Energy Conservation Program for Appliance Standards: Procedures, Interpretations, and Policies for Consideration in New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Commercial/Industrial Equipment, 70892-70931 [2021-25725]
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Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Rules and Regulations
SUPPLEMENTARY INFORMATION:
DEPARTMENT OF ENERGY
Table of Contents
10 CFR Part 430
[EERE–2021–BT–STD–0003]
RIN 1904–AF13
Energy Conservation Program for
Appliance Standards: Procedures,
Interpretations, and Policies for
Consideration in New or Revised
Energy Conservation Standards and
Test Procedures for Consumer
Products and Commercial/Industrial
Equipment
Office of Energy Efficiency and
Renewable Energy (EERE), Department
of Energy.
ACTION: Final rule.
AGENCY:
The U.S. Department of
Energy (‘‘DOE’’ or the ‘‘Department’’) is
revising the Department’s ‘‘Procedures,
Interpretations, and Policies for
Consideration of New or Revised Energy
Conservation Standards and Test
Procedures for Consumer Products and
Certain Commercial/Industrial
Equipment.’’ The revisions are
consistent with longstanding DOE
practice and would remove unnecessary
obstacles to DOE’s ability to meet its
statutory obligations under the Energy
Policy and Conservation Act (‘‘EPCA’’).
DATES: This rule is effective January 12,
2022.
ADDRESSES: The docket for this
rulemaking, which includes Federal
Register notices, comments, and other
supporting documents/materials, is
available for review at
www.regulations.gov. All documents in
the docket are listed in the
www.regulations.gov index. However,
not all documents listed in the index
may be publicly available, such as
information that is exempt from public
disclosure. The docket web page can be
found at: www.regulations.gov/docket/
EERE-2021-BT-STD-0003. The docket
web page contains instructions on how
to access all documents, including
public comments, in the docket.
FOR FURTHER INFORMATION CONTACT:
Mr. John Cymbalsky, U.S. Department
of Energy, Office of Energy Efficiency
and Renewable Energy, Building
Technologies Office, EE–5B, 1000
Independence Avenue SW, Washington,
DC, 20585–0121. Email:
ApplianceStandardsQuestions@
ee.doe.gov.
Mr. Pete Cochran, U.S. Department of
Energy, Office of the General Counsel,
GC–33, 1000 Independence Avenue SW,
Washington, DC 20585. Telephone:
(202) 586–9496. Email: Peter.Cochran@
hq.doe.gov.
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SUMMARY:
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I. Summary of the Final Rule
II. Authority and Background
A. Authority
B. Background
III. Discussion of Specific Revisions to
Appendix A
A. Restoring the Department’s Discretion
To Depart From the General Guidance in
Appendix A
B. Significant Energy Savings Threshold
C. Determinations of Economic
Justification
D. Adoption of Industry Test Standards
E. Finalization of Test Procedures Prior to
Issuance of a Standards Proposal
F. Direct Final Rules
G. Negotiated Rulemaking
H. Other Topics
IV. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866
B. Review Under the Regulatory Flexibility
Act
C. Review Under the Paperwork Reduction
Act of 1995
D. Review Under the National
Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates
Reform Act of 1995
H. Review Under the Treasury and General
Government Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General
Government Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Consistent With OMB’s
Information Quality Bulletin for Peer
Review
M. Congressional Notification
V. Approval of the Office of the Secretary
I. Summary of the Final Rule
In July of 1996, the United States
Department of Energy (‘‘DOE’’ or ‘‘the
Department’’) issued a final rule that
codified DOE’s ‘‘Procedures,
Interpretations and Policies for
Consideration of New or Revised Energy
Conservation Standards for Consumer
Products’’ at 10 CFR part 430, subpart
C, appendix A (‘‘appendix A’’). 61 FR
36974 (July 15, 1996) (‘‘July 1996 Final
Rule’’). The July 1996 Final Rule
acknowledged that the guidance
contained in appendix A would not be
applicable to every rulemaking and that
the circumstances of a particular
rulemaking should dictate application
of these generally applicable practices.
61 FR 36979.
On February 14, 2020, DOE published
a final rule (‘‘February 2020 Final
Rule’’) in the Federal Register that made
significant revisions to appendix A. 85
FR 8626. DOE also published a
companion final rule on August 19,
2020 (‘‘August 2020 Final Rule’’), that
clarified how DOE would conduct a
comparative analysis across all trial
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standard levels when determining
whether a particular trial standard level
was economically justified. See 85 FR
50937. Contrary to the July 1996 Final
Rule, the revisions made in the February
2020 Final Rule sought to create a
standardized rulemaking process that
was binding on the Department. 85 FR
8626, 8634. In creating this one-size-fitsall approach, the February 2020 Final
Rule and the August 2020 Final Rule
also added additional steps to the
rulemaking process that are not required
by any applicable statute.
Subsequent events have caused DOE
to reconsider the merits of a one-sizefits-all rulemaking approach to
establishing and amending energy
conservations standards and test
procedures. Two of these events are
particularly salient. First, on October 30,
2020, a coalition of non-governmental
organizations filed suit under EPCA
alleging that DOE has failed to meet
rulemaking deadlines for 25 different
consumer products and commercial
equipment.1 On November 9, 2020, a
coalition of States filed a virtually
identical lawsuit.2 In response to these
lawsuits, DOE has reconsidered whether
the benefits of a one-size-fits-all
rulemaking approach outweigh the
increased difficulty such an approach
poses in meeting DOE’s statutory
deadlines and obligations under EPCA.
As mentioned previously, the July 1996
Final Rule allowed for ‘‘case-specific
deviations and modifications of the
generally applicable rule.’’ 3 This
allowed DOE to tailor rulemaking
procedures to fit the specific
circumstances of a particular
rulemaking. For example, under the July
1996 Final Rule, minor modifications to
a test procedure would not
automatically result in a 180-day delay
before DOE could issue a notice of
proposed energy conservation
standards. Eliminating these
unnecessary delays would better enable
DOE to clear this backlog of missed
rulemaking deadlines in a timely
manner and meet future obligations and
deadlines under EPCA while not
affecting the ability of any interested
person, including small entities, to
participate in DOE’s rulemaking
process. Further, the sooner new or
amended energy conservation standards
eliminate less-efficient covered products
and equipment from the market, the
1 Natural Resources Defense Council v. DOE, Case
No. 20–cv–9127 (S.D.N.Y. 2020).
2 State of New York v. DOE, Case No. 20–cv–9362
(S.D.N.Y. 2020).
3 61 FR 36974, 36979.
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greater the resulting energy savings and
environmental benefits.
Second, on January 20, 2021, the
White House issued Executive Order
13990, ‘‘Protecting Public Health and
the Environment and Restoring Science
to Tackle the Climate Crisis.’’ 86 FR
7037 (Jan. 25, 2021). Section 1 of that
Order lists a number of policies related
to the protection of public health and
the environment, including reducing
greenhouse gas emissions and bolstering
the Nation’s resilience to climate
change. Id. at 86 FR 7037, 7041. Section
2 of the Order instructs all agencies to
review ‘‘existing regulations, orders,
guidance documents, policies, and any
other similar agency actions (agency
actions) promulgated, issued, or
adopted between January 20, 2017, and
January 20, 2021, that are or may be
inconsistent with, or present obstacles
to, [these policies].’’ Id. Agencies are
then directed, as appropriate and
consistent with applicable law, to
consider suspending, revising, or
rescinding these agency actions and to
immediately commence work to
confront the climate crisis. Id. Under
that same section, for certain explicitly
enumerated agency actions, including
the February 2020 and the August 2020
Final Rules, the Order directs agencies
to consider publishing for notice and
comment a proposed rule suspending,
revising, or rescinding the agency action
within a specific time frame. Under this
mandate, DOE is directed to propose
any major revisions to these two rules
by March 2021, with any remaining
revisions to be proposed by June 2021.
Id. at 86 FR 7038.
In light of these events, DOE has
identified several aspects of the
February 2020 and the August 2020
Final Rules that present obstacles to
DOE’s ability to expeditiously clear the
backlog of missed rulemaking deadlines
while meeting future obligations under
EPCA. In accordance with E.O. 13990,
DOE proposed major revisions to
appendix A in a notice of proposed
rulemaking (NOPR) that was published
on April 12, 2021 (‘‘April 2021 NOPR’’).
86 FR 18901. DOE proposed additional
revisions to appendix A in a second
NOPR that was published on July 7,
2021 (‘‘July 2021 NOPR’’). 86 FR 35668.
DOE is addressing the proposed
revisions from the April 2021 NOPR in
this document. DOE will address the
70893
additional revisions proposed in the
July 2021 NOPR in a separate final rule.
In this document, DOE is: (1)
Restoring DOE’s discretion to depart
from the general guidance in appendix
A; (2) removing the recently-added
threshold for determining when the
significant energy savings criterion is
met; (3) removing the recently-added
requirement to conduct a comparative
analysis as part of DOE’s analysis of
economic justification under the factors
listed in 42 U.S.C. 6295(o)(2)(B)(i); (4)
reverting to DOE’s 1996 guidance
regarding completion of test procedure
rulemakings prior to issuance of a NOPR
for an energy conservation standards
rulemaking; (5) clarifying that DOE may
make modifications to industry test
procedure standards to comply with the
requirements of EPCA, as well as for
certification, compliance, and
enforcement purposes; (6) reverting to
DOE’s prior practice on direct final
rules; and (7) clarifying that DOE will
conduct negotiated rulemakings in
accordance with the Negotiated
Rulemaking Act (‘‘NRA’’), Public Law
104–320 (5 U.S.C. 561, et seq.). These
revisions are summarized in the
following table.
LIST OF REVISIONS IN THIS DOCUMENT
Section
Proposed revisions in April 2021 NOPR
1. Objectives .......................................................
Revise language to be consistent with the
newly proposed Section 3.
2.
3.
4.
5.
No revisions proposed in this document .........
Replace with new Section 3, ‘‘Application’’ .....
No revisions proposed in this document .........
Eliminate the 180-day period in paragraph (c)
between finalization of DOE test procedures
and issuance of a NOPR proposing new or
amended energy conservation standards.
Eliminate paragraph (b), ‘‘Significant Savings
of Energy’’.
Eliminate text in paragraph (e)(2)(i) requiring
DOE to conduct a comparative analysis
when determining whether a proposed
standard level is economically justified.
Clarify in paragraph (c) that DOE may revise
consensus industry test procedure standards for compliance, certification, and enforcement purposes; eliminate the 180-day
period in paragraph (d) between finalization
of DOE test procedures and issuance of a
NOPR proposing new or amended energy
conservation standards.
No revisions proposed in this document .........
Revise section to clarify that DOE will implement its direct final rule authority on a caseby-case basis.
Eliminate section ..............................................
No revisions proposed in this document .........
Scope .............................................................
Mandatory Application of the Process Rule ...
Setting Priorities for Rulemaking Activity .......
Coverage Determination Rulemakings ..........
6. Process for Developing Energy Conservation
Standards.
7. Policies on Selection of Standards ................
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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.
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No revisions proposed in this document .........
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Final revisions
Revise language to be consistent with new
Section 3; revise paragraph (g) to specifically reference consensus recommendations developed through negotiated
rulemakings.
No revisions in this document.
Replace with new Section 3, ‘‘Application.’’
No revisions in this document.
Eliminate the 180-day period in paragraph (c)
between finalization of DOE test procedures
and issuance of a NOPR proposing new or
amended energy conservation standards.
Eliminate paragraph (b), ‘‘Significant Savings
of Energy.’’
Eliminate text in paragraph (e)(2)(i) requiring
DOE to conduct a comparative analysis
when determining whether a proposed
standard level is economically justified.
Clarify in paragraph (c) that DOE may revise
consensus industry test procedure standards for compliance, certification, and enforcement purposes; revise application of
the 180-day period in paragraph (d).
No revisions in this document.
Revise section to clarify that DOE will implement its direct final rule authority on a caseby-case basis.
Eliminate section.
No revisions in this document.
No revisions in this document.
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LIST OF REVISIONS IN THIS DOCUMENT—Continued
Section
Proposed revisions in April 2021 NOPR
Final revisions
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 .........
Eliminate incorrect cross reference .................
Eliminate incorrect cross reference.
No revisions proposed in this document .........
No revisions in this document.
No revisions proposed in this document .........
No revisions in this document.
No revisions proposed in this document .........
No revisions in this document.
* As part of the revisions, sections and subsections have been renumbered as required.
II. Authority and Background
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A. Authority
Title III, Parts B 4 and C 5 of the Energy
Policy and Conservation Act, as
amended, (‘‘EPCA’’ or ‘‘the Act’’), Public
Law 94–163 (42 U.S.C. 6291–6317, as
codified), established the Energy
Conservation Program for Consumer
Products and Certain Industrial
Equipment.6 Under EPCA, DOE’s energy
conservation program for covered
products consists essentially of four
parts: (1) Testing; (2) certification and
enforcement procedures; (3)
establishment of Federal energy
conservation standards; and (4) labeling.
Subject to certain criteria and
conditions, DOE is required to develop
test procedures to measure the energy
efficiency, energy use, or estimated
annual operating cost of each covered
product and covered equipment during
a representative average use cycle or
period of use. (42 U.S.C. 6293; 42 U.S.C.
6314) Manufacturers of covered
products and covered equipment must
use the prescribed DOE test procedure
when certifying to DOE that their
products and equipment comply with
the applicable energy conservation
standards adopted under EPCA and
when making any other representations
to the public regarding the energy use or
efficiency of those products. (42 U.S.C.
6293(c); 42 U.S.C. 6295(s); 42 U.S.C.
6314(a); and 42 U.S.C. 6316(a))
Similarly, DOE must use these test
procedures to determine whether the
products comply with energy
conservation standards adopted
pursuant to EPCA. (42 U.S.C. 6295(s); 42
U.S.C. 6316(a))
In addition, pursuant to EPCA, any
new or amended energy conservation
standard for covered products (and at
least certain types of equipment) must
4 For editorial reasons, upon codification in the
U.S. Code, Part B was redesignated Part A.
5 Part C was added by Public Law 95–619, Title
IV, section 441(a). For editorial reasons, upon
codification in the U.S. Code, Part C was
redesignated Part A–1.
6 All references to EPCA in this document refer
to the statute as amended through Energy Act of
2020, Public Law 116–260 (Dec. 27, 2020).
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be designed to achieve the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified. (42 U.S.C.
6295(o)(2)(A); 42 U.S.C. 6316(a)) In
determining whether a standard is
economically justified, EPCA requires
DOE, to the greatest extent practicable,
to consider the following seven factors:
(1) The economic impact of the standard
on the manufacturers and consumers;
(2) the savings in operating costs,
throughout the estimated average life of
the products (i.e., life-cycle costs),
compared with any increase in the price
of, or in the initial charges for, or
operating and maintaining expenses of,
the products which are likely to result
from the imposition of the standard; (3)
the total projected amount of energy, or
as applicable, water, savings likely to
result directly from the imposition of
the standard; (4) any lessening of the
utility or the performance of the
products likely to result from the
imposition of the standard; (5) the
impact of any lessening of competition,
as determined in writing by the
Attorney General, that is likely to result
from the imposition of the standard; (6)
the need for national energy and water
conservation; and (7) other factors DOE
finds relevant. (42 U.S.C.
6295(o)(2)(B)(i)) Furthermore, the new
or amended standard must result in a
significant conservation of energy (42
U.S.C. 6295(o)(3)(B); 42 U.S.C.
6313(a)(6); and 42 U.S.C. 6316(a)) and
comply with any other applicable
statutory provisions.
B. Background
DOE conducted an effort between
1995 and 1996 to improve the process
it follows to develop energy
conservation standards for covered
appliance products. As part of this
effort, DOE reached out to many
different stakeholders, including
manufacturers, energy-efficiency
advocates, trade associations, State
agencies, utilities, and other interested
parties for input on the procedures,
interpretations, and policies used by
DOE in considering whether to issue
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new or amended energy conservation
standards. This process resulted in
publication of the July 1996 Final Rule
which codified these procedures,
interpretations, and policies in
appendix A. The goal of the July 1996
Final Rule was to elaborate on the
procedures, interpretations, and policies
that would guide the Department in
establishing new or revised energy
conservation standards for consumer
products. The rule was issued without
notice and comment under the
Administrative Procedure Act’s
(‘‘APA’’) exception for ‘‘interpretative
rules, general statements of policy, or
rules of agency organization, procedure,
or practice.’’ (5 U.S.C. 553(b)(A))
On December 18, 2017, DOE issued a
request for information (‘‘RFI’’) on
potential revisions to appendix A. 82 FR
59992. DOE subsequently published a
NOPR regarding appendix A in the
Federal Register on February 13, 2019.
84 FR 3910. On July 26, 2019, DOE
subsequently issued a notice of data
availability (‘‘NODA’’) in the Federal
Register. 84 FR 36037 (‘‘July 2019
NODA’’). After considering the
comments it received DOE then
published a final rule in the Federal
Register on February 14, 2020, which
significantly revised appendix A. 85 FR
8626.
While DOE issued the July 1996 Final
Rule without notice and comment as an
interpretative rule, general statement of
policy, or rule of agency organization,
procedure, or practice, the February
2020 Final Rule was issued with notice
and comment. For several reasons, as
stated throughout the April 2021 NOPR
and this document, DOE believes
appendix A is best described and
utilized not as a legislative rule but
instead as generally applicable guidance
that may guide, but not bind, the
Department’s rulemaking process. The
revisions finalized in this document are
intended to clarify this point. In
accordance with Executive Order 13990,
DOE used a notice and comment
process to revise appendix A. 86 FR
7037. DOE held a public webinar for the
April 2021 NOPR on April 23, 2021.
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70895
In response to the April 2021 NOPR
and public webinar, DOE received
comments from the following parties:
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TABLE OF COMMENTERS
Commenter(s)
Affiliation
A.O. Smith ..............................................................................................
Air-Conditioning, Heating, and Refrigeration Institute ............................
Air-Conditioning, Heating, and Refrigeration Institute (AHRI), AMCA
International (AMCA), American Lighting Association (ALA), Association of Home Appliance Manufacturers (AHAM), Consumer Technology Association (CTA), Hearth, Patio & Barbecue Association
(HPBA), Heating, Air-conditioning & Refrigeration Distributors International (HARDI), Information Technology Industry Council (ITI),
International Sign Association (ISA), Manufactured Housing Institute
(MHI), National Association of Manufacturers (NAM), National Electrical Manufacturers Association (NEMA), North American Association of Food Equipment Manufacturers (NAFEM), Power Tool institute, Inc. (PTI), and Plumbing Manufacturers International (PMI).
American Gas Association, American Public Gas Association, Spire,
Inc., and Spire Missouri, Inc.
American Lighting Association ...............................................................
Americans for Prosperity ........................................................................
Anonymous .............................................................................................
Anonymous .............................................................................................
Appliance Standards Awareness Project ...............................................
(Joint Comments filed with the American Council for an Energy-Efficient Economy, Consumer Federation of America, and National
Consumer Law Center).
Attorneys General of California, Colorado, Connecticut, Illinois, Maine,
Maryland, Michigan, Minnesota, Nevada, New Jersey, New York,
Oregon, Pennsylvania, Vermont, Washington, the Commonwealth of
Massachusetts, the District of Columbia, and the City of New York.
Bradford White Corporation ....................................................................
California Energy Commission ...............................................................
California Investor-Owned Utilities .........................................................
John Cannon ..........................................................................................
Carrier Corporation .................................................................................
Crown Boiler Company ...........................................................................
Edison Electric Institute ..........................................................................
GE Appliances ........................................................................................
Goodman Manufacturing Company, L.P ................................................
Grundfos Americas Corporation .............................................................
Ahmed Ahmed Hamdi ............................................................................
Hoshizaki America, Inc ...........................................................................
Hussmann Corporation ...........................................................................
Hydraulic Institute ...................................................................................
Hydronic Industry Alliance—Commercial ...............................................
Institute for Policy Integrity—New York University School of Law .........
Lennox International ...............................................................................
Lutron ......................................................................................................
Manufactured Housing Institute ..............................................................
New Yorker Boiler Company, Inc ...........................................................
North American Association of Food Equipment Manufacturers ...........
National Propane Gas Association .........................................................
Natural Resources Defense Council, Earthjustice & Sierra Club ..........
Nortek Global HVAC, LLC ......................................................................
Northwest Power and Conservation Council ..........................................
Northwest Energy Efficiency Alliance .....................................................
Signify .....................................................................................................
Small Business Administration (SBA) Office of Advocacy .....................
Southern Company .................................................................................
Sullivan-Palatek, Inc ...............................................................................
Sara Taylor .............................................................................................
Trane Technologies ................................................................................
Unico, Inc ................................................................................................
U.S. Boiler Company ..............................................................................
Weil-McLain Company ............................................................................
Westinghouse Lighting Corporation .......................................................
Whirlpool Corporation .............................................................................
Zero Zone, Inc ........................................................................................
Manufacturer ...........................
Manufacturer Trade Group .....
Manufacturer Trade Groups ...
A.O. Smith.
AHRI.
Joint Industry Commenters.
Utility Trade Group .................
AGA.
Manufacturer Trade Group .....
Advocacy Group .....................
Individual.
Individual.
Advocacy Group .....................
ALA.
AFP.
State, Local Governments ......
State Commenters.
Manufacturer ...........................
State ........................................
Utilities ....................................
Individual.
Manufacturer ...........................
Manufacturer ...........................
Utility Trade Group .................
Manufacturer ...........................
Manufacturer ...........................
Manufacturer ...........................
Individual.
Manufacturer ...........................
Manufacturer ...........................
Manufacturer Trade Group .....
Manufacturer Trade Group .....
Academic Institution ................
Manufacturer ...........................
Manufacturer ...........................
Manufacturer Trade Group .....
Manufacturer ...........................
Manufacturer Trade Group .....
Utility Trade Group .................
Advocacy Groups ...................
Manufacturer ...........................
Advocacy Group .....................
Advocacy Group .....................
Manufacturer ...........................
Federal Government Agency ..
Utility .......................................
Manufacturer ...........................
Individual.
Manufacturer ...........................
Manufacturer ...........................
Manufacturer ...........................
Manufacturer ...........................
Manufacturer ...........................
Manufacturer ...........................
Manufacturer ...........................
BWC.
CEC.
Cal-IOUs.
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Acronym, identifier
Joint Advocacy Commenters.
Carrier.
Crown Boiler.
EEI.
GEA.
Goodman.
Grundfos.
Hoshizaki.
Hussmann.
HI.
HIA.
IPR.
Lennox.
Lutron.
MHI.
New Yorker Boiler.
NAFEM.
NPGA.
Joint Environmentalist Commenters.
Nortek.
NPCC.
NEEA.
Signify.
SBA Office of Advocacy.
Southern.
Sullivan-Palatek.
Trane.
Unico.
U.S. Boiler.
Weil-McLain.
Westinghouse.
Whirlpool.
Zero Zone.
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III. Discussion of Specific Revisions to
Appendix A
A. Restoring the Department’s
Discretion To Depart From the General
Guidance in Appendix A
One of the most significant changes
made to appendix A in the February
2020 Final Rule was to turn what had
been guidance on usual practices for
issuing new or amended energy
conservation standards and test
procedures into binding requirements.
In contrast, the July 1996 Final Rule
contained procedures, interpretations,
and policies that DOE believed would
be appropriate for general use in
conducting energy conservation
standard and test procedure
rulemakings. However, in the July 1996
Final Rule, DOE also acknowledged the
possibility that the usual practices
would not be appropriate for every
rulemaking and that the circumstances
of a particular rulemaking should
dictate application of these generally
applicable practices, subject to public
notice explaining any such deviations.
61 FR 36974, 36979.
In making appendix A binding, DOE
made a policy determination at the time
it issued the February 2020 Final Rule
that ‘‘promot[ing] a rulemaking
environment that is both predictable
and consistent’’ outweighed the need for
‘‘flexibility to fit the appropriate process
to the appliance standard or test
procedure at issue.’’ February 2020
Final Rule, 85 FR 8626, 8633–8634.
Additionally, in response to comments
that mandatory application of appendix
A could conflict with DOE’s statutory
obligations under EPCA (e.g.,
rulemaking deadlines), DOE stated its
policy view that the February 2020
Final Rule had been drafted to closely
follow and implement EPCA. Id. at 85
FR 8634.
As noted in its April 2021 proposal,
DOE is reconsidering its policy
judgment in weighing the predictability
of a one-size-fits-all approach against
the negative effects that a mandatory
application of appendix A would have
on DOE’s ability to meet the statutory
deadlines established under EPCA and
other applicable requirements. Under
EPCA, DOE is required to review energy
conservation standards for covered
products and equipment at least once
every six years to determine whether a
more-stringent standard would result in
significant conservation of energy and is
technologically feasible and
economically justified. (42 U.S.C.
6295(m)(1); 42 U.S.C. 6313(a)(6)(C); 42
U.S.C. 6316(a)) Similarly, DOE is also
required to review test procedures for
covered products and equipment at least
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once every seven years to determine
whether improvements can be made. (42
U.S.C. 6293(b)(1); 42 U.S.C.
