Energy Conservation Program for Appliance Standards: Procedures for Evaluating Statutory Factors for Use in New or Revised Energy Conservation Standards, 50937-50944 [2020-15967]

Agencies

• DEPARTMENT OF ENERGY

[Federal Register Volume 85, Number 161 (Wednesday, August 19, 2020)]
[Rules and Regulations]
[Pages 50937-50944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15967]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 85, No. 161 / Wednesday, August 19, 2020 / 
Rules and Regulations

[[Page 50937]]



DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2017-BT-STD-0062]
RIN 1904-AE84


Energy Conservation Program for Appliance Standards: Procedures 
for Evaluating Statutory Factors for Use in New or Revised Energy 
Conservation Standards

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

ACTION: Final rule.

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SUMMARY: The Department of Energy is amending its decision-making 
process for selecting energy conservation standards by specifying that 
it will conduct a comparative analysis of the relative benefits and 
burdens of potential energy conservation standard levels in determining 
whether a specific energy conservation standard level is economically 
justified.

DATES: The effective date of this rule is October 19, 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
III. Discussion of Revisions to DOE's Policies on Selecting Standard 
Levels
    A. Use of Consumer Impacts in Determining Economic Justification
    B. Comparison of Benefits and Burdens Across All Proposed TSLs
    C. Other Issues Raised by Commenters
IV. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under Executive Orders 13771 and 13777
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act of 1995
    E. Review Under the National Environmental Policy Act of 1969
    F. Review Under Executive Order 13132
    G. Review Under Executive Order 12988
    H. Review Under the Unfunded Mandates Reform Act of 1995
    I. Review Under the Treasury and General Government 
Appropriations Act, 1999
    J. Review Under Executive Order 12630
    K. Review Under the Treasury and General Government 
Appropriations Act, 2001
    L. Review Under Executive Order 13211
    M. Review Consistent With OMB's Information Quality Bulletin for 
Peer Review
    N. Congressional Notification
V. Approval of the Office of the Secretary

I. Summary of the Final Rule

    With respect to the establishment of Federal energy conservation 
standards, Federal law requires that any new or amended energy 
conservation standard for covered products (and certain types of 
commercial and industrial equipment) 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)) 
In determining whether an energy conservation standard is economically 
justified, the United States Department of Energy (``DOE'' or ``the 
Department'') determines whether the benefits of the standard exceed 
its burdens by considering the seven factors laid out in 42 U.S.C. 
6295(o)(2)(B)(i). In this document, DOE is finalizing the requirement 
that determinations of economic justification for a specific Trial 
Standard Level (``TSL''), as assessed using the seven factors, must 
include a comparison of the benefits and burdens of that TSL against 
the benefits and burdens of the baseline case (``no new standards'' 
case) and across all other TSLs. DOE will, in accordance with EPCA, 
continue to determine whether the benefits of a standard exceed its 
burdens by, to the greatest extent practicable, considering the seven 
factors in 42 U.S.C. 6295(o)(2)(B)(i). DOE will then use the results of 
this analysis in determining whether a standard is economically 
justified in a ``walk-down'' process. In conducting this analysis, DOE 
may determine that some TSLs are not economically justified based on 
comparisons to the baseline, while DOE may determine other TSLs are not 
economically justified based on comparisons to other TSLs. From the 
technologically feasible and economically justified TSLs, DOE will 
select as the energy conservation standard the TSL that represents the 
maximum improvement in energy efficiency. This process ensures that the 
selection of an energy conservation standard is made in consideration 
of the economic factors contained in EPCA.

II. Introduction

A. Authority

    Title III, Parts B \1\ and C \2\ of the Energy Policy and 
Conservation Act, as amended, (``EPCA'' or ``the Act''), Public Law 94-
163 (42 U.S.C. 6291-6317, as codified), established the Energy 
Conservation Program for consumer products and certain industrial 
equipment.\3\ Under EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) 
certification and enforcement procedures; (3) establishment of Federal 
energy conservation standards; and (4) labeling.
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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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    In determining whether a standard is economically justified, EPCA 
also requires DOE, to the greatest extent

