsed since the most recent final rule establishing or 
amending a standard'')). (Earthjustice, No. 134 at p. 3)
    In response to Earthjustice, DOE reasons that if ASHRAE acts to 
amend standards for certain equipment classes for an equipment category 
in Standard 90.1, that organization would have at a minimum reviewed 
the entirety of that equipment category. It would be illogical, 
confusing, and misleading to cherry-pick only select equipment classes 
within a category without reviewing the complete category, particularly 
since that could impose unnecessary burdens on industry and State code 
enforcement officials. Consequently, presuming this assumption is 
correct, in most cases, ASHRAE would be making an active decision to 
the extent it did not modify certain equipment classes within an 
equipment category. However, the matter is largely a philosophical 
debate, because such characterization of ASHRAE's action (or, in this 
case, non-action) does not have any impact on the subsequent steps DOE 
is required to take under EPCA. Where ASHRAE has not acted, DOE remains 
obligated to review the need for amended standards under DOE's 6-year-
lookback authority. (42 U.S.C. 6313(a)(6)(C)) Pursuant to that 
statutory provision, DOE must adopt amended standards more stringent 
than the current standards, if there is clear and convincing evidence 
showing that such amended standards would result in significant 
additional conservation of energy and are technologically feasible and 
economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II); 42 U.S.C. 
6313(a)(6)(B)(ii); 42 U.S.C. 6313(a)(6)(C)(i)(II)) Because DOE must 
follow its legal obligations under EPCA, ASHRAE cannot shield covered 
equipment from potential amended energy conservation standards in the 
manner Earthjustice suggests.
    Southern Company argued that DOE should (but has not always) 
examine the totality of ASHRAE actions in setting equipment standards, 
because there may be associated usage standards which are also part of 
the equation (e.g., requiring occupancy sensors to limit the time lamps 
are on, which may justify a higher energy use per watt but save more 
energy overall). According to Southern Company, DOE needs to look at 
the totality of how equipment would be used under ASHRAE Standard 90.1, 
not just looking at a particular piece of equipment in isolation and 
judging that by DOE's rules, ASHRAE should have chosen a higher 
standard. (Southern Company, March 21, 2019 Public

[[Page 8647]]

Meeting Transcript, No. 87 at pp. 102-103)
    In response, DOE acknowledges that ASHRAE action in Standard 90.1 
may sometimes employ a suite of complementary provisions intended to 
provide operational and energy savings benefits. In doing so, ASHRAE is 
not bound by the legal constraints of EPCA, so the organization is free 
to approach issues from a more purely technical perspective, rather 
than a regulatory one. In contrast, DOE must meet its legal obligations 
under the statute--particularly 42 U.S.C. 6313(a)(6)(A)-(C) and 
applicable definitions under 42 U.S.C. 6311--in considering new or 
amended standards for ASHRAE equipment, whether acting under the ASHRAE 
trigger or 6-year-lookback. In general, DOE must adopt the levels set 
forth in ASHRAE Standard 90.1, unless DOE finds, supported by clear and 
convincing evidence, that more-stringent standards would result in 
significant additional energy savings and are technologically feasible 
and economically justified. Consequently, in conducting rulemakings for 
ASHRAE equipment, DOE must live within the parameters set forth in the 
statute.
    PG&E argued there needs to be some form of verification of ASHRAE 
test procedures to ensure that they produce representative results. The 
company cited an example where through its own research, it was able to 
determine that an ASHRAE test procedure was producing results that were 
as much as 50 percent off, so the commenter recommended that a process 
be put in place to ensure that similar problems do not arise going 
forward. (PG&E, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 
123-124)
    DOE agrees that there should be a robust assessment of industry 
consensus test procedures prior to adoption as Federal test procedures, 
as contemplated by the statute. EPCA clearly contemplates that the test 
procedures for ASHRAE equipment ``shall be those generally accepted 
industry test procedures or rating procedures developed or recognized 
by [AHRI or ASHRAE] as referenced in ASHRAE/IES Standard 90.1.'' The 
statute also directs that, when those industry test procedures are 
amended, DOE should amend the Federal test procedures to be consistent. 
The statute does require that such amended test procedures remain 
reasonably designed to produce test results that reflect the energy 
efficiency, energy use, and estimated operating costs of a type of 
industrial equipment (or class thereof) during a representative average 
use cycle and shall not be unduly burdensome to conduct. If the test 
procedure is a procedure for determining estimated annual operating 
costs, such amended procedure must continue to provide that such costs 
shall be calculated from measurements of energy use in a representative 
average-use cycle, and from representative average unit costs of the 
energy needed to operate such equipment during such cycle. (42 U.S.C. 
6314(a)(2), (3), (4)(A)-(B)) If the amended industry consensus test 
procedures fail to meet these requirements, DOE may establish its own 
test procedure that meets the requirements of the statute. (42 U.S.C. 
6314(a)(4)(C))
    It is DOE's standard practice to undertake a review of amended 
industry consensus test procedures referenced in ASHRAE Standard 90.1 
before proposing conforming amendments to the corresponding Federal 
test procedures. As part of the process, DOE seeks public comment on 
its proposed test procedures, and all substantive comments must be 
addressed prior to adoption of a test procedure final rule. DOE 
believes that thorough vetting by both the Department and the 
interested public offers a sound practice that satisfies these express 
statutory requirements, as demonstrated by the case in PG&E's example.
    Southern Company argued that the proposed 0.5 quad threshold for 
significant energy savings should not apply to individual equipment 
lines in ASHRAE's standards (given that many involve equipment with 
smaller overall energy usage). The point was that for those equipment 
types, the threshold level may never be reached, so DOE would be left 
once again to await ASHRAE action, despite that fact that Congress had 
adopted a 6-year-lookback provision for ASHRAE. (Southern Company, 
March 21, 2019 Public Meeting Transcript, No. 87 at p. 122)
    In response, DOE notes that while Southern Company made the 
argument at the March 21, 2019 public meeting that certain categories 
of ASHRAE equipment may have small shipments, energy consumption, or 
both, such that the energy savings potential would be limited and 
potentially never meet the proposed 0.5 quad threshold for significant 
energy savings, the commenter did not provide any further detail, data, 
or other evidence to support its claim. Southern Company then asserts 
that DOE's proposed threshold would prevent such equipment from ever 
being subject to the 6-year-look back at 42 U.S.C. 6313(a)(6)(C), 
thereby ceding too much control to ASHRAE.
    If, for the sake of argument, DOE were to assume Southern Company's 
assessment of the market for ASHRAE equipment to be correct, the 
Department believes that the commenter has failed to consider all of 
the relevant provisions of EPCA, as well as the impact that the 
percentage savings prong of the energy savings threshold would have in 
such situations. First, in the ASHRAE context, Congress did include a 
requirement that more-stringent standards be supported by clear and 
convincing evidence showing that such standards would result in 
``significant additional conservation of energy'' and be 
technologically feasible and economically justified (42 U.S.C. 
6313(a)(6)(A)(ii)(II)), a provision which comes into play under both 
the ASHRAE trigger and the 6-year-lookback. By including such 
requirement for significant additional energy savings, Congress not 
only acted consistently with its overall approach of deferring to 
ASHRAE but also to explicitly point out that some equipment may have 
energy savings that are too small to justify the imposition of 
standards. The implication of Southern Company's argument would be to 
have DOE read the ``significant additional energy savings'' requirement 
out of the statute for at least some subset of ASHRAE equipment. DOE is 
not at liberty to follow that suggestion, but instead must give effect 
to all applicable statutory provisions.
    Nonetheless, DOE is sensitive to the concern that such equipment 
not be put beyond the reach of energy conservation standards without 
proper consideration of the potential for significant additional energy 
savings. That is why DOE has also proposed to include a percentage 
energy savings prong as part of its significant energy savings 
threshold test. Under that prong, if covered ASRAE equipment could 
achieve a substantial energy savings improvement (i.e., 10% reduction 
in energy use), such equipment would pass the test even though the quad 
threshold may never be reached. In summary, DOE has concluded that its 
approach properly addresses all of the relevant statutory provisions 
for adopting standard levels for ASHRAE equipment, including the 
requirement for significant additional energy savings. DOE's approach 
permits an assessment of each category of ASHRAE equipment, accords 
ASHRAE the deference it is due under the statute, and permits the 
adoption of more-stringent standards, supported by clear and convincing 
evidence, in appropriate cases.

D. Priority Setting

    Previously, the Process Rule at 10 CFR part 430, subpart C, 
Appendix A,

[[Page 8648]]

section 3(d) outlines DOE's priority-setting analysis, which considers 
ten factors: (1) Potential energy savings; (2) potential economic 
benefits; (3) potential environmental or energy security benefits; (4) 
applicable deadlines for rulemakings; (5) incremental DOE resources 
required to complete the rulemaking process; (6) other relevant 
regulatory actions affecting products; (7) stakeholder recommendations; 
(8) evidence of energy efficiency gains in the market absent new or 
revised standards; (9) status of required changes to test procedures; 
and (10) other relevant factors. The Process Rule also previously 
required that the results of this analysis be used to develop 
rulemaking priorities and proposed schedules for the development and 
issuance of all rulemakings which would then be documented and 
distributed for review and comment. 10 CFR part 430, subpart C, 
Appendix A, section 3(a). The 1996 Process Rule also stated that each 
Fall, DOE would issue, simultaneously with the Administration's 
Regulatory Agenda, a final set of rulemaking priorities, the 
accompanying analysis, and the schedules for all priority rulemakings 
that it anticipated within the next two years. (Id. at section 3(c).)
    In the February 13, 2019 NOPR, DOE proposed revising this process. 
DOE proposed that stakeholders would have the opportunity to provide 
input on prioritization of rulemakings through a request for comment as 
DOE begins preparation of its Regulatory Agenda each spring. In 
particular, DOE would point interested parties to the Regulatory Agenda 
posted to www.reginfo.gov the previous Fall and would request input 
concerning which rulemaking proceedings should be in particular action 
categories in the spring Regulatory Agenda and request comment on the 
timing of such rulemakings. If stakeholders believe that the Department 
is pursuing a rule that should not be prioritized, they would have the 
opportunity to use this mechanism to so inform DOE. If stakeholders 
believe DOE should act more quickly on another rulemaking they could 
make that point as well. DOE has concluded that increased stakeholder 
input early in the rulemaking process, combined with the public 
availability of the Regulatory Agenda, would meet the same objectives 
as DOE's previous priority-setting analysis. (84 FR 3910, 3916) 
(February 13, 2019)
    In response to DOE's NOPR, stakeholders provided mixed reviews of 
the proposal. Several stakeholders supported DOE's proposed 
prioritization process to invite early stage comments. (Acuity, No. 95, 
at p. 2; AHAM, March 21, 2019 Public Meeting Transcript, No. 87, at p. 
136; AHRI, March 21, 2019 Public Meeting Transcript, No. 87, at p. 135; 
AGA, No. 114, at p. 11; BWC, No. 103 at p. 2; CTA, No. 136 at p. 2; 
Edison Electric Institute, March 21, 2019 Public Meeting Transcript, 
No. 87, at pp. 133-34; GM Law, No. 105 at p. 2; Joint Commenters, No. 
112 at p. 3; NEMA, March 21, 2019 Public Meeting Transcript, No. 87, at 
p. 134; NPCC, No. 94, at p. 5; NPGA, No. 110 at p. 1; BHI, No. 135, at 
p. 4)
    Others commenters stated that EPCA deadlines take precedence over 
the Department's policy preferences in determining DOE's agenda. For 
instance, ASE questioned whether DOE's prioritization proposal is 
needed. ASE argued that DOE's proposal is potentially duplicative of 
existing procedures based on statutory and regulatory requirements. ASE 
argued that Congress has already set deadlines for DOE, either by a 
date specific or through the 6-year-lookback provision (for energy 
conservation standards) or 7-year-look-back provision (for test 
procedures). Furthermore, ASE stated that DOE already reports its 
priorities through contributions to the Regulatory Agenda. However, ASE 
suggested that using requests for information (RFIs) to gather 
stakeholder input could help prioritize new product coverage and 
publicize statutory deadlines. ASE recommended that DOE issue a revised 
proposal to better reconcile its statutory and regulatory duties with 
its plan for priority setting. (ASE, No. 108 at p. 3) ASAP stated that 
a provision for priority-setting should not be in the Process Rule. 
(ASAP, March 21, 2019 Public Meeting Transcript, No. 87, at p. 137, 
139) ASAP, et al. stated that existing statutory deadlines will largely 
determine the sequencing of DOE's work on standards and test 
procedures. Further, requesting input on prioritization would seem to 
be duplicative of the ``early assessment'' for each product since 
stakeholders will have the opportunity to provide input at the 
beginning of each rulemaking regarding whether DOE should proceed. 
(ASAP, et al., No. 126 at pp. 2, 5)
    CT-DEEP, CEC, and Cal-IOUs, and Earthjustice agreed with other 
commenters that DOE should not prioritize rulemakings based on anything 
other than the sequencing already required by statute. (CT-DEEP, No. 
93, at p. 2; CEC, No. 121, at p.3; Cal-IOUs, No. 124, at p.6; 
Earthjustice, No. 134, at p. 3) As Earthjustice summarized, the Process 
Rule cannot authorize a delay or suspension of work that would lead to 
or exacerbate the violation of a statutory deadline. (Earthjustice, No. 
134, at p. 3)
    The Cal-IOUs also indicated that it did not understand the specific 
details of this aspect of DOE's proposal or how it would ensure that 
DOE would adhere to its schedules. The Cal-IOUs acknowledged that 
providing stakeholder input on DOE's priorities seems positive, but it 
warned that this added input would create additional burden through the 
imposition of new steps to the current process. (Cal-IOUs, No. 124, at 
p. 6). Also, Energy Solutions questions how priority setting would 
supersede EPCA requirements. (Energy Solutions, March 21, 2019 Public 
Meeting Transcript, No. 87, at p. 132)
    As for the 10 existing priority-setting factors, the CEC supports 
the continued application of the 10 existing priority-setting factors 
to DOE's priority-setting process and supports streamlining how the DOE 
notifies the public of its priorities by eliminating duplicative 
processes and using the Regulatory Agenda as the means for distributing 
the Agency's plans for upcoming efficiency regulations. (CEC, No. 121, 
at p. 3) Another commenter, AGA, stated that the Department should 
focus on two of the 10 existing priority-setting factors, the potential 
energy savings and the potential economic benefits as an initial screen 
for prioritization. The focus on these two factors is important because 
if the Department determines the proposed regulatory activity does not 
provide sufficient energy savings or is not cost effective, there is no 
need to review the other factors. (AGA, No. 114, at p. 11)
    Although stakeholders have given DOE's prioritization proposal 
mixed reviews, DOE is implementing this revised priority-setting 
process because increased stakeholder input early in the rulemaking 
process, combined with the public availability of the Regulatory 
Agenda, is additional input that could better inform the Department in 
its decision-making process concerning priority-setting and would meet 
the same objectives as DOE's previous priority-setting analysis in the 
current Process Rule.

E. Coverage Determinations

    In its proposal, DOE explained that EPCA provides DOE with the 
discretionary authority to classify additional types of consumer 
products and industrial/commercial equipment as ``covered'' within the 
meaning of EPCA. See 42 U.S.C. 6292(b) (providing authority for 
establishing coverage over consumer products) and 42 U.S.C.

[[Page 8649]]

6295(l) (setting criteria for setting standards for consumer products); 
see also 42 U.S.C. 6312(c) (providing authority for establishing 
coverage over specified commercial and industrial equipment). This 
authority allows DOE to consider regulating additional products/
equipment that would further the goals of EPCA to conserve energy for 
the Nation--as long as the statutory threshold requirements are met.
    DOE proposed to initiate the process through which it would add 
coverage of a particular product or equipment by publishing a notice of 
proposed determination to address solely the merits of covering that 
product or equipment. The notice would explain how the coverage of the 
item would meet the relevant statutory requirements and why coverage is 
``necessary or appropriate'' to carry out the purposes of EPCA. (84 FR 
3910, 3916 (Feb. 13, 2019). See also 42 U.S.C. 6292(b)(1) (detailing 
criteria for classifying a consumer product as a covered product). In 
cases involving commercial/industrial equipment, DOE follows the same 
process, except that the Department need only show the coverage 
determination is ``necessary'' to carry out the purposes of EPCA. See 
42 U.S.C. 6312(b) (providing that the Secretary of Energy ``may, by 
rule, include a type of industrial equipment as covered equipment if he 
determines that to do so is necessary to carry out the purposes of 
[Part A-1 of EPCA]''). DOE's authority to add coverage over commercial 
equipment is more limited than its coverage authority for consumer 
products because Congress specified the particular types of equipment 
that could be added. (42 U.S.C. 6311(2)(B)) Stakeholders would then be 
given 60 days to submit written comments to DOE on the proposed 
determination notice. Subsequently (and in a change from DOE's past 
practice), DOE would assess the written comments and then publish its 
final decision on coverage as a separate notice, an action which would 
be completed prior to the initiation of any rulemaking for related test 
procedures or energy conservation standards. If the final decision 
determines that coverage is warranted, DOE would proceed with its 
typical rulemaking process for both test procedures and standards, 
applying the requirements of the Process Rule, as amended. See 
generally, 84 FR 3910, 3916 (Feb. 13, 2019).
Comment Summary
    DOE received a variety of comments responding to its proposal, 
which would, at its core, emphasize the need for clearly establishing 
coverage over the relevant product/equipment prior to taking any 
additional steps, such as engaging with the public on matters involving 
potential test procedures or possible energy conservation standards. 
Commenters responded both in support of the proposal and against it.
    Supporters of DOE's proposal included manufacturers, trade 
associations, and utility companies.
    Acuity agreed with the proposal, stating that it makes sense to 
solicit public input and determine coverage prior to considering 
potential standards for products/equipment. (Acuity, No. 95, at pp. 2-
3.) It added that a bifurcated approach like the one proposed by DOE 
would save both DOE and stakeholders significant resources if there 
should be a ``no coverage'' determination. (Acuity, No. 95, at p. 3.) 
Acuity also agreed with DOE's proposal to identify newly covered 
products in a limited fashion and to narrowly and clearly define any 
new designations involving products. (Acuity, No. 95, at p. 3.)
    BWC agreed with DOE's proposal to finalize a coverage determination 
at least six months prior to publication of a test procedure proposal, 
but it cautioned that the scope of coverage should be narrowly defined 
so as to prevent any unintended consequences. (BWC, No. 103 at p. 2)
    Westinghouse Lighting stressed that as a small manufacturer, it 
does not have the bandwidth to quickly examine the impacts of a sudden 
``last minute'' expansion in product coverage. It also emphasized that 
the coverage determination process ``cannot go back to square one'' but 
needs to have clear ``exit ramp options'' along the way to enable the 
agency to drop or add a product that no one had considered earlier in 
the process. (Westinghouse Lighting, March 21, 2019 Public Meeting 
Transcript at pp. 161-162.)
    AGA supported DOE's proposal to limit any expansion of coverage to 
those narrow circumstances that satisfy the statutory requirements and 
purpose of EPCA. (AGA, No. 114, at 13)
    NEMA stressed that it preferred to have determinations of 
rulemaking scopes of coverage, along with the completion of 
accompanying test procedures, completed early during DOE's rulemaking 
efforts. (NEMA, March 21, 2019 Public Meeting Transcript at p. 157)
    The Joint Commenters also supported DOE's coverage determination 
proposal. In their view, finalizing coverage determinations before the 
initiation of any labeling, standards, or test procedure rulemakings 
(by six months prior to the start of a test procedure rulemaking) is 
necessary because it is impossible to address substantive issues until 
the products at issue have been clearly and specifically defined. 
(Joint Commenters, No. 112 at p. 3) They also asserted that any 
proposed covered products/equipment should be narrowly defined with 
sufficient clarity so that the proposed coverage corresponds to what is 
intended to be covered. In their view, following the proposed approach 
would avoid unnecessary confusion, the wasting of resources, and 
failures to address relevant and critical issues. They also asserted 
that finalizing coverage determinations first would ensure that both 
stakeholders and DOE know what products/equipment are at issue in the 
substantive rulemakings. The Joint Commenters also supported DOE's 
proposal to initiate a new coverage determination process (and to 
complete that process prior to moving forward either with a standards 
or test procedure rulemaking) if DOE finds it necessary to expand or 
reduce the scope of coverage during the substantive rulemaking process. 
(Joint Commenters, No. 112 at pp. 3-4)
    HPBA stressed that unless a given product is ``covered'' by DOE, 
the Agency may not prescribe standards for that product (and only under 
certain circumstances)--and before DOE considers proposing a standard, 
there must be the possibility of a ``substantial improvement'' in that 
product's energy efficiency and DOE must first consider whether 
labeling requirements would be effective. (HPBA, No. 128, at pp. 1-2.) 
HPBA elaborated that, with respect to labeling, the question is not 
whether a labeling rule would achieve the same energy savings that a 
mandatory standard would achieve but whether such a rule would be 
insufficient ``to induce manufacturers to produce and consumers and 
other persons to purchase'' products capable of achieving the highest 
level of efficiency that would be technologically feasible and 
economically justified. (HPBA, No. 128, at p. 2 (quoting from 42 U.S.C. 
6295(l)(D)).) HPBA stressed that DOE's consideration of potential new 
standards should occur only after the potential products for coverage 
have been clearly identified but before any standards development has 
begun and only after the criteria for issuing standards for newly 
covered products under 42 U.S.C. 6295(l) (i.e., newly covered products) 
have been satisfied. (HPBA, No. 128, at p. 2.)
    EEI viewed the proposal as ``a good first step.'' (Edison Electric 
Institute, March 21, 2019 Public Meeting Transcript at pp. 147)
    HPBA suggested that DOE codify the predicate conditions for 
substantive

[[Page 8650]]

regulations in the Process Rule and stressed that DOE must (1) be clear 
as to what products are at issue, while determining that it is 
necessary to regulate them and (2) settle the issue of finality for 
judicial review to avoid having disputes over coverage before a 
decision is made on whether to impose standards. To address the latter 
of these, HPBA suggested characterizing the determination of coverage 
as a ``preliminary determination of coverage.'' (HPBA, March 21, 2019 
Public Meeting Transcript at pp. 148-49) Following this suggested 
approach would lead to a final determination once standards are 
adopted. (HPBA, March 21, 2019 Public Meeting Transcript at p. 149)
    Responding to concerns during the March 2019 Public Meeting about 
having to restart the whole process every time there is an error in the 
coverage determination, Spire argued that it is necessary for the 
process to restart to help ensure that manufacturers have an 
opportunity to be involved in the process. (HPBA, March 21, 2019 Public 
Meeting Transcript at pp. 153, 158)
    Finally, GM Law supported what it regarded as DOE's proposal to 
limit its ability to recognize new covered products. In its view, the 
proposed approach would allow all interested parties to focus on the 
most effective conservation measures. (GM Law, No. 105 at p. 3)
    Commenters who expressed concerns about DOE's proposal, like those 
who supported it, represented a variety of different interests. These 
interested parties included energy efficiency advocacy groups, States, 
and utilities.
    Earthjustice expressed concern that DOE would not gather standards-
related information prior to finalization of the coverage 
determination. (Earthjustice, March 21, 2019 Public Meeting Transcript 
at p. 156)
    NPCC disagreed with the proposed use of a separate coverage 
determination process. In its view, having notice and comment on 
coverage adds unnecessary burden and time to the standards process. 
(NPCC, No. 94, at p. 5.)
    ACEEE argued that requiring a final coverage determination prior to 
initiating a test procedure or standard rulemaking, and a final test 
procedure 180 days before a standards NOPR, will weaken coordination of 
DOE's rulemaking process. In its view, these restrictions will prolong 
the rulemaking process and prevent subsequent proceedings from 
informing earlier ones, resulting in worse coverage and test procedure 
decisions or years-long delays as the earlier rulemakings are repeated. 
(ACEEE, No. 123, at p. 2) ACEEE also indicated that it generally 
supported an approach that would result in completion of test 
procedures well before the end of the comment period on the 
accompanying energy conservation standard rulemaking for the affected 
product, while leaving an ability to fix problems that may become 
apparent later. (ACEEE, No. 123, at p. 2)
    ASAP, like HPBA, supported the idea of settling the issue of 
finality regarding a given coverage determination for judicial review 
purposes and suggested that having a ``preliminary determination'' 
would help avoid the prospect of restarting the analytical process by 
moving back to a coverage determination analysis for the entire product 
or equipment type at issue. It envisioned a process where DOE could 
continue to move forward on those products/equipment that were already 
addressed by the earlier ``preliminary'' determination. (ASAP, March 
21, 2019 Public Meeting Transcript at pp. 151-152) As proposed, ASAP 
expressed concern that the coverage determination process would be 
restarted whenever a problem with coverage is detected, which would 
result in DOE being unable to produce a rule within a reasonable 
timeframe, particularly if test procedures and coverage determinations 
are not being addressed in parallel with each other. To avoid this 
potential outcome, ASAP suggested that DOE adopt an approach that would 
address coverage determination and test procedures simultaneously. 
(ASAP, March 21, 2019 Public Meeting Transcript at pp. 167-168)
    In jointly-filed comments, ASAP, et al. argued that the Process 
Rule should not require that a coverage determination be completed 
prior to initiating a rulemaking. These groups criticized DOE's 
proposal as not reflecting the fact that information learned during the 
rulemaking process for both test procedures and standards can, and 
should, inform the coverage determination. (ASAP, et al., No. 126 at p. 
2) They cautioned that the proposal would result in potentially adding 
steps to the process and unnecessarily delaying rulemakings and pointed 
to the miscellaneous refrigeration products rule to illustrate how 
information that is learned during the rulemaking process can 
ultimately inform the determination of coverage. (ASAP, et al., No. 126 
at pp. 5-6)
    The State AGs contended that DOE's proposal to issue final coverage 
determinations six months prior to initiating a test procedure or 
standards rulemaking would improperly delay the promulgation of 
beneficial and necessary standards that are in the public interest. 
They worried that a standards-setting rulemaking would be significantly 
delayed if DOE determined that a coverage determination should be 
modified after finalizing coverage. They also worried that the need to 
restart the coverage determination process could act as a disincentive 
to modifying coverage determinations, even when warranted by new 
information obtained during the rulemaking process. In their view, the 
current approach followed by DOE readily permits changes to the scope 
of coverage as the process unfolds, while DOE's proposed approach would 
require re-noticing of the coverage determination, re-finalization, and 
restarting the 6-month clock for a standards rulemaking, all of which 
could impact DOE's ability to meet statutory deadlines. (AGs Joint 
Comment, No. 111 at pp. 8-9) The State AGs also contended that DOE's 
proposed ``limited'' approach to identifying new covered products is 
contrary to what they view as Congress's intent for DOE to continue 
expanding covered products. (AGs Joint Comment, No. 111 at p. 4) 
Finally, the State AGs noted that since coverage determinations allow 
DOE to regulate previously unregulated products, a delay at this stage 
would delay the potentially significant benefits that could accrue from 
regulating these new products, contrary to EPCA's objective of 
propelling the market for new efficient consumer and industrial 
technologies. (AGs Joint Comment, No. 111 at pp. 8-9)
    The CEC also made a variety of broad points in its public meeting 
statements and comments. It stated its belief that it did not view the 
issuance of a coverage determination to have a preemptive effect until 
standards are set for the product at issue. (CEC, March 21, 2019 Public 
Meeting Transcript at p. 165) It also argued that DOE must retain 
flexibility to modify the applicable scope of coverage in response to 
new information developed as part of the rulemaking process. (CEC, No. 
121, at p. 4 (pointing to DOE's actions during its battery charger 
rulemaking that resulted in moving backup battery chargers into a 
separate rulemaking proceeding)) In its view, DOE's proposal to restart 
its entire standard-setting process if it needs to revise the scope of 
coverage would effectively prevent any appliances from becoming newly 
covered products, regardless of the potential for energy savings, the 
maturity of the test procedure, or the readiness for standards. (CEC, 
No. 121, at p. 4.) The CEC added that, at best,

[[Page 8651]]

DOE's proposal would result in delayed standards without increasing 
stakeholder participation or providing consumer benefits. (CEC, No. 
121, at p. 4.)
    CT-DEEP argued that the proposal's coverage determination provision 
would generate an unnecessary and increased number of steps to the 
rulemaking process in cases where DOE finds it necessary to modify the 
scope of coverage during a rulemaking. (CT-DEEP, No. 93, at p. 2.) In 
its view, to prevent unnecessary delays, DOEs should not require a 
completed coverage determination prior to initiating a rulemaking. (CT-
DEEP, No. 93, at p. 2.)
    The Cal-IOUs noted during the March 2019 public meeting that it 
agreed with HPBA's suggestions--i.e., that DOE must codify the 
predicate conditions for substantive regulations in the process rule, 
which would involve (1) not only being clear as to what products are at 
issue but also to determine that it is necessary to regulate them and 
(2) making this decision final for judicial review purposes to avoid 
having a dispute over coverage. (Cal-IOUs and HPBA, March 21, 2019 
Public Meeting Transcript at pp. 148-150) (To the latter of these 
points, Spire suggested the use of a ``preliminary determination of 
coverage.'' (HPBA, March 21, 2019 Public Meeting Transcript at p. 149)) 
The Cal-IOUs were also concerned with whether the proposed process 
would preempt State regulatory efforts. In their view, preemption 
should not apply until the relevant test procedure and standards are 
established. (Cal-IOUs, March 21, 2019 Public Meeting Transcript at pp. 
155-156.) In their written comments, the Cal-IOUs again asserted that 
final coverage determinations should be established only after 
standards have been finalized for the product that is subject to that 
determination. (Cal-IOUs, No. 124, at p. 6.) In their view, publishing 
a final determination before establishing standards could be 
problematic if modifications to the product scope are necessary during 
the rulemaking process. (Cal-IOUs, No. 124, at p. 6.) They argued that 
without the flexibility to readily modify the scope of coverage without 
pausing a rulemaking to solicit public comment on the coverage 
determination before moving forward, the rulemaking burden would 
increase both on DOE and stakeholders. (Cal-IOUs, No. 124, at pp. 6-7 
(alluding to various comments from the March 2019 Public Meeting 
regarding potential problems with the proposed finalization of coverage 
determination before establishing standards))
    Finally, individual commenter Linda Steinberg provided a general 
wholesale rejection of the proposal. (Steinberg, No. 90, at 1)
Response to Comments
    DOE has carefully considered the comments it received from all 
interested parties. While DOE has decided to largely continue with its 
proposed approach, it is making certain clarifications to address the 
concerns expressed in response to the proposal.
    As a preliminary matter, DOE notes that without settling the 
fundamental question of what product or equipment to regulate, all 
other aspects of its regulatory framework--i.e. test procedures and 
energy conservation standards--stand on infirm ground. By ensuring that 
the scoping of a particular product or equipment type is appropriately 
set, the necessary details regarding how to evaluate the efficiency of 
that product/equipment can be discussed and evaluated. Once there is an 
agreed-upon means on how to evaluate the energy efficiency of a 
product/equipment, only then can there be a meaningful analytical 
discussion regarding what the appropriate energy conservation standards 
should be. And without completing the test procedure prior to issuing a 
proposal on potential standards (and providing industry with time to 
familiarize itself with the test procedure itself), the analytical 
process in evaluating those potential standards would be more prone to 
confusion and error in ensuring that an appropriate standard is set. 
The approach that DOE is adopting in this final rule is consistent with 
what DOE has done in the past, and the agency seeks to adhere to this 
analytical sequence to help ensure that the framework that it applies 
to newly covered products and equipment will stand on firm technical 
and legal grounds.
    Further, while DOE will seek to ensure that its coverage 
determination is as complete as possible, the agency emphasizes that 
coverage of a product/equipment type is necessarily broad in nature. 
DOE does not anticipate many changes to the scope of coverage of a 
product or equipment type once it finalizes a coverage determination 
but it recognizes that there may be issues involving which classes of 
products or equipment to regulate and how to regulate them. In DOE's 
view, these timing and policy questions are separate from the issue of 
determining coverage and can be addressed within the context of an 
ongoing test procedure or standards rulemaking, as appropriate. By way 
of a hypothetical example, if, after finalizing a coverage 
determination for ``handheld or worn mobile communication-capable 
computing devices'' that specifically includes smartphones, tablets, 
and smartwatches, DOE discovers that another group of devices should 
also have been covered--e.g., smartglasses--DOE would be able to 
address that issue separately from the question of what testing method 
or standard would apply to the remaining classes of products within 
this product type. The question of coverage in this instance would be 
handled separately, as would questions concerning the appropriate test 
procedure and standards to apply. Once coverage is established, DOE may 
opt to regulate certain classes of a particular product type and defer 
regulating other classes for another time as appropriate.
    DOE appreciates the concern expressed by Earthjustice regarding the 
importance of obtaining sufficient data prior to making a final 
decision regarding product or equipment coverage. This sentiment for 
ensuring that DOE has sufficient information before making any final 
coverage decision, as indicated in the earlier summary, was shared by 
others as well. DOE notes that in performing its analysis to determine 
whether to extend coverage over a particular product or equipment, it 
would, as it routinely has in the past, collect as much information as 
possible through its own analysis and research--including through 
careful reviews of responses to DOE's requests for information to the 
public. DOE is also hopeful that, given this apparently universally-
held belief in the importance of ensuring that the agency has 
sufficient information on which to base its coverage determinations, 
interested parties will endeavor to provide DOE with as much relevant 
information as possible to help inform the decision-making process.
    DOE also appreciates the concerns expressed by ACEEE to ensure that 
coverage determinations are properly set. DOE agrees that this factor 
is a critical consideration in the context of its test procedure and 
standards rulemakings. A coverage determination is the foundational 
step that serves as the stepping stone upon which an entire rulemaking 
will stand--and without a strong foundation on which to build, the 
framework of the rulemaking will be prone to difficulties in 
implementation and potentially vulnerable to a legal challenge. DOE 
wishes to avoid these and similar issues going forward to ensure that 
its regulations are appropriately scoped and implemented.
    Regarding the notion of continuing with an ongoing test procedure 
or standards rulemaking if a problem with

[[Page 8652]]

a finalized coverage determination is found, DOE notes that the 
addition (or removal) of a given product/equipment class as part of the 
overall coverage of a product/equipment would be treated and analyzed 
separately from the other classes already being examined and agreed 
upon as appropriate for inclusion as part of an ongoing test procedure 
or standards rulemaking. To the extent that a given coverage 
determination is so defective that the determination itself needs 
reevaluating--such as from the reliance on inaccurate energy use data--
DOE would pause its pending rulemakings to examine what aspects of its 
rulemakings need modifying in light of the new information. That 
process may very well involve seeking public comment and input to 
assist DOE in addressing any deficiencies in its analysis and related 
determination. DOE believes that the prospect of having to re-initiate 
the coverage determination process--and the attendant regulatory 
uncertainty and overall unpredictability that will follow--will serve 
as sufficient incentive for all interested parties to participate fully 
in the coverage determination process and provide DOE with 
comprehensive and relevant data to consider as part of the Agency's 
analysis when it first initiates a coverage determination for a product 
or equipment type. When applied in this manner, DOE does not believe 
that a ``preliminary determination,'' as suggested by HPBA and others, 
is necessary to ensure the validity of coverage determinations or that 
the rulemaking process is able to proceed in a timely fashion. 
Accordingly, DOE is declining to adopt the suggested preliminary 
determination approach. DOE may revisit this issue if circumstances 
suggest that such a change is needed.
    DOE notes that examples of coverage determination changes cited by 
ASAP, et al. (miscellaneous refrigeration products) and the CEC 
(battery chargers), reflect approaches that could still be followed 
with respect to the addressing of any fundamental problems with 
coverage. In the example of miscellaneous refrigeration products 
(MREFs), DOE settled questions regarding coverage by eliminating 
icemakers from the potential rulemaking's scope after initiating a 
negotiated rulemaking. DOE does not anticipate that this process of 
addressing coverage questions prior to setting out the framework for 
related test procedures and standards would be altered by the 
provisions adopted in this final rule. DOE also notes that because it 
initiated a negotiated rulemaking to address test procedure- and 
standards-related issues, the agency was able to address its various 
regulatory framework issues through a mutually agreed-on negotiated 
rulemaking process allowing the handling of these issues. See 80 FR 
17355 (April 1, 2015). DOE agrees that the concurrent publication of 
DOE's test procedure final rule and coverage determination for these 
products, when following the normal course set out in this final rule, 
would unfold differently than in the negotiated rulemaking process as 
used in the MREF proceeding. See 81 FR 46768 (July 18, 2016).
    Regarding the CEC's concerns, DOE first notes that it disagrees 
with the CEC's suggestion that the proposed coverage determination 
provision would prevent DOE from issuing any standards in the future. 
Since EPCA separates the determination of coverage from the setting of 
standards and test procedures, unless the problems with an earlier 
coverage determination were defectively fatal, DOE does not anticipate 
that the coverage determination provision being adopted in this final 
rule will necessarily prevent the agency from issuing future standards. 
Instead, it will help ensure that the scope of coverage that DOE sets 
is appropriate and sets out a firm foundation for future rulemakings.
    With respect to the backup battery charger situation cited by the 
CEC, DOE notes that the removal of that class of products from the 
battery charger rulemaking to a different product type's rulemaking 
would still be possible, as no overall change to the product type 
itself--i.e., battery chargers--was made. See 81 FR 38266, 38275 (June 
13, 2016). Applying this final rule's approach would allow a finalized 
coverage determination to continue to remain intact provided that the 
removal of a given class of products would not affect DOE's ability to 
demonstrate that the coverage criteria under 42 U.S.C. 6295(l) would 
still be met. If, however, DOE can no longer demonstrate that these 
criteria are satisfied, the prior coverage determination would need to 
be re-evaluated and analyzed as appropriate.
    As for the CEC's statements regarding preemption, DOE notes that 
the scope of preemption is already covered by 42 U.S.C. 6297 and, as 
applicable, 42 U.S.C. 6295(ii). In DOE's view, test procedure rules 
would preempt any similar requirements imposed at the local level--
irrespective of whether standards for the products/equipment at issue 
have been set. With respect to standards, any newly covered product for 
which DOE sets coverage and standards would be addressed under 42 
U.S.C. 6295(ii). DOE agrees with the CEC that under this scenario, 
where DOE is setting standards for a newly covered consumer product 
type for the first time, preemption of any pre-existing standards would 
not occur until the compliance date for the relevant DOE standards is 
reached. See 42 U.S.C. 6295(ii)(1). With respect to industrial 
equipment for which DOE adds coverage, DOE believes that the provisions 
of 42 U.S.C. 6297(b) do not require that a Federal standard must first 
be effective in order for preemption to apply. This provision, which 
preempts State and local regulations until such time that a Federal 
standard becomes effective, provides an exception for those products 
that were already addressed by regulations prescribed or enacted before 
January 8, 1987 and applies to products before January 2, 1988. 
(Special provisions applicable to certain types of lighting products 
also apply.) Exceptions are also provided for a variety of other 
regulations but have no bearing on the industrial equipment over which 
DOE has authority to add coverage. See 42 U.S.C. 6297(b)(2)-(7).
    With respect to the concerns expressed by the State AGs, DOE's 
responsibility is to ensure that it establishes legally defensible 
standards for newly covered products--in effect, to perform a balancing 
test regarding the benefits of energy savings, the costs of producing 
those savings, and the policy considerations inherent in making the 
final decision on standards. This means that the standards that DOE 
promulgates must produce significant energy savings that are 
economically justified and technically feasible. DOE acknowledges 
EPCA's goal of improving energy efficiency, and also emphasizes that 
DOE must ensure that those standards are produced with the benefit of 
full participation from interested parties to help it ascertain whether 
the requisite criteria for setting standards in a given scenario are 
met. DOE believes that the measured approach being adopted in this rule 
will enable it to continue to do so in a manner that addresses the 
concerns noted earlier by interested parties regarding the 
predictability and transparency of DOE's process while ensuring that a 
proper scope is used to set economically justified levels of energy 
efficiency that will benefit the Nation as a whole.
    If DOE determines to initiate the coverage determination process, 
it will first publish a notice of proposed determination, limited to 
the issue of coverage, in which DOE will explain how such products/
equipment that it seeks to designate as ``covered'' meet the

[[Page 8653]]

statutory criteria for coverage and why such coverage is ``necessary or 
appropriate'' to carry out the purposes of EPCA. (42 U.S.C. 6292(b)(1)) 
In the case of commercial/industrial equipment, DOE follows the same 
process, except that the Department need only show the coverage 
determination is ``necessary'' to carry out the purposes of EPCA. (42 
U.S.C. 6312) DOE's authority to add commercial equipment is more 
limited than its authority to add consumer products because Congress 
specified the particular types of equipment that could be added. (42 
U.S.C. 6311(2)(B)) Stakeholders would then be given 60 days to submit 
written comments to DOE on the proposed determination notice. 
Subsequently (and in a change from DOE's past practice), DOE would 
assess the written comments and then publish its final decision on 
coverage as a separate notice, an action which would be completed prior 
to the initiation of any rulemaking for related test procedures or 
energy conservation standards. If the final decision determines that 
coverage is warranted, DOE will proceed with its typical rulemaking 
process for both test procedures and standards, applying the 
requirements of the Process Rule, as amended. Specifically, DOE would 
not issue any RFIs, notices of data availability (``NODAs''), or any 
other mechanism to gather information for the purpose of initiating a 
rulemaking to establish a test procedure or energy conservation 
standard for the proposed covered product prior to finalization of the 
coverage determination. DOE will also finalize coverage for a product 
at least six months prior to publication of a proposed rule to 
establish a test procedure. And, DOE will complete the test procedure 
rulemaking at least six months prior to publication of a proposed 
energy conservation standard. This timing does not present any legal 
issue because adding coverage for a product and establishing test 
procedures and standards is a purely discretionary act without legal 
deadline.
    The Joint Commenters, citing to 42 U.S.C. 6292(b)(1)(A), argued 
that DOE should exercise its authority to identify new ``covered 
products'' in a limited fashion, extending only to those products for 
which EPCA regulation is ``necessary or appropriate'' to the 
achievement of EPCA's purposes. They further argued that DOE's 
authority to identify new ``covered products'' is limited to products 
that consume at least enough energy to satisfy a stated minimum energy 
consumption criterion. The Joint Commenters urged that coverage 
determinations be made on a product-specific basis with each new 
covered product being defined separately with sufficient clarity to 
ensure that products serving different purposes are not treated as a 
single covered product. They added that each product should 
individually satisfy the minimum energy consumption requirement and 
qualify as a ``necessary or appropriate'' target for regulation. The 
Joint Commenters advocated that the Process Rule should be amended to 
require that proposed and final coverage determinations under 42 U.S.C. 
6292(b) specifically identify each of the products at issue and provide 
a separate justification for the coverage of each. They further added 
that DOE has failed to satisfy these requirements in the past. 
Moreover, the Joint Commenters recommended that a final coverage 
determination be in place before substantive rulemaking on test 
procedures or energy conservation standards commences so that the 
public clearly understands which products are covered, thus avoiding 
unnecessary confusion, wasted resources, and the failure to address 
critical issues. Lastly, the Joint Commenters suggested that the 1996 
Process Rule requires a reopening of comment on the justification for a 
coverage determination during the first rulemaking in which substantive 
regulation is imposed and if broader coverage is required, a new 
coverage determination must be proposed and finalized before initiating 
a rulemaking to regulate the broader range of products. (Joint Comment, 
No. 51 at pp. 9-10) Whirlpool and Lutron expressed support for these 
views. (See Whirlpool, No. 76 at p. 1; Lutron, No. 50 at p. 2)
    DOE agrees with the points raised by the Joint Commenters, 
discussed previously, that DOE should exercise its authority to 
identify new ``covered products'' in a limited fashion. To this end, 
DOE proposes to extend coverage only to: (1) Those consumer products 
for which EPCA regulation is ``necessary or appropriate'' to the 
achievement of EPCA's purposes and which meet statutory consumption 
criterion, and (2) to that commercial/industrial equipment for which 
EPCA regulation is ``necessary'' to the achievement of EPCA's purposes. 
DOE agrees that any proposed new covered products/equipment should be 
narrowly defined with sufficient clarity so that the proposed coverage 
corresponds to that which is intended.
    DOE does not agree with the Joint Commenters' suggestion that all 
coverage determinations must be reopened as a matter of course in the 
first substantive rulemaking on the newly covered product/equipment. 
After completing notice and comment on a proposed coverage 
determination and issuing a final determination, DOE believes it is 
appropriate to accord such process finality. However, if during the 
substantive rulemaking proceeding DOE finds it necessary and 
appropriate to expand or reduce the scope of coverage, the Department 
agrees with the Joint Commenters' that a new coverage determination 
process at that point should be initiated and finalized prior to moving 
forward with the test procedure or standards rulemaking.

F. Early Stakeholder Input To Determine the Need for Rulemaking

    In the February 2019 NOPR, DOE proposed to adopt provisions in the 
revised Process Rule detailing the steps DOE would take prior to 
issuing a notice of proposed rulemaking, including a proposed 
determination not to amend an energy conservation standard or test 
procedure. The proposed revisions focused on two main areas: (1) 
Establishing an early assessment review of potential test procedure and 
energy conservation standard rulemakings; and (2) clarifying what steps 
DOE will take, and the corresponding opportunities stakeholders will 
have to comment, after the early assessment review and before issuance 
of any notice of proposed rulemaking. (84 FR 3910, 3917)
a. Early Assessment Review
    In order to ensure that DOE maximizes the benefits of its 
rulemaking efforts, DOE proposed to revise the Process Rule to include 
an early assessment review of the suitability of further rulemaking. 
Id. at 84 FR 3917. This purpose of this review is to limit the 
resources, from both DOE and stakeholders, committed to rulemakings 
that will not satisfy the requirements in EPCA that a new or amended 
energy conservation standard save a significant amount of energy, and 
be economically justified and technologically feasible; and that an 
amended test procedure more accurately measure energy (or water) use 
during a representative average use cycle, or reduce testing burden. 
(42 U.S.C. 6295(o)(3)(B); 42 U.S.C. 6293(b)) Therefore, as the first 
step in any proceeding to consider establishing or amending an energy 
conservation standard or amending a test procedure, DOE would publish a 
notice in the Federal Register announcing that DOE is considering 
initiation of a proceeding, and as part of that notice, DOE would 
request submission of related comments, including data and information 
showing whether any new or amended standard

[[Page 8654]]

would satisfy the relevant requirements in EPCA for a new or amended 
energy conservation standard or an amended test procedure. Based on the 
information received in response to the notice and its own analysis, 
DOE would determine whether to proceed with a rulemaking for a new or 
amended energy conservation standard or an amended test procedure. If 
DOE determines that a new or amended standard or amended test procedure 
would not meet the applicable statutory criteria, DOE would engage in 
notice and comment rulemaking to make that determination. If DOE 
receives sufficient information suggesting it could justify a new or 
amended standard or the information received is inconclusive with 
regard to the statutory criteria, DOE would undertake the preliminary 
stages of a rulemaking to issue or amend an energy conservation 
standard. Beginning such a rulemaking, however, would not preclude DOE 
from later making a determination that a new or amended energy 
conservation standard or amended test procedure cannot satisfy the 
requirements in EPCA. (84 FR 3910, 3917, 3921)
    In response, several commenters supported the addition of an early 
assessment review. For example, Acuity stated that early determinations 
at these stages will save regulated parties and the Department 
countless hours and valuable resources by cutting off what have become 
virtually automatic rulemakings to update standards and test 
procedures--updates that no longer produce meaningful energy savings 
and divert attention and resources from pro-consumer innovation, R&D, 
etc. (Acuity, No. 95, at p. 3) Similarly, Joint Commenters stated that 
early assessment improves and streamlines the Department's approach to 
rulemaking by identifying early in the process how DOE should use its 
resources. (Joint Commenters, No. 112, at p. 4)
    DOE also received comments expressing various concerns with the 
proposed early assessment review process. Several commenters were 
concerned that the addition of the early assessment review would 
increase the length of the rulemaking process and make it more 
difficult for DOE to meet applicable statutory deadlines. For instance, 
CEC stated that the early assessment review should be completed in 
sufficient time for DOE to meets its statutory deadlines under EPCA, as 
delays caused by adding new procedures are not sufficient to change 
those Congressional mandates. (CEC, No. 121, at p. 5)
    In response, DOE notes that the purpose of the early assessment 
review is to reduce the length of the rulemaking process when issuing a 
determination that a new or amended energy conservation standard or 
amended test procedure is not warranted under the applicable statutory 
criteria. And, while DOE acknowledges that the early assessment review 
adds an additional step to rulemaking processes, this step will allow 
DOE to focus more resources on rulemaking activities that result in a 
new or amended energy conservation standard or amended test procedure. 
As a result, DOE believes the increase in available resources will 
offset, in part or whole, the extra time spent conducting an early 
assessment review.
    Commenters, such as ASAP, et al. and ASE, also expressed concern 
that the early assessment review process is unnecessarily duplicative 
of DOE's current process regarding preliminary rulemaking activities. 
(ASAP, et al., No. 126, at p. 7; ASE, No. 108, at p. 5) In response, 
DOE notes that the early assessment review is not just an earlier 
version of DOE's normal rulemaking analysis. The goal of the early 
assessment review is to conduct a more focused, limited analysis of a 
specific set of facts or circumstances that would allow DOE to 
determine that, based on one or more statutory criteria, a new or 
amended energy conservation standard or amended test procedure is not 
warranted.
    Some commenters expressed concern that the early assessment review 
would shift the burden of determining whether to proceed with a 
rulemaking to stakeholders. For instance, NPGA disagreed with placing 
the onus on stakeholders to demonstrate that new regulatory action is 
not necessary, and CEC stated that DOE will simply defer to commenters 
about whether a test procedure amendment is necessary, without 
conducting its own analysis, and then make a determination not to amend 
a test procedure without an opportunity for the public to comment on 
the reasoning behind that determination. (NPGA, No. 110, at p. 2; CEC, 
No. 121, at p. 6) Additionally, Cal-IOUs stated that an early 
assessment review creates a heavy stakeholder burden to review, 
research, test, and validate all aspects of a test procedure in the 
typical 30-day comment period because after the early assessment, DOE 
could decide a more thorough review of the test procedure is not 
required based on stakeholder comments in this limited window, ending 
the rulemaking process. (Cal-IOUs, No. 124, at pp. 11-12) In response, 
DOE clarifies that the revisions to the Process Rule do not affect 
DOE's responsibility to determine whether a rulemaking satisfies 
applicable statutory criteria under EPCA. DOE has always solicited 
input from stakeholders during the rulemaking process, but that has 
never changed the fact that it is DOE's responsibility to determine 
whether an energy conservation standard or test procedure is 
promulgated in accordance with the criteria and procedures laid out in 
EPCA.
b. Other Avenues for Early Stakeholder Input in the Rulemaking Process
    In a November 6, 2010, policy statement, DOE stated that while the 
framework document and preliminary analysis provide useful information, 
there are more efficient ways of gathering data. Accordingly, in 
appropriate cases, the Department will gather the needed preliminary 
data informally and begin the public rulemaking process with the 
issuance of a proposed rule for public comment.\13\ In the February 
2019 NOPR, DOE proposed to revise this process to ensure stakeholders 
have the opportunity to comment prior to issuance of a proposed energy 
conservation standard or test procedure rule. Assuming the early 
assessment review process does not result in DOE issuing a 
determination that a new or amended energy conservation standard or 
amended test procedure is not warranted, DOE would issue a framework 
document and preliminary analysis or an ANOPR. These documents, as 
opposed to ``informal'' data gathering, would provide the necessary 
robust analysis to determine whether to move forward with a proposed 
standard. RFIs and NODAs could be issued, as appropriate, in addition 
to these analytical documents. (84 FR 3910, 3918, 3921)
---------------------------------------------------------------------------

    \13\ The November 6, 2010 Policy Statement is available at 
https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf.
---------------------------------------------------------------------------

    In general, commenters were in favor of ensuring stakeholders have 
to opportunity to comment prior to issuance of a proposed rule. For 
instance, ASAP, et al. supports providing an opportunity for early 
stakeholder input prior to the publication of a NOPR, and CTA stated 
that greater opportunities for early stakeholder input is a step that 
would make more efficient use of government and private sector 
resources. (ASAP, et al., No. 126, at p. 2; CTA, No. 136, at p. 3) GWU 
stated that the proposed revisions to the Process Rule would improve 
opportunities for public

[[Page 8655]]

participation by committing the agency to procedures for early 
stakeholder input, thereby strengthening DOE's decision-making process 
and aligning with good regulatory practices. (GWU, No. 132 at pp. 3, 6) 
With regard to specific vehicles for early stakeholder input, CEC 
supported the elimination of ANOPRs ``in favor of flexibility in 
determining the appropriate document for early stakeholder input,'' 
while AGA supported the continued use of the ANOPR process. (CEC, No. 
121, at p. 6; AGA, No. 114, at p. 16) AGA also stated that DOE should 
explain its rationale for choosing a particular vehicle for early 
stakeholder input. (AGA, No. 114, at p. 16)
    In response to these comments, DOE agrees that there are a variety 
of approaches that can achieve the goal of early information gathering 
in the rulemaking process. The ANOPR might be preferable in a given 
proceeding. Alternatively, an RFI or Notice of Data Availability would 
also allow for early stakeholder input through a request for comments 
in circumstances where DOE may not have sufficient information to 
develop an ANOPR. DOE might issue a Framework Document and Preliminary 
Analysis where DOE received information in response to the early look 
that might have been inconclusive with regard to the need for a new or 
amended standard, and DOE seeks additional input to help make that 
determination. These alternate tools equally promote transparency in 
DOE's process and allow for early information exchange. As such, DOE 
does not believe it is necessary to establish guidelines or scenarios 
for utilizing a specific form of early stakeholder input. In all cases, 
DOE will provide for some form of preliminary data gathering and public 
comment process, including either an ANOPR or Framework Document and 
Preliminary Analysis, prior to issuing a proposed rule.