6314(a)(1)(A)) DOE currently has energy
conservation standards and test
procedures in place for more than 60
categories of covered products and
equipment and is typically working on
anywhere from 50 to 100 rulemakings
(for both energy conservation standards
and test procedures) at any one time.
Consequently, DOE has often been
unable to meet its rulemaking deadlines,
and with the February 2020 Final Rule
mandating procedural steps that make
the rulemaking process lengthier than
EPCA requires, implementation of this
binding process would make it even
more difficult to clear the existing
backlog of missed rulemaking deadlines
in a timely manner and meet future
rulemaking deadlines.
Among the steps that EPCA does not
require—but the February 2020 Final
Rule does—is for DOE to issue
rulemaking documents in advance of a
NOPR. The February 2020 Final Rule
mandates use of an early assessment RFI
and either an advanced notice of
proposed rulemaking (‘‘ANOPR’’) or a
framework document with a
preliminary analysis. While DOE
recognizes the importance of gathering
early stakeholder input and has
proposed to maintain opportunities for
pre-NOPR input in the July 2021
NOPR,7 such input may not be
necessary or useful in all cases. For
instance, EPCA requires DOE to revisit
a determination that standards do not
need to be amended within three years.
(42 U.S.C. 6295(m)(3)(B)) In such cases,
particularly with respect to covered
products and equipment that have gone
through multiple rounds of rulemakings
and for which there has been negligible
change to the market and relevant
technology, a pre-NOPR publication
may provide limited value. Thus, DOE
may be able to directly issue a notice of
proposed determination that standards
do not need to be amended.
Stakeholders would still have the
opportunity to comment on the
proposed determination. And, in the
event that DOE receives new
information in response to the notice of
proposed determination, DOE can issue
supplemental rulemaking documents
before proceeding to a final rule or
determination.
The February 2020 Final Rule also
required that DOE finalize test
procedure rulemakings establishing
methodologies used to evaluate
proposed energy conservation standards
at least 180 days prior to publication of
7 86
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a NOPR proposing new or amended
energy conservation standards. DOE
stated that this requirement would
allow stakeholders to provide more
effective comments on the proposed
energy conservation standards. 85 FR
8626, 8676. DOE acknowledges the
importance of established
methodologies for measuring energy use
and energy efficiency when evaluating
potential amendments to the energy
conservation standards. Whether a
potential energy conservation standard
is technologically feasible and
economically justified will be
dependent, in part, on how the energy
use of a product is measured. As
discussed in section III.E of this
document, DOE is requiring that new
test procedures and amended test
procedures that impact measured energy
use or efficiency be finalized at least 180
days prior to the close of the comment
period for: (i) A NOPR proposing new
or amended energy conservation
standards; or (ii) a notice of proposed
determination that standards do not
need to be amended. However, this 180day period may not always be
necessary. For example, DOE will
typically use an industry test procedure
as the basis for a new DOE test
procedure. If DOE adopts the industry
test procedure without modification,
stakeholders should already be familiar
with the test procedure. In such cases,
requiring the new test procedure to be
finalized 180 days prior to the close of
the comment period for a NOPR
proposing new energy conservation
standards would offer little benefit to
stakeholders while delaying DOE’s
promulgation of new energy
conservation standards.
These examples illustrate what was
clearly understood in the July 1996
Final Rule—that the procedures,
interpretations, and policies laid out in
appendix A that are generally applicable
to DOE’s rulemaking program should be
determined on a case-by-case basis
based on the individual circumstances
of a given rulemaking. 61 FR 36974,
36979. Accordingly, in the April 2021
NOPR, the Department proposed
reverting back to the original, nonbinding status of appendix A. DOE
requested comments, information, and
data on whether appendix A should be
non-binding or, alternatively, whether
the rule should remain binding but with
revised provisions.
In addition, consistent with its
proposal to revert appendix A back to
non-binding guidance, DOE’s April
2021 NOPR also proposed clarifying
that appendix A does not create legally
enforceable rights. DOE does not intend
for departures from the generally
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applicable guidance contained in
appendix A to serve as the basis for
potential procedural legal challenges.
DOE’s proposed clarification, like the
general approach contained in the July
1996 Final Rule, would not impact the
ability of a party to raise a challenge
regarding the substantive merits of a
given rulemaking or the procedural
steps delineated under EPCA or the
APA. (See 42 U.S.C. 6306 (applying
judicial review to EPCA’s consumer
product provisions) and 42 U.S.C.
6316(a)–(b) (extending the application
of 42 U.S.C. 6306 to commercial and
industrial equipment)) DOE sought
comment on this proposed clarification
as well. 86 FR 18901, 18905.
Comments in Favor of DOE’s Proposal
To Restore the Non-Binding Nature of
Appendix A
A number of commenters favored
DOE’s proposed approach. For example,
the Joint Environmentalist Commenters
reasoned that it is impossible for DOE
to create a binding, one-size-fits-all
procedure that would adequately
address all the unique situations and
requirements of DOE’s myriad
rulemakings. In their view, neither the
Administrative Procedure Act (APA)
nor EPCA compel such a rigid approach.
They argued that the rulemaking
process created by the February 2020
Final Rule is more onerous and more
time consuming than the one enacted by
Congress or adopted in the July 1996
Final Rule. These commenters argued
that DOE cannot afford to waste time in
addressing its statutory mandate and
rulemaking backlog, and they supported
DOE’s attempt to restore flexibility to
appendix A by returning it to nonbinding guidance, thereby allowing DOE
to respond appropriately to the unique
circumstances of a particular
rulemaking. (Joint Environmentalist
Commenters, No. 31 at p. 2) 8
Similarly, the CA IOUs urged DOE to
return appendix A to its previous status
as non-binding guidance, which they
argued would restore predictability and
certainty to the rulemaking process.
These commenters argued that each
DOE rulemaking is unique, making the
inflexible blanket approach followed in
the February 2020 Final Rule one that
could result in missed opportunities for
increased energy and water efficiency
and delay DOE’s timely completion of
its statutory obligations (including
8 The parenthetical reference provides a reference
for information located in the docket of this
rulemaking. (Docket No. EERE–2021–BT–STD–
0003, which is maintained at www.regulations.gov).
The references are arranged as follows: (Commenter
name, comment docket ID number, page of that
document).
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elimination of the current backlog of
rulemakings). Furthermore, the CA IOUs
argued that a binding appendix A
opened DOE up to additional avenues of
legal challenge, first on the basis of
appendix A itself and then on the
potentially conflicting requirements of
appendix A and EPCA. They suggested
that a binding appendix A increases
uncertainty and reduces the ability for
all parties to plan for the future, so they
encouraged DOE to expand its reasoning
for this rulemaking action to clarify
DOE’s position for future
Administrations. However, in the
interest of transparency, the CA IOUs
also recommended that DOE should
alert stakeholders and document when
the agency finds it necessary to deviate
from the guidance embodied in
appendix A; however, the commenters
stated that even this provision should be
non-binding. (CA IOUs, No. 34 at pp. 1,
2, 6)
The CEC also agreed with DOE’s
proposal to return appendix A to a nonbinding status as a means to enable DOE
to retain the flexibility to adapt to the
unique circumstances of each
rulemaking. It argued generally that
unless DOE adopted its proposed
approach, following the February 2020
Final Rule would lead to worse air
pollution, higher greenhouse gas
emissions, unnecessary consumption of
water, less-efficient products, and
higher energy bills. It further argued that
DOE’s proposal would ensure necessary
flexibility while providing the regulated
community with sufficient certainty,
encouraging innovation, saving
consumers money, improving
efficiency, making progress on the
backlog of missed deadline rulemakings,
and limiting unnecessary greenhouse
gas emissions. (CEC, No. 35 at pp. 1–2,
11)
Furthermore, the CEC asserted that
the self-imposed administrative barriers
in the February 2020 Final Rule would
lead to continued delays, market
uncertainty, lost energy savings, and
harm to consumers. Although the CEC
encouraged DOE to be as transparent,
consistent, and predictable as possible
in its rulemakings, it cautioned that
strict adherence to all of the February
2020 Final Rule’s required elements will
lead to further delay regarding already
overdue energy conservation standards
and test procedure rulemakings. It
reasoned that a mandatory appendix A
would provide additional opportunities
for procedural challenges, which would
create additional costs and unnecessary
market uncertainties that would limit
innovation and undermine achievable
energy savings. In its view, EPCA’s
mandatory procedures regarding the
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setting of standards and test procedures
control, and to the extent that any
appendix A provisions conflict with
EPCA, those regulatory requirements
would be unlawful. For all these
reasons, the CEC stated that appendix A
should be returned to guidance status.
(CEC, No. 35 at p. 3)
The Joint Advocacy Commenters also
favored returning appendix A to general
guidance and restoring DOE’s discretion
to depart from that guidance in
appropriate cases. These commenters
recognized the importance of having a
predictable process for industry
stakeholders and encouraged DOE to
strive to adhere to the procedures set
forth in appendix A, while stressing the
need for DOE to have the flexibility to
adjust the process to cover the range of
issues which may arise in individual
rulemakings. According to the Joint
Advocacy Commenters, departing from
appendix A’s general practice may
sometimes be necessary to avoid
uncertainty for manufacturers and/or to
avoid unnecessary delays. As an
example, they noted how appendix A
details the analytical practices DOE uses
in rulemaking and argued that DOE
should not need to go through
rulemaking to change appendix A each
time it wishes to modify its analytical
processes to reflect best practices. They
also expressed concern that the
February 2020 Final Rule’s binding
provisions could conflict with statutory
requirements and increase litigation
solely on the issue of whether DOE has
followed the prescribed procedures. For
these reasons, the commenters argued
that applying these guidelines to a
specific rulemaking should be
determined on a case-by-case basis and
that appendix A should be returned to
its original, non-binding status. (Joint
Advocacy Commenters, No. 38 at pp. 1–
2; Joint Advocacy Commenters
(Appendix I), No. 38 at pp. 1, 2)
The State Commenters argued that
application of appendix A should be
determined on a case-by-case basis so
that DOE is accorded the latitude and
discretion to pursue the most
appropriate approach to gathering,
analyzing, and synthesizing stakeholder
input for different standards. In their
view, this procedural flexibility will
help ensure that DOE is able to fulfill its
statutory mandates as efficiently as
possible and with minimal delay and
litigation risk. (State Commenters, No.
29 at p. 8) The commenters also noted
that making appendix A binding on all
rulemakings—including where doing so
conflicts with EPCA—exposes DOE to
increased litigation that would further
delay promulgation of final standards
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on statutorily mandated timelines.
(State Commenters, No. 29 at p. 8)
NPCC and NEEA supported DOE’s
April 2021 proposal, noting that the
current version of appendix A contains
unnecessary obstacles to DOE’s ability
to meet its obligations under EPCA.
(NPCC, No. 12 at pp. 1–2; NEEA, No. 43
at p. 2) NEEA also asserted that many
of the changes in the 2020 Final Rule
were unclear and confusing and that
they handicapped DOE’s ability to
effectively and efficiently adopt
standards and test procedures so as to
achieve maximum economic and
environmental benefits for the Nation—
thereby making it more difficult for DOE
to meet rulemaking deadlines, and
resulting in less national energy savings.
(NEEA, No. 43 at pp. 1–2) NPCC
supported DOE’s effort to revert back to
non-binding guidance and to restore the
flexibility that DOE once had under the
1996 version of appendix A. (NPCC, No.
12 at p. 3) Similarly, NEEA supported
DOE’s ability to address each
rulemaking individually, but in
furtherance of transparency, it urged
DOE to clearly state in a particular
rulemaking when it intended to depart
from the procedures outlined in
appendix A, along with the reasons for
that departure. (NEEA, No. 43 at p. 2)
Comments Opposing DOE’s Proposal
DOE also received a number of
comments opposing its proposed
removal of the mandatory application of
appendix A. In AHRI’s and BWC’s
views, appendix A should remain
mandatory so as to provide certainty,
transparency, and consistency in the
rulemaking process DOE uses to
implement its energy conservation
standards program. (AHRI, No. 25 at p.
1–2; BWC, No. 24 at p. 1) AHRI also
asserted that the Department’s proposal
fails to address or acknowledge DOE’s
stated reason for making the February
2020 Final Rule binding—namely that
of promoting a predictable and
consistent rulemaking environment
where all stakeholders know what to
expect during the rulemaking process—
and DOE’s proposal does not provide
any explanation as to why the record
before the agency no longer warrants
ensuring that it provide a predictable
and consistent rulemaking process.
(AHRI, No. 25 at p. 7)
AFP also argued that appendix A
should remain binding. It dismissed
DOE’s stated reasons for making
appendix A non-binding—namely to aid
in meeting deadlines and to allow it to
meet unspecified ‘‘statutory
obligations’’—noting that with over two
decades of rulemakings, DOE has rarely
met its statutory deadlines even when
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appendix A was non-binding. In AFP’s
view, DOE offered no justification in its
proposal as to why this situation would
change now. (AFP, No. 36 at p. 2) AFP
asserted that the three examples offered
by DOE in favor of making appendix A
non-binding were flawed. It argued that
with respect to DOE’s ability to meet its
statutory deadlines and ‘‘other
applicable requirements,’’ DOE offered
no explanation as to what comprised the
latter. (AFP, No. 36 at pp. 2–3) It also
argued that although DOE stated that
changes or additions to EPCA’s
procedural requirements may affect
DOE’s ability to meet the relevant
rulemaking deadlines, DOE failed to
show how a non-binding appendix A
will either help in meeting these
statutory requirements or what will be
different from DOE’s historic practices.
AFP offered similar criticisms with
respect to DOE’s statements regarding
how the mandatory application of
appendix A’s requirements for early
assessment RFIs and ANOPRs may
affect DOE’s ability to meet statutory
deadlines and how having a binding
appendix A would also make it more
difficult to meet those statutory
obligations. (AFP, No. 36 at pp. 2–3)
AFP also referenced DOE’s statements
to Congress regarding the Department’s
ability to satisfy the requisite statutory
deadlines, in which DOE explained that
the Appliance Standards Program has
historically had difficulties in meeting
its statutorily-required rulemaking
obligations, including when appendix A
was non-binding. (AFP, No. 36 at p. 3)
The commenter asserted that the
proposal did not explain how making
appendix A non-binding will yield
results different from the past, and that
DOE should hold itself accountable for
complying with its own procedures to
ensure that the public will have
confidence in the transparency and
fairness of DOE’s rulemaking process.
(AFP, No. 36 at pp. 3, 5)
Commenters Favoring a Mandatory
Appendix A Coupled With WellDefined Exceptions
Additionally, there were also
commenters who favored the use of
limited, well-defined exceptions to
appendix A while maintaining its
overall mandatory approach. A number
of manufacturers favored an approach
that would retain the mandatory nature
of appendix A (along with the certainty
and predictability it offered), while
building in additional flexibility for
DOE, and objected to returning
appendix A to its prior status as
guidance. (Carrier, No. 26 at pp. 1–2;
Nortek, No. 19 at p. 2; GEA, No. 20 at
pp. 2–3; Lennox, No. 18 at p. 2; A.O.
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Smith, No. 27 at p. 2; Goodman, No. 22
at p. 2; Trane, No. 23 at p. 2) Nortek and
GEA added that if Appendix A becomes
non-binding, DOE should add both a
mandatory public notice and comment
provision that must be followed
whenever the agency intends to deviate
from appendix A and a rule-specific
explanation for the deviation, followed
by an opportunity for public comment
before the agency proceeds with such
deviation. (Nortek, No. 19 at p. 2; GEA,
No. 20 at pp. 2–3; see also Goodman,
No. 22 at p. 2 (asserting that DOE should
explain its deviation)) Carrier, Lennox,
A.O. Smith, and Trane offered that if
DOE required more flexibility (such as
making more expeditious, non-material,
technical adjustments to test
procedures), DOE should tailor those
provisions of appendix A where that
added flexibility is needed, rather than
making Appendix A non-binding.
(Carrier, No. 26 at p. 4; Lennox, No. 18
at p. 2; A.O. Smith, No. 27 at p. 3;
Trane, No. 23 at p. 20). A.O. Smith
suggested that DOE should propose to
add a clear ‘‘exception clause’’ that
would permit DOE to deviate from
appendix A when certain criteria are
met, namely: (1) Consensus agreements;
(2) negotiated rulemakings; and (3) test
procedure rulemakings that are
addressing clarifications necessary to
provide clarity to the market, reduce
uncertainty, and provide a level playing
field. (A.O. Smith, No. 27 at p. 2) In
A.O. Smith’s view, this limited
exception would recognize those
circumstances where deviations from
appendix A are necessary and the
expediting of the rulemaking process is
reasonable. (A.O. Smith, No. 27 at pp.
2–3) Carrier suggested that DOE should
retain its current early assessment
requirement (i.e., that an early
assessment be conducted prior to the
issuance of a standards NOPR) but that
the current rule be modified to permit
DOE the ability to use the most efficient
early assessment method available.
(Carrier, No. 26 at p. 1) The commenter
offered a similar approach with respect
to the current 180-day buffer period
between the finalizing of a test
procedure rule and the proposal for new
or amended energy conservation
standards. (Carrier, No. 26 at p. 2)
AGA objected to DOE’s proposal to
make appendix A non-binding and
noted that because the 1996 version of
appendix A had not been binding on
DOE, it held little value. The commenter
stated that in 2016, DOE frequently
ignored appendix A, and its nonbinding nature effectively conflicted
with the need for an orderly and
predictable regulatory process. (AGA,
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No. 33 at pp. 3–4) Reversing the
February 2020 Final Rule’s mandatory
nature would, in its view, be a serious
mistake in light of AGA’s past
experience with having a non-binding
version of appendix A in place. (AGA,
No. 33 at p. 4) AGA argued that
concerns over the rigidity of the
February 2020 Final Rule—which AGA
acknowledged to be the case with
respect to some requirements—can be
addressed through the revision of those
requirements or by providing exceptions
in appropriate circumstances, all
without resorting to making appendix A
non-binding. (AGA, No. 33 at pp. 4–5)
NPGA stated that while DOE’s April
2021 NOPR has identified a number of
rulemaking scenarios where different
procedures may be beneficial, the
agency’s ability to make unilateral
decisions about when and how to
implement different rulemaking
procedures lacks transparency. (NPGA,
No. 15 at p. 2) It stressed the importance
of getting stakeholder input regarding
the potential feasibility and energy
savings of rulemaking actions as soon in
the process as possible. For that reason,
NPGA supported the continued use of
the ‘‘early look’’ provisions to solicit
public comments on new regulatory
actions. However, it agreed with DOE
that different rulemaking approaches
may be better suited in some cases for
soliciting stakeholder input, so in the
alternative, NPGA suggested that DOE
should propose a new structure or
minimum requirements that must be
satisfied to justify an agency decision to
deviate from appendix A and seek
stakeholder information in response.
(NPGA, No. 15 at pp. 2, 3) NPGA also
argued that businesses need regulatory
predictability and that DOE’s proposal
to largely operate on a case-by-case basis
would make it difficult for
manufacturers to have confidence in
such rulemakings. It urged DOE to
prepare and finalize regulations in an
orderly fashion with a fair opportunity
for all stakeholders to share information
with the agency. (NPGA, No. 15 at p. 3)
Crown Boiler (along with fellow
boiler manufacturers U.S. Boiler and
New Yorker Boiler who both filed
nearly identical responses) opposed
DOE’s proposed change to make
appendix A non-binding. Although
Crown Boiler acknowledged that in
some cases it may make sense for DOE
to have flexibility in adapting the
rulemaking process to different
situations, the commenter asserted that
when DOE did have such discretion in
the past, the Department abused it.
Crown Boiler argued that where
deviation from appendix A is necessary,
DOE should be required to justify such
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deviation in writing after soliciting
stakeholder input. If DOE is deviating
frequently from appendix A, Crown
Boiler stated that further amendments to
appendix A may be required, but the
solution should not be to scrap the
binding nature of the process. (Crown
Boiler, No. 10 at pp. 2–3; U.S. Boiler,
No. 11 at p. 3; and New Yorker Boiler,
No. 13 at pp. 2–3)
ALA urged DOE to retain the binding
aspects of appendix A but recognized
that a one-size-fits-all approach may not
always be practical. It argued that
retaining the binding aspects of the
February 2020 Final Rule will allow
DOE to meet its statutory obligations
and eliminate time-wasting negotiations
on process and procedures. (ALA, No.
28 at p. 2) ALA suggested that if
appendix A becomes non-binding, DOE
should ensure consistency such as
through applying at least a 180-day
period between finalizing a test
procedure and proposing standards
when major changes affecting energy
consumption measurements are at issue,
although the commenter concluded that
a shorter time frame may be warranted
for changes that do not impact measured
energy performance. In its view, this
change will ensure the best outcome in
setting appropriate standards and
reduce undue burden—particularly on
small business entities who have
limited resources with which to fully
participate in DOE’s rulemakings. (ALA,
No. 28 at 2)
Lutron stated that it understands
DOE’s desire to increase flexibility and
improve efficiency by restoring DOE’s
discretion to depart from appendix A’s
general guidance. It did not oppose such
changes as a general matter, but the
company argued that certain aspects
should remain mandatory, specifically:
(1) Test procedures must be finalized
before energy conservation standards
are proposed; (2) New test procedures or
test procedure amendments that impact
measured energy must have an adequate
lead time between finalization of that
test procedure and a new or amended
standards proposal; and (3) There
should be some form of stakeholder
engagement before issuance of a notice
of proposed rulemaking for energy
conservation standards. (Lutron, No. 16
at p. 2) Lutron suggested that DOE
should revert to the language in section
14(a) of the July 1996 Final Rule, which
required DOE to make a finding that it
is necessary and appropriate to deviate
from the procedure specified in
appendix A, to explain why, and to
provide interested parties an
opportunity to comment. The
commenter also argued that DOE should
clarify that any such deviations will be
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rule-specific and done on a case-by-case
basis, rather than being broadly
applicable. (Lutron, No. 16 at p. 2)
Both Grundfos and HI disagreed with
DOE’s proposal to return appendix A to
guidance and noted that manufacturers
are held to the strict requirements of the
regulations, so DOE should likewise be
expected to define a clear and consistent
method for how it intends to manage its
process to create/update those
regulations, thereby providing
stakeholders with needed predictability
and consistency—as well as a means of
enforcing those provisions through
legally enforceable rights. They did not
favor a case-by-case approach and
stressed that such an approach would be
at odds with the need for consistency,
predictability, and transparency in
DOE’s regulatory process. However,
these commenters also offered a middle
ground, suggesting that appendix A
should be binding, but with clear,
thoughtful, and well-constructed
flexibility to ensure DOE can meet the
applicable requirements of EPCA.
(Grundfos, No. 37 at pp. 1, 2; HI, No. 42
at pp. 1, 2)
The SBA Office of Advocacy stated
that appendix A should remain binding
while allowing for exceptions in certain
instances. (SBA Office of Advocacy, No.
14 at p. 4) It stated that, among other
things, without clear-cut processes for
how the agency will promulgate
standards, small businesses are not able
to participate meaningfully in
commenting and are not able to provide
the types of substantive technical
comments necessary to determine
whether a particular test procedure is
feasible. (SBA Office of Advocacy, No.
14 at p. 4)
NAFEM opposed restoring DOE’s
discretion to depart from appendix A’s
general provisions and asserted that if
DOE is concerned about unnecessary
delays, the Department could amend the
rule by including the option of using a
NODA for early assessment instead of
relegating the whole appendix A to
being optional guidance. (NAFEM, No.
30 at p. 4) NAFEM added that the April
2021 NOPR makes clear that DOE is
seeking additional insulation from
having to follow any rule or having any
provisions that would impinge on its
unbridled discretion by removing any
legal impediment to its actions.
(NAFEM, No. 30 at p. 4) In NAFEM’s
view, removing accountability and
allowing for unlimited discretion will
not provide economic stability or
efficiency in the EPCA rulemaking
process. (NAFEM, No. 30 at p. 4)
The Joint Industry Commenters also
strongly opposed DOE’s proposal to
eliminate the mandatory nature of the
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February 2020 Final Rule. (Joint
Industry Commenters, No. 40 at p. 4)
They suggested instead that DOE should
ensure the rule is tailored to its needs
and provides the needed flexibility such
that the agency can follow it regularly.
(Joint Industry Commenters, No. 40 at p.