[[Page 50938]]

practicable, to consider the following seven factors: (1) The economic 
impact of the standard on the manufacturers and consumers; (2) the 
savings in operating costs, throughout the estimated average life of 
the products (i.e., life-cycle costs), compared with any increase in 
the price of, or in the initial charges for, or operating and 
maintaining expenses of, the products which are likely to result from 
the imposition of the standard; (3) the total projected amount of 
energy savings likely to result directly from the imposition of the 
standard; (4) any lessening of the utility or the performance of the 
products likely to result from the imposition of the standard; (5) the 
impact of any lessening of competition, after consultation with the 
Department of Justice; (6) the need for national energy and water 
conservation; and (7) other factors DOE finds relevant. (42 U.S.C. 
6295(o)(2)(B)(i))

B. Background

    DOE had conducted a formal effort between 1995 and 1996 to improve 
the process used 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 in the Federal Register 
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, and became known colloquially as the 
``Process Rule.''
    On December 18, 2017, DOE issued a Request for Information 
(``RFI'') to address potential improvements to the Process Rule, so as 
to achieve meaningful burden reduction while continuing to discharge 
the Department's statutory obligations in the development of energy 
conservation standards and test procedures. 82 FR 59992. Subsequently, 
on February 13, 2019, DOE published a Notice of Proposed Rulemaking 
(``NOPR'') to update and modernize the Process Rule. 84 FR 3910 
(``February 2019 NOPR''). Among other changes, DOE proposed that in 
making a determination of economic justification for a specific TSL, it 
would consider whether an economically rational consumer would choose a 
product meeting that TSL over products meeting the other TSLs after 
considering relevant factors, including but not limited to, energy 
savings, efficacy, product features, and life-cycle costs. Id. at 84 FR 
3938.
    DOE received numerous comments asking for clarification on how this 
concept would be implemented and what effect it would have on DOE's 
``walk-down'' process for selecting standard levels. In response, DOE 
did not finalize that aspect of the proposal when it issued a final 
Process Rule. See 85 FR 8626 (Feb. 14, 2020). (``2020 Process Final 
Rule'') Instead, DOE proposed in a supplemental NOPR (``SNOPR'') to 
separately revise section 7 of the Process Rule, Policies on Selection 
of Standards, to clarify its earlier proposal and explain how this 
approach would be incorporated into DOE's decision-making process for 
selecting energy conservation standards. See 85 FR 8483 (Feb. 14, 2020) 
(``February 2020 SNOPR''). More specifically, DOE clarified that its 
proposed revisions to section 7 would require the agency to conduct a 
comparative analysis of the relative costs and benefits of all of the 
proposed TSLs in order to make a reliable determination that the chosen 
TSL is economically justified. This comparative analysis, DOE 
explained, would include assessing the incremental changes in costs and 
benefits for each TSL's benefits and burdens relative to other TSLs and 
as part of a holistic analysis across all TSLs. Id. at 85 FR 8485. DOE 
also explained that the factors an economically rational consumer would 
consider in selecting a TSL (e.g., energy savings, efficacy, product 
features, and life-cycle costs), arise out of EPCA's seven factors for 
determining economic justification. See 42 U.S.C. 6295(o)(2)(B)(i). As 
a result, DOE stated that it was not necessary to refer to the concept 
of an economically rational consumer in determining whether a TSL is 
economically justified. Id.
    In response to the February 2020 SNOPR, DOE received written 
comments from the following parties:

              Table of Entities Submitting Written Comment
------------------------------------------------------------------------
                 Commenter                           Affiliation
------------------------------------------------------------------------
Joint Industry Commenters -................  Industry.
Air Conditioning, Heating, & Refrigeration
 Institute, Association of Home Appliance
 Manufacturers, and the National Electrical
 Manufacturers Association.
Earthjustice...............................  Energy Efficiency Advocate.
Spire......................................  Utilities.
American Public Gas Association (``APGA'').  Utilities.
Energy Efficiency Advocacy and State Joint   State Government, Energy
 Commenters (``Joint Efficiency'')--          Efficiency Advocate.
 Appliance Standards Awareness Project,
 American Council for an Energy-Efficient
 Economy, California Energy Commission,
 Consumer Federation of America, Natural
 Resources Defense Council, Northeast
 Energy Efficiency Partnerships, Northwest
 Energy Efficiency Alliance.
California Investor-Owned Utilities (``Cal-  Utilities.
 IOUs'')--Pacific Gas and Electric Company,
 San Diego Gas and Electric, and Southern
 California Edison.
Institute for Policy Integrity at New York   Public Policy Advocate.
 University (``IPI'').
Mercatus Center at George Mason University   Public Policy Advocate.
 (``Mercatus'').
Anonymous..................................  Unaffiliated.
Derek McLaughlin...........................  Unaffiliated.
North American Association of Food           Industry.
 Equipment Manufacturers (``NAFEM'').
Jim McMahon................................  Unaffiliated.
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[[Page 50939]]