G. Decision-Making Process for Issuing a Determination Not To Issue a 
New or Amended Energy Conservation Standard or an Amended Test 
Procedure

    In the February 2019 NOPR, DOE proposed to adopt provisions in the 
revised Process Rule detailing DOE's decision-making process when 
determining whether a new or amended energy conservation standard or an 
amended test procedure is warranted under the relevant provisions in 
EPCA. In determining whether to move forward with a given energy 
conservation standards rulemaking, DOE stated it would address a series 
of issues that, while more expeditious than a complete rulemaking 
analysis, would nonetheless be supported by a thorough analysis to 
ensure that DOE proceeds with only those rulemakings that may yield a 
significant conservation of energy and be technologically feasible and 
economically justified. (84 FR 3910, 3920) For instance, if DOE is able 
to determine that a new or amended standard would not meet the 
threshold for significant energy savings, DOE would issue a proposed 
determination not to issue a new or amended standard without conducting 
additional analyses to determine whether a standard would also be 
technologically feasible and economically justified. DOE stated that it 
would apply a similar process for test procedure rules in order to 
determine whether an amended test procedure would more accurately 
measure the energy or water use of a covered product during a 
representative average use cycle or reduce testing burden. (84 FR 3910, 
3921)
    Joint Commenters, along with several others, noted that EPCA grants 
DOE authority to issue determinations of no new amended standards after 
considering three factors: Significant energy savings, technological 
feasibility, and cost effectiveness. (Joint Commenters, No. 112, at p. 
6) CEC stated that DOE should replace the term ``economically 
justified'' with ``cost effective'' throughout the early assessment 
process, instead of adding new considerations that are not permitted 
under the statute. (CEC, No. 121, at p. 6)
    In response, DOE notes that there are two situations in which DOE 
will issue determinations of no new amended standards. First, as 
commenters have pointed out, DOE has authority to issue determinations 
of no new amended standards based on three factors: Significant energy 
savings, technological feasibility, and cost effectiveness. (42 U.S.C. 
6295(m)(1)(A) and 42 U.S.C. 6295(n)(2)) However, DOE is also only 
authorized to issue an amended standard if the standard would result in 
significant conservation of energy and would be technologically 
feasible and economically justified. (42 U.S.C. 6295(m)(1)(B) and 42 
U.S.C. 42 6295(o)) If an amended standard does not satisfy these 
criteria, DOE will issue a determination that an amended standard is 
not warranted. As a result, DOE has revised the Process Rule to reflect 
DOE's statutory obligation to consider both cost effectiveness and 
economic justification when issuing a determination not to amend a 
standard.

H. Significant Savings of Energy Threshold

1. Comments on the Proposed Threshold Approach
    The December 2017 RFI raised a number of issues for which DOE 
sought comment with respect to how the Process Rule might be improved. 
Among these issues was whether (and if so, how) to give a more 
definitive meaning to the statutory phrase used in EPCA: --
``significant conservation of energy'' (or stated more generically, 
``significant energy savings''). In response to numerous comments to 
the RFI urging DOE to address this larger issue of what level of 
potential energy savings would be appropriate for purposes of 
satisfying EPCA, DOE proposed using a two-step threshold for 
determining whether setting energy conservation standards for a given 
product or equipment type would be likely to lead to a significant 
conservation of energy. See 84 FR 3910, 3921 (Feb. 13, 2019). See also 
42 U.S.C. 6295(o)(3)(B) (prohibiting DOE from prescribing an amended or 
new standard for a type or class of covered product if the Secretary 
determines that the standard ``will not result in significant 
conservation of energy'' or that the standard is not ``technologically 
feasible or economically justified.'')
    Under the first step of this proposed approach, the projected 
energy savings from a potential maximum technologically feasible 
(``max-tech'') standard would be evaluated against a set numerical 
threshold. This initial step would be performed to ascertain whether a 
potential standard level would enable DOE to avoid setting a standard 
that ``will not result in significant conservation of energy,'' as 
provided under 42 U.S.C. 6295(o)(3)(B). (84 FR 3910, 3923) DOE proposed 
a quad-based threshold of 0.5 quad for this first step. (Id. at 84 FR 
3924) Under the second step of the proposed approach, if the projected 
max-tech energy savings failed to meet or exceed this initial numerical 
threshold (with any lower level expected to achieve even less energy 
savings), those max-tech savings would then be compared to the total 
energy usage of the product/equipment to calculate a potential 
percentage improvement in energy efficiency/reduction in energy usage. 
(Id. at 84 FR 3923) DOE had proposed a percentage threshold of 10 
percent, meaning that if the difference between the projected max-tech 
savings and the total energy usage of the product/equipment was under 
the 10 percent threshold, the analysis would end, and DOE would 
determine that no

[[Page 8656]]

significant energy savings would likely result from setting new or 
amended standards. (See Id. at 84 FR 3923-3924). This step would ensure 
that DOE will promulgate those standards that are most likely to confer 
substantial benefits to consumers and the Nation and eliminate from 
further consideration those potential standards that are projected to 
result in substantially lower energy savings below those generated 
under the relevant threshold. (Id. at 84 FR 3923)
    Satisfying either of these thresholds would trigger DOE to analyze 
whether a standard can be prescribed that produces the maximum 
improvement in energy efficiency that is both technologically feasible 
and economically justified (and still constitutes significant energy 
savings at the level determined to be economically justified). See 42 
U.S.C. 6295(o)(2)(A). Because technological feasibility is already 
determined through the max-tech analysis, DOE would then focus on 
performing an economic justification analysis under the seven criteria 
in 42 U.S.C. 6295(o)(2)(B)(i). DOE is issuing a proposal elsewhere in 
this issue of the Federal Register to amend the previous process for 
determining whether and what standard can satisfy the criteria under 
EPCA. Id.
    As DOE explained in the preamble to its proposal, in performing 
this analysis, the Agency would consider the total amount of energy 
savings at issue at each trial standard level (``TSL''). Assuming that 
DOE uses a minimum numerical threshold and a separate percentage 
threshold, the projected savings for any given TSL would be measured 
against these two thresholds. DOE would perform its economic analysis 
to determine whether an economically justified level (producing the 
maximum amount of energy savings possible) can be reached that meets or 
exceeds either of these thresholds. The analysis would proceed to 
compare that projected savings against the amount that the examined 
product/equipment consumes at each TSL. (84 FR 3910, 3923)
    Unsurprisingly, DOE's proposed significant energy savings threshold 
approach generated substantial interest from commenters. These comments 
came during both of DOE's two separate public meetings to discuss its 
proposal as well as in written submissions. Commenters generally fell 
into one of two groups--those who supported the use of a threshold 
(including those who suggested modifications to the proposed approach) 
and those who opposed the use of a threshold.
A. Comments Supporting the Proposed Threshold Approach
    Commenters who supported the idea of applying a threshold for 
significant energy savings included AHAM, AHRI, AGA, BWC, CTA, GEA, GMU 
Law, GWU, the Joint Commenters, Lutron, NAFEM, NEMA, Regal-Beloit, 
Rheem, Samsung, Signify, Southern Co., Spire, and BHI. Among these 
commenters, AHAM, BWC, the Joint Commenters, and Samsung, preferred 
that a threshold level different from the proposed levels be used. 
Regal-Beloit suggested that, in addition to the proposed thresholds, 
DOE supplement its approach to include the use of a ratio of quads over 
cost impacts (in dollars). The company asserted that using this method 
would enable DOE to help ensure that it could still avail itself of 
energy savings opportunities in those cases where a free or low cost 
opportunity to achieve additional energy savings is possible--but would 
not meet the proposed 0.5 quad threshold. (Regal Beloit Corp., March 
21, 2019 Public Meeting Transcript at p. 291) EEI also suggested that 
an exception or different threshold for ASHRAE equipment as well as 
those products and equipment with smaller markets be used. (Edison 
Electric Institute, March 21, 2019 Public Meeting Transcript, No. 87 at 
p. 268)
    Regarding specific issues raised by commenters favoring the use of 
thresholds, AHRI supported the use of a definition for significant 
energy savings and did not agree with criticisms that DOE's proposal 
was arbitrary, arguing instead that DOE's approach was based on a 
reasoned analysis. (AHRI, March 21, 2019 Public Meeting Transcript, No. 
87 at p. 242)
    AGA supported DOE's premise that the setting of a significant 
conservation of energy threshold should be non-trivial and that each 
candidate standard considered should result in significant energy 
savings. In its view, the thresholds set should illustrate a problem 
large enough to justify a regulation or rule. It asserted that DOE's 
proposal establishes a mechanism to evaluate whether a new standard is 
appropriate based on the significance of the energy savings, the 
technological feasibility of a given standards proposal and the 
economic effect of a proposed standards rule. It suggested that 
whatever methodology adopted by DOE should consider a combination of 
the anticipated percentage reduction of energy consumption for the 
covered product compared to the existing standard, along with the 
impact of overall energy consumption in the market sector. (AGA, No. 
114 at pp. 19-20) In its view, reviewing a proposed standards 
rulemaking under the proposal's approach would indicate if a standard 
merits amending--for example, AGA asserted that a new standard for a 
consumer product ``may not be needed if it could achieve a 20% increase 
in efficiency, but only negligibly contribute to a reduction in overall 
residential energy consumption.'' (AGA, EERE-2017-BT-STD-0062, No. 114 
at p. 20)
    CTA agreed that DOE should apply a threshold with respect to 
whether the projected energy savings for a given standard would be 
significant for purposes of satisfying the statutory requirements under 
EPCA. Without a specific numerical threshold, it argued, 
interpretations of what is ``significant'' will vary by stakeholder and 
administration. In its view, such a threshold would also support 
priority-setting to help DOE in managing its periodic rulemaking 
obligations and related accumulated backlog of rulemaking activities. 
It asserted that establishing a threshold for significant energy 
savings, as well as having a formal consideration of diminishing 
returns and non-regulatory alternatives, are necessary for 
prioritization and the effective use of public resources. (CTA, No. 136 
at p. 3)
    Coupled with its belief that the proposal will help alleviate 
unnecessary regulatory burdens on the regulated entities as well as 
DOE, GEA asserted that it was particularly important for DOE to 
establish a requirement to demonstrate significant energy savings will 
occur before a revised standard is set. (GEA, No. 125 at p. 2)
    GMU Law also favored the adoption of a minimum threshold for 
``significant'' energy savings as a way to increase predictability and 
reduce regulatory uncertainty. (GMU Law, No. 105 at p. 3) In its view, 
DOE's proposal not only did not contradict the Herrington opinion, it 
reflected the type of cost-benefit analysis that the Herrington court 
expected DOE to perform, but which DOE had not done in the case before 
it. (GMU Law, No. 105 at pp. 7-8) GMU Law added that DOE's previous 
reading of the term ``significant'' as meaning ``non-trivial'' was 
based on a misreading of the Herrington decision and that DOE is 
permitted to conclude that the small energy savings benefits from a 
potential standard may be outweighed by the costs involved. (GMU Law, 
No. 105 at p. 7)
    GWU supported a threshold-based analysis to avoid marginally 
effective revisions to standards whose benefits are outweighed by their 
costs. (GWU,

[[Page 8657]]

No. 132 at p. 8) However, GWU argued that because expected energy 
savings are based on projections, DOE should also conduct ex-post 
evaluations to determine the accuracy of the savings estimates of 
standards that are implemented. Furthermore, GWU stated that a 
threshold-based analysis should not be used as the sole determinant of 
whether a standards rulemaking should proceed with notice and comment, 
but instead be used to filter out standards where decreasing marginal 
returns to energy savings likely exist. To this point, GWU argued that 
in some cases, standards with benefits that do not outweigh their costs 
may still reach the threshold, which is why economic justification 
analysis is needed. GWU stated that DOE should ensure that standards 
undergo economic justification analysis before issuing a NOPR. (GWU, 
No. 132 at p. 8)
    Lutron indicated that setting a threshold for significant energy 
savings is critical to adding clarity to, and planning for, future 
rulemakings, which would result in reducing burden by reducing 
regulatory uncertainty. (Lutron, No. 137 at p. 2)
    NAFEM supported the development of objective thresholds for 
determining what constitutes ``significant energy savings.'' It 
suggested that rather than use the proposed 0.5 quad threshold, that 
DOE instead analyze the 57 standards examined under the proposal using 
the Pareto philosophy, where 80 percent of the deliverables would come 
from 20 percent of the activities. NAFEM asserted that since the Pareto 
analysis is consistently used in quality control and pertinent business 
research, DOE should consider using it in determining significant 
energy savings to provide a more grounded and defensible threshold. 
(NAFEM, No. 122 at p. 4)
    NEMA supported the proposed threshold, noting that it provided DOE 
with a means to determine whether the potential energy savings in a 
given scenario are worth pursuing. It asserted that without a clearly 
defined path, the answer to the question of whether to set a more 
stringent standard would always be yes. (NEMA, March 21, 2019 Public 
Meeting Transcript, No. 87 at p. 244)
    During the March 2019 public meeting, Rheem initially indicated 
that while it was unsure whether the proposed 0.5 quad threshold was 
``the right number,'' it suggested that DOE consider the impact to the 
consumer. In other words, if going forward with a particular standard 
for a given item would result in the consumer paying significantly more 
to purchase that item, that standard would not be a good option for DOE 
to select. Rheem supported the idea of having guidelines for DOE to 
follow and expressed reluctance over a ``one-size fits all'' approach. 
(Rheem, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 263-
264) Rheem's written comments supported DOE's proposed changes to its 
significant energy savings analysis and the definition of significant 
energy savings without elaborating further. (Rheem, No. 101 at p. 1)
    Signify supported the setting of minimum threshold energy savings 
requirements and it asserted that such an approach would help DOE with 
prioritization and in focusing on the right energy savings 
opportunities. (Signify, No. 116 at p. 1)
    Southern Co., like some other commenters, was unsure whether the 
proposed 0.5 quad threshold was the appropriate value to apply. It 
asserted that there is value in setting a formalized threshold value, 
since what DOE has considered ``significant'' has varied in the past. 
(Southern Company, March 21, 2019 Public Meeting Transcript, No. 87 at 
p. 246) Southern Co. also suggested that the threshold be a presumption 
and not mandatory. In its view, DOE should develop a procedure that 
offers an avenue for exceptions instead of having only a hard rule. 
(Id. at 266.) Southern Co. also echoed EEI's suggestion with respect to 
ASHRAE equipment and stated that the significant energy thresholds 
under consideration by DOE should not apply when DOE is conducting 
rulemakings under the ASHRAE-related provisions. It argued that not all 
of the different equipment types that are addressed by ASHRAE have the 
potential of yielding energy savings at the proposed threshold levels. 
Consequently, in its view, applying the proposed thresholds within the 
context of DOE's ASHRAE rulemakings under 42 U.S.C. 6313(a)(6) is not 
needed. (Southern Co., March 21, 2019 Public Meeting Transcript, No. 87 
at p. 122)
    Spire indicated during the March 2019 public meeting that DOE 
should clarify certain aspects of its proposal. In particular, it 
suggested that DOE include definitions for ``quad,'' ``site,'' 
``source,'' ``discount rates,'' and other related terms used in the 
proposal. (Spire, March 21, 2019 Public Meeting Transcript, No. 87 at 
p. 284) Spire offered further observations as part of its written 
comments. First, it asserted that DOE needs to specify the metric being 
used, and -- it suggested the use of ``source'' or ``primary'' energy 
and that the value used should include energy losses upstream of power 
plants. (Spire, No. 139 at p. 10.) Second, it suggested, consistent 
with DOE's proposal, that the Process Rule be made enforceable to 
mitigate the risk of litigation. (Spire, No. 139 at p. 11.) Spire 
indicated its support for DOE's proposed threshold-based approach 
provided that these two conditions are met. (Id.)
    BHI supported the concept of a significant energy savings threshold 
as a means for DOE to deploy its rulemaking resources on products with 
the greatest energy saving potential. With respect to the proposed 0.5 
quad threshold, BHI offered no specific comments other than to state 
that it expected DOE to set an initial level compatible with its 
objective to assign adequate resources for effective rulemaking 
processes. It added that it expected future rulemakings could amend the 
initial level as specific energy conservation standards reach points of 
diminishing returns (or [are] no longer eligible for an amended 
standard) and/or as the availability of the Department's resources 
fluctuates. (BHI, No. 135 at p. 3)
    Some supporters of DOE's proposed approach also suggested applying 
different threshold levels. AHAM suggested that the quad threshold 
should be higher than the proposed 0.5 quad but offered no particular 
alternative or explanation as to why. (AHAM, March 21, 2019 Public 
Meeting Transcript, No. 87 at p. 223) BWC suggested that DOE consider a 
threshold of 1 quad, which it argued would justify a standard on a per-
household basis but remain consistent with the threshold discussed in 
the Herrington case. Regarding the proposed percentage threshold, BWC 
questioned whether this level was appropriate, particularly in the 
context of products that have previously been regulated or may be 
nearing the maximum available technology--but it did not offer a 
specific alternative for DOE to consider. BWC added that it had no 
objections to the general concept of a threshold test using a hybrid 
approach for an overall level of energy savings and a certain 
percentage of efficiency improvement. (BWC, No. 103 at p. 3) The Joint 
Commenters supported DOE's approach as well as the proposed threshold 
levels. They added, however, that their own analysis for 21 past 
rulemakings demonstrated that a 1.0 quad threshold over 30 years could 
be more appropriate.\14\ With respect to the

[[Page 8658]]

proposed percentage increase in efficiency, the Joint Commenters 
supported the proposed 10-percent level as appropriate. They also 
supported having a bright-line rule for significant energy savings as 
it would provide certainty and predictability. (Joint Commenters, No. 
112 at p. 7) Samsung, however, criticized the proposed 0.5 quad 
threshold as unnecessarily high and could hinder the advancement of 
energy efficiency standards for newly covered products. It asserted 
that energy efficiency standards have incentivized innovation in 
various product categories and have resulted in significant cost 
savings for consumers and environmental benefits. In spite of its 
concerns regarding the proposed quad-based threshold, Samsung 
nonetheless supported the proposed threshold for a 10-percent increase 
in energy efficiency/energy use reduction. (Samsung, No. 129 at p. 2)
---------------------------------------------------------------------------

    \14\ For support, the Joint Commenters cited to a June 30, 2014, 
submission from the National Electrical Manufacturers Association 
regarding a proposed rulemaking addressing general fluorescent lamps 
and incandescent reflector lamps. That submission showed, among 
other things, the projected savings over 30 years (in quads) over 
the estimated industry net present value impacts for these two 
lighting equipment types when compared to the overall average 
projected energy savings for DOE's appliance efficiency rulemakings 
completed between 2008 and the date of the submission--2.156 quads. 
See NEMA, EERE-2011-BT-STD-0006, No. 54 at p. 4.
---------------------------------------------------------------------------

B. Comments Opposing the Proposed Threshold Approach
    Commenters who opposed DOE's proposal to use a significant energy 
savings threshold included A.O. Smith, ACEEE, the AG Joint Commenters, 
American Efficient, ASAP, ASE, Bosch, CEC, CT-DEEP, Earthjustice, 
Energy Solutions (on behalf of the Cal-IOUs during both public 
meetings), Ingersoll Rand, NYU Law, NEEA, NPCC, NRDC, Ms. Linda 
Steinberg, and PG&E (in conjunction with all Other Cal-IOUs in written 
comments). These commenters contended that applying a threshold was not 
only unnecessary but conflicted with EPCA.
    DOE notes that one comment written on a single postcard expressed 
general dissatisfaction with the entirety of DOE's proposal. (Linda 
Steinberg, No. 90 at p. 1)
    A.O. Smith was concerned about having what it viewed as defining 
``significant energy savings'' by an arbitrary number. It argued that 
DOE should only consider the cost effectiveness of a given standard and 
that it did not understand why DOE needed to set a threshold. (A.O. 
Smith, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 28, 
237.) A.O. Smith also posed the question of how DOE would treat a 
consensus agreement that presented potential energy savings that fell 
shy of the proposed quad threshold--i.e. whether the agreement would 
also be bound to the minimum threshold in order for DOE to move forward 
with a DFR on that agreement. (Id. at 239-241.)
    ASE argued that there is an inherent arbitrariness and 
inflexibility to setting any threshold, including when stakeholders may 
reach a consensus on an alternate path towards potential standards. ASE 
suggested that DOE instead examine whether energy savings from 
standards are cost-effective both in terms of the amount of energy 
saved and other benefits. ASE also criticized DOE for considering a 
significant energy savings threshold when it should be focused on 
meeting statutory deadlines. (ASE, No. 108 at p. 5)
    ACEEE pointed out during the public meeting that DOE needed to 
clarify whether the proposed threshold was based on source or site 
energy. It also argued that having a hard threshold would prevent DOE 
from setting a national standard that benefits both manufacturers and 
consumers. (ACEEE, March 21, 2019 Public Meeting Transcript, No. 87 at 
p. 277) ACEEE also asserted its belief that while a standard threshold 
is not needed, if DOE were to set one, the threshold should not only be 
at a much lower level but also be a rebuttable presumption rather than 
an inflexible requirement. It asserted that without having some 
flexibility in the treatment of the threshold, DOE may be prevented 
from considering consensus agreements, thus leaving manufacturers 
subject to a patchwork of State standards on a product. ACEEE also 
argued that requiring a threshold could also prevent DOE from 
considering a standard that would have a large impact on peak electric 
load or on a specific fuel. In its view, DOE should have the 
flexibility to consider these types of impacts. (ACEEE, No. 123 at p. 
3)
    During the March 2019 public meeting, ASAP argued that 
``significance'' cannot be determined as a proportion of a figure but 
is an absolute value. (ASAP, March 21, 2019 Public Meeting Transcript, 
No. 87 at pp. 256-57) It also sought clarity regarding when DOE's 
proposed ``significance analysis would be conducted in relation to 
other steps in the proposed revisions to the rulemaking process. (Id. 
at 260.) Additionally, ASAP, et al. argued that DOE should maintain its 
current interpretation of significant energy savings, which, it 
asserted, has been to view significant energy savings under the statute 
as savings that are not ``genuinely trivial.'' ASAP, et al. stated in 
written comments that DOE's proposal would establish arbitrary 
thresholds for defining significant savings that could result in large 
lost savings for consumers and businesses and prohibit the adoption of 
consensus agreements. It asserted, without providing supporting 
evidence, that energy savings of 0.5 quad are equivalent to electricity 
bill savings of about $7 billion and that DOE's proposal would 
sacrifice billions of dollars in potential savings for consumers and 
businesses. ASAP, et al. also asserted that the proposal is not 
consistent with Herrington or Congress' intent. (ASAP, et al., EERE-
2017-BT-STD-0062, No. 126 at pp. 2, 9)
    Further, ASAP, et al. did not agree with DOE's justification for 
the 0.5 quad threshold. In their view, the fact that a subset of rules 
comprises a relatively small portion of total savings does not mean 
that the savings from those rules are not significant. These commenters 
highlighted language cited in Herrington in which the Chairman of the 
House Sub-Committee on Energy and Power, Representative John Dingell, 
explained that ``conservation must be approached on a nickel and dime 
basis'' and that ``the cumulative impact of a series of conservation 
initiatives, which in themselves might appear insignificant, could be 
enormous.'' (ASAP, et al., No. 126 at p. 9) ASAP, et al. did not 
believe that the proposed thresholds reflected the intent of Congress, 
pointing in particular to Herrington's discussion regarding the annual 
energy use threshold of 4.2 billion kWh established by Congress for 
prescribing standards for a newly-covered product. (ASAP, et al., No. 
126 at p. 9 (citation omitted)). Using figures cited in the proposal, 
the commenters argued that for a product consuming 1.45 quads over 30 
years, achieving 0.5 quad of savings would require a reduction in 
energy use of about 33%. ASAP stated that DOE appears to recognize that 
in proposing a 10% savings threshold, it is not reasonable to assume 
that Congress intended that a 33% reduction in energy use for a product 
consuming 4.2 billion kWh would be necessary in order for the savings 
in quads to be considered ``significant.'' Citing Herrington, the 
commenters stated that ``Congress knew that standards for some covered 
products would produce quite modest incremental gains in efficiency and 
consequently in energy conserved.'' (Id. at 10 (citation omitted)) ASAP 
added that DOE's proposal would foreclose the possibility of pursuing a 
standard that did not meet the thresholds even if there would be no 
first-cost impact and gave some examples of potential scenarios where 
such rules would have been prohibited by the proposed threshold.

[[Page 8659]]

(See id.) ASAP added that the determination that a new or amended 
standard would constitute ``significant'' energy savings is not a 
determination that such a standard is economically justified. In its 
view, DOE's proposed thresholds for determining significant savings 
would eliminate DOE's ability to even consider whether a standard that 
would not meet the thresholds would be economically justified. (Id. at. 
2, 9-11)
    The AG Joint Commenters also criticized DOE's proposed significant 
energy savings threshold (which the commenters believed would short-
circuit the standard-setting process) as a contravention of 
congressional intent, as expressed through EPCA, to save energy 
whenever technologically feasible and economically justified. (AGs 
Joint Comment, No. 111 at p. 4) They argued that setting a bright-line 
requirement for an energy savings threshold is an unlawful 
interpretation of EPCA that is both arbitrary and contrary to the APA. 
In their view, the proposal provided no substantive justification for 
the thresholds chosen or how these thresholds are appropriate in light 
of congressional intent, particularly how they strike an appropriate 
balance between lost energy savings and reduced regulatory burden, 
consistent with EPCA. They further asserted that DOE failed to explain 
whether the reduction in regulatory burden would outweigh the reduction 
in benefits that would be lost from the foregone standards, and warned 
that the proposal risks misinterpreting EPCA's significant energy 
savings provision in the same manner the agency had done in the run-up 
to the Herrington case. (AGs Joint Comment, No. 111 at pp. 9-11) The 
commenters argued that DOE must evaluate standards for a given product 
or equipment type unless the energy savings are ``genuinely trivial,'' 
so as to avoid foregoing cost-free benefits, and stressed that failing 
to conduct an economic justification analysis would mean that DOE 
cannot answer this fundamental question from Herrington. They added 
that the proposed use of a threshold could preclude regulations that, 
while producing small benefits individually, would result in 
substantial benefits cumulatively. The commenters suggested that only 
by combining the significant energy savings threshold with the seven 
factors for economic justification can DOE ensure that it is 
promulgating standards that substantially benefit the public. They 
reasoned that it would be more appropriate to assess significant energy 
savings later in the process when more information has been gathered on 
the record related to the seven factors for economic justification, of 
which energy savings is one. (AGs Joint Comment, No. 111 at pp. 10-11)
    In addition, the AG Joint Commenters argued that DOE has not 
explained how its proposal would encourage gradual efficiency 
improvements without mandatory regulatory requirements. The commenters 
argued that DOE appears to be benefitting an entrenched industry at the 
expense of the public good and innovation. (AGs Joint Comment, No. 111 
at p. 12) They also stated that significance thresholds can be subject 
to gaming, such as might occur if DOE were to divide rulemakings to 
only cover certain product classes (rather than all classes for a given 
product type) so as to keep the total anticipated energy savings below 
the significance threshold. The commenters argued that the proposal did 
not address this possibility or establish any safeguards to prevent 
such scenarios. They added that, were this to occur, it would frustrate 
the intent of Congress and EPCA. (AGs Joint Comment, No. 111 at p. 12) 
For all of the above reasons, the AG Joint Commenters concluded that 
DOE's proposed significance thresholds are arbitrary, capricious, and 
inconsistent with EPCA. (AGs Joint Comment, No. 111 at p. 12)
    Bosch opposed the proposed thresholds, believing their application 
would produce results with far fewer energy efficiency gains, which 
would ultimately put U.S. manufacturers at a competitive disadvantage 
with its global competitors. It asserted, without citing or providing 
supporting evidence or data, that such a threshold would inadvertently 
pose a barrier to achieving small and incremental gains in efficiency, 
which Bosch claimed is the general way technology advances. Bosch 
sought additional clarity regarding DOE's methodology in selecting the 
proposed threshold levels, as well as a better understanding if and 
when DOE would allow for an exception to this threshold. (Bosch, No. 
113 at pp. 4-5)
    During the April 2019 public meeting, the CEC noted its opposition 
to the proposed thresholds. In its view, the statutory criteria were 
already adequate to allow for DOE to determine that no amended 
standards were needed in a given scenario and that setting an arbitrary 
minimum savings threshold would not relieve DOE from its statutory 
obligations to regularly review standards and, when required, to 
prescribe standards. It further asserted that any non-zero amount of 
technically feasible energy savings must be evaluated to determine its 
cost effectiveness and economic justification. (CEC, April 11, 2019 
Public Meeting Transcript, No. 92 at pp. 230-231) The CEC elaborated on 
its views in written comments, asserting that the determination of 
significant energy savings must be made on a case-by-case basis. (CEC, 
No. 121 at p. 7) It further argued that applying a broadly defined 
threshold of 0.5 quad over 30 years or a 10 percent improvement in 
energy efficiency may not be appropriate for every appliance--such as 
in instances where potential energy (or water) savings have no 
incremental cost, where the potential savings accrue primarily in a few 
states where sales or use of the appliance at issue are more 
significant, or where the appliance currently has a small market share 
that makes a savings estimate small, but has the potential to balloon 
into a larger market share as a result of non-standards. (CEC, No. 121 
at pp. 7-8) The CEC added that, in its view, DOE's failure to pursue 
standards for products that do not meet the applicable threshold 
``misses an opportunity to make incremental improvements to an 
appliance rather than dramatic overhauls'' and argued that incremental 
improvements can yield significant energy savings improvements while 
minimizing manufacturer burdens. By setting a high threshold for a 
rulemaking to start, the CEC argued that DOE would be eliminating the 
opportunity for creating incremental improvements that Congress viewed 
as appropriate through its inclusion of regular review provisions in 
EPCA. CEC also asserted that the proposed thresholds would result in 
``no-standard'' standards at the national level while preempting States 
from acting to set their own standards. (CEC, No. 121, at p. 8)
    While CT-DEEP commended DOE for considering modifications to the 
current Process Rule to help moderate the burdens on industry and 
manufacturers, it too argued that the proposed significant energy 
savings threshold would eliminate enormous energy savings potential. It 
asserted that the energy savings from rules that would have fallen 
under DOE's proposed 0.5 quad threshold have collectively saved the 
equivalent of over 10% of commercial and residential building energy 
use annually--which CT-DEEP stated was equal to ``41.5 million MMBTU'' 
of annual energy savings. DEEP-CT argued that the proposed quad-based 
threshold would have significant impacts on energy savings nationwide 
and urged DOE to continue to interpret ``significant energy savings''

[[Page 8660]]

as defined by NRDC v. Herrington. (CT-DEEP, No. 93 at p. 3)
    Like the AG Joint Commenters, Earthjustice noted its concern about 
how the proposed thresholds would apply in the context of the ASHRAE 
rulemakings that DOE conducts for certain categories of commercial/
industrial equipment. In its view, DOE has discretion in sorting 
products for rulemaking, including ASHRAE equipment, but the proposal 
would be leaving to ASHRAE the determination of whether a product is 
going to meet the significance threshold. (Earthjustice, March 21, 2019 
Public Meeting Transcript, at pp. 250-251) (See also id. at 252-253)
    Energy Solutions (on behalf of the Cal-IOUs) argued that cost 
effective energy savings to a consumer is cost effective and in its 
view, 0.5 quad of energy use comprises a substantial amount of savings 
on the overall grid. It asked that DOE clarify the basis for its 
proposal by publishing the analysis for the 57 standards cited in the 
NOPR preamble and it added that it was unclear how DOE's max-tech 
analysis would differ from what would happen during the proposed pre-
rulemaking stage. (Energy Solutions, March 21, 2019 Public Meeting 
Transcript, at pp. 228-29) Energy Solutions questioned the use of the 
lower end of the range over the higher or middle ranges in the 
analysis, (id. at 253) as well as the origins of the proposed 10% 
threshold. (Id. at 269)
    Ingersoll Rand opposed the proposed thresholds and suggested that 
DOE continue to use its own discretion, after carefully weighing 
stakeholder input, as to whether potential cumulative energy savings 
are significant enough to proceed with a standards rulemaking. The 
company noted that 0.5 quad of energy could be significant, cost-
effective, and technically justified for some product classes or sub-
classes, which would, in its view, be appropriate to capture through 
appliance standards. It argued further that the proposed 10-percent 
improvement backstop was not appropriate, as this level of improvement 
could represent a significant leap for many covered products that is 
simply impossible to achieve, and may not be technically feasible. As a 
result, Ingersoll Rand argued that the proposed thresholds could 
prevent DOE from revising appliance standards when mature market 
conditions demonstrate that they would be appropriate, and leave cost-
effective energy savings on the table. (Ingersoll Rand, No. 118, at p. 
3)
    Of additional concern to Ingersoll Rand is the potential unintended 
consequence of DOE having the inability to limit the stringency and/or 
scope of a standard in response to manufacturer feedback--or 
negotiations between affected stakeholders--in order to focus a 
potential appliance standard on the most optimal requirements in cases 
where projected savings would not meet the proposed thresholds. 
Ingersoll Rand cited a recent example of this issue, wherein DOE 
proposed one TSL for commercial and industrial air compressors but 
indicated it was ``strongly considering'' both a more stringent one and 
an expanded scope to include additional classes and size ranges of air 
compressors. The air compressor industry urged DOE to set standards 
using the more limited scope and stringency, which would have yielded 
correspondingly lower energy savings, as this was the more cost-
justified level and aligned closely with familiar product testing 
methods. Under DOE's proposal for setting a threshold for significant 
energy savings, this discretion would not have been possible, but could 
have resulted in DOE pursuing standards more burdensome to 
manufacturers if they are also found to be technologically feasible and 
economically justified. (Ingersoll Rand, No. 118, at p. 3)
    NYU Law asserted that DOE's proposed thresholds for defining 
whether energy savings are ``not . . . significant'' are arbitrary and 
that ``significance'' should instead be weighed by considering all 
important costs and benefits.'' (NYU Law, No. 119, at p. 1) In its 
view, whether the amount of energy savings is ``significant'' is 
relative and no single numerical threshold can determine significance 
in every situation. Instead, it argued, determining significance 
implicitly calls for the balancing of factors. It stressed that 
comparative terms that ``admit[ ] of degree'' like ``significant,'' 
``minimize,'' or ``reasonable'' typically should be employed to compare 
the costs and benefits, because ``whether it is `reasonable' to bear a 
particular cost may well depend on the resulting benefits.'' (NYU Law, 
No. 119, at p. 2)
    Similarly, NEEA objected to the proposed quad threshold as 
arbitrary and argued that it should be lower. (NEEA, March 21, 2019 
Public Meeting Transcript, No. 87 at p. 245) It also suggested that DOE 
determine whether a given level of energy efficiency is ``cost-
effective to the consumer'' rather than using the proposed 0.5 quad as 
the relevant metric. (NEEA, March 21, 2019 Public Meeting Transcript, 
No. 87 at p. 276)
    NPCC and NRDC also disagreed with DOE's proposal to set a threshold 
and argued that EPCA required the consideration of seven factors (not 
just one) when determining whether to adopt a standard. NPCC indicated 
that if Congress intended to establish a savings threshold it would 
have done so in EPCA. (NPCC, March 21, 2019 Public Meeting Transcript 
No. 87 at pp. 23-24, 249) In NPCC's view, the proposal is inconsistent 
with EPCA and that applying a threshold before a standard can be 
proposed and evaluated against the criteria under EPCA risks losing 
substantial savings from standards that simply do not pass the 
threshold but that EPCA would otherwise allow. Citing estimates from 
ASAP, NPCC asserted that a third of the standards adopted by DOE 
between 2009 and 2017 would not have met the proposed threshold, which 
means that these proposed standards (and their combined savings) would 
not have been realized under DOE's current proposal. It added that 
setting a threshold that prejudges a proposal based on only its 
proposed savings--and not a ``balanced consideration of the overall 
benefits and costs''--conflicted with DOE's statutory obligations. 
(NPCC, No. 94, at p. 6.)
    NRDC argued that the issue of applying a threshold number for 
significant energy savings had been settled in Herrington and that, if 
implemented as proposed, would forego substantial energy savings. (See 
NRDC, March 21, 2019 Public Meeting Transcript, No. 87 at p. 248) In 
its view, the proposal to set a threshold for significant energy 
savings is arbitrary and contrary to both EPCA and the Herrington 
decision and should be withdrawn. NRDC asserted that it would be 
difficult or impossible to develop a threshold that is sufficiently 
responsive to the unique characteristics of each covered product and 
that does not unnecessarily reject savings. It added that the proposal 
would not account for the importance of saving energy at different 
times of day, such as at times of peak grid demand. NRDC also argued 
that DOE failed to explain whether its thresholds for significant 
energy savings were based on site energy consumption, source energy 
consumption, or some other method of calculation, which left 
stakeholders unable to effectively comment. NRDC also asserted that DOE 
has not explained how it will apply the threshold when aggregating 
savings from product/equipment classes and expressed concern (like 
Earthjustice and State AGs) that DOE could game the system by examining 
a subset of classes which fail to meet the threshold, even though a 
combined rule examining multiple product classes would meet it.

[[Page 8661]]

(NRDC, No. 131 at pp. 5-7) Pointing to the comments of ASAP, at al., 
NRDC argued that some of DOE's energy conservation standards could be 
considered ``cost-free,'' such as those for pre-rinse spray valves, and 
as a result, the proposed threshold would effectively prevent DOE from 
adopting such standards in violation of Herrington. (NRDC, No. 131 at 
p. 8)
    NRDC stated that DOE's proposed significant energy savings 
threshold repeats the same mistake DOE made in Herrington, namely by 
arguing that 23 rulemakings adding up to 4.24 quads of savings were not 
worth the effort. NRDC argued that standards with smaller amounts of 
energy savings can add up to larger savings. Although it acknowledged 
that the Herrington court left open the possibility that an energy 
savings threshold could be set, NRDC asserted that DOE failed to show 
any awareness of the range of energy savings that Congress considered 
worth pursuing. In its view, this failure provides another reason for 
why DOE should withdraw its proposal. (NRDC, No. 131 at p. 9)
    To highlight this point and to help illustrate the potential 
conflict between Congressional intent and the proposed thresholds 
regarding new energy conservation standards for various regulated 
products and equipment, NRDC identified three sets of statutory 
standards set by Congress for residential boilers, dehumidifiers, and 
electric motors, which over 30 years were projected to save 0.16 quads, 
0.17 quads, and 0.14 quads, respectively. Under DOE's proposed 
significant energy savings threshold, NRDC argued that none of these 
energy conservation standards would have been set, although Congress 
clearly thought them worth adopting. (NRDC, No. 131 at p. 10)
    NRDC also criticized DOE's proposal for failing to mention how the 
agency would determine a significant savings of water (which is 
required under 42 U.S.C. 6295(o)(3)(B) for showerheads, faucets, water 
closets, and urinals). It urged DOE to address how water-consuming 
products would be addressed under the Process Rule. (NRDC, No. 131 at 
p. 10)
    Finally, PG&E stated that grid reliability must be considered when 
discussing significant energy savings and worried that it would not be 
if a contemplated rulemaking action ends because DOE's early assessment 
``off-ramp'' is taken (i.e. the proposed thresholds are not met and no 
proposed rulemaking follows). PG&E noted that it would be unrealistic 
for it to submit comments to DOE during the proposed early assessment 
period since it would be difficult to assess grid impacts within the 
short amount of time allotted under the proposed time frame. (PG&E, 
March 21, 2019 Public Meeting Transcript, No. 87 at pp. 214-15) With 
respect to the proposed thresholds themselves, PG&E (in conjunction 
with the other Cal-IOUs) ultimately opposed them, indicating that any 
``non-zero'' amount of technically feasible energy savings should be 
considered significant by DOE. To this end, it argued that DOE should 
interpret ``significant energy savings'' as meaning ``not genuinely 
trivial.'' (Cal-IOUs, No. 124, at pp. 7-8)
    The Cal-IOUs criticized DOE's proposal, characterizing the 
justification for the proposed threshold values as vague, including 
what the commenters described as a lack of clarity as to whether the 
proposal relied on site versus source energy. (Cal-IOUs, No. 124, at p. 
8.) Referring to text from the Herrington case and comparing it to the 
proposal, the Cal-IOUs posed three questions/issues to DOE to address: 
(1) Can DOE provide a current site-to-power plant energy use factor, so 
that stakeholders can better interpret Herrington in the current 
landscape? (2) Given that the proposed 0.5 quad threshold represents a 
35 percent source energy savings based on the 1982 site-to-power plant 
energy use factor, and the Herrington court noted that ``Congress 
plainly thought that saving some part of the energy consumed by an 
appliance operating at those levels would be significant,'' DOE should 
elaborate on its interpretation of this adjudicated decision to 
interpret ``some part'' to mean 35 percent. (3) In light of the absence 
of a reference to a ten-percent energy savings threshold in the 
Herrington decision, DOE should elaborate on the logic and legal 
justification for the proposed threshold. (Cal-IOUs, No. 124, at pp. 8-
9.) The Cal-IOUs also stressed that the proposal, by eliminating 23 
rulemaking standards (as indicated in the NOPR's preamble discussion), 
would also have eliminated 4.24 quads of energy savings over 30 years, 
which the commenters viewed as a significant amount of savings. In 
their view, this approach would conflict with Herrington and with DOE's 
stated concern about limiting the first-cost impacts to consumers since 
the proposed threshold would not allow DOE to consider truly cost-free 
opportunities. (Cal-IOUs, No. 124, at p. 9.) The Cal-IOUs further noted 
that, as proposed, DOE would have removed multiple products/equipment 
from being considered for more efficient standards. The commenters 
cited DOE's rulemakings for circulator pumps and dedicated-purpose pool 
pumps as examples of the types of rulemaking activities that would have 
ceased prior to the initiation of an ASRAC working group. Since both 
rulemakings originated with the commercial and industrial pumps rule 
(which had a projected savings of 0.29 quads), the Cal-IOUs argued that 
neither of these rules would have survived DOE's proposed threshold--
commercial and industrial pumps would have been dropped because it 
would not have satisfied the 0.5 quad threshold, which would also have 
ended the examination of potential standards for dedicated-purpose pool 
pumps. In the view of the Cal-IOUs, the savings projected for these two 
rulemakings (which the group stressed would be 4.51 quads) would have 
been lost under DOE's proposal. (Cal-IOUs, No. 124 at p. 9)
    The Cal-IOUs were also critical of the information released by DOE 
regarding how the thresholds would be implemented as part of the 
Process Rule. They asserted that there were inconsistencies between 
flow diagrams released as part of the proposal and during the April 
2019 meeting, with the latter document noting that the thresholds would 
apply at three different points--(1) during the early assessment 
review, (2) during the preliminary stage review, and (3) during the 
NOPR review, while being compared against technological feasibility and 
economic justification at each step. (Cal-IOUs, No. 124 at p. 10) The 
Cal-IOUs viewed this approach as ``particularly troublesome'' during 
the early stages of the review process because DOE did not indicate 
whether it would conduct a thorough analysis to provide a reasonable 
savings comparison against a quantitative savings threshold. In their 
view, DOE should specify that a DOE-led thorough analysis will be 
conducted at each stage and that a suggested (rather than mandatory) 
threshold be applied at earlier stages of the review process. (Cal-
IOUs, No. 124 at p. 10)
    The Cal-IOUs further noted that the published flow chart contained 
in the NOPR (unlike the revised one handed out during the April 2019 
meeting) indicated that the savings threshold would first be considered 
during the preliminary stage of review while acknowledging that the 
early assessment will consider whether significant energy savings can 
be achieved in accordance with EPCA's economically justified and 
technologically feasible tests. In their view, these statements are in 
conflict and that DOE should elaborate in detail how and when the 
proposed