5). If DOE reverts back to a non-binding
version of appendix A, the Joint
Industry Commenters suggested DOE
consider adding the following: (1)
Provide parties with notice and
explanation of why a deviation from
appendix A is necessary and
appropriate; (2) clarify that deviations
can only be established on a case-bycase basis; (3) provide stakeholders with
the opportunity to comment on the need
for the deviation; and (4) maintain the
mandatory nature of the rule for certain
provisions, including: (a) A requirement
to finalize test procedures before issuing
proposed energy conservation standards
with a 180-day lead-in period for new
test procedures or amended test
procedures that impact measured energy
use or efficiency, and (b) an opportunity
for early stakeholder input prior to
issuance of proposed energy
conservation standards. (Joint Industry
Commenters, No. 40 at pp. 6–7)
DOE’s Response to Comments
DOE first notes that the majority of
commenters, both in support of and
against restoring the Department’s
discretion to depart from the general
guidance in Appendix A, have noted the
merits of providing DOE with some
measure of flexibility in its rulemaking
processes. (See, e.g., Carrier, No. 26 at
pp. 1–2 (favoring a more flexible
application of the procedures in
appendix A); Nortek, No. 19 at p. 2
(suggesting DOE provide rule-specific
explanations when deviations are
needed); A.O. Smith, No. 27 at p. 3
(preferring a binding process with
reasonable exceptions over the current
rigid approach); AGA, No. 33 at pp. 4–
5 (noting that the rigidity imposed by
the current requirements can be
mitigated by providing for exceptions in
certain circumstances); State
Commenters, No. 29 at p. 8 (noting that
procedural flexibility will help ensure
that DOE is able to fulfill its statutory
mandates as efficiently as possible with
minimal delay and litigation risk); Joint
Environmentalist Commenters, No. 31 at
p. 2 (discussing the importance of
allowing DOE to respond appropriately
to the unique circumstances of a
particular rulemaking)) Where
commenters differ is on how to
implement this flexibility. Some
commenters, such as the Joint
Environmentalist Commenters, support
making appendix A non-binding to
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allow DOE the necessary flexibility to
respond to the unique circumstances of
a particular rulemaking, while other
commenters, such as the Joint Industry
Commenters, support retaining the
current, binding nature of appendix A
with modifications to ensure procedures
are tailored to DOE’s needs and provide
the needed flexibility such that DOE can
follow it regularly. (Joint
Environmentalist Commenters, No. 31 at
p. 2; Joint Industry Commenters, No. 40
at p. 5)
After carefully considering these
comments, DOE is finalizing the
proposal from the April 2021 to revert
appendix A back to its original status as
non-binding guidance. That being said,
DOE recognizes the merits in both
approaches and believes the revisions to
appendix A finalized in this document
represent the best combination of these
two approaches. Accordingly, DOE is
also modifying appendix A to reduce
the need for departures from the
generally-applicable guidance by
accounting for specific circumstances
surrounding a rulemaking. For example,
in section III.E of this document, DOE
is implementing guidance on when a
180-day period between finalization of a
test procedure and the end of the
comment period for an associated
standards proposal is warranted. These
changes will result in fewer departures
from the procedures laid out in
appendix A. However, as noted
previously, DOE currently has energy
conservation standards and test
procedures in place for more than 60
categories of covered products and
equipment and is typically working on
anywhere from 50 to 100 rulemakings.
Further these covered products and
equipment encompass a wide variety of
industries. For certain covered products
and equipment, such as commercial
package air conditioning and heat
pumps, there are established trade
organizations that represent a majority
of manufacturers and that are able to
compile comprehensive datasets.
External power supplies, on the other
hand, are used in a wide range of
products and do not fall neatly into a
single trade organization. As a result,
DOE may need to tailor its rulemaking
approach to account for the lack of
consolidated information for a given
covered product. This is just one
example of how DOE has had to adapt
its rulemaking process due to varying
circumstances across covered products/
equipment. Consequently, it is simply
not feasible to anticipate every instance
of when flexibility or an exception to
the generally applicable procedures of
appendix A would be warranted for the
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more than 60 categories of covered
products and equipment that DOE
regulates. As such, in addition to the
specific instances where DOE is
incorporating flexibility into appendix
A, DOE believes it is imperative that the
Department have the discretion to
depart from the generally-applicable
guidance in appendix A.
Several commenters expressed
concern that reverting to the prior,
longstanding use of appendix A as nonbinding guidance would reduce
certainty, transparency, and consistency
in the rulemaking process DOE uses to
implement its Appliance Standards
Program. (See, e.g., AHRI, No. 25 at p.
1–2; BWC, No. 24 at p. 1) NAFEM went
so far as to state that a non-binding
appendix A would allow for unbridled
discretion in the rulemaking process by
removing any legal impediment to
DOE’s actions. (NAFEM, No. 30 at p. 4)
In response, DOE notes that reverting
appendix A to non-binding guidance
has no effect on the procedures that are
already required under EPCA. DOE will
continue to follow those statutory
requirements and strive to continue to
meet the related deadlines that EPCA
prescribes. For example, EPCA requires
that a test procedure or standards
proposal be published for public
comment, that comment periods be of
specified minimum durations, and that
notice of determinations be subject to
notice and comment before DOE
publishes a final determination not to
amend a given set of standards for
covered products and equipment. (See
42 U.S.C. 6293(b)(2) (prescribing
minimum comment period for test
procedure proposed rulemakings); 42
U.S.C. 6295(m)(2) (prescribing
minimum comment period for proposed
determinations); and 42 U.S.C.
6295(p)(2) (prescribing minimum
comment period for standards proposed
rulemakings)) Further, DOE will
continue to ensure new or amended
energy conservation standards and test
procedures meet applicable statutory
criteria in EPCA (e.g., standards result
in the maximum improvement in energy
efficiency that is technologically
feasible and economically justified).
Taken together, all of these
requirements establish a consistent,
predictable rulemaking process.
NAFEM’s concerns about unbridled
discretion and a lack of any legal
impediment to DOE’s actions are
unfounded. As discussed above, EPCA
restrains DOE’s discretion in several
areas and specifies a more detailed
rulemaking process than that laid out in
the Administrative Procedure Act.
As for comments regarding the
transparency of DOE’s rulemaking
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process, DOE notes that appendix A is
an agency construction—a provision
that was developed not only to address
how DOE will conduct energy
conservation standards and test
procedure rulemakings but also to
provide transparency to DOE’s
rulemaking process. As stated
throughout this rulemaking, DOE is
making appendix A non-binding in
recognition of the fact that DOE should
be able to tailor its rulemaking process
to best fit the unique circumstances of
a particular rulemaking, not to reduce
transparency in its rulemaking process.
That being said, DOE recognizes that
deviations from appendix A without
notice or explanation are not conducive
to a transparent rulemaking process.
Accordingly, DOE is modifying its
proposed approach from the April 2021
NOPR to more closely match the
original appendix A by providing the
public with notice and an explanation
of any deviations to the generally
applicable guidance of appendix A.
These deviations will be narrowly
tailored to the individual rulemaking at
issue and will not be applied on an
across-the-board basis.
In response to those commenters who
criticized DOE’s proposal and noted the
Department’s past inability to meet
statutory deadlines even under a nonbinding appendix A, DOE acknowledges
the difficulties it has had in meeting
these requirements in the past. DOE will
continue to strive to meet these
deadlines, and the removal of the
mandatory provisions imposed by the
2020 February Final Rule (which tended
to lengthen the rulemaking process) will
provide DOE with a greater chance of
success in doing so. Reserving this
discretionary flexibility will aid in
DOE’s ability to focus its various
resources in meeting the deadlines
imposed under EPCA (or any other
potential deadlines, such as those
imposed pursuant to court order).
Furthermore, DOE’s past difficulty in
meeting these deadlines when appendix
A’s provisions were not mandatory only
further highlights the need for the
agency to have more flexibility in
carrying out a given rulemaking, not
less, as the February 2020 Final Rule
dictates.
Finally, DOE agrees with those
commenters who suggested that the
removal of the binding nature of
appendix A would reduce the overall
scope of DOE’s litigation risk and avoid
scenarios where appendix A
requirements may conflict with
statutory requirements in EPCA.
Reducing litigation risk, among other
things, provides added certainty to
DOE’s rulemaking process. DOE also
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notes that removing the potential for
procedural challenges stemming from a
set of self-imposed requirements does
not affect the ability of interested parties
to bring substantive legal challenges
under the relevant statutory provisions,
such as the APA and EPCA. This change
should contribute to DOE’s ability to
satisfy its statutory obligations in a
timely manner.
For the aforementioned reasons, DOE
is finalizing the proposal from the April
2021 NOPR to restore DOE’s discretion
to depart from the generally-applicable
guidance of appendix A, subject to the
modification discussed above requiring
notice and explanation for each
deviation.
B. Significant Energy Savings Threshold
As DOE noted in the preamble to the
April 2021 NOPR, the Secretary of
Energy may not prescribe an amended
or new energy conservation standard if
the Secretary determines that such
standard will not result in significant
conservation of energy. (42 U.S.C.
6295(o)(3)(B); 42 U.S.C.
6313(a)(6)(A)(ii)(II); and 42 U.S.C.
6316(a)) Congress did not define the
statutory term ‘‘significant conservation
of energy,’’ and, for several decades
prior to the February 2020 Final Rule,
DOE also did not provide specific
guidance or a numerical threshold for
determining what constitutes significant
conservation of energy. Instead, DOE
determined on a case-by-case basis
whether a particular rulemaking would
result in a significant conservation of
energy.
In a departure from this practice, the
February 2020 Final Rule added a
numerical threshold for significant
conservation of energy that currently
applies to all energy conservation
standards rulemakings for both covered
products and equipment. That threshold
requires an energy conservation
standard to result in either: (1) A 0.30
quad reduction in site energy use over
a 30-year analysis period or (2) a 10percent reduction in site energy use
over that same period. DOE explained in
the February 2020 Final Rule its
expectation that the threshold would
ensure that economically-justified
standards would be developed, while
also making the rulemaking process
more predictable. 85 FR 8626, 8670.
As DOE explained in its April 2021
proposal, the Department is
reconsidering its policy views on
whether this numerical threshold allows
DOE to fully consider whether an
energy conservation standard would
result in significant conservation of
energy. 86 FR 18901, 18905. In
particular, DOE is reevaluating whether
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70901
the significance of energy savings
offered by a new or amended energy
conservation standard can be
determined without knowledge of the
specific circumstances surrounding a
given rulemaking.
As noted in the April 2021 NOPR, a
uniform numerical threshold for site
energy savings does not account for
differences in primary energy and fullfuel-cycle (‘‘FFC’’) effects for different
covered products and equipment when
determining whether energy savings are
significant. Id. Primary energy and FFC
effects include the energy consumed in
electricity production (depending on
load shape), in distribution and
transmission, and in extracting,
processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum
fuels). For example, 1 quad of site
electricity energy consumption in 2022
corresponds to approximately 3.05
quads of FFC energy consumption (for
a generic end-use load shape). By
contrast, 1 quad of site natural gas or oil
energy consumption in 2022
corresponds to 1.11 and 1.17 quads of
FFC energy consumption, respectively.9
Thus, FFC effects present a more
complete picture of the impacts of
potential energy conservation standards,
including greenhouse gas emissions,
and would allow DOE to more fully
consider the impacts of potential energy
conservation standards during its
rulemaking processes. This is especially
important in light of the fact that the
United States has now rejoined the Paris
Agreement and will exert leadership in
confronting the climate crisis.10
Additionally, DOE pointed out in the
April 2021 NOPR that some covered
products and equipment have most of
their energy consumption occur during
periods of peak energy demand—a
condition that a uniform numerical
threshold does not capture. 86 FR
18901, 18905. The impacts of these
products on the energy infrastructure
can be more significant than those from
products with relatively constant site
energy use demand. For example,
whereas consumer refrigerators operate
24 hours per day, 365 days per year,
central air conditioners typically
operate during only part of the year,
including periods of peak demand (i.e.,
during the hottest summer days), a
factor that is likely to impact grid
reliability. Thus, reducing energy use
9 See Coughlin, K. Projections of Full-Fuel-Cycle
Energy and Emissions Metrics. (2013). LBNL–
6025E; Energy information Administration Annual
Energy Outlook 2021 (available at: https://
www.eia.gov/outlooks/aeo).
10 See Executive Order 14008, ‘‘Tackling the
Climate Crisis at Home and Abroad,’’ 86 FR 7619
(Feb. 1, 2021).
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during periods of peak demand has a
more significant impact as it helps
reduce stress on energy infrastructure.
But the current threshold for
determining whether energy savings are
significant does not allow DOE to assign
greater significance to energy savings
that have a greater impact on reducing
the stress on U.S. energy infrastructure.
FFC and grid impacts are but two
examples of any number of factors that
cannot be fully accounted for when
using DOE’s current uniform threshold
for significant conservation of energy.
Accordingly, DOE sought comment on
whether to eliminate the current
threshold for determining significant
conservation of energy and to revert to
its prior practice of making such
determinations on a case-by-case basis
or on any suggested alternatives.
Commenter responses on this issue are
summarized in the ensuing paragraphs,
followed by the Department’s response.
Comments Supporting Removal of the
Significant Energy Savings Threshold
A number of commenters supported
DOE’s proposal to remove the February
2020 Final Rule’s significant energy
savings threshold. For example, in
expressing support for DOE’s proposal,
NPCC noted its initial objection to the
threshold when it was first proposed by
DOE. (NPCC, No. 12 at p. 3) NEEA held
a similar view, asserting that the
threshold was overly prescriptive and
would prevent DOE from adopting
standards that save energy and are
economically justified. The commenter
provided hypothetical examples of what
it viewed as anomalous results that
might occur if the significant energy
saving threshold were to be used in its
current form. (NEEA, No. 43 at p. 2
(noting that DOE would be able to
implement a standards rulemaking
resulting in 0.1 quads of energy savings
if it represented 11% of site energy use
but would be unable to implement two
separate rulemakings resulting in 0.2
quads and 8% of site energy use
reduction each))
Some commenters also argued that
the particular facts and circumstances
need to be fully considered by DOE
before it can make a determination
regarding the significance of the energy
savings involved. (State Commenters,
No. 29 at p. 8; CEC, No. 35 at p. 5)
Several Commenters also argued that
the current significant energy savings
threshold is both an unreasonable
interpretation of EPCA and in conflict
with existing case law. (State
Commenters, No. 29 at p. 9 (asserting
that the threshold violated EPCA, case
law, and congressional intent, and
would result in lost public benefits);
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Joint Environmentalist Commenters, No.
31 at pp. 3–4) (asserting that the
threshold violated EPCA and judicial
precedent); CEC, No. 35 at pp. 4–5
(citing NRDC v. Herrington, 768 F.2d
1355, 1373 (D.C. Cir. 1985) and asserting
that energy savings are significant if
they are not ‘‘genuinely trivial’’)) The
CEC further argued that using a
mandatory significant energy savings
threshold as an initial consideration
would allow DOE to side-step its
obligations to evaluate the costs and
benefits of any energy conservation
opportunity that is not genuinely trivial,
which is particularly important for
technologies that may currently have a
small market share but which could
consume significant amounts of energy
in the future (e.g., electric vehicle
supply equipment). It also warned that
a static significant energy savings
threshold could be abused in situations
where products could be split into
numerous categories in order to ensure
that no product meets the threshold,
such that no standards may be
established or amended. (CEC, No. 35 at
pp. 4–5)
The Joint Environmentalist
Commenters characterized the adoption
of the significant energy savings
threshold as a ‘‘harmful change’’ that is
inflexible. They argued that many of
DOE’s previously adopted energy
conservation standards would not have
met the 2020 February Final Rule’s
threshold, despite providing billions of
dollars in utility bill savings, avoided
health harms, and reduced greenhouse
gas emissions. These commenters also
argued that Congress intended for DOE
to apply a gradualist approach by
requiring the reexamination of
standards at least every six years, and
they reasoned that DOE cannot use a
significant energy savings threshold to
short-circuit this statutory requirement
to reconsider standards at regular
intervals. (Joint Environmentalist
Commenters, No. 31 at pp. 3–5)
The Joint Advocacy Commenters
argued generally that adoption of the
proposals contained in the April 2021
NOPR would have the potential to
achieve very large consumer and
climate benefits, while still providing
ample opportunity for stakeholder input
throughout DOE’s rulemaking process.
(Joint Advocacy Commenters, No. 38 at
p. 1) Regarding the threshold
specifically, these commenters favored
its removal because, in their view, such
an arbitrary threshold is inconsistent
with the relevant case law and
congressional intent and has the
potential to sacrifice large savings for
both consumers and businesses since
site energy savings of 0.30 quads (as
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provided in the threshold) are
equivalent to electricity bill savings of
about $11 billion. The Joint Advocacy
Commenters further argued that the
numerical threshold would prevent
DOE from pursuing a standard, even if
such standard would impose no costs,
because the agency would never get to
consider that level of savings as part of
the required analysis of economic
justification. These commenters also
faulted the numerical threshold for not
allowing DOE to account for factors
such as the increased significance of
energy savings that can reduce
greenhouse gas emissions or the specific
circumstances associated with a given
product. They agreed with the April
2021 NOPR’s arguments that the
significant energy savings threshold
does not allow DOE to account for other
relevant considerations such as a
potential standard’s impact on peak
demand and reduction of stress on the
electric grid, and they added that the
threshold could also prevent the
successful conclusion of consensus
agreements. For these reasons, the Joint
Advocacy Commenters recommended
that DOE should return to considering
whether significant energy savings are
present on a case-by-case basis, as it has
historically done. (Joint Advocacy
Commenters, No. 38 at pp. 2–3; Joint
Advocacy Commenters (Appendix I),
No. 38 at pp. 1, 2, 9–11)
IPI also supported DOE’s proposed
removal of the significant energy
savings threshold and suggested that
DOE should also consider other factors
besides climate effects when
determining whether energy savings are
significant. (IPI, No. 17 at p. 1) In
addition to supporting DOE’s stated
reasons for removing the threshold, IPI
argued that had the threshold been in
place when DOE set standards for
commercial warm air furnaces in 2016,
the Nation would have had to forego
12.4 million metric tons of CO2
emissions savings, as well as significant
reductions in criteria pollutants and
consumer savings of $1 billion. (IPI, No.
17 at p. 2) The commenter asserted that
foregoing such savings in the future by
continuing to use the threshold would
significantly undermine commitments
to U.S. leadership on climate change
and would bypass the ‘‘cost-free
chance[s] to save energy’’ that courts
have said that Congress did not intend
for DOE to pass up. (IPI, No. 17 at pp.
2–3) In IPI’s view, relying solely on
numerical thresholds is arbitrary (IPI,
No. 17 at p. 3), and it agreed with the
April 2021 NOPR’s observation that
peak demand has a greater impact on
U.S. energy infrastructure compared to
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non-peak demand. IPI stated that the
timing of energy demand matters not
only in this context but also with
respect to climate, health, and consumer
impacts, explaining that electricity
generators that satisfy peak demand can
also be among the most-polluting
generators and that some consumers
may experience increased electricity
pricing during peak demand periods.
(IPI, No. 17 at pp. 3–4) As a result, in
IPI’s view, energy savings for appliances
that operate during peak demand
periods can have greater benefits for the
climate, human health, and consumers
than the raw numbers show. For this
reason, IPI argued that these impacts
should be considered when determining
whether a given savings level is
significant. (IPI, No. 17 at p. 4)
IPI added that climate and health
impacts should be incorporated into
DOE’s reasoning for the removal of the
current energy savings threshold. (IPI,
No. 17 at p. 4) In addition to DOE’s
reasoning that the current threshold’s
link to site energy use does not permit
DOE to account for differences in
primary energy and FFC effects for
different covered products, IPI
contended that a given amount of site
energy usage will also be associated
with different amounts of FFC
emissions depending on the fuel type
used and that those different emissions
will likewise be associated with
different climate and health impacts.
The commenter argued that these
reasons favor DOE’s consideration of
climate and health impacts when
assessing the significance of energy
savings for a given standard and in
repealing the February 2020 Final Rule’s
numerical thresholds.11 (IPI, No. 17 at p.
4)
The CA IOUs also supported removal
of the significant energy savings
threshold, arguing that it directly
conflicts with DOE’s ability to set
energy conservation standards that
achieve the maximum energy savings
that are technologically feasible and
economically justified. They
characterized it as an ‘‘arbitrary
minimum savings threshold’’ and also
faulted it for its potential to prevent
DOE from setting efficiency standards
for emerging technologies that may have
relatively low market penetration
currently but that present large savings
opportunities for the future. The CA
IOUs argued that appropriate Federal
11 IPI also offered as additional support its
comments to DOE’s prior proposals regarding
appendix A in which it opposed the use of a
threshold for significant energy savings. (IPI, No. 17
(Attachment 4) (Comments dated March 16, 2020)
at pp. 3–4)); IPI, No. 17 (Attachment 5) (Comments
dated May 6, 2019) at pp. 2–3)
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energy conservation standards could
help reduce the social cost of such
technologies and accelerate their
acceptance, and accordingly, these
commenters recommended that DOE
should again interpret significant energy
savings to mean not ‘‘genuinely trivial’’
(referencing the Herrington case). (CA
IOUs, No. 34 at pp. 2–3)
Finally, the proposed elimination of
the significant energy savings threshold
was also supported by some
manufacturers. A.O. Smith stated that it
did not believe that appendix A needed
to include a significant energy savings
threshold, as the factors that EPCA
requires DOE to evaluate include both
savings and cost. (A.O. Smith, No. 27 at
p. 4) Trane noted that, even with the
current approach’s ‘‘10% improvement
backstop,’’ this level of improvement
could represent a significant leap for
many covered products that is simply
impossible to achieve, let alone be
technically feasible. (Trane, No. 23 at p.
3). Instead, Trane favored permitting
DOE to use its own discretion, after
carefully weighing stakeholder input, as
to whether potential cumulative energy
savings are significant enough to
proceed with a standards rulemaking.
(Trane, No. 23 at p. 3)
Comments Opposing Removal of the
Significant Energy Savings Threshold
A number of commenters opposed
DOE’s proposal to remove the current
threshold for significant energy savings.
For example, in AHRI’s view, DOE’s
establishment of the current significant
energy savings threshold, rather than
relying on a case-by-case determination,
fell within DOE’s authority under EPCA.
(AHRI, No. 25 at p. 7) Many commenters
asserted that the use of such a threshold
would provide consistency,
predictability, certainty, stability, or
some combination of these elements, to
regulated entities and stakeholders, and
they argued that it would ensure that
DOE pursues economically-justified
standards. (AHRI, No. 25 at p. 7; Joint
Industry Commenters, No. 40 at p. 12;
Goodman, No. 22 at p. 3; Lutron, No. 16
at p. 2; Zero Zone, No. 21 at p. 2;
Grundfos, No. 37 at p. 2; HI, No. 42 at
p. 2; AGA, No. 33 at p. 5; MHI, No. 32
at p. 2). The SBA Office of Advocacy
made special note that the threshold
provides certainty to small businesses.
(SBA Office of Advocacy, No. 14 at p.
5) A number of commenters also
asserted that focusing on potential
standards capable of satisfying the
threshold would help DOE prioritize its
resources and meet its statutory
deadlines. (AHRI, No. 25 at pp. 7–8;
Carrier, No. 26 at p. 2; Crown Boiler, No.
10 at p. 2; Nortek, No. 19 at p. 3; BWC,
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70903
No. 24 at pp. 2–3; GEA, No. 20 at p. 3;
Joint Industry Commenters, No. 40 at p.
12; ALA, No. 28 at 2; MHI, No. 32 at p.
2; AFP, No. 36 at pp. 1–2, 4; SBA Office
of Advocacy, No. 14 at p. 5) (See also
U.S. Boiler, No. 11 at pp. 2–5 and New
Yorker Boiler, No. 13 at pp. 2–4) 12 GEA
added that if a rule is not going to make
a meaningful difference in energy
consumption, DOE should make no new
standard and return to the rule in three
years, pursuant to EPCA. (GEA, No. 20
at p. 3) NAFEM cautioned that removing
the threshold and leaving an undefined
process will make standards
rulemakings more contentious and less
efficient. (NAFEM, No. 30 at p. 5)
Some commenters also contended
that by removing the threshold, DOE
would improperly be relying on factors
outside of its statutory authority when
considering whether to adopt a given
standard (e.g., rejoining of the U.S. to
the Paris Agreement, reducing stress on
energy infrastructure, and considering
greenhouse gas emissions). (AHRI, No.
25 at p. 8; AFP, No. 36 at pp. 4–5) These
commenters argued that DOE’s
consideration of ‘‘significant
conservation of energy’’ is limited to
whether there is a significant
conservation of electricity or fossil fuels
and does not extend to whether that
conservation of energy would have a
significant impact on other DOE
priorities such as reducing peak
demand, limiting stress on electricity
infrastructure, or taking action on
climate change. (AHRI, No. 25 at p. 8;
AFP, No. 36 at pp. 4–5). AGA faulted
DOE for proposing to remove the
significant energy savings threshold
before having even had a chance to use
it. (AGA, No. 33 at p. 5 (noting the same
and requesting DOE first analyze
previous appliance efficiency
rulemakings to provide context and a
transparent rationale for the threshold
value (or lack thereof) that DOE would
apply to future rulemakings.)) ALA
disfavored case-by-case determinations,
and the organization asserted that the
economic cost of the regulatory process
and related testing should be weighed
against the potential energy savings over
a determined period of time. (ALA, No.
28 at p. 2) ALA noted its prior support
for DOE’s efforts to prioritize test
procedures and standards development
to identify categories offering consumers
the most energy savings, and it argued
that following this approach would
allow DOE to target its limited resources
on those products consuming the most
12 The comments from Crown Boiler will serve as
the basis for discussion of the positions taken by
these commenters, as the comments provided were
essentially identical.