III. Discussion of Revisions to DOE's Policies on Selecting Standard 
Levels

A. Use of Consumer Impacts in Determining Economic Justification

    Following the SNOPR, DOE received several comments supporting DOE's 
efforts to account for the impacts of energy conservation standards on 
consumers through the seven factors in EPCA.\4\ For example, APGA noted 
that DOE's revised approach will incorporate the economic aspects of 
consumer welfare impacts. (APGA, No. 166 at p. 5) \5\ Similarly, NAFEM 
indicated that it believes that using a comparative approach would be a 
positive step towards evaluating how customers actually make decisions. 
(NAFEM, No. 168 at p. 3) Jim McMahon indicated that DOE would be wise 
to abandon the framework of an economically rational consumer as the 
seven factors specified in 42 U.S.C. 6295(o)(2)(B)(i) provide the legal 
and appropriate basis for evaluating economic justification when 
calibrated to actual markets and their behaviors. (Jim McMahon, No. 169 
at p. 1)
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    \4\ All comments can be found at https://www.regulations.gov in 
Docket No. EERE-2017-BT-STD-0062.
    \5\ This type of notation identifies the commenter, the docket 
document number assigned to the comment, and the relevant pages of 
that document.
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B. Comparison of Benefits and Burdens Across All Proposed TSLs

    In the February 2020 SNOPR, DOE proposed that determinations of 
economic justification must include a comparative analysis of the 
relative costs and benefits of all of the proposed TSLs to make a 
reliable determination that a specific TSL is economically justified. 
85 FR 8486. This analysis includes assessing the incremental changes 
for each TSL's benefits and burdens relative to other TSLs as part of a 
holistic analysis across all TSLs.\6\ Id. Further, in order to show 
that this comparative analysis of benefits and burdens is consistent 
with past DOE practices, DOE provided an example of a rulemaking in 
which economic justification was based, at least in part, on 
comparisons between TSLs. Id. 85 FR 8487 (noting DOE's use of a 
comparative approach when examining TSLs during the dehumidifiers 
standards rulemaking to minimize disproportionate impacts to small, 
domestic manufacturers). Finally, DOE noted that it would still ``walk-
down'' from the TSL with the highest energy savings when selecting the 
energy conservation standard level that represents the maximum energy 
savings that is technologically feasible and economically justified but 
would now also formalize for consistency and clarity its comparative 
approach as part of its consideration of economic justification.\7\ Id 
.
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    \6\ Consistent with prior determinations, there may be instances 
where a potential standard impacts a subset of factors so 
significantly as to preclude economic justification, irrespective of 
the other economic factors.
    \7\ DOE is required under 42 U.S.C. 6295(p)(1) to determine the 
maximum improvement in energy efficiency or maximum reduction in 
energy use that is technologically feasible when proposing a new or 
amended conservation standard and explain the reasons for any 
deviation in the proposed standard from the maximum technologically 
feasible improvement. DOE focuses its rulemaking analyses on energy 
savings as there may not always be a direct correlation between 
efficiency improvements and energy savings. For example, if the 
maximum improvement in energy efficiency significantly increases the 
cost of a covered product, many consumers may choose to repair, 
instead of replace, their less-efficient covered products. The 
standard ultimately promulgated by DOE continues to represent the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified. See 42 U.S.C. 6295(o)(2).
---------------------------------------------------------------------------