[[Page 8662]]

quantitative threshold will be applied. They added that DOE should also 
explain what information will inform the analysis throughout the 
rulemaking process and how the thresholds would be applied in those 
cases where a product type has multiple product classes. (Cal-IOUs, No. 
124 at p. 10) The Cal-IOUs also criticized the proposal by asserting 
that the use of a threshold would ignore real-world implications and 
the additional value provided by more efficient products, citing as 
examples reduced energy generation and reducing and managing energy 
demand during peak hours. (Cal-IOUs, No. 124 at pp. 10-11)
C. Comments Regarding DOE's Notice of Data Availability
    DOE received fourteen (14) comments responding to its July 2019 
NODA. In addition to reiterating or expanding on earlier points made in 
response to the NOPR, these comments also highlighted the potential 
challenges and disadvantages that DOE may face if it were to adopt an 
energy savings threshold based on site energy use compared to primary 
source or full fuel cycle (``FFC'') energy use. Commenters also raised 
issues regarding the sufficiency of DOE's data as support for the 
proposal and alleged that the particulars regarding the thresholds 
remained unclear.
    A.O. Smith asserted that the NODA and its associated analysis fell 
short in providing enough analytical, technical, and factual 
justification to support DOE's proposed energy savings threshold. It 
argued that the materials provided no actual methodology or explanation 
on how DOE arrived at a 0.5 quad energy savings threshold. In its view, 
the NODA and accompanying data did not support the proposed energy 
savings threshold conclusion or provide a sound methodology to recreate 
the actual value proposed in the NOPR to enable the public to 
understand how the threshold conclusion was reached and cannot be 
relied on to justify this aspect of DOE's proposal. (A.O. Smith, No. 
153, at pp. 1-2) It added that basing a threshold using site energy 
savings would not present a ``full picture of the total energy use used 
by the building (or the appliances in it) because the process of 
generating electricity incurs substantial losses associated with 
delivering fuel (e.g. gas, electricity, oil) to the site In its view, 
source energy is the most equitable metric for evaluating national 
energy savings comparisons among buildings and appliances since it 
considers different fuels and provides a more neutral foundation to 
assess total energy savings. It further argued that relying on site 
energy ``severely undervalues'' electricity savings compared to gas or 
oil savings and noted that there is a three-fold difference between 
site and primary/FFC electricity savings when accounting for all 
transmission and distribution losses. A.O. Smith contended that such a 
threshold would place electric and gas/oil appliances on an unequal 
footing with each other, distort DOE's national energy savings 
analyses, and negatively impact consumers and U.S. manufacturers by 
permitting the importation of less efficient products. (A.O. Smith, No. 
153, at p. 2).
    A.O. Smith also criticized the information disclosed in the NODA 
because DOE did not acknowledge or consider that each rulemaking 
included an analytical methodology that was appropriate for the 
particular covered product in question. For example, not all of the 
examined rulemakings use the same analysis period (i.e. length of 
time), leading to a mismatched comparison. (A.O. Smith, No. 153, at p. 
2) Further, it noted that the U.S. Energy Information Administration 
continuously updates the Annual Energy Outlook with changes in the 
economy and energy supply/generation, which may deviate from earlier 
estimates published by the Department. It asserted that to account for 
the changes in methodology across this time period, DOE would need to 
convert each energy savings estimate from published final rules to 
allow for an accurate comparison. (A.O. Smith, No. 153, at pp. 2-3) It 
also suggested that DOE should evaluate the impacts of a significant 
energy savings threshold using the most recent version of DOE's 
analysis of energy and economic impacts from energy and water 
conservation standards, which would allow for cross comparisons of 
savings across rulemakings. (A.O. Smith, No. 153, at p. 3)
    Finally, A.O. Smith asserted that the NODA included the energy 
savings from four remanded rulemakings in error--2001 central air 
conditioners and central heat pumps (replaced by a 2002 rule with lower 
national energy savings), 2010 direct heating equipment (unrealized 
energy savings from remanded portion of the rule for hearth products), 
2011 central air conditioners, central heat pumps, and furnaces 
(unrealized energy savings from remanded portion of rule regarding 
furnaces); and 2014 walk-in coolers and freezers (double-counting of 
energy savings of some products vacated from the 2014 rule and 
subsequently covered by the replacement 2017 rule). (A.O. Smith, No. 
153, at p. 3)
    A.O. Smith also noted that DOE failed to consider the historical 
context of the appliance standards program and the implementation of 
energy conservation standard regulations over time. In its view, the 
initial standards rulemakings conducted by DOE amounted to ``lower-
hanging fruit'' with regard to improvements in energy efficiency and, 
as a result, yielded much higher energy savings than subsequent ``more 
incremental'' standards rulemakings. Consequently, A.O. Smith argued 
that DOE's inclusion of the projected energy savings from these earlier 
initial rulemakings was erroneous and that DOE should have excluded 
these initial savings when developing an energy savings threshold. 
(A.O. Smith, No. 153, at p. 3)
    A.O. Smith further asserted that EPCA already prescribes a method 
for determining whether a given standard would be too costly (or 
technologically infeasible) for DOE to adopt. As a result, A.O. Smith 
viewed the need for a significant energy savings threshold value as 
unnecessary. (A.O. Smith, No. 153, at p. 4)
    AGA urged DOE to rely on FFC energy use rather than site energy use 
for developing energy savings thresholds and in calculating energy 
savings projections for new or amended energy conservation standards. 
(AGA, No. 157, at p. 2) It stressed that under 42 U.S.C. 6295(o), DOE 
may use full FFC energy use when determining whether a given level of 
energy savings constitutes ``significant'' energy savings. (AGA, No. 
157, at pp. 5-6) AGA also pointed to DOE's prior policy statement 
regarding the use of full fuel cycle energy use metrics. (AGA, No. 157, 
at pp. 6-7) AGA also argued that site energy use does not account for 
upstream energy savings impacts from standards or permit comparisons 
across fuel types. (AGA, No. 157, at pp. 7-8) By adopting an approach 
that eliminates all upstream energy consumption and associated 
emissions required to deliver fuel to its point of use, AGA argued that 
DOE's significant energy thresholds would provide an incomplete picture 
regarding the potential impacts of a standard. (AGA, No. 157, at pp. 8-
9). AGA also noted that the National Academy of Sciences recommended 
that DOE use a FFC metric and that other agencies, such as the EPA, 
supported that approach. (AGA, No. 157, at pp. 9-11). AGA added that 
source energy--used by the GREET model \15\--excludes

[[Page 8663]]

extraction and production losses but could be readily converted to a 
FFC measure of energy consumption. (AGA, No. 157, at p. 11). AGA was 
also concerned that DOE's potential reliance on a site energy-based 
approach would ignore the benefit that FFC energy use would provide by 
accounting for a broader range of energy impacts and would depart from 
the Agency's past practice. (AGA, No. 157, at p. 12) It added that the 
public would benefit from the use of a FFC energy metric and asserted 
that such a metric would provide ``the most efficient and equitable 
characterizations'' of energy usage across competing fuels. Further, it 
noted EPA's reliance on full fuel cycle energy data as part of their 
ENERGY STAR program for commercial buildings. (AGA, No. 157, at p. 13)
---------------------------------------------------------------------------

    \15\ Sponsored by the U.S. Department of Energy's Office of 
Energy Efficiency and Renewable Energy (EERE), Argonne National Lab 
developed a full life-cycle model called GREET (Greenhouse gases, 
Regulated Emissions, and Energy use in Transportation) to allow 
researchers and analysts to evaluate various vehicle and fuel 
combinations on a full fuel-cycle/vehicle-cycle basis. This model is 
used by DOE to help ascertain potential impacts related to DOE's 
standards rulemakings.
---------------------------------------------------------------------------

    In addition, AGA reiterated its support for the use of significant 
energy savings thresholds and reiterated its earlier recommendation 
that the thresholds consider a combination of the anticipated overall 
energy consumption savings along with the percentage reduction of 
energy consumption for the covered products compared to the applicable 
existing standard. (AGA, No. 157, at p. 14) AGA suggested that DOE 
should take into account a combination of the possible quad reductions 
and the anticipated percentage reduction of energy consumption so that 
it is not ``one or the other.'' (AGA, No. 157, at p. 15)
    AGA offered an example to illustrate one way to use its suggested 
threshold approach:
    If DOE established a threshold of 0.5 quads of energy savings and a 
10 percent reduction in the energy consumption of the covered product, 
as referenced in the NODA, and if a new standard was projected to save 
0.25 quads of energy (a level below the energy savings threshold) but 
result in a 20 percent reduction in energy consumption for the covered 
product (two times the percent threshold), the rulemaking process could 
proceed since the two thresholds were proportionately achieved. 
However, if in the above example, the new standard would have only 
achieved a 10 percent reduction in energy consumption for the covered 
product, it would not proportionately meet the combined thresholds and 
the rulemaking process would not proceed. (AGA, No. 157, at pp. 14-15)
    AGA also suggested that all DOE benefit and cost calculations be 
fully documented, subject to public review prior to their use in any 
rulemaking analyses, and peer reviewed prior to final publication. 
(AGA, No. 157, at pp. 15-16) It suggested that DOE establish consistent 
national average energy conversion factors that reflect consensus views 
of transitions to renewable electricity generation operating 
contribution, captured energy from renewables, and more realistic 
electricity grid considerations. It pointed to the use of source energy 
conversions published by the Pacific Northwest National Laboratory 
(``PNNL'') in May 2019. \16\ (AGA, No. 157, at pp. 16-17)
---------------------------------------------------------------------------

    \16\ See also PNNL, Preliminary Energy Savings Analysis: 2018 
IECC Residential Requirements.
---------------------------------------------------------------------------

    In addition, AGA suggested that analyses of products should include 
an analysis of competing product markets and penetrations flowing from 
efficiency standards proposals, particularly with respect to competing 
fuel types--which would collectively include estimated responses among 
manufacturers and their competing product lines, including fuel choice 
considerations, more realistic fuel switching considerations, and 
public review of fuel choice and switching methodologies. (AGA, No. 
157, at p. 17) Consumer baseline decisions should also presume rational 
decision making. Under this approach, AGA contended that DOE should 
model consumers as preferring the product model providing the greatest 
consumer surplus relative to all covered product models available in 
the absence of new minimum standards. (AGA, No. 157, at pp. 17-18). It 
also suggested that once a covered product analysis begins, DOE should 
better characterize end-user markets. Specifically, AGA suggested that 
DOE define these markets in public workshops directed at identifying 
key customer classes and building types, and achieve consensus on how 
the standards analysis would apply to these differentiated markets. 
(AGA, No. 157, at p. 18)
    APGA continued to support DOE's goal of establishing a metric that 
best estimates climate impacts and supports the interests of the 
public. (APGA, No. 151, at p. 2) It expressed concern, however, with 
the prospect of DOE's adoption of a site-based energy use metric. 
Citing to earlier work from the National Academy of Sciences and DOE's 
subsequent adoption of a policy statement agreeing to use FFC metrics, 
APGA urged DOE to continue to follow this FFC-based approach when 
measuring energy consumption. (APGA, No. 151, at pp. 2-3) Pointing to 
data comparing energy costs and CO2 emissions across 
different electric-powered and natural gas appliances, APGA highlighted 
the lower annual operating costs, lower energy usage and lower 
CO2 emissions of natural gas appliances relative to 
electric-powered ones. (APGA, No. 151, at p. 3)
    APPA supported the use of site energy when determining whether the 
proposed energy use thresholds were met. (APPA, No. 154, at p. 2) In 
its view, site energy is credible, reliable, replicable, transparent, 
and an actual metric that can be verified while source energy is an 
estimate that can be calculated in a variety of ways, have a variety of 
values, and does not account for significant regional differences in 
the U.S. (APPA, No. 154, at pp. 2-3). APPA also suggested that DOE 
clarify which thresholds it would use. It sought clarification on how 
DOE would treat a scenario where a 10% reduction in energy use occurs 
over 30 years. If the reduction were based on site energy use, in 
APPA's view, the threshold requirement should be based on a minimum 
percentage reduction in appliance/equipment site energy consumption per 
year over a 30-year analysis period (or require an X% reduction in 
annual site energy consumption over a 30-year analysis period). (APPA, 
No. 154, at p. 3 (emphasis in original)). Regarding those instances 
where DOE presents a potential range of savings over a 30-year analysis 
period, APPA suggested that DOE use the mid-point value of the range to 
improve the understandability and technical accuracy of the analysis 
being used. (APPA, No. 154, at p. 4)
    In joint comments responding to the NODA, ASAP and its fellow joint 
commenters re-stated concerns with the proposed energy savings 
threshold and asserted that DOE has not made a clear proposal regarding 
those potential thresholds. The commenters were also concerned that DOE 
would consider using site energy use when evaluating potential energy 
savings from energy conservation standards and they asserted that DOE 
has still not provided an ``apples-to-apples'' comparison of energy 
savings from historical rulemakings. (ASAP, et al. 2, No. 158 at p. 1) 
The commenters urged DOE not to adopt a significant energy savings 
threshold and highlighted examples where DOE analyses have identified 
efficiency improvements with no first-cost impacts. They argued that 
setting a threshold would potentially deny the

[[Page 8664]]

benefits of these energy savings to consumers and businesses. (ASAP, et 
al. 2, No. 158 at p. 2)
    The commenters also asserted that DOE's proposal and subsequent 
NODA have not yet offered a clear proposal regarding the potential 
thresholds for determining whether significant energy savings were 
present in a given situation. They noted that it was unclear whether 
DOE would be applying an approach based on site, source, or full fuel 
cycle energy use--in spite of the NODA's presentation of past energy 
savings in terms of site energy use. The commenters added that DOE has 
not clearly defined the 30-year period that would apply and that the 
proposal continued to remain unclear with respect to the 10 percent 
threshold--specifically, whether it would amount to a reduction in 
energy usage or an improvement in energy efficiency. (With respect to 
the last of these, it highlighted an example of the practical 
difference between a reduction in energy use and an increase in 
efficiency.) (ASAP, et al. 2, No. 158 at pp. 2-3)
    Additionally, with the NODA's presentation of past rulemaking 
energy savings in site energy use, the commenters were concerned about 
relying on site energy, which would, in their view, deviate from prior 
DOE practice of using source or full fuel cycle energy use. It noted 
two problems in particular. First, site energy savings do not 
accurately reflect the total impact of standards on national energy 
consumption since associated losses in electricity generation, 
transmission and distribution are not included--in addition to the 
absence of considering energy used to extract, process, and transport 
the fuels that are consumed to produce that electricity. Second, 
relying solely on site energy use would not provide a fair comparison 
between electricity savings and natural gas savings for the reasons 
noted. They asserted that FFC energy savings from a standard that saves 
electricity produces (i.e. accounts for) roughly three times as much in 
energy savings than from site energy use measurements alone--a standard 
saving natural gas, by comparison, would yield only 10% more in savings 
over site energy savings. (ASAP, et al. 2, No. 158 at p. 3).
    Finally, the commenters contended that even with the publication of 
the NODA and the release of its accompanying data, DOE has not provided 
an ``apples-to-apples'' comparison. They noted that the projected 
energy savings from certain rules presented in DOE's data provided 
different analytical periods. Second, the commenters stated that the 
projected savings of two standards were calculated differently: the 
small electric motors rule was based on a reduction in energy losses, 
while the electric motors rule was based on a reduction in energy 
usage. These different approaches can yield different results. Finally, 
the commenters noted that relying on site energy usage does not provide 
an ``apples-to-apples'' comparison when evaluating rules that affect 
both electric and natural gas products. (ASAP, et al. 2, No. 148, at 
pp.3-4)
    ASAP, et al. 2 provided an example of how this discrepancy could 
impact the calculated energy savings. For example, the site energy 
savings listed in the document referenced in the NODA would suggest 
that the 2016 rule for residential boilers will save more energy (0.137 
quads) than the 2016 rule for dehumidifiers (0.100 quads). But in fact, 
the total energy savings (reported as full-fuel-cycle energy savings in 
each rule) for dehumidifiers (0.30 quads) are about twice as great as 
those for residential boilers (0.16 quads). (ASAP, et al. 2, No. 158, 
at pp. 3-4 (footnotes omitted))
    The Cal-IOUs suggested that DOE issue a supplemental notice of 
proposed rulemaking to provide additional details and respond to 
various comments. They asserted that the NODA raised a number of issues 
and that the NODA was unclear whether DOE was proposing to use site or 
source energy as the basis for the proposed thresholds. They also 
asserted that the NODA did not provide a uniform set of data to enable 
a comparison of historical rulemakings since the data unfairly compared 
the energy savings from gas and electric equipment standards and 
provided a misleading picture of the savings from gas and electric 
standards. The Cal-IOUs also expressed confusion over the ``statutorily 
required measure'' referenced by DOE in the NODA's preamble. (Cal-IOUs, 
No. 155, at p. 2) Further, the Cal-IOUs reiterated certain questions it 
raised in response to the proposal itself: (1) How and when will the 
quantitative energy savings threshold be applied, and what information 
will inform that analysis? (2) How would the threshold apply to 
products with multiple product classes? (3) How did DOE arrive at the 
conclusion that to apply a 0.5 quad threshold in light of the 
Herrington decision's discussion regarding aggregate source energy? (4) 
What is the basis for DOE's 10% threshold? (Cal-IOUs, No. 155, at pp. 
2-3)
    The Joint Commenters indicated that DOE could adopt a higher quad-
based threshold of up to 0.75 quad or a percentage-based reduction of 
ten percent--which would achieve the same energy savings as the 
proposed 0.5 quad threshold. (Joint Commenters, No. 159 at pp. 1-2) 
They noted that the NODA's data showed that 34 of the 57 rules analyzed 
would have met the proposed significant energy savings thresholds when 
applying a quad threshold range of 0.40 to 0.75 quad or ten percent 
reduction in energy use and emphasized that among the remaining rules 
that did not meet the proposed threshold, which comprised nearly half 
of the analyzed rules, the energy savings achieved by these rules 
amounted to a little over 6% of the total projected energy savings of 
DOE's standards rulemakings. (Joint Commenters, No. 159, at 2)
    They also stressed that with the passage of time between since 
Herrington, DOE has developed a robust dataset and a voluminous record 
of energy conservation standards. The Joint Commenters also asserted 
that DOE's interpretation of the term ``significant'' conservation of 
energy in the aftermath of Herrington did not track that decision, 
which counseled that it was unlikely that Congress intended for DOE to 
ignore a cost-free chance to save energy unless the amount of energy 
saved was genuinely trivial. (Joint Commenters, No. 159, at pp. 3-4) 
They further emphasized that the Herrington court noted that if it were 
truly obvious, without the extended investigation appropriately 
undertaken as part of the inquiry into economic justification, that the 
value of saving small amounts of energy was outweighed by the cost and 
trouble of undertaking any appliance program at all, DOE might be 
justified in determining that those small savings were not significant. 
(Joint Commenters, No. 159, at p. 4 (quoting Herrington, 768 F.2d at 
1373, n. 19)) The Joint Commenters also noted that recent case law 
suggests that the meaning of the word ``significant'' means something 
``important, notable'' as opposed to being ``more than trivial or of no 
importance.'' (Joint Commenters, No. 159, at pp. 4-5 (quoting Kaufman 
v. Allstate N.J. Ins. Co. 561 F.3d 144, 157 (3rd Cir. 2009)) They 
further noted that in determining whether a given level of energy 
savings is significant, DOE necessarily must compare the aggregate site 
energy savings achieved by rulemakings that were able to achieve a 
potential energy savings threshold against those savings that do not. 
In their view, recognizing every incremental increase in energy savings 
without limit would effectively read the word ``significant'' out from 
EPCA. Consequently, the Joint Commenters

[[Page 8665]]

argued that the statute should be read as providing DOE with the 
discretion to establish a significance threshold based on a balancing 
approach such as the one that DOE has conducted in comparing the 
projected energy savings from rulemakings that meet a given threshold 
against the savings from rulemakings that do not. (Joint Commenters, 
No. 159 at pp. 5-6) To this end, using historical energy savings to 
determine a potential threshold level is, in the view of the 
commenters, reasonable. (Joint Commenters, No. 159 at pp. 6-9)
    MHARR repeated its earlier assertions regarding the various alleged 
procedural defects affecting the unrelated rulemaking in which DOE is 
currently considering potential energy conservation standards for 
manufactured housing and again urged DOE to adopt the same type of 
procedural protections and safeguards set forth in the NOPR for 
manufactured homes. (MHARR, No. 149, at p. 2.) MHARR argued that DOE's 
approach with respect to setting energy use thresholds for determining 
whether a given standard would produce significant energy savings 
should apply equally to DOE's manufactured housing rulemaking--and that 
DOE should issue an entirely new rulemaking in light of the alleged 
defects. (MHARR, No. 149, at pp. 3-4)
    NBI cautioned that the use of site energy would result in distorted 
information becoming the foundation of standards setting at DOE. (NBI, 
No. 150, at p. 1). It noted that jurisdictions both within and outside 
of the U.S. have relied on source-based, primary energy use rather than 
site energy, and if DOE were to adopt a site energy-based approach, the 
Agency would become increasingly divergent from the policies and rules 
being set at local, State, and international levels. (NBI, No. 150 at 
p. 1)
    NRDC repeated its opposition to the adoption of an energy savings 
threshold and argued that when applying the projected energy savings 
presented with the NODA to the proposed thresholds, DOE's approach 
would make the proposed quad threshold more stringent than if it were 
based on source or FFC energy use. (NRDC, No. 156 at pp. 1-2) It 
further argued that the proposed threshold is invalid and contrary both 
to EPCA and Herrington, asserting that DOE's proposal (and subsequent 
NODA) fails to address the question of rejecting ``no-cost standards'' 
that would result in additional energy savings and urged DOE to 
evaluate the issue of significant energy savings on a standard-by-
standard basis and to consider the aggregate savings of energy 
involved. (NRDC, No. 156 at pp. 2-3) In addition, NRDC stressed that, 
in light of the Herrington court's discussion of potential source 
energy-based savings, DOE should consider thresholds at or above the 
level of 1.45 quads of source energy as ``clearly legally 
impermissible.'' \17\ (NRDC, No. 156 at p. 4) When applied to a site 
energy-based approach, NRDC asserted that DOE's proposed 0.5 quad 
threshold is equivalent to a 1.5 quad source energy threshold, which, 
in its view, would run afoul of the upper bound discussed in 
Herrington. (NRDC, No. 156 at 4) NRDC added that it would not consider 
a threshold below the 1.45 quad source energy level discussed in 
Herrington as necessarily reasonable or permissible and it urged DOE to 
withdraw its proposal in its entirety. (NRDC, No. 156, at 4-5)
---------------------------------------------------------------------------

    \17\ The figure of 1.45 quads is based on the D.C. Circuit's 
discussion of the energy consumption that must be present to permit 
DOE to issue a discretionary energy conservation standard for a 
consumer product--i.e. an annual energy consumption of 0.014335 
quad, which is equivalent to 0.0483 quad of annual site energy 
usage. Projected over a 30-year period would yield 1.449 quads (i.e. 
1.45 quads when rounded up). See generally Herrington, 768 F.2d at 
1374.
---------------------------------------------------------------------------

    NYU Law contended that DOE's proposal would set arbitrary 
thresholds in violation of EPCA and noted that at least one recent 
court decision indicated that a ``'very small portion' of a 
`gargantuan' total effect'' may still create a ``gargantuan'' effect of 
its own--suggesting that DOE's proposed thresholds would exclude a 
large amount of future energy savings as being insignificant. (NYU Law, 
No. 148, at p. 1) In the commenter's view, DOE's percentage approach 
can create a misleading impression and is subject to manipulation. 
Consequently, the energy savings from the various standards that would 
not have satisfied DOE's proposed thresholds--in addition to avoided 
carbon emissions--would be sacrificed in the future if the proposed 
thresholds were adopted. (NYU Law, No. 148, at pp. 1-2)
    Samsung reiterated its earlier view (without providing additional 
support) that the proposed 0.5 quad threshold is too large and may 
hinder advancement of energy efficiency standards for newly covered 
products. (Samsung, No. 161, at p. 2) It also repeated its support for 
DOE's proposed percentage threshold of 10 percent increase in energy 
efficiency/reduction in energy usage for covered products as a trigger 
for new standard levels. (Samsung, No. 161, at p. 2)
    In joint comments responding to the NODA, Sierra Club and 
Earthjustice expressed concern over what it perceived as a ``dramatic 
shift'' by DOE to move away from relying on source energy or FFC energy 
consumption to site energy use when projecting potential energy savings 
of a given standard. (Sierra Club & Earthjustice, No. 160, at p. 1) In 
their view, adopting a site energy-based approach would ignore DOE's 
own past findings that site energy measurements do not account for the 
inefficiencies present in electric generation. (Sierra Club & 
Earthjustice, No. 160, at pp. 1-2) If adopted without acknowledging and 
addressing DOE's own record with respect to the deficiencies of site 
energy and providing a reasoned explanation for the change, the 
commenters contended that such a move would be unlawful. (Sierra Club & 
Earthjustice, No. 160, at p. 2) They also asserted that EPCA does not 
compel that site energy be the basis for the Agency's analyses 
performed with respect to determining the impacts of a given energy 
conservation standard and it emphasized that DOE's past and 
longstanding use of source and FFC energy as part of prior standards 
rulemakings reflected the Agency's own conclusion regarding the partial 
picture presented by site energy usage. That conclusion, the commenters 
continued, was further buttressed by the work performed by the National 
Academy of Sciences, which recommended that DOE use FFC energy 
consumption when assessing the national and environmental impacts from 
energy conservation standards. (Sierra Club & Earthjustice, No. 160, at 
pp. 2-3)
    They further asserted that even if DOE were permitted to establish 
a threshold for significant energy savings--which they stressed it 
could not--shifting DOE's energy savings calculations to site energy 
would result in setting a threshold that far exceeds the level of 
energy savings Congress viewed as significant when it amended EPCA to 
require DOE's adoption of standards. (Sierra Club & Earthjustice, No. 
160, at p. 3) Citing to Herrington, the commenters again emphasized 
that Congress could not have intended for DOE to not adopt a standard 
that imposed ``absolutely no burdens at all'' and that it was unlikely 
that Congress had intended for DOE to throw away a cost-free chance to 
save energy unless the amount of energy saved was genuinely trivial. 
(Sierra Club & Earthjustice, No. 160, at p. 3 (citing Herrington, 768 
F.2d at 1373)) Sierra Club and Earthjustice also stressed that when the 
Herrington court examined the specific figures inserted into EPCA by 
Congress, including the prerequisites found in 42 U.S.C. 6295(l) for 
prescribing standards for newly covered

[[Page 8666]]

products, it concluded that Congress had viewed 0.014335 quad of site 
energy use as significant--while DOE's proposed threshold would not. 
(Sierra Club & Earthjustice, No. 160, at p. 3)
    With respect to the application of a percentage threshold, the 
commenters noted that the standards at issue in Herrington provided for 
efficiency increases of 5 percent or less, which, in their view, 
supported the notion that Congress sought to provide for incremental 
improvements in energy efficiency--and thereby constraining DOE's 
ability to treat equivalent efficiency improvements as insignificant. 
(Sierra Club & Earthjustice, No. 160, at pp. 3-4) The commenters argued 
further that prior amendments to EPCA--particularly, the National 
Appliance Energy Conservation Act of 1987, Public Law 100-12 (March 17, 
1987), demonstrated (through its adoption of water heater standards 
that would yield efficiency increases of less than 10 percent and 
potential energy savings for some standards as being under 0.03 quad 
per year) that Congress had viewed marginal improvements in efficiency 
as ``worth seizing'' through efficiency standards. Accordingly, Sierra 
Club and Earthjustice argued that history counsels against adopting a 
significance threshold that would foreclose the adoption of standards 
yielding comparable energy savings. (Sierra Club & Earthjustice, No. 
160, at pp. 3-4)
    Spire supported the concept of adopting an energy savings threshold 
but claimed that a threshold based on site energy use would not 
appropriately measure the efficiency of fuel utilization from the point 
of extraction--thereby leading to misleading information regarding the 
efficiency of gas-fueled vs. electric-powered appliances. It asserted 
that reliance on site energy would distort the market for appliances 
and ultimately reduce competition, which would lead to higher costs for 
consumers. While Spire stated that source energy is a better metric for 
measuring energy savings than site energy, it also viewed that metric 
as flawed since the amount of energy lost from the point of fuel 
extraction to the input of an electric power plant is not considered 
for purposes of measuring the `source' efficiency of an electric 
appliance. (Spire, No. 152, at p. 2) Instead, Spire suggested that DOE 
adopt an approach based on the FFC, which would, in its view, readily 
show that gas appliances ``significantly'' out-perform electric-based 
options with respect to CO2 emissions and when examining 
consumer marginal energy use rates. (Spire, No. 152, at pp. 2-3)
2. Response to Comments on the Proposed Thresholds
    After evaluating comments received from both those who supported 
the use of a threshold--including those who suggested that a different 
quad threshold be applied--and those who objected to one, DOE revisited 
its approach. In response to comments seeking clarification regarding 
the type of energy use on which the quad and percentage thresholds were 
based, DOE re-examined its data and published a Notice of Data 
Availability (``NODA'') to present its energy savings data in terms of 
site energy usage. See 84 FR 36037 (July 26, 2019). After taking a 
second careful look at its data and applying a uniform approach with 
respect to the energy usage examined, DOE has adjusted its thresholds 
to account for the concerns raised by commenters.
    DOE has divided its responses to the comments on this issue into 
two parts--one to address comments that generally supported the use of 
the proposed thresholds and one to address comments that opposed them.

A. Response to Comments Supporting the Proposed Threshold Approach

    As a preliminary matter, DOE emphasizes that its application of its 
thresholds will apply when it first examines whether to initiate a 
standards rulemaking, during the early assessment phase and throughout 
the rulemaking process. If DOE engages in a standards rulemaking, these 
thresholds will also be applied at the different steps of that 
rulemaking--i.e., Early Assessment, Preliminary Stage, NOPR, 
supplemental NOPR (if applicable), and final rule. In effect, these 
thresholds will apply throughout the rulemaking process to ensure that 
the statutory requirement of achieving significant energy savings is 
achieved with any standards final rule that DOE promulgates. (For a 
visual illustration of how this would apply, see Figure III.1, 
presented later in this discussion.)
    In response to commenters who suggested that the proposed 0.5 quad 
threshold be raised higher (AHAM, AHRI, BWC, and the Joint Commenters) 
to 1.0 quad, DOE notes that it recognizes that there is the potential 
for additional burden reduction and related manufacturer cost savings 
from increasing the magnitude of the quad-based threshold. The data 
examined by DOE, however, suggest that doing so in the context of the 
57 standards final rules that were examined in the NOPR would 
significantly decrease the amount of potential energy savings that 
could be obtained. (See 84 FR 36037, 36038 (July 26, 2019)) When 
comparing that value to the suggested 1.0 quad offered by commenters 
and applying the same percentage threshold that DOE had proposed, the 
level of energy savings would decrease by approximately 3% from 94% v. 
91%. Following this approach would also eliminate a little over half of 
these standards rulemakings. (See id. at 84 FR 36038-36039.) In DOE's 
view, raising the quad threshold in the manner suggested would have a 
severe impact on the potential energy savings that could be obtained 
from future rulemakings. DOE is not adopting this suggestion due to 
this fact, along with the absence of any supporting data or analysis 
from the proponents of this approach to increase the quad-based 
threshold. As for Samsung's separate suggestion that the 0.5-quad 
threshold may be too high, DOE has addressed this concern--along with 
similar ones raised by other commenters--by modifying the quad-based 
threshold, which is discussed elsewhere in this document.
    Regarding suggestions from both EEI and Southern Co. to apply an 
exception or different threshold for ASHRAE equipment, as explained 
elsewhere in this document, DOE is treating ASHRAE equipment in a 
manner consistent with the specific provisions laid out in 42 U.S.C. 
6313(a)(6). As explained elsewhere in this discussion, the threshold 
framework will apply in those instances where DOE intends to adopt 
standards that exceed the stringency of those set by ASHRAE. DOE notes 
that the ``significant conservation of energy'' requirement for 
standards, that is woven into 42 U.S.C. 6295(o)(3)(B) for consumer 
products and non-ASHRAE equipment, does not apply to ASHRAE equipment 
when DOE is following the statutory command to establish the national 
minimum efficiency standard at the level set by ASHRAE. In setting a 
more stringent standard for this equipment, DOE must have ``clear and 
convincing evidence'' that doing so ``would result in significant 
additional conservation of energy'' in addition to being 
technologically feasible and economically justified. 42 U.S.C. 
6313(a)(6)(A)(ii)(II). This language indicates that Congress had 
intended for DOE to ensure that, in addition to the savings from the 
ASHRAE standards, DOE's standards would yield additional energy savings 
that are significant. In DOE's view, these two statutory provisions 
share the requirement that ``significant conservation of energy'' must 
be present--and supported with ``clear and convincing evidence''--to 
permit DOE to set a more stringent

[[Page 8667]]

requirement than ASHRAE. Accordingly, in examining these potential 
impacts, DOE believes that Congress intended for standards more 
stringent than ASHRAE to achieve significant conservation of energy in 
addition to the savings already projected under the ASHRAE standards. 
The variety of equipment that are encompassed by the ASHRAE equipment 
classes, the intense amount of scrutiny already applied by technical 
experts in adjusting any potential standards for ASHRAE equipment 
through the ASHRAE standards review process, and the nearly identical 
statutory language imposing that ``significant additional conservation 
of energy'' used by Congress with respect to DOE-initiated standards 
for this equipment, all favor treating ASHRAE equipment in a manner 
that recognizes the particular nature of this equipment relative to all 
other products and equipment that are not similarly subject to the same 
level of technical scrutiny and review. In other words, the statutory 
language and factual circumstances surrounding ASHRAE equipment 
indicate that DOE must determine that adopting a more stringent 
standard than ASHRAE will produce a significant amount of energy 
savings above what would be achieved by simply adopting the level set 
by ASHRAE. As a result, to be consistent with this established 
framework, DOE is applying the thresholds in this final rule to the 
standards rulemaking process of 42 U.S.C. 6313(a)(6) governing ASHRAE 
equipment.
    As for EEI's suggestion that an exception or different threshold be 
applied to those other products and equipment with smaller markets--DOE 
does not believe that such changes, absent more concrete and definitive 
information, are necessary, particularly in light of the other changes 
that are being incorporated into this final rule in response to 
commenter concerns. In DOE's view, the fact that the footprint of a 
given product or equipment is small suggests that Federal intervention 
in the form of mandatory standards may not be the appropriate means at 
that time to improve the efficiency of that product. See, e.g., Battery 
Chargers Standards Final Rule, 81 FR 38266, 38281-38282 (June 13, 2016) 
(refraining from including wireless chargers within the scope of the 
battery charger standards rulemaking to avoid the ``loss of utility and 
performance likely to result from the promulgation of a standard for a 
nascent technology such as wireless charging.''). In addition, the 10 
percent energy savings threshold enables the application of more 
stringent standards to products with a ``small footprint'' that would 
otherwise be unable to meet the criteria for saving a significant 
amount of energy.
    With respect to AGA's suggested imposition of an overall reduction 
in residential energy use test, DOE notes that such an approach would 
be similar to the one explicitly rejected in Herrington, which would 
not only present a legal problem under existing case law but also link 
improvements to energy efficiency from a standard for a given 
individual product/equipment type solely to the amount of savings from 
that standard relative to the entirety of residential energy usage. 
(See Herrington, 768 F.2d at 1375-1378 (rejecting DOE's significance 
tests that, among other things, relied on the overall reduction in 
energy use when evaluating the energy savings potential that a 
particular standard could achieve)) Aside from the conflict with 
current case law, this approach would effectively eviscerate the 
Agency's ability to amend its standards. In DOE's view, AGA's 
suggestion presents an overbroad approach that fails to consider the 
requisite balancing that Congress had instructed DOE to undertake--that 
of determining whether a given standard that produces significant 
energy savings for a given product or equipment type is both 
technologically feasible and economically justified--in order to 
produce a more precisely calibrated result to improve the energy 
efficiency of consumer products and (specifically identified) 
industrial equipment. See 42 U.S.C. 6201(5) and 42 U.S.C. 6312(a).
    Similarly, NAFEM's suggestion that DOE apply a Pareto analysis 
approach to the thresholds presents another alternative that DOE is 
also declining to adopt. This approach may result in cases where DOE 
would forego energy savings in cases where one of the two thresholds is 
met since it would involve applying a more stringent threshold (i.e., 
determine which 20 percent of rulemakings produce 80% of the energy 
savings) that would likely remove additional standards that would 
produce significant energy savings from further consideration. While 
DOE seeks to improve the efficiency of its own process in developing 
and finalizing energy conservation standards for its regulated products 
and equipment, it must also ensure that the statutory criteria can be 
achieved under the balancing performed under EPCA. See 42 U.S.C. 
6295(o)(2)(A) (standards must be designed to achieve ``the maximum 
improvement in energy efficiency'') and 42 U.S.C. (o)(2)(B)(i) 
(detailing factors for determining whether a given standard is 
economically justified). Applying NAFEM's suggested approach, would 
make it unlikely for DOE to meet this requirement since it would raise 
the probability of prematurely eliminating standards rulemakings for 
those products and equipment that may still produce significant 
conservation of energy.
    Regarding Regal-Beloit's suggestion that DOE supplement its 
thresholds with the use of a ratio of quads over cost impacts, DOE, 
after careful consideration of this suggested change, is declining to 
add this step to its threshold approach at this time. To the extent 
that any ``cost-free'' energy savings are possible, DOE believes that 
the modified levels being adopted in this final rule will be sufficient 
to ensure that it is able to capture the maximum amount of energy 
savings while limiting the potential financial burdens manufacturers or 
consumers may face provided the energy savings result in significant 
conservation of energy. As a result, DOE has decided to retain the 
general framework of its proposed thresholds without adding this 
suggested change.
    As to GWU's concerns about the analytical process that DOE would 
follow once a significant energy savings determination is made, DOE 
notes that it would continue to perform the routine economic 
justification analysis for any potential rulemaking standard that 
satisfies the applicable threshold. Analyzing whether a potential 
standard is economically justified is a prerequisite to determining 
whether the economic justification prong under 42 U.S.C. 
6295(o)(2)(B)(i) is met and DOE must complete this step prior to 
finalizing its rulemaking determination. Consequently, DOE does not 
anticipate making any changes to this aspect of its rulemaking process.
    DOE also took into account Rheem's concerns regarding whether 0.5 
quad was ``the right number'' for a quad-based threshold. Under the 
revised approach detailed in this final rule, DOE believes that these 
revisions establish an appropriate quad threshold--namely, 0.3 quads of 
site energy over 30 years-- that satisfies DOE's legal obligations in 
implementing EPCA. As DOE explains elsewhere in this document, the 
approach adopted in the rule will apply appropriate quad and percentage 
thresholds to ensure that those energy savings meriting further 
analysis are not ignored and receive due consideration for adoption as 
a standard. And regarding Rheem's urging that DOE consider consumer 
impacts, DOE notes that consumer impacts remain an

[[Page 8668]]

integral part of DOE's routine energy conservation standards analysis 
and the Department does not anticipate any changes to this approach. 
(See, e.g., 42 U.S.C. 6295(o)(2)(B)(i)(I) (instructing DOE when 
determining whether a standard is economically justified to consider 
``the economic impact of the standard on the manufacturers and on the 
consumers of the products subject to such standard.''))
    Regarding BHI's comments regarding the potential amendment of the 
threshold levels in the future, DOE notes that while it does not 
anticipate making changes to these levels, any amendments would be made 
as part of a notice and comment rulemaking regarding the Process Rule 
similar to the one that DOE initiated for this final rule. DOE does not 
anticipate amending the threshold levels as part of individual energy 
conservation standards rulemaking efforts.
    Finally, as suggested by Spire and numerous other commenters, 
including those opposed to the use of thresholds, DOE is clarifying the 
basis for its proposed thresholds and making adjustments to the values 
being adopted as part of this final rule. While DOE's proposal was 
based on a calculated value that used both site- and source-based 
energy savings, this final rule bases the adopted threshold levels on 
site energy-based savings. DOE's July 2019 NODA on this very topic laid 
out a variety of threshold scenarios based on site energy usage to 
illustrate their potential impacts using a combination of different 
threshold values. See 84 FR 36037, 36038-36039 (July 26, 2019) 
(detailing the impacts of a variety of quad-based and percentage-based 
threshold combinations based on site energy use). This approach will 
serve as the basis for DOE's significant energy use thresholds and is 
consistent with EPCA's definition for ``energy use'' (i.e., ``the 
quantity of energy directly consumed by a consumer product at point of 
use'') and the process followed by DOE when determining whether to 
apply energy conservation standards to other covered products (i.e., 
applying ``average per household energy use'' when determining whether 
to prescribe standards). See 42 U.S.C. 6291(4) (defining ``energy 
use'') and 42 U.S.C. 6295(l)(1) (detailing qualifying criteria DOE must 
consider prior to prescribing standards for newly covered products).

B. Response to Commenters Opposing DOE's Proposed Use of Thresholds

    In reviewing and considering the arguments forwarded by commenters 
who opposed the use of thresholds for determining whether a potential 
standard would produce significant conservation of energy, DOE gave 
careful thought to the concerns and potential problems that they 
identified. After considering these specific concerns, DOE has taken a 
number of steps to address them and has made some adjustments to the 
proposed approach as part of this final rule. These adjustments include 
providing further explanation of the supporting data (as presented in 
the July 2019 NODA) and modifying the quad-based threshold level that 
DOE initially considered adopting. As indicated in DOE's NODA regarding 
the various threshold combinations it examined, DOE sought additional 
feedback from the public regarding what might be appropriate levels to 
use by providing the projected energy savings for the examined 
standards final rules in a uniform manner using site energy.
    As a preliminary matter, in response to the commenters who opposed 
the proposed thresholds because of the lack of clarity concerning the 
basis for the proposed levels or out of concern for the level of the 
proposed thresholds themselves (ACEEE, Bosch, CT-DEEP, Ingersoll-Rand, 
and NEEA), DOE has since clarified the basis of these threshold levels. 
See 84 FR 36037 (July 26, 2019) (presenting and explaining data 
regarding projected impacts on number of rulemakings and percentage of 
energy savings retained relative to applying no threshold under various 
quad/percentage improvement scenarios using primary source energy use). 
That NODA explained that DOE re-examined its data and discovered that 
its proposed 0.5 quad threshold was based on the use of source- and 
site-based energy. As a result, DOE released a set of tables to 
illustrate the potential energy savings related to the 57 different 
standards rulemakings that were examined and the impacts that various 
quad/percentage efficiency threshold combinations would have had on 
those rulemakings. These revised tables present the energy savings 
involved uniformly in terms of site energy usage and DOE's use of these 
data is consistent with the manner discussed elsewhere in this 
document. And while DOE acknowledges Energy Solutions' (i.e. the Cal-
IOU's) objections to the proposed thresholds, Energy Solutions offered 
no data or substantive analysis in support of its views.
    Consistent with these clarifications, DOE notes that it will 
determine whether the threshold levels are met by relying on site 
energy use values, which, as indicated earlier, is consistent with 
EPCA's treatment of energy use and procedures for prescribing standards 
for those covered products not already explicitly addressed under the 
statute. DOE will also continue to follow its policy of using FFC 
analyses as part of the Department's energy conservation standards 
program when analyzing overall impacts, including emissions, from a 
given rulemaking standard. See 76 FR 51281 (Aug. 18, 2011) (announcing 
DOE's statement of policy to use FFC analysis in its standards 
rulemakings). See also 77 FR 49701 (Aug. 17, 2012) (amending DOE's FFC 
policy by specifying that DOE's National Energy Modeling System rather 
than the Greenhouse Gases, Regulated Emissions, and Energy Use in 
Transportation model). In DOE's view, this approach maintains 
consistency with both its statutory obligations and its policy of 
ensuring that its analyses address the full range of potential savings 
and costs that flow from examining the FFC energy use of a given 
product or equipment.
    Regarding the CEC's concern that the application of any thresholds 
would preempt States from enacting their own standards for a Federally-
covered product or equipment type, DOE agrees that EPCA contains 
explicit preemption provisions that apply both in general for covered 
products and as specified in particular circumstances. See 42 U.S.C. 
6295(ii) and 42 U.S.C. 6297 (detailing specific circumstances in which 
limitations on Federal preemption of State standards applies).
    With respect to Ingersoll-Rand's and NEEA's concerns over the use 
of thresholds--specifically, that they may be arbitrary and too high, 
with the proposed 10 percent threshold posing too steep a level of 
improvement for many covered products and equipment to achieve--DOE 
notes that it has modified its quad threshold after reviewing its data 
and relevant comments. The modified thresholds adopted in this final 
rule, which are based on analyses of projected energy savings from 
final rules previously adopted by DOE, ensure that those rulemakings 
that produce energy conservation standards also produce, as urged by 
NEEA, cost-effective savings to consumers while reducing the burdens 
that accompany repeated cycles of rulemakings to eke out more limited 
potential energy savings. While the final selected level of energy 
efficiency may be influenced by a variety of factors specific to a 
given case, DOE must rely on its available data and analyses in 
determining what level--if any--to set for energy savings. Using data 
from its past analyses and rulemakings, and weighing its obligations 
under the statute to account for a variety of factors,

[[Page 8669]]

DOE has determined that applying the thresholds detailed in this final 
rule set out an approach consistent with its legal obligations and 
policy to continuously improve energy efficiency that is economically 
justified.
    In DOE's view, the adjustments made to the final threshold levels 
should be sufficient to address both NEEA's and Ingersoll-Rand's 
initial concerns about their magnitudes. DOE notes that, given the 
increasing number of products and equipment that it is either directly 
regulating or over which it currently has coverage but is not yet 
regulating, the Agency's oversight responsibilities are extensive--and, 
based on prior Congressional actions, are expected to continue to grow. 
See, e.g. Energy Policy Act of 2005, Public Law 109-58 (Aug. 8, 2005) 
(adding battery chargers and external power supplies as products for 
DOE to regulate), Energy Independence and Security Act of 2007, Public 
Law 110-140 (Dec. 19, 2007) (adding walk-in cooler and freezer 
equipment for DOE to regulate and revising the scope of electric motor 
coverage), American Energy Manufacturing Technical Corrections Act, 
Public Law 112-210 (Dec. 18, 2012) (making a series of amendments 
affecting a variety of procedural and scoping-related provisions 
regarding regulated consumer products and industrial equipment), and 
EPS Improvement Act of 2017, Public Law 115-115 (Jan. 12, 2018) 
(setting out procedures for DOE to follow in the event that solid state 
lighting power supply circuits, drivers, or devices are treated by DOE 
as covered equipment). Without a more efficient way of managing and 
prioritizing its limited resources to address these increasing 
regulatory activities, DOE runs an increased risk of falling further 
behind in fulfilling its statutory obligations, reducing the quality 
and comprehensiveness of its analyses, or, adopting statutory 
interpretations that, while potentially providing an expedient solution 
for a given issue, may inadvertently undermine the careful 
consideration that Congress required DOE to perform when evaluating 
potential efficiency standards for the numerous consumer and industrial 
appliances that DOE oversees.
    As to those commenters (A.O. Smith, AG Joint Commenters, ASAP, et 
al., Cal-IOUs, CEC, NPCC, NRDC, and NYU Law) who opposed the use of any 
thresholds, most took that position out of the belief that EPCA only 
permits the use of an individual case-by-case analysis in every 
instance where DOE is considering whether to amend or establish a 
standard for a particular product or equipment. We note the fact that 
EPCA specifically states the Secretary may not prescribe an amended or 
new standard under this section for a type (or class) of covered 
product if the Secretary determines, by rule, that the establishment of 
such standard will not result in significant conservation of energy, or 
that the establishment of such standard is not technologically feasible 
or economically justified. See 42 U.S.C. 6295(o)(3)(B).
    DOE has carefully considered these arguments and re-examined the 
Herrington opinion. The statutory test for establishing or revising an 
energy conservation standard contains three separate and distinct 
determinations. EPCA makes clear that DOE cannot establish or amend a 
standard unless all three are met. To comply with EPCA requirements DOE 
is unable to simply decide that any savings of energy that is 
technologically feasible and economically justified per se saves a 
significant savings of energy or that the savings from a number of 
energy conservation standards will add up to a significant amount of 
energy. Separate from a determination regarding economic justification 
or technological feasibility, the Secretary is explicitly prohibited 
from prescribing an amended or new standard that will not result in 
significant conservation of energy. Any other position would write out 
of the statute the discrete determination the language requires about 
the significance of the energy savings. In explaining its proposal, DOE 
noted its concern with the direct economic impacts that are likely to 
flow from imposing standards that are projected to yield relatively 
lower energy savings--standards that may produce little in overall 
benefits in energy and cost savings for consumers when compared to the 
costs related to the manufacture and purchase of products and equipment 
meeting these kinds of standards. (84 FR 3910, 3922 (Feb. 13, 2019)) 
DOE elaborated on the basis for its proposal, noting that this 
[proposed] approach gives effect to the Herrington court's reference to 
not forego energy savings that are ``cost-free.'' However, it would 
also limit the first-cost impacts to consumers to those instances where 
a given rulemaking is expected to generate significant energy savings 
and other substantial benefits. (84 FR 3910, 3922 (Feb. 13, 2019))
    And as DOE previously pointed out in its preamble to the proposal, 
see 84 FR 3910, 3922 (Feb. 13, 2019), EPCA, despite using it in 
multiple statutory sections, does not define the term ``significant 
conservation of energy'' nor does it specify any particular criteria or 
specific guidance as to the term's meaning. See 42 U.S.C. 6295(n) 
(specifying that DOE shall grant a petition for an amended standard if 
the petition contains evidence that, if no other evidence were 
considered, provides an adequate basis that amended standards will 
result in significant conservation of energy) and (o) (providing that 
DOE may not prescribe an amended standard if the establishment of that 
standard will not result in significant conservation of energy). See 
also 42 U.S.C. 6313(a)(6)(A)(ii)(II) (requiring DOE to demonstrate with 
clear and convincing evidence that adoption of a standard more 
stringent than those set by ASHRAE would result in ``significant 
additional conservation of energy''). The fact that this term, despite 
its prominent place in key provisions related to DOE's standards-making 
authority remains undefined, indicates that Congress had intended for 
DOE to make this determination of what level(s) of energy use savings 
(if any) would satisfy this term. Under such circumstances, case law is 
clear that an agency, where gaps are present in the statute, must 
necessarily fill those gaps as appropriate. See Chevron v. Natural 
Resources Defense Council, 467 U.S. 837, 843-44 (1984) (``If Congress 
has explicitly left a gap for the agency to fill, there is an express 
delegation of authority to the agency to elucidate a specific provision 
of the statute by regulation.'') (Stevens, J.) See also Herrington, 768 
F.2d at 1372-1373 (noting that DOE has ``substantial discretion to set 
specific levels of significance'' so long as the levels selected are 
``consistent with the express terms and underlying congressional 
intentions of [EPCA].''). Significantly, the Herrington court did not 
attempt to dictate the meaning of ``significant conservation of 
energy,'' deferring instead to those specific provisions Congress 
prescribed in the enacted legislation to discern a reasonable meaning 
for ``significance.'' See Herrington, 768 F.2d at 1373-1374.
    Further, the use of thresholds for determining significance was 
clearly contemplated under the Herrington decision. The Herrington 
court did not shy from applying a threshold--it sought only to 
determine what would be a reasonable one in light of the various 
provisions laid out in EPCA. Using the threshold that Congress already 
set for prescribing an energy conservation standard for which DOE has 
added coverage, the Herrington court determined that Congress must have 
viewed the prescribed level of energy savings (0.014335 quad per year 
of household energy consumption for a

[[Page 8670]]

given product, which translates into a source energy use of 0.0483 quad 
per year) as being significant. See id. (When calculated over 30 years, 
this source energy use value reaches 1.449 quads and the site value 
reaches 0.43 quads. These values clearly exceed the max-tech quad 
threshold of 0.5 quad that DOE had earlier proposed and the 0.3 site 
energy quad that DOE is finalizing here, respectively.) \18\ The 
Herrington court even went as far to emphasize that in those instances 
where the threshold for significance was not reached, DOE must not 
issue a standard even in the face of the prospect of forfeiting savings 
that would impose no burdens. See 768 F.2d at 1373 (stressing that 
``DOE may not issue a standard it has disqualified under the 
significance provision even if that standard imposes absolutely no 
burdens at all.'') (emphasis in original). Determining significance is 
a decision that rests with DOE. In making this judgment, the Department 
balanced competing considerations and its limited resources. DOE notes 
that while the commenters object to the use of thresholds, their past 
actions in other rulemaking contexts have demonstrated a willingness to 
accept no changes in a standard for specific product classes where the 
projected energy savings would be small. See, e.g. ASAP, December 16, 
2015 Central Air Conditioner and Heat Pumps Working Group Meeting, 
EERE-2014-BT-STD-0048 at pp. 90-91 (ASAP stating its willingness to 
leave the standards for single-packaged air conditioners and heat pumps 
unchanged when the projected energy savings over 30 years were 
calculated to be 0.2 quad)
---------------------------------------------------------------------------