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energy, thereby creating a baseline
approach. (ALA, No. 28 at pp. 2–3) AFP
noted that the agency has devoted
substantial time and effort to rules
producing little energy savings, while
missing its deadlines 90 percent of the
time. (AFP, No. 36 at pp. 1–2, 4 (citing
DOE’s own finding that 40 percent of
the 60 rules it had examined produced
6 percent of the overall energy
efficiency savings))
While many commenters supported
the continued use of the significant
energy savings threshold, some also
recognized the need for DOE to have
some flexibility in how the threshold
would be applied. For example, while
Carrier thought the threshold would
apply in most instances, it
acknowledged that there may be some
instances where additional or
alternative benefits may exist and
suggested that DOE revise appendix A
to provide the agency with the ability to
address those unique cases (where
appropriate) with notice and
explanation. (Carrier, No. 26 at p. 2) The
Joint Industry Commenters and Nortek
reasoned that, even if appendix A
became non-binding, DOE should retain
the significant energy savings threshold,
because DOE could undertake a
deviation after giving the public notice
and an opportunity for comment should
other factors lead DOE to conclude that
doing so would satisfy EPCA. (Joint
Industry Commenters, No. 40 at p. 12;
Nortek, No. 19 at p. 3) Goodman also
offered alternatives to the complete
removal of the threshold, suggesting that
DOE either: (1) Retain the current
threshold as a rebuttable presumption
that, if met, would be deemed
‘‘significant’’ while savings levels falling
under the threshold would be presumed
‘‘insignificant’’ unless DOE
demonstrates otherwise or (2) define
‘‘significant energy savings’’ to be a
value connected to the average annual
per-household energy use requirement
specified in 42 U.S.C. 6292(b)(1)(B).
(Goodman, No. 22 at p. 4) Lutron
suggested that if the current threshold
causes problems in achieving the
Administration’s energy conservation
and climate goals, lowering the
threshold would be preferable to its
removal. (Lutron, No. 16 at pp. 2–3)
NAFEM stated that if DOE removes the
threshold, appendix A should be
revised to provide a list of all of the
factors DOE may consider when making
a determination that energy savings are
significant. (NAFEM, No. 30 at p. 5)
ALA asserted that there should be some
baseline approach to setting standards
to avoid wasting time and money, but it
added that using exact thresholds are
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unlikely to apply to all product types.
(ALA, No. 28 at p. 2)
Lennox suggested that DOE should
issue a supplemental proposal with an
analytical basis for its approach to
determining significant energy savings,
if the agency wants to consider
eliminating its use of ‘‘quantitative
significance thresholds,’’ including why
a smaller threshold may not be
appropriate. (Lennox, No. 18 at p. 9).
Lennox went on to state that if DOE
eliminates the use of thresholds, it
should restore and strengthen the prior
version of appendix A, where
presumptions had existed against
regulations such as those that would: (1)
Result in a negative return on
investment for the industry; (2) would
significantly reduce the value of the
industry; or (3) be the direct cause of
plant closures, significant losses in
domestic manufacturer employment, or
significant losses of capital investment
by domestic manufacturers. (Lennox,
No. 18 at pp. 9–10) (See also 10 CFR
part 430, subpart C, appendix A, section
5(e)(3) (2018))
Crown Boiler—in conjunction with
both U.S. Boiler and New York Boiler,
who both filed essentially identical
comments (see U.S. Boiler, No. 11 at pp.
2–5 and New Yorker Boiler, No. 13 at
pp. 2–4) 13—made a number of
arguments, in addition to those noted
earlier, in support of the significant
energy savings threshold. It argued that
the threshold is an acknowledgement by
DOE that there is a point at which
projected energy (and carbon) savings
become too small to be statistically
significant and its proposed removal
would, in its view, make appendix A
less science-based, an action which
would be in conflict with Executive
Order 13990. (Crown Boiler, No. 10 at
p. 2) Crown Boiler also stressed that
energy efficiency standards have real
world impacts, including added cost for
equipment and potential job losses, and
the commenter argued that DOE should
be required to show a degree of energy
savings above a de minimis level before
setting an energy conservation standard.
(Crown Boiler, No. 10 at p. 3) It further
added that there is a direct relationship
between fuel consumption and carbon
emissions, and consequently,
insignificant energy savings would be
expected to also translate into
insignificant carbon reductions. Crown
Boiler reasoned that given these
limitations, standards with a low-yield
potential for energy savings would not
justify the imposition of heavy
13 The comments from Crown Boiler will serve as
the basis for discussion of the positions taken by
these commenters.
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regulatory burdens and DOE should
avoid setting standards simply for
purposes of ‘‘international virtue
signaling’’ and to demonstrate
leadership in confronting the climate
crisis. (Crown Boiler, No. 10 at p. 3)
Crown Boiler also noted that an
insignificant reduction in energy
savings is highly unlikely to be realized
entirely during a peak demand period,
and the commenter added that DOE
itself considered the impact that the
significant energy savings threshold
would have on potential reductions in
peak demand, but that it determined
that it retained the ability to consider
the impacts of new standards on grid
reliability if these concerns impacted
specific rulemakings. (Crown Boiler, No.
10 at p. 3; see also 85 FR 8626, 8672
(Feb. 14, 2020)) Crown Boiler also
challenged DOE’s view that eliminating
the threshold would allow DOE to
consider potential source energy savings
by pointing out that DOE had noted that
it believed it was statutorily obligated to
utilize site energy use when analyzing
energy savings, and it asserted that the
April 2021 NOPR did not address DOE’s
ability to consider source energy savings
in this manner while still complying
with EPCA. (Crown Boiler, No. 10 at pp.
3–4)
Additionally, Crown Boiler asserted
that DOE’s only possible error in setting
its significant energy savings threshold
was reducing it from the originally
proposed value of 0.5 quad to the 0.3
quad threshold ultimately adopted.
(Crown Boiler, No. 10 at p. 4) It pointed
to two energy conservation standard
rules—the 2016 rule for residential
boilers and the 2020 rule for commercial
boilers—as highlighting the potential for
negative impacts in the absence of a
threshold. The commenter asserted that
each of these rules was expected to
result in only a 0.6 percent
improvement in efficiency, for a total of
0.16 quads and 0.27 quads over 30
years, respectively. Crown Boiler argued
that in exchange for these small gains,
both gas and oil boilers would face a
significant reduction in their ability to
work properly when installed with suboptimal vent systems. Moreover, Crown
Boiler argued that such boilers face an
increased risk of reliability problems
that could reduce efficiency in the field
over time, and that manufacturers
experienced a drain on engineering
resources that would have otherwise
been allocated to more productive uses
(such as research into new technologies
capable of operating on a higher
concentration of renewable fuels).
Crown Boiler viewed these outcomes as
real losses that were traded for
theoretical energy savings so low that it
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raises questions as to whether DOE can
credibly claim these predicted saving as
accurate. (Crown Boiler, No. 10 at p. 4)
DOE’s Response to Comments
In response to these comments, DOE
first notes that several commenters
discussed DOE’s authority to establish a
threshold for determining whether
energy savings are significant. As
discussed in the April 2021 NOPR, DOE
proposed to remove the current
numerical threshold for determining
whether energy savings are significant
because it did not allow DOE to
consider the specific circumstances
surrounding a given rulemaking, not
because DOE lacked the statutory
authority to establish a threshold. 86 FR
18901, 18905. As evidenced by the
court’s decision in Herrington, it is clear
that DOE may choose to establish a
numerical threshold as long as the
threshold is consistent with the policies
behind the program. See Herrington,
768 F.2d at 1376 (‘‘we do not hold that
the Act forbids DOE to set levels of
significance for each product type as a
percentage of the energy consumed by
that product type, provided that the
levels selected reasonably accommodate
the policies of the Act.’’). However,
while establishing a threshold is
permissible under EPCA, DOE does not
believe it is the best course of action. As
discussed previously, a set numerical
threshold does not allow DOE to
consider the specific circumstances
(e.g., electric infrastructure impacts,
FFC effects, and greenhouse gas
emissions) surrounding a given
rulemaking when determining whether
energy savings are significant.
As for the argument that DOE’s
determinations of significance for
energy savings should be limited to
whether there is a significant
conservation of electricity or fossil fuels
and that it should not extend to the
impacts of those energy savings,
commenters seem to suggest that the
significance of energy savings can be
determined without consideration of the
broader impacts of those savings. DOE
does not agree with this position, nor
does EPCA compel such an approach.
As noted in Herrington, determining
whether energy savings are significant
should be informed by the underlying
policies of the Appliance Standards
Program. Id. DOE’s Appliance Standards
Program was created in the 1970’s in
response to an energy supply crisis. See
EPCA (noting in the Act’s description
the law’s intention ‘‘[t]o increase
domestic energy supplies and
availability; to restrain energy demand;
to prepare for energy emergencies; and
for other purposes.’’)
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Congress expanded further on the
intended policies underlying the
Appliance Standards Program in
subsequent amendments to EPCA. For
example, the Energy Policy Act of 2005,
Public Law 109–58 (Aug. 8, 2005),
which, among other things, amended
EPCA to establish energy conservations
standards for additional consumer
products, was enacted to ‘‘ensure jobs
for our future with secure, affordable,
and reliable energy.’’ The Energy
Independence and Security Act of 2007,
Public Law 110–140 (Dec. 19, 2007),
which similarly amended EPCA to
establish new energy conservation
standards for consumer products and
commercial equipment, was enacted to
‘‘move the United States toward greater
energy independence and security, to
increase the production of clean
renewable fuels, to protect consumers,
to increase the efficiency of products,
buildings, and vehicles, to promote
research on and deploy greenhouse gas
capture and storage options, and to
improve the energy performance of the
Federal Government, and for other
purposes.’’ Energy conservation
achieved through the Appliance
Standards Program helps achieve many
of these policy objectives. For example,
energy conservation standards can
increase grid reliability by decreasing
peak demand. Energy conservation
standards also protect consumers by
reducing greenhouse gas and other
pollutant emissions. As a result, and in
accordance with the court in
Herrington, DOE believes any
determination of whether energy
savings are significant should involve
some consideration of the potential
impact of those energy savings on the
policy objectives underlying the
Appliance Standards Program. Thus,
rather than being constrained in the
manner suggested by these
commenters—i.e., that DOE is limited to
determining significance solely in terms
of the amount of projected electricity or
fossil fuel energy savings—DOE is
guided by the underlying policy
objectives of EPCA, as amended,
governing the Appliance Standards
Program when determining whether
potential energy savings are significant.
DOE also received several other
comments disagreeing with DOE’s
decision to consider the potential
impacts of energy savings when
determining whether those energy
savings are significant. Crown Boiler
commented that DOE itself had noted it
was statutorily obligated to utilize site
energy use when analyzing energy
savings. (Crown Boiler, No. 10 at pp. 3–
4) Crown Boiler also commented that
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70905
DOE had determined in the February
2020 Final Rule that it could address the
impacts of new standards on grid
reliability in individual rulemakings.
In response, DOE first notes that
Crown Boiler’s claim that DOE stated it
was obligated to use site energy savings
mischaracterizes DOE’s position in the
February 2020 Final Rule. In that rule,
DOE stated that use of site energy
savings was consistent with EPCA’s
definition for ‘‘energy use’’ and the
process followed by DOE when
determining whether to apply energy
conservation standards to other covered
products. 85 FR 8626, 8668. But, even
if Crown Boiler’s claim had been
accurate, DOE did not propose to
remove the threshold because the use of
site energy savings itself is problematic.
Instead, DOE proposed to remove the
uniform numerical threshold because
relying solely on the threshold itself
does not account for the specific
circumstances surrounding a given
rulemaking. Nowhere is this deficiency
more evident than in the consideration
of FFC effects for electricity and natural
gas where 1 quad of site electricity
energy consumption corresponds to
approximately 3.05 quads of FFC energy
consumption, while 1 quad of site
natural gas energy consumption
corresponds to 1.11 quads of FFC energy
consumption. DOE will continue to
calculate potential site energy savings
for energy conservation standards. But
DOE will determine the significance of
those site energy savings based on their
impact, which may include impacts on
FFC savings, grid reliability, and
greenhouse gas emissions. Crown
Boiler’s second argument similarly
misses the mark. DOE agrees that the
impact of new standards on grid
reliability can be addressed during
individual rulemakings. But, that can
only occur if the February 2020 Final
Rule threshold has been met.
In response to comments that
eliminating a uniform numerical
threshold will reduce certainty and
predictability in DOE’s rulemaking
process (see, e.g., AHRI, No. 25 at p. 7;
Joint Industry Commenters, No. 40 at p.
12; Goodman, No. 22 at p. 3) or lead to
an undefined process that will make
standards rulemakings more contentious
and less efficient (NAFEM, No. 30 at p.
5), DOE notes that elimination of the
numerical threshold will not change its
rulemaking process. DOE will continue
to collect information and conduct
analyses to determine if new or
amended standards would result in
significant conservation of energy and
are technologically feasible and
economically justified. If these statutory
criteria are met, DOE will propose new
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or amended standards. Stakeholders
will then have the opportunity to
comment on the proposed new or
amended standards, including whether
the potential energy savings are
significant. If new or amended
standards are subsequently issued in a
final rule, manufacturers will typically
have between 3 and 5 years to come into
compliance with the new or amended
standards. (See 42 U.S.C. 6295(m)(4))
This is a consistent process based on
well-established methodologies that
have been extensively used over the
long lifetime of DOE’s Appliance
Standards Program. As for claims that
elimination of the uniform numerical
threshold will lead to less predictable
rulemakings, DOE does not issue new or
amended energy conservation standards
based solely on whether the potential
energy savings are significant. Any new
or amended standard must also be
technologically feasible and
economically justified. Further, DOE
only makes these determinations after
conducting a full analysis of all
available information, including
information obtained during the
rulemaking process. And, while DOE
acknowledges that a uniform numerical
threshold makes for less complicated
significance determinations, it does so
by ignoring the very real differences,
e.g., FFC effects and electrical grid
impacts, between energy savings across
different rulemakings. DOE believes that
any benefits of this approach are more
than outweighed by its failure to
account for the specific facts and
circumstances surrounding an
individual rulemaking.
As for commenters such as ALA and
AFP that asserted the uniform
numerical threshold would help DOE
prioritize its resources and meet its
statutory deadlines, DOE notes that
having a threshold can only constrain
DOE’s ability to prioritize its resources.
As discussed previously, a uniform
numerical threshold does not account
for the differences across covered
products and equipment rulemakings,
e.g., FFC effects. For example, under the
threshold established in the February
2020 Final Rule, DOE would not be able
to prioritize a rule that saves 0.25 quad
of site energy and 0.6 quad of FFC
energy over a rule that saves 0.30 quad
of site energy and 0.4 quad of FFC
energy. DOE assumes commenters also
meant that the threshold would result in
more rulemakings resulting in
determinations that standards do not
need to be amended, which would free
up DOE resources. But, in many cases
the process for issuing a new or
amended standard, in terms of the
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number of Federal Register publications
and opportunities for public comment,
is very similar to the process for issuing
a final determination not to amend a
standard. Both typically involve the
issuance of pre-NOPR documents where
DOE collects information and data in
order to determine whether a new or
amended standard would satisfy the
relevant criteria in EPCA. DOE then
uses these data and information to
prepare a proposal on whether a new or
amended standard is warranted. After
reviewing public comments on the
proposal, DOE issues a final document
that either establishes a new or
amended standard or determines that a
new or amended standard is not
warranted. Finally, a determination not
to amend standards must be revisited
within 3 years, while a decision to issue
new or amended standards must be
revisited within 6 years. (42 U.S.C.
6295(m)) DOE believes the other
revisions to appendix A finalized in this
document and the additional revisions
that were proposed in the July 2021
NOPR will have a much greater impact
on DOE’s ability to meet its statutory
deadlines.
As for the commenters who proposed
a modified threshold, e.g., a rebuttable
presumption of significance or a lower
threshold value, DOE notes these
approaches pose the same problem as
the threshold set in the February 2020
Final Rule. Namely, they assume on
some level that the significance of
energy savings can be determined
without considering the specific
circumstances surrounding a given
rulemaking. Additionally, DOE notes
that it has never stated the threshold for
determining the significance of energy
savings established in the February 2020
Final Rule is too high. Rather, the issue
is that any set threshold ignores the very
real differences in energy savings across
different rulemakings.
Several commenters discussed the
potential economic impacts on industry
and consumers of DOE’s proposal to
remove the threshold for determining
whether energy savings are significant.
DOE notes that a determination that
energy savings are significant is but one
step in the process of issuing new or
amended standards. EPCA still requires,
among other things, that a new or
amended standard be economically
justified, which includes the
consideration of economic impacts on
manufacturers and consumers. (See 42
U.S.C. 6295(o)(2)(B)(i)(I)) DOE will
continue to follow these provisions and
to perform the required analyses to
demonstrate and ensure that the
relevant statutory criteria are satisfied
before setting (or amending) energy
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conservation standards or deciding not
to amend them.
With regards to Lennox’s comment
that, assuming the threshold is
eliminated, DOE should restore and
strengthen prior provisions from the
July 1996 Final Rule, DOE will address
these comments and the additional
revisions proposed in the July 2021
NOPR in a separate final rule.
Finally, DOE does not agree with
AGA’s statement faulting the
Department for proposing to remove the
significant energy savings threshold
before having even had a chance to use
it. The effects of the threshold
established in the February 2020 Final
Rule on the Department’s rulemaking
processes were readily apparent on
issuance of the rule. As discussed
throughout this document, the February
2020 Final Rule, including the
significant energy savings threshold,
does not allow DOE to account for the
particular circumstance of individual
rulemakings, e.g., FFC and electrical
grid impacts.
Accordingly, for the aforementioned
reasons, DOE has concluded that
determinations of significance for
energy savings should be made on a
case-by-case basis. As a result, DOE is
removing the significant energy savings
threshold.
C. Determinations of Economic
Justification
Under EPCA, any new or amended
standard must be designed to achieve
the maximum improvement in energy
efficiency that is technologically
feasible and economically justified. (42
U.S.C. 6295(o)(2)(A); 42 U.S.C. 6316(a)).
To ensure that DOE meets this statutory
mandate, DOE employs a walk-down
process to select energy conservation
standard levels. As a first step in the
process, DOE screens out technologies
for improving energy efficiency that are
not feasible. DOE then uses the
remaining technologies to create a range
of trial standard levels (‘‘TSLs’’). These
TSLs typically include: (1) The moststringent TSL that is technologically
feasible (i.e., the ‘‘max-tech’’ standard);
(2) the TSL with the lowest life-cycle
cost; (3) a TSL with a payback period of
not more than three years; and (4) any
TSLs that incorporate noteworthy
technologies or fill in large gaps
between efficiency levels of other TSLs.
Beginning with the max-tech TSL, DOE
then determines whether a specific TSL
is economically justified. In making that
determination, DOE determines, after
reviewing public comments and data,
whether the benefits of the standard
exceed its burdens by, to the greatest
extent practicable, considering the
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seven factors described in 42 U.S.C.
6295(o)(2)(B)(i). (See also 42 U.S.C.
6313(a)(6)(B)(ii) (applying the seven
factors to ASHRAE equipment); 42
U.S.C. 6316(a) (applying the seven
factors to non-ASHRAE equipment)). If
DOE determines that the max-tech TSL
is economically justified, the analysis
ends, and DOE adopts the max-tech TSL
as the new or amended standard.
However, if DOE determines that the
max-tech TSL is not economically
justified, DOE walks down to consider
the next-most-stringent TSL. This walkdown process continues until DOE
determines that a TSL is economically
justified or that none of the TSLs are
economically justified.
In the August 2020 Final Rule, DOE
modified this process to require that
determinations of economic justification
include a comparison of the benefits
and burdens of the selected TSL against
the benefits and burdens of the baseline
case and all other TSLs. 85 FR 50937,
50944. DOE stated its belief that such an
approach would allow for more reliable
determinations that a specific TSL is
economically justified. Id. at 85 FR
50939. While the requirement to
conduct a comparative analysis affected
DOE’s process for determining whether
a TSL is economically justified, it did
not dictate any particular outcome or
require DOE to modify its general
approach of walking down from the
max-tech TSL.
DOE’s decision to add a comparative
analysis to the process for determining
whether a TSL is economically justified
generated concern among several
stakeholders that DOE would use the
comparative analysis to select a TSL
that maximizes net benefits, as opposed
to the TSL that maximizes energy
savings and is technologically feasible
and economically justified. Id. DOE’s
statement in the August 2020 Final Rule
that ‘‘the purpose of EPCA’s seven
factors is not to select the standard that
achieves the maximum improvement in
energy efficiency, no matter how minute
an estimated cost savings’’ added
further confusion to how DOE would
use the comparative analysis in
determining whether a TSL is
economically justified. 85 FR 50937,
50939 (emphasis added).
In light of the confusion and
uncertainty around whether a
comparative analysis would result in
DOE choosing the TSL that maximizes
net benefits as opposed to the TSL that
represents the maximum improvement
in energy efficiency that is
technologically feasible and
economically justified, DOE proposed to
eliminate the requirement to conduct a
comparative analysis when determining
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whether a specific TSL is economically
justified in the April 2021 NOPR. 86 FR
18901, 18906. DOE received numerous
comments on this proposal with some
commenters in favor of eliminating the
comparative analysis and others arguing
that it should be retained.
Comments Supporting DOE’s Proposal
To Eliminate the Requirement To
Conduct a Comparative Analysis in
Determining Economic Justification
In support of DOE’s proposal to
remove the requirement to conduct a
comparative analysis, several
commenters expressed concern that the
comparative analysis could lead to DOE
selecting a TSL that does not represent
the maximum improvement in energy
efficiency that is technologically
feasible and economically justified. (See
e.g., Joint Advocacy Commenters, No.
38 at p. 3; Grundfos, No. 37 at p. 3; CEC,
No. 35 at p. 6; State Commenters, No.
29 at p. 9) Some commenters were
particularly concerned that the
comparative analysis would result in
DOE choosing a TSL that maximizes net
benefits instead of energy savings. (Joint
Environmentalist Commenters, No. 31 at
p. 5; CA IOUs, No. 34 at pp. 2–3) IPI
commented that the approach would
not be transparent and allow DOE to
define what is ‘‘economically justified’’
on any subset of adverse impacts to
which DOE may happen to arbitrarily
assign controlling weight—a result that
it asserted would be inconsistent with
statutory requirements and rational
decision making. (IPI, No. 17
(Attachment 4 (Comments dated March
16, 2020) at pp. 2–3; IPI, No. 17
(Attachment 5 (Comments dated May 6,
2019) at pp. 3–4)
Comments Opposing DOE’s Proposal To
Eliminate the Requirement To Conduct
a Comparative Analysis in Determining
Economic Justification
Other commenters opposed DOE’s
proposal to remove the requirement to
conduct a comparative analysis. For
example, several commenters stated the
comparative analysis will ensure DOE,
when faced with TSLs with comparable
savings, chooses the trial standard level
with a less severe negative impact. (See,
e.g., MHI, No. 32 at p. 2; Lutron, No. 16
at p. 3; Joint Industry Commenters, No.
40 at pp. 12–13) NAFEM commented
that removal of the comparative analysis
requirement could result in energy
conservation standards that save more
energy at the expense of product
differentiation, refinement, and end-use
flexibility. (NAFEM, No. 30 at p. 5) SBA
Office of Advocacy commented that
EPCA does not expressly prohibit an
analysis of net benefits and DOE does
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not provide justification as to why a net
benefits approach is inaccurate or
otherwise prohibited, and instead
merely states that the elimination of the
comparative analysis is to reduce
uncertainty. (SBA Office of Advocacy,
No. 14 at p. 6) SBA Office of Advocacy
also stated that engaging in a
comparative analysis would ensure that
DOE is considering the full scope of
impacts of a particular standard and
would help DOE in moving towards
better compliance with the Regulatory
Flexibility Act. (SBA Office of
Advocacy, No. 14 at p. 7) Zero Zone
stated that DOE should retain the
comparative analysis for standard level
selection, because the Department has
not provided any evidence of an actual
problem using that approach. (Zero
Zone, No. 21 at p. 2) Finally, BWC
stated that the comparative analysis
would help DOE and stakeholders better
assess the TSLs against the applicable
statutory criteria. (BWC, No. 24 at p. 3)
DOE’s Response to Comments
DOE first notes that both commenters
in favor of the proposal to eliminate the
comparative analysis and those against
its removal stated that the comparative
analysis could lead to the Department
forgoing energy savings in favor of
increased economic benefits. (See, e.g.,
Joint Advocacy Commenters, No. 38 at
p. 3; MHI, No. 32 at p. 2) Based on these
comments, it is clear that the
comparative analysis generated
significant confusion and uncertainty
about whether the process would result
in DOE selecting the TSL that results in
the maximum improvement in energy
efficiency that is technologically
feasible and economically justified or a
TSL that saves less energy but imposes
lower costs on manufacturers and
consumers.
Pursuant to EPCA, any new or
amended energy conservation standard
must be designed to achieve the
maximum improvement in energy
efficiency that DOE determines is
technologically feasible and
economically justified. (42 U.S.C.