    In response, DOE received comments both in support of and against 
the use of a comparative analysis that assesses each TSL's benefits and 
burdens relative to other TSLs. For example, with regard to support for 
the proposal, the Joint Industry Commenters indicated that the proposal 
did not present a new approach towards setting standards and it noted a 
number of examples from the past in which DOE had effectively applied 
the same holistic process in various rulemakings (Joint Industry 
Commenters, No. 167 at p. 2). They added that the proposal would build 
this holistic approach into DOE's routine rulemaking process, which 
would enable DOE to fully consider the seven factors already required 
under EPCA and to help ensure that DOE does not review its TSLs in 
isolation. Id. APGA also supported DOE's proposed approach. It noted 
that the proposal was responsive to APGA's past criticisms of DOE's 
process for developing energy conservation standards for covered 
appliance products, which, in APGA's view, did not always result in 
standards that were economically justified (APGA, No. 166 at pp. 4-5). 
APGA agreed that the most logical way to determine whether a particular 
consumer option is economically justified is to compare it to the full 
range of available consumer choices. As a result, APGA supported 
requiring determinations of economic justification to consider 
comparisons of economically relevant factors across TSLs. Id. at p. 5.
    As for the commenters who opposed the proposal, several expressed 
concerns that using a comparative analysis for economic justification 
would not result in the selection of a TSL in accordance with EPCA. For 
example, the CA-IOUs stated that the purpose of EPCA's seven factors is 
to select the standard that achieves the maximum improvement in energy 
efficiency, but that the February 2020 SNOPR proposed to improperly 
substitute comparison of the relative burdens of each TSL in place of 
EPCA's expressed aim of approving the ``highest TSL'' for which 
benefits exceed burdens. (CA-IOUs, No. 173 at pp. 3-4) The CA-IOUs 
added that if DOE chooses to compare economically justifiable TSLs 
against one another, this may not only prevent the maximum energy 
savings for a given standards cycle, but may also hinder cost-effective 
savings for future code cycles. Id. at p. 4. Similarly, the Joint 
Efficiency Commenters stated that the proposal could result in DOE 
choosing efficiency levels lower than the maximum levels that are 
technologically feasible and economically justified. (Joint Efficiency 
Commenters, No. 171 at p. 2) The Joint Efficiency Commenters added 
that, contrary to DOE's statement in the February 2020 SNOPR, DOE did 
not conduct a comparative analysis of economic justification in the 
dehumidifiers rulemaking. Id. at p. 3.
    With respect to these concerns, DOE notes that a simple cost-
savings determination fails to satisfy the more complex economic 
justification requirement in EPCA. DOE reiterates that, in accordance 
with EPCA, it will select the TSL that represents the maximum 
improvement in energy efficiency that is both technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A)) Contrary to the 
statement from the CA-IOUs, the purpose of EPCA's seven factors is not 
to select the standard that achieves the maximum improvement in energy 
efficiency, no matter how minute an estimated cost savings; it is to 
aid in assessing economic justification when selecting the standard 
that represents the maximum improvement in energy efficiency that is 
technologically feasible and also economically justified. EPCA states 
that, in determining whether a standard is economically justified, the 
Secretary must determine whether the ``benefits of the standard exceed 
its burdens''. (42 U.S.C. 6295(o)(2)(B)(i)) Further, as evidenced by 
the seven factors listed for consideration, determining whether the 
benefits of a standard exceed its burdens is not simply a calculation 
exercise. Rather, EPCA recognizes that economic impacts are broader 
than those that occur in isolation as may be depicted in

[[Page 50940]]