    \18\ DOE notes that in the case of industrial equipment, which 
DOE began regulating after the Herrington decision, the population 
of potential commercial/industrial equipment over which DOE could 
add coverage is limited solely to those equipment types listed under 
42 U.S.C. 6311(2)(B). DOE may include such equipment types as 
covered equipment if the Secretary ``determines that to do so is 
necessary to carry out the purposes of this part.'' 42 U.S.C. 
6312(b). While this provision, unlike its counterpart for consumer 
products (found in 42 U.S.C. 6295(l)), does not specify a minimum 
energy use threshold to establish coverage or to set standards, an 
appropriate threshold based on similar energy consumption use could 
also apply. Accordingly, DOE may use its discretion in setting 
initial threshold requirements for adding regulatory coverage of 
commercial/industrial equipment.
---------------------------------------------------------------------------

    Further, DOE notes that EPCA itself does not use the phrase 
``genuinely trivial'' when describing the amount of energy savings that 
a given standard must achieve. The Herrington court used that phrase in 
an attempt to give substance to the concept of significance but, like 
``significant energy savings,'' never defined that phrase. While DOE 
may have treated ``genuinely trivial'' as the test to apply when 
determining whether to adopt a standard, DOE is now applying the test 
from the statute itself--i.e. whether the standard produces significant 
energy savings.
    Finally, DOE points out that the Herrington court expressed concern 
not with the use of thresholds but the manner in which those thresholds 
were developed and justified. In that case, the court viewed DOE's 
effort at defining ``significant energy savings'' as problematic in 
light of the agency's inability to sufficiently explain why its three 
tests for significant conservation of energy were valid in light of 
other provisions contained in EPCA. The tests that DOE attempted to use 
to define the contours of significant energy savings effectively 
prevented DOE from issuing the discretionary energy conservation 
standards that Congress had intended for DOE to promulgate. See 
Herrington, 768 F.2d at 1375-76. The Herrington court sought evidence 
demonstrating that DOE's definition of significance showed ``some 
awareness of the range of energy savings Congress thought worth 
pursuing.'' Herrington, 768 F.2d at 1377.
    In this rule, DOE has taken a much more tailored approach to 
account for the concerns noted in Herrington and the issues raised by 
commenters regarding the potential impacts from using thresholds. It 
has not erected a series of tests that would pose an insurmountable 
barrier that would effectively bar it from promulgating efficiency 
standards going forward. To the contrary, DOE's approach, which relies 
on the past experiences, data, and information from dozens of standards 
rulemakings completed over three decades, has been designed to not only 
ensure that economically justified energy conservation standards are 
developed but to also provide a reasonable level of predictability to 
DOE's rulemaking process as numerous commenters have repeatedly asked 
DOE to follow. These thresholds will also enable DOE to focus its 
rulemaking efforts and enable DOE to efficiently manage the finite 
resources it currently has with respect to overseeing the standards and 
test procedures for the products and equipment it regulates.
    Further, DOE notes that technological innovation occurs on a 
constant basis, which means that the product and equipment efficiency 
levels and cumulative energy savings potential from new or revised 
standards for a given product are not static. This potential for 
continuous improvement is driven by technological innovation and 
product development which are a function of time. Designs that DOE 
previously analyzed as max-tech prototypes, and which failed the 
screening criteria 20 years ago, are today's baseline models. As a 
result, DOE does not anticipate that the thresholds being adopted in 
this rule will present an insurmountable barrier to achieve further 
energy savings in the future.
    In light of the balancing of interests that DOE continues to 
perform with respect to evaluating potential energy conservation 
standards, DOE is also mindful of its past rulemakings when setting new 
or amended standards for regulated products and equipment, and believes 
its extensive regulatory past is the best guide to its future actions. 
As DOE previously explained, it selected a level that accounted for the 
concerns noted in the Herrington decision by considering the level of 
savings to apply against the thresholds discussed in that decision and 
prescribed in EPCA. See 84 FR 3910, 3922-3924 (Feb. 13, 2019). In so 
doing, DOE initially determined that a 0.5 quad threshold applied to 
the projected max-tech savings, when compared against the sizable 
number of completed rulemakings that produced new or amended standards 
for regulated products and equipment, would help DOE to continue to 
ensure that the vast majority of future energy savings from its 
rulemakings would be preserved.
    Additionally, DOE's proposed approach included a second step to 
ensure that it would be able to capture energy savings even in those 
cases where less than 0.5 quad of savings were projected under the max-
tech analysis. That second step--applying a percentage-based increase 
in efficiency, also projected under the max-tech analysis--was intended 
to provide DOE with a backstop that would help better account for the 
energy efficiency potential of the individual product or equipment at 
issue. DOE notes that by applying these thresholds to the max-tech 
analysis, DOE will be able to assess the technological feasibility of 
whether significant energy savings is possible at an early stage of its 
analysis. Once it makes this determination, DOE will also be positioned 
to evaluate whether a standard for this level of energy savings is 
economically justified. Accordingly, under DOE's approach, decisions 
regarding whether and how to proceed with a given standard can be made 
in a more transparent and predictable manner consistent with the 
statute.
    While commenters have expressed concerns regarding the potential of 
inadvertently missing cost-free opportunities for higher energy 
efficiency-related savings from a standard, those savings must in the 
first instance be significant, since Congress

[[Page 8671]]

did not intend for DOE to continually set standards irrespective of the 
magnitude of those potential savings. See Herrington, 768 F.2d at 1378 
(noting that ``DOE is right to think that under [42 U.S.C. 6295(o)], 
standards for each product type must result in significant 
conservation.''). See also id. at 1373 (stressing that ``DOE may not 
issue a standard it has disqualified under the significance provision 
even if that standard imposes absolutely no burdens at all.'') 
(emphasis in original). DOE believes that its revised process as 
outlined in this final rule will encourage interested parties to 
provide substantive input that will assist DOE in readily addressing 
those potential areas where rulemaking will be most beneficial and 
yield the greatest amount of energy savings without imposing the 
economic burdens from multiple additional rulemakings yielding only 
marginal benefits. By conducting an early assessment of the max-tech 
energy savings from potential new or amended standards for a given 
product or equipment type as described in this final rule, DOE expects 
that interested parties will provide as much information as early as 
possible to help supplement any information already being evaluated by 
DOE to ascertain whether either of the thresholds is met. And in those 
cases where DOE must make decisions regarding the scope of a particular 
set of standards, the Agency will apply a cleaner--and broader--
approach by evaluating each product/equipment type as a whole rather 
than dividing a particular product/equipment type into multiple classes 
or subclasses. DOE does not expect such a circumstance to arise, but 
should the Department proceed with a standards rulemaking applicable to 
only a segment of a covered product, it will evaluate the potential 
energy savings across all product classes. While DOE may ultimately 
decide not to set standards for every conceivable class within a 
product or equipment type, DOE anticipates that the potential max-tech 
standards it will use to evaluate each product and equipment type as a 
whole at the early assessment stage will enable DOE to reasonably 
determine whether a new or amended standard for a given product or 
equipment type merits further evaluation. And should DOE initially view 
new or amended standards as not being warranted for having not met 
either threshold, interested parties would have the opportunity to 
weigh in with additional information and data as part of the notice of 
proposed determination process required under 42 U.S.C. 6295(m)(1)-(3). 
See Figure III.1 at the end of this discussion section.
    In the case of those rulemakings where standards have been 
characterized by commenters as having been cost-free (i.e. those 
involving commercial clothes washers, pre-rinse spray valves, 
dehumidifiers, and hugger fans), DOE refers back to Herrington, which 
stressed that a standard must not be set unless there are significant 
energy savings to be had. And as to the specific rulemakings 
highlighted by commenters, DOE notes that the preamble discussions from 
the cited rules noted that certain efficiency levels that DOE 
considered for certain classes of the products or equipment at issue 
were not projected to yield net costs, not that these standards would 
have been cost-free (an amended standard would necessarily involve 
costs for manufacturers to implement through new compliance-related 
costs).\19\ Regarding water savings, DOE notes that the significant 
energy (water) savings requirement does not apply to pre-rinse spray 
valves, which would mean that even if DOE had developed specific water 
savings thresholds, as it has the authority to do, such thresholds 
would not apply to this particular equipment type. See 42 U.S.C. 
6295(o)(3)(B) (specifying significant conservation of water for only 
``showerheads, faucets, water closets, or urinals''). In any event, 
even if DOE could consider adopting standards that it believed did not 
produce significant energy savings, those standards cannot be 
accurately characterized as ``cost-free.''
---------------------------------------------------------------------------

    \19\ See 79 FR 74492 (Dec. 15, 2014) (final rule amending 
standards for commercial clothes washers); 81 FR 4748 (Jan. 27, 
2016) (final rule amending standards for commercial prerinse spray 
valves); 81 FR 38338 (June 13, 2016) (final rule amending standards 
for dehumidifiers); and 82 FR 6826 (Jan. 19, 2017) (final rule 
amending standards for ceiling fans).
---------------------------------------------------------------------------

    As to concerns of potential conflicts between the quad savings 
levels achieved by Congressionally-enacted standards and the quad 
threshold being set by DOE in this rule, DOE notes that 
Congressionally-enacted standards are independent of DOE's analysis of 
what qualifies as ``significant'' and can be determined on a case-by-
case basis. As a result, Congressionally-enacted standards are always 
open to any level that Congress deems appropriate. It does not follow, 
however, that DOE would, without explicit statutory language to the 
contrary, set a standard without first determining whether significant 
energy conservation of energy could be achieved. By leaving the meaning 
of this term undefined, Congress has permitted DOE to define the 
meaning of this term--and DOE's reliance on a reasonable threshold that 
accounts for the savings of prior rulemakings in no way conflicts with 
the ability of Congress to unilaterally set a standard that may differ 
from the thresholds that DOE applies through this Process Rule. As 
indicated elsewhere, DOE's approach can permit standards that fall 
below the quad threshold through its second prong if the facts 
supported a rulemaking based on the projected reduction in energy use 
from a standard.
    Regarding Earthjustice's concerns of potential gaming by DOE if a 
threshold is set, DOE notes generally that when examining all products 
and equipment within a particular type (or in the case of ASHRAE 
equipment, equipment category) for purposes of determining whether the 
projected energy savings would satisfy the significance thresholds, DOE 
will examine product and equipment types in a manner that makes the 
most sense and not selectively examine classes or sub-classes of 
products and equipment simply for the purposes of projecting whether 
potential energy savings would satisfy the applicable thresholds. 
Similarly, in the case of ASHRAE equipment, which are addressed by a 
separate statutory provision, if DOE is triggered to examine the 
standards for certain classes within a particular equipment type, DOE 
will also examine all of the remaining classes within that same 
equipment category consistent with its current obligations under the 
six-year review cycle under 42 U.S.C. 6313(a)(6)(C). Accordingly, in 
light of the concerns expressed by Earthjustice, DOE has adjusted its 
regulatory text under Section 6(b) to explicitly spell out this 
approach.
    Regarding water efficiency, DOE acknowledges that its proposed 
thresholds do not encompass a particular level for the specific water-
consuming products identified in 42 U.S.C. 6295(o)(2)(B). In DOE's 
view, with sufficient data and analysis, a water savings threshold may 
be possible in the future. However, the absence of a proposed threshold 
was due at least in part to the fewer number of data points with 
respect to water savings. With this data situation remaining the same 
since the publication of DOE's proposal, DOE is opting not to set any 
threshold levels related to water savings at this time.
    DOE also acknowledges the concerns raised by the Cal-IOUs. While 
grid reliability issues are a critical concern in the overall context 
of energy usage, these issues are best addressed within a separate 
effort focusing on these issues. DOE also notes that the Cal-IOUs did 
not indicate whether the magnitude of

[[Page 8672]]

the proposed max-tech threshold levels--let alone those thresholds that 
DOE is adopting today--would have any appreciable impact to grid 
reliability and if so, by how much. Nevertheless, DOE notes that, to 
the extent that these issues become a major factor in a given 
rulemaking, DOE will address them within the context of that particular 
rulemaking action.
    Regarding the Cal-IOUs assertion that the proposed thresholds would 
eliminate 4.24 quads of energy savings, DOE believes that the adopted 
approach presents a careful and reasonably balanced method of ensuring 
that significant energy savings are produced while limiting the overall 
burdens associated with implementing and following the necessary 
regulations for complying with new or amended standards. Moreover, 
under the proposed thresholds, DOE would still have achieved over 100 
quads of energy savings (with 54.64 quads of site energy savings). (See 
84 FR 3910, 3923 (Feb. 13, 2019) (noting that applying a 0.5 quad 
threshold would yield 109 quads of energy savings based on an 
examination of prior DOE standards rulemakings) and 84 FR 36037, 36038 
(July 26, 2019) (noting site energy savings of 54.64 quads) (See also 
84 FR 36037, 36038-36039 (July 26, 2019) (noting that 34 of the 
examined 57 standards rules produced nearly 94% of the total energy 
savings--and would be roughly equivalent to 51.3 quads of site energy 
savings)). In addition, the 4.24 quads of savings that the commenters 
cite translate to 3.29 quads of site energy. Moreover, according to 
EIA, the United States consumed approximately 100 quads of energy in 
2018.\20\ The 0.3 site energy quad threshold for a significant 
conservation of energy established in this revision to the Process Rule 
is savings over a 30-year period and, therefore, is an extremely low 
bar when considered against approximately 3000 quads of consumed energy 
in the same timeframe (holding 2018 energy consumption constant).
---------------------------------------------------------------------------

    \20\ https://www.eia.gov/energyexplained/us-energy-facts/.
---------------------------------------------------------------------------

    As for the concern raised by the Cal-IOUs of the possibility that 
DOE's thresholds may inadvertently close off potential rulemakings that 
may unlock substantially more energy savings than had been initially 
anticipated as part of DOE's early look process, DOE is unsure what the 
Cal-IOUs are suggesting. However, DOE notes that a properly scoped 
rulemaking effort from the beginning will minimize the risk of 
foregoing energy savings. The example cited by the Cal-IOUs--pumps--
involved a broad array of products and equipment that fell within that 
particular category, within which were classes with different 
potentials for energy savings. When examining the particular pumps at 
issue in that rulemaking, DOE projected that the max-tech energy 
savings involved 1.28 quads primary source energy use (and 1.34 full-
fuel cycle energy use)--easily well in excess of the 0.3 site energy 
quad threshold established in this revision to the Process Rule.
    With respect to the timing of DOE's application of the thresholds, 
DOE notes that these thresholds would be applied continuously 
throughout its various rulemaking steps. DOE would apply these 
thresholds as part of the early assessment in addition to when weighing 
the merits of a particular proposal. DOE anticipates that all 
interested parties will assist the Agency's decision-making process to 
ensure that any potential energy savings are not unnecessarily foregone 
and that no rulemaking will be initiated until the appropriate 
conditions are met--i.e. when sufficient energy savings under the 
thresholds are satisfied through DOE's examination and analyses of 
potential max-tech energy savings. Accordingly, while DOE appreciates 
the concerns raised by the Cal-IOUs, the framework detailed under this 
rule should provide adequate incentives to ensure that DOE receives and 
analyzes sufficient information to enable the Agency to determine 
whether a given rulemaking merits further action at that particular 
point in time. Given that DOE is obligated to review its determinations 
to not amend a standard within a relatively short (three-year) window, 
additional opportunities to review the max-tech energy savings 
potential for a particular product or equipment will continuously 
present themselves. (See 42 U.S.C. 6295(m)(1)-(3) (detailing the 
process by which a notice of determination to not amend a standard will 
occur and specifying that such notice will provide an opportunity for 
written comment and for public review of DOE's analysis.))
    As for A.O. Smith's concern regarding the treatment of DFRs within 
the context of DOE's significant energy threshold, DOE notes that any 
DFR agreement submitted to DOE must conform to the statute. As 
explained elsewhere in this final rule, the DFR provision is 
procedural, and in no way provides an authority to take an action not 
in compliance with the rest of EPCA. Thus, a DFR submitted to DOE would 
need to satisfy the provisions detailed in EPCA in order for DOE to 
move forward with that submission. In addition, consistent with the 
approach detailed elsewhere in this discussion of the final rule, any 
projected energy savings from the standards contained in a consensus 
agreement presented to DOE pursuant to the DFR provision would need to 
satisfy the thresholds in this final rule.
    Finally, both ASE and Ms. Steinberg appeared to wholly oppose the 
thresholds out of principle. As to these commenters, DOE refers back to 
the arguments and explanations presented earlier. Regarding ASE's view 
that the setting of any threshold is arbitrary and inflexible, and that 
DOE should instead focus on meeting its statutory deadlines, DOE 
believes that the thresholds being established in this final rule are 
based on a careful consideration of available data regarding energy 
savings that were projected to accrue from these standards. In turn, 
DOE believes that the adoption of these thresholds will enable DOE to 
more readily satisfy its continuing obligation to review its standards 
as well as its separate ongoing obligations to review all of its test 
procedures on a cyclical basis by helping DOE to quickly identify those 
areas that will yield the most benefit from DOE's efforts to amend or 
establish standards producing significant energy conservation for a 
given regulated product or equipment. By helping DOE to prioritize its 
efforts, the thresholds will allow DOE to better focus on standards 
that ``provide for improved energy efficiency of . . . major appliances 
and certain other consumer products.'' 42 U.S.C. 6201(5).
BILLING CODE 6450-01-P

[[Page 8673]]

[GRAPHIC] [TIFF OMITTED] TR14FE20.000

BILLING CODE 6450-01-C

[[Page 8674]]

C. Response to Comments on the Notice of Data Availability
Site Energy
    The term ``energy use'' is defined under EPCA as ``the quantity of 
energy directly consumed by a consumer product at point of use'' and as 
determined under the test procedure promulgated pursuant to DOE's 
authority under 42 U.S.C. 6293. (42 U.S.C. 6291(4)) See also 42 U.S.C. 
6311(4) (defining ``energy use'' for industrial/commercial equipment as 
``point of use'' energy). An energy conservation standard is defined as 
either (1) a performance standard that prescribes a minimum level of 
energy efficiency or a maximum quantity of energy use (or in the case 
of certain water products, water use) or (2) a design requirement with 
respect to certain specified products. (See 42 U.S.C. 6291(6). See also 
42 U.S.C. 6311(18) (applying similar criteria for industrial/commercial 
equipment energy conservation standards)) Further, when establishing 
coverage for a product under DOE's limited discretionary authority 
under EPCA, DOE must first evaluate the average ``annual per-household 
energy use'' for the product at issue against a prescribed statutory 
threshold. (See 42 U.S.C. 6292(a)(20) (specifying that a covered 
product includes ``[a]ny other type of consumer product which the 
Secretary classifies as a covered product under [42 U.S.C. 6292(b)]'') 
and 42 U.S.C. 6292(b) (permitting the Secretary to classify a product 
as a covered product if it is ``necessary or appropriate to carry out 
the purposes of this chapter'' and where products of such type are 
likely to exceed an average annual per-household energy use of 100 
kilowatt-hours or its Btu equivalent)) EPCA also clarifies that in 
determining whether the 100 kilowatt-hour threshold for coverage is 
met, DOE must take the estimated aggregate annual energy use of the 
product type at issue that is used by households in the United States, 
divided by the number of such households which use products of such 
type. (42 U.S.C. 6292(b)(2))
    Similarly, when determining whether it can set an energy 
conservation standard for a product added for coverage under 42 U.S.C. 
6292(b), DOE must determine whether additional criteria, including 
thresholds based on household energy use, are satisfied. (See 42 U.S.C. 
6295(l)) In particular, DOE may prescribe an energy conservation 
standard for a product covered under 42 U.S.C. 6292(b) provided that 
the Secretary determines that: (1) The ``household energy use of 
products of that type (or class) exceeded 150 kilowatt-hours (or its 
Btu equivalent) for any 12-month period ending before such 
determination; (2) the aggregate ``household energy use within the 
United States by products of such type (or class) exceeded 
4,200,000,000 kilowatt-hours (or its Btu equivalent) for any such 12-
month period; (3) substantial improvement in the energy efficiency of 
the product is technologically feasible; and (4) applying a labeling 
rule is unlikely to be sufficient to induce manufacturers to produce, 
and consumers and others to purchase, covered products of such type (or 
class) that would achieve the maximum level of energy efficiency that 
is technologically feasible and economically justified. (See 42 U.S.C. 
6295(l)(1)(A)-(D))
    Accordingly, since ``household energy use'' refers to the point of 
use energy consumption, these statutory provisions, when read together, 
indicate that the standards promulgated by DOE must be based on the 
site energy use of the products at issue. Consistent with this 
framework, DOE presented its supporting data for the NODA with this 
structure in mind.
    Further, in contrast to the assertions made by some of the 
commenters, adhering to a site-based approach is also consistent with 
the framework developed under DOE's FFC Policy Statement when the 
Agency considered the question of using the FFC within the context of 
its energy conservation standards analyses. (See 76 FR 51281 (August 
18, 2011) (DOE Statement of Policy for Adopting Full-Fuel-Cycle 
Analyses Into Energy Conservation Standards Program)) While the Policy 
Statement noted that using FFC measures would help provide more 
complete information about the total energy use and greenhouse gas 
emissions associated with a specific energy efficiency level, the 
Agency also stressed that EPCA requires that its measures used to 
determine the energy efficiency of its covered products be based solely 
on the energy consumed at the point of use. (76 FR 51281, 51282) DOE 
pointed out that although EPCA does not mandate the use of ``point-of-
use'' measures in each of its analyses in support of a given standard--
and DOE ultimately decided to include FFC energy measures were included 
as part of DOE's national impact analyses and environmental assessments 
for standards rulemakings--DOE made clear its view that the final 
energy conservation standard chosen ``must be expressed as a point-of-
use measure.'' (76 FR 51281, 51284 (citing to 42 U.S.C. 6291(4)-(6), 
6311(3)-(4), (18)) DOE also considered the question of whether it 
should establish a policy to calculate and use full fuel cycle measure 
in future rulemakings in instances where a fuel choice is present--but 
ultimately concluded that these additional measures would only provide 
a rough indicator of the impacts of possible fuel switching on total 
energy savings and emissions and, therefore, would not enhance current 
DOE estimates of the direct impacts of alternative standard levels on 
fuel choice, energy savings, emissions and other factors. (76 FR 51281, 
51285)
    The adoption of a full fuel cycle approach by other entities and 
jurisdictions (as indicated by a number of commenters) does not change 
the fact that DOE has its own, Congressionally-mandated requirements to 
follow--which require that DOE base its standards on site-based energy 
use. DOE also notes that the determination of a threshold for 
significant energy savings is a separate question from whether a given 
standard is economically justified. Accordingly, consistent with its 
statutory obligations and with its past practice and policy statements, 
when determining whether a given standard is economically justified, 
DOE will apply FFC measures to evaluate the given standard level but 
continue to base its energy conservation standards on site energy use.
Calculation Methodology
    DOE appreciates the various suggestions offered by commenters on 
possible ways to modify DOE's supporting analysis, such as by modifying 
the analysis to account for changes in EIA-related numbers, accounting 
for different methods for setting standards (e.g., reduction in losses 
v. increased energy efficiency), excluding first-round rulemakings, and 
others. However, the purpose of DOE's analysis was not to go back and 
verify or improve the energy savings analyses from these rules. 
Instead, DOE conducted this analysis in response to Herrington, which 
stated that the ``cumulative savings possible from the appliance 
program as a whole is certainly relevant to whether the conservation 
that standards for a particular product type might achieve should be 
deemed significant.'' 768 F.2d 1355, 1378 (1985). DOE's goal was to 
determine how much the proposed threshold would have reduced the 
projected, cumulative energy savings from its prior rules. As the 
proposed threshold would have preserved 94 percent of the projected, 
cumulative energy savings, DOE believes it is a

[[Page 8675]]

reasonable threshold for significant energy savings.
    In future rules, DOE will quantify the quads of site energy saved 
using the same methodology it has used for previous rulemakings to 
ensure that standards meet the 0.3 quad threshold over 30 years 
outlined in this rule. As noted elsewhere in this document, DOE will 
continue to use FFC energy savings to calculate emissions reductions. 
As an alternate threshold, DOE will assess the energy savings 
percentage by assessing the quads of energy saved relative to the 
baseline. DOE notes that, using this method, the percentage of energy 
savings would be identical whether quads are assessed at the site 
energy or primary energy level. In this way, use of a percentage energy 
threshold in addition to the site energy threshold addresses some 
commenters' concerns regarding whether a site energy threshold would 
skew how the Department will treat standards for gas-using versus 
electric appliances.
Quad and Percentage Thresholds
    Regarding the various comments in favor and against the proposed 
thresholds in light of the supplemental data furnished by the NODA and 
related docketed materials, DOE continues to believe that it has the 
authority to establish threshold levels for determining significant 
energy savings. Nevertheless, DOE has revisited its proposed threshold 
levels in light of the comments it received in response to the NODA. 
After reviewing the quad site energy savings from past energy 
conservation standards rulemakings, DOE has determined to revise its 
proposed 0.5 quad threshold. The 0.5 quad threshold was not based on a 
consistent evaluation of energy use across rules. When the energy 
savings of all rules are evaluated on a site energy basis, the primary 
goals of the proposed threshold are best achieved at 0.3 quads of site 
energy. Namely, this threshold clearly distinguishes between the 
standards that accomplish the vast majority of total energy savings and 
those that accomplish purely incremental savings at the same level of 
administrative burden. When considered in this light, DOE has decided 
to adopt a threshold for significant energy savings at 0.3 quads of 
site energy or, if that level is not met, a 10 percent reduction in 
site energy use.
    As a preliminary matter, DOE notes that the NODA data were intended 
to present the projected energy savings from past rulemakings in a 
uniform manner consistent with the framework established by Congress to 
illustrate the relative savings achieved by DOE's prior rulemakings 
when setting energy conservation standards. As A.O. Smith noted, the 
rulemakings listed in the NODA do not all have the same analytical 
period. However, DOE clearly specifies in this rule that for future 
rulemakings energy savings will be assessed over a 30-year analytical 
period, which clearly provides a uniform approach across rulemakings.
    With respect to the energy usage threshold that Congress imposed as 
a mandatory prerequisite before permitting DOE to set standards for a 
given product using its discretionary authority under 42 U.S.C. 
6295(l), that threshold is equivalent to 0.014335 quad of site energy 
use on an annual basis. When extrapolated over 30 years, that total 
amount of quad savings--0.43005 quad--would exceed the site energy-
based equivalent level adopted in this final rule. With the site 
energy-based approach adopted in this rule, DOE has decided to lower 
its quad-based threshold to 0.3 quad.
    DOE notes that in those instances where even this amount of savings 
may prove too high a hurdle to surmount, DOE would apply its percentage 
threshold, which was intended to be a measure that would be better 
tailored to accommodate the particular energy savings potential of the 
product/equipment under consideration. With respect to applying the 
percentage threshold, DOE notes that it has further examined its 
proposed 10 percent level. Under DOE's proposed thresholds, 
approximately 95% of the total savings from the 57 final rule would 
have been retained. Given the concerns raised by the commenters, DOE 
adjusted its quad-based threshold but has chosen to retain the proposed 
10 percent threshold for this final rule. In DOE's view, these 
thresholds together create a fair trade-off to ensure that energy 
savings achieved by DOE's rulemaking efforts produce results that are 
consistent with the balancing required under EPCA--i.e. to produce 
significant energy savings that are technologically feasible and 
economically justified. This result is consistent with EPCA's goal of 
improving energy efficiency while also ensuring that those energy 
savings achieved are significant in the first instance. See generally 
42 U.S.C. 6201(5) and 42 U.S.C. 6295(o)(3)(B). See also Herrington, 768 
F.2d at 1376 (noting that DOE may set levels of significance as a 
percentage of energy consumed by a product ``provided that the levels 
selected reasonably accommodate the policies of the Act.'') In DOE's 
view, the adjustments it is making in this final rule to establish 
thresholds for significant energy savings attempts to reduce the 
overall potential regulatory burdens in the form of reduced rulemakings 
while retaining the vast majority of energy savings (over 95%) when 
viewed against past rulemakings. (See 84 FR 36037, 36038 (July 26, 
2019)).
    Further, use of a percentage threshold addresses commenters' 
concerns regarding the ways in which a site energy threshold could 
cause appliances with different fuel sources to be treated differently, 
because the percentage change remains constant regardless of which 
energy metric is selected. See generally 42 U.S.C. 6201(5) and 42 
U.S.C. 6295(o)(3)(B). See also Herrington, 768 F.2d at 1376 (noting 
that DOE may set levels of significance as a percentage of energy 
consumed by a product ``provided that the levels selected reasonably 
accommodate the policies of the Act.'' The 10 percent level being 
adopted in this rule accounts for potentially lower reductions in 
energy savings that may occur as DOE continues to incrementally amend 
the standards for regulated products and equipment.
    As DOE previously explained, its purpose in setting thresholds for 
significant energy savings was to take a middle ground when determining 
significant savings of energy to improve the predictability and 
transparency of its standards rulemakings. (See 84 FR 3910, 3923 (Feb. 
13, 2019)) Further, DOE must also consider ``the overall conservation 
possible'' under its program in determining what would meet the 
``significant conservation of energy'' requirement prescribed under 
EPCA. Herrington, 768 F.2d at 1378. In following this framework, and in 
contrast to its past approach of emphasizing whether projected energy 
savings were ``genuinely trivial,'' DOE gave careful consideration to 
the results of its past rulemaking actions and is now seeking to better 
balance the potential savings and potential burdens involved to help 
ensure that DOE produces rulemakings that achieve significant energy 
conservation as required under EPCA while reducing the overall burdens 
in achieving those savings.
    Regarding requests that DOE clarify whether it is adopting a max-
tech percentage threshold based on a reduction in energy use or an 
improvement in energy efficiency, DOE has decided, as indicated 
earlier, to adopt the former. In addition to the differences noted by 
commenters, DOE believes that adopting a percentage threshold based on 
the reduction in energy use is preferable given that it

[[Page 8676]]

more closely tracks the statutory framework to directly address energy 
use and to reduce that usage to the extent possible within the limits 
prescribed by EPCA. See generally 42 U.S.C. 6291.
Other Comments
    With respect to MHARR's suggestion to apply the Process Rule's 
provisions to the separate rulemaking on manufactured housing that is 
currently underway, while DOE appreciates this suggestion, we note that 
the statutory authorities for manufactured housing and the appliance 
standards that are addressed by this final rule are in separate 
chapters within Title 42 of the U.S. Code and have no relationship with 
each other--aside from applying generally to DOE. Consequently, DOE is 
declining to adopt this suggestion.
    As for suggestions that DOE issue a supplemental notice of proposed 
rulemaking, DOE is also declining this suggestion. In DOE's view, the 
proposal, related public meetings, and subsequent NODA (and 
accompanying data), provided a sufficient opportunity for interested 
parties to meaningfully comment on the proposed rulemaking. Given the 
detailed feedback provided by commenters, and the nearly 200 days in 
total that stakeholder have had to submit comments on these topics, DOE 
does not believe that a supplemental notice is necessary. Should DOE 
decide, however, to amend the process rule at a later point in time, a 
new notice of proposed rulemaking would be issued and published.
    Regarding how and when the quantitative thresholds would be 
applied, as noted elsewhere, these thresholds would be applied at the 
initiation of a review of potential standards for a given product or 
equipment. Assuming that the max-tech-based threshold for significant 
energy savings is met, DOE would evaluate potential standards under 
consideration against that threshold and whether those standards would 
be economically justified--with technological feasibility already being 
addressed under the initial max-tech analysis. This review would be 
conducted in a manner consistent with the approach outlined in Figure 
III-1. Relevant information collected by and submitted to DOE at each 
respective step will be used to assess any potential standards under 
consideration. In applying these thresholds to multiple product classes 
belonging to a particular product type, as stated elsewhere in this 
document, the significant energy thresholds would apply to the product 
type as a whole, not simply to a particular class of that product type. 
DOE has added language to the regulatory text to mitigate the risk of 
potential manipulation of classes (or subclasses) for the purposes of 
attempting to solely satisfy (or not satisfy) the thresholds.

I. Finalization of Test Procedures Prior to Issuance of a Standards 
NOPR

    Currently, the Process Rule states that DOE will propose any 
modifications to a test procedure prior to issuing an ANOPR for energy 
conservation standards and finalize those modifications prior to 
issuing a NOPR for energy conservation standards. However, DOE has 
deviated from this schedule in the past and conducted test procedure 
and standards rulemakings concurrently.
    DOE recognizes that a finalized test procedure allows interested 
parties to provide more effective comments on proposed standards. 
Further, if the test procedure is finalized sufficiently in advance of 
the issuance of proposed standards, interested parties will have 
experience using the new test procedure, which may provide additional 
insights into the proposed standards. As a result, in its February 13th 
NOPR, DOE proposed to require that test procedures used to evaluate new 
or amended standards will be finalized at least 180 days before 
publication of a NOPR proposing new or amended standards. (84 FR 3910, 
3926) In this final rule, DOE has adopted this proposal.
    Most commenters are in general agreement that test procedures 
should be finalized before DOE proposes new or amended standards. 
Commenters agreeing include: CTA, No. 136 at p. 3; A.O. Smith, March 
21, 2019 Public Meeting Transcript, No. 87, at p. 27; Acuity, No. 95, 
at p.5; AHAM, April 11, 2019 Public Meeting Transcript, No. 92, at p. 
36; AHRI, March 21, 2019 Public Meeting Transcript, No. 87, at p. 12; 
AHRI, April 11, 2019 Public Meeting Transcript, No. 87, at p. 49; ASE, 
No. 108 at p. 5; AGA, March 21, 2019 Public Meeting Transcript, No. 87, 
at p. 20; Joint Commenters, No. 112, at p.8; AGA, No. 114, at pp. 20-
21; ALA, No. 104 at p. 2; APGA, March 21, 2019 Public Meeting 
Transcript, No. 87, at pp. 14-15; APGA, No. 106 at p. 4; ASAP, April 
11, 2019 Public Meeting Transcript, No. 92, at p. 43; BWC, No. 103 at 
p. 3; CTA, No. 136 at p. 3; Joint Commenters, No. 112 at p. 8; Lutron, 
April 11, 2019 Public Meeting Transcript, No. 92, at pp. 52-53; Lutron, 
No. 137 at p. 2; NEMA, April 11, 2019 Public Meeting Transcript, No. 
92, at pp. 47-48; NPGA, No. 110 at p. 2; PG&E, April 11, 2019 Public 
Meeting Transcript, No. 92, at pp. 41-42; Rheem, No. 101 at p. 1; 
Signify, No. 116 at p. 2; BHI, No. 135, at p. 3; Westinghouse, April 
11, 2019 Public Meeting Transcript, No. 92, at p. 38; Zero Zone, No. 
102 at p. 2.
    Most of the commenters agree that the proposed 180-day time period 
is appropriate. Only three would prefer a longer time period: NAFEM 
suggesting a 270-day time period (NAFEM, No. 122, at p. 4), 
Westinghouse suggesting a longer time period without a specific 
proposal (Westinghouse, April 11, 2019 Public Meeting Transcript, No. 
92, at p. 38), and ALA offering support for the 180-day, although 
suggesting that more time would be beneficial (ALA, No. 104 at p. 2).
    Zero Zone argued that test procedures must be finalized before a 
standard is developed. Zero Zone emphasized that, due to EPCA's anti-
backsliding provision, energy conservation standards improperly set due 
to an incomplete understanding of test procedure amendments cannot be 
adjusted downwards. According to Zero Zone, completion of a test 
procedure prior to standards initiation would help avoid such problems 
and ensure that standards are set at an appropriate level. (Zero Zone, 
No. 102 at p. 2) DOE agrees with Zero Zone's comment as another reason 
in support of DOE's proposal.
    Several commenters believe that the requirement to finalize test 
procedures 180-days prior to proposing a related standards rule is too 
restrictive. ACEEE stated that such a requirement would not only 
prolong the process, but also prevent the later proceedings from 
informing the earlier one, thus resulting in worse test procedure 
decisions or years-long delays as the earlier rulemakings are repeated. 
ACEEE stated that it generally supports completion of test procedures 
well before the end of the comment period on the standard NOPR, while 
leaving an ability to fix problems that may become apparent later. 
(ACEEE, NO. 123, at p. 2) Similarly, the AGs Joint Comment opposed the 
requirement for test procedures to be finalized 180 days prior to 
issuance of a standards NOPR because it would unnecessarily delay the 
rulemaking process by imposing a 180-day waiting period, thereby 
threatening DOE's ability to meet EPCA statutory deadlines. It agreed 
that DOE should strive to finalize test procedures before a standards 
rulemaking commences, but saw no reason to impose an inefficient 
waiting period which would be to the detriment of the interests of the 
public and other non-manufacturer stakeholders. Furthermore, the AGs 
Joint Comment

[[Page 8677]]

argued that manufacturers already have a very significant role in test 
procedure rulemakings, because they supply information (e.g., product 
expertise and test data), so making the standards rulemaking await 
completion of the test procedure rulemaking would give manufacturers 
inordinate influence over when such standards rulemaking may begin. 
According to the AGs Joint Comment, DOE's proposed approach is contrary 
to the spirit of EPCA, which affords diverse stakeholders an equal 
opportunity to participate in the process, and any delay on the part of 
the manufacturers could render DOE unable to meet its statutory 
deadlines. (AGs Joint Comment, No. 111 at p. 7)
    DOE disagrees with the proposition from the AG's Joint Comment that 
the 180-day waiting period will give manufacturers excessive influence 
over the timing of the standards rulemaking process. First, DOE 
approaches the rulemaking process expecting that all stakeholders will 
act in good faith even while advocating for their particular position. 
DOE notes that existing Process Rule, which has been in place for more 
than 20 years, has contemplated that the test procedure would be 
finalized prior to the publication of the proposed rule in the 
standards proceeding and the scenario posited by the AG's Joint Comment 
has never materialized. Second, the 180-day period has its own clear 
purpose, that is, it is designed to ensure that during the standards 
process all parties can rely on the accuracy of the related final test 
procedure. Most stakeholders agree with the underlying intent of the 
provision even if they disagree with the specific time period.
    The CEC asserted that DOE's proposal to insert an interval between 
the test procedure and standards rulemakings would introduce 
``unnecessary barriers'' to the standards process and would ``do 
nothing to advance energy efficiency under the statutory intent of 
EPCA'' and harm consumers by delaying the effectiveness of standards 
that would otherwise save energy and money. (CEC, No. 121, at pp. 4-5) 
CT-DEEP asserted generally that it opposed any changes that would 
lengthen the rulemaking process. (CT-DEEP, No. 93, at pp. 1-2) As noted 
above, the accuracy of test procedures advances EPCA's goal of energy 
efficiency. The standards rulemaking process cannot proceed without 
accurate test procedures. Thus, the 180-day period is not an 
``unnecessary barrier.''
    NPCC supported the goal of developing a test procedure prior to the 
issuance of a standards NOPR but it objected to the fixed 180-day time 
interval between the test procedure final rule and the publication of 
the standards proposal. In its view, this time period is both too long 
and removes DOE's flexibility to issue a proposal in a shorter period 
of time in order to satisfy a related statutory deadline for a 
standards rulemaking. NPCC also objected to the proposed condition that 
the test procedure final rule be ``completely `finalized' prior to the 
[standards] rulemaking [being initiated NPCC argued that DOE should 
continue to allow for flexibility if the rulemaking process reveals a 
need to modify the applicable test procedure. (NPCC, No. 94, at p. 6)
    Energy Solutions stated that DOE should aim to finalize a test 
procedure before issuing a proposal for standards, but it should be 
non-binding guidance, not mandatory. If it is mandatory, it could cause 
DOE to miss statutory deadlines. (Energy Solutions, April 11, 2019 
Public Meeting Transcript, No. 92, at pp. 37-38, 56) Similarly, the 
Cal-IOUs support the current guidance approach, which is for DOE to aim 
to issue a final test procedure rule prior to a standards NOPR whenever 
feasible or practical so that the standards rulemaking can account for 
any test procedure updates. (Cal-IOUs, No. 124, at p. 11) By linking a 
standards rulemaking directly to a test procedure rulemaking, the Cal-
IOUs worried that this approach would significantly hamper DOE's 
ability to meet statutory deadlines. Cal-IOUs, No. 124, at p. 11. ASE 
expressed concern that a binding Process Rule would make it impossible 
for DOE to resolve test procedure issues which come to light without 
losing time and potentially missing statutory deadlines. (ASE, No. 108 
at p. 5)
    The above comments reflect the concern among several commenters 
that DOE needs to retain flexibility during the rulemaking process. To 
a large extent, the process of amending the Process Rule arose from 
complaints that DOE was exercising too much flexibility during the 
rulemaking process and was not following the current Process Rule. A 
number of those complaints were situations in which DOE had not 
completed a test procedure rulemaking prior to proposing a new or 
revised standard. In DOE's experience, not following that step-wise 
approach resulted in disputes over data and technical issues that lead 
to delays. In response, DOE has examined the issue and has decided to 
make the previously existing concept of completing the test procedure 
rulemaking prior to proposing a new or revised standard mandatory and 
specify a period of time that is of sufficient duration that accurate 
data can be produced using that test procedure to inform decisionmaking 
in the standards rulemaking process.
    One specific issue addressing flexibility on which commenters have 
generally expressed concern is how the Department will handle technical 
corrections to a finalized test procedure, either discovered during the 
standards rulemaking or perhaps, at a time after it becomes final. 
Lennox suggested that if such a situation arises, DOE should assess the 
best course of action on a case-by-case basis guided by principles 
that: (1) Stakeholders have adequate notice and opportunity to comment 
on rulemakings; and (2) burdens on regulated-equipment manufacturers, 
including the burdens of the rulemaking process itself, are minimized. 
Lennox believes that DOE should not automatically be required to re-
propose the standards NOPR if the need for a technical correction is 
discovered. (Lennox, No. 133, at pp. 6-7) On this same topic, the AGs 
Joint Comment questioned whether the test procedure problem would need 
to be resolved first and then have the standards rulemaking start all 
over again. According to the AGs Joint Comment, not only would this 
approach jeopardize DOE's ability to meet statutory deadlines, but 
given the ambiguity of this part of the agency's proposal, stakeholders 
have not been afforded adequate notice to allow a meaningful 
opportunity to comment. (AGs Joint Comment, No. 111 at pp. 7-8)
    Similarly, ASAP raised the concern as to how DOE will make changes 
to the test procedure when the problems arise during the standards 
process after the test procedure has been finalized. Referring to the 
test procedure, ASAP said ``have it done but don't have it so done'' 
that the Department cannot make changes if needed and still meet 
statutory obligations for test procedures. (ASAP, April 11, 2019 Public 
Meeting Transcript, No. 92, at pp. 44-46) ASAP urges the Department to 
retain flexibility to address test procedure issues because it seems 
inevitable that situations will arise that will require deviating from 
the general practice. ASAP, et al. believes that the language in the 
current Process Rule that ``final, modified test procedures will be 
issued prior to the NOPR on proposed standards,'' is sufficient. ASAP, 
et al. states that an alternative could be to specify 180 days between 
the finalization of a test procedure and the end of the comment periods 
on the standards NOPR, which would give manufacturers enough time to 
evaluate the impact of any test procedure

[[Page 8678]]

changes on the performance of the products. (ASAP, et al., No. 126, at 
pp. 2, 11-12) In response, DOE takes the position that ASAP's 
alternative proposed language is too open-ended and vague to create 
certainty for stakeholders.
    Southern California Edison also expressed its concern as to how 
test procedure changes will be handled and is concerned about DOE 
giving up its flexibility. (Southern California Edison, April 11, 2019 
Public Meeting Transcript, No. 92, at pp. 49-51). One commenter 
specifically suggested that if changes to the test procedure are made 
after the 180-days, manufacturers will need to re-test to the new 
standard and the 180-day period should be reset. (Lutron, April 11, 
2019 Public Meeting Transcript, No. 92, at pp. 52-53) The Joint 
Commenters recommended that DOE include an opportunity for DOE to 
adjust and address test procedure amendments on an expedited basis, 
such as a petition from stakeholders. This commenter stated that such a 
process would not be intended to address sweeping changes to the method 
of test, but could fix errors or address burdensome practical 
challenges that had not been anticipated during the rulemaking stage. 
(Joint Commenters, No. 112, at p. 8; GEA, No. 125 at pp. 2-3, also 
supporting a quick fix process)
    Generally speaking, DOE would not expect that as soon as a test 
procedure is finalized, DOE and stakeholders would immediately find 
significant changes that need to be made to the just-finalized test 
procedure. In fact, requiring the test procedure be completed prior to 
proposing a new or revised energy conservation standard should ensure 
that these issues don't occur and, in the unlikely event that they do, 
DOE can make an amendment before getting too far along in the standards 
rulemaking or before the statute would require use of the test 
procedure to make representations. If it was discovered that small, 
technical changes are needed, DOE would hope that all stakeholders 
would join together with DOE to allow such minor changes to be made 
without revisiting the entire test procedure from the beginning. We 
would expect that all stakeholders would join in a common sense, 
expeditious solution.
    The remote possibility of a worst-case scenario happening, that is, 
significant errors being discovered during a standards rulemaking for a 
related, recently finalized test procedure, should not diminish the 
positive impact of providing for a specific 180-day period, which 
coincides with the statutory 180-day period prior to use of the test 
procedure for making representations using the test procedure. 
Providing a 180-day period between a final test procedure rule and a 
proposed standards rule gives stakeholders the opportunity to evaluate 
the new or amended test procedure and assess the effects of the test 
procedure on upcoming proposed standards within a specified reasonable 
time period. As AHAM stated at the April 11, 2019 public meeting, 
industry needs to have some opportunity to work with the new or amended 
test procedure before standards proposals can be effectively analyzed. 
(AHAM, April 11, 2019 Public Meeting Transcript, No. 92, at p. 36) APGA 
offered a similar comment stating that finalizing the test procedure 
first gives stakeholders the opportunity to work with the test 
procedure to help ensure that it is technically correct and produces 
repeatable results, and that interested parties can ascertain the 
impacts of the test procedure on the current energy efficiency rating 
of covered products. APGA argued that unless stakeholders know the 
exact and settled procedure for testing, they cannot meaningfully 
analyze and comment on the impacts of proposed standards. (APGA, No. 
106 at p. 4) And, the Joint Commenters commented that the appropriate 
sequencing allows predictability, transparency, and the opportunity for 
stakeholders to understand the ramifications of the DOE's rulemaking 
proposals. Only after real-world testing can manufacturers, and 
indirectly DOE and the public, be comfortable that the implications for 
the test procedure's application to a revised standard are fully 
understood. (Joint Commenters, No. 112, at p. 8)
    Accordingly, in light of the reasons discussed above, DOE is 
adopting its proposal to require that test procedures used to evaluate 
new or amended standards will be finalized 180 days before publication 
of a NOPR proposing new or amended standards.

J. Adoption of Industry Standards

    As part of its February 13th NOPR, DOE proposed to amend the 
Process Rule to require adoption, without modification, of industry 
standards as test procedures for covered products and equipment unless 
such standards do not meet the EPCA statutory criteria for test 
procedures. (84 FR 3910, 3927) This Process Rule requirement would 
apply to covered products and equipment where use of an industry 
standard is not mandated by EPCA. In effect, this requirement is merely 
a codification of DOE established practice.\21\
---------------------------------------------------------------------------

    \21\ Throughout this discussion, DOE will use the terminology 
``consensus standards'' as opposed to ``industry standards'' due to 
the fact that the National Technology Transfer and Advancement Act 
(NTTAA) and OMB Circular A-119 address the use of private sector 
standards, developed by private, consensus organizations to meet 
Federal agency needs in standards development activities.
     There was some debate during the course of this rulemaking as 
to the meaning of ``consensus.'' NRDC specifically states that these 
standards should not be rebranded as something they are not. (NRDC, 
April 11, 2019 Public Meeting Transcript at pp 79-80) Consensus 
means different things in different context. (NRDC, April 11, 2019 
Public Meeting Transcript at p. 87) EEI stated that the term 
consensus is more than a simple majority but less than unanimity. 
(EEI, April 11, 2019 Public Meeting Transcript at p. 82) 
Westinghouse requested that DOE change terminology from industry 
standards to consensus standards. (Westinghouse, April 11, 2019 
Public Meeting Transcript at pp. 39-40)
---------------------------------------------------------------------------

    DOE's established practice has been to routinely adopt industry 
standards as DOE test procedures and in cases where the industry 
standard does not meet EPCA statutory criteria for test procedures make 
modifications to these standards as the DOE test procedure. These 
modifications have always been handled during the individual notice and 
comment rulemaking proceeding for the test procedure at issue. As noted 
in the NOPR, DOE recognizes that modifications to these standards 
impose a burden on industry (i.e., manufacturers face increased costs 
if the DOE modifications require different testing equipment or 
facilities).
    Several commenters, CTA, the Joint Commenters, and NEMA point to 
the fact that U.S. law and policy, that is, the National Technology 
Transfer and Advancement Act (NTTAA) and OMB Circular A-119, ``Federal 
Participation in the Development and Use of Voluntary Consensus 
Standards and in Conformity Assessment Activities,'' together direct 
Federal agencies to adopt voluntary, private sector, consensus 
standards to meet agency needs during standards development activities, 
thereby supporting the use of technical standards that are developed or 
adopted by voluntary, private sector, consensus standards bodies 
(rather than government-unique standards), unless such standards are 
inconsistent with applicable law or otherwise impractical. (National 
Technology Transfer and Advancement Act of 1995, Pub. L. 104-113, 
Section 12 (March 7, 1996) and revised Circular A-119, 81 FR 4673 
(January 27, 2016)) The NTTAA codified the policies in OMB Circular A-
119. The 2016 revised version of OMB Circular A-119 is available and 
can be accessed via PDF download at https://www.whitehouse.gov/omb/information-for-agencies/circulars/.