6295(o)(2)(A)) In deciding whether a
proposed standard is economically
justified, DOE must determine whether
the benefits of the standard exceed its
burdens. (42 U.S.C. 6295(o)(2)(B)(i))
DOE must make this determination after
receiving comments on the proposed
standard, and by considering, to the
greatest extent practicable, the seven
statutory factors, which allow DOE to
consider the full breadth of impacts
including benefits and costs, along with
other factors the Secretary considers
relevant. In practice, DOE determines an
appropriate energy conservation
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standard level for adoption by
conducting a ‘‘walk-down’’ analysis of
the trial standard levels (TSLs)
considered in the proposal, after
reviewing any public comments. DOE
starts by analyzing the maximum
technologically feasible (max-tech) level
to see whether the statutory criteria for
significant energy savings, technological
feasibility, and economic justification
have been met. If the max-tech TSL fails
to meet any of these statutory criteria,
DOE determines that it cannot adopt
that level, and it then moves to the next
highest TSL and conducts the same
analysis. The agency continues in this
manner until it reaches a TSL that meets
all of the statutory criteria. Once DOE
arrives at such level (if any), DOE is
required under EPCA to choose that TSL
because it represents the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified. (See 42 U.S.C.
6295(o)(2)(A); 42 U.S.C. 6316(a))
With respect to the SBA Office of
Advocacy’s comments, DOE would like
to clarify two issues. First, DOE did not
state in the April 2021 NOPR that
conducting an analysis of net benefits is
inaccurate or otherwise prohibited by
EPCA. The concern with the
comparative analysis, as discussed
previously, is that the process would
result in the maximization of net
benefits instead of energy savings that
are technologically feasible and
economically justified, which is
contrary to the statute. As for ensuring
DOE considers the full scope of impacts
of a particular TSL, the comparative
analysis did not change the scope of
impacts considered by DOE for a
particular TSL. The analysis required
DOE to compare the benefits and
burdens of a TSL against the benefits
and burdens of the baseline case and all
other TSLs. 85 FR 50937. But, as stated
in the August 2020 Final Rule, the vast
majority of DOE’s analytical work
involves evaluating the seven factors for
each TSL (e.g., life-cycle costs,
manufacturer impacts, total energy
savings). 85 FR 50937, 50941. For
example, DOE performs a
manufacturing impact analysis to
identify and quantify the impacts of any
new or amended energy conservation
standards on manufacturers. As part of
this analysis, DOE uses the Government
Regulatory Impact Model (‘‘GRIM’’) to
calculate cash flows using standard
accounting principles and changes in
industry net present value (INPV)
between the no-new-standards case and
each proposed TSL. The difference in
INPV between the no-new-standards
case and each TSL represents the
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financial impact of the new or amended
energy conservation standard on
manufacturers. The addition of a
comparative analysis has no effect on
DOE’s analysis of manufacturing
impacts.
The comments received in response to
the April 2021 NOPR have solidified
DOE’s concerns regarding the use of the
comparative analysis. DOE has no desire
to create a situation where stakeholders
will question, and potentially challenge,
whether the Department is choosing a
TSL that maximizes net benefits instead
of the TSL that represents the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified as required under
EPCA. Further, the process and criteria
laid out in 42 U.S.C. 6295(o)(2)(B)(i) and
42 U.S.C. 6313(a)(6)(B)(ii) for
determining economic justification are
already sufficiently robust, and any
potential, incremental improvement that
may result from the use of a
comparative analysis is outweighed by
the uncertainty it casts over DOE’s
fulfillment of its statutory obligations
under EPCA. As a result, DOE is
eliminating the requirement in
appendix A to conduct a comparative
analysis when determining whether a
TSL is economically justified.
Consistent with EPCA and past practice,
DOE will determine whether a TSL is
economically justified after
determining, based on the factors listed
in 42 U.S.C. 6295(o)(2)(B)(i) and 42
U.S.C. 6313(a)(6)(B)(ii), whether the
benefits of the standard exceed its
burdens.
D. Adoption of Industry Test Standards
The February 2020 Final Rule
amended appendix A to require
adoption, without modification, of
consensus industry test standards as test
procedures for covered products and
equipment, unless such standards do
not meet the EPCA statutory criteria for
test procedures. 85 FR 8626, 8678–8682,
8708. In essence, DOE sought to explain
and codify its established practice,
which is to analyze the appropriate
industry consensus test standard, with
the input of stakeholders and the
interested public, to: (1) Determine that
the EPCA criteria are met and use the
consensus test standard as the Federal
test procedure; (2) modify the standard
so that it complies with the statutory
criteria, or (3) reject the standard and
develop an entirely new test procedure.
On further review, DOE has come to
see that its attempt at clarification may
have had the opposite effect, creating
the false impression that DOE had put
in place a new presumption for an ‘‘asis’’ adoption of consensus industry test
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standards without meaningful review.
That was not DOE’s intention, and
accordingly, the Department proposed
to clarify in the April 2021 NOPR that
while DOE will first consider applicable
consensus industry test standards, such
test standards must first undergo a
thorough agency review to ensure that
they meet the requirements of the
statute and are compatible with DOE’s
compliance, certification, and
enforcement (‘‘CC&E’’) regulations. 86
FR 18901, 18907.
Comments Supporting DOE’s
Clarification of Its Process for Adopting
Consensus Industry Standards
The majority of commenters generally
supported or had no objections to DOE’s
proposal to clarify that the Department
will amend consensus industry test
standards as necessary to ensure
compliance with both the statutory
requirements in EPCA and DOE’s CC&E
regulations. (See, e.g., State
Commenters, No. 29 at p. 10; Lutron,
No. 16 at p. 3; NEEA, No. 43 at p. 3;
Joint Environmentalist Commenters, No.
31 at p. 6; Joint Industry Commenters,
No. 40 at p. 10) In citing their support
for DOE’s proposal, several commenters
stated that consensus industry test
standards are not generally designed for
regulatory purposes and, as such,
modifications to ensure compliance
with EPCA and DOE’s CC&E regulations
are often necessary. (See, e.g., CA IOUs,
No. 34 at p. 5; Joint Advocacy
Commenters, No. 38 at pp. 3–4) The CA
IOUs and Joint Environmentalist
Commenters also favored DOE’s
proposal because it would relieve
stakeholders of the burden of having to
participate in both industry and DOE
test procedure development processes.
(CA IOUs, No. 34 at p. 5; Joint
Environmentalist Commenters, No. 31 at
p. 6)
Aside from expressing their support
for DOE’s proposal, Lutron and the Joint
Industry Commenters also asked DOE to
clarify in the regulatory text of appendix
A that industry test standards are
consensus test procedures, which
usually involve more than just industry
stakeholders. (Lutron, No. 16 at p. 3;
Joint Industry Commenters, No. 40 at p.
10)
Comments Opposing DOE’s
Clarification of Its Process for Adopting
Consensus Industry Standards
Other commenters supported DOE’s
adoption of consensus industry test
standards with little or no modification.
(See, e.g., Signify, No. 41 at p. 1;
Lennox, No. 18 at p. 5; New Yorker
Boiler, No. 13 at p. 5) These commenters
expressed a variety of reasons for
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advocating for the adoption of
consensus industry test standards. For
example, Crown Boiler and BWC stated
that most consensus industry test
standards are developed by all
interested stakeholders, including
manufacturers, industry advocates,
regulators (including DOE), and
certification agency laboratories. (Crown
Boiler, No. 10 at p. 5; BWC, No. 24 at
p. 3) Crown Boiler also noted that the
committee members tend to have
decades of experience and that DOE
should rely on these committees to
develop the test procedures. (Crown
Boiler, No. 10 at p. 5) Some commenters
stated that adopting consensus industry
test standards would reduce burden on
both DOE and stakeholders. (See BWC,
No. 24 at p. 3 (stating that deviating
from consensus industry test procedures
will add unnecessary workload for DOE
staff); Signify, No. 41 at p. 1 (stating that
changes to consensus industry test
procedures create unnecessary burden
for industry and test laboratories))
Several commenters also stated that
adoption of consensus industry test
procedures would expedite DOE’s test
procedure rulemaking process and
allow stakeholders to address standards
rulemakings sooner. (See, e.g., U.S.
Boiler, No. 11 at pp. 5–6; GEA, No. 20
at p. 3) Finally, GEA stated that
adopting consensus industry test
procedures would reduce the likelihood
of litigation over test procedures. (GEA,
No. 20 at p. 3)
In order to avoid the need to make
modifications to consensus industry test
procedures, several commenters
encouraged DOE to participate in the
industry test standards development
process as a way to ensure that
consensus industry test standards are
compatible with EPCA and DOE’s CC&E
regulations. (See, e.g., Signify, No. 41 at
p. 1; ALA, No. 28 at p. 3) Additionally,
with regards to compatibility with
DOE’s CC&E regulations, Lennox stated
that DOE should consider ‘‘the potential
need to modify the applicable CC&E
requirements, not the industry test
procedure.’’ (Lennox, No. 18 at p. 5).
DOE’s Response to Comments
As an initial matter regarding the
request that DOE clarify that industry
test standards are ‘‘consensus’’ test
standards, DOE uses the term
‘‘consensus’’ broadly to indicate a
process in which multiple stakeholders
develop and finalize the industry test
standard. The use of the term
‘‘consensus’’ is not intended as an
assessment of the representativeness of
those stakeholders involved in the
process. In certain cases, industry test
standards were not developed by a
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group that is fully representative of
DOE’s rulemaking stakeholders,
including energy-efficiency advocacy
organizations, utilities, States, consumer
groups, etc. DOE notes that under
section 301 of the Department of Energy
Organization Act (Pub. L. 95–91; 42
U.S.C. 7101), DOE must comply with
section 32 of the Federal Energy
Administration Act of 1974, as amended
by the Federal Energy Administration
Authorization Act of 1977. (15 U.S.C.
788; ‘‘FEAA’’) Section 32 essentially
provides in relevant part that, where a
proposed rule authorizes or requires use
of commercial standards, DOE must
inform the public of the use and
background of such standards. DOE
must also evaluate these standards as to
whether they fully comply with the
requirements of section 32(b) of the
FEAA (i.e., whether they were
developed in a manner that fully
provides for public participation,
comment, and review). In addition,
section 32(c) requires DOE to consult
with the Attorney General and the
Chairman of the Federal Trade
Commission concerning the impact of
the commercial or industry standards on
competition.
In response to the remaining
comments, DOE first notes that
commenters have raised several valid
points about the benefits of adopting
consensus industry test standards with
little to no modification (e.g., reducing
test procedure development cost). That
said, these benefits cannot be realized at
the expense of DOE’s statutory
obligations. In accordance with EPCA,
DOE must ensure that a consensus
industry test standard is reasonably
designed to produce test results that
measure energy efficiency or use during
a representative average use cycle or
period of use without being unduly
burdensome to conduct. (42 U.S.C.
6293(b)(3)) As a result, DOE has often
found it necessary to make
modifications to an applicable
consensus industry test standard to
ensure compliance with these statutory
requirements. For example, the DOE test
procedure for dehumidifiers requires
reduced indoor ambient temperature
conditions as compared to those
specified in the referenced industry test
standard as DOE determined that the
reduced conditions are more
representative of the product’s average
use cycle as required by EPCA. 80 FR
45801, 45807 (July 31, 2015). As another
example, the DOE test procedure for
portable air conditioners includes
several modifications to the industry
test method that DOE determined would
provide results that are representative of
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typical use. Specifically, in comparison
to the industry test procedure, the DOE
test procedure requires a different set of
indoor and outdoor test conditions; an
additional test condition for units with
a dual-duct configuration; and
additional provisions to account for heat
transferred to the indoor conditioned
space from the ducts and any
infiltration air from unconditioned
spaces, which are not accounted for in
the industry test method. 81 FR 35241,
35250, 35248, 35253 (June 1, 2016).
Additionally, DOE notes that
consensus industry test standards are
often designed to support industry
certification programs with the goal of
verifying ratings within a tolerance
specified by industry. DOE’s CC&E
regulations, on the other hand, are
designed to ensure, in accordance with
EPCA, that all products and equipment
distributed in commerce in the United
States comply with applicable Federal
energy and water conservation
standards. Furthermore, DOE’s CC&E
regulations seek to establish a level
playing field amongst industry
participants and to also help ensure that
the utility bill savings that consumers
expect from energy and water
conservation standards are being
realized. For example, in the past, DOE
has had to specify airflow tolerances for
certain industry standard test conditions
that are referenced for the testing of
certain categories of small, large, and
very large air-cooled commercial
package air conditioners and heating
equipment after having determined that
such tolerances are necessary to address
potential variation in the measured
efficiency and cooling capacity of the
equipment. 80 FR 79655, 79659–79660
(Dec. 23, 2015). DOE also notes that
industry representatives and other
stakeholders are welcome to participate
in the development and modification of
the Department’s CC&E regulations.14 In
fact, some of DOE’s existing CC&E
regulations were developed by a
negotiated rulemaking that resulted in a
consensus agreement amongst the
Department, industry, and many diverse
stakeholders over, among other things,
the allowance of simulations to develop
ratings under specific circumstances for
commercial heating, ventilation, and
air-conditioning equipment; commercial
water heaters; and commercial
refrigeration equipment. 80 FR 144 (Jan.
5, 2015).
DOE may also modify consensus
industry test standards for other
14 For example, DOE recently asked for comment
on a proposal to amend the certification and
reporting provisions for several covered products
and equipment. 86 FR 43120 (August 6, 2021).
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reasons. For example, DOE is not
required to adopt or align its test
procedures with sections of the
consensus industry test standard that
are not necessary for the method of test
for metric(s) included in the DOE test
procedure. For instance, sections of the
industry test procedure regarding
selection of models for testing under an
industry certification program,
verification of represented values and
the associated tolerances, and
operational requirements need not be
referenced or aligned with under the
DOE test procedure. This is consistent
with the Department’s longstanding
practice to only include sections that are
relevant to the method of test for
metric(s) included in the DOE test
procedure, or that provide clarifications
that help promote understanding
amongst regulated entities. Another
instance where DOE may need to
deviate from a consensus industry test
standard is to address issues identified
through DOE’s test procedure waiver
process. For example, a manufacturer
may seek a test procedure waiver for a
covered product that incorporates a
new, innovative technology that was not
contemplated by the consensus industry
test standard or where some other
deficiency in the test procedure
forestalls successful testing. In such
cases, DOE is required to update the
Federal test procedure to eliminate the
need for such a waiver. 10 CFR
430.27(l); 10 CFR 431.401(l).
Finally, although DOE has explained
why the Department is often required to
modify consensus industry test
standards, DOE agrees with commenters
that consensus industry test standards
should serve as the basis for Federal test
procedures whenever possible.15 As a
result, DOE wishes to underscore the
importance of the consensus industry
test procedure development process,
including the need to ensure that a
broad cross-section of stakeholder
interests are represented in the
development of such consensus
industry standards. DOE believes that
consensus test standards that represent
a consensus across all stakeholders, not
just industry, will be more likely to
meet the statutory requirements in
EPCA and DOE’s CC&E regulations. To
that end, DOE is committed to
supporting the consensus industry
15 The National Technology Transfer and
Advancement Act of 1995 (‘‘NTTA’’), Public Law
104–113, and the Office of Management and Budget
(‘‘OMB’’) Circular A–119, Federal Participation in
the Development and Use of Voluntary Consensus
Standards and in Conformity Assessment Activities,
both direct Federal agencies to adopt voluntary
consensus standards unless they are inconsistent
with applicable law or otherwise impracticable.
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standards development process by
participating on relevant industry
standards committees. However, DOE
reiterates that the industry test standard
development process cannot supplant
the Department’s test procedure
rulemaking process, because DOE must
still ensure that potential Federal test
procedures meet applicable statutory
requirements in EPCA and are
compatible with DOE’s CC&E
regulations.
Accordingly, for the aforementioned
reasons, DOE is clarifying in appendix
A that consensus industry test standards
must undergo a thorough review to
ensure that they meet the requirements
of EPCA and are compatible with DOE’s
CC&E regulations before being adopted
as a Federal test procedure.
E. Finalization of Test Procedures Prior
to Issuance of a Standards Proposal
In the February 2020 Final Rule, DOE
adopted at section 8(d) of appendix A,
a requirement that Federal test
procedures establishing methodologies
used to evaluate new or amended
energy conservation standards be
finalized at least 180 days prior to
publication of a NOPR proposing new or
amended energy conservation
standards. 85 FR 8626, 8678, 8708. DOE
explained that this approach would
allow stakeholders time to gain
familiarity with the new or amended
test procedure prior to commenting on
any proposed standards.
Upon further review, DOE has
determined that, similar to other
provisions in the February 2020 Final
Rule, a one-size-fits-all requirement to
finalize new or amended test procedures
180 days before proposing standards
does not allow DOE to account for the
particular circumstances of a
rulemaking and may result in
unnecessary delays. For instance, as
noted in the April 2021 NOPR, some
test procedure amendments may involve
only minor modifications that do not
change the measured energy efficiency
of a covered product or equipment. 86
FR 18901, 18907–18908. As a result,
DOE proposed to remove this 180-day
spacing requirement and revert to the
approach previously followed in the
July 1996 Final Rule that test procedure
rulemakings be finalized prior to
publication of an energy conservation
standards proposal, which permitted
DOE to appropriately adjust the length
of time between the test procedure final
rule and an energy conservation
standards proposal. Id. DOE also sought
comment on any alternatives to its
proposal, including whether DOE
should retain a set period between
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finalization of a test procedure and
issuance of a standards NOPR. Id.
Comments Supporting DOE’s Proposal
To Eliminate the Requirement That Test
Procedures Be Finalized at Least 180
Days Prior to Issuance of a Standards
NOPR
Several commenters expressed their
support for DOE’s proposal in the April
2021 NOPR. These commenters stated
that the 180-day requirement may not be
necessary for all rulemakings and that
DOE should have the flexibility to
determine the appropriate period
between finalization of new or amended
test procedures and issuance of
proposed standards. (See, e.g., Joint
Advocacy Commenters, No. 38 at pp. 4–
5; NEEA, No. 43 at pp. 3–4; CA IOUs,
No. 34 at pp. 1, 3–4) Some of the
commenters cited negotiated
rulemakings, where test procedures and
energy conservation standards are often
considered and issued in parallel, as an
area where the 180-day requirement
delays implementation of consensus
standards without providing a
corresponding benefit. (See, e.g., Joint
Advocacy Commenters, No. 38 at pp. 4–
5; NEEA, No. 43 at pp. 3–4) Commenters
also argued that minor modifications to
a test procedure may not warrant a
lengthy delay before issuance of a
standards proposal. (See, e.g., NEEA,
No. 43 at pp. 3–4; Joint
Environmentalist Commenters, No. 31 at
p. 2) Finally, Joint Advocacy
Commenters expressed concern that the
180-day requirement could lead to DOE
foregoing certain test procedure
corrections in order to avoid delaying
rulemakings. (Joint Advocacy
Commenters, No. 38 at pp. 4–5)
Comments Supporting the Requirement
That Test Procedures Be Finalized at
Least 180 Days Prior to Issuance of a
Standards NOPR
Several commenters asserted that the
180-day period is necessary to allow
stakeholders the opportunity to conduct
testing and gain familiarity with the
new or amended test procedure so as to
better inform their understanding of the
impacts of a proposed energy
conservation standard. (See, e.g., AHRI,
No. 25 at p. 9; ALA, No. 28 at p. 3; AGA,
No. 33 at p. 5; BWC, No. 24 at p. 2)
These commenters also expressed a
variety of other reasons for opposing
removal of the 180-day period between
finalization of a test procedure and
issuance of a standards proposal. For
instance, Zero Zone opposed
eliminating the 180-day spacing
between test procedure and energy
conservation standards rules, stating
that DOE has not documented any
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delays that would be caused if the 180day waiting period were to be applied.
The SBA Office of Advocacy noted that
small businesses have limited resources
and staff, and in many instances, they
do not have the ability to test their
products on-site. According to the SBA
Office of Advocacy, small businesses
must instead either hire an outside
laboratory to test the products and
report back or pull employees from
other tasks to conduct such testing inhouse. (SBA Office of Advocacy, No. 14
at p. 5) BWC argued that the benefits of
having a finalized test procedure far
outweigh any delay in complying with
statutory deadlines, particularly in light
of EPCA’s anti-backsliding provisions.
(BWC, No. 24 at p. 2)
Comments Supporting Alternatives to
DOE’s Proposal
Numerous commenters recognized
that a 180-day period between
finalization of a test procedure and
issuance of a standards NOPR is not
always necessary. However, these
commenters did not agree with DOE’s
proposal to eliminate the 180-day
period and determine the appropriate
period on a case-by-case basis. Instead,
these commenters suggested a variety of
approaches for determining an
appropriate length of time between
finalization of a test procedure and
issuance of a standards proposal. For
instance, several commenters suggested
revising the relevant section of
appendix A to allow DOE to shorten the
180-day period through some formal
mechanism, which would include an
opportunity for stakeholder input. (See,
e.g., Carrier, No. 26 at p. 3; Crown
Boiler, No. 10 at pp. 4–5) Other
commenters suggested that DOE should
list the limited circumstances under
which it would deviate from the 180day period. (A.O. Smith, No. 27 at p. 4;
Lennox, No. 18 at p. 4) Similarly, if DOE
eliminates the requirement for a
standardized 180-day period, ALA
requested that DOE provide clear and
specific guidance on when the 180-day
period would be warranted. (ALA, No.
28 at p. 4) Several other commenters
urged DOE to retain the 180-day period
when the test procedure is new or
makes significant changes that will
impact measured energy use or
efficiency. (See, e.g., Lutron, No. 16 at
pp. 2, 3–4, Joint Industry Commenters,
No. 40 at p. 9; EEI, No. 9 at pp. 64–65)
Nortek acknowledged that there are
situations where 180 days is not
necessary (e.g., minor technical
corrections to a longstanding test
procedure), and in those cases, the
company stated that it would be
supportive of a 90-day minimum.
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(Nortek, No. 19 at p. 3) Grundfos
recommended that DOE: (1) Include a
proposed timeline in each test
procedure NOPR/final rule for input
from stakeholders, and (2) conduct a
mandatory webinar for related input to
be heard. The company reasoned that
such approach would provide DOE with
the flexibility it desires, while
preventing DOE from defining arbitrary
timelines without negotiation.
(Grundfos, No. 37 at pp. 1–2) While
Goodman expressed support for
retaining the 180-day requirement,
Goodman also stated that, if DOE
chooses to modify the 180-day period,
the Department should define the 180day period as preferred but not
mandatory in appendix A and articulate
with specificity and on the record its
reasons for choosing a lesser time
period. (Goodman, No. 22 at p. 3)
DOE also received an alternative joint
proposal from AHAM, ALA, Hearth
Patio and Barbecue Association (HPBA),
NEMA, Plumbing Manufacturers
International (PMI), ASAP, and ACEEE.
These stakeholders suggested that DOE
provide a 180-day time period between
the finalization of a new or amended
test procedure and the end of the
comment period on the proposed
standard. They also specified that DOE
could deviate from the 180-day
requirement for negotiated rulemakings
and test procedure changes that are
limited to calculation changes (e.g., use
factor or adder) (AHAM et al.
Submission, No. 74 at pp. 2–3)
DOE Response to Comments
Commenters uniformly expressed
support for finalizing test procedures
prior to proposing new or amended
standards. (See, e.g., Carrier, No. 26, at
p. 3; Lutron, No. 16 at pp. 2, 3–4; CA
IOUs, No. 34 at pp. 1, 3–4; NEEA, No.
43 at pp. 3–4; Joint Industry
Commenters, No. 40 at p. 8; Whirlpool,
No. 9 at p. 36) For example, the CA
IOUs encouraged DOE to complete test
procedure final rules before publication
of a NOPR for new or amended energy
conservation standards whenever
possible (due to generally better
outcomes in both proceedings). (CA
IOUs, No. 34 at pp. 1, 3–4) Where
commenters differed was on the
minimum length of time between
finalization of a test procedure and
issuance of a standards proposal—and
under what circumstances, if any, that
period of time should be shortened (or
lengthened).
With respect to the comments in favor
of DOE retaining the 180-day
requirement for all test procedure
rulemakings, DOE agrees with the
majority of commenters who recognized
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that a 180-day period is not necessary
for all test procedure rulemakings (e.g.,
minor technical corrections and
negotiated rulemakings). As stated
throughout this rulemaking, DOE is
amending appendix A to avoid
situations where an inflexible process
lengthens a rulemaking without
providing a corresponding benefit.
Thus, DOE is not establishing a
minimum period of time between
finalization of a test procedure and
issuance of a standards proposal that
would be applied across all of the
Department’s rulemakings.
Nevertheless, while the majority of
commenters recognized that the 180-day
period was not necessary for every
rulemaking, a large number of
commenters wanted more guidance on
circumstances under which DOE would
provide stakeholders with sufficient
time to become familiar with a new or
amended test procedure prior to having
to comment on a standards proposal.
These commenters typically cited new
test procedures or test procedure
amendments that impact measured
energy use as instances necessitating
that DOE provide some period of time
for stakeholders to gain familiarity with
the test procedure prior to commenting
on any proposed standards. (See, e.g.,
Joint Industry Commenters, No. 40 at p.