an average life-cycle cost analysis or manufacturer impact analysis.
    The enumeration of the seven factors in the statutory text 
recognizes the complex and broad assessment necessary in evaluating 
benefits and burdens of TSLs. As further context, these statutory 
factors can be framed in a more general economic construct that would 
shed light on how DOE's analyses in support of energy conservation 
standards mesh with standard tools for analyzing market impacts 
associated with regulation. The first of the seven factors states that 
economic justification should take into consideration the ``economic 
impact of the standard on the manufacturers and on the consumers of the 
product subject to such standard.'' In evaluating such effects, 
comparison of relative burden is necessary to meaningfully evaluate the 
economic impacts to both manufacturers and consumers. From the economic 
construct perspective, the most comprehensive measures for evaluating 
economic impacts on manufacturers and consumers are producer surplus 
and consumer surplus.\8\ Producer surplus is the difference between the 
amount a producer is paid for a unit of a good and the minimum amount 
the producer would accept to supply that unit. It is measured by the 
area between the price and the supply curve for that unit. Consumer 
surplus is the difference between what a consumer pays for a unit of a 
good and the maximum amount the consumer would be willing to pay for 
that unit. It is measured by the area between the price and the demand 
curve for that unit. These measures or their approximations are often 
used to illustrate the economic impact of regulations on both 
manufacturers and consumers.
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    \8\ Discussions of producer and consumer surplus are provided in 
economics texts extensively such as Mas-Colell, Andreu & Whinston, 
Michael D. & Green, Jerry R., 1995. ``Microeconomic Theory,'' OUP 
Catalogue, Oxford University Press, number 9780195102680; and Kreps, 
David M., 1990. ``A Course in Microeconomic Theory.'' Princeton 
University Press. See also OMB's Circular A-4 on conducting 
regulatory impact analyses, at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
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    The next three statutory factors spell out more specific economic 
effects consumers would experience, such as operating cost savings of 
covered products, any price increase of the covered products, any 
increase in maintenance expense of the covered products, the energy and 
water savings that would accrue to consumers, and any lessening of the 
utility of the covered product. From an economic construct perspective, 
these factors can also be viewed as components of consumer surplus. In 
application, depending on the quantity and quality of data, these 
factors may be analyzed separately or inter-relatedly as components of 
consumer surplus, with appropriate weight given in decision-making, as 
permitted by the statute. Choosing a standard that simply maximizes 
improvement in energy efficiency, without regard to technological 
feasibility and economic justification, would not be consistent with 
the requirements of 42 U.S.C. 6295(o)(2). To holistically evaluate the 
economic impact on consumers, DOE must simultaneously evaluate and 
balance these interrelated factors.
    The fifth statutory factor recognizes that greater energy savings 
could be at the expense of consumer choice, and that anti-competitive 
effects should also be considered. The sixth factor accounts for 
changes over time in the need for national energy and water 
conservation. Finally, the seventh factor recognizes that an exclusive 
list of factors for assessing economic justification could not 
anticipate (for example) product-specific market conditions, and 
authorizes the Secretary to consider any other factor that at the time 
may be relevant to assess the economic justification of a TSL.
    Assessing such impacts, for purposes of the statutory determination 
of economic justification, requires the exercise of agency judgment and 
discretion, informed by the aforementioned analysis. For instance, not 
all life-cycle cost savings are directly comparable. From a more 
holistic analytic perspective, the benefits of life-cycle cost savings 
that impose net costs to 20% of consumers may on net need to be 
considered differently than the benefits of life-cycle cost savings 
that impose net costs to 10% of consumers because the TSL that imposes 
net cost to 20% of consumers might have better product utility than the 
TSL that imposes net cost to 10% of consumers. Similarly, not all 
manufacturer impacts are directly comparable. Manufacturer impacts that 
disproportionately affect small businesses need to be weighed 
differently than those that do not. DOE is seeking to resolve this 
issue by using a comparison across multiple TSLs, which will enable DOE 
to consider incrementally both some of the distinctive benefits and 
burdens that are not immediately apparent from simply looking at a 
single TSL's numbers (e.g., life-cycle costs or changes in industry net 
present value), as well as those relative changes in numbers in moving 
from one TSL to another. Thus, DOE is not proposing to unilaterally 
select an economically justified, technically feasible TSL with less 
energy savings over another economically justified, technically 
feasible TSL. Instead, as stated previously, DOE is requiring a 
comparative analysis of the relative costs and benefits of all proposed 
TSLs in order to make a reliable determination that a specific TSL is 
economically justified. This comparative analysis brings into sharper 
and more transparent focus the balancing contemplated by the statute in 
assessing economic justification. DOE is clarifying its regulatory text 
consistent with this approach.
    With regard to the comment from the Joint Efficiency Advocates that 
DOE has not compared the benefits and burdens of TSLs in the past, DOE 
disagrees. In the dehumidifier example cited in the February 2020 
SNOPR, DOE, in discussing why TSL 2 is economically justified, stated 
that ``TSL 2 will minimize disproportionate impacts to small, domestic 
dehumidifier manufacturers relative to TSL 3 and TSL 4.'' 81 FR 38338, 
38388 (June 13, 2016) (emphasis added). This is an explicit, and 
appropriate, comparison of the burdens (i.e., impacts on small 
manufacturers) between three TSLs.
    Similarly, the Joint Efficiency Advocates' characterization of 
DOE's reference in the February 2020 SNOPR to a 2015 final rule 
amending standards for general service fluorescent lamps (``GSFLs'') is 
mistaken. In that rule, DOE determined that a TSL with positive net 
benefits was not economically justified because it would have net costs 
for 22 percent of consumers and would decrease industry net present 
value by 24 percent. 85 FR 8487. The Joint Efficiency Advocates 
interpreted this reference to mean that DOE was claiming that it had 
not selected the maximum energy efficiency level that was economically 
justified. (Joint Efficiency Advocates, No. 171 at p. 3) That is 
incorrect. DOE cited this rulemaking to address concerns that a 
comparative analysis will result in DOE selecting standards that are 
the most economically justified instead of standards that result in the 
maximum improvement in energy savings that is technologically feasible 
and economically justified. 85 FR 8487. DOE explained that it would not 
just use one criterion (e.g., maximum net benefits) in determining 
economic justification. Id. Using only one criterion would be contrary 
to the statutory mandate to consider multiple factors for purposes of 
determining whether a given standard is economically justified. DOE 
will continue, as it has in the past, to look