[[Page 8679]]

    Together, the commenters explain that several public policy 
objectives underlie the NTTAA and OMB Circular A-119. These objectives 
include the intention to enhance technological innovation for 
commercial public purposes, to promote the adoption of technological 
innovations, to encourage long-term growth for U.S. enterprises, to 
promote efficiency and economic competition through harmonization of 
standards, and to eliminate the cost to the Federal government of 
developing its own standards and decrease the burden of complying with 
agency regulation. CTA also points out that it believes governmental 
use of consultants to develop test procedures is not only costly, but 
is less transparent and open than the consensus standards development 
process. It states that such standards development organizations are 
accredited by national bodies and are open to all interested parties. 
(CTA, No. 136, at pp. 2-3) NEMA added that by adopting such industry 
test procedures as Federal test procedure, it is likely to facilitate 
expedited compliance with DOE legally mandated test procedures. Also, 
NEMA states that these consensus test procedure standards are likely to 
meet the EPCA requirement that a test procedure not be ``unduly 
burdensome to conduct'' as they are likely already in use. (NEMA, No. 
107, at p. 6) And finally, the Joint Commenters point out that DOE's 
proposal aligns with decades-old executive and Congressional policy 
goals and agrees with NEMA that this policy enables more rapid 
compliance. The Joint Commenters add that it also promotes confidence 
in the adoption of energy conservation standards by regulated parties. 
(; NEMA, No. 107, at pp. 5-6, and the Joint Commenters, No. 112, at pp. 
9-10) Accordingly, putting DOE's proposal in context, on its face, this 
proposal explicitly implements and is consistent with the NTTAA and OMB 
Circular A-119.
    Lastly, with respect to the NTTAA, Atlas Copco suggested that 
language be added to DOE's proposal requiring procedural compliance 
with section 12(d)(3) of the NTTAA. (Miles & Stockbridge on behalf on 
Atlas Copco, No. 100, at p. 2-3) In order for DOE to consider adding 
new language to its proposal at this time, DOE would need to issue a 
supplemental notice of proposed rulemaking (SNOPR) and re-open the 
comment period. Rather than delay finalizing this rule, DOE will take 
this recommendation under advisement and decide at a later date if 
further amendment to the Process Rule is required.\22\
---------------------------------------------------------------------------

    \22\ Atlas Copco also proposed additional changes to the amended 
Process Rule that relate to its rulemaking petition concerning the 
Rotary Air Compressor Test Procedure. This petition was submitted in 
response to DOE's request that stakeholders identify existing test 
procedures that should be modified to conform to existing industry 
test procedures. (Miles & Stockbridge, on behalf of Atlas Copco, No. 
100, at pp. 1-6) These matters will be addressed during the DOE 
rulemaking that considers Atlas Copco's petition.
---------------------------------------------------------------------------

    DOE also strongly agrees with stakeholders that the Department has 
a fundamental obligation to apply all EPCA statutory requirements when 
it promulgates any and all test procedures for covered consumer 
products and commercial and industrial equipment. For certain covered 
products and equipment, EPCA specifically mandates that DOE adopt 
certain consensus standards, subject to certain conditions as specified 
in EPCA. This latter category is not the subject of this discussion. 
Instead, the following discussion applies only to covered products and 
equipment where use of consensus standards is not mandated by EPCA.
    In order to adopt any such test procedure, the Department must 
apply certain EPCA statutory criteria. These criteria are contained in 
two sections of EPCA, that is, 42 U.S.C. 6293(b)(3), and (4), or 42 
U.S.C. 6314(a)(2) and (3), depending upon the specific covered product 
or covered commercial equipment to which the test procedure would 
apply. Both of these sections contain similar language describing two 
statutory criteria for the promulgation of a test procedure: (1) That 
the test procedure shall be reasonably designed to produce test results 
which measure energy efficiency, energy use, water use, or estimated 
annual operating cost of a covered product during a representative 
average use cycle or period of use, as determined by the Secretary, and 
(2) that the test procedure shall not be unduly burdensome to 
conduct.\23\
---------------------------------------------------------------------------

    \23\ The language in 42 U.S.C. 6314 (a)(2) and (3) differs 
slightly from its parallel sections in 42 U.S.C. 6293(b)(3) and (4). 
42 U.S.C. 6314(a)(2) reads as follows: ``(2) Test procedures 
prescribed in accordance with this section shall be reasonably 
designed to produce test results which reflect energy efficiency, 
energy use, and estimated operating costs of a type of industrial 
equipment (or class thereof) during a representative average use 
cycle (as determined by the Secretary), and shall not be unduly 
burdensome to conduct.
    Subparagraphs (3) for each of these two statutory provisions 
referenced above address test procedures for determining estimated 
annual operating costs have similar language but are not identical 
in order to reflect differences in criteria for covered products and 
covered commercial equipment.
---------------------------------------------------------------------------

    Accordingly, when DOE considers promulgating either a new or 
amended test procedure, DOE will evaluate the applicable consensus 
standard to determine whether such consensus standard meets the 
applicable above-referenced EPCA requirements. If the consensus 
standard does not meet both of the two criteria in the applicable 
section of EPCA, DOE will not adopt the consensus standard ``as is.'' 
Stated another way, the consensus standard under consideration must 
meet the EPCA statutory criteria for it to be used verbatim. If it does 
not meet the statutory criteria, it will then be necessary for DOE and 
stakeholders, during the notice and comment rulemaking process, to 
determine what specific modifications will bring the consensus standard 
into compliance with the statutory criteria in order for it to be the 
basis for a final DOE test procedure. Logically speaking then, if the 
applicable consensus standard under consideration fully meets both 
statutory criteria, then DOE will adopt it pursuant to this provision 
in the amended Process Rule. If, on the other hand, the consensus 
standard cannot be modified to meet the statutory criteria, DOE will 
not use it and will need to craft its own test procedure from the 
beginning. As with all test procedure rules and as we stated above, all 
of these issues, including whether the consensus standard meets the 
EPCA statutory criteria, will be discussed and decided in the regular 
notice and comment rulemaking process.
    DOE hopes that the above discussion clarifies the application of 
DOE's proposal to the adoption of consensus standards. In reviewing the 
many comments concerning this proposal, DOE observes that many 
commenters misunderstood DOE's proposal. Many commenters objected to 
the proposal, stating in various ways, that DOE should not have a 
mandatory rule to rely on, or give deference to, consensus test 
procedures. These commenters state that they do not want DOE to 
abdicate its responsibility for reviewing and revising consensus test 
procedures since modifications may be necessary. Generally, commenters 
want DOE to retain its independence and flexibility when setting test 
procedures. It would appear that these commenters generally believe 
that the DOE proposal does not require application of the EPCA 
statutory criteria to the consensus standard under consideration. (A.O. 
Smith, March 21, 2019 Public Meeting Transcript at p. 28; A.O. Smith, 
No. 127, at pp. 3-4; ASE, No. 108 at p. 5; AGA, No. 114, at pp. 21-22; 
ASAP, April 11, 2019 Public Meeting Transcript at pp. 70-71; ASAP, et 
al., No. 126 at pp. 2, 12-13; ACEEE, No. 123, at p. 3; NPCC,

[[Page 8680]]

March 21, 2019 Public Meeting Transcript at p. 24; NPCC, No. 94, at pp. 
6-7; NRDC, No. 131 at pp. 11-12; PG&E, April 11, 2019 Public Meeting 
Transcript at pp. 228-229; Cal-IOUs, No. 124, at pp. 6, 12-13; Southern 
California Edison, April 11, 2019 Public Meeting Transcript at p. 65) 
One commenter, Energy Solutions, stated that outsourcing the test 
procedure development process to industry is problematic. (Energy 
Solutions, April 11, 2019 Public Meeting Transcript at p. 74) Whereas 
another commenter, CEC characterizes DOE's proposal as a ``blanket 
approach'' to adopting industry test procedures without providing 
reasoning that such test procedures meet EPCA's requirements. (CEC, 
April 11, 2019 Public Meeting Transcript at pp. 231-232; CEC, No. 121, 
at p. 9-10) Another commenter, the Cal-IOUs, questioned how the 
provisions in the NOPR regarding industry test procedures help DOE 
independently assess the representativeness and enforceability of DOE 
test procedures. (Cal-IOUs, No. 124, at p. 2). As we have explained 
previously, DOE has determined that it will use industry test 
procedures as the initial basis for a DOE test procedure, but that is 
only the first step in the process. Most importantly, DOE must assess 
whether the industry standard under consideration specifically meets 
the EPCA statutory criteria for the establishment of a test procedure. 
So, in response to the Cal-IOUs above-stated question, DOE is applying 
two separate principles; one does not support or help the other.
    According to NRDC, DOE's proposed approach would conflict with 
EPCA, because unlike commercial equipment, Congress did not explicitly 
point DOE toward industry consensus standards for consumer products. 
But NRDC agrees that industry test procedures can serve as a useful 
starting point for discussions, even though they often require 
modification, for instance, to account for power consumption of new 
features or to address loopholes. NRDC states a preference for DOE's 
current approach to test procedures, whereby DOE acts as a neutral 
convener for discussion of test procedure issues. (NRDC, No. 131 at pp. 
11-12) While it is true that EPCA does not require the use of consensus 
standards for certain test procedures for certain equipment, it does 
not prohibit such use and the NTTAA and OMB Circular A-119 favors the 
use of consensus standards by agencies, unless there is a conflict with 
applicable law or it is otherwise impractical. Clearly, nothing in EPCA 
prevents DOE from using consensus standards in test procedure 
rulemakings as long as DOE can demonstrate that these consensus 
standards meet the EPCA statutory criteria. Moreover, DOE believes that 
whether it uses consensus standards or not in any given situation, it 
can act as a neutral convener for the discussion and promulgation of 
test procedures during the rulemaking process.
    Moreover, Earthjustice argues that the NOPR fails to consider the 
implication of Congress's decision to explicitly require DOE to adopt 
industry test methods for specific products (i.e., many types of 
commercial equipment, thus limiting its discretion to a narrow review 
of industry standards for specific products). (Earthjustice, No. 134, 
at p. 4) As we stated above in response to NRDC, nothing in EPCA 
prevents DOE from using consensus standards in its test procedure 
rulemakings, as long as DOE can demonstrate that these consensus 
standards meet the EPCA statutory criteria. All commenters agree that 
DOE must meet the EPCA statutory criteria for the establishment of test 
procedures and most, if not all agree that consensus standards are a 
logical foundation to begin the test procedure process. Furthermore, 
the NTTAA and OMB Circular A-119 provide a context for the use of 
consensus standards to meet agency needs. Accordingly, DOE finds that 
this proposal implements both the underlying purpose of EPCA with 
respect to test procedures, and the NTTAA and OMB Circular A-119 with 
respect to consensus standards and ultimately, is a reasonable exercise 
of the agency's discretion in its test procedure rulemaking activity.
    ACEEE also argued that consensus test procedures are not generally 
developed for regulatory purposes. ACEEE added that in developing and 
implementing mandatory standards, a lack of clarity or different 
interpretations of the test procedures may surface. It believes that a 
failure to address these issues results in an uneven playing field for 
manufacturers as well as inconsistent efficiency levels for consumers. 
New metrics or requirements may require additional test procedures. 
This commenter, and others, states that the Department should have the 
ability to ensure its test procedures serve the purposes of the 
program, and not be required to adopt industry procedures without 
modification. (ACEEE, No. 123, at p. 3) DOE agrees with ACEEE that the 
agency should be able to modify the consensus standards. As we have 
already discussed, and will reiterate throughout this discussion, if 
the EPCA statutory criteria are not met, DOE will not adopt the 
consensus standard under consideration verbatim and modifications will 
be made to the consensus standard, if possible, so that it will meet 
the statutory criteria. If this latter result cannot be achieved, DOE 
must develop a whole new test procedure.
    Another commenter, ASAP, believes that DOE's proposal favors 
manufacturers. ASAP believes that DOE is turning away from consumer 
needs for a representative test procedure and the Department's need to 
set standards that are representative of actual energy use in the real 
world. (ASAP, April 11, 2019 Public Meeting Transcript at pp. 67-68) As 
with other commenters, it agrees that it is reasonable for DOE to start 
with existing test procedures (regardless of whether they are 
``industry'' test procedures). (ASAP, April 11, 2019 Public Meeting 
Transcript at p. 68) ASAP further states their concern that the NOPR 
document emphasizes a test procedure without modification and it does 
not want DOE to tie its hands. (ASAP, April 11, 2019 Public Meeting 
Transcript at p. 71) ASAP, et al. further states that any reference in 
the Process Rule to the criteria that DOE will use in adopting test 
procedures should simply refer to the statutory criteria. (ASAP, et 
al., No. 126 at pp. 12-13) In response to ASAP, DOE points out that 
this proposal requires DOE to unequivocally apply the statutory 
criteria, with representativeness being part of that evaluation. 
Moreover, the regulatory text for section 8(c), Adoption of Industry 
Test Methods, contains the statutory criteria that DOE must satisfy.
    Next, the AGs Joint Comment faulted DOE's proposed approach for 
using industry consensus test procedures, because it finds the approach 
to be overly deferential to industry and without sufficient weight 
given to DOE's own analysis and determination. This commenter states 
that by making a presumption in favor of consensus test procedures, 
DOE's flexibility would be unnecessarily limited and it would hinder 
DOE's ability to satisfy EPCA's test procedure requirements, as well as 
expose the Department to considerable litigation risk. It states that 
DOE cannot presume that industry test procedures satisfy EPCA's 
requirements. (AGs Joint Comment, No. 111 at pp. 4, 14) In response to 
the AGs Joint Comment, DOE can only reassure this commenter, and others 
who are similarly concerned, that DOE takes its regulatory 
responsibility seriously and will analyze the appropriate consensus 
standards in light of the EPCA statutory criteria to

[[Page 8681]]

ensure that EPCA is not undermined. DOE agrees with the AGs Joint 
Comment, and others like it, that DOE should not presume that the 
consensus test procedures meet the EPCA requirements; it will not do 
so.
    According to the Attorneys General, the biggest problem with DOE's 
proposed approach is that it would impose a duty on DOE to adopt the 
industry test procedure unless the Department makes a contrary 
determination. The AGs Joint Comment argued that DOE would need to make 
an affirmative finding that the industry test procedures would need to 
be modified prior to adoption, and that finding would be subject to 
litigation in which the Department would bear the burden of proof that 
the industry test procedure did not meet EPCA's requirements. (AGs 
Joint Comment, No. 111 at p. 14) With respect to this point, DOE 
believes that the AGs Joint Comment has superimposed requirements that 
do not exist, and has inserted steps into the process that are 
unnecessary. DOE will proceed with its established practice to analyze 
the appropriate consensus standards, and with the input of stakeholders 
either determine that the EPCA statutory criteria are met and use it as 
the DOE test procedure, modify it so that it complies with the 
statutory criteria, or reject it and develop an entirely new test 
procedure. Stakeholders will have ample opportunity to comment on DOE's 
ultimate approach for any given test procedure under consideration.
    The AGs Joint Comment also argued that industry test procedures are 
generally not created to measure energy efficiency and are likely not 
appropriate under EPCA. It alleges that industry interests hostile to 
stronger efficiency standards may try to manipulate the industry test 
procedures to their own advantage. (AGs Joint Comment, No. 111, at p. 
14) While DOE appreciates the AGs perspective, we believe that this 
point of view is speculative at best.
    The AGs Joint Comment also points out that some products may have 
multiple industry test procedures which could apply, but that the 
Process Rule NOPR does not explain how DOE would determine which 
procedure to adopt in those cases. (AGs Joint Comment, No. 111 at p. 
14) Similarly, the CEC contends that the blind adoption of industry 
test procedures would create confusion where multiple procedures exist 
for a given product since it would be unclear as to which procedure to 
use. (CEC, No. 121, at p. 11) With respect to its criticism of DOE's 
approach, the CEC also argued that, in many cases, industry test 
procedures contain optional test requirements, multiple test set-ups, 
instances where testing requirements are not specified and left to the 
testing lab's discretion, or unclear or overlapping definitions. As a 
result, the CEC states that test results would vary between test labs 
(affecting reproducibility) and tested products (affecting 
comparability, and leave open the potential for gaming by 
manufacturers. As a result the CEC argues that consumers would not 
receive the expected level of efficiency from their products, 
manufacturers would not be held to the same efficiency standard for the 
same products, and DOE would be unable to enforce its standards 
effectively. (CEC, No. 121, at p. 10) Because, as one might expect, 
consensus test procedures vary widely, DOE takes the position that 
these hypothetical scenarios, if and when they materialize, must be 
addressed on a case-by-case basis during the specific rulemaking 
proceeding.
    CEC further asserted that where EPCA requires DOE to affirmatively 
determine that amended test procedures are reasonably designed to 
produce test results that measure the energy use or operating costs of 
appliances and is not unduly burdensome to conduct, DOE cannot require, 
by regulation, the public instead to prove to DOE that an industry test 
procedure does not meet these goals. (CEC, No. 121, at p. 10) DOE's 
proposal does not shift the burden of proof to stakeholders to 
demonstrate that the applicable consensus standard should not apply. 
During the rulemaking process, DOE will analyze the consensus standard 
and make a determination as to whether the statutory criteria are met. 
Stakeholders will have the opportunity to give their comments.
    As DOE explained at the beginning of this discussion, this proposal 
is merely codifying DOE established practice concerning the use of 
consensus standards as DOE test procedures. Commenters are incorrect 
that DOE is proposing mandatory use of consensus standards without 
providing for an evaluation as to whether the EPCA statutory criteria 
are met. This proposal does not require the absolute adoption of 
consensus standards verbatim in all circumstances. If the EPCA 
statutory criteria are not met, in order to use the appropriate 
consensus standard, modifications will need to be made so that the 
consensus standard meets the EPCA statutory criteria. Such 
modifications will be vetted during the notice and comment rulemaking 
process so that all interested stakeholders can give DOE feedback. DOE 
follows this same analytical process now and will continue to do so. 
Commenters need not worry that consensus standards will be 
automatically adopted as DOE test procedures. As a matter of fact, 
commenters generally agree that using consensus standards as a basis to 
begin considering the substance of new or amended DOE test procedures 
is appropriate. At least one commenter, AHAM, recognized and agreed 
that DOE's proposal on this matter is not a departure from DOE's 
current, established process, and gave its support. (AHAM, April 11, 
2019 Public Meeting Transcript at pp. 63-64)
    Other commenters generally support DOE's proposal, without 
specifically acknowledging that it is not a change from its current 
practice. (Acuity, No. 95, at p. 4; BWC, No. 103 at pp. 3-4; CTA, No. 
136 at pp. 2-3; GM Law, No. 105 at p. 3; Joint Commenters, No. 112 at 
p. 9; Lutron, No. 137 at pp. 2-3; NAFEM, No. 122, at p. 5; NEMA, No. 
107 at pp. 5-6; Rheem, No. 101 at p. 1; Signify, No. 116 at p.1; 
Westinghouse, April 11, 2019 Public Meeting Transcript at pp. 72,74) In 
support of the proposal, AHRI stated that this proposal reflects 
renewed adherence to the statutory requirements and makes sense from 
the perspective of a cost-benefit analysis. (AHRI, March 21, 2019 
Public Meeting Transcript at p.12; AHRI, April 11, 2019 Public Meeting 
Transcript at pp 65-66)
    In addition, many commenters support DOE working with consensus 
standards development organizations to address issues that would ensure 
that relevant consensus standards can be used as Federal test 
procedures. (AHRI, April 11, 2019 Public Meeting Transcript at p. 76; 
EEI, April 11, 2019 Public Meeting Transcript, at p. 82; BWC, No. 103 
at pp. 3-4; Signify, No. 116 at p. 2; Southern Company, April 11, 2019 
Public Meeting Transcript at p. 78) Acuity specifically urged DOE to 
work with the appropriate industry standards development organization 
to update the relevant standard to minimize any gaps, duplication or 
conflicts between testing standards and statutory requirements. 
(Acuity, No. 95, at p. 4) AGA stated that the use of industry standards 
can minimize regulatory burdens and improve transparency. (AGA, March 
21, 2019 Public Meeting Transcript at p. 20; AGA, No. 114, at pp. 21-
22) Similarly, GM Law stated that adoption of existing industry 
standards would decrease unpredictability and the burdens of 
regulation. (GM Law, No. 105 at p. 3) ASHRAE emphasized that the 
standards development process is open to everybody, and its fairness, 
due process and transparency are ensured by its

[[Page 8682]]

ANSI accreditation. (ASHRAE, April 11, 2019 Public Meeting Transcript 
at pp. 61-63)
    BHI supports the adoption of industry test standards, but would 
prefer a collaborative process and specifically suggested adding 
language to DOE's proposal. BHI states that it disagrees with the 
expected comments that the industry technical experts who design and 
test the product are the best informed to draft test procedures. It 
states that industry technical experts normally design and test 
products to specific ANSI, UL or other construction and performance 
standards primarily focused on safety and reliability. It specifically 
suggested additional language to the DOE proposal to require the active 
DOE participation in the consensus standards process and require DOE to 
make available, as necessary, the resources of the National Institute 
of Standards and Technology (NIST). (BHI, No. 135, at pp. 5-6) While 
DOE appreciates BHIs suggestions, DOE does not believe that the 
suggested language itself will enhance DOE's participation. DOE 
currently participates in the consensus standards-setting process and 
already has the statutory authority to utilize NIST resources pursuant 
to 42 U.S.C. 6314(e). Accordingly, DOE will not add this language which 
it considers duplicative.\24\
---------------------------------------------------------------------------

    \24\ OMB Circular A-119 encourages agencies to participate fully 
in the private standards development process as equal parties. OMB, 
however, defers to individual agencies on their policies for 
determining to what extent and under what circumstances agency 
representatives are authorized to engage in particular activities, 
based on agency requirements and priorities. (OMB Circular A-119, at 
pp. 7-8)
---------------------------------------------------------------------------

    Several commenters expressed concern with non-DOE consensus groups. 
PG&E voiced its concern that it is difficult to get changes to 
consensus standards in these groups, and that the standards do not work 
as they should. Mostly, consumers are hurt, according to PG&E. (PG&E, 
April 11, 2019 Public Meeting Transcript at pp. 59-61) Another 
commenter, the Cal-IOUs believe that DOE would increase stakeholder 
burden and reduce transparency by requiring stakeholders to participate 
in non-DOE activities--or, in the extreme case, have stakeholder voices 
ignored entirely if these non-DOE activities are not administered in a 
way to incorporate stakeholder participation or are otherwise headed by 
a biased committee. (Cal-IOUs, No. 124, at p. 6) The Cal-IOUs take the 
position that EPCA provides a balanced approach to create a repeatable, 
reproducible, representative, and enforceable test procedures, while 
any given consensus test procedure is produced within organizations 
that do not share these same goals. The commenters fear that following 
the DOE's proposed approach would reduce transparency and increase 
stakeholder burden by requiring stakeholder participation in at least 
two test procedure rulemaking processes per product--one led by 
standards setting consensus organizations and the other by DOE. (Cal-
IOUs, No. 124, at p. 12)
    Moreover, A.O. Smith specifically requested that the Department 
issue a supplemental proposal that would consider guidelines to help it 
better understand the facts underlying the development of any new or 
revised consensus test procedure including: (1) The representation on 
the committee; (2) how innovative technologies are addressed; (3) de-
identified test data showing the new or amended industry method is 
capable of being run in a laboratory; and (4) the rationale for 
associated changes. (A. O. Smith, No. 127, at p. 4) After carefully 
considering the request, DOE has determined that the request for a 
supplemental NOPR to develop guidelines for use in the consensus 
development process is a subject that will not change the outcome of 
this specific proposal and would significantly delay implementation of 
the amended Process Rule. Accordingly, DOE rejects A.O. Smith's request 
at the current time. We also note that enhanced participation by DOE in 
the standards development processes, with or without this type of 
guidance, would not change DOE's obligation during the rulemaking 
process to review each consensus standard for adherence to the EPCA 
statutory criteria on a case-by-case basis.
    After careful consideration of the many comments related to DOE's 
proposal concerning the adoption of consensus standards during the DOE 
test procedure rulemaking process, and for the reasons articulated 
above, DOE is adopting its proposal in the final rule.

K. Direct Final Rules

    The Energy Independence Security Act of 2007 (``EISA 2007'') (Pub. 
L. 110-140) amended EPCA, in relevant part, to grant DOE authority to 
issue a ``direct final rule'' (i.e. DFR) to establish energy 
conservation standards. As amended, EPCA establishes requirements for 
when DOE uses this type of rulemaking proceeding for the issuance of 
certain actions. Specifically, DOE may issue a DFR adopting energy 
conservation standards for a covered product or equipment upon receipt 
of a joint proposal from a group of ``interested persons that are 
fairly representative of relevant points of view,'' provided DOE 
determines the energy conservation standards recommended in the joint 
proposal conform with the requirements of 42 U.S.C. 6295(o) or section 
342(a)(6)(B) as applicable. (42 U.S.C. 6295(p)(4)(A)) In the February 
2019 NOPR, DOE proposed to (1) clarify its authority under the DFR 
provision found at 42 U.S.C. 6295(p)(4); (2) provide guidance as to 
DOE's interpretation of ``fairly representative,'' and (3) explain 
DOE's obligations upon receipt of an adverse comment. (84 FR 3910, 
3928)
1. DOE's Authority Under the DFR Provision
    The DFR provision is found in EPCA at 42 U.S.C. 6295(p), the 
heading and introduction of which state: ``Procedure for prescribing 
new or amended standards. Any new or amended energy conservation 
standard shall be prescribed in accordance with the following 
procedure.'' Given the placement of the DFR provision within EPCA, DOE 
sought to clarify in the February 2019 NOPR that 42 U.S.C. 6295(p)(4) 
is a procedural process for issuing a DFR and not an independent grant 
of rulemaking authority. As such, any standard issued as a DFR must 
comply with the provisions of the EPCA subsection under which the rule 
was authorized.
    In response, AGA stated that the proposed revisions in the revised 
Process Rule will help to ensure that the DFR process is used only when 
all of the statutory requirements are met. (AGA, No. 114, at p. 24) 
Other commenters expressed concerns with DOE's clarification and its 
effect on achieving consensus agreements for new standards. For 
example, ACEEE stated that flexibility is needed in Direct Final Rules. 
DOE has interpreted the Direct Final Rule authority to allow more 
flexibility in metrics, requirements, and compliance dates than it 
usually takes in setting standards. This flexibility has been crucial 
to achieving consensus, allowing more room for negotiation, for example 
to trade stringency for lead time in ways that increase savings and 
decrease burden on manufacturers. (ACEEE, No. 123, at p. 4) AHRI also 
agreed that the ability to make important adjustments, particularly to 
compliance timelines, has been a vital aspect of being able to work 
together. (AHRI, April 11, 2019 Public Meeting Transcript, at 99) In 
addition to concerns about reduced flexibility in reaching consensus 
standards, commenters also disagreed with DOE's proposed clarification 
that the DFR provision is not an independent grant of

[[Page 8683]]

rulemaking authority. For instance, A.O. Smith stated that DOE did not 
provide an additional basis for its legal reinterpretation in the 
proposed process rule and A.O. Smith does not believe the 
reinterpretation is legally sound. (A.O. Smith, No. 127, at p. 6) 
Similarly, the Cal-IOUs stated that DOE's proposed clarification is 
``incorrect and inconsistent.'' (Cal-IOU, No. 124, at p. 13)
    DOE recognizes that the clarifications made in the Process Rule 
mean there is not flexibility in DFRs regarding certain aspects of 
energy conservation standards, e.g., compliance periods, energy 
efficiency metrics, etc. That being said, EPCA generally has very 
specific requirements for compliance periods and other aspects of 
energy conservation standards. For example, EPCA mandates either 3 or 
5-year compliance periods for standards issued under 42 U.S.C. 6295(m). 
EPCA also requires either 3 or 5-year compliance for standards issued 
in response to a petition for rulemaking under 42 U.S.C. 6295(n). The 
DFR provision in EPCA, on the other hand, is silent regarding 
compliance periods and every other aspect of the substantive 
requirements applicable to energy conservation standards. In the past, 
DOE has interpreted this silence as providing some flexibility 
regarding compliance periods and certain other aspects of energy 
conservation standards. However, that interpretation assumes that the 
DFR provision is an independent grant of rulemaking authority that 
outlines its own set of substantive requirements on the establishment 
or amendment of an energy conservation standard as opposed to a 
procedural option for issuing a standard authorized under another 
provision of EPCA, such as 42 U.S.C. 6295(m) or 42 U.S.C. 6295(n). 
However, there is no language in EPCA providing statutory support for 
that position. As stated previously, the DFR provision is found in EPCA 
at 42 U.S.C. 6295(p), the heading and introduction of which state: 
``Procedure for prescribing new or amended standards. Any new or 
amended energy conservation standard shall be prescribed in accordance 
with the following procedure.'' The first three subparagraphs of 42 
U.S.C. 6295(p) outline the process the Secretary must follow to propose 
and finalize a standard using the ``normal'' rulemaking approach. These 
are procedural requirements that apply when DOE is exercising its 
rulemaking authority under a separate provision of EPCA. These 
subparagraphs could not be interpreted as granting DOE a separate and 
independent statutory authority for issuing standards.
    Similarly, 42 U.S.C. 6295(p)(4) outlines the procedural 
requirements for issuing a standard as a DFR and should also not be 
read as independent grant of rulemaking authority. Nor has DOE claimed 
that 42 U.S.C. 6295(p)(4) is a separate grant of rulemaking authority 
in its prior issuances of DFRs that differed from the requirements in a 
substantive provision of EPCA. This is a curious omission in that it 
means DOE relied on a substantive provision of EPCA, such as 42 U.S.C. 
6295(m), to authorize issuance of an energy conservation standard but 
based variance from the requirements in such section on a procedural 
provision that says nothing about such variance. Thus, the ``silence'' 
in 42 U.S.C. 6295(p)(4) regarding compliance periods and other 
requirements associated with standards cannot be interpreted as 
providing flexibility, but rather as simply the result of these 
requirements already being addressed by the statutory provision that 
authorizes issuance of the standard, e.g., 42 U.S.C. 6295(m). Moreover, 
there is no limitation on a variance authorized by silence. That is, 
the logic of the argument expressed by commenters in favor of 
``flexibility'' could be used to, for example, exempt all domestic 
manufacturers from compliance with a standard or permit backsliding on 
an existing standard. Such positions would surely make reaching 
consensus on a measure more enticing to some parties, but would be 
antithetical to the purposes of the statute. DOE cannot take a legal 
position that statutory silence has authorized it to pick and choose 
with interested parties the parts of the statute to negotiate away. The 
revised Process Rule clarifies that the DFR provision in 42 U.S.C. 
6295(p) is not an independent grant of rulemaking authority and DOE 
will not accept or issue as a DFR a submitted joint proposal that does 
not comply with all pertinent parts of EPCA, including those product 
specific requirements included in the provision that authorizes 
issuance of the standard.
2. Interested Persons Fairly Representative of Relevant Points of View
    As part of the DFR process, DOE must determine if a proposed 
standard has been ``submitted jointly by interested persons that are 
fairly representative of relevant points of view (including 
representatives of manufacturers of covered products, States, and 
efficiency advocates). (42 U.S.C. 6295(p)(4)(A)) In the February 2019 
NOPR, DOE proposed that at a minimum, ``fairly representative of 
relevant points of view'' must include businesses, including small 
businesses in the regulated industry/manufacturer community, energy 
advocates, energy utilities, as appropriate, consumers, and States. DOE 
also stated that it would be necessary to determine whether a proposal 
was submitted by interested persons that are ``fairly representative of 
relevant points of view'' on a case-by-case basis, subject to the 
circumstances of a particular rulemaking. In order to assist DOE in 
making this case-by-case determination, upon receipt of a joint 
statement recommending energy conservation standards, DOE proposed to 
publish in the Federal Register the statement, as submitted to DOE, in 
order to obtain feedback as to whether the joint statement was 
submitted by a group that is fairly representative of relevant points 
of view. (84 FR 3910, 3929)
    DOE received several comments on these proposals. First, with 
regards to DOE's explanation of what it means for a DFR to be 
``submitted jointly by interested persons that are fairly 
representative of relevant points of view,'' Acuity stated that any DFR 
proposal should reflect a reasonable balance of representation and 
support from key stakeholders. (Acuity, No. 95, at p. 5) Spire stated 
that representation of manufacturers of the covered products at issue, 
suppliers of the energy used by such products, and efficiency advocates 
should always, at a minimum, be required. (Spire, No. 97, at p. 2) AGA 
and APGA stated that DOE should specify particular entity types or 
interest groups that are relevant to certain categories of proposed 
standards, such as gas distribution utilities and their customers for 
appliances that use gas. (AGA, No. 114, at pp. 24-25; APGA, No. 106, at 
p. 8) AGA and APGA also stated that the DFR process was intended to be 
used only in circumstances in which representatives of all relevant 
interests jointly submit a proposed energy conservation standard for a 
product, i.e., when there is a clear consensus. (AGA, No. 114, at p. 
24; APGA, No. 106, at p. 6) The Joint Commenters and Lennox, on the 
other hand, encouraged DOE to avoid an interpretation where every 
possible point of view must be represented for a DFR to proceed. (Joint 
Commenters, No. 112, at p. 11; Lennox, No. 133, at p. 5) Lennox also 
commented that ``DOE should not mandate the need for separate 
`consumer' representation for a joint proposal.'' (Lennox, No. 133, at 
p. 5)
    As for DOE's proposal to determine, after seeking public comment 
through a

[[Page 8684]]

Federal Register notice, whether a DFR was submitted by parties ``that 
are fairly representative of relevant points of view'' on a case-by-
case basis, CEC and Signify agreed that the determination should be 
made on a case-by-case basis. (CEC, No. 121, at p. 12; Signify, No. 
116, at p. 2) CEC, however, opposed the addition of a public comment 
period as it would add process and delay without adding any meaningful 
opportunity for input. (CEC, No. 121, at p. 12) NPCC commented that 
there may not always be a need for a public comment period and 
encouraged DOE to assess the need for that step on a case-by-case 
basis. (NPCC, No. 94, at p. 7)
    In response, DOE notes that any concerns about whether a DFR was 
submitted by parties ``that are fairly representative of relevant 
points of view'' can be raised during the public comment period on the 
DFR. DOE will raise this issue as a specific topic on which it seeks 
input in the Federal Register notice publishing for public comment on 
any DFR. After receiving public comment DOE will determine if the 
submitting parties include, at a minimum, businesses, including small 
businesses, in the regulated industry/manufacturer community, energy 
advocates, energy utilities, as appropriate, consumers, and States. As 
for specific comments on which parties must be represented in a DFR, 
DOE agrees with AGA, APGA, and Spire that suppliers of the energy used 
by a covered product/equipment must be included, in relevant instances. 
This is reflected in DOE's list of mandatory parties to a DFR, which 
includes ``energy utilities, as appropriate.'' DOE does not agree with 
Lennox's comment that separate consumer representation is not necessary 
in a DFR. Consumer concerns do not necessarily overlap with those of 
manufacturers, efficiency advocates, or any of the other parties 
discussed previously. Finally, as the comment period for determining 
representativeness would occur during the time DOE analyzes the 
submission for other legal and analytical issues and considers 
preparation of a rulemaking document, it would not delay the decision 
to publish a DFR.
3. Adverse Comments
    Simultaneous with the issuance of a DFR, DOE must also issue a NOPR 
containing the same energy conservation standards as in the DFR. 
Following publication of the DFR, DOE must solicit public comment for a 
period of at least 110 days; then, not later than 120 days after 
issuance of the DFR, the Secretary must determine whether any adverse 
comments ``may provide a reasonable basis for withdrawing the direct 
final rule,'' based on the rulemaking record. (42 U.S.C. 6295(p)(4)(B), 
(C)(i)) In the past, to determine whether a comment was sufficiently 
``adverse'' so as to provide a reasonable basis for withdrawal of the 
direct final rule, DOE weighed the substance of any adverse comment 
received against the anticipated benefits of the consensus agreement 
and the likelihood that further consideration of the comment would 
change the result of the rulemaking (referred to as the ``balancing 
test''). This approach was outlined in recent DOE rulemakings, such as 
DOE's final rule for energy conservation standards for dishwashers. 77 
FR 59712, 59714 (Oct. 1, 2012).
    In the February 2019 NOPR, DOE proposed to consider the substance 
of adverse comments and not the quantity when determining if there is a 
reasonable basis for withdrawing the DFR. For instance, one comment may 
present an argument that could lead DOE to conclude that it is an 
adverse comment providing a basis for withdrawal of the DFR. Moreover, 
in contrast to previous policy, DOE also proposed to consider adverse 
comments even if the issue was brought up previously during DOE-
initiated discussions (e.g. publication of a framework or RFI document) 
that preceded submission of a joint statement. In short, if DOE 
determines that one or more substantive comments objecting to the final 
rule provides a sufficient reason to withdraw the DFR, DOE will do so, 
and instead proceed with the published NOPR (which could include 
withdrawal of that NOPR, as appropriate). (84 FR 3910, 3930)
    DOE received numerous comments on the revised approach to 
determining whether an adverse comment provides a reasonable basis for 
withdrawing a DFR. Acuity and AGA supported the revised approach's 
focus on the substance of the adverse comments, as opposed to the 
quantity of the adverse comments. (Acuity, No. 95, at p. 5; AGA, No. 
114, at p. 25)) AGA also stated that speculative and unsupported 
assertions may not warrant the withdrawal of a DFR, but positions 
supported by the material submitted in the proceeding and precedent 
should be provided sufficient weight when balancing differing 
interests. (AGA, No. 114, at p. 25) APGA stated that the bar for 
withdrawal is ``very low'' and any serious and substantive objections 
to a DFR that are reasonably backed by argument--even if the Secretary 
disagrees with them--should be deemed to provide a reasonable basis for 
withdrawing the DFR. (APGA, No. 106, at p. 9) Spire commented that DOE 
should withdraw a DFR if any interested party submits comment that 
opposes the adoption of a DFR as written and provides relevant 
information or argument as a basis for such opposition. This approach 
would define ''adversity'' in simple, easily-applied terms, and--
consistent with both the statutory language and the principle that 
exceptions to notice and comment requirements should be narrowly 
construed--it requires that any doubt be resolved in favor of 
withdrawal of a DFR when comment reflects substantive opposition.'' 
(Spire, No. 97, at pp. 2-3) GWU commented that moving away from the 
balancing test is a positive development, since DFRs constrain public 
input in the rulemaking process. (GWU, No. 132, at p. 9)
    The CA IOUs, on the other hand, commented that the balancing test 
``for evaluating adverse comments to DFRs was an effective approach and 
DOE's language reversal could allow a single commenter to derail the 
DFR process, even if that commenter had previous opportunities to 
submit adverse comments. The CA IOUs also requested that DOE provide 
more clarity on what constitutes a ``substantive'' comment in this 
setting, especially in light of DOE reserving the right to consider a 
previously-issued adverse comment as ``substantive'' enough to prevent 
finalization of a DFR. (CA IOUs, No. 124, at p. 13) The Joint 
Commenters and Lennox encouraged DOE to maintain flexibility in 
determining the quantity and quality of comments considered 
``adverse.'' (Joint Commenters, No. 112, at p. 11; Lennox, No. 133, at 
p. 5) CEC opposed DOE's proposal to withdraw the DFR upon receiving any 
substantive adverse comment that provides a ``sufficient reason'' to 
withdraw the DFR, even if that comment raises issues previously 
considered by DOE and resolved. CEC further commented that this 
approach does not offer any clarity on what DOE considers to be 
`substantive' or `adverse,' and could result too easily in 
ideologically opposed stakeholders commenting on DFRs, using the exact 
arguments considered and rejected in earlier comment periods, to ensure 
that the DFRs are withdrawn. (CEC, No. 121, at p. 12)
    In response, DOE notes that the focus on the substance, as opposed 
to quantity, of adverse comments, is designed to ensure that DOE 
considers adverse comments that may provide a reasonable basis for 
withdrawing a DFR. Thus, numerous speculative and unsupported 
assertions will not constitute a reasonable basis for

[[Page 8685]]

withdrawing a DFR, while one, well-supported comment may provide a 
reasonable basis for withdrawing a DFR. With regards to issues 
previously raised during the rulemaking process (e.g., in response to a 
framework document or RFI), DOE recognizes that facts and circumstances 
may change or new information may come to light, and, as a result, DOE 
will not foreclose consideration of adverse comments that address 
issues previously raised during the rulemaking process.

L. Negotiated Rulemaking

    Negotiated rulemaking is a process by which an agency attempts to 
develop a consensus proposal for regulation in consultation with 
interested parties, thereby addressing salient comments from 
stakeholders before issuing a proposed rule.\25\ Consequently, when 
done properly, negotiated rulemaking can yield better decisions, while 
conserving time and resources of both the agency and interested 
parties. To facilitate potential negotiated rulemakings, DOE 
established the Appliance Standards and Rulemaking Federal Advisory 
Committee (i.e., ASRAC) to comply with the Federal Advisory Committee 
Act (``FACA''), Public Law 92-463 (1972) (codified at 5 U.S.C. App. 2). 
As part of the DOE process, working groups have been established as 
subcommittees of ASRAC, from time to time, for specific products, and 
one member from the ASRAC committee attends and participates in the 
meetings of a specific working group. Ultimately, the working group 
reports to ASRAC, and ASRAC itself votes on whether to make a 
recommendation to DOE to adopt a consensus agreement. The negotiated 
rulemaking process allows real-time adjustments to the analyses as the 
working group is considering them. Furthermore, it allows parties with 
differing viewpoints and objectives to negotiate face-to-face regarding 
the terms of a potential standard. Additionally, it encourages 
manufacturers to provide data for the analyses in a more direct manner, 
thereby helping to better account for manufacturer concerns. While 
negotiated rulemaking is not a topic directly addressed by the current 
Process Rule, the Process Rule does recognize the value and encourage 
submission of joint stakeholder recommendations.
---------------------------------------------------------------------------

    \25\ This process is conducted in accordance with the 
requirements of the Negotiated Rulemaking Act (``NRA''), Public Law 
104-320 (5 U.S.C. 561-570).
---------------------------------------------------------------------------

    In the February 2019 NOPR, DOE proposed to include a section on 
negotiated rulemaking in the updated Process Rule. In the proposed 
section on negotiated rulemaking, DOE stated that negotiated 
rulemakings would go through the ASRAC process outlined above, and that 
the appropriateness of a negotiated rulemaking for any given rulemaking 
would be determined on a case-by-case basis. In making this 
determination, DOE proposed to use a convener to ascertain, in 
consultation with relevant stakeholders, whether review for a given 
product or equipment type would be conducive to negotiated rulemaking, 
with the agency evaluating the convener's recommendation before 
reaching a decision on such matter. DOE also proposed that the 
following five factors would weigh in favor of a negotiated rulemaking: 
(1) Stakeholders commented in favor of negotiated rulemaking in 
response to the initial rulemaking notice; (2) the rulemaking analysis 
or underlying technologies in question are complex, and DOE can benefit 
from external expertise and/or real-time changes to the analysis based 
on stakeholder feedback, information, and data; (3) the current 
standards have already been amended one or more times; (4) stakeholders 
from differing points of view are willing to participate; and (5) DOE 
determines that the parties may be able to reach an agreement. If a 
negotiated rulemaking is initiated, DOE proposed to have a neutral and 
independent facilitator, who is not a DOE employee or consultant, 
present at all ASRAC working group meetings. Additionally, DOE proposed 
to set aside a portion of each ASRAC working group meeting to receive 
input and data from non-members of the ASRAC working group. Finally, 
DOE stated that a negotiated rulemaking in which DOE participates under 
the ASRAC process will not result in the issuance of a DFR. Further, 
any potential term sheet upon which an ASRAC working group reaches 
consensus must comply with all of the provisions of EPCA under which 
the rule is authorized. (84 FR 3910, 3950)
    In response, several commenters expressed their support for the 
negotiated rulemaking process and its inclusion in the Process Rule. 
(See, e.g., A.O. Smith, No. 127, at p. 5; AGA, No. 114, at p. 26; CEC, 
No. 121, at p. 13) In supporting the inclusion of negotiated rulemaking 
in the Process Rule, CEC stated that negotiated rulemakings open up the 
discussion between interested parties on challenging but resolvable 
issues in potential standards or test procedures, reduce the risk of 
litigation on the rule, allow for public input, and reduce DOE's burden 
in having to prepare multiple regulatory documents through the ordinary 
rulemaking process. (CEC, No. 121, at p. 13) GWU, on the other hand, 
commented that notice-and-comment procedures are more likely to produce 
meaningful public participation at a more effective time in the process 
than a negotiated rulemaking process. (GWU, No. 132, at 10).
    DOE recognizes that, as GWU alluded, a negotiated rulemaking puts 
the onus on the public to participate in the rulemaking process in a 
different manner than through traditional notice-and-comment 
rulemaking. However, DOE believes that this concern is greatly 
mitigated by the benefits to the data gathering and analytical process 
that are accomplished through face-to-face discussion of complex 
technical issues that occur through negotiated rulemaking. The agency 
is committed to setting aside a portion of each ASRAC working group 
meeting to receive input and data from non-members (i.e., the public). 
Further, DOE agrees with the benefits cited by CEC and the Process Rule 
is amended to include a section on negotiated rulemaking.
    With regards to appointing a convener, AGA commented that the 
Process Rule should make clear that, prior to initiating a negotiated 
rulemaking, DOE will, pursuant to the APA, appoint a convener to: (i) 
Identify persons who will be significantly affected by a proposed rule; 
and (ii) conduct discussions with such persons to identify their issues 
of concern and to ascertain whether the establishment of a negotiated 
rulemaking committee is feasible and appropriate in the particular 
rulemaking. (AGA, No. 114, at pp. 26-27) CEC was neutral on whether to 
engage a convener, but cautioned DOE against using a process that would 
result in unnecessary delays. (CEC, No. 121, at p. 14) NPCC commented 
that a convener is not needed in all cases. (NPCC, No. 94, at p. 8) 
Lennox sought revision of section 11(a)(3) that, independent of the 
convener's report, DOE can still proceed with a negotiated rulemaking 
based on the five proposed criteria. (Lennox, No. 133, at pp. 3-4)
    As for the five factors DOE listed previously that would weigh in 
favor of a negotiated rulemaking, the Joint Commenters reiterated their 
support for the factors, while CEC recommended that the five factors be 
used as a balancing test rather than as a strict set of requirements 
for whether a negotiation would work. (Joint Commenters, No. 112, at p. 
11; CEC, No. 121, at p. 14) CEC and the CA IOUs also recommended 
excluding the criterion limiting negotiated rulemakings to

[[Page 8686]]

products/equipment that have already undergone one or more rounds of 
rulemaking. (CEC, No. 121, at p. 14; CA IOUs, No. 124, at p. 14)
    DOE notes that these five factors are not a required check-list for 
convening a negotiated rulemaking. Rather, they are simply additional 
factors (to the convener's report) that will help DOE determine if a 
negotiated rulemaking is appropriate. With regards to comments that DOE 
should eliminate the factor limiting negotiated rulemakings to 
products/equipment that have already undergone one or more rounds of 
rulemaking, DOE notes that this factor is not a requirement and it does 
not exclude newly covered products from being the subject of a 
negotiated rulemaking. Further, DOE believes that there is an advantage 
to focusing negotiated rulemakings on products/equipment that already 
have standards as DOE will already have a good grasp on which parties 
should be included in the working group and manufacturers will already 
be familiar with DOE's regulatory scheme. On the other hand, if DOE 
engages in negotiated rulemaking for newly covered products, DOE may be 
able to gather data and information about the product and vet issues 
applicable to such product more effectively than through traditional 
notice and comment rulemaking. This is why these factors are listed as 
considerations rather than requirements.
    In regards to DOE's proposal that an independent, neutral 
facilitator (who cannot be a DOE employee) be present at all ASRAC 
working group meetings, several commenters expressed their support. For 
example, Acuity stated that a neutral, qualified facilitator is 
essential for a successful negotiated rulemaking process. A facilitator 
helps ensure that processes are followed and that all participants have 
an equal opportunity to contribute to the discussion. (Acuity, No. 95, 
at p. 6) Similarly, BWC commented that use of an experienced 
facilitator will enable the working group to . . . work towards an 
amenable consensus. (BWC, No. 103, at p. 4) DOE agrees with these 
comments as it has found independent, neutral facilitators to be 
essential in moving working group discussions along and reaching 
consensus.
    With respect to DOE's proposal that a dedicated portion of each 
ASRAC working group meeting will be set aside to receive input and data 
from non-members of the ASRAC working group, AGA commented that 
allowing for public comment before the working group will help ensure 
the participation of all relevant interests in the process. (AGA, No. 
114, at p. 27). DOE agrees with this comment.
    Finally, DOE received numerous comments on its proposal that any 
negotiated rulemaking in which DOE participates under the ASRAC process 
will not result in the issuance of a DFR, but instead a proposed rule 
that complies with the provisions of EPCA, under which the rule is 
authorized. The majority of commenters opposed this proposal. For 
example, ACEEE stated that a negotiated rulemaking should be able to 
result in a Direct Final Rule. If the outcome of a formal negotiated 
rulemaking meets the statutory requirements for a Direct Final Rule, 
the Department should be able to use that process to issue the 
standard. Banning it makes a consensus agreement less likely. (ACEEE, 
No. 123, at p. 2) The Joint Commenters generally agreed with DOE's 
negotiated rulemaking proposals with the exception of DOE's proposed 
discontinuance of DFRs. (Joint Commenters, No. 112, at p. 11) NPCC 
commented that abandoning the use of direct final rules in all cases--
rather than retaining the flexibility to use DFRs when appropriate 
following a negotiated rulemaking--will simply result in prolonging the 
agency process, increasing the agency's own costs often to no useful 
end, and increasing the regulatory process burden on manufacturers and 
other stakeholders rather than reducing it. (NPCC, No. 94, at p. 8) 
Some commenters did express support for DOE's proposed plan to separate 
DFRs and negotiated rulemakings. GWU commented that the decision to 
separate DFRs and negotiated rulemaking and establish that the outcome 
of negotiated rulemaking would be a proposed rule are positive 
developments. (GWU, No. 132, at p. 10) AGA also supports DOE separating 
DFRs from negotiated rulemakings and requiring that the outcome of a 
negotiated rulemaking be a proposed rule, subject to a comment period. 
(AGA, No. 114, at p. 27)
    As stated in the February 2019 NOPR, DOE is modifying its 
negotiated rulemaking process to be more consistent with the NRA which 
contemplates that the committee will transmit to the agency a report 
containing a proposed rule (or more applicable in DOE's use of the 
process, a term sheet specifying the potential standard levels to be 
incorporated into a proposed rule). If the Department determined to act 
on the term sheet, it would be in the form of a proposed rule open for 
notice and comment rather than a direct final rule.