9; Trane, No. 23 at p. 2)
In response to these comments, DOE
first notes that it already acknowledged
in the April 2021 NOPR that there may
be circumstances where a longer
rulemaking timeline is necessary to
allow stakeholders time to become
familiar with a new or amended test
procedure. See 86 FR 18901, 18908.
Further, DOE’s proposal to revert to the
guidance provided in the 1996 version
of Appendix A that test procedures be
finalized prior to issuance of a standards
proposal does not prevent DOE from
finalizing test procedures well in
advance (i.e., 180 days or more) of
proposing new or amended energy
conservation standards.
However, recognizing the importance
of this issue to stakeholders, DOE
believes a modified version of its
proposal from the April 2021 NOPR can
meet the Department’s goal of avoiding
the inefficiencies and unnecessary
delays of a one-size-fits-all rulemaking
approach while assuring stakeholders
they will have sufficient time to gain
familiarity with a new or amended test
procedure prior to commenting on a
standards proposal. As such, DOE is
adopting the proposal from the April
2021 NOPR that test procedures be
finalized prior to issuing a standards
proposal. However, in response to
comments, DOE is also adopting a
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requirement that new test procedures or
significant test procedure amendments
that impact measured energy use or
efficiency be finalized at least 180 days
before the end of the comment period of
a proposal for new or amended
standards. DOE will state in the test
procedure final rule whether this 180day provision applies and why—i.e.,
because the test procedure is either new
or the amendments impact measured
energy use or efficiency. While DOE is
adopting the 180-day period as
requested by several commenters, DOE
is tying the 180 days to the end of the
comment period instead of the issuance
of the standards proposal. DOE believes
this is a better approach for two reasons.
First, it recognizes that the comment
period, which is at least 60 days, also
provides stakeholders with an
opportunity to gain familiarity with the
new or amended test procedure. And
second, it provides DOE with more
flexibility in issuing standards
proposals, which can benefit both DOE
and stakeholders. For instance, if DOE
needs to meet a statutory deadline for
issuing a standards NOPR, the
Department could choose to issue a
standards NOPR with a longer comment
period in order to more quickly issue
that NOPR after finalizing a new or
amended test procedure. In addition to
helping DOE meet a statutory deadline,
the longer comment period would also
give stakeholders more time to comment
on aspects of the standards proposal
that are not directly related to the test
procedure. Finally, as suggested in the
AHAM et al. proposal, DOE is adopting
exceptions to the 180-day requirement
for negotiated rulemakings and test
procedure amendments that only result
in a calculational change. In the first
instance, stakeholders can determine
the appropriate period between
finalization of the test procedure and
issuance of a standards NOPR as part of
their negotiations. With regards to the
second instance, calculational changes
do not require stakeholders to conduct
new tests to determine the effect of the
test procedure change on measured
energy use or efficiency.
For the aforementioned reasons, DOE
is finalizing the proposal from the April
2021 NOPR that test procedures be
finalized prior to issuance of a standards
proposal, subject to the modifications
discussed above establishing a
minimum period of 180 days between
the finalization of a test procedure and
the end of the standards NOPR
comment period for, with certain
exceptions: (1) New test procedures; and
(2) amended test procedures that impact
measured energy use or efficiency.
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F. Direct Final Rules
As discussed in the April 2021 NOPR
(see 86 FR 18901, 18908–18909), the
Energy Independence Security Act of
2007, Public Law 110–140 (Dec. 19,
2007), amended EPCA, in relevant part,
to grant DOE authority to issue a ‘‘direct
final rule’’ (‘‘DFR’’) to establish energy
conservation standards in appropriate
cases. Under this authority, DOE may
issue a DFR adopting energy
conservation standards for a covered
product or equipment upon receipt of a
joint proposal from a group of
‘‘interested persons that are fairly
representative of relevant points of view
(including representatives of
manufacturers of covered products,
States, and efficiency advocates),’’
provided DOE determines the energy
conservation standards recommended in
the joint proposal conform with the
requirements of 42 U.S.C. 6295(o) or 42
U.S.C. 6313(a)(6)(B), as applicable. (42
U.S.C. 6295(p)(4)(A)) While these two
provisions contain many of the
requirements DOE typically must satisfy
in issuing an energy conservation
standard, such as the prohibition against
setting less-stringent standards (i.e., the
‘‘anti-backsliding’’ requirement), they
do not adopt all the requirements of a
typical energy conservation standard
rulemaking. For example, 42 U.S.C.
6295(o) does not specify a mandatory
time period between promulgation of an
energy conservation standard and the
compliance date for that standard (i.e.,
compliance period). DOE has looked to
the joint proposals to fill in these
necessary details. This process had been
well-received by manufacturers, trade
organizations, and energy efficiency
advocates, as it allowed more room for
negotiation, which in turn made it
easier for stakeholders to reach a
consensus agreement. February 2020
Final Rule, 85 FR 8626, 8682–8683.
In a departure from this practice, DOE
clarified in the February 2020 Final
Rule that 42 U.S.C. 6295(p)(4) is a
procedure for issuing a DFR and not an
independent grant of rulemaking
authority. As such, under the February
2020 Final Rule, any joint proposal
submitted to DOE under the DFR
provision must identify a separate
rulemaking authority such as 42 U.S.C.
6295(m) (amendment of standards) or 42
U.S.C. 6295(n) (petition for amended
standard) and comply with the
requirements (e.g., compliance periods)
listed in that provision. Id. DOE also
provided additional guidance on the
Department’s interpretation of ‘‘fairly
representative’’ and obligations upon
receipt of an adverse comment. Id. at 85
FR 8683–8685.
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In the April 2021 NOPR, DOE
explained that it is reconsidering
whether these clarifications regarding
the DFR process are appropriate or
necessary, for the reasons set forth
subsequently. This reconsideration
begins with the language of the statute.
The language in 42 U.S.C. 6295(p)(4) is
clear that DOE may issue standards
recommended by interested persons that
are fairly representative of relative
points of view as a DFR when the
recommended standards are in
accordance with 42 U.S.C. 6295(o) or 42
U.S.C. 6313(a)(6)(B), as applicable.
There are no other requirements listed,
which is consistent with the unique
circumstances of rules issued under the
DFR provision. DOE’s overarching
statutory mandate in issuing energy
conservation standards is to choose a
standard that results in the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified—a requirement
found in 42 U.S.C. 6295(o).
Many of the other requirements found
in EPCA constrain DOE’s discretion in
setting standards for the benefit of
stakeholders. For example, mandatory
compliance periods are intended to give
manufacturers sufficient lead time to
design new products and shift
manufacturing capacity as necessary.
Similarly, EPCA provides that
manufacturers shall not be required to
apply new standards to a product with
respect to which other new standards
have been required during the prior 6year period. (42 U.S.C. 6295(m)(4)(B))
But, if manufacturers agree to a shorter
compliance period or two tiers of
standards as part of a consensus
agreement submitted under the DFR
provision, it would be odd if DOE were
then forced to deny such a proposal
based upon requirements designed to
protect the interests of those same
manufacturers. That being said, DOE
will still deny such a proposal if it is not
fairly representative of manufacturers’
points of view. (42 U.S.C. 6295(p)(4)(A))
Similarly, DOE will also deny such a
proposal if it does not meet applicable
criteria in 42 U.S.C. 6295(o), which,
among other things, require DOE to
consider the economic impact on
manufacturers (including small
manufacturers) and any possible
lessening of competition that may result
from imposition of the proposed
standard. As to this latter point,
pursuant to EPCA, DOE receives a
written determination from the Attorney
General as to the potential anticompetitive effects from any proposed
energy conservation standard. (See 42
U.S.C. 6295(o)(2)(B)(i)(V) and (ii))
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Issuing standards through a consensus
agreement among stakeholders is
different than DOE’s normal rulemaking
process. There is a corresponding
difference in the statutory criteria that
DOE must apply to each process, one
that is made clear by the language in 42
U.S.C. 6295(p)(4). Accordingly, DOE has
proposed to eliminate the rigid
requirement that DFR submittals
identify a separate rulemaking authority
and instead revert to the Department’s
prior practice of evaluating DFR
submittals based on the criteria laid out
in 42 U.S.C. 6295(p)(4).
As discussed previously, DOE also
provided additional guidance on the
Department’s interpretation of ‘‘fairly
representative’’ and obligations upon
receipt of an adverse comment. Upon
reconsideration, DOE believes that the
additional guidance may be overly
prescriptive in some circumstances. For
instance, the February 2020 Final Rule
required a group submitting a DFR
proposal to include larger concerns and
small businesses in the regulated
industry/manufacturer community,
energy advocates, energy utilities (as
appropriate for the given covered
product or equipment), consumers, and
States. 85 FR 8626, 8683. While this list
may be appropriate for some DFR
proposals, it is not universally
applicable. For instance, some of DOE’s
regulated industries do not have small
business manufacturers (e.g., external
power supplies).16 DOE also stated it
would publish in the Federal Register
any DFR proposal to obtain feedback as
to whether the proposal was submitted
by a group that is fairly representative
of relevant points of view. Id. Once
again, this may be good practice for
some DFR proposals (e.g., those
concerning newly covered products or
equipment), but it may be unnecessary
for most DFR proposals. The bulk of
DOE’s covered products and equipment
have gone through multiple rounds of
rulemakings, and DOE has become very
familiar with the relevant points of view
for these covered products and
equipment.
With respect to DOE’s discussion of
adverse comments in the February 2020
Final Rule, DOE largely repeated the
requirements listed in 42 U.S.C.
6295(p)(4)(C). Namely, DOE will
withdraw a DFR if one or more adverse
comments may provide a reasonable
basis for withdrawing the rule under 42
U.S.C. 6295(o), 42 U.S.C. 6313(a)(6)(B),
or any other applicable law. The one
clarification DOE offered was that the
Department may consider comments as
adverse, even if the issue was brought
16 See
85 FR 30636, 30648 (May 20, 2020).
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up previously during the rulemaking
process. Id. at 85 FR 8685. However,
this clarification does not offer any
insight into how DOE will determine
whether an adverse comment provides a
reasonable basis for withdrawing the
rule.
For these reasons, DOE considered
whether the guidance contained in the
February 2020 Final Rule concerning
DFRs is unnecessary or redundant to the
statutory language in 42 U.S.C.
6295(p)(4) and proposed to add ‘‘where
appropriate’’ to clarify that DOE retains
the discretion to determine what ‘‘fairly
representative’’ means for a given DFR
submission on a case-by-case basis.
Regardless of whether the DFR section
in appendix A is retained, deleted, or
revised, DOE stated that it will continue
to evaluate DFR proposals in accordance
with 42 U.S.C. 6295(p)(4).
DOE requested comments on the
merits of its proposed revisions to the
DFR section, as well as any alternative
approaches, such as deletion of or
amendments to the section or retention
of aspects of this section. Additionally,
DOE sought comment regarding small
business perspectives and related
impacts as to the proposed application
of the DFR provision of EPCA.
In response to the April 2021 NOPR,
DOE received a considerable number of
comments on its proposal related to
DFRs, which were overwhelmingly
supportive of DOE’s proposed return to
the Department’s historic approach to
DFRs that was in place before adoption
of the February 2020 Final Rule.
(Hamdi, No. 7 at p. 1; NPCC, No. 12 at
p. 5; Carrier, No. 26 at p. 3; A.O. Smith,
No. 27 at p. 5; MHI, No. 32 at pp. 3–
4; Nortek, No. 19 at p. 4; Joint
Environmentalist Commenters, No. 31 at
pp. 6–7; CA IOUs, No. 34 at p. 4; CEC,
No. 35 at p. 7; Grundfos, No. 37 at p.
3; Joint Advocacy Commenters, No. 38
at pp. 5–6; Joint Advocacy Commenters
(appendix I), No. 38 at pp. 1, 2, 13–14;
NEEA, No. 43 at p. 4; Lennox, No. 18
at p. 7; Goodman, No. 22 at p. 4; Trane,
No. 23 at p. 3; Joint Industry
Commenters, No. 40 at p. 16) However,
there were a few commenters who
opposed DOE’s proposal and instead
supported retention of the approach to
DFRs contained in the February 2020
Final Rule. (AGA, No. 33 at p. 6; AFP,
No. 36 at p. 2; Anonymous, No. 39 at p.
1) These comments and their rationale
are discussed in further detail in the
paragraphs that follow.
Comments in Support of DOE’s Proposal
To Return to Its Prior Practice Regarding
the Use of the DFR Provision in EPCA
A number of commenters argued that
a return to DOE’s prior interpretation of
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70913
EPCA’s DFR provisions are authorized
by and consistent with the statute’s
requirements. (Joint Environmentalist
Commenters, No. 31 at pp. 6–7; CEC,
No. 35 at p. 7; Joint Advocacy
Commenters, No. 38 at p. 6; A.O. Smith,
No. 27 at p. 5) On this point, the Joint
Environmentalist Commenters made the
case that EPCA’s DFR provision at 42
U.S.C. 6295(p)(4) expressly authorizes
DOE to accept a proposed standard
negotiated by a representative group of
stakeholders, provided that the proposal
complies with 42 U.S.C. 6295(o)
(residential products) or 42 U.S.C.
6313(a)(6)(B) (commercial and
industrial products). The Joint
Environmentalist Commenters disagreed
with DOE’s interpretation in the
February 2020 Final Rule that 42 U.S.C.
6295(p)(4) confers no independent grant
of rulemaking authority upon DOE, and,
as a result DFRs must satisfy the
statutory requirements associated with
another rulemaking authority, e.g., 42
U.S.C. 6295(m) or 42 U.S.C. 6295(n).
Instead, these commenters favored a
return to DOE’s prior flexibility in this
area (e.g., consideration of different
compliance timelines). (Joint
Environmentalist Commenters, No. 31 at
pp. 6–7) Similarly, the CEC supported
DOE’s proposed interpretation in the
April 2021 NOPR that the direct final
rule provision at 42 U.S.C. 6295(p)(4)
grants the agency rulemaking authority
separate and distinct from its general
authority to adopt energy conservation
standards. The commenter argued that
the interpretation of that statutory
provision contained in the February
2020 Final Rule is inconsistent with the
language of the statute and
congressional intent to facilitate DFRs.
Consequently, the CEC encouraged DOE
to move forward with its proposal.
(CEC, No. 35 at p. 7)
The NPCC reasoned that the direct
final rule provision enacted by Congress
was designed with the intent to
streamline mutually agreed upon
standards. The NPCC stated that the
current rule’s requirement that DOE first
identify a separate and independent
basis for a given standards rulemaking
adds unnecessary steps and
requirements to the direct final rule
process. Consequently, the NPCC
supported the removal of this provision.
(NPCC, No. 12 at p. 5) Likewise, Nortek
stated that it disagrees with DOE’s
decision in the February 2020 Final
Rule to define DFRs as a procedural tool
and to eliminate the use of DFRs in
negotiated rulemaking. (Nortek, No. 19
at p. 4) Trane and Lennox also agreed
with DOE’s proposal to eliminate the
requirement for a separate rulemaking
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authority and to implement its DFR
authority on a case-by-case basis,
evaluating consensus proposal
submissions based on the criteria laid
out in 42 U.S.C. 6295(p)(4). (Trane, No.
23 at p. 3; Lennox, No. 18 at p. 6)
Most of the commenters favored a
return to DOE’s prior approach to DFRs
because of the increased flexibility that
approach provided. (Joint
Environmentalist Commenters, No. 31 at
pp. 6–7; CA IOUs, No. 34 at p. 4; Joint
Advocacy Commenters, No. 38 at p. 6;
Joint Advocacy Commenters (Appendix
I), No. 38 at pp. 1, 2, 13–14) For
example, Carrier characterized DOE’s
earlier direct final rule process as an
efficient, cost-effective regulatory
process for both the government and
stakeholders, a point echoed by MHI
and NEEA. (Carrier, No. 26 at p. 3; MHI,
No. 32 at pp. 3–4; NEEA, No. 43 at p.
4) A.O. Smith stated that applying the
DFR authority in a flexible manner, so
as to permit consideration of measures
such as alternative compliance dates,
dual metrics, phased-in compliance by
product/equipment class, and twotiered standards, is both permitted
under EPCA and essential to maintain
as part of the Program’s structure. The
company supports the use of the DFR
authority in this manner because it
affords manufacturers with flexibility
for consensus-based or negotiated
solutions. (A.O. Smith, No. 27 at p. 5)
The CA IOUs made a similar point,
arguing that DOE’s pre-2020 Final Rule
guidance for direct final rules may lead
to more nuanced and detailed
approaches to test procedures and
energy conservation standards through
utilization of the mechanisms cited by
A.O. Smith. (CA IOUs, No. 34 at p. 4)
MHI added the DFRs can incentivize the
consensus process. (MHI, No. 32 at pp.
3–4)
Citing the ability to utilize those same
mechanisms, the Joint Advocacy
Commenters reasoned that many of the
other EPCA requirements beyond those
included in 42 U.S.C. 6295(o) and 42
U.S.C. 6313(a)(6)(B) are for the benefit of
stakeholders, but they are arguably
unnecessary in the context of DFRs. For
example, the Joint Advocacy
Commenters stated that other EPCA
provisions specify lead times for
compliance so as to provide
manufacturers with sufficient time to
comply with a new standard, but such
considerations are not necessary when
manufacturers negotiate an agreement
subjecting themselves to a different
compliance date. (Joint Advocacy
Commenters, No. 38 at pp. 5–6; Joint
Advocacy Commenters (Appendix I),
No. 38 at pp. 1, 2, 13–14)
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There was considerable discussion
and overlap of issues between appendix
A’s DFRs and negotiated rulemaking
provisions, because in the past, most
DFRs have arisen out of that type of
rulemaking proceeding. A number of
commenters stressed that in contrast to
the restriction in the February 2020
Final Rule, negotiated rulemakings
should once again be permitted to result
in a consensus recommendation that
leads to a DFR. (Grundfos, No. 37 at p.
3; NEEA, No. 43 at p. 4; Lennox, No. 18
at p. 7) Generally, commenters pointed
to the statutory protections associated
with both DFRs and negotiated
rulemaking as adequate to ensure the
fairness, transparency, and integrity of
the process, as explained subsequently.
For example, NEEA noted how the
DFR provisions already provide several
safeguards, including a requirement that
the consensus recommendation for
standards be fairly representative of
relevant points of view and the potential
for a DFR to be withdrawn upon receipt
of one or more adverse comments
(leading to further notice and comment
rulemaking). Particularly where there is
a consensus agreement, NEEA argued
that further comment beyond that
provided by the DFR would be
redundant. (NEEA, No. 43 at p. 4)
Similarly, MHI asserted that the
interested persons that are fairly
representative of relevant points of view
who participate in that process will
have taken the time during or in
advance of the rulemaking to exchange
views and reach a common or joint
understanding of what level of energy
efficiency or energy use will reasonably
strike a balance between benefits and
burdens. (MHI, No. 32 at pp. 3–4).
Consequently, MHI argued that DOE
should give substantial weight to the
consensus views of these participants in
light of their competing interests. (MHI,
No. 32 at p. 4) Furthermore, the Joint
Industry Commenters stated that, ‘‘[a]t a
minimum, the ‘relevant points of view’
are likely to reflect the views of the
persons who will bear the heaviest
burden of implementing the regulatory
mandate and the responsibility for
certifying compliance (manufacturers,
specifically those who make and use the
covered product), the persons who are
active in promoting the maximum
improvement in energy savings (energy
efficiency advocates), and
representatives of the country’s citizens
who are expected to realize net benefits
from a mandatory rule (States).’’ (Joint
Industry Commenters, No. 40 at p. 16)
However, the Joint Advocacy
Commenters cautioned that the
February 2020 Final Rule’s additional
guidance regarding what constitutes a
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‘‘fairly representative’’ group of
stakeholders and its clarification
regarding adverse comments may be
overly prescriptive, a position in
agreement with DOE’s April 2021
NOPR. (Joint Advocacy Commenters,
No. 38 at pp. 5–6; Joint Advocacy
Commenters (appendix I), No. 38 at pp.
1, 2, 13–14) Along these lines, Lennox
also warned that appendix A should not
go further than the statutory language
regarding participants (i.e.,
manufacturers, States, and efficiency
advocates) to also include ‘‘energy
utilities, consumers,’’ per the February
2020 Final Rule. Instead, Lennox stated
that it supports amending appendix A to
include the language ‘‘where
appropriate’’ regarding parties, thereby
avoiding any unnecessary constraints to
the DFR process. (Lennox, No. 18 at pp.
6–7)
In a more neutral posture, NAFEM
took the position that this is not a
critical issue, arguing that it is not
overly concerned either with DOE
maximizing its use of DFR when issues
are routine and non-controversial, or
even to reflect the results of a wellconducted negotiated rulemaking, so
long as DOE can overcome the other
statutory issues it identifies with such
negotiated rulemakings. (NAFEM, No.
30 at pp. 6–7)
A few commenters provided
suggestions for potential process
improvements. For example, although
Grundfos supported DOE’s proposal that
a negotiated rulemaking may culminate
in a term sheet recommending a DFR,
the commenter suggested that before
such recommendation is accepted, DOE
should be required to publish a
determination (with supporting
reasoning) that the Appliance Standards
and Rulemaking Federal Advisory
Committee (ASRAC) Working Group
meets the EPCA requirement to be
‘‘fairly representative of relevant points
of view.’’ (Grundfos, No. 37 at p. 3)
The Joint Advocacy Commenters
stated that although they have no
qualms about retaining the DFR section
of appendix A with the modifications
proposed, they alternatively support
removal of that section, because the
statute already provides sufficient
guidance regarding DOE’s DFR
authority. (Joint Advocacy Commenters,
No. 38 at p. 6)
Comments Opposing DOE’s Proposal To
Return To Its Prior Practice Regarding
the Use of the DFR Provision in EPCA
Three commenters provided
dissenting views in opposition to DOE’s
proposal regarding DFRs as set forth in
the April 2021 NOPR. (AGA, No. 33 at
p. 6; AFP, No. 36 at p. 2; Anonymous,
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No. 39 at p. 1) These commenters
largely supported the approach to DFRs
presented in the February 2020 Final
Rule, for the reasons that follow.
AFP supported the reasoning DOE
provided in its 2020 Final Rule
indicating that the DFR statutory
provision does not provide an
independent grant of rulemaking
authority (i.e., outlining its own set of
substantive requirements when
establishing or amending a standard)
but is instead only a procedural process
for issuing a standard authorized under
another provision of EPCA. In AFP’s
view, nothing in EPCA permits DOE to
interpret the DFR provision as a means
to evade EPCA’s requirements with
respect to compliance periods, energy
efficiency metrics, or other factors.
(AFP, No. 36 at p. 2) An anonymous
commenter expressed similar views,
quoting extensively from that portion of
the February 2020 Final Rule final rule
making the case that the DFR provision
does not create any additional flexibility
with regard to such statutory
requirements. (Anonymous, No. 39 at p.
1)
AGA stated that the February 2020
Final Rule contains appropriate and
necessary clarifications and
requirements to help ensure that
negotiated rulemakings and direct final
rules are treated distinctly from each
other and not conflated. (AGA, No. 33
at p. 6) Rather than making a broad
change, AGA suggested that it would be
preferable for DOE to allow for
divergences from the current set of
requirements where the need for such
divergences is appropriately
substantiated by DOE. It added that a
DFR and its accompanying process
should be consistent with EPCA and the
APA and that since a DFR is issued
without prior notice and comment, the
process for these rules should only be
used when DOE has deemed that rule to
be routine or noncontroversial in
accordance with the relevant statutory
requirements. (AGA, No. 33 at p. 6)
DOE Response to Comments
After careful consideration of these
comments, DOE has decided to adopt
the identified changes to its DFR
process along the lines proposed in the
April 2021 NOPR. In essence, DOE has
concluded that it is appropriate to
return to its historic practice for DFRs
in place prior to the February 2020 Final
Rule. DOE agrees with the commenters
who argued that the February 2020
Final Rule’s interpretation of EPCA’s
DFR provision (i.e., as a purely
procedural one) is not the best reading
of the statute, and DOE disagrees with
those commenters such as AFP and
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AGA, who support the opposite
statutory reading. Instead, DOE is
reverting to its longstanding
interpretation that the DFR provision
conveys upon DOE a substantive grant
of rulemaking authority, thereby
allowing stakeholders to negotiate over
more aspects of the energy or water
conservation standard, e.g., compliance
periods, so long as the requirements of
42 U.S.C. 6295(o) (and 42 U.S.C.
6313(a)(6)(B), as applicable) are met.
DOE has determined that the February
2020 Final Rule imposed certain
unnecessary restrictions upon the use of
DFRs, thereby limiting DOE’s flexibility,
program efficiency, and the usefulness
of this important regulatory tool
provided by Congress. In the past,
DFRs—arising from both consensus
agreement submissions and negotiated
rulemakings—have frequently utilized
measures such as alternative
compliance dates, dual metrics, phasedin compliance by product/equipment
class, and two-tiered standards. These
measures have typically resulted in
greater overall energy savings more
quickly, an outcome which the
Department finds consistent with the
energy-saving purposes of EPCA, and
DOE agrees with MHI that the
Department should give such consensus
recommendations appropriate weight.