[[Page 50941]]

at the full range of benefits and burdens encompassed by the seven 
factors listed in 42 U.S.C. 6295(o)(2)(B)(i). DOE cited the GSFL rule 
as an example of its consideration of industry net present value and 
the proportion of consumers who bear net costs in determining whether a 
TSL was economically justified.
    Commenters also expressed concerns that a comparative analysis 
would improperly affect DOE's consideration of the seven factors laid 
out in 42 U.S.C. 6295(o)(2)(B)(i). For example, IPI stated that the 
proposed change would allow the Department to irrationally and 
inconsistently give preference to whichever subset of economic impacts 
the Department wants to focus on in order to conclude that standards 
that otherwise achieve net benefits are not economically justified. 
(IPI, No. 170 at p. 1) Earthjustice stated that the seven factors 
repeatedly direct DOE to compare a standard level only to the baseline 
case, by requiring DOE to analyze impacts likely to result from the 
imposition of the standard. As a result, in Earthjustice's view, EPCA 
does not authorize the proposed comparative analysis approach to 
determining economic justification. (Earthjustice, No. 174 at p. 2) The 
Joint Efficiency Advocates stated that a comparative analysis of the 
seven factors would not be a simple task and would make it more 
difficult for DOE to fulfill its obligation to review standards. (Joint 
Efficiency Advocates, No. 171 at p. 4)
    In response, DOE first notes that use of a comparative analysis 
does not fundamentally change DOE's consideration of the seven factors 
in 42 U.S.C. 6295(o)(2)(B)(i). DOE will, in accordance with EPCA, 
continue to determine whether the benefits of a standard exceed its 
burdens by, to the greatest extent practicable, considering the seven 
factors in 42 U.S.C. 6295(o)(2)(B)(i). DOE will then use the results of 
this analysis in determining whether a standard is economically 
justified. This process, as noted in the GSFL example, has previously 
resulted in the conclusion that TSLs with positive net benefits fail to 
satisfy the economically justified criterion. As for IPI's 
characterization of such a result as ``irrational,'' DOE does not agree 
that it is ``irrational'' to determine that a TSL that causes a 
significant number of consumers to experience net costs is not 
economically justified.
    Earthjustice's argument that EPCA precludes a comparative analysis 
in determining economic justification is based on the assumption that 
DOE only has two options: (1) select the TSL under analysis as the new 
energy conservation standard; or (2) decline to adopt a new energy 
conservation standard (baseline case). This assumption ignores the fact 
that DOE evaluates several proposed TSLs in each of its rulemakings 
before selecting one (or none) as the new energy conservation standard. 
Thus, a TSL not only has impacts relative to the baseline case, but it 
also has impacts relative to each of the other proposed TSLs. EPCA does 
not prohibit DOE from considering relative impacts, and a comparative 
analysis that assesses the incremental changes in the benefits and 
burdens of each TSL relative to the other TSLs is essential in 
determining whether a specific TSL is economically justified.
    With regard to the Joint Efficiency Advocates' comment that a 
comparative analysis of the seven factors will increase DOE's 
analytical workload and make it more difficult to review standards, DOE 
appreciates the concern, but finds it unwarranted. The vast majority of 
DOE's analytical work involves evaluating the seven factors for each 
TSL (e.g., life-cycle costs, manufacturer impacts, total energy 
savings). The additional step of comparing these values across TSLs is 
unlikely to pose a significant incremental burden to DOE's analytical 
workload.