M. Other Revisions and Issues

1. DOE's Analytical Methodologies, Generally
    After considering the many comments on its analytical methodology 
in the Process Rule RFI, DOE explained in the Process Rule NOPR its 
plan to convene an expert independent peer review (consistent with 
OMB's Information Quality Bulletin for Peer Review \26\) of its 
assumptions, models, and methodologies to ensure that its approach is 
designed to provide projections that are sufficiently rigorous for 
their intended use. 84 FR 3910, 3936-3938 (Feb. 13, 2019). The goals of 
the peer review are to assess whether any changes are needed to the 
agency's analytical methodologies and potentially to the Process Rule. 
In order to ensure that the analytical models and approaches that DOE 
regulatory uses are as up-to-date and accurate as possible, DOE 
committed to undertaking a recurring peer review of the Department's 
analytical methods at least once every 10 years. DOE tentatively 
concluded that the investment of resources in both immediate and long-
term peer review by the Department and interested parties would help 
improve the overall rulemaking process and ensure the credibility and 
validity of the results of that process. DOE also committed to making 
its peer review available to the public, and during its initial peer 
review meeting on November 19-20, 2019, provided the public with an 
opportunity to observe and raise issues for peer reviewers' 
consideration. The Process Rule NOPR went on to identify and discuss 12 
potential focus areas for the peer review, including:
---------------------------------------------------------------------------

    \26\ 70 FR 2664 (Jan. 14, 2005) (Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2005/m05-03.pdf).

 Analytical time horizon(s)
 Baseline efficiency estimates
 Consumer choice model
 Emissions analysis
 Fuel switching analysis
 Indirect employment effects
 Marginal manufacturer mark-up
 Product price forecasts
 Product performance
 Subgroup analysis
 Use of proprietary data
 Welfare analysis and deadweight loss

    DOE requested comments and other relevant information on these 
topics, as well as other related issues which stakeholders wish to 
raise. The Department explained that any potential changes to the 
Process Rule that might be appropriate based on the results of the peer 
review and any methodological

[[Page 8687]]

updates would be addressed in a subsequent proceeding. (For a more 
detailed discussion of DOE's past and planned peer reviews, please 
consult the relevant discussion in the February 13, 2019 Process Rule 
NOPR at 84 FR 3910, 3936-3938.)
    In response to the Process Rule NOPR, DOE received a variety of 
comments from approximately 22 discrete commenters regarding its 
analytical methodologies, with recommendations that, in many cases, 
that are both detailed and specific. These submissions generally fell 
into one of several discrete areas--peer review, DOE's analytical 
methodologies generally (e.g., transparency of models and assumptions, 
public access to data, discount rates, marginal energy prices, life-
cycle cost and payback period issues, the screening analysis, use of 
proprietary data, the Social Cost of Carbon), and the walk-down 
approach to standard-setting.
    For the reasons discussed subsequently, DOE has decided as part of 
this final rule to move forward with a peer review of its analytical 
methodologies, models, and assumptions, so DOE will summarize and 
respond to the peer review comments it received on the Process Rule 
NOPR in the paragraphs below. Likewise, DOE will summarize and respond 
to the comments on its proposed walk-down approach to standard setting, 
because any upcoming energy conservations standards rulemaking would 
confront that part of the rulemaking process and require a path 
forward. However, the Department is not addressing the other 
substantive comments on and critiques of its analytical methodologies 
and models in this final rule, because those are the types of issues 
that will be addressed during the course of the peer review and 
stakeholders will have a separate opportunity to weigh in on that 
proceeding. Relevant comments on those topics submitted to the docket 
for this rulemaking will be referred to the independent expert peer 
reviewers to be addressed as part of their charge in that separate 
proceeding.
a. Peer Review
    As noted previously, peer review was a topic of discussion in the 
Process Rule NOPR, because DOE identified that approach as a suitable 
and effective way to evaluate the concerns raised by various 
stakeholders about the agency's analytical methodologies. 84 FR 3910, 
3936-3938 (Feb. 13, 2019). The Department foresees both an immediate 
peer review of its analytical methodologies, as well as recurring peer 
review over a longer term (e.g., every 10 years). Overall, commenters 
on the Process Rule NOPR expressed support for DOE's plans to conduct a 
peer review of it analytical methodologies, although one commenter 
(Spire) expressed some misgivings as to the Department's ability to 
conduct such review in a fair and effective fashion. The following 
comments focused on the peer review itself (rather than the subject 
matter to be addressed by the peer review).
    A number of commenters expressed general support for DOE's planned 
peer review of its analytical methodologies, including Acuity and 
NAFEM. (Acuity, No. 95, at p. 6; NAFEM, No. 122 at p. 7) APGA also 
expressed support for a peer review, which it believes will allow 
stakeholders to have assurance that the standards development process 
is based on sound scientific and economic data and methods. (APGA, 
March 21, 2019 Public Meeting Transcript at p. 15) Likewise, Energy 
Solutions stated that it supports DOE's plans for peer review, 
suggesting that product price forecasts should be one of the focus 
areas for that review. (Energy Solutions, April 11, 2019 Public Meeting 
Transcript at p. 156)
    Other commenters stated support for DOE's planned peer review and 
followed up with additional thoughts and recommendations regarding that 
process. Some of those commenters focused on the peer review to be 
conducted in the near term, while others concentrated on the long-term, 
recurring peer review, and some addressed both.
    Focusing on the need for an immediate peer review, AGA recommended 
that DOE conduct a peer review of its assumptions, models, and 
methodologies as soon as possible to ensure that its processes are 
current. By not conducting peer reviews in a timely manner, AGA argued 
that the Department deprives the public of certain regulatory 
protections--such as standards based on current scientific information 
that has been tested impartially and deemed appropriate and reliable by 
a group of relevant experts. For example, the commenter stated that the 
regulatory guidelines established by the Office of Management and 
Budget (OMB) require a peer review of any changes to scientific data 
and/or methodologies used in the development of rules or regulations. 
Specifically, AGA noted that OMB's Final Information Quality Bulletin 
for Peer Review requires each Federal agency to conduct a peer review 
of all influential scientific information that the agency intends to 
disseminate. Because the Technical Support Documents (TSDs) that the 
Department relies on when issuing a proposed and final standard contain 
influential scientific information that DOE has disseminated, AGA 
concluded that such information should be peer reviewed and up-to-date. 
AGA also considered the long term and expressed support for the 
Department conducting a peer review, at least once every ten years, of 
its assumptions, models, and methodologies to ensure that its approach 
is designed to provide reasonable, accurate projections. (AGA, No. 114 
at pp. 28-29)
    Likewise focusing on the immediate peer review, the Joint 
Commenters and AHRI strongly urged DOE not to delay in commencing its 
peer review of its analytical methodologies. (Joint Commenters, No. 112 
at p. 12; AHRI, April 11, 2019 Public Meeting Transcript at p. 157) The 
Joint Commenters asserted that the current DOE methodologies are 
seriously flawed. Furthermore, the Joint Commenters stated that a sound 
peer review process should be conducted by a third-party panel, not by 
DOE. (Joint Commenters, No. 112 at p. 12) In furtherance of this point, 
the Joint Commenters suggested several principles to guide the peer 
review process including: (1) The composition of the peer review panels 
must include people who are technically competent to review economic, 
cost, energy, and other matters. The composition of the panels should 
be determined in a public process with advice and comment from the 
public on the panels' composition; (2) The members of the peer review 
panels should conform to the standards for ``Highly Influential 
Scientific Assessments;'' (3) The peer review panels should not be 
constrained by the twelve topics identified by DOE, but these should 
instead be viewed as a minimum scope. The peer review panels should 
look at DOE's analytical processes with a clean slate. Additional 
topics for consideration may include consumer discount rates, the use 
of learning and experience curves in projecting future product prices, 
mark-ups across the total chain from factory to consumer, and the 
definition of maximum technically feasible product configuration; (4) 
The peer review panels should hold hearings to help guide them in 
determining which topics they should pursue and what alternatives they 
should consider; and (5) The peer review panels should present their 
tentative findings for public review and comment prior to finalizing 
their reports. (Joint Commenters, No. 112 at p. 13-14)

[[Page 8688]]

    Lennox and AHRI echoed some of the points raised by the Joint 
Commenters. Lennox commented that DOE's peer review should be 
transparent, with stakeholders such as industry allowed to provide 
input, and peer review panels should present their tentative findings 
for public review and comment prior to finalizing their reports. 
(Lennox, No. 133 at pp. 8-9) Although commending DOE on beginning a 
peer review process, AHRI made a similar point urging the Department to 
open up the process of selecting a peer review panel by getting 
interested parties to comment on the charter and the candidates for the 
peer review panel. AHRI added that it does not agree that one of the 12 
focus areas should be incremental margins at the manufacturer level, a 
concept which it believes is flawed and should be removed. (AHRI, April 
11, 2019 Public Meeting Transcript at pp. 146-148) Instead, AHRI 
recommended that peer review should look at the whole modeling effort. 
(AHRI, April 11, 2019 Public Meeting Transcript at p. 158)
    Regarding long-term peer review, APGA stated that it is in favor of 
a recurring peer review of DOE's analytical assumptions, models, and 
methodologies, at least once every 10 years, so as to ensure that such 
analyses are based on sound scientific and economic data. The commenter 
stated that such approach is consistent with OMB's regulatory 
guidelines and its Final Information Quality Bulletin for Peer Review. 
However, APGA reiterated its belief that DOE's models are too complex 
and burdensome and urged replacing the current complicated life-cycle 
cost analysis with a simple payback analysis based on real numbers''. 
(APGA, No. 106 at pp. 10-12)
    Finally, Spire's comments reflected some skepticism of DOE's 
efforts to conduct a peer review of its analytical methodologies and 
urged caution to ensure a fair and balanced outcome. More specifically, 
one representative of Spire criticized peer review as a useless 
appendage of the past. (Spire, April 11, 2019 Public Meeting Transcript 
at p. 145) However, another Spire representative expressed mixed 
feelings about peer review, suggesting that it can be helpful with some 
types of issues but stating that there are a lot of issues where it is 
not suitable. (Spire, April 11, 2019 Public Meeting Transcript at pp. 
149-150) Spire indicated that a peer review within the context of 
setting standards for regulated appliances continues to be problematic 
when DOE selects ``experts'' whose interests are already aligned with 
EERE's ``clean energy'' mission. As a result, the commenter suggested 
that DOE should eliminate peer reviews until fundamental changes are 
made, such as reconvening its general purpose advisory board as laid 
out in the 1996 Process Rule. (Spire, No. 139 at p. 7) (DOE notes that 
it is unclear what Spire is referring to here.) Spire argued that the 
peer review process under DOE's current approach would not have 
identified in a timely manner the means by which DOE uses to justify a 
given standard through its LCC analyses. (Spire, No. 139 at p. 8) Spire 
added that the multiple adverse effects it identified in its comments 
would have cumulative impacts on consumers as the time period between 
peer reviews lengthens. Rather than conduct periodic peer reviews, 
Spire recommended that DOE should adopt a ``Continual Improvement 
Process'' to change the frequency of reviews and reconsider the make-up 
of its advisory committee, given what the commenter characterizes as 
ASRAC's current lack of ``requisite diversity.'' (Spire, No. 139 at pp. 
9-10) As part of its suggestion that DOE apply a continuous improvement 
approach, Spire stressed that there should be independent review of the 
agency's ``misuse'' of Monte Carlo simulations, as well as other DOE 
methodologies that Spire alleged distort the Department's 
determinations and drive unwarranted increases in energy efficiency. 
(Spire, No. 139 at p. 10)
    In response, DOE appreciates the many thoughtful comments it 
received on peer review of its analytical methodologies, models, and 
assumptions. The Department agrees with the commenters as to the 
importance of using the best available scientific, technical, and 
economic data that contribute to it decision-making when setting energy 
conservation standards. Because such standards typically generate 
significant public benefits and costs to the regulated community, it is 
incumbent upon DOE to utilize the best available data and practices in 
developing such standards. Given the passage of time since the last 
peer review of the Appliance Standards Program, DOE has commenced a new 
peer review, but it also plans to conduct an ongoing, periodic peer 
review on a 10-year cycle. Because the technical support documents for 
energy conservation standards rulemakings contain influential 
scientific/technical/economic information that underpins DOE's 
standards, it is crucial that such information be current, validated, 
and of high quality. Although it is DOE's position that its data, 
methods, and models already meet the requirements of OMB Circular A-4 
\27\ and the Information Quality Act,\28\ the Department is committed 
to ensuring that its analytical models and methodologies continue to 
meet a high standard of integrity and to be based on sound scientific 
methods and principles. DOE believes that peer review advances this 
objective and is consistent with the principles of good government, and 
consequently, the agency is moving expeditiously to commence its next 
review. Such action should also satisfy DOE's obligations under OMB's 
Final Information Quality Bulletin for Peer Review.
---------------------------------------------------------------------------

    \27\ Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
    \28\ Section 515 of Public Law 106-554. OMB issued final 
guidelines to implement the Information Quality Act on February 22, 
2002 (67 FR 8452) (available at: https://www.govinfo.gov/content/pkg/FR-2002-02-22/pdf/R2-59.pdf).
---------------------------------------------------------------------------

    DOE further agrees with commenters that this peer review should be 
part of an open and transparent process, with opportunities for public 
input and public availability of the recommendations made by the 
reviewers. The Department also agrees that the peer review should be 
conducted by independent, third-party experts drawn from the relevant 
disciplines. DOE would make clear that the peer reviewers are not 
limited to consideration of the 12 topic areas mentioned in the Process 
Rule NOPR, but they instead have license to conduct a comprehensive 
review of the models, methodologies, and assumptions used in DOE's 
rulemakings. Those peer reviewers would be free to consider relevant 
subjects presented by DOE, public comments, and other stakeholder 
input, as well as those identified by their own initiative. DOE will 
also ensure that there is an opportunity for public engagement with the 
peer reviewers as part of this process. The Department believes that 
such approach will ensure that it is receiving an objective and 
unbiased assessment of its analytical methodologies and models, while 
inspiring public confidence along those same lines. To this end, DOE 
has contracted with the National Academy of Sciences (NAS) to 
independently conduct its peer review. All information and 
announcements regarding this peer review, including the group's 
charter, topics to be addressed, announcements of public meetings, and 
availability of the final peer review report, are available via the NAS 
website. Any necessary changes to the Process Rule arising from the 
peer review and methodological updates will be addressed in a separate 
proceeding.

[[Page 8689]]

    DOE disagrees with Spire as to the value of a peer review of DOE's 
analytical methodologies, and the agency expects that an independently 
conducted peer review, as DOE envisions and presents here, will 
alleviate many of Spire's concerns. In addition, DOE notes that it is 
not officially adopting Spire's recommendation for a ``continual 
improvement process,'' although the Department is always open to 
constructive feedback about its processes. Interested parties are free 
to raise methodological issues as part of their public comments on 
various rulemakings or to bring the matter to DOE's attention through 
other correspondence. DOE will carefully consider such comments, and in 
appropriate cases where the agency finds merit, it may take action 
outside the normal 10-year peer review cycle. In such cases, options 
might include immediate corrective action, initiation of rulemaking, or 
early commencement of the next peer review cycle.
b. Walk-Down
    In the Process Rule NOPR, DOE specifically sought comment on its 
``walk-down'' approach to assessing different potential standards. DOE 
explained that using this approach, DOE starts from the most stringent 
choice to determine both economic justification and technological 
feasibility by ``walking-down'' through the available choices by 
stringency until arriving at the first choice that meets all of the 
statutory criteria. In the proposal, DOE noted that economic theory 
suggests that the most logical way to determine if a particular option 
is ``economically justified'' is to compare it to the full range of 
available choices, rather than just one baseline. Applying economic 
theory, DOE proposed at 10 CFR part 430, subpart C, appendix A, sec. 
(7)(e)(2)(G) to require the Secretary to determine whether a candidate/
trial standard level would be economically justified when compared to 
the full range of other feasible TSLs. The proposal stated that in 
making this determination, the Secretary is to consider whether an 
economically rational consumer would choose a product meeting the 
candidate/trial standard level over products meeting the other feasible 
TSLs levels after considering all relevant factors, including but not 
limited to, energy savings, efficacy, product features, and life-cycle 
costs. If an economically rational consumer would not choose the 
candidate TSL after considering these factors, it would be rejected as 
economically unjustified. This approach would recognizes that the 
``economic justification'' of any particular option depends on a 
broader comparison of economic attributes relative to other available 
options, rather than relative to just one baseline, particularly one 
that is likely to be of little relevance to a consumer when choosing 
which product(s) are economically justified for their purchase. Rather 
that person is likely to be focused on the set of actually available 
products at the time of purchase, rather than some hypothetical 
baseline representing the set of products that would have been 
available in the absence of the standard (including perhaps the model 
currently being replaced). DOE sought public comment on its proposal to 
refine the ``walk-down'' approach to require determinations of economic 
justification to consider comparisons of economically relevant factors 
across TSLs, consistent with both economic theory and the actual 
purchasing behavior of rational consumers. (84 FR 3910, 3938)
    DOE received a substantial amount of comment on its proposal 
related to the walk-down and as a consequence is issuing a notice of 
proposed rulemaking published elsewhere in this issue of the Federal 
Register to further clarify amendments to the walk-down approach. 
Although one commenter supported DOE's proposal as presented (APGA), 
the rest of the comments on this topic generally ranged from neutral 
(citing a lack of information necessary to comment and move forward) to 
strongly negative (arguing that the proposed approach would be illegal 
under EPCA). These comments are summarized below, followed by DOE's 
response.
    Alone among the commenters, APGA expressed unqualified support for 
DOE's proposal to modify its walk-down approach to standard setting. 
The commenter explained how it has long complained that DOE uses a 
materially-flawed analysis which the commenter argued overstates 
potential benefits of standards and underestimates their costs, thereby 
failing to meet EPCA's requirements for economic justification. APGA 
stated that in order to determine whether a potential standard is 
economically justified, it should be compared to the full range of 
available consumer choices reflected by the entire suite of TSLs. 
(APGA, No. 106 at pp. 12-13)
    A number of other commenters expressed varying degrees of 
theoretical support for potential modifications to DOE's walk-down but 
concluded that the Process Rule NOPR did not present enough detail or 
explanation to support a change at this time. Among this group, AHAM 
stated that because DOE's walk-down proposal was not sufficiently clear 
and fully articulated, it was not in a position to comment at this 
time, but it added that the concept should not be discarded. However, 
AHAM concluded that just because the walk-down proposal is not fully 
developed, that should not slow down consideration and finalization of 
the rest of the Process Rule proposal. (AHAM, April 11, 2019 Public 
Meeting Transcript at p. 169) Similarly, a representative for AHAM, 
AHRI, and the Joint Commenters stated that it is impossible to evaluate 
DOE's walk-down proposal and that commenters would need more 
information before they could do so, such as by the agency publishing 
an example as to how the revised process would work. (Everett Shorey, 
April 11, 2019 Public Meeting Transcript at p. 174)
    NYU Law stated that DOE's proposed replacement of its walk-down 
approach with an ``economically rational consumer'' test is 
insufficiently defined and inadequately justified. NYU Law noted the 
following reasons to support its opinion: The Department vaguely 
alludes to ``economic theory'' but provides no citations; it does not 
detail how it is defining a ``rational consumer'' or how the test will 
be conducted; it does not explain whether or how the new test will 
weigh important social externalities; and it does not provide any 
illustrations or guidance on how the new test will compare to the old 
one. Accordingly, the commenter concluded that DOE has failed to 
sufficiently justify its proposal and has not provided the public with 
enough information to offer meaningful comments. (NYU Law, No. 119, at 
p. 1)
    Likewise, NAFEM stated that it is not expressing any view as to the 
proposed ``walk-down'' approach specifically. However, NAFEM commented 
generally that it does support approaches that evaluate customer choice 
based on models that are economically viable with commercially 
available technologies contemporaneously with the review, rather than 
purely theoretical models based on technologies that may or may not be 
available in the future. (NAFEM, No. 122 at p. 7)
    NEMA stated that while it is not opposed to considering the 
behavior of consumers as part of the walk-down to determine the 
economic justification of potential standards, it would need to know 
more about how such approach would work in regulatory practice. NEMA 
expressed concern that different perspectives about the ``rational 
consumer'' are capable of being variably

[[Page 8690]]

applied, and consequently, it recommended that DOE approach this issue 
on a case-by-case basis in rulemakings where there is an opportunity 
for notice and comment. Thus, NEMA suggested that these principles 
would need to evolve before being incorporated into the Process Rule. 
(NEMA, No. 107 at pp. 7-8)
    Southern Company characterized the Process Rule NOPR's walk-down 
proposal as a major improvement, particularly since it deemed consumer 
discount rates to have been significantly underestimated in the past. 
(Southern Company, April 11 Public Meeting Transcript at p. 162) 
However, Southern Company ventured that the topic of the walk-down 
proposal is likely to be very intertwined with methodological issues 
that are being handled in a separate proceeding, and the commenter 
added that it would like to see a separate proceeding conducted every 
three or four years on the economic assumptions that are being used in 
different rulemakings. (Southern Company, April 11 Public Meeting 
Transcript at pp. 170) Spire expressed support for these comments of 
Southern Company, echoing the need for further details and perhaps a 
definition of ``economically rational consumer.'' \29\ (Spire, April 
11, 2019 Public Meeting Transcript at p. 163) Nonetheless, Spire viewed 
DOE's proposal as an attempt to improve the status quo which has 
prevailed for many years. (Spire, April 11, 2019 Public Meeting 
Transcript at p. 168)
---------------------------------------------------------------------------

    \29\ Although the transcript shows the commenter referring to an 
``environmentally-rational consumer,'' DOE assumes that Spire meant 
to say ``economically-rational consumer'' in this context.
---------------------------------------------------------------------------

    Similarly, AHRI stated that it would be interested to see what DOE 
comes up with and what it thinks is advisable to consider in terms of 
the walk-down proposal. The trade association concluded that the walk-
down proposal does not currently provide enough information to allow it 
to offer meaningful comment, although the organization noted that it 
looks forward to subsequently seeing the agency's analysis and a more 
formal proposal. (AHRI, April 11, 2019 Public Meeting Transcript at pp. 
165-166) AHRI commented that it does not think the walk-down approach 
is statutorily mandated, and it also pointed out that the language 
``maximum improvement in energy efficiency that is technologically 
feasible and economically justified'' only applies to consumer 
products, not to commercial equipment. Thus, AHRI suggested that DOE 
has more flexibility with commercial equipment and that it has the 
authority to reconsider its economic justification analysis. (AHRI, 
April 11, 2019 Public Meeting Transcript at pp. 172-173)
    The Joint Commenters expressed their support for a full 
consideration of the consumer choice frameworks used by the DOE, 
including both the current ``walk-down'' and alternatives, as well as 
the random assignment of base-case efficiencies currently used in the 
life-cycle costing analysis. These commenters made clear that they are 
not taking a position on the proposed ``walk-down'' approach and 
alternatives until all possible approaches have been reviewed in the 
context of how they would affect particular analyses. According to the 
Joint Commenters, the complexity and subtlety of translating 
theoretical approaches to practical situations are high and fraught 
with unintended consequences. Thus, the Joint Commenters suggested that 
this subject should be addressed during the peer review process. (Joint 
Commenters, No. 112 at p. 14)
    The balance of the comments opposed DOE's walk-down proposal to 
move from its current analytical methodology and walk-down standards 
selection process to an ``economically rational consumer'' test, as 
presented in the Process Rule NOPR, for a variety of reasons. (ASE, No. 
108 at pp. 6-7; ACEEE, April 11, 2019 Public Meeting Transcript at pp. 
171-172; ASAP, et al., No. 126 at pp. 15-16; AGs Joint Comment, No. 111 
at pp. 15-16; Earthjustice, No. 134 at p. 5; NRDC, No. 131 at pp. 15-
17; NPCC, No. 94 at p. 8; Cal-IOUs, No. 124 at p. 14; PG&E, April 11, 
2019 Public Meeting Transcript at pp. 164-165; Southern California 
Edison, April 11, 2019 Public Meeting Transcript at p. 222; CEC, No. 
121 at p. 14; CT-DEEP, No. 93 at p. 4)
    More specifically, many commenters were concerned that DOE did not 
define the term ``economically rational consumer'' in the NOPR. (ASE, 
No. 108 at pp. 6-7; ACEEE, April 11, 2019 Public Meeting Transcript at 
pp. 171-172) ASAP (and others) argued that particularly because DOE did 
not define that key term, it is unclear precisely what DOE is proposing 
for a revised walk-down methodology, so the organization does not know 
how to comment. (ASAP, April 11, 2019 Public Meeting Transcript at pp. 
166-167; AGs Joint Comment, No. 111 at pp. 15-16; NRDC, No. 131 at pp. 
15-17) ACEEE added that if DOE were to choose to move forward with this 
concept, a supplemental NOPR would be required. (ACEEE, April 11, 2019 
Public Meeting Transcript at pp. 171-172)
    Even if the term ``economically rational consumer'' were to be 
defined, some of the commenters expressed concerns with any such 
attempt. For example, ASAP, et al. argued that seeking to define who a 
``rational consumer'' is and to assess what choices such a person would 
make would be fraught with problems, and the commenter reminded DOE 
that the NOPR provided no information about how DOE would make such 
determinations. (ASAP, et al., No. 126 at pp. 15-16) The AGs Joint 
Comment likewise stated that there is widespread skepticism surrounding 
the concept of the ``economically rational consumer'' because 
economists and social scientists recognize that many times consumers 
act irrationally, so this theory may not reflect real-world conditions. 
(AGs Joint Comment, No. 111 at pp. 15-16) NRDC argued that there are 
varying academic opinions regarding the decisions consumers make, 
whether an economically rational consumer exists, and the value of such 
a construct, so much energy and money could be lost if a standard is 
rejected simply because a consumer were to make an irrational choice 
under such test. (NRDC, No. 131 at pp. 17) Furthermore, NRDC asserted 
that the Process Rule NOPR's efforts to advance the concept of an 
economically rational consumer overlook the fact that not all consumers 
purchase their appliances or equipment (i.e., renters), so the 
commenter questioned how, under this type of approach, DOE would 
account for the benefits of standards to low-income people or renters 
who would not necessarily be making purchasing decisions. (NRDC, April 
11, 2019 Public Meeting Transcript at p. 164) Similarly, CT-DEEP 
opposed DOE's proposal walk-down approach based on what it 
characterized as a hypothetical and arbitrary `economically rational 
consumer,' arguing that modern economic theory suggests that such 
consumer does not truly exist. (CT-DEEP, No. 93 at p. 4)
    PG&E stated that the concept of a rational consumer is a difficult 
one to quantify and that it could potentially contribute error to DOE's 
analyses. More specifically, PG&E argued that the proposed change to 
the walk-down would add complexity to the analysis, and with more 
complexity would come the possibility of more mistakes. Furthermore, 
the commenter ventured that the relevant information may be unknown and 
would then require estimation. (PG&E, April 11, 2019 Public Meeting 
Transcript at pp. 164) Southern California Edison made a similar point 
that the proposal

[[Page 8691]]

surrounding the rational consumer looks very difficult to quantify, 
which runs counter to the goal of making DOE's process more 
transparent. (Southern California Edison, April 11, 2019 Public Meeting 
Transcript at p. 222)
    Several commenters in this group questioned how DOE could meet its 
statutory obligations under EPCA while following this new approach. ASE 
and ACEEE argued that Congress has mandated that the Department set 
standards at the maximum level that is technologically feasible and 
economically justified, and has specified seven considerations to be 
balanced in determining what is economically justified; the statute 
does not direct DOE to choose the most economically justified level. 
(ASE, No. 108 at pp. 6-7; ACEEE, April 11, 2019 Public Meeting 
Transcript at pp. 171-172; ACEEE, No. 123 at p. 4) ASAP, et al. 
explained its understanding of how DOE has implemented the current 
process by first looking at the ``max-tech'' level and evaluating 
whether that level is economically justified; if DOE concludes that 
that level is not economically justified, it proceeds to the next-
highest level and makes the same evaluation until reaching a level (if 
any) that the Department determines is economically justified. The 
commenter expressed its opinion that the process used to date 
implements what the statute requires. Specifically, by starting at the 
``max-tech'' level and working its way down, ASAP, et al. argued that 
the Department ensures that it does in fact adopt the maximum level 
that is technologically feasible and economically justified. (ASAP, et 
al., No. 126 at pp. 15-16) In contrast, ASAP and ASAP, et al. 
questioned that fact that the NOPR leaves unclear how DOE's proposed 
approach would fit with the statutory requirement to consider the seven 
factors in determining whether a standard is ``economically 
justified,'' except maybe factor 7 (i.e., other factors the Secretary 
considers relevant). (ASAP, April 11, 2019 Public Meeting Transcript at 
pp. 166-167; ASAP, et al., No. 126 at pp. 15-16) ASAP stated that it 
cannot find a legal justification for the agency's proposed change to 
the walk-down or how one would conduct such revised walk-down from a 
process point of view, expressing unease with what appears to be DOE's 
suddenly reworking of how the entire standards process has been 
conducted for over 30 years. (ASAP, April 11, 2019 Public Meeting 
Transcript at pp. 166167) NPCC recommended that because the current 
walk-down approach (as described in the Process Rule NOPR) is 
consistent with the statutory directive that standards must be set at 
the maximum level of efficiency that is technically feasible and 
economically justified, no further refinement of this aspect of DOE's 
existing rulemaking process is needed. (NPCC, No. 94 at p. 8)
    ACEEE argued that the current walk-down approach has a clear 
process of choosing the maximum improvement level required under the 
statute, but once the current process is abandoned in favor of a 
rational consumer approach, the commenter asserted that the Department 
would be ignoring the law, because the ``preferred'' level is not what 
is in the statute. (ACEEE, April 11, 2019 Public Meeting Transcript at 
pp. 171-172) On this point, ASAP, et al. similarly stated that DOE's 
proposed approach, as presented, would appear to instead hinge on 
whether an ill-defined ``economically rational consumer'' would choose 
a product meeting a certain efficiency level. (ASAP, et al., No. 126 at 
pp. 16) ACEEE expressed its view that the Department has not made clear 
how selection of a consumer's preferred level, among all the options, 
would yield the maximum level that meets the statutory criteria. 
Moreover, ACEEE argued that it is even less clear how consideration of 
a single consumer would incorporate, or would be incorporated with, the 
seven required considerations. As the Department has provided no 
information on how the rational consumer would make their choice, ACEEE 
opined that DOE's walk-down proposal also would introduce significant 
uncertainty and potentially arbitrary decisions for manufacturers and 
consumers (e.g., What rational consumer will be considered, based on 
what financial situation, with what economic utilities? How will this 
be determined?). These considerations shaped ACEEE's view that the 
``economically rational consumer,'' while well-studied in the economics 
literature, does not appear to be a concept in current Federal law, 
and, thus, it is a likely subject for litigation, if adopted. 
Consequently, ACEEE concluded that a theoretical, economically rational 
consumer cannot be used to choose an energy conservation standard 
level. (ACEEE, No. 123 at p. 4)
    Still others characterized DOE's proposed walk-down approach more 
strongly; arguing either that the proposed approach is impermissible 
and illegal under EPCA or arguing that the current approach is legally 
mandated by EPCA. (AGs Joint Comment, No. 111 at pp. 15-16; 
Earthjustice, No. 134 at p. 5; NRDC, No. 131 at pp. 15-16; CEC, No. 121 
at p. 14) Among this group, the AGs Joint Comment strongly disfavored 
DOE's use of an ``economically rational consumer,'' as arbitrary and 
capricious and inconsistent with EPCA. According to the AGs Joint 
Comment, DOE has failed to describe how it would conceive this 
purported rational consumer or detail how this approach would be put 
into practice. According to the AGs, DOE may only consider an 
``economically rational consumer'' consistent with EPCA's payback 
presumption in 42 U.S.C. 6295(o)(2)(B)(iii), and diverging from that 
presumption in favor of a hypothetically economically rational consumer 
would violate EPCA. Furthermore, the AGs Joint Comment argued that EPCA 
already explains how consumer interests are to be addressed as one of 
the seven factors for economic justification, a consideration to be 
weighed but not to be valued predominantly or exclusively. (AGs Joint 
Comment, No. 111 at pp. 15-16)
    Although Earthjustice suggested that the Process Rule NOPR's 
proposed changes shifting the focus of DOE's economic justification 
inquiry to a hypothetical ``economically rational consumer'' are not 
clearly explained in the NOPR, the commenter stated that any such 
change abandoning the walk-down approach the Department has long used 
to assess the economic justification for each TSL under consideration 
would be impermissible. Earthjustice stated that as the D.C. Circuit 
has explained, EPCA ``establishes a clear decision-making procedure'' 
that applies when DOE selects energy conservation standard levels 
(citing NRDC v. Herrington, 768 F.2d 1355, 1391 (D.C. Cir. 1985)). 
Specifically, the commenter stated that DOE must first identify, for 
all product types or classes, the maximum improvement in energy 
efficiency that is technologically feasible, and if a standard at that 
level would be economically justified, DOE must set the standard there. 
Earthjustice added that if a standard requiring the maximum 
technologically feasible level would not be economically justified, DOE 
must set the standard at the next highest level that is both 
technologically feasible and economically justified. In that event, 
Earthjustice stated that EPCA requires DOE to explain specifically why 
a standard achieving the maximum technologically feasible improvement 
in efficiency was rejected (citing Id. at 1391-1392 (citations 
omitted)). To the extent the NOPR would substitute a different 
approach, the commenter

[[Page 8692]]

argued that that proposal is unlawful. Earthjustice stated that if that 
is not what DOE intended, the Department must provide stakeholders with 
a clear understanding of how the reliance on an ``economically rational 
consumer'' would change DOE's evaluation of whether a TSL is 
economically justified. (Earthjustice, No. 134 at p. 5) NRDC's comments 
used much the same logic as Earthjustice in opposing DOE's proposed 
``walk-down'' approach, because in its view, such approach is 
prohibited by EPCA. According to NRDC, basing such decisions on an 
``economically rational consumer'' is problematic for a number of 
reasons, particularly since EPCA does not permit DOE to prioritize an 
``economically rational consumer'' test higher than other factors the 
agency is required to consider for economic justification. (NRDC, No. 
131 at pp. 15-17)
    In objecting to DOE's proposed change to the current walk-down 
analytical approach, the CEC argued that the factors for economic 
justification are described in, and limited to, those in EPCA, which 
makes no mention of an ``economically rational consumer'' for purposes 
of DOE's required analysis. Moreover, the CEC added that practical 
experience and results over decades of implementing the appliance 
efficiency program show that there is a need for efficiency standards 
to overcome information barriers, cost barriers, and corporate inertia 
that stymie the otherwise rational economic consumer. (CEC, No. 121 at 
p. 14)
    Finally, BWC and the Cal-IOUs offered some suggestions as to other 
alternatives DOE might consider when revising its walk-down approach. 
BWC stated that it does not support DOE's proposed revised ``walk-
down'' approach, but instead favors a ``walk-up'' approach that looks 
at the TSL just above the current standard (i.e., the baseline). From 
there, BWC suggested that each level would be compared independently to 
the baseline. According to BWC, such approach would better reflect its 
experience that most consumers want the least expensive option that 
provides them the same utility as their current appliance. (BWC, No. 
103 at p. 4)As an alternative to DOE's potential use of an 
``economically rational consumer'' as part of the agency's analytical 
process (to which they objected), the Cal-IOUs instead suggested that 
DOE should align its approach with the one already in use in 
California--where energy efficiency measures are evaluated using the 
current standard as the baseline and to factor in natural market 
adoption in the measured case to prevent double-counting. (Cal-IOUs, 
No. 124 at p. 14)
    In response, DOE recognizes that its walk-down proposal, as 
presented in the Process Rule NOPR, could be viewed as a fundamental 
shift in the way the Department has historically selected energy 
conservation standards for adoption. Some commenters favored further 
examination of the subject matter of the proposal (perhaps as part of a 
peer review) but stated that the lack of clarity and sufficient detail 
rendered them unable to express an opinion or comment further. Those 
commenters were clear that, while they believed DOE should look into 
the issues presented by the walk-down proposal, they were opposed to 
delaying the remainder of the Process Rule's improvements while that 
work was done. Others not only questioned the workability and academic 
underpinnings of DOE's proposal but flatly challenged the legal basis 
for the agency's proposed approach (citing both the statute and case 
precedent), suggesting that it would invite litigation.
    Upon further reflection and after reviewing the public comments 
received on the matter, DOE has come to understand that its walk-down 
proposal would benefit from further elaboration and opportunity for 
public comment. Accordingly, DOE has decided not to finalize its 
proposed revised walk-down approach in this rule. Instead, elsewhere in 
this issue of the Federal Register, DOE has proposed revisions to its 
existing walk-down methodology together with added explanation to 
address some of the concerns raised by stakeholders. This supplemental 
proposal will revise 10 CFR part 430, subpart C, appendix A, sec. 
(7)(e) of the Process Rule. Specifically, the proposal clarifies that 
the process by which DOE selects among alternative energy efficiency 
standards under EPCA, satisfies the requirement that standards achieve 
the ````maximum improvement in energy efficiency, or in the case of 
showerheads, faucets, water closets, or urinals, water efficiency, 
which the Secretary determines is technologically feasible and 
economically justified.'' 42 U.S.C. 6295(o)(2)(A). In response to the 
concerns and requests for further explanation related to the 
economically rational consumer mentioned in DOE's prior proposal, DOE 
is: (1) Clarifying how impacts are considered in determining economic 
justification through the seven factors specified in EPCA; and (2) 
explaining that the requirement to determine economic justification is 
based on comparisons across the full range of trail standard levels 
(TSLs) is consistent with EPCA. This proposal will respond to public 
comment requesting further clarity on DOE's initial proposal that in 
making the determination of economic justification, DOE would choose a 
TSL over other feasible TSLs after considering all relevant factors, 
including, but not limited to, energy savings, efficacy, product 
features, and life-cycle costs.
    DOE encourages interested parties to review DOE's proposal and 
provide comment for consideration.
c. Other
    In commenting on DOE's analytical methodologies, Lutron suggested 
that as part of the Department's analysis, DOE should assess the 
impacts on customers related to the potential elimination of desirable 
product features. According to the commenter, DOE should not promulgate 
rules that would eliminate features that are highly valued by customer 
subgroups. (Lutron, No. 137 at p. 3) In response, DOE notes that EPCA 
specifically addresses this issue, stating at 42 U.S.C. 6295(o)(4) that 
DOE may not prescribe an amended or new standard if it finds (and 
publishes such finding) that interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States at the time of 
DOE's finding. Thus, in keeping with its statutory mandate, DOE 
routinely evaluates the effects its potential energy conservation 
standards would have on identified product features and takes action 
consistent with 42 U.S.C. 6295(o)(4). (These same principles apply to 
covered commercial and industrial equipment through operation of 42 
U.S.C. 6313(a)(6)(B)(iii)(II)(aa), 42 U.S.C. 6313(a)(6)(C)(i), and 42 
U.S.C. 6316(b).)
2. Cumulative Regulatory Burden
    In the Process Rule NOPR, DOE acknowledged that its past treatment 
of cumulative regulatory burdens faced by regulated entities may have 
lacked the comprehensiveness sought by some industry stakeholders. 
However, DOE attempted to address these burdens in a consistent manner 
to ensure that it accounts for them in each of DOE's energy 
conservation standards rulemakings. DOE committed to improving its 
assessments of the potential burdens (i.e., costs) faced by industry in 
implementing potential standards by improving its analysis. As

[[Page 8693]]

part of this effort, DOE stated that it will attempt to account for 
these potential costs through its modeling approaches, but the 
Department welcomed constructive feedback on particular steps it should 
take (consistent with its legal obligations) that would help improve 
its evaluation of the cumulative regulatory burdens faced by regulated 
entities within the energy conservation standards context. 84 FR 3910, 
3939 (Feb. 13, 2019).
    In response to the Process Rule NOPR, DOE received several comments 
on the topic of cumulative regulatory burden, primarily from individual 
companies and industry trade associations. Most of these commenters 
supported DOE's proposal to strengthen its analysis of cumulative 
regulatory burden, often reiterating their view of the perceived 
problem, stressing the importance of addressing it, and sometimes 
offering suggestions for how the Department can improve its process. 
For example, Rheem expressed strong support for DOE's efforts to 
improve the Department's consideration of cumulative regulatory burden 
and to reduce complexity as part of the standards rulemaking process. 
(Rheem, No. 101 at pp. 1-2) MHI expressed a similar sentiment, stating 
that it is critical that the process by which DOE sets rules for energy 
standards must carefully consider the cost impacts and work together 
with other Federal agencies so that cumulative regulatory costs are 
accounted for in the rulemaking process. (MHI, No. 130 at p. 3) These 
comments are discussed in the paragraphs immediately below, along with 
DOE's response.
    As noted, DOE's past practices (and in some cases its NOPR 
proposal) regarding cumulative regulatory burden were criticized by a 
number of the commenters on the Process Rule NOPR. For example, Lennox 
faulted DOE's actions in recent energy efficiency rulemakings for what 
it characterized as the agency's consistent failure to undertake a 
meaningful analysis of the cumulative impacts of multiple regulations, 
beyond merely listing factors such as the industry conversion costs of 
separate rulemakings in isolation (citing DOE's supplemental notice of 
proposed rulemaking for residential furnaces at 81 FR 65720, 65824-
65825 (Sept. 23, 2016) as an example). According to Lennox, DOE's 
cumulative regulatory burden analysis has often been a perfunctory 
exercise, identifying harms to industry and lost jobs, but failing to 
meaningfully weigh these harms and instead emphasizing energy saved 
without properly assessing whether a standard is economically 
justified. Lennox argued that while DOE actions impose a significant 
burden on manufacturers, several other Federal and State regulations 
may also significantly burden manufacturers of the same products. Under 
section 10 of the existing Process Rule (now proposed section 14(g)), 
DOE is to ``recognize and seek to mitigate the overlapping effects on 
manufacturers of new or revised DOE standards and other regulatory 
actions affecting the same products.'' However, according to the 
commenter, DOE insufficiently considers the impacts of these other 
regulations, so the Process Rule should clarify that the cumulative 
impacts analysis should include all regulations that impact 
manufacturers of DOE-regulated products, including other Federal and 
State regulations (particularly regarding those States where 
significant volumes of equipment are distributed and regulations are 
rapidly evolving, such as California). (Lennox, No. 133 at p. 7)
    Further, Southern California Edison stated that in DOE's 
rulemakings, the Department has overestimated the burden on 
manufacturers and taken a conservative approach. The commenter argued 
that manufacturers need to provide cost data to DOE in a methodical and 
historical manner, and the Department should consider such data. 
(Southern California Edison, April 11, 2019 Public Meeting Transcript 
at pp. 178-179) However, in contrast, Westinghouse strongly disagreed 
with any suggestion that DOE overestimates the costs of its rulemakings 
on industry. The commenter suggested that although manufacturers 
routinely provide data through industry associations and confidential 
manufacturer interviews, DOE typically underestimates costs and is not 
transparent as to where they get their alternate numbers that do not 
match those provided by manufacturers. Westinghouse went on record to 
state its opinion that DOE has never properly accounted for the costs 
of regulations in any of the rulemakings. (Westinghouse, April 11, 2019 
Public Meeting Transcript at pp. 179-180)
    Other commenters, such as AHAM and AHRI, expressed concerns about 
DOE's past cumulative regulatory burden practices but were optimistic 
that the Department's proposal could lead to improvements in this area. 
AHAM commended DOE's Process Rule proposal for its efforts to make its 
analysis of cumulative regulatory burden clear and explicit. DOE should 
always consider cumulative regulatory burden (as early in the process 
as possible) even if it does not ultimately change the course of 
regulatory action, suggesting that this concept offers a way to 
prioritize rulemakings in terms of allocating agency and industry 
resources. AHAM, April 11, 2019 Public Meeting Transcript at pp. 175-
176) AHRI commenter argued that in the past, DOE has run the numbers 
for cumulative regulatory burden, but the Department has failed to make 
clear what it is doing with them. (AHRI, April 11, 2019 Public Meeting 
Transcript at p. 180) AHRI also stated that it also supports DOE's 
proposal regarding cumulative regulatory burden, and it echoed the 
comments of AHAM. AHRI advocated that (AHRI, April 11, 2019 Public 
Meeting Transcript at pp. 177-178)
    Still other commenters either requested further clarification of 
DOE's proposal regarding cumulative regulatory burden or offered 
specific recommendations as to potential improvements to that process. 
Along this line, NAFEM requested that DOE clarify the scope of 
regulations it will consider in the cumulative regulatory burden 
analysis. The commenter stated that DOE's proposed language provides a 
temporal scope (i.e., within three years of the compliance date of 
another DOE standard), but argued that there is ambiguity as to whether 
DOE will consider non-DOE regulations. As an example of the problems 
arising from an inadequate cumulative regulatory burden analysis, NAFEM 
challenged the last commercial refrigeration equipment (CRE) 
rulemaking, because DOE's analysis included equipment that used 
refrigerants that EPA no longer permitted. The commenter stressed that 
DOE should set forth procedures for ensuring robust analyses of the 
overall burdens and costs on all regulated entities associated with its 
various rulemakings. (NAFEM, No. 122 at pp. 7-8)
    In response to the Process Rule NOPR, DOE received a number of 
recommendations as to the types of information that should be included 
in any cumulative regulatory burden analysis conducted by the 
Department. For example, Lennox recommended that improvements to the 
Process Rule should include an assessment of the generally known 
regulatory burdens and systematic analysis of the cumulative impacts of 
any new or amended regulation, including economic modelling to show how 
multiple regulatory actions impact manufacturers and employment related 
to DOE-regulated products. (Lennox, No. 133 at p. 7) More specifically, 
BWC urged DOE to consider cumulative regulatory burden from a domestic 
standpoint at the Federal, State, and regional/local level. According 
to the commenter,

[[Page 8694]]

some of those requirements--such as certain emission limits (e.g., 
Ultra-Low NOX for the California Air Quality Management or 
Air Pollution Control Districts)--can significantly affect allocation 
of manufacturer resources. BWC also stated that DOE should account for 
situations where manufacturers might have multiple rulemakings, 
possibly of different product types, going on at the same time. The 
commenter added that when manufacturers are forced to spend most of 
their limited resources on regulatory changes, it inhibits work on new, 
higher-efficiency products. (BWC, No. 103 at p. 4)
    NAFEM stated that DOE should include within its burden review the 
scope all of the regulations, even from other Federal agencies, that 
affect the viability of the equipment DOE is targeting at the TSLs. 
Specifically, NAFEM argued that the Regulatory Flexibility Act (RFA) 
requires that regulations from other Federal agencies must be reviewed, 
noting that the Small Business Administration (SBA) publishes the RFA 
Guide as a tool for Federal agencies to use to help ensure compliance 
with the RFA and related laws and Executive Orders (providing in 
relevant part that ``[r]ules are conflicting when they impose two 
conflicting regulatory requirements on the same classes of industry''). 
(NAFEM, No. 122 at pp. 7-8)
    Commenters also discussed the mechanism for considering the 
information obtained through the cumulative regulatory burden analysis. 
Relatedly, the Joint Commenters urged DOE to modify its current 
rulemaking process so as to incorporate the financial results of the 
current cumulative regulatory burden analysis directly into the 
Manufacturer Impact Analysis. They suggested that this can be done by 
adding the combined costs of complying with multiple regulations into 
the product conversion costs in the Government Regulatory Impact 
Analysis (GRIM) model. The Joint Commenters argued that this would be 
an appropriate approach to include the costs to manufacturers of 
responding to and monitoring regulations, noting that in the past, AHRI 
has submitted such information to DOE. (Joint Commenters, No. 112 at p. 
14)
    Energy Solutions stated that although it does not object to DOE's 
cumulative regulatory burden analysis, it recommends that such review 
should not be included in the life-cycle cost analysis. (Energy 
Solutions, April 11, 2019 Public Meeting Transcript at p. 180)
    NAFEM also stated that DOE should incorporate a comprehensive 
process into its Process Rule that fairly and adequately implements the 
RFA, that fosters engagement with the SBA Office of Advocacy, and that 
contemplates either different standards or more reasonable compliance 
deadlines for small business manufacturers subject to EPCA standards. 
(NAFEM, No. 122 at pp. 7-8) AHRI also commented that cumulative 
regulatory burden might be included in the Regulatory Flexibility Act 
(RFA) analysis, and it urged DOE to consider relevant governmental 
actions beyond its own regulations. (AHRI, April 11, 2019 Public 
Meeting Transcript at pp. 177-178)
    Finally, certain commenters focused on the types of impacted 
entities that should be examined under DOE's cumulative regulatory 
burden analysis, which has typically focused on manufacturers of the 
products/equipment subject to new or amended energy conservation 
standards. Spire made the point that regulatory burden is not limited 
to manufacturers, and other entities, such as utilities, also face 
significant regulatory burdens. Accordingly, Spire cautioned DOE not to 
limit its consideration of cumulative regulatory burdens to 
manufacturers. (Spire, April 11, 2019 Public Meeting Transcript at p. 
177) NAFEM added that as part of its cumulative regulatory burden 
analysis, DOE should ensure that there are no disproportional impacts 
on small businesses. (NAFEM, No. 122 at pp. 7-8)
    In response, DOE is both cognizant of and sensitive to the 
cumulative regulatory burden faced by regulated parties subject to the 
Department's energy conservation standards. As DOE fulfills its 
statutory mandate under EPCA, it is obligated to consider the economic 
impacts of potential standards on manufacturers; however, the 
Department's understanding of those impacts is arguably incomplete 
unless one assesses the overall regulatory environment facing the 
relevant industry. In addition to the energy conservation standard at 
issue in a given rulemaking, a manufacturer or industry may be 
simultaneously subject to other DOE appliance standards rulemakings, 
regulations of other Federal agencies, as well as State and regional/
local regulatory requirements. Assembling and analyzing data relevant 
to examining cumulative regulatory burden is a complex task. DOE has 
generally sought to examine other appliance standards rulemakings 
coming into effect within three years of the anticipated compliance 
date of the standard under development, as well as other Federal, 
State, and local regulations of which it is aware and which are 
expected to have a significant impact. Nonetheless, DOE acknowledges 
that its cumulative regulatory burden analysis has not been as 
comprehensive nor its impacts as transparent as some might have liked. 
The Department also recognizes the negative effects that excessive 
regulatory burdens can have on corporate resource allocations. While 
DOE avers that cumulative regulatory burden was one of the factors the 
agency weighed carefully when considering potential energy conservation 
standards, it is committed to working towards the development of a more 
robust and transparent approach going forward.
    DOE agrees with AHRI that the inquiry into cumulative regulatory 
burden should begin as early in the rulemaking process as possible, and 
the Department continues to welcome data and information regarding such 
burdens during comment opportunities at the various stages of a 
standards rulemaking. To NAFEM's point, DOE does strive to carefully 
and fully consider the impacts of its rulemakings on small entities 
through its analysis under the Regulatory Flexibility Act (RFA) and 
related Executive Orders. Although cumulative regulatory burden is 
certainly a consideration in that context, it is a matter of more 
global concern to all manufacturers subject to the energy conservation 
standards at issue. Consequently, DOE does not believe that the RFA 
analysis would be the appropriate locus for a broad consideration of 
cumulative regulatory burden. In response to NAFEM's other comments 
regarding small businesses, DOE notes that it cannot set differentiated 
standards under EPCA (e.g., one set of requirements applicable to small 
businesses and another set of requirements applicable to large 
manufacturers). Any test procedure or energy conservation standard DOE 
promulgates must be equitable to all industry participants, meaning 
that all participants, regardless of size, must be held to the same 
testing and energy conservation standards criteria. However, additional 
compliance flexibilities may be available to small businesses through 
other means. For example, individual manufacturers may petition DOE for 
a waiver of the applicable test procedures. (See 10 CFR 430.27) 
Furthermore, EPCA provides that a manufacturer whose annual gross 
revenue from all of its operations does not exceed $8,000,000 may apply 
for an exemption from all or part of an energy conservation standard 
for a period not