In providing a streamlined process for
DFRs, Congress built in certain
safeguards in the relevant statutory
provision, namely the requirement that
a joint statement recommending an
energy or water conservation standard
must be ‘‘fairly representative of
relevant points of view (including
representatives of manufacturers of
covered products, States, and efficiency
advocates)’’ and the potential for
withdrawal of a DFR upon receipt of
one or more adverse comments. (42
U.S.C. 6295(p)(4)(A) and (C)) However,
because each rulemaking proceeding is
different (in terms of both issues and
stakeholders), DOE has concluded that
it is beneficial for the agency to assess
representativeness and any adverse
comments on a case-by-case basis. For
example, if there are no small business
manufacturers producing a certain
covered product, that should not
preclude consideration of a consensus
agreement or a negotiated rulemaking
leading to a DFR. Unfortunately, in
seeking to clarify DOE’s DFR process,
the February 2020 Final Rule
inadvertently imposed a one-size-fits-all
regime that may not be appropriate for
all proceedings.
DOE is not adopting the suggestion of
Grundfos that before such a consensus
recommendation is accepted, the
Department should be required to
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70915
publish a determination (with
supporting reasoning) that an ASRAC
Working Group meets the EPCA
requirement to be ‘‘fairly representative
of relevant points of view.’’ If an
interested party has concerns as to
representativeness, this issue may be
addressed in a comment on the DFR
(potentially as an ‘‘adverse’’ comment).
Particularly given the numerous
statutory deadlines DOE faces for energy
conservation rulemakings, the agency
does not find it reasonable to put in
place a separate comment opportunity
for this narrow issue, as a consolidated
comment opportunity would suffice and
serve the same purpose.
Thus, in this final rule, DOE is
retaining the expanded list of
potentially representative parties (i.e.,
beyond the statutorily required
manufacturers, States, and efficiency
advocates) but adding ‘‘where
appropriate’’ in recognition of the fact
that there is no set group of relevant
points of view across all rulemakings.
DOE anticipates that such an approach
will encourage consensus agreement
and DFRs, consistent with the
requirements of EPCA. Similarly, DOE
is removing discussion of adverse
comments from appendix A, so as not
to limit the Department’s ability to
consider the merits of such comments
on a case-by-case basis.
In addition, DOE is also returning to
its historic practice that a negotiated
rulemaking may result in a term sheet
with recommendations culminating in a
DFR. (For further discussion of
negotiated rulemaking, see section G of
this final rule.) The Department has
concluded that the contrary position
taken in the February 2020 Final Rule
was an overly restrictive interpretation
not compelled by EPCA or the NRA.
Upon further consideration, DOE now
sees the applicable provisions of these
two statutory sources can be read in
harmony to allow for DFRs to arise from
such proceedings, a result consistent
with 5 U.S.C. 561, Purpose, of the NRA
which states, ‘‘Nothing in this
subchapter shall be construed as an
attempt to limit innovation and
experimentation with the negotiated
rulemaking process or with other
innovative rulemaking procedures
otherwise authorized by law.’’ DOE does
not agree with the more restrictive
approach recommended by the AGA,
because it could unnecessarily limit use
of the provision Congress placed in
statute. Consequently, DOE is clarifying
that a negotiated rulemaking can result
in a DFR.
DOE notes that even if the position
taken in the February 2020 rule was not
erroneous, as a matter of policy, a
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negotiated rulemaking can still result in
a direct final rule. DOE’s independent
(and separate) authority to initiate a
direct final rule does not preclude the
possibility that it may be the product of
a negotiated rulemaking. The consensus
agreement contemplated under DOE’s
authority under 42 U.S.C. 6295(p)(4)
only requires that DOE receive a joint
statement from specified interested
parties and that the recommended
standard(s) be in accordance with 42
U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B), as applicable.
For the aforementioned reasons, DOE
is finalizing its proposed revisions to
the DFR section of appendix A, thereby
restoring flexibility to the process and
allowing the Department to tailor its
approach to the needs of individual
energy conservation standard or test
procedure rulemakings on a case-bycase basis. DOE concludes that retention
of a revised DFR section as part of
appendix A will provide additional
clarity for interested parties.
G. Negotiated Rulemaking
As discussed in the April 2021 NOPR
(see 86 FR 18901, 18909–18911), the
Department adopted a new section 11,
Negotiated Rulemaking Process, in the
February 2020 Final Rule to set forth the
procedures that DOE would follow
when using negotiated rulemaking
under the Appliance Standards
Program. 85 FR 8626, 8708–8709. These
provisions discussed DOE’s historical
use of negotiated rulemaking, along
with a few modifications to the agency’s
past approach. 85 FR 8626, 8685–8686.
As that final rule explained, negotiated
rulemaking is a process by which an
agency attempts to develop a consensus
proposal for regulation in consultation
with interested parties, thereby
addressing comments from stakeholders
before issuing a proposed rule. This
process is conducted in accordance with
the requirements of the NRA. To
facilitate potential negotiated
rulemakings, DOE established the
Appliance Standards and Rulemaking
Federal Advisory Committee
(‘‘ASRAC’’) to comply with the Federal
Advisory Committee Act, Public Law
92–463 (5 U.S.C. App. 2). As part of the
DOE process, working groups have been
established as subcommittees of
ASRAC, from time to time, for specific
products, with one member from the
ASRAC committee attending and
participating in the meetings of the
specific working group. Ultimately, the
working group reports to ASRAC, and
ASRAC itself votes on whether to make
a recommendation to DOE to adopt a
consensus agreement. The negotiated
rulemaking process allows real-time
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adjustments to the analyses as the
working group is considering them.
Furthermore, it allows parties with
differing viewpoints and objectives to
negotiate face-to-face regarding the
terms of a potential standard.
Additionally, it encourages
manufacturers to provide data for the
analyses in a more direct manner,
thereby helping to better account for
manufacturer concerns. DOE recognizes
the value of this process and encourages
submission of joint stakeholder
recommendations.
The February 2020 Final Rule also
discussed the following key points
related to negotiated rulemaking at 85
FR 8626, 8685:
• Negotiated rulemakings will go
through the ASRAC process outlined
above, and the appropriateness of a
negotiated rulemaking for any given
rulemaking will be determined on a
case-by-case basis.
• In making this determination, DOE
will use a convener to ascertain, in
consultation with relevant stakeholders,
whether review for a given product or
equipment type would be conducive to
negotiated rulemaking, with the agency
evaluating the convener’s
recommendation before reaching a
decision on such matter.
• The following five factors militate
in favor of a negotiated rulemaking: (1)
Stakeholders have commented in favor
of negotiated rulemaking in response to
the initial rulemaking notice; (2) the
rulemaking analysis or underlying
technologies in question are complex,
and DOE can benefit from external
expertise and/or real-time changes to
the analysis based on stakeholder
feedback, information, and data; (3) the
current standards have already been
amended one or more times; (4)
stakeholders from differing points of
view are willing to participate; and (5)
DOE determines that the parties may be
able to reach an agreement.
• If a negotiated rulemaking is
initiated, a neutral and independent
facilitator, who is not a DOE employee
or consultant, shall be present at all
ASRAC working group meetings.
• DOE will set aside a portion of each
ASRAC working group meeting to
receive input and data from nonmembers of the ASRAC working group.
• Finally, a negotiated rulemaking in
which DOE participates under the
ASRAC process will not result in the
issuance of a DFR, and further, any
potential term sheet upon which an
ASRAC working group reaches
consensus must comply with all of the
provisions of EPCA under which the
rule is authorized.
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After further consideration, DOE
tentatively determined in the April 2021
NOPR that further changes to its
approach to negotiated rulemaking are
necessary and appropriate. Although
section 11 of appendix A largely mirrors
the process DOE has followed when the
Department has determined, on a caseby-case basis, that such alternative
rulemaking procedures would be useful
to supplement the normal notice-andcomment rulemaking process, DOE
proposed in the April 2021 NOPR to
make certain modifications to the
process articulated in that section. On a
number of points, DOE proposed to
revert to the approach it employed prior
to promulgation of the February 2020
Final Rule. The following paragraphs
outline the proposed changes from the
April 2021 NOPR.
First, DOE would clarify that although
the Department has frequently used
facilitators and considered whether to
use convenors in past negotiated
rulemakings, the use of such individuals
is left to agency discretion and is not
required under the NRA (see 5 U.S.C.
563(b)). A ‘‘convenor’’ performs the task
of canvassing various interested parties
regarding the potential and feasibility of
achieving consensus in a particular
matter. In contrast, a ‘‘facilitator’’ helps
guide the discussion among the
participants to a negotiated rulemaking.
While DOE recognizes the value of
using a convenor and/or a facilitator in
certain cases, there are also instances
where DOE can adequately assess
whether a given situation is ripe for a
consensus-based approach through
negotiated rulemaking. These instances
may occur where DOE has accumulated
years or decades of experience with
setting standards with a particular
product or equipment, or where DOE is
approached by concerned stakeholders.
In those instances, it may not be
necessary to expend the time and/or
resources associated with the use of a
convenor. Consequently, DOE proposed
to eliminate the requirement for use of
a convenor and a facilitator and to
instead retain discretion to utilize the
services of such individuals in
appropriate cases. This change in
approach would allow the agency to
conserve resources and avoid delay
where such services are not necessary.
Second, DOE proposed that the list of
factors militating in favor of a negotiated
rulemaking, as currently articulated at
section 11(a)(3) of appendix A, are
neither mandatory nor exclusive. The
NRA already sets forth factors for
consideration at 5 U.S.C. 563(a).
Because the factors set forth in section
11(a)(3) of appendix A may not be
appropriate in all cases, DOE proposed
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to no longer be bound by this list when
determining whether it is appropriate to
convene a negotiated rulemaking.
Instead, the Department proposed to
consider the factors articulated under 5
U.S.C. 563(a), as well as any other
considerations relevant to the specific
product/equipment proceeding in
question.
Third, DOE proposed to revert to its
prior approach, which would allow for
a negotiated rulemaking to result in a
term sheet recommending promulgation
of a DFR under 42 U.S.C. 6295(p)(4).
(See section III.F of this document for a
more complete discussion of DFRs.)
DOE tentatively concluded that the
approach adopted in the February 2020
Final Rule (i.e., that a negotiated
rulemaking must result in a proposed
rule followed by a final rule) was an
overly restrictive reading of the NRA.
While 5 U.S.C. 563(a) discusses
issuance of a proposed rule and a final
rule, 42 U.S.C. 6295(p)(4) (under EPCA)
already mandates publication of a
proposed rule simultaneously with a
DFR—and in the event of an adverse
comment that may provide a reasonable
basis for withdrawal, DOE is required to
conduct further rulemaking under the
proposed rule, proceeding to a final
rule, if appropriate. (42 U.S.C.
6295(p)(4)(C)(i)(II)) Furthermore, at 5
U.S.C. 561, Purpose, the NRA states,
‘‘Nothing in this subchapter shall be
construed as an attempt to limit
innovation and experimentation with
the negotiated rulemaking process or
with other innovative rulemaking
procedures otherwise authorized by
law.’’ In light of the above, DOE has
tentatively concluded that these
relevant legal authorities can be read in
harmony and do not preclude the
possibility of a negotiated rulemaking
that results in a recommendation to
implement the body’s consensus
through a DFR. Accordingly, DOE
proposed to revert to its prior position
on this topic.
In light of these proposed
modifications, DOE tentatively
concluded that section 11 of the revised
appendix A would become largely
redundant of the NRA requirements to
which the agency is already subject, and
therefore, the Department found section
11 to be unnecessary and proposed its
removal. DOE noted, however, that its
proposal to remove this section from
appendix A in no way reflected a
change in the Department’s perception
of the value of negotiated rulemaking or
its intention to use negotiated
rulemaking in appropriate cases.
Similarly, this proposal was not
expected to affect DOE’s practice of
providing opportunities for public
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comment and access to working group
documents and meetings/webinars
throughout the negotiated rulemaking
process. DOE requested comments on
the merits of this proposed approach
including comments regarding the
proposed complete removal of section
11, as well as any alternatives to this
proposal, such as amendments or
revisions to the section or retention of
aspects of section 11. See generally
April 2021 NOPR 86 FR 18901, 18909–
18911.
In response to the April 2021 NOPR,
DOE received a considerable number of
comments on its proposal related to the
topic of negotiated rulemaking, which
like the comments on the proposed DFR
provisions, were overwhelmingly
supportive of both the negotiated
rulemaking mechanism itself and DOE’s
proposal to return to the Department’s
historic approach to such rulemakings
that was in place before adoption of the
February 2020 Final Rule. (Hamdi, No.
7 at p. 1; NPCC, No. 12 at p. 5; Carrier,
No. 26 at p. 3; ALA, No. 28 at p. 4; CEC,
No. 35 at p. 7; Joint Advocacy
Commenters, No. 38 at p. 7; Joint
Advocacy Commenters (appendix I), No.
38 at pp. 1, 2, 15; NEEA, No. 43 at p.
4; Lennox, No. 18 at pp. 8–9; Goodman,
No. 22 at p. 3; Nortek, No. 19 at p. 4;
CEC, No. 35 at p. 7; CA IOUs, No. 34
at p. 4) A small minority of commenters
either favored the approach to
negotiated rulemaking contained in the
February 2020 Final Rule or otherwise
expressed concern with the proposal set
forth in the April 2021 NOPR. (AGA,
No. 33 at p. 6; MHI, No. 32 at pp. 1–
2) All of these comments and their
rationale are discussed in further detail
in the paragraphs that follow.
Comments in Support of DOE’s Proposal
Regarding Negotiated Rulemaking
Commenters generally agreed that
DOE’s use of negotiated rulemakings has
yielded substantial benefits. For
example, ALA stated that negotiated
rulemakings implemented through
DOE’s ASRAC process have produced
significant energy savings by allowing a
collaborative effort among interested
parties that can be faster, more
transparent, and less contentious than
the normal rulemaking process. (ALA,
No. 28 at p. 4)
A number of commenters favored a
return to DOE’s prior practice regarding
negotiated rulemaking because of the
increased flexibility that approach
provided. On this point, the Joint
Environmentalist Commenters generally
opposed what they characterized as the
unnecessarily strict limits and
restrictions related to negotiated
rulemaking in the February 2020 Final
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70917
Rule, beyond the requirements of the
NRA, so these commenters expressed
support for returning flexibility to the
process for negotiated rulemakings.
(Joint Environmentalist Commenters,
No. 31 at pp. 6–7; CA IOUs, No. 34 at
p. 4) The CA IOUs argued that the use
of negotiated rulemaking (in
combination with DFRs) offers
flexibility and can lead to more nuanced
and detailed approaches to test
procedures and standards, such as
staged standards, different compliance
dates, and multiple efficiency standards.
The CA IOUs added that it has been
their experience that direct negotiations
between stakeholders has resulted in
energy conservation standards that are
quicker and easier for industry to
implement and that save more energy
overall than would have been
achievable through the conventional
rulemaking process. (CA IOUs, No. 34 at
p. 4) The CEC added that a reversion
back to DOE’s prior, effective negotiated
rulemaking practice is based on and
consistent with the requirements of the
NRA. (CEC, No. 35 at p. 7) GEA
described negotiated rulemaking with
direct final rules as a powerful tool for
fast progress that reduce the use of DOE
resources. GEA added that negotiated
rulemaking offers all stakeholders an
opportunity for increased control,
decreases the likelihood of litigation,
and provides an opportunity for
solutions outside the scope of EPCA’s
analytical framework and for the
consideration and resolution of
standards and test procedures for
multiple products at once. (GEA, No. 20
at p. 3) NEEA also stated that negotiated
rulemakings (in combination with
DFRs) can lead to more efficient
rulemaking. (NEEA, No. 43 at p. 4)
As discussed previously, there was
considerable discussion and overlap of
issues between appendix A’s DFR and
negotiated rulemaking provisions,
because in the past, most DFRs arose out
of that type of rulemaking proceeding. A
number of commenters stressed that in
contrast to the restriction in the
February 2020 Final Rule, negotiated
rulemakings should once again be
permitted to result in a term sheet with
a consensus recommendation that leads
to a DFR. (NPCC, No. 12 at p. 5; Carrier,
No. 26 at p. 4; MHI, No. 32 at p. 3;
Nortek, No. 19 at p. 4; Joint
Environmentalist Commenters, No. 31 at
pp. 6–7; Joint Advocacy Commenters,
No. 38 at p. 7; Joint Advocacy
Commenters (appendix I), No. 38 at pp.
1, 2, 15; NEEA, No. 43 at p. 4; NAFEM,
No. 30 at p. 7; Joint Industry
Commenters, No. 40 at p. 15) On this
point, A.O. Smith argued that the
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approach contained in the February
2020 Final Rule undermines DOE’s own
authority under EPCA. In A.O. Smith’s
view, DOE’s past application of the DFR
provision to permit a DFR to result from
a negotiated rulemaking has ensured
that the DFR’s ‘‘fairly representative’’
requirement has been met, and the
commenter asserted that the negotiated
rulemaking process has been an
important advancement and addition to
the Appliance Standards Program, and
for these reasons, its use should
continue. A.O. Smith also asserted that
applying the DFR provision in this
manner meets the goal of Congress to
promote consensus agreements that
reflect broad input from interested
parties who can fashion agreements that
best promote the aims of the statute. It
added that when DOE receives a
consensus agreement consistent with
the DFR process, that act alone is
sufficient to satisfy the statute so long as
42 U.S.C. 6295(o) (or 42 U.S.C.
6313(a)(6)(B) as applicable) are met.
(A.O. Smith, No. 27 at p. 5)
Commenters also addressed the
individual proposed changes regarding
negotiated rulemakings that DOE
presented in the April 2021 NOPR. On
the topic of convenors and facilitators,
most stakeholders expressed support for
DOE’s proposal to make their use
discretionary in appropriate cases.
(NPCC, No. 12 at p. 5; Carrier, No. 26
at p. 3; Grundfos, No. 37 at p. 3)
Commenters offered the following
views. The Joint Industry Commenters
agreed that a convenor and a facilitator
may not be necessary in every
negotiated rulemaking, and the Joint
Advocacy Commenters added that use
of facilitators and convenors is not
required under the NRA. (Joint Industry
Commenters, No. 40 at p. 15; Joint
Advocacy Commenters, No. 38 at p. 7)
Similarly, NAFEM stated that although
it generally acknowledges the benefits of
facilitators in appropriate cases, DOE
and stakeholders have experience as to
when engagement of facilitators would
be helpful. (NAFEM, No. 30 at p. 7)
However, Grundfos argued that DOE has
sufficient experience with these roles to
clearly define in appendix A when their
use would be warranted. (Grundfos, No.
37 at p. 3)
Once again, DOE proposed in the
April 2021 NOPR to clarify that the list
of factors militating in favor of a
negotiated rulemaking, as currently
articulated at section 11(a)(3) of
appendix A, are neither mandatory nor
exclusive. Because the specified factors
may not be appropriate in all cases, DOE
reasoned that it should no longer be
bound by this list when determining
whether it is appropriate to convene a
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negotiated rulemaking, but instead
proposed to consider the factors
articulated under 5 U.S.C. 563(a), as
well as any other considerations
relevant to the specific product/
equipment proceeding in question. In
response, commenters offered the
following input. Carrier and the Joint
Advocacy Commenters agreed that the
factors favoring a negotiated rulemaking
currently listed in Section 11(a)(3) of
appendix A are not exclusive, and the
Joint Advocacy Commenters also
pointed out that they are not mandatory.
(Carrier, No. 26 at pp. 3–4; Joint
Advocacy Commenters, No. 38 at p. 7)
The Joint Industry Commenters likewise
stated that they have no objection to
DOE eliminating the list of factors in
appendix A militating in favor of a
negotiated rulemaking, and, instead
considering the factors under 5 U.S.C.
563(a). (Joint Industry Commenters, No.
40 at p. 15)
Among commenters who generally
supported DOE’s proposal regarding
negotiated rulemaking, there was mixed
reaction as to how best to address
section 11 of appendix A (Negotiated
Rulemaking Process). Some commenters
recommended that section 11 should be
eliminated (as the Department proposed
in the April 2021 NOPR). (NPCC, No. 12
at p. 5; Joint Advocacy Commenters, No.
38 at p. 7; NEEA, No. 43 at p. 4) Other
commenters recommended that section
11 should be retained with revisions.
(Carrier, No. 26 at p. 4; Grundfos, No.
37 at p. 3; Joint Industry Commenters,
No. 40 at pp. 14–15; Lennox, No. 18 at
pp. 8–9)
Commenters favoring removal of
section 11 offered the following
reasoning in support of their position.
The Joint Advocacy Commenters agreed
that DOE’s proposal complies with the
requirements of the NRA and that given
the existing NRA requirements, section
11 of the February 2020 Final Rule is
unnecessary and should be removed.
(Joint Advocacy Commenters, No. 38 at
p. 7) NEEA stated its agreement with
DOE’s proposal to remove the language
related to negotiated rulemaking from
appendix A, arguing that the NRA
already sufficiently specifies that
process. The commenter asserted that
the negotiated rulemaking provisions of
the February 2020 Final Rule did not
clarify that process and that it may have
added unnecessary burden in some
cases. (NEEA, No. 43 at p. 4)
Commenters who favored retention of
section of 11 with revisions offered the
following reasoning in support of that
view, including any specific language
offered. Grundfos argued that a
modified version of section 11 of
appendix A should be allowed to
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remain in the regulation, because it
assists stakeholders in understanding
how that process will work under the
NRA. (Grundfos, No. 37 at p. 3) Along
those same lines, Carrier suggested that
DOE should expressly state its modified
process for negotiated rulemakings by
updating the current text of section 11
to: (1) Provide the flexibility to
determine whether a convener or
facilitator is needed; (2) provide the
flexibility to consider factors beyond
those currently listed in Section
11(a)(3); and (3) allow the promulgation
of a direct final rule from a negotiated
rulemaking. (Carrier, No. 26, at p. 4)
Finally, the Joint Industry Commenters
also stated that DOE should reinsert
several aspects of the July 1996 Final
Rule, which include the following: First,
DOE should include the following
statement from the July 1996 Final Rule:
‘‘[u]nder the guidelines in this
appendix, DOE will support the
development and submission of
consensus recommendations for
standards by representative groups of
interested parties to the fullest extent
possible.’’ Second, DOE should indicate
that it will consider deferring its
rulemaking analysis while a
representative group of interested
parties works to develop joint
recommendations on standards. Third,
DOE should propose a consensus
recommendation submitted by a breadth
of interested parties so long as it met the
applicable statutory criteria. Lastly, DOE
should give substantial weight to
consensus recommendations. (Joint
Industry Commenters, No. 40 at pp. 14–
15) MHI recommended inclusion of
nearly identical language as that
suggested by the Joint Industry
Commenters. (MHI, No. 32 at p. 3)
While Lennox is generally supportive
of DOE’s clarifications regarding the
negotiated rulemaking process, the
company suggests retaining an
abbreviated version of appendix A’s
section on negotiated rulemaking.
(Lennox, No. 18 at p. 8). Lennox offered
the following suggested modifications.
First, Lennox stated that DOE could
retain the substance of the first two
sentences in section 11(a)(1) indicating
‘‘In those instances where negotiated
rulemaking is determined to be
appropriate, DOE will comply with the
requirements of the Negotiated
Rulemaking Act (NRA) (5 U.S.C. 561–
570) and the requirements of the Federal
Advisory Committee Act (FACA) (5
U.S.C. App. 2). To facilitate potential
negotiated rulemakings, and to comply
with the requirements of the NRA and
the FACA, DOE established the
Appliance Standards and Rulemaking
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Federal Advisory Committee (ASRAC).’’
Similarly, Lennox argued that DOE
could retain some or all of section
11(a)(4) whereby ‘‘DOE will provide
notice in the Federal Register of its
intent to form an ASRAC working group
(including a request for nominations to
serve on the committee), announcement
of the selection of working group
members (including their affiliation),
and announcement of public meetings
and the subject matter to be addressed.’’
Furthermore, according to Lennox, DOE
has not explained why it is deleting
appendix A subsections 11(b) and (c),
and the commenters believes these
subsections seem appropriate. For
instance, Lennox pointed out that
subsection 11(c) merely states ‘‘A
negotiated rulemaking may be used to
develop energy conservation standards,
test procedures, product coverage, and
other categories of rulemaking
activities.’’ Lennox opined that retaining
this language seems a helpful
clarification on the potential scope of
negotiated rulemaking. Subsection 11(b)
states ‘‘DOE’s role in the negotiated
rulemaking process is to participate as
a member of a group attempting to
develop a consensus proposal for energy
conservation standards [and the
commenter noted that ‘test procedures
or other rulemaking activities’ should be
added here] for a particular product/
equipment and to provide technical/
analytical advice to the negotiating
parties and legal input where needed to
support the development of a potential
consensus recommendation in the form
of a term sheet.’’ Again, Lennox argued
that this language seems to be a helpful
clarification, and the commenter
asserted that DOE does not explain the
reasons for deleting this particular
subsection. Moreover, Lennox argued
that appendix A should affirmatively
indicate a negotiated rulemaking (e.g.,
through ASRC) can lead directly to a
DFR. (Lennox, No. 18 at pp. 8–9)
Comments Opposing DOE’s Proposal
Regarding Negotiated Rulemaking
Finally, some commenters expressed
opposition to or concern about the April
2021 NOPR’s proposed changes to the
negotiated rulemaking section of
appendix A. Specifically, AGA stated
that although it supports the use of
negotiated rulemakings, it had
previously sought to include provisions
in appendix A to promote and require
full participation. In AGA’s view, DOE’s
current proposal to remove appendix
A’s provisions regarding negotiated
rulemakings should not be adopted
because the current set of requirements
are critical elements to help ensure full
participation in the negotiated
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rulemaking process. (AGA, No. 33 at p.