C. Other Issues Raised by Commenters

    Commenters raised a number of other issues not directly related to 
DOE's proposal. Some of these comments concerned issues that were 
already finalized in the 2020 Process Final Rule and, as a result, are 
not addressed in this document. Several commenters submitted 
recommendations for improving DOE's rulemaking analysis. For example, 
Mercatus offered four broad recommendations for improving DOE's 
analysis: (1) Base the analysis on revealed preferences unless 
compelling evidence exists to support alternative assumptions; (2) 
carefully distinguish between individual and social discount rates; (3) 
properly account for the opportunity cost of capital; and (4) 
distinguish between consumption and investment. (Mercatus, No. 172 at 
pp. 1-6) DOE notes that it has engaged the National Academies of 
Sciences, Engineering, and Medicine to undertake a peer review of the 
assumptions, models, and methodologies used by DOE in establishing 
energy efficiency regulations. See https://www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards. The review committee is aware of this rulemaking 
and DOE will send them a copy of the final rule so it may be accounted 
for in their report. DOE encourages the public to submit written 
comments related to DOE's assumptions, models, and methodologies via 
email to these National Academies at [email protected]. For further 
information regarding this process, interested persons should contact 
the National Academies directly at [email protected]. For information 
regarding access to materials docketed by the National Academies 
related to this review, interested persons should contact the Public 
Access Records Office using the fillable on-line form found at https://www8.nationalacademies.org/pa/managerequest.aspx?key=DEPS-BICE-19-02.

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 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). 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. In addition, on February 
24, 2017, the President issued E.O. 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.

[[Page 50942]]

    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.
    This final rule is an amendment of DOE's February 14, 2020, final 
rule (2020 Process Rule) that revised and updated the Department's 
``Process Rule.'' For purposes of Executive Order 13771, the February 
14, 2020 final rule was a de-regulatory action for which DOE 
anticipates that the changes 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%. The important, but incremental, change to the 2020 
Process Rule amendments are difficult to quantify beyond the benefits 
achieved by the Process Rule as a whole. As such, for purposes of 
Executive Order 13771, this final rule constitutes an ``other'' action.

C. 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 rule does not directly regulate small entities but 
only imposes procedural requirements on DOE itself, DOE certifies that 
this 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. FERC, 773 F.2d 327, 
341-42 (D.C. Cir. 1985).

D. 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 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 certifications 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 rule, addressing clarifications to the Process 
Rule itself, does not contain any collection of information requirement 
that would trigger the PRA.

E. Review Under the National Environmental Policy Act of 1969

    In this final rule, DOE is revising a portion of its Process Rule, 
which outlines the procedures that DOE follows 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 of regulations at 10 CFR part 1021. Specifically, this 
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.

F. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 10, 
1999), imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the necessity for such actions. The Executive Order 
also requires agencies to have an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications. 
On March 14, 2000, DOE published a statement of policy describing the 
intergovernmental consultation process it will follow in the 
development of such regulations. 65 FR 13735. DOE has examined this 
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.

G. 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

[[Page 50943]]

and burden reduction. Regarding the review required by section 3(a), 
section 3(b) of Executive Order 12988 specifically requires that each 
Executive agency make every reasonable effort to ensure that when it 
issues a regulation, the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires that Executive 
agencies review regulations in light of applicable standards in 
sections 3(a) and 3(b) to determine whether they are met, or whether 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 rule meets the relevant standards of Executive Order 12988.