[[Page 8695]]

longer than 24 months after the effective date of a final rule 
establishing the standard. (See 42 U.S.C. 6295(t); 10 CFR part 430, 
subpart E) Additionally, section 504 of the Department of Energy 
Organization Act, 42 U.S.C. 7194, provides authority for the Secretary 
to adjust a rule issued under EPCA in order to prevent ``special 
hardship, inequity, or unfair distribution of burdens'' that may be 
imposed on that manufacturer as a result of such rule. Manufacturers 
should refer to 10 CFR part 430, subpart E, and 10 CFR part 1003 for 
additional details. Regarding NAFEM's comment about engagement with the 
SBA Office of Advocacy, DOE notes that that office closely follows and 
regularly participates in DOE's appliance standards rulemakings, and 
the Department always appreciates SBA's involvement and insights.
    As a general path forward, DOE expects that the scope and timeframe 
for the cumulative regulatory burden analysis, as well as related 
economic models, will be among the topics examined in depth by peer 
reviewers. Based upon the results and conclusions of that peer review, 
DOE may take further action, as necessary, to modify its processes 
accordingly.
    The issue of the specific mechanism for considering cumulative 
regulatory burden in DOE's standard-setting process is an interesting 
question which will likely require further consideration and study. To 
date and as noted previously, DOE has considered cumulative regulatory 
burden as a factor contributing to the economic impacts on 
manufacturers, which is one of the criteria for assessing the economic 
justification of a potential energy conservation standard. The Joint 
Commenters' suggestion to somehow incorporate a quantitative assessment 
of cumulative regulatory burden into the MIA through DOE's GRIM model 
will have to be evaluated further. Regarding the cautionary statement 
of Energy Solutions not to include assessment of cumulative regulatory 
burden as part of the life-cycle cost (LCC) analysis, the Department 
agrees that the two are not linked. The LCC analysis estimates of 
consumer benefits, whereas cumulative regulatory burden involves 
manufacturer costs. Regarding the best mechanism for incorporating 
cumulative regulatory burden into DOE's standard-setting process 
(including the specific suggestions raised by these commenters), the 
Department has once again concluded that this matter would benefit from 
examination by the peer reviewers who will be examining the analytical 
methodologies underpinning the Appliance Standards Program.
    Finally, in response to Spire's comment regarding the cumulative 
regulatory impacts on utilities, DOE notes that the Appliance Standards 
Program regulates covered products and equipment constructed and/or 
imported and certified by manufacturers. DOE's program does not 
directly regulate entities such as utilities, although they may 
experience some ancillary effects. However, DOE is open to exploring 
potential impacts of its Appliance Standards Program on non-
manufacturer third parties as part of the peer review of DOE's 
analytical processes and addressing such impacts as necessary and 
appropriate.
3. Should DOE conduct retrospective reviews of the energy savings and 
costs of energy conservation standards?
    At the January 9, 2018 Process Rule RFI public meeting and also in 
the Process Rule NOPR, DOE solicited feedback as to whether it should 
conduct a retrospective review of the energy savings and costs for its 
current standards as well as associated costs and benefits as part of 
any pre-rulemaking process that it ultimately adopts. 84 FR 3910, 3939 
(Feb. 13, 2019). In responding to the numerous comments on this topic, 
DOE acknowledged that a broad and comprehensive retrospective review of 
DOE's current and past energy conservation standards could provide 
significant data for DOE to consider as part of future standards 
rulemakings. The Department stated that while it recognizes the 
potential benefits of conducting this type of retrospective review on a 
periodic basis, it also recognizes that it faces limits on its own 
resources to conduct the broad and comprehensive analyses that would be 
needed to collect and analyze this information. Accordingly, DOE stated 
that it is continuing to evaluate the prospect of conducting these 
types of reviews, including on a longer-term (e.g., 10-year) basis but 
has not, as of yet, reached a final decision as to how to proceed. DOE 
did note that its proposed early assessment processes do incorporate an 
element of retrospective review. That is, by beginning a potential 
proceeding to amend existing energy conservation standards or test 
procedures for a product by asking if anything has changed since 
issuance of the last standard or test procedure, DOE will be seeking 
input in what effectively amounts to a retrospective review of the 
impact and effectiveness of its most recent regulatory action for the 
product at issue. (Id. at 84 FR 3940.)
    Commenters on the Process Rule NOPR expressed divergent viewpoints 
on the need to conduct a retrospective review in the context of DOE's 
appliance standards rulemaking process. The following commenters 
supported DOE's use of a retrospective review as a mechanism to improve 
the quality and effectiveness of the agency's rulemakings. BWC 
recommended that DOE conduct a retrospective review to determine 
whether products and markets have materialized as the Department 
anticipated in its rulemaking, and if not, that DOE investigate to 
understand why its previous analysis was incorrect. (BWC, No. 103 at p. 
5) Similarly, Signify expressed support for the concept of 
retrospective reviews to see what past rulemakings actually 
accomplished and to save time and money by avoiding iterative 
rulemakings that are not realizing significant energy savings. 
(Signify, No. 116 at p. 2) APGA also supported DOE's use of routine 
retrospective reviews generally. (APGA, No. 106 at p. 13)
    GWU emphasized retrospective review as essential to making DOE's 
standards rulemaking process more effective and transparent. GWU argued 
that because DOE relies heavily on assumptions about future prices of 
energy and other goods, opportunity costs, and producer and consumer 
preferences, it is reasonable for DOE to assess the outcomes and 
effects of its past rulemaking so as to better inform its next 
rulemaking. According to GWU, such review would allow DOE to measure 
the efficacy of its assumptions and to use a real (rather than 
hypothesized) baseline in its next set of rulemaking analyses. In 
addition to reviewing existing standards and analytical assumptions, 
GWU also sees the potential for reviewing how new standards are 
established by building in metrics, indicators, and timelines at the 
rule's outset. (GWU, No. 132 at pp. 11-12)
    AGA expressed its belief that DOE should not commence a new minimum 
energy efficiency standards process until the existing standards have 
been reviewed. According to AGA, an effective retrospective review 
would include objective, verifiable quantification, and if done right, 
this sort of retrospective review should enhance DOE's modeling and 
analyses and should avoid any material flaws in DOE's current modeling. 
If a retrospective review demonstrates that a substantial percentage of 
high-efficiency appliances exceeding the current standard within the 
type (or class) already exists, the commenter reasoned

[[Page 8696]]

that no new minimum standard would be needed. AGA further stated that 
it understands that DOE has limited resources to conduct a 
retrospective review and is still evaluating how to effectively 
proceed. In the meantime, AGA commented that the retrospective review 
can occur during the comment period of the applicable early stakeholder 
process. AGA argued that interested parties can and should provide data 
demonstrating changes since the issuance of the last standard or test 
procedure, and the impact and effectiveness of its most recent 
regulatory action for the product at issue. According to AGA, the 
Department, as part of the Process Rule, should commit to such 
retrospective reviews when data is submitted as part of the stakeholder 
process. (AGA, No. 114 at p. 30)
    Citing Executive Order 13563 (particularly section 6 of that Order 
which contains retrospective review requirements), Spire expressed 
support for the idea of DOE performing a retrospective analysis of its 
rules. (Spire, April 11, 2019 Public Meeting Transcript at p. 186; 
Spire, No. 139 at p. 24) Spire argued that retrospective review should 
be conducted almost every time you are considering new efficiency 
standards to see how well estimates of claimed consumer savings have 
done. (Spire, April 11, 2019 Public Meeting Transcript at p. 182) The 
commenter suggested that retrospective reviews should be conducted on a 
continuous basis, rather than sporadically. (Spire, No. 139 at p. 10) 
Spire also criticized DOE's use of Energy Information Agency (EIA) data 
by asserting that these data routinely over-estimate consumer gas price 
increases and under-estimates electricity price increases, and it 
argued that DOE's reliance on these data should be subject to 
retrospective review. Spire also suggested that the appropriate length 
of time for analysis should be the useful lifetime of the product under 
consideration. (Spire, No. 139 at p. 22)
    Other commenters cautioned against the initiation of a 
comprehensive retrospective review, which they characterized as a 
complex and costly endeavor. However, even these commenters generally 
supported the type of more limited retrospective review proposed as 
part of the early assessment provisions in DOE's Process Rule NOPR. 
Among this group of commenters, the Joint Commenters stated that they 
do not support a separate retrospective review process, arguing that 
trying to determine what actually happened following the implementation 
of standards is an incredibly complicated process and that there is no 
public data to support such an analysis. In addition, the Joint 
Commenters explained that the cost to manufacturers to develop this 
data is very substantial, as the information is not readily available 
and is highly proprietary and confidential. (Joint Commenters, No. 112 
at p. 15) Along these lines, a consultant to AHAM/AHRI and the Joint 
Commenters, alerted any potential peer reviewers that looking at 
manufacturer costs is an expensive and difficult process. The commenter 
took issue with the notion that DOE's price forecasts are incorrect and 
that DOE has underestimated manufacturing costs, arguing that there is 
no data to support that conclusion. (Everett Shorey, April 11, 2019 
Public Meeting Transcript at pp. 185-186)
    However, the Joint Commenters did support a review of what has 
changed in the cost or energy savings projections for the design 
options considered in previous standards. If nothing or very little has 
changed, then the Joint Commenters suggested that the presumption 
should be that the existing standards are appropriate, and DOE should 
not make a change. These commenters concluded that it should be 
determinative that DOE concluded in the previous rulemaking that no 
more-stringent standard met its own criteria. (Joint Commenters, No. 
112 at p. 15)
    Lennox agreed that the Process Rule NOPR's proposed early 
assessment for rulemakings already contains an element of retrospective 
review and that requiring a formal retrospective review for all 
rulemakings would unnecessarily burden DOE and manufacturers alike. 
Moreover, Lennox stated that EPCA already requires an extensive 
economic justification test (e.g., 42 U.S.C. 6295(o)). As a result, 
Lennox reasoned that a full and burdensome retrospective review of 
market impacts some six years or more before a rulemaking is not 
necessarily relevant to determining whether a standard under 
consideration is economically justified, but instead, DOE should make 
common sense inquiries such as what, if anything, has changed since a 
previous DOE appliance efficiency standards final rule for that product 
was adopted. The commenter stated that this seems in line with the 
Process Rule NOPR approach on this issue, and to that extent Lennox 
concurs. (Lennox, No. 133 at p. 6)
    A few other commenters expressed support for a more limited or 
targeted form of retrospective review. On this topic, NEMA stated that 
it would like to see the models and other forecasting tools put to the 
test in order to assess how they performed and how accurate such 
forecasting was in actual application. (NEMA, April 11, 2019 Public 
Meeting Transcript at p. 184) Southern Company remarked that 
retrospective review looks good in theory, but it wondered how it would 
work out in practice. Due to statutory cycles (6 and 7 years), Southern 
Company reasoned that it is difficult to judge the impact of the last 
standard, and it reiterated the need for good documentation of 
assumptions made in rulemakings. (Southern Company, April 11, 2019 
Public Meeting Transcript at p. 183) Although BHI pointed out that most 
project management systems conclude with a lessons learned session to 
identify administrative issues that hindered the completion of the 
project, the company did not recommend a retrospective review. However, 
BHI does recommend reviewing and documenting principles and procedures 
that have resulted in effective rulemaking processes. (BHI, No. 135 at 
p. 7)
    Finally, United Cool Air raised an example of why it presumably 
thinks retrospective review would be necessary in the context of DOE 
energy conservation standards rulemakings. More specifically, United 
Cool Air set forth a number of allegations regarding DOE's past 
approaches with respect to the Process Rule. In particular, it 
highlighted what it characterized as illegal efforts by DOE to avoid 
the current requirements of 10 CFR part 430, subpart C, appendix A. In 
its view, that approach resulted in the fabrication of data to enable 
DOE to ``rush through'' dozens of new regulations. (UCA-1, No. 96 at p. 
1) The commenter cited to what it believed was evidence that DOE did 
not have any record of collecting data that the agency purportedly had 
collected. (See UCA-1, No. 96, at p. 1 and related attachments 
comprising of: (1) A FOIA request to DOE seeking the identities of the 
five small businesses that DOE had noted in a published Federal 
Register document related to certification requirements for commercial 
HVAC, water heater, and refrigeration equipment manufacturers, and (2) 
the agency's response stating that no responsive documents were found 
(EERE-2017-BT-STD-0062-0096 (``FOIA Request for 5 Small Business 
Names'' and ``Final Letter''))) United Cool Air also alleged that small 
businesses are not being informed of the new regulations being 
developed or having any input into them, which have led to small 
businesses being harmed. (UCA-1, No. 96 at p. 1) Furthermore, the 
company added that the standards being developed only apply to large

[[Page 8697]]

manufacturers who have greater resources compared to small businesses 
(i.e., 1-250 employees). (UCA-1, No. 96 at p. 1)
    In response, DOE notes that the comments on retrospective review--
as diverse as they were--all seemed to agree that an understanding of 
the impacts of the Department's past regulations (and the predictive 
power of the analytical tools employed in support of the adoption of 
those regulations) could contribute to more targeted and less 
burdensome regulations in the future. The disagreement among commenters 
seemed to center on whether it would be feasible to generate the 
requisite data for such an analysis (which may be proprietary, if it 
exists at all) and to do so in a cost-effective fashion. If those 
hurdles are surmounted, further questions arise as to the proper scope 
of the retrospective review (e.g., whether to assess the effectiveness 
of the Appliance Standards Program as a whole, of an individual 
product/equipment type over time, or of a specific, most recent 
rulemaking) and the appropriate frequency of such review (e.g., every 
ten years, prior to the next round of rulemaking for a given product, 
on a continuous basis). However, most commenters appeared to favor an 
early assessment analysis of the technological and market developments 
since the last standards rulemaking, which would be a limited but 
practical form of retrospective review.
    DOE is in full accord with such sentiments regarding the potential 
benefits of retrospective review. It would be valuable to understand 
the impacts of the Department's past regulatory actions and the 
predictive power of its analytical tools, thereby enhancing the quality 
and effectiveness of DOE's rulemakings and conserving resources by 
avoiding iterative rulemakings resulting in standards that do not 
realize significant energy savings. The Department also agrees with GWU 
that given DOE's reliance on assumptions about future prices of energy 
and other goods, opportunity costs, and producer and consumer 
preferences, it would be reasonable to assess the outcomes and effects 
of its past rulemakings so as to better inform its next rulemaking. As 
GWU suggests, such review may allow DOE to measure the efficacy of its 
assumptions and to use a real (rather than hypothesized) baseline in 
its next set of rulemaking analyses.
    After carefully considering these comments, DOE has decided, at 
least initially, to bifurcate its approach to retrospective review of 
its past appliance standards rulemakings. One aspect of this approach 
can be commenced immediately. Namely, through its early assessment 
process, the agency believes it is possible to conduct a timely and 
useful assessment of developments since the last rulemaking for the 
product/equipment in question. To this end, DOE welcomes comments, 
data, and other information on costs, prices, shipments, and other 
relevant factors, such that the Department might refine its analyses 
and models to better prospectively capture the real world impacts of 
its standards. Along with this useful feedback, stakeholders may 
provide other information to suggest that the technologies, costs, or 
energy use profiles for the product/equipment at issue have not 
changed, such that amended standards are unlikely to be cost-justified, 
or information suggesting just the opposite. (DOE does not agree with 
the Joint Commenters that a presumption to this effect is appropriate, 
given the variety of relevant data to be considered, but instead, the 
Department would undertake such assessment in each individual case 
based upon the information before it.) DOE believes that this is a 
practical mechanism for the near term, because DOE faces a number of 
statutory deadlines for rulemaking actions, so it cannot simply hold 
rulemaking in abeyance until a comprehensive retrospective review is 
completed, as AGA suggested.
    The other, more long-term aspect of DOE's approach to retrospective 
analysis will involve consideration of retrospective review as a topic 
under the peer review of DOE's analytical methodologies used in the 
Appliance Standards Program. The peer reviewers will examine the 
feasibility of and options for conducting a comprehensive retrospective 
review of the Department's past appliance standards rulemakings, either 
at a programmatic or individual product level. Peer reviewers will 
consider the scope, costs, and anticipated benefits of such 
retrospective review(s) and seek to ensure that results generated are 
objective and verifiable to the maximum extent practicable. As GWU 
suggested, in addition to reviewing existing standards and analytical 
assumptions, peer reviewers might also consider how new standards are 
established by building in metrics, indicators, and timelines at a 
rule's outset. An examination of the efficacy of DOE's models, 
assumptions, forecasting, timeframe for analysis, and the documentation 
of principles and procedures all might fall within the ambit of the 
peer reviewers' work vis-[agrave]-vis retrospective review. After 
carefully considering the results and recommendations coming out of 
such peer review, DOE will consider what further actions, if any, 
should be undertaken in this area.
    Regarding other matters raised by commenters on retrospective 
review, DOE does not agree with AGA's suggestion that if a 
retrospective review demonstrates that a substantial percentage of 
high-efficiency appliances exceeding the current standard within the 
type (or class) already exists, then no new minimum standard would be 
needed. The criteria for promulgating energy conservation standards are 
established under EPCA (i.e., significant energy savings, technological 
feasibility, and economic justification) and do not hinge on the 
percentage of high-efficiency products in the marketplace. DOE must 
follow its statutory mandate for standard setting and may not 
substitute other criteria or tests along the lines the commenter 
suggests.
    DOE likewise does not agree with Spire's criticism of DOE's use of 
EIA data in its analyses. Although Spire asserts that these data 
overestimate consumer gas price increases and underestimate electricity 
price increases, the Department has entertained these arguments in past 
rulemakings and found them to be unproven and without merit. EIA data 
are based on sound scientific and economic principles, and they are 
used on a government-wide basis for a variety of regulatory analyses, 
which are not limited to DOE. Thus, DOE does not agree that the 
totality of EIA data should be subjected to retrospective review or 
that the Department should otherwise be limited in its use of such 
data.
    Finally, in response to United Cool Air, DOE appreciates the 
commenter's interest in the Department's shared goal of increasing the 
transparency of its decision-making and public participation through 
this revised Process Rule. DOE cannot readily address the particulars 
of the commenter's concerns about the prior rulemaking it mentioned, 
although the Department suspects that it may have involved proprietary 
data obtained under nondisclosure agreement(s), the type of information 
which would not be subject to release under FOIA. DOE respectfully 
disagrees with United Cool Air's contention that DOE has not considered 
small businesses in its rulemakings (as its RFA analysis demonstrates), 
and contrary to the commenter's assertions, DOE's energy conservation 
standards are applicable to all manufacturers of the covered

[[Page 8698]]

product or covered equipment that is the subject of a rulemaking, 
regardless of the size of that manufacturer. DOE's proposals are 
published in the Federal Register, and thus, they are publicly 
available to all interested stakeholders, including small businesses. 
DOE encourages public participation and maintains a transparent process 
with open public meetings and the opportunity for public comment on its 
proposals and other rulemakings documents which are published in the 
Federal Register. DOE fully addresses public comments on its proposal 
in the final rule.
4. Certification, Compliance, and Enforcement (CCE)-Related Issues
    While certification, compliance, and enforcement (CCE) are 
important standards-related matters for DOE, regulated entities, and 
other interested stakeholders, DOE's Process Rule NOPR explained in 
response to CCE-related comments on its Process Rule RFI that such 
matters are largely beyond the scope of the current proceeding. 
However, DOE stated that it is willing to evaluate this topic in 
further detail through separate rulemaking. (84 FR 3910, 3940) The 
Department acknowledged that in 2010-2011 when DOE changed its CCE 
requirements for all products in a single rulemaking, that process was 
unwieldy, particularly given the level of interest from various parties 
and volume of comments received (see 76 FR 38287 (June 30, 2011) \30\). 
In the Process Rule NOPR, DOE explained that its plan is to address 
changes to its CCE regulations, and related provisions in 10 CFR parts 
430 and 431, in separate rulemakings with separate public meetings to 
help manage comments and to allow DOE to consider industry-specific 
issues in a more focused format. DOE stated that it may ultimately 
adopt different provisions for different products based on comments and 
would make appropriate changes to regulatory text to be more general or 
product-specific in a final rule. (84 FR 3910, 3940 (Feb. 13, 2019))
---------------------------------------------------------------------------

    \30\ Docket Number EERE-2010-BT-CE-0014, https://www.regulations.gov/docket?D=EERE-2010-BT-CE-0014.
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    Despite DOE's pronouncement that the Department would be addressing 
CCE-related issues in separate rulemakings, DOE did received a few 
further comments on this issue. More specifically, Acuity argued that 
DOE should streamline and modernize its CCE processes, as improvements 
in these areas will help bolster any improvements to the Process Rule 
in terms of reducing unnecessary regulatory burdens and serving the 
Program's purposes. (Acuity, No. 95 at p. 7) NEMA similarly encouraged 
DOE to continue working on ways to refine the CCE process, including 
doing more to ensure that products coming through ports of entry are 
compliant. (NEMA, April 11, 2019 Public Meeting Transcript at pp. 189-
190) Finally, at the April 11, 2019 public meeting, AHRI sought 
clarification as to whether DOE would do one global rulemaking when 
updating its CCE regulations or making changes as individual energy 
conservation standards and test procedures are done. In this context, 
AHRI expressed support for an industry-by-industry approach to 
addressing CCE. (AHAM, April 11, 2019 Public Meeting Transcript at pp. 
190-191) At that public meeting, DOE responded that the agency expects 
to now examine CCE-related issues on an industry-by-industry basis. 
(DOE, April 11, 2019 Public Meeting Transcript at p. 191)
    In response, DOE affirms its commitment to continue examining its 
CCE regulations and consider amending those regulations, as necessary, 
through future rulemaking, and it will reconsider the substance of 
these comments in such venues, including the port-of-entry issue raised 
by NEMA. In short, however, DOE agrees with Acuity that improvements to 
DOE's CCE regulations have the potential to complement the improvement 
made to the Process Rule through this final rule. The Department notes 
that it expects to address CCE-related issues on an industry-by-
industry basis in the context of individual product/equipment 
rulemakings, for the reasons previously stated.
5. Other Issues
    DOE also received a number of comments on its Process Rule NOPR 
that did not fit neatly into any of the categories discussed 
previously, so those issues are set forth and addressed here.
Preemption
    Acuity sought a clear statement from DOE on the preemptive effects 
of a ``no amended standard'' or ``no new standard'' determination. In 
the commenter's view, these situations should trigger Federal 
preemption, and States should be prohibited from imposing their own 
regulations regarding a given covered product. (Acuity, No. 95 at p. 7) 
In response, EPCA explicitly addresses the preemptive effects of 
regulatory actions taken by DOE under the Appliance Standards Program, 
and DOE acts in accordance with those provisions. Specifically, with 
certain limited exceptions, the general rule of preemption for energy 
conservation standards, before Federal standards have become effective, 
is that no State regulation, or revision thereof, concerning the energy 
efficiency, energy use, or water use of the covered product, shall be 
effective with respect to such covered product. (42 U.S.C. 6297(b)) In 
addition, under 42 U.S.C. 6295(ii), there is a specific preemption 
provision that applies to new coverage determinations, certain lamps 
(i.e., rough service lamps, vibration service lamps, 3-way incandescent 
lamps, 2,601-3,300 lumen general service incandescent lamps, and 
shatter-resistant lamps), battery chargers, external power supplies, 
and refrigerated beverage vending machines, which provides that the 
preemption provisions of 42 U.S.C. 6297 apply to products for which 
energy conservation standards are to be established under subsections 
(l), (u), and (v) of 42 U.S.C. 6295 beginning on the date on which a 
final rule is issued by DOE, but any State or local standard prescribed 
or enacted for the product before the date on which the final rule is 
issued shall not be preempted until the energy conservation standard 
established under subsection (l), (u), or (v) of 42 U.S.C. 6295 for the 
product takes effect.
    Similarly, with certain limited exceptions, the general rule of 
preemption when Federal standards become effective for the product, no 
State regulation concerning the energy efficiency, energy use, or water 
use of such covered product shall be effective with respect to such 
covered product. (42 U.S.C. 6297(c)) DOE may waive Federal preemption 
in appropriate cases consistent with the provisions of 42 U.S.C. 
6297(d). In addition, the statute also provides that a State (and its 
political subdivisions) requiring testing or labeling regarding the 
energy consumption or water use of any covered product may do so only 
if such requirements are identical to those established pursuant to 42 
U.S.C. 6293 and 42 U.S.C. 6294, respectively. These same provisions 
generally apply to covered commercial and industrial equipment through 
operation of 42 U.S.C. 6316, except for the provisions at 42 U.S.C. 
6295(ii) which only apply to consumer products.
Specific Products Recommended for Regulatory Review
    AHRI requested that DOE address four regulatory concerns (as set 
forth in five exhibits submitted as part of AHRI's written comments) in 
future rulemakings or, preferable, by

[[Page 8699]]

interpretive rule. These topics included: (1) Furnace fan test 
procedure clarifications; (2) Central air-conditioning and heat pump 
test procedure calculation corrections; (3) Water heater recovery 
energy efficiency calculations; and (4) Instantaneous water heater test 
procedure tolerances. (AHRI, No. 117 at p. 1) In response, DOE 
appreciates stakeholder efforts to make the Department aware of 
identified problems with its energy conservation standards or test 
procedure regulations. The Appliance Standards Program will examine the 
exhibits submitted by AHRI to determine what actions, if any, are 
necessary.
Effective Date vs. Compliance Date Clarifications
    The CEC supported DOE's attempt to distinguish between ``effective 
dates'' and ``compliance dates'' but noted that the terms are not 
clearly distinguished in the statute. As a result, it asserted that 
DOE's efforts could lead to further confusion rather than clarity. The 
CEC added that DOE's definition of a compliance date for a test 
procedure is inconsistent with EPCA's requirement that newly prescribed 
or established test procedures take effect for representation of energy 
efficiency or energy use 180 days after that procedure has been 
prescribed or established. Consequently, the CEC asserted that DOE's 
proposed approach would be invalid under EPCA. (See 42 U.S.C. 
6293(c)(2)) (CEC, No. 121 at pp. 14-15) In response, DOE appreciates 
that the CEC recognizes the difficulty that the agency, regulated 
entities, and other interested stakeholders have had in distinguishing 
between ``effective dates'' and ``compliance dates'' under relevant 
provisions of EPCA. However, contrary to what the CEC suggests, DOE 
does not believe that allowing such confusion to persist should be the 
preferred option. Instead, DOE has sought to clarify this matter in the 
Process Rule through a dedicated section 12. DOE has received many 
questions along these lines over the years, and the Department has 
sought to foster a general understanding that the ``effective date'' is 
the point at which a rule becomes legally operative after publication 
in the Federal Register (typically 60 days after publication) and that 
the ``compliance date'' is the point at which regulated entities must 
meet the requirements of the rule. DOE's inclusion of such provision in 
the Process Rule has not altered the approach the agency has 
historically taken when dealing when giving meaning to the somewhat 
unclear statutory language. DOE does not agree with the CEC's 
assessment that its clarifications run afoul of section 323(c)(2) of 
EPCA (42 U.S.C. 6293(c)(2)); instead, section 12 of the Process Rule is 
integrally linked to that statutory provision. To be clear, DOE is not 
expanding the 180-day timeframe that regulated entities have to begin 
making representations consistent with a new or amended test procedure 
after publication in the Federal Register. Consequently, DOE is 
adopting the proposed Process Rule provisions for distinguishing 
between effective dates and compliance dates in this final rule.
Judicial Review
    GWU urged DOE to consider strengthening its commitments toward 
process improvement by making the agency accountable in court. Although 
GWU noted that DOE's proposal removed the prior provision precluding 
judicial review, it suggested that the agency should consider an 
affirmative statement subjecting itself to judicial review, a step 
which studies have shown improves the quality of agency analyses. (GWU, 
No. 132 at pp. 3-4) In response, DOE does not believe it necessary to 
include a specific judicial review provision in the Process Rule, 
because a comprehensive judicial review provision for covered consumer 
products already exists at 42 U.S.C. 6306 (which is extended to covered 
commercial and industrial equipment through 42 U.S.C. 6316(a) and (b)). 
This provision applies to final rules for energy test procedures, 
labelling, and conservation standards, and it had been used by 
litigants on a number of occasions. Consequently, a separate judicial 
review provision in the Process Rule would be largely redundant of the 
existing statutory provision. Agencies cannot create judicial review 
when Congress has not provided it.
Manufactured Housing
    MHAAR requested that in any final Process Rule, DOE expressly apply 
all pertinent procedural protections and safeguards set out in its 
Process Rule NOPR to any manufactured housing energy conservation 
standards or revisions to those standards, or any applicable test 
procedures developed pursuant to section 413 (42 U.S.C. 17071) of the 
Energy Independence and Security Act of 2007 (EISA 2007). MHAAR pointed 
out that DOE's proposal does not specifically reference standards 
development and/or testing procedures under section 413 of EISA 2007, 
concerning energy conservation standards for Federally-regulated 
manufactured homes. The commenter stated that because the proposed 
Process Rule applies to DOE's Appliance Standards program and both the 
previously proposed June 17, 2016 DOE standards for such homes (81 FR 
39756) and the currently pending proposed energy standards for 
manufactured homes set forth in the August 3, 2018 NODA (83 FR 38073) 
derive directly from a negotiated rulemaking process conducted by and 
within the DOE Appliance Standards Program, the pertinent provisions of 
the Process Rule should apply. (MHAAR, No. 115 at pp. 2-3)
    In response, DOE's authority for manufactured housing is derived 
from free-standing authority in EISA 2007, which is separate and apart 
from the EPCA provisions governing the Appliance Standards Program. 
DOE's Process Rule is strictly focused on the Appliance Standards 
Program and related provisions of EPCA. Consequently, DOE does not find 
it appropriate to conflate these two programs or the procedures that 
apply to them. Furthermore, DOE notes that its manufactured housing 
rule is currently the subject of litigation in the U.S. District Court 
for the District of Columbia, so the Department does not wish to 
undertake any action that would impact its position in that case.
Market-Based Approach to Energy Conservation Standards
    Samsung responded to DOE's indication in the Process Rule NOPR that 
it would continue to contemplate additional topics to update the 
Process Rule. Along those lines, the commenter encouraged DOE to 
consider a pilot market-based approach to energy conservation standards 
rulemaking when considering other potential revisions to the Process 
Rule. Samsung pointed out that in 2018, DOE considered such innovative 
approach in the Appliance and Equipment Standards Program Design (82 FR 
56181(Nov. 28, 2017), and it urged DOE to further pursue that concept 
that allows the market to drive energy efficiency, which helps 
consumers save money. (Samsung, No. 129 at p. 2) In response, DOE 
appreciates the commenter's suggestion to further consider market-based 
approaches to energy conservation standards rulemaking. The Department 
is currently reviewing the comments it received on the November 2017 
RFI and evaluating potential next steps.

[[Page 8700]]

IV. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    This regulatory action is a significant regulatory action under 
section 3(f) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993). Accordingly, this proposed 
regulatory action was subject to review under the Executive Order by 
the Office of Information and Regulatory Affairs (OIRA) in the Office 
of Management and Budget (OMB).

B. Review Under Executive Orders 13771 and 13777

    On January 30, 2017, the President issued Executive Order (E.O.) 
13771, ``Reducing Regulation and Controlling Regulatory Costs.'' 82 FR 
9339 (Jan. 30, 2017). That Order states that the policy of the 
Executive Branch is to be prudent and financially responsible in the 
expenditure of funds, from both public and private sources. More 
specifically, the Order provides that it is essential to manage the 
costs associated with the governmental imposition of requirements 
necessitating private expenditures of funds required to comply with 
Federal regulations. This final rule is considered an E.O. 13771 
deregulatory action. Details on the estimated cost savings of this 
proposed rule can be found in the rule's economic analysis.
    In addition, on February 24, 2017, the President issued Executive 
Order 13777, ``Enforcing the Regulatory Reform Agenda.'' 82 FR 12285 
(March 1, 2017). The Order requires the head of each agency to 
designate an agency official as its Regulatory Reform Officer (RRO). 
Each RRO is tasked with overseeing the implementation of regulatory 
reform initiatives and policies to ensure that individual agencies 
effectively carry out regulatory reforms, consistent with applicable 
law. Further, E.O. 13777 requires the establishment of a regulatory 
task force at each agency. The regulatory task force is required to 
make recommendations to the agency head regarding the repeal, 
replacement, or modification of existing regulations, consistent with 
applicable law.
    To implement these Executive Orders, the Department, among other 
actions, issued a request for information (RFI) seeking public comment 
on how best to achieve meaningful burden reduction while continuing to 
achieve the Department's regulatory objectives. 82 FR 24582 (May, 30, 
2017). In response to this RFI, the Department received numerous and 
extensive comments pertaining to DOE's Process Rule.

C. Economic Analysis

    DOE estimated cost savings for the final Process Rule by 
quantifying the reduction in administrative burden that results from 
new streamlined rulemaking procedures, namely, the energy savings 
threshold. DOE quantified these savings by identifying each of its 
previous rulemakings that would not have met the final threshold and 
tallying the total administrative burden associated with each. DOE 
quantified the average administrative burden per rulemaking and 
forecast how many rulemakings per year are likely to be affected in the 
future.
    In July 2019, DOE published in the Federal Register a notice of 
data availability (NODA) outlining the energy savings of each of its 
energy conservation standards issued since 1989. DOE used these data, 
which were available for public comment, to identify rules that would 
be affected by a potential threshold at the max tech and the adopted 
standard level. Based on this review, DOE expects that approximately 
half of the rulemakings that fail to meet the significant energy 
threshold will do so at the outset of rulemaking (i.e. the RFI/NODA 
stage) and half will do so at the proposed rule (i.e., the NOPR/NOPD) 
stage.
    DOE assessed administrative burden by aggregating the key 
regulatory documents in each regulatory docket and estimating the 
average word count using several samples from each docket. For 
regulations that include several different product types, DOE broke out 
the portion of the docket attributable to the product in question.
    DOE used methodology established by the U.S. Food and Drug 
Administration (FDA) to estimate the administrative burden of reading 
DOE regulatory documents. DOE additionally estimates the administrative 
burden of attending public meetings and submitting comments. The 
Department of Health and Human Services provides guidelines regarding 
the reading speed of regulation reviewers, which assumes a normal 
distribution with a mean of 225 words per minute.\31\ DOE estimated 
administrative burden at the mean reading speed and at one standard 
deviation to provide a range.
---------------------------------------------------------------------------

    \31\ https://aspe.hhs.gov/system/files/pdf/242926/HHS_RIAGuidance.pdf Table 4.1.
---------------------------------------------------------------------------

    In implementing this guideline, FDA recognizes that due to the 
complexity of some rules multiple individuals may read a rule for a 
single stakeholder (for example, 2 lawyers for a small firm or 4 
lawyers for a large firm).\32\ The National Small Business 
Association's (NSBA) 2017 Small Business Regulations Survey further 
states that although 72 percent of small firms report having read 
through proposed regulations, the majority of those who do so (63 
percent) report that they have to comply with the rules they read only 
half of the time, or less frequently.\33\ This indicates that the 
number of comments submitted on a given rule, or even the number of 
affected stakeholders, may not adequately capture the number of people 
who bear administrative burden from DOE's rulemakings. In light of the 
FDA estimate above and NSBA survey data, DOE conservatively estimates 
that 1.75 people read a proposed rule for every comment submitted to 
the docket.
---------------------------------------------------------------------------

    \32\ U.S. Food & Drug Administration. Premarket Tobacco Product 
Applications and Recordkeeping Requirements: Preliminary Regulatory 
Impact Analysis; Initial Regulatory Flexibility Analysis; Unfunded 
Mandates Reform Act Analysis. Docket No. FDA-2019-N-2854. Page 35. 
https://www.fda.gov/about-fda/economic-impact-analyses-fda-regulations/premarket-tobacco-product-applications-and-recordkeeping-requirements-proposed-rule-preliminary.
    \33\ 2017 NSBA Small Business Regulations SURVEY. Page 10. 
https://www.nsba.biz/wp-content/uploads/2017/01/Regulatory-Survey-2017.pdf.
---------------------------------------------------------------------------

    The NSBA survey also provides data on the number of hours it takes 
small business to submit comments.\34\ DOE uses the weighted average of 
these survey data to estimate the average time it takes a small 
business to submit a comment on a DOE regulation. DOE assumes that 
other stakeholders, such as trade associations, spend approximately 10 
hours on writing and submitting comments (to include time spend 
collecting data from members and potential test follow-up).
---------------------------------------------------------------------------

    \34\ 2017 NSBA Small Business Regulations SURVEY. Page 11. 
https://www.nsba.biz/wp-content/uploads/2017/01/Regulatory-Survey-2017.pdf.
---------------------------------------------------------------------------

    DOE monetizes the cost savings using the cost of labor to represent 
the opportunity cost of participating in a rulemaking. For industry 
wages, we use 2016 mean wage estimates from the Bureau of Labor 
Statistics' National Industry-Specific Occupational Employment and Wage 
Estimates for the household appliance manufacturing industry. The table 
below shows the mean hourly wages, the fully loaded wages, and the 
public meeting and public comment-weighted wages that are used in this 
analysis. (For example, DOE assumes that compliance officers are less 
involved in attending public meetings than they are in reading and 
commenting on regulations.)

[[Page 8701]]



------------------------------------------------------------------------
      NAICS Occupation 335200
       (Household Appliance         Mean hourly  wage     Fully-loaded
          Manufacturing)                                      wage
------------------------------------------------------------------------
Management Occupations............             $63.97            $127.94
Compliance Officers...............              23.90              47.80
Engineers.........................              41.14              82.28
Lawyers *.........................              83.73             167.46
------------------------------------------------------------------------

    DOE anticipates that the changes finalized in this rule will reduce 
total administrative burdens by between $53.5 million and $59.7 million 
(undiscounted) for annualized cost savings of between $0.5 million to 
$0.6 million, discounted at 7%.

                                 Table Number--Total and Annualized Cost Savings
----------------------------------------------------------------------------------------------------------------
                                                              Low-end       Primary  estimate       High-end
----------------------------------------------------------------------------------------------------------------
Total Savings (2016$):.................................        $53,505,672        $56,189,431        $59,698,963
NPV, 3%................................................         16,907,207         17,755,245         18,864,219
NPV, 7%................................................          7,634,859          8,017,811          8,518,595
Annualized Savings (7%)................................            534,440            561,247            596,302
----------------------------------------------------------------------------------------------------------------

D. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996) 
requires preparation of an initial regulatory flexibility analysis 
(IRFA) for any rule that by law must be proposed for public comment and 
a final regulatory flexibility analysis (FRFA) for any such rule that 
an agency adopts as a final rule, unless the agency certifies that the 
rule, if promulgated, will not have a significant economic impact on a 
substantial number of small entities. A regulatory flexibility analysis 
examines the impact of the rule on small entities and considers 
alternative ways of reducing negative effects. Also, as required by 
Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the DOE rulemaking process. 68 FR 7990. DOE has made 
its procedures and policies available on the Office of the General 
Counsel's website at: https://energy.gov/gc/office-general-counsel.
    Because this final rule does not directly regulate small entities 
but instead only imposes procedural requirements on DOE itself, DOE 
certifies that this final rule will not have a significant economic 
impact on a substantial number of small entities, and, therefore, no 
regulatory flexibility analysis is required. Mid-Tex Elec. Co-Op, Inc. 
v. F.E.R.C., 773 F.2d 327 (1985).

E. Review Under the Paperwork Reduction Act of 1995

    Manufacturers of covered products/equipment must certify to DOE 
that their products comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers must test their 
products according to the DOE test procedures for such products/
equipment, including any amendments adopted for those test procedures, 
on the date that compliance is required. DOE has established 
regulations for the certification and recordkeeping requirements for 
all covered consumer products and commercial equipment. 76 FR 12422 
(March 7, 2011); 80 FR 5099 (Jan. 30, 2015). The collection-of-
information requirement for certification and recordkeeping is subject 
to review and approval by OMB under the Paperwork Reduction Act (PRA). 
This requirement has been approved by OMB under OMB control number 
1910-1400. Public reporting burden for the certification is estimated 
to average 30 hours per response, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.
    Specifically, this final rule, addressing clarifications to the 
Process Rule itself, does not contain any collection of information 
requirement that would trigger the PRA.

F. Review Under the National Environmental Policy Act of 1969

    In this document, DOE revises its Process Rule, which outlines the 
procedures DOE will follow in conducting rulemakings for new or amended 
energy conservation standards and test procedures for covered consumer 
products and commercial/industrial equipment. DOE has determined that 
this rule falls into a class of actions that are categorically excluded 
from review under the National Environmental Policy Act of 1969 (42 
U.S.C. 4321 et seq.) and DOE's implementing regulations at 10 CFR part 
1021. Specifically, this final rule is strictly procedural and is 
covered by the Categorical Exclusion in 10 CFR part 1021, subpart D, 
paragraph A6. Accordingly, neither an environmental assessment nor an 
environmental impact statement is required.

G. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 10, 
1999), imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the necessity for such actions. The Executive Order 
also requires agencies to have an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that

[[Page 8702]]

have Federalism implications. On March 14, 2000, DOE published a 
statement of policy describing the intergovernmental consultation 
process it will follow in the development of such regulations. 65 FR 
13735. DOE has examined this final rule and has determined that it will 
not have a substantial direct effect on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government. 
It will primarily affect the procedure by which DOE develops proposed 
rules to revise energy conservation standards and test procedures. EPCA 
governs and prescribes Federal preemption of State regulations that are 
the subject of DOE's regulations adopted pursuant to the statute. In 
such cases, States can petition DOE for exemption from such preemption 
to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 
6297(d)) Therefore, Executive Order 13132 requires no further action.

H. Review Under Executive Order 12988

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

I. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. (Pub. L. 104-4, sec. 201 (codified at 2 U.S.C. 1531)) 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. (62 FR 12820) (This policy is also available at https://www.energy.gov/gc/office-general-counsel under ``Guidance & Opinions'' 
(Rulemaking)) DOE examined the final rule according to UMRA and its 
statement of policy and has determined that the rule contains neither 
an intergovernmental mandate, nor a mandate that may result in the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any year. 
Accordingly, no further assessment or analysis is required under UMRA.

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

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

K. Review Under Executive Order 12630

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

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

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

M. Review Under Executive Order 13211

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

[[Page 8703]]

action by the Administrator of OIRA. Therefore, it is not a significant 
energy action, and, accordingly, DOE has not prepared a Statement of 
Energy Effects for this final rule.

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

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

O. Congressional Notification

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

V. Approval of the Office of the Secretary

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

List of Subjects

10 CFR Part 430

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

10 CFR Part 431

    Administrative practice and procedure, Confidential business 
information, Incorporation by reference, Reporting and recordkeeping 
requirements, Test procedures.

    Signed in Washington, DC, on December 31, 2019.
Daniel R Simmons,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons stated in the preamble, DOE amends parts 430 and 
431 of title 10 of the Code of Federal Regulations as set forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

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

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


0
2. Appendix A to subpart C of part 430 is revised to read as follows:

Appendix A to Subpart C of Part 430--Procedures, Interpretations, and 
Policies for Consideration of New or Revised Energy Conservation 
Standards and Test Procedures for Consumer Products and Certain 
Commercial/Industrial Equipment

1. Objectives
2. Scope
3. Mandatory Application of the Process Rule
4. Setting Priorities for Rulemaking Activity
5. Coverage Determination Rulemakings
6. Process for Developing Energy Conservation Standards
7. Policies on Selection of Standards
8. Test Procedures
9. ASHRAE Equipment
10. Direct Final Rules
11. Negotiated Rulemaking Process
12. Principles for Distinguishing Between Effective and Compliance 
Dates
13. Principles for the Conduct of the Engineering Analysis
14. Principles for the Analysis of Impacts on Manufacturers
15. Principles for the Analysis of Impacts on Consumers
16. Consideration of Non-Regulatory Approaches
17. Cross-cutting Analytical Assumptions

1. Objectives

    This appendix establishes procedures, interpretations, and 
policies that DOE will follow in the consideration and promulgation 
of new or revised appliance energy conservation standards and test 
procedures under the Energy Policy and Conservation Act (EPCA). This 
appendix applies to both covered consumer products and covered 
commercial/industrial equipment. The Department's objectives in 
establishing these procedures include:
    (a) Provide for early input from stakeholders. The Department 
seeks to provide opportunities for public input early in the 
rulemaking process so that the initiation and direction of 
rulemakings is informed by comment from interested parties. Under 
the procedures established by this appendix, DOE will seek early 
input from interested parties in determining whether establishing 
new or amending existing energy conservation standards will result 
in significant savings of energy and is economically justified and 
technologically feasible. In the context of test procedure 
rulemakings, DOE will seek early input from interested parties in 
determining whether--
    (1) Establishing a new or amending an existing test procedure 
will better measure the energy efficiency, energy use, water use (as 
specified in EPCA), or estimated annual operating cost of a covered 
product/equipment during a representative average use cycle or 
period of use (for consumer products); and
    (2) Will not be unduly burdensome to conduct.
    (b) Increase predictability of the rulemaking timetable. The 
Department seeks to make informed, strategic decisions about how to 
deploy its resources on the range of possible standards and test 
procedure development activities, and to announce these 
prioritization decisions so that all interested parties have a 
common expectation about the timing of different rulemaking 
activities. Further, DOE will offer the opportunity to provide input 
on the prioritization of rulemakings through a request for comment 
as DOE begins preparation of its Regulatory Agenda each spring.
    (c) Eliminate problematic design options early in the process. 
The Department seeks to eliminate from consideration, early in the 
process, any design options that present unacceptable problems with 
respect to manufacturability, consumer utility, or safety, so that 
the detailed analysis can focus only on viable design options. Under 
the procedures in this appendix, DOE will eliminate from 
consideration design options if it concludes that manufacture, 
installation or service of the design will be impractical, or that 
the design option will have a material adverse impact on the utility 
of the product, or if the design option will have a material adverse 
impact on safety or health. DOE will also eliminate from 
consideration proprietary

[[Page 8704]]

design options that represent a unique pathway to achieving a given 
efficiency level. This screening will be done at the outset of a 
rulemaking.
    (d) Fully consider non-regulatory approaches. The Department 
seeks to understand the effects of market forces and voluntary 
programs on encouraging the purchase of energy efficient products so 
that the incremental impacts of a new or revised standard can be 
accurately assessed and the Department can make informed decisions 
about where standards and voluntary programs can be used most 
effectively. DOE will continue to support voluntary efforts by 
manufacturers, retailers, utilities, and others to increase product/
equipment efficiency.
    (e) Conduct thorough analysis of impacts. In addition to 
understanding the aggregate social and private costs and benefits of 
standards, the Department seeks to understand the distribution of 
those costs and benefits among consumers, manufacturers, and others, 
as well as the uncertainty associated with these analyses of costs 
and benefits, so that any adverse impacts on subgroups and 
uncertainty concerning any adverse impacts can be fully considered 
in selecting a standard. Pursuant to this appendix, the analyses 
will consider the variability of impacts on significant groups of 
manufacturers and consumers in addition to aggregate social and 
private costs and benefits, report the range of uncertainty 
associated with these impacts, and take into account cumulative 
impacts of regulation on manufacturers. The Department will also 
conduct appropriate analyses to assess the impact that new or 
amended test procedures will have on manufacturers and consumers.
    (f) Use transparent and robust analytical methods. The 
Department seeks to use qualitative and quantitative analytical 
methods that are fully documented for the public and that produce 
results that can be explained and reproduced, so that the analytical 
underpinnings for policy decisions on standards are as sound and 
well-accepted as possible.
    (g) Support efforts to build consensus on standards. The 
Department seeks to encourage development of consensus proposals for 
new or revised standards because standards with such broad-based 
support are likely to balance effectively the various interests 
affected by such standards.