6) Furthermore, MHI asserted that the
negotiated rulemaking process that it
experienced as part of its efforts to assist
in the development of energy
conservation standards for
manufactured homes resulted in certain
stakeholders having an outsized
influence, which led to skewed
outcomes. In MHI’s view, the proposed
rule that resulted from that negotiated
rulemaking would have had a
detrimental impact on the ability of
consumers to afford a manufactured
home. MHI argued that any DOE
standard-setting process should be
transparent, allow for input from all
affected stakeholders, and provide a
reasonable cost-benefit analysis before
engaging in a rulemaking that can have
significant impacts on industry and
consumers. (MHI, No. 32 at pp. 1–2)
DOE’s Response to Comments
After careful consideration of these
comments, DOE has decided to adopt
the identified changes to its negotiated
rulemaking process along the lines
proposed in the April 2021 NOPR. In
essence, DOE has concluded that it is
appropriate to return to its historic
practice for negotiated rulemaking in
place prior to the February 2020 Final
Rule. DOE agrees with the commenters
who argued that in attempting to codify
DOE’s existing practice, appendix A
provisions in section 11, Negotiated
Rulemaking Process, imposed certain
unnecessary restrictions that were
beyond the requirements of the NRA,
thereby limiting DOE’s flexibility and
the usefulness of this important
regulatory tool. Consequently, through
this final rule, DOE is restoring its
flexibility in the context of the
negotiated rulemaking process, thereby
allowing the Department to tailor its
approach to the needs of individual
energy conservation standard or test
procedure rulemakings on a case-bycase basis.
To be clear, DOE hereby reiterates its
strong support for negotiated
rulemakings and consensus agreements
in appropriate cases, and the
Department acknowledges the
substantial benefits of such mechanisms
mentioned by commenters. DOE and
many stakeholders have considerable
experience with negotiated rulemakings,
including those conducted under the
auspices of ASRAC. DOE is familiar
with the circumstances under which a
negotiated rulemaking is most likely to
have the potential to be successful, and
the Department is also aware when the
services of a convenor or facilitatory
would be useful. Consequently, rather
than having a mandatory but non-
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exhaustive list of factors for
consideration for initiation of a
negotiated rulemaking, DOE believes
that it is better for the Department to be
able to consider all relevant
circumstances, so it has decided that the
February 2020 Final Rule’s list of factors
is unnecessary and overly restrictive,
and therefore, it should be eliminated.
Similarly, because of limited resources
and the need for rulemaking efficiency,
DOE has decided to eliminate the
required use of convenors and
facilitators as part of every negotiated
rulemaking, but to instead employ such
individuals on a case-by-case basis
when the agency determines it
appropriate.
DOE also agrees with the vast majority
of commenters that, consistent with the
agency’s historic approach, it should be
permissible for a negotiated rulemaking
to result in a term sheet with
recommendations that culminate in a
DFR. DOE has concluded that contrary
provisions in the February 2020 Final
Rule were driven by an interpretation of
EPCA not compelled by the statute. For
the reasons explained in the April 2021
NOPR, DOE has once again concluded
that the DFR provision at 42 U.S.C.
6295(p)(4) constitutes substantive
authority which offers DOE some
flexibility for rulemakings with
consensus agreements, as long as the
requirements of 42 U.S.C. 6295(o) (or 42
U.S.C. 6313(a)(6)(B) as applicable) are
met. When the negotiated rulemaking
process has been combined with a DFR,
it has been possible to implement
agreements with staged standards,
different compliance dates, and
multiple efficiency standards. Typically,
such process has achieved greater
energy savings, done so more
expeditiously, and reduced the risk of
litigation. DOE agrees with AGA and
MHI as to the importance of public
participation in its negotiated
rulemaking process, and that is why
ASRAC meetings are open to the public
with opportunities for non-Working
Group member input. DOE does not
agree with MHI that members of any
ASRAC negotiating committee have
more influence than others, given the
balance of various points of view that is
required by ASRAC. DOE also notes that
EPCA itself imposes a requirement that
any joint statement recommending an
energy conservation standard must be
fairly representative of relevant points
of view (see 42 U.S.C. 6295(p)(4)(A)).
DOE has concluded that these measures
provide adequate safeguard in terms of
public participation.
As for the suggestion from Joint
Industry Commenters that DOE reinsert
several statements regarding negotiated
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rulemaking from the July 1996 Final
Rule, DOE believes that the statements
are either unnecessary or potentially in
tension with the Department’s
obligations and authority under EPCA.
First, the Objectives section of appendix
A already contains a statement
encouraging the development of
consensus recommendations for new or
revised standards. DOE has also
clarified in the Objectives section that
this support and encouragement extends
to consensus recommendations
developed in accordance with the NRA.
Second, with regards to potentially
delaying a rulemaking analysis while
stakeholders work to develop a
consensus recommendation, DOE
believes it would be ill-advised in many
situations to curtail its own rulemaking
analysis in the hopes that stakeholders
come to a consensus agreement in time
to meet a statutory deadline. With
respect to affording substantial weight
to consensus recommendations and
issuing them as proposals, EPCA
already contains criteria for evaluating
consensus proposals. (See 42 U.S.C.
6295(p)(4)(A)) DOE will determine
whether to issue a consensus agreement
as a proposal in accordance with these
criteria.
In light of the changes being adopted
for negotiated rulemaking as part of this
final rule, DOE sees little reason to
retain a separate section of appendix A
dedicated to negotiated rulemaking.
What remains essentially grants DOE
the same level of flexibility accorded to
it under the NRA, and it is noted that
the Department’s past attempt to clarify
its existing process produced some level
of confusion. Furthermore, DOE’s prior,
longstanding negotiated rulemaking
practice has generally been transparent,
open to the public, and well understood
by interested stakeholders.
Consequently, for these reasons, DOE
has concluded that inclusion of a
section on negotiated rulemaking in
appendix A is unnecessary and
susceptible to generating further
confusion, so, therefore, the Department
is removing such section entirely.
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H. Other Topics
In addition to receiving comments on
the proposed revisions to appendix A
set forth in the April 2021 NOPR, DOE
received numerous other comments
related to appendix A. These comments
fall primarily into two categories: (1)
Comments related to aspects of
appendix A not addressed in the April
2021 NOPR; and (2) comments
challenging the basis for the rulemaking.
Regarding the first category, DOE will
address these comments and the
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additional revisions proposed in the
July 2021 NOPR in a separate final rule.
As to the second category, several
commenters stated that since the
February 2020 Final Rule has only been
in effect for a limited period of time
DOE has not had sufficient experience
with the rule to establish a reasonable
basis for determining that modifications
are needed to help meet the
Department’s statutory obligations
under EPCA. (See, e.g., AHRI, No. 25 at
p. 7; Crown Boiler, No. 10 at p. 2) DOE
does not agree with these comments.
First, many of the effects of the February
2020 Final Rule on the Department’s
rulemaking processes were readily
apparent on issuance of the rule. The
February 2020 Final Rule created a onesize-fits-all rulemaking process that was
binding on DOE. Further, the February
2020 Final Rule and the August 2020
Final Rule added additional, mandatory
steps to the rulemaking process that are
not required by any applicable statute.
These mandatory provisions, among
other things, added steps to the
rulemaking process and required buffer
periods (i.e., delays) between certain
rulemaking actions. Further, since the
February 2020 Final Rule became
effective on April 14, 2020, DOE has
had to conduct additional rulemaking
steps (early assessment RFIs) 17 and
delay other rulemaking actions in
accordance with the binding provisions
of the February 2020 Final Rule.
Consequently, these provisions
increased both the length of the
rulemaking process and the overall
resource burdens on DOE by requiring
additional steps that may not always be
needed under the circumstances of a
given rulemaking. In addition, as stated
throughout the April 2021 NOPR and
this final rule, DOE is not revising
appendix A because the February 2020
Final Rule revisions offered no policy
benefits or were otherwise legally
deficient. Instead, DOE is revising
appendix A because it unnecessarily
constrains DOE’s ability to readily meet
its considerable statutorily-imposed
rulemaking obligations under EPCA.
From a practical perspective, applying a
mandatory, one-size-fits-all rulemaking
process does not allow the Department
to account for the specific
circumstances of a particular
rulemaking. For example, the February
17 See ‘‘Energy Conservation Program: Energy
Conservation Standards for Certain Commercial and
Industrial Equipment; Early Assessment Review;
Refrigerated Bottled or Canned Beverage Vending
Machines,’’ 85 FR 35394 (June 10, 2020); ‘‘Energy
Conservation Program: Test Procedures for Certain
Commercial and Industrial Equipment; Early
Assessment Review; Pumps,’’ 85 FR 60734 (Sept.
28, 2020).
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2020 Final Rule required that all test
procedures be finalized at least 180 days
prior to issuance of an associated
standards proposal. DOE recognizes that
in certain cases a delay between
finalization of a test procedure and
issuance of a standards proposal is
necessary for stakeholders to gain
familiarity with the new test procedure
before having to comment on proposed
standards. However, that is not the case
for all of DOE’s test procedure
rulemakings, such as those instances
where DOE makes minor, technical
amendments to the test procedure that
do not affect measured energy use or
efficiency. In such cases, there is no
need to delay a standards proposal for
180 days, especially when DOE is
striving to meet rulemaking deadlines
and facing lawsuits regarding missed
rulemaking deadlines.
AHRI also disagreed with DOE’s
statement that appendix A is best
described and utilized as generally
applicable guidance that may guide, but
not bind, the Department’s rulemaking
process. AHRI stated that the
modifications proposed in the April
2021 NOPR are not enough to render
appendix A as an interpretive rule that
is not binding on DOE and does not
require notice and comment rulemaking
procedures. AHRI went on to state that
appendix A promulgates rules
governing specific contexts such that it
amounts to an exhaustive framework
designed to cabin its discretion. (AHRI,
No. 25 at pp. 11–12)
DOE disagrees with AHRI’s
characterization of the revisions made to
appendix A in this document. As DOE
has made clear throughout the April
2021 NOPR and this document, the
purpose of these revisions to appendix
A is to ensure that DOE is not bound by
a rigid, one-size-fits-all rulemaking
process that does not account for the
specific circumstances of a rulemaking.
This rule does not cabin DOE’s
discretion. Instead, this rule restores
DOE’s discretion to tailor its rulemaking
processes to, among things, avoid
unnecessary delays and burdens on the
Department’s rulemaking resources.
Finally, AHRI also argued that DOE’s
proposal did not consider the regulated
community’s reliance on the February
2020 Final Rule’s procedures in the
context of ongoing proceedings for test
procedures and energy conservation
standards. In its view, the regulated
community has a significant interest in
both the regulations relating to test
procedures and energy conservation
standards that DOE develops, as well as
the process in promulgating those
regulations. These regulatory actions, it
argued, trigger a complex series of
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business and governance decisions by
the regulated community requiring
precise planning and budgeting to
respond to those actions. AHRI argued
that by proposing to rescind appendix A
six months after the rule itself took
effect and without addressing concerns
related to the regulated community’s
efforts to prepare for adjustments related
to the February and August 2020 Final
Rules, DOE has not considered these
serious reliance interests. (AHRI, No. 25
at p. 12) Citing Nat’l Urban League v.
Ross, 977 F.3d 770 (9th Cir. 2020), AHRI
emphasized that there is no specific
length of time for which a rule must
have been in place for serious reliance
interests to exist, and in certain cases,
a shorter period of time may be
sufficient to create those interests in
light of the surrounding circumstances.
(AHRI, No. 25 at pp. 12–13) As a result,
AHRI argued that given the link
between test procedures and
standards—including the process by
which DOE develops them—and the
regulated community’s critical
organizational and financial obligations
to achieve compliance, it has clearly
demonstrated that the regulated entities
have serious reliance interests in the
February 2020 Final Rule. (AHRI, No. 25
at p. 13)
DOE notes that AHRI’s stated reliance
interests are general in nature, and at no
point does AHRI detail with any
specificity what those specific reliance
interests are or their extent. While it is
true that, at the time of the NOPR’s
publication, appendix A in its current
form had been in effect for a six-month
period, this fact alone, in spite of
AHRI’s views to the contrary, does not
lend itself towards establishing a
particularly strong reliance interest.
When coupled with DOE’s clearly stated
intention to further modify appendix A
to enhance DOE’s flexibility in
addressing the considerable rulemaking
obligations imposed by EPCA, any
purported reliance interest that
interested parties may claim to have
regarding the various provisions that
DOE sought to make in its April 2021
proposal—and that are being finalized
in this document—are further
diminished.18
18 The effective date for the August 2020 Final
Rule was October 19, 2020, and a NOPR proposing
changes to appendix A was published in the
Federal Register on April 12, 2021. Consequently,
while nearly a year has passed since the
promulgation of appendix A’s stricter requirements,
the public—including all interested industry
parties—have been on notice since the release of the
April 2021 NOPR as to DOE’s intentions to modify
these requirements. As such, stakeholders have
been accorded lead time to modify their
expectations and plans regarding the prospective
functioning of DOE’s regulatory process for the
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To elaborate on these points, DOE
notes that in establishing its reliance
interests, AHRI relied upon bare
assertions to that effect. Thus, DOE has
been presented with no credible
evidence of the reliance interests or
impacts at stake as a result of DOE’s
change to appendix A. See, Kiewit
Power Construction v. Sec’y,
Department of Labor, 959 F.3d 381, 399
(D.C. Cir. 2020) (noting the absence of
reliance concerns where a regulation
existed for less than four months).
Compare, Encino Motorcars v. Navarro,
126 S. Ct. 2117, 2126–2127 (2016)
(finding reliance interests on the part of
regulated employers were implicated in
an agency’s attempt to change that
agency’s decades-old approach in an
opposite manner). Moreover, to the
extent that reliance interests may exist,
DOE does not believe that, based on the
current record, these reliance interests
were as significant as AHRI claims. If
such reliance interest did exist and were
as significant as AHRI claims, DOE
expects that the commenter would have
demonstrated such reliance with some
particularity, but AHRI did not.
Presumably, reliance interests could not
form until such time as DOE finalized
its changes to appendix A; at earliest,
the clock could have started February
14, 2020, but even then, stakeholders
knew that at least one important aspect
of appendix A (i.e., the comparative
analysis of potential standard levels)
was still undergoing ongoing
rulemaking, with such provision not
being finalized until August 19, 2020.
Further, Executive Order 13990, which
directed DOE to consider suspending,
revising, or rescinding the February and
August 2020 Final Rules, was issued on
January 20, 2021. Given that DOE once
again proposed changes to appendix A
on April 12, 2021, the intervening
period arguably left very little time for
significant reliance interests to develop
or strongly attach. Furthermore, as
evidenced by the earlier review/revision
process for appendix A, stakeholders
were aware that DOE’s internal
procedures are subject to change, and
such fact should have tempered their
reliance expectations.
DOE also notes that in those instances
where rulemakings are currently
underway, the Department is following
the existing requirements of appendix A
by providing early assessment requests
for information to the public to help
DOE decide its next steps with respect
to test procedure and energy
conservation standard rulemaking
activities—thereby mitigating any harm
Appliance Standards Program and any reliance on
them have been necessarily diminished.
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70921
to the reliance interests of interested
parties. DOE also notes that interested
parties will have a transition period (the
30 days between publication of this
final rule and its effective date) in
which to adjust to the application of the
version of appendix A being adopted in
this final rule. Consequently, under the
current set of circumstances, DOE has
seen no evidence of ‘‘serious reliance
interests’’ regarding a rule that governed
DOE’s rulemaking procedures and was
only in effect for 6 months. See, FCC v.
Fox Television, 556 U.S. 502, 514–15
(2009) (noting an agency need not
conduct a more searching review
beyond explaining its reasons for
reversing course and accounting for any
‘‘serious reliance interests’’ that may be
present). And assuming arguendo that
some limited reliance interests were
found to exist, the agency has clearly
stated its reasons regarding the need to
change course consistent with and in
light of the Department’s EPCA
obligations.
IV. Procedural Issues and Regulatory
Review
A. Review Under Executive Orders
12866
This regulatory action is a significant
regulatory action under section 3(f)(4) of
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ 58 FR 51735
(Oct. 4, 1993). Accordingly, this final
regulatory action was subject to review
under the Executive order by the Office
of Information and Regulatory Affairs
(OIRA) in the Office of Management and
Budget (OMB).
The revisions contained in this final
regulatory action are procedural changes
designed to improve DOE’s ability to
meet its rulemaking obligations and
deadlines under EPCA. These revisions
would not impose any regulatory costs
or burdens on stakeholders, nor would
they limit public participation in DOE’s
rulemaking process. Instead, these
revisions would allow DOE to tailor its
rulemaking processes to fit the facts and
circumstances of a particular
rulemaking for a covered product or
equipment.
DOE currently has energy
conservation standards and test
procedures in place for more than 60
categories of covered products and
equipment and is typically working on
anywhere from 50 to 100 rulemakings
(for both energy conservation standards
and test procedures) at any one time.
Further, these rulemakings are all
subject to deadlines. Typically, review
cycles for energy conservation standards
and test procedures for covered
products are 6 and 7 years, respectively.
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(42 U.S.C. 6295(m)(1); 42 U.S.C.
6293(b)(1)) Additionally, if DOE decides
not to amend an energy conservation
standard for a covered product, the
subsequent review cycle is shortened to
3 years. (42 U.S.C. 6295(m)(3)(B)) It is
challenging to meet these cyclical
deadlines for more than 60 categories of
covered products and equipment. In
fact, as previously discussed, DOE is
currently facing two lawsuits that allege
DOE has failed to meet rulemaking
deadlines for 25 different consumer
products and commercial equipment. In
order to meet these rulemaking
deadlines, DOE cannot afford the
inefficiencies that come with a one-sizefits-all rulemaking approach. For
example, having to issue an early
assessment RFI followed by an ANOPR
to collect early stakeholder input when
a NODA would accomplish the same
purpose unnecessarily lengthens the
rulemaking process and wastes limited
DOE resources. Similarly, having to
delay issuance of a proposed energy
conservation standard for 180 days
because of a minor modification to a test
procedure makes it more difficult for
DOE to meet rulemaking deadlines,
while offering no benefit to
stakeholders. The revisions contained in
this document allow DOE to eliminate
these types of inefficiencies that
lengthen the rulemaking process and
waste DOE resources, while not
affecting the ability of the public to
participate in the rulemaking process.
Eliminating inefficiencies that lengthen
the rulemaking process allows DOE to
more quickly develop energy
conservation standards that deliver the
environmental benefits, including
reductions in greenhouse gas emissions,
that DOE is directed to implement
under E.O. 13990. Further, the sooner
new or amended energy conservation
standards eliminate less-efficient
covered products and equipment from
the market, the greater the resulting
energy savings and environmental
benefits.
Further, the revisions contained in
this document would not dictate any
particular rulemaking outcome in an
energy conservation standard or test
procedure rulemaking. DOE will
continue to calculate the regulatory
costs and benefits of new and amended
energy conservation standards and test
procedures issued under EPCA in
future, individual rulemakings.
B. Review Under the Regulatory
Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq., as amended by the
Small Business Regulatory Enforcement
Fairness Act of 1996) requires
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preparation of an initial regulatory
flexibility analysis (IRFA) for any rule
that by law must be proposed for public
comment and a final regulatory
flexibility analysis (FRFA) for any such
rule that an agency adopts as a final
rule, unless the agency certifies that the
rule, if promulgated, will not have a
significant economic impact on a
substantial number of small entities. A
regulatory flexibility analysis examines
the impact of the rule on small entities
and considers alternative ways of
reducing negative effects. Also, as
required by Executive Order 13272,
‘‘Proper Consideration of Small Entities
in Agency Rulemaking,’’ 67 FR 53461
(August 16, 2002), DOE published
procedures and policies on February 19,
2003, to ensure that the potential
impacts of its rules on small entities are
properly considered during the DOE
rulemaking process. 68 FR 7990. DOE
has made its procedures and policies
available on the Office of the General
Counsel’s website at: https://energy.gov/
gc/office-general-counsel.
This final rule details generally
applicable guidance that may guide, but
not bind, the Department’s rulemaking
process. The revisions are intended to
improve DOE’s ability to meet the
obligations and deadlines outlined in
EPCA by allowing DOE to tailor its
rulemaking procedures to fit the specific
facts and circumstances of a particular
covered product or equipment, while
not affecting the ability of any interested
person, including small entities, to
participate in DOE’s rulemaking
process. Because this final rule imposes
no regulatory obligations on the public,
including small entities, and does not
affect the ability of any interested
person, including small entities, to
participate in DOE’s rulemaking
process, DOE certifies that this final rule
will not have a significant economic
impact on a substantial number of small
entities, and, therefore, no final
regulatory flexibility analysis is
required. Mid-Tex Elec. Co-Op, Inc. v.
F.E.R.C., 773 F.2d 327 (1985).
C. Review Under the Paperwork
Reduction Act of 1995
Manufacturers of covered products/
equipment must certify to DOE that
their products comply with any
applicable energy conservation
standards. In certifying compliance,
manufacturers must test their products
according to the DOE test procedures for
such products/equipment, including
any amendments adopted for those test
procedures, on the date that compliance
is required. DOE has established
regulations for the certification and
recordkeeping requirements for all
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covered consumer products and
commercial equipment. 76 FR 12422
(March 7, 2011); 80 FR 5099 (Jan. 30,
2015). The collection-of-information
requirement for certification and
recordkeeping is subject to review and
approval by OMB under the Paperwork
Reduction Act (PRA). This requirement
has been approved by OMB under OMB
control number 1910–1400. Public
reporting burden for the certification is
estimated to average 30 hours per
response, including the time for
reviewing instructions, searching
existing data sources, gathering and
maintaining the data needed, and
completing and reviewing the collection
of information.
Notwithstanding any other provision
of the law, no person is required to
respond to, nor shall any person be
subject to a penalty for failure to comply
with, a collection of information subject
to the requirements of the PRA, unless
that collection of information displays a
currently valid OMB Control Number.
Specifically, this final rule,
addressing clarifications to appendix A
itself, does not contain any collection of
information requirement or revisions to
existing information collections that
would trigger the PRA.
D. Review Under the National
Environmental Policy Act of 1969
Pursuant to the National
Environmental Policy Act (NEPA) of
1969, DOE has analyzed this proposed
action in accordance with NEPA and
DOE’s NEPA implementing regulations
(10 CFR part 1021). DOE has determined
that this rule qualifies for categorical
exclusion under 10 CFR part 1021,
subpart D, appendix A5 because it is an
interpretive rulemaking that does not
change the environmental effect of the
rule and meets the requirements for
application of a categorical exclusion.
See 10 CFR 1021.410. DOE has also
determined that this rule qualifies for
categorical exclusion under 10 CFR part
1021, subpart D, appendix A6 because
it is strictly procedural and meets the
requirements for application of a
categorical exclusion. See 10 CFR
1021.410. Therefore, DOE has
determined that promulgation of this
rule is not a major Federal action
significantly affecting the quality of the
human environment within the meaning
of NEPA, and does not require an
Environmental Assessment or an
Environmental Impact Statement.
E. Review Under Executive Order 13132
Executive Order 13132, ‘‘Federalism,’’
64 FR 43255 (August 10, 1999), imposes
certain requirements on Federal
agencies formulating and implementing
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policies or regulations that preempt
State law or that have federalism
implications. The Executive order
requires agencies to examine the
constitutional and statutory authority
supporting any action that would limit
the policymaking discretion of the
States and to carefully assess the
necessity for such actions. The
Executive order also requires agencies to
have an accountable process to ensure
meaningful and timely input by State
and local officials in the development of
regulatory policies that have federalism
implications. On March 14, 2000, DOE
published a statement of policy
describing the intergovernmental
consultation process it will follow in the
development of such regulations. 65 FR
13735. DOE has examined this final rule
and has determined that it will not have
a substantial direct effect on the States,
on the relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. It will primarily
affect the procedure by which DOE
develops proposed rules to revise
energy conservation standards and test
procedures. EPCA governs and
prescribes Federal preemption of State
regulations that are the subject of DOE’s
regulations adopted pursuant to the
statute. In such cases, States can
petition DOE for exemption from such
preemption to the extent, and based on
criteria, set forth in EPCA. (42 U.S.C.
6297(d)) Therefore, Executive Order
13132 requires no further action.
F. Review Under Executive Order 12988
Regarding the review of existing
regulations and the promulgation of
new regulations, section 3(a) of
Executive Order 12988, ‘‘Civil Justice
Reform,’’ 61 FR 4729 (Feb. 7, 1996),
imposes on Federal agencies the