H. 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 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.

I. 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 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.

J. 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 rule will not 
result in any takings that might require compensation under the Fifth 
Amendment to the U.S. Constitution.

K. 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 rule under the OMB and DOE 
guidelines and has concluded that it is consistent with the applicable 
policies in those guidelines.

L. 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 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 either (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 concluded that the regulatory action in this document, 
which makes clarifications to the Process Rule that guides the 
Department in proposing energy conservation standards, is not a 
significant energy action because it would not have a significant 
adverse effect on the supply, distribution, or use of energy, nor has 
it been designated as a significant energy action by the Administrator 
of OIRA. Therefore, it is not a significant energy action, and, 
accordingly, DOE has not prepared a Statement of Energy Effects for 
this rule.

M. 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

[[Page 50944]]

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://www.energy.gov/eere/buildings/peer-review. Because available data, models, and 
technological understanding have changed since 2007, DOE has engaged 
the National Academies of Sciences, Engineering, and Medicine to 
undertake a new peer review of its analytical methodologies, as noted 
above.

N. Congressional Notification

    As required by 5 U.S.C. 801, DOE will submit to Congress a report 
regarding the issuance of this final rule prior to the effective date 
set forth at the outset of this rulemaking. The report will state that 
it has been determined that the rule is not a ``major rule'' as defined 
by 5 U.S.C. 801(2).

V. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 430

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

Signing Authority

    This document of the Department of Energy was signed on July 17, 
2020, by Daniel R Simmons, Assistant Secretary for Energy Efficiency, 
Energy Efficiency and Renewable Energy, pursuant to delegated authority 
from the Secretary of Energy. That document with the original signature 
and date is maintained by DOE. For administrative purposes only, and in 
compliance with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on July 20, 2020.
Treena V. Garrett
Federal Register Liaison Officer, U.S. Department of Energy.

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

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

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

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


0
2. In appendix A to subpart C of part 430, revise paragraph 7(e) 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 for Consumer Products

* * * * *

7. Policies on Selection of Standards

* * * * *
    (e)(1) Selection of proposed standard. Based on the results of 
the analysis of impacts, DOE will select a standard level to be 
proposed for public comment in the NOPR. As required under 42 U.S.C. 
6295(o)(2)(A), any new or revised standard must be designed to 
achieve the maximum improvement in energy efficiency that is 
determined to be both technologically feasible and economically 
justified.
    (2) Statutory policies. The fundamental policies concerning the 
selection of standards include:
    (i) A trial standard level will not be proposed or promulgated 
if the Department determines that it is not both technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 
U.S.C. (o)(3)(B)) For a trial standard level to be economically 
justified, the Secretary must determine that the benefits of the 
standard exceed its burdens by, to the greatest extent practicable, 
considering the factors listed in 42 U.S.C. 6295(o)(2)(B)(i). In 
making such a determination, the Secretary shall compare the 
benefits and burdens of the standard against the benefits and 
burdens of the baseline case (``no new standards'' case) and all 
other trial standard levels under consideration. This comparative 
analysis includes assessing the incremental changes in costs and 
benefits for each TSL's benefits and burdens relative to other TSLs 
and as part of a holistic analysis across all TSLs. 42 U.S.C. 
6295(o)(2)(B). The Secretary will also consider, consistent with the 
statute, other economic measures such as life-cycle cost analysis, 
manufacturer impact analysis, and other relevant measures. A 
standard level is subject to a rebuttable presumption that it is 
economically justified if the payback period is three years or less. 
(42 U.S.C. 6295(o)(2)(B)(iii))
    (ii) If the Department determines that interested persons have 
established by a preponderance of the evidence that a standard level 
is likely to result in the unavailability in the United States of 
any covered product/equipment type (or class) with performance 
characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the U.S. at the time of the determination, 
then that standard level will not be proposed. (42 U.S.C. 
6295(o)(4))
    (iii) If the Department determines that a standard level would 
not result in significant conservation of energy, that standard 
level will not be proposed. (42 U.S.C. 6295(o)(3)(B))
* * * * *
[FR Doc. 2020-15967 Filed 8-18-20; 8:45 am]
BILLING CODE 6450-01-P