2. Scope

    The procedures, interpretations, and policies described in this 
appendix apply to rulemakings concerning new or revised Federal 
energy conservation standards and test procedures, and related rule 
documents (i.e., coverage determinations) for consumer products in 
Part A and commercial and industrial equipment under Part A-1 of the 
Energy Policy and Conservation Act (EPCA), as amended, except 
covered ASHRAE equipment in Part A-1 are governed separately under 
section 9 in this appendix.

3. Mandatory Application of the Process Rule

    The rulemaking procedures established in this appendix are 
binding on DOE.

4. Setting Priorities for Rulemaking Activity

    (a) In establishing its priorities for undertaking energy 
conservation standards and test procedure rulemakings, DOE will 
consider the following factors, consistent with applicable legal 
obligations:
    (1) Potential energy savings;
    (2) Potential social and private, including environmental or 
energy security, benefits;
    (3) Applicable deadlines for rulemakings;
    (4) Incremental DOE resources required to complete the 
rulemaking process;
    (5) Other relevant regulatory actions affecting the products/
equipment;
    (6) Stakeholder recommendations;
    (7) Evidence of energy efficiency gains in the market absent new 
or revised standards;
    (8) Status of required changes to test procedures; and
    (9) Other relevant factors.
    (b) DOE will offer the opportunity to provide input on 
prioritization of rulemakings through a request for comment as DOE 
begins preparation of its Regulatory Agenda each spring.

5. Coverage Determination Rulemakings

    (a) DOE has discretion to conduct proceedings to determine 
whether additional consumer products and commercial/industrial 
equipment should be covered under EPCA if certain statutory criteria 
are met. (42 U.S.C. 6292 and 42 U.S.C. 6295(l) for consumer 
products; 42 U.S.C. 6312 for commercial/industrial equipment)
    (b) If DOE determines to initiate the coverage determination 
process, it will first publish a notice of proposed determination, 
providing an opportunity for public comment of not less than 60 
days, in which DOE will explain how such products/equipment that it 
seeks to designate as ``covered'' meet the statutory criteria for 
coverage and why such coverage is ``necessary or appropriate'' to 
carry out the purposes of EPCA. In the case of commercial equipment, 
DOE will follow the same process, except that the Department must 
demonstrate that coverage of the equipment type is ``necessary'' to 
carry out the purposes of EPCA.
    (c) DOE will publish its final decision on coverage as a 
separate notice, an action that will be completed prior to the 
initiation of any test procedure or energy conservation standards 
rulemaking (i.e., DOE will not issue any Requests for Information 
(RFIs), Notices of Data Availability (NODAs), or any other mechanism 
to gather information for the purpose of initiating a rulemaking to 
establish a test procedure or energy conservation standard for the 
proposed covered product/equipment prior to finalization of the 
coverage determination). If DOE determines that coverage is 
warranted, DOE will proceed with its typical rulemaking process for 
both test procedures and standards. Specifically, DOE will finalize 
coverage for a product/equipment at least 180 days prior to 
publication of a proposed rule to establish a test procedure. And, 
DOE will complete the test procedure rulemaking at least 180 days 
prior to publication of a proposed energy conservation standard.
    (d) If, during the substantive rulemaking proceedings to 
establish test procedures or energy conservation standards after 
completing a coverage determination, DOE finds it necessary and 
appropriate to expand or reduce the scope of coverage, a new 
coverage determination process will be initiated and finalized prior 
to moving forward with the test procedure or standards rulemaking.

6. Process for Developing Energy Conservation Standards

    This section describes the process to be used in developing 
energy conservation standards for covered products and equipment 
other than those covered equipment subject to ASHRAE/IES Standard 
90.1.
    (a) Early Assessment. (1) As the first step in any proceeding to 
consider establishing or amending any energy conservation standard, 
DOE will publish a document in the Federal Register announcing that 
DOE is considering initiating a rulemaking proceeding. As part of 
that document, DOE will solicit submission of related comments, 
including data and information on whether DOE should proceed with 
the rulemaking, including whether any new or amended rule would be 
cost effective, economically justified, technologically feasible, or 
would result in a significant savings of energy. Based on the 
information received in response to the notice and its own analysis, 
DOE will determine whether to proceed with a rulemaking for a new or 
amended energy conservation standard or an amended test procedure. 
If DOE determines that a new or amended standard would not satisfy 
applicable statutory criteria, DOE would engage in notice and 
comment rulemaking to issue a determination that a new or amended 
standard is not warranted. If DOE receives sufficient information 
suggesting it could justify a new or amended standard or the 
information received is inconclusive with regard to the statutory 
criteria, DOE would undertake the preliminary stages of a rulemaking 
to issue or amend an energy conservation standard, as discussed 
further in paragraph (a)(2) of this section.
    (2) If the Department determines it is appropriate to proceed 
with a rulemaking, the preliminary stages of a rulemaking to issue 
or amend an energy conservation standard that DOE will undertake 
will be a Framework Document and Preliminary Analysis, or an Advance 
Notice of Proposed Rulemaking (ANOPR). Requests for Information 
(RFI) and Notices of Data Availability (NODA) could be issued, as 
appropriate, in addition to these preliminary-stage documents.
    (3) In those instances where the early assessment either 
suggested that a new or amended energy conservation standard might 
be justified or in which the information was inconclusive on this 
point, and DOE undertakes the preliminary stages of a rulemaking to 
establish or amend an energy conservation standard, DOE may still 
ultimately determine that such a standard is not economically 
justified, technologically feasible or would not result in a 
significant savings of energy. Therefore, DOE will examine the 
potential costs and benefits and energy savings potential of a new 
or amended energy conservation standard at the

[[Page 8705]]

preliminary stage of the rulemaking. DOE notes that it will, 
consistent with its statutory obligations, consider both cost 
effectiveness and economic justification when issuing a 
determination not to amend a standard.
    (b) Significant Savings of Energy. (1) In evaluating the 
prospects of proposing a new or amended standard--or in determining 
that no new or amended standard is needed--DOE will first look to 
the projected energy savings that are likely to result. DOE will 
determine as a preliminary matter whether the rulemaking has the 
potential to result in ``significant energy savings.'' If the 
rulemaking passes the significant energy savings threshold, DOE will 
then compare these projected savings against the technological 
feasibility of and likely costs necessary to meet the new or amended 
standards needed to achieve these energy savings.
    (2) Under its significant energy savings analysis, DOE will 
examine both the total amount of projected energy savings and the 
relative percentage decrease in energy usage that could be obtained 
from establishing or amending energy conservation standards for a 
given covered product or equipment. This examination will be based 
on the applicable product or equipment type as appropriate and will 
not be used to selectively examine classes or sub-classes of 
products and equipment solely for the purposes of projecting whether 
potential energy savings would satisfy (or not satisfy) the 
applicable thresholds detailed in this rule. Under the first step of 
this approach, the projected energy savings from a potential maximum 
technologically feasible (``max-tech'') standard will be evaluated 
against a threshold of 0.3 quads of site energy saved over a 30-year 
period.
    (3) If the projected max-tech energy savings does not meet or 
exceed this threshold, those max-tech savings would then be compared 
to the total energy usage of the covered product or equipment to 
calculate a potential percentage reduction in energy usage.
    (4) If this comparison does not yield a reduction in site energy 
use of at least 10 percent over a 30-year period, the analysis will 
end, and DOE will propose to determine that no significant energy 
savings would likely result from setting new or amended standards.
    (5) If either one of the thresholds described in paragraphs 
(b)(3) or (b)(4) of this section is reached, DOE will conduct 
analyses to ascertain whether a standard can be prescribed that 
produces the maximum improvement in energy efficiency that is both 
technologically feasible and economically justified and still 
constitutes significant energy savings (using the same criteria of 
either 0.3 quad of aggregate site energy savings or a 10-percent 
decrease in energy use, as measured in quads--both over a 30-year 
period) at the level determined to be economically justified.
    (6) In the case of ASHRAE equipment, DOE will examine the 
potential energy savings involved across the equipment category at 
issue.
    (c) Design options--(1) General. Once the Department has 
initiated a rulemaking for a specific product/equipment but before 
publishing a proposed rule to establish or amend standards, DOE will 
identify the product/equipment categories and design options to be 
analyzed in detail, as well as those design options to be eliminated 
from further consideration. During the pre-proposal stages of the 
rulemaking, interested parties may be consulted to provide 
information on key issues through a variety of rulemaking documents. 
The preliminary stages of a rulemaking to issue or amend an energy 
conservation standard that DOE will undertake will be a framework 
document and preliminary analysis, or an advance notice of proposed 
rulemaking (ANOPR). Requests for Information (RFI) and Notice of 
Data Availability (NODA) could also be issued, as appropriate.
    (2) Identification and screening of design options. During the 
pre-NOPR phase of the rulemaking process, the Department will 
develop a list of design options for consideration. Initially, the 
candidate design options will encompass all those technologies 
considered to be technologically feasible. Following the development 
of this initial list of design options, DOE will review each design 
option based on the factors described in paragraph (c)(3) of this 
section and the policies stated in section 7 of this Appendix (i.e. 
Policies on Selection of Standards). The reasons for eliminating or 
retaining any design option at this stage of the process will be 
fully documented and published as part of the NOPR and as 
appropriate for a given rule, in the pre-NOPR documents. The 
technologically feasible design options that are not eliminated in 
this screening will be considered further in the Engineering 
Analysis described in paragraph (d) of this section.
    (3) Factors for screening of design options. The factors for 
screening design options include:
    (i) Technological feasibility. Technologies incorporated in 
commercial products or in working prototypes will be considered 
technologically feasible.
    (ii) Practicability to manufacture, install and service. If mass 
production of a technology under consideration for use in 
commercially-available products (or equipment) and reliable 
installation and servicing of the technology could be achieved on 
the scale necessary to serve the relevant market at the time of the 
effective date of the standard, then that technology will be 
considered practicable to manufacture, install and service.
    (iii) Adverse Impacts on Product Utility or Product 
Availability.
    (iv) Adverse Impacts on Health or Safety.
    (v) Unique-Pathway Proprietary Technologies. If a design option 
utilizes proprietary technology that represents a unique pathway to 
achieving a given efficiency level, that technology will not be 
considered further.
    (d) Engineering analysis of design options and selection of 
candidate standard levels. After design options are identified and 
screened, DOE will perform the engineering analysis and the benefit/
cost analysis and select the candidate standard levels based on 
these analyses. The results of the analyses will be published in a 
Technical Support Document (TSD) to accompany the appropriate 
rulemaking documents.
    (1) Identification of engineering analytical methods and tools. 
DOE will select the specific engineering analysis tools (or multiple 
tools, if necessary to address uncertainty) to be used in the 
analysis of the design options identified as a result of the 
screening analysis.
    (2) Engineering and life-cycle cost analysis of design options. 
DOE and its contractor will perform engineering and life-cycle cost 
analyses of the design options.
    (3) Review by stakeholders. Interested parties will have the 
opportunity to review the results of the engineering and life-cycle 
cost analyses. If appropriate, a public workshop will be conducted 
to review these results. The analyses will be revised as appropriate 
on the basis of this input.
    (4) New information relating to the factors used for screening 
design options. If further information or analysis leads to a 
determination that a design option, or a combination of design 
options, has unacceptable impacts, that design option or combination 
of design options will not be included in a candidate standard 
level.
    (5) Selection of candidate standard levels. Based on the results 
of the engineering and life-cycle cost analysis of design options 
and the policies stated in paragraph (c) of this section, DOE will 
select the candidate standard levels for further analysis.
    (e) Pre-NOPR Stage--(1) Documentation of decisions on candidate 
standard selection.
    (i) If the early assessment and screening analysis indicates 
that continued development of a standard is appropriate, the 
Department will publish either:
    (A) A notice accompanying a framework document and, 
subsequently, a preliminary analysis or;
    (B) An ANOPR. The notice document will be published in the 
Federal Register, with accompanying documents referenced and posted 
in the appropriate docket.
    (ii) If DOE determines at any point in the pre-NOPR stage that 
no candidate standard level is likely to produce the maximum 
improvement in energy efficiency that is both technologically 
feasible and economically justified or constitute significant energy 
savings, that conclusion will be announced in the Federal Register 
with an opportunity for public comment provided to stakeholders. In 
such cases, the Department will proceed with a rulemaking that 
proposes not to adopt new or amended standards.
    (2) Public comment and hearing. The length of the public comment 
period for pre-NOPR rulemaking documents will vary depending upon 
the circumstances of the particular rulemaking, but will not be less 
than 75 calendar days. For such documents, DOE will determine 
whether a public hearing is appropriate.
    (3) Revisions based on comments. Based on consideration of the 
comments received, any necessary changes to the engineering analysis 
or the candidate standard levels will be made.
    (f) Analysis of impacts and selection of proposed standard 
level. After the pre-NOPR stage, if DOE has determined preliminarily 
that a candidate standard level is likely to

[[Page 8706]]

produce the maximum improvement in energy efficiency that is both 
technologically feasible and economically justified or constitute 
significant energy savings, economic analyses of the impacts of the 
candidate standard levels will be conducted. The Department will 
propose new or amended standards based on the results of the impact 
analysis.
    (1) Identification of issues for analysis. The Department, in 
consideration of comments received, will identify issues that will 
be examined in the impacts analysis.
    (2) Identification of analytical methods and tools. DOE will 
select the specific economic analysis tools (or multiple tools if 
necessary to address uncertainty) to be used in the analysis of the 
candidate standard levels.
    (3) Analysis of impacts. DOE will conduct the analysis of the 
impacts of candidate standard levels.
    (4) Factors to be considered in selecting a proposed standard. 
The factors to be considered in selection of a proposed standard 
include:
    (i) Impacts on manufacturers. The analysis of private 
manufacturer impacts will include: Estimated impacts on cash flow; 
assessment of impacts on manufacturers of specific categories of 
products/equipment and small manufacturers; assessment of impacts on 
manufacturers of multiple product-specific Federal regulatory 
requirements, including efficiency standards for other products and 
regulations of other agencies; and impacts on manufacturing 
capacity, plant closures, and loss of capital investment.
    (ii) Private Impacts on consumers. The analysis of consumer 
impacts will include: Estimated private energy savings impacts on 
consumers based on national average energy prices and energy usage; 
assessments of impacts on subgroups of consumers based on major 
regional differences in usage or energy prices and significant 
variations in installation costs or performance; sensitivity 
analyses using high and low discount rates reflecting both private 
transactions and social discount rates and high and low energy price 
forecasts; consideration of changes to product utility, changes to 
purchase rate of products, and other impacts of likely concern to 
all or some consumers, based to the extent practicable on direct 
input from consumers; estimated life-cycle cost with sensitivity 
analysis; consideration of the increased first cost to consumers and 
the time required for energy cost savings to pay back these first 
costs; and loss of utility.
    (iii) Impacts on competition, including industry concentration 
analysis.
    (iv) Impacts on utilities. The analysis of utility impacts will 
include estimated marginal impacts on electric and gas utility costs 
and revenues.
    (v) National energy, economic, and employment impacts. The 
analysis of national energy, economic, and employment impacts will 
include: Estimated energy savings by fuel type; estimated net 
present value of benefits to all consumers; and estimates of the 
direct and indirect impacts on employment by appliance 
manufacturers, relevant service industries, energy suppliers, 
suppliers of complementary and substitution products, and the 
economy in general.
    (vi) Impacts on the environment. The analysis of environmental 
impacts will include estimated impacts on emissions of carbon and 
relevant criteria pollutants, and impacts on pollution control 
costs.
    (vii) Impacts of non-regulatory approaches. The analysis of 
energy savings and consumer impacts will incorporate an assessment 
of the impacts of market forces and existing voluntary programs in 
promoting product/equipment efficiency, usage, and related 
characteristics in the absence of updated efficiency standards.
    (viii) New information relating to the factors used for 
screening design options.
    (g) Notice of Proposed Rulemaking--(1) Documentation of 
decisions on proposed standard selection. The Department will 
publish a NOPR in the Federal Register that proposes standard levels 
and explains the basis for the selection of those proposed levels, 
and will post on its website a draft TSD documenting the analysis of 
impacts. The draft TSD will also be posted in the appropriate docket 
on https://www.regulations.gov. As required by 42 U.S.C. 6295(p)(1) 
of EPCA, the NOPR also will describe the maximum improvement in 
energy efficiency or maximum reduction in energy use that is 
technologically feasible and, if the proposed standards would not 
achieve these levels, the reasons for proposing different standards.
    (2) Public comment and hearing. There will be not less than 75 
days for public comment on the NOPR, with at least one public 
hearing or workshop. (42 U.S.C. 6295(p)(2) and 42 U.S.C. 6306).
    (3) Revisions to impact analyses and selection of final 
standard. Based on the public comments received, DOE will review the 
proposed standard and impact analyses, and make modifications as 
necessary. If major changes to the analyses are required at this 
stage, DOE will publish a Supplemental Notice of Proposed Rulemaking 
(SNOPR), when required. DOE may also publish a NODA or RFI, where 
appropriate.
    (h) Final Rule. The Department will publish a Final Rule in the 
Federal Register that promulgates standard levels, responds to 
public comments received on the NOPR, and explains how the selection 
of those standards meets the statutory requirement that any new or 
amended energy conservation standard produces the maximum 
improvement in energy efficiency that is both technologically 
feasible and economically justified and constitutes significant 
energy savings, accompanied by a final TSD.

7. Policies on Selection of Standards

    (a) Purpose. (1) Section 5 describes the process that will be 
used to consider new or revised energy efficiency standards and 
lists a number of factors and analyses that will be considered at 
specified points in the process. Department policies concerning the 
selection of new or revised standards, and decisions preliminary 
thereto, are described in this section. These policies are intended 
to elaborate on the statutory criteria provided in 42 U.S.C. 6295 of 
EPCA.
    (2) The procedures described in this section are intended to 
assist the Department in making the determinations required by EPCA 
and do not preclude DOE's consideration of any other information 
consistent with the relevant statutory criteria. The Department will 
consider pertinent information in determining whether a new or 
revised standard is consistent with the statutory criteria.
    (b) Screening design options. These factors will be considered 
as follows in determining whether a design option will receive any 
further consideration:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in commercially-viable, 
existing prototypes will not be considered further.
    (2) Practicability to manufacture, install and service. If it is 
determined that mass production of a technology in commercial 
products and reliable installation and servicing of the technology 
could not be achieved on the scale necessary to serve the relevant 
market at the time of the compliance date of the standard, then that 
technology will not be considered further.
    (3) Impacts on product utility. If a technology is determined to 
have significant adverse impact on the utility of the product/
equipment to subgroups of consumers, or result in the unavailability 
of any covered product type with performance characteristics 
(including reliability), features, sizes, capacities, and volumes 
that are substantially the same as products generally available in 
the U.S. at the time, it will not be considered further.
    (4) Safety of technologies. If it is determined that a 
technology will have significant adverse impacts on health or 
safety, it will not be considered further.
    (5) Unique-pathway proprietary technologies. If a technology has 
proprietary protection and represents a unique pathway to achieving 
a given efficiency level, it will not be considered further, due to 
the potential for monopolistic concerns.
    (c) Identification of candidate standard levels. Based on the 
results of the engineering and cost/benefit analyses of design 
options, DOE will identify the candidate standard levels for further 
analysis. Candidate standard levels will be selected as follows:
    (1) Costs and savings of design options. Design options that 
have payback periods that exceed the median life of the product or 
which result in life-cycle cost increases relative to the base case, 
using typical fuel costs, usage, and private discount rates, will 
not be used as the basis for candidate standard levels.
    (2) Further information on factors used for screening design 
options. If further information or analysis leads to a determination 
that a design option, or a combination of design options, has 
unacceptable impacts under the policies stated in this Appendix, 
that design option or combination of design options will not be 
included in a candidate standard level.
    (3) Selection of candidate standard levels. Candidate standard 
levels, which will be identified in the pre-NOPR documents and on 
which impact analyses will be conducted, will be based on the 
remaining design options.
    (i) The range of candidate standard levels will typically 
include:

[[Page 8707]]

    (A) The most energy-efficient combination of design options;
    (B) The combination of design options with the lowest life-cycle 
cost; and
    (C) A combination of design options with a payback period of not 
more than three years.
    (ii) Candidate standard levels that incorporate noteworthy 
technologies or fill in large gaps between efficiency levels of 
other candidate standard levels also may be selected.
    (d) Pre-NOPR Stage. New information provided in public comments 
on any pre-NOPR documents will be considered to determine whether 
any changes to the candidate standard levels are needed before 
proceeding to the analysis of impacts.
    (e) Selection of proposed standard. Based on the results of the 
analysis of impacts, DOE will select a standard level to be proposed 
for public comment in the NOPR. As required under 42 U.S.C. 
6295(o)(2)(A), any new or revised standard must be designed to 
achieve the maximum improvement in energy efficiency that is 
determined to be technologically feasible and economically 
justified.
    (1) Statutory policies. The fundamental policies concerning the 
selection of standards include:
    (i) A candidate/trial standard level will not be proposed or 
promulgated if the Department determines that it is not 
technologically feasible and economically justified. (42 U.S.C. 
6295(o)(2)(A) and 42 U.S.C. (o)(3)(B)) For a standard level to be 
economically justified, the Secretary must determine that the 
benefits of the standard exceed its burdens. (42 U.S.C. 
6295(o)(2)(B)(i)) A standard level is subject to a rebuttable 
presumption that it is economically justified if the payback period 
is three years or less. (42 U.S.C. 6295(o)(2)(B)(iii))
    (ii) If the Department determines that a standard level is 
likely to result in the unavailability of any covered product/
equipment type with performance characteristics (including 
reliability), features, sizes, capacities, and volumes that are 
substantially the same as products generally available in the U.S. 
at the time, that standard level will not be proposed. (42 U.S.C. 
6295(o)(4))
    (iii) If the Department determines that a standard level would 
not result in significant conservation of energy, that standard 
level will not be proposed. (42 U.S.C. 6295(o)(3)(B))
    (2) Considerations in assessing economic justification.
    (i) The following considerations will guide the application of 
the economic justification criterion in selecting a proposed 
standard:
    (A) If the Department determines that a candidate/trial standard 
level would result in a negative return on investment for the 
industry, would significantly reduce the value of the industry, or 
would cause significant adverse impacts to a significant subgroup of 
manufacturers (including small manufacturing businesses), that 
standard level will be presumed not to be economically justified 
unless the Department determines that specifically identified 
expected benefits of the standard would outweigh this and any other 
expected adverse effects.
    (B) If the Department determines that a candidate/trial standard 
level would be the direct cause of plant closures, significant 
losses in domestic manufacturer employment, or significant losses of 
capital investment by domestic manufacturers, that standard level 
will be presumed not to be economically justified unless the 
Department determines that specifically identified expected benefits 
of the standard would outweigh this and any other expected adverse 
effects.
    (C) If the Department determines that a candidate/trial standard 
level would have a significant adverse impact on the environment or 
energy security, that standard level will be presumed not to be 
economically justified unless the Department determines that 
specifically identified expected benefits of the standard would 
outweigh this and any other expected adverse effects.
    (D) If the Department determines that a candidate/trial standard 
level would not result in significant energy conservation, that 
standard level will be presumed not to be economically justified.
    (E) If the Department determines that a candidate/trial standard 
level is not practicable to manufacture or has a negative impact on 
consumer utility or safety, that standard level will be presumed not 
to be economically justified unless the Department determines that 
specifically identified expected benefits of the standard would 
outweigh this and any other expected adverse effects.
    (F) If the Department determines that a candidate/trial standard 
level is not consistent with the policies relating to consumer costs 
in paragraph (c)(1) of this section, that standard level will be 
presumed not to be economically justified unless the Department 
determines that specifically identified expected benefits of the 
standard would outweigh this and any other expected adverse effects.
    (G) If the Department determines that a candidate/trial standard 
level will have significant adverse impacts on a significant 
subgroup of consumers (including low-income consumers), that 
standard level will be presumed not to be economically justified 
unless the Department determines that specifically identified 
expected benefits of the standard would outweigh this and any other 
expected adverse effects.
    (H) If the Department of Energy and the Department of Justice 
determine that a candidate/trial standard level would have 
significant anticompetitive effects, that standard level will be 
presumed not to be economically justified unless the Department of 
Energy determines that specifically identified expected benefits of 
the standard would outweigh this and any other expected adverse 
effects.
    (ii) DOE will, consistent with paragraph (f) of this section, 
account for the views expressed by the Department of Justice 
regarding a given proposal's effects on competition.
    (iii) The basis for a determination that triggers any 
presumption in paragraph (e)(2)(i) of this section and the basis for 
a determination that an applicable presumption has been rebutted 
will be supported by substantial evidence in the record and the 
evidence and rationale for making these determinations will be 
explained in the NOPR.
    (iv) If none of the policies in paragraph (e)(2)(i) of this 
section is found to be dispositive, the Department will determine 
whether the benefits of a candidate standard level exceed the 
burdens considering all the pertinent information in the record.
    (f) Selection of a final standard. New information provided in 
the public comments on the NOPR and any analysis by the Department 
of Justice concerning impacts on competition of the proposed 
standard will be considered to determine whether issuance of a new 
or amended energy conservation standard produces the maximum 
improvement in energy efficiency that is both technologically 
feasible and economically justified and still constitutes 
significant energy savings or whether any change to the proposed 
standard level is needed before proceeding to the final rule. The 
same policies used to select the proposed standard level, as 
described in this section, will be used to guide the selection of 
the final standard level or a determination that no new or amended 
standard is justified.

8. Test Procedures

    (a) General. As with the early assessment process for energy 
conservation standards, DOE believes that early stakeholder input is 
also very important during test procedure rulemakings. DOE will 
follow an early assessment process similar to that described in the 
preceding sections discussing DOE's consideration of amended energy 
conservation standards. Consequently, DOE will publish a notice in 
the Federal Register whenever DOE is considering initiation of a 
rulemaking to amend a test procedure. In that notice, DOE will 
request submission of comments, including data and information on 
whether an amended test procedure rule would:
    (1) More accurately measure energy efficiency, energy use, water 
use (as specified in EPCA), or estimated annual operating cost of a 
covered product during a representative average use cycle or period 
of use without being unduly burdensome to conduct; or
    (2) Reduce testing burden. DOE will review comments submitted 
and, subject to statutory obligations, determine whether it agrees 
with the submitted information. If DOE determines that an amended 
test procedure is not justified at that time, it will not pursue the 
rulemaking and will publish a notice in the Federal Register to that 
effect. If DOE receives sufficient information suggesting an amended 
test procedure could more accurately measure energy efficiency, 
energy use, water use (as specified in EPCA), or estimated annual 
operating cost of a covered product during a representative average 
use cycle or period of use and not be unduly burdensome to conduct, 
reduce testing burden, or the information received is inconclusive 
with regard to these points, DOE would undertake the preliminary 
stages of a rulemaking to amend the test procedure,

[[Page 8708]]

as discussed further in the paragraphs that follow in this section.
    (b) Identifying the need to modify test procedures. DOE will 
identify any necessary modifications to established test procedures 
prior to initiating the standards development process. It will 
consider all stakeholder comments with respect to needed test 
procedure modifications. If DOE determines that it is appropriate to 
continue the test procedure rulemaking after the early assessment 
process, it would provide further opportunities for early public 
input through Federal Register documents, including NODAs and/or 
RFIs.
    (c) Adoption of Industry Test Methods. DOE will adopt industry 
test standards as DOE test procedures for covered products and 
equipment, unless such methodology would be unduly burdensome to 
conduct or would not produce test results that reflect the energy 
efficiency, energy use, water use (as specified in EPCA) or 
estimated operating costs of that equipment during a representative 
average use cycle.
    (d) Issuing final test procedure modification. Test procedure 
rulemakings establishing methodologies used to evaluate proposed 
energy conservation standards will be finalized at least 180 days 
prior to publication of a NOPR proposing new or amended energy 
conservation standards.
    (e) Effective Date of Test Procedures. If required only for the 
evaluation and issuance of updated efficiency standards, use of the 
modified test procedures typically will not be required until the 
implementation date of updated standards.

9. ASHRAE Equipment

    (a) EPCA provides that ASHRAE equipment are subject to unique 
statutory requirements and their own set of timelines. More 
specifically, pursuant to EPCA's statutory scheme for covered ASHRAE 
equipment, DOE is required to consider amending the existing Federal 
energy conservation standards and test procedures for certain 
enumerated types of commercial and industrial equipment (generally, 
commercial water heaters, commercial packaged boilers, commercial 
air-conditioning and heating equipment, and packaged terminal air 
conditioners and heat pumps) when ASHRAE Standard 90.1 is amended 
with respect to standards and test procedures applicable to such 
equipment. Not later than 180 days after the amendment of the 
standard, the Secretary will publish in the Federal Register for 
public comment an analysis of the energy savings potential of 
amended energy efficiency standards. For each type of equipment, 
EPCA directs that if ASHRAE Standard 90.1 is amended, not later than 
18 months after the date of publication of the amendment to ASHRAE 
Standard 90.1, DOE must adopt amended energy conservation standards 
at the new efficiency level in ASHRAE Standard 90.1 as the uniform 
national standard for such equipment, or amend the test procedure 
referenced in ASHRAE Standard 90.1 for the equipment at issue to be 
consistent with the applicable industry test procedure, 
respectively, unless--
    (1) DOE determines by rule, and supported by clear and 
convincing evidence, that a more-stringent standard would result in 
significant additional conservation of energy and is technologically 
feasible and economically justified; or
    (2) The test procedure would not meet the requirements for such 
test procedures specified in EPCA. In such case, DOE must adopt the 
more stringent standard not later than 30 months after the date of 
publication of the amendment to ASHRAE/IES Standard 90.1 for the 
affected equipment.
    (b) For ASHRAE equipment, DOE will adopt the revised ASHRAE 
levels or the industry test procedure, as contemplated by EPCA, 
except in very limited circumstances.
    With respect to DOE's consideration of standards more-stringent 
than the ASHRAE levels or changes to the industry test procedure, 
DOE will do so only if it can meet a very high bar to demonstrate 
the ``clear and convincing evidence'' threshold. Clear and 
convincing evidence would exist only where the specific facts and 
data made available to DOE regarding a particular ASHRAE amendment 
demonstrates that there is no substantial doubt that a standard more 
stringent than that contained in the ASHRAE Standard 90.1 amendment 
is permitted because it would result in a significant additional 
amount of energy savings, is technologically feasible and 
economically justified, or, in the case of test procedures, that the 
industry test procedure does not meet the EPCA requirements. DOE 
will make this determination only after seeking data and information 
from interested parties and the public to help inform the Agency's 
views. DOE will seek from interested stakeholders and the public 
data and information to assist in making this determination, prior 
to publishing a proposed rule to adopt more-stringent standards or a 
different test procedure.
    (c) DOE's review in adopting amendments based on an action by 
ASHRAE to amend Standard 90.1 is strictly limited to the specific 
standards or test procedure amendment for the specific equipment for 
which ASHRAE has made a change (i.e., determined down to the 
equipment class level). DOE believes that ASHRAE not acting to amend 
Standard 90.1 is tantamount to a decision that the existing standard 
remain in place. Thus, when undertaking a review as required by 42 
U.S.C. 6313(a)(6)(C), DOE would need to find clear and convincing 
evidence, as defined in this section, to issue a standard more 
stringent than the existing standard for the equipment at issue.

10. Direct Final Rules

    (a) A direct final rule (DFR), as contemplated in 42 U.S.C. 
6295(p)(4), is a procedural mechanism separate from the negotiated 
rulemaking process outlined under the Negotiated Rulemaking Act (5 
U.S.C. 563). DOE may issue a DFR adopting energy conservation 
standards for a covered product provided that:
    (1) DOE receives a joint proposal from a group of ``interested 
persons that are fairly representative of relevant points of view,'' 
which does not include DOE as a member of the group. At a minimum, 
to be ``fairly representative of relevant points of view'' the group 
submitting a joint statement must include larger concerns and small 
businesses in the regulated industry/manufacturer community, energy 
advocates, energy utilities, as appropriate, consumers, and States. 
However, it will be necessary to evaluate the meaning of ``fairly 
representative'' on a case-by-case basis, subject to the 
circumstances of a particular rulemaking, to determine whether 
additional parties must be part of a joint statement in order to be 
``fairly representative of relevant points of view.''
    (2) This paragraph (a)(2) describes the steps DOE will follow 
with respect to a DFR.
    (i) DOE must determine whether the energy conservation standard 
recommended in the joint proposal is in accordance with the 
requirements of 42 U.S.C. 6295(o) or section 342(a)(6)(B) as 
applicable. Because the DFR provision is procedural, and not a 
separate grant of rulemaking authority, any standard issued under 
the DFR process must comply fully with the provisions of the EPCA 
subsection under which the rule is authorized. DOE will not accept 
or issue as a DFR a submitted joint proposal that does not comply 
with all applicable EPCA requirements.
    (ii) Upon receipt of a joint statement recommending energy 
conservation standards, DOE will publish in the Federal Register 
that statement, as submitted to DOE, in order to obtain feedback as 
to whether the joint statement was submitted by a group that is 
fairly representative of relevant points of view. If DOE determines 
that the DFR was not submitted by a group that is fairly 
representative of relevant points of view, DOE will not move forward 
with a DFR and will consider whether any further rulemaking activity 
is appropriate. If the Secretary determines that a DFR cannot be 
issued based on the statement, the Secretary shall publish a notice 
of the determination, together with an explanation of the reasons 
for the determination.
    (iii) Simultaneous with the issuance of a DFR, DOE must also 
publish a NOPR containing the same energy conservation standards as 
in the DFR. Following publication of the DFR, DOE must solicit 
public comment for a period of at least 110 days; then, not later 
than 120 days after issuance of the DFR, the Secretary must 
determine whether any adverse comments ``may provide a reasonable 
basis for withdrawing the direct final rule,'' based on the 
rulemaking record. If DOE determines that one or more substantive 
comments objecting to the DFR provides a sufficient reason to 
withdraw the DFR, DOE will do so, and will instead proceed with the 
published NOPR (unless the information provided suggests that 
withdrawal of that NOPR would likewise be appropriate). In making 
this determination, DOE may consider comments as adverse, even if 
the issue was brought up previously during DOE-initiated discussions 
(e.g. publication of a framework or RFI document), if the Department 
concludes that the comments merit further consideration.

11. Negotiated Rulemaking Process

    (a)(1) In those instances where negotiated rulemaking is 
determined to be appropriate, DOE will comply with the requirements 
of

[[Page 8709]]

the Negotiated Rulemaking Act (NRA) (5 U.S.C. 561-570) and the 
requirements of the Federal Advisory Committee Act (FACA) (5 U.S.C. 
App. 2). To facilitate potential negotiated rulemakings, and to 
comply with the requirements of the NRA and the FACA, DOE 
established the Appliance Standards and Rulemaking Federal Advisory 
Committee (ASRAC). Working groups can be established as 
subcommittees of ASRAC, from time to time, and for specific 
products/equipment, with one member representative from the ASRAC 
committee attending and participating in the meetings of a specific 
working group. (Consistent with 5 U.S.C. 565(b), committee 
membership is limited to 25 members, unless the agency determines 
that more members are necessary for the functioning of the committee 
or to achieve balanced membership.) Ultimately, the working group 
reports to ASRAC, and ASRAC itself votes on whether to make a 
recommendation to DOE to adopt a consensus agreement developed 
through the negotiated rulemaking.
    (2) DOE will use the negotiated rulemaking process on a case-by-
case basis and, in appropriate circumstances, in an attempt to 
develop a consensus proposal before issuing a proposed rule. When 
approached by one or more stakeholders or on its own initiative, DOE 
will use a convener to ascertain, in consultation with relevant 
stakeholders, whether the development of the subject matter of a 
potential rulemaking proceeding would be conducive to negotiated 
rulemaking, with the agency evaluating the convener's recommendation 
before reaching a decision on such matter. A neutral, independent 
convenor will identify issues that any negotiation would need to 
address, assess the full breadth of interested parties who should be 
included in any negotiated rulemaking to address those issues, and 
make a judgment as to whether there is the potential for a group of 
individuals negotiating in good faith to reach a consensus agreement 
given the issues presented. DOE will have a neutral and independent 
facilitator, who is not a DOE employee or consultant, present at all 
ASRAC working group meetings.
    (3) DOE will base its decision to proceed with a potential 
negotiated rulemaking on the report of the convenor. The following 
additional factors militate in favor of a negotiated rulemaking:
    (i) Stakeholders commented in favor of negotiated rulemaking in 
response to the initial rulemaking notice;
    (ii) The rulemaking analysis or underlying technologies in 
question are complex, and DOE can benefit from external expertise 
and/or real-time changes to the analysis based on stakeholder 
feedback, information, and data;
    (iii) The current standards have already been amended one or 
more times;
    (iv) Stakeholders from differing points of view are willing to 
participate; and
    (v) DOE determines that the parties may be able to reach an 
agreement.
    (4) DOE will provide notice in the Federal Register of its 
intent to form an ASRAC working group (including a request for 
nominations to serve on the committee), announcement of the 
selection of working group members (including their affiliation), 
and announcement of public meetings and the subject matter to be 
addressed.
    (b) DOE's role in the negotiated rulemaking process is to 
participate as a member of a group attempting to develop a consensus 
proposal for energy conservation standards for a particular product/
equipment and to provide technical/analytical advice to the 
negotiating parties and legal input where needed to support the 
development of a potential consensus recommendation in the form of a 
term sheet.
    (c) A negotiated rulemaking may be used to develop energy 
conservation standards, test procedures, product coverage, and other 
categories of rulemaking activities.
    (d) A dedicated portion of each ASRAC working group meeting will 
be set aside to receive input and data from non-members of the ASRAC 
working group. This additional opportunity for input does nothing to 
diminish stakeholders' ability to provide comments and ask relevant 
questions during the course of the working group's ongoing 
deliberations at the public meeting.
    (e) If DOE determines to proceed with a rulemaking at the 
conclusion of negotiations, DOE will publish a proposed rule. DOE 
will consider the approved term sheet in developing such proposed 
rule. A negotiated rulemaking in which DOE participates under the 
ASRAC process will not result in the issuance of a DFR. Further, any 
potential term sheet upon which an ASRAC working group reaches 
consensus must comply with all of the provisions of EPCA under which 
the rule is authorized. DOE cannot accept recommendations or issue a 
NOPR based upon a negotiated rulemaking that does not comply with 
all applicable EPCA requirements, including those product- or 
equipment-specific requirements included in the provision that 
authorizes issuance of the standard.

12. Principles for Distinguishing Between Effective and Compliance 
Dates

    (a) Dates, generally. The effective and compliance dates for 
either DOE test procedures or DOE energy conservation standards are 
typically not identical and these terms should not be used 
interchangeably.
    (b) Effective date. The effective date is the date a rule is 
legally operative after being published in the Federal Register.
    (c) Compliance date. (1) For test procedures, the compliance 
date is the specific date when manufacturers are required to use the 
new or amended test procedure requirements to make representations 
concerning the energy efficiency or use of a product, including 
certification that the covered product/equipment meets an applicable 
energy conservation standard.
    (2) For energy conservation standards, the compliance date is 
the specific date upon which manufacturers are required to meet the 
new or amended standards for applicable covered products/equipment 
that are distributed in interstate commerce.

13. Principles for the Conduct of the Engineering Analysis

    (a) The purpose of the engineering analysis is to develop the 
relationship between efficiency and cost of the subject product/
equipment. The Department will use the most appropriate means 
available to determine the efficiency/cost relationship, including 
an overall system approach or engineering modeling to predict the 
reduction in energy use or improvement in energy efficiency that can 
be expected from individual design options as discussed in 
paragraphs (b) and (c) of this section. From this efficiency/cost 
relationship, measures such as payback, life-cycle cost, and energy 
savings can be developed. The Department will identify issues that 
will be examined in the engineering analysis and the types of 
specialized expertise that may be required. DOE will select 
appropriate contractors, subcontractors, and expert consultants, as 
necessary, to perform the engineering analysis and the impact 
analysis. Also, the Department will consider data, information, and 
analyses received from interested parties for use in the analysis 
wherever feasible.
    (b) The engineering analysis begins with the list of design 
options developed in consultation with the interested parties as a 
result of the screening process. The Department will establish the 
likely cost and performance improvement of each design option. 
Ranges and uncertainties of cost and performance will be 
established, although efforts will be made to minimize uncertainties 
by using measures such as test data or component or material 
supplier information where available. Estimated uncertainties will 
be carried forward in subsequent analyses. The use of quantitative 
models will be supplemented by qualitative assessments as 
appropriate.
    (c) The next step includes identifying, modifying, or developing 
any engineering models necessary to predict the efficiency impact of 
any one or combination of design options on the product/equipment. A 
base case configuration or starting point will be established, as 
well as the order and combination/blending of the design options to 
be evaluated. DOE will then perform the engineering analysis and 
develop the cost-efficiency curve for the product/equipment. The 
cost efficiency curve and any necessary models will be available to 
stakeholders during the pre-NOPR stage of the rulemaking.

14. Principles for the Analysis of Impacts on Manufacturers

    (a) Purpose. The purpose of the manufacturer analysis is to 
identify the likely private impacts of efficiency standards on 
manufacturers. The Department will analyze the impact of standards 
on manufacturers with substantial input from manufacturers and other 
interested parties. This section describes the principles that will 
be used in conducting future manufacturing impact analyses.
    (b) Issue identification. In the impact analysis stage (section 
5(d)), the Department will identify issues that will require greater 
consideration in the detailed manufacturer impact analysis. Possible 
issues may include identification of specific types or groups of

[[Page 8710]]

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

15. Principles for the Analysis of Impacts on Consumers

    (a) Early consideration of impacts on consumer utility. The 
Department will consider at the earliest stages of the development 
of a standard whether particular design options will lessen the 
utility of the covered products/equipment to the consumer. See 
paragraph (c) of section 6.
    (b) Impacts on product/equipment availability. The Department 
will determine, based on consideration of information submitted 
during the standard development process, whether a proposed standard 
is likely to result in the unavailability of any covered product/
equipment type with performance characteristics (including 
reliability), features, sizes, capacities, and volumes that are 
substantially the same as products/equipment generally available in 
the U.S. at the time. DOE will not promulgate a standard if it 
concludes that it would result in such unavailability.
    (c) Department of Justice review. As required by law, the 
Department will solicit the views of the Department of Justice on 
any lessening of competition likely to result from the imposition of 
a proposed standard and will give the views provided full 
consideration in assessing economic justification of a proposed 
standard. In addition, DOE may consult with the Department of 
Justice at earlier stages in the standards development process to 
seek its preliminary views on competitive impacts.
    (d) Variation in consumer impacts. The Department will use 
regional analysis and sensitivity analysis tools, as appropriate, to 
evaluate the potential distribution of impacts of candidate/trial 
standard levels among different subgroups of consumers. The 
Department will consider impacts on significant segments of 
consumers in determining standards levels. Where there are 
significant negative impacts on identifiable subgroups, DOE will 
consider the efficacy of voluntary approaches as a means to achieve 
potential energy savings.
    (e) Payback period and first cost. (1) In the assessment of 
consumer impacts of standards, the Department will consider Life-
Cycle Cost, Payback Period, and Cost of Conserved Energy to evaluate 
the savings in operating expenses relative to increases in purchase 
price. The Department also

[[Page 8711]]

performs sensitivity and scenario analyses when appropriate. The 
results of these analyses will be carried throughout the analysis 
and the ensuing uncertainty described.
    (2) If, in the analysis of consumer impacts, the Department 
determines that a candidate/trial standard level would result in a 
substantial increase in product/equipment first costs to consumers 
or would not pay back such additional first costs through energy 
cost savings in less than three years, Department will assess the 
likely impacts of such a standard on low-income households, product/
equipment sales and fuel switching, as appropriate.

16. Consideration of Non-Regulatory Approaches

    The Department recognizes that non-regulatory efforts by 
manufacturers, utilities, and other interested parties can result in 
substantial efficiency improvements. The Department intends to 
consider the likely effects of non-regulatory initiatives on 
product/equipment energy use, consumer utility and life-cycle costs, 
manufacturers, competition, utilities, and the environment, as well 
as the distribution of these impacts among different regions, 
consumers, manufacturers, and utilities. DOE will attempt to base 
its assessment on the actual impacts of such initiatives to date, 
but also will consider information presented regarding the impacts 
that any existing initiative might have in the future. Such 
information is likely to include a demonstration of the strong 
commitment of manufacturers, distribution channels, utilities, or 
others to such non-regulatory efficiency improvements. This 
information will be used in assessing the likely incremental impacts 
of establishing or revising standards, in assessing--where 
possible--appropriate compliance dates for new or revised standards, 
and in considering DOE support of non-regulatory initiatives.

17. Cross-Cutting Analytical Assumptions

    In selecting values for certain cross-cutting analytical 
assumptions, DOE expects to continue relying upon the following 
sources and general principles:
    (a) Underlying economic assumptions. The appliance standards 
analyses will generally use the same economic growth and development 
assumptions that underlie the most current Annual Energy Outlook 
(AEO) published by the Energy Information Administration (EIA).
    (b) Analytic time length. The appliance standards analyses will 
use two time lengths--30 years and another time length that is 
specific to the standard being considered such as the useful 
lifetime of the product under consideration. As a sensitivity case, 
the analyses will also use a 9-year regulatory time line in 
analyzing the effects of the standard.
    (c) Energy price and demand trends. Analyses of the likely 
impact of appliance standards on typical users will generally adopt 
the mid-range energy price and demand scenario of the EIA's most 
current AEO. The sensitivity of such estimated impacts to possible 
variations in future energy prices are likely to be examined using 
the EIA's high and low energy price scenarios.
    (d) Product/equipment-specific energy-efficiency trends, without 
updated standards. Product/equipment-specific energy-efficiency 
trends will be based on a combination of the efficiency trends 
forecast by the EIA's residential and commercial demand model of the 
National Energy Modeling System (NEMS) and product-specific 
assessments by DOE and its contractors with input from interested 
parties.
    (e) Price forecasting. DOE will endeavor to use robust price 
forecasting techniques in projecting future prices of products.
    (f) Private Discount rates. For residential and commercial 
consumers, ranges of three different real discount rates will be 
used. For residential consumers, the mid-range discount rate will 
represent DOE's approximation of the average financing cost (or 
opportunity costs of reduced savings) experienced by typical 
consumers. Sensitivity analyses will be performed using discount 
rates reflecting the costs more likely to be experienced by 
residential consumers with little or no savings and credit card 
financing and consumers with substantial savings. For commercial 
users, a mid-range discount rate reflecting DOE's approximation of 
the average real rate of return on commercial investment will be 
used, with sensitivity analyses being performed using values 
indicative of the range of real rates of return likely to be 
experienced by typical commercial businesses. For national net 
present value calculations, DOE would use the Administration's 
approximation of the average real rate of return on private 
investment in the U.S. economy. For manufacturer impacts, DOE 
typically uses a range of real discount rates which are 
representative of the real rates of return experienced by typical 
U.S. manufacturers affected by the program.
    (g) Social Discount Rates. Social discount rates as specified in 
OMB Circular A-4 will be used in assessing social effects such as 
costs and benefits.
    (h) Environmental impacts. (1) DOE calculates emission 
reductions of carbon dioxide, sulfur dioxide, nitrogen oxides, 
methane, nitrous oxides, and mercury likely to be avoided by 
candidate/trial standard levels based on an emissions analysis that 
includes the two components described in paragraphs (h)(2) and (3) 
of this section.
    (2) The first component estimates the effect of potential 
candidate/trial standard levels on power sector and site combustion 
emissions of carbon dioxide, nitrogen oxides, sulfur dioxide, 
mercury, methane, and nitrous oxide. DOE develops the power sector 
emissions analysis using a methodology based on DOE's latest Annual 
Energy Outlook. For site combustion of natural gas or petroleum 
fuels, the combustion emissions of carbon dioxide and nitrogen 
oxides are estimated using emission intensity factors from the 
Environmental Protection Agency.
    (3) The second component of DOE's emissions analysis estimates 
the effect of potential candidate/trial standard levels on emissions 
of carbon dioxide, nitrogen oxides, sulfur dioxide, mercury, 
methane, and nitrous oxide due to ``upstream activities'' in the 
fuel production chain. These upstream activities include the 
emissions related to extracting, processing, and transporting fuels 
to the site of combustion as detailed in DOE's Fuel-Fuel-Cycle 
Statement of Policy (76 FR 51281 (August 18, 2011)). DOE will 
consider the effects of the candidate/trial standard levels on these 
emissions after assessing the seven factors required to demonstrate 
economic justification under EPCA. Consistent with Executive Order 
13783, dated March 28, 2017, when monetizing the value of changes in 
reductions in CO2 and nitrous oxides emissions resulting 
from its energy conservation standards regulations, including with 
respect to the consideration of domestic versus international 
impacts and the consideration of appropriate discount rates, DOE 
ensures, to the extent permitted by law, that any such estimates are 
consistent with the guidance contained in OMB Circular A-4 of 
September 17, 2003 (Regulatory Analysis).

PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 
INDUSTRIAL EQUIPMENT

0
3. The authority citation for part 431 continues to read as follows:

    Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.


0
4. Section 431.4 is added to subpart A to read as follows:


Sec.  431.4  Procedures, interpretations, and policies for 
consideration of new or revised energy conservation standards and test 
procedures for commercial/industrial equipment.

    The procedures, interpretations, and policies for consideration of 
new or revised energy conservation standards and test procedures set 
forth in appendix A to subpart C of part 430 of this chapter shall 
apply to the consideration of new or revised energy conservation 
standards and test procedures considered for adoption under this part.

[FR Doc. 2020-00023 Filed 2-13-20; 8:45 am]
 BILLING CODE 6450-01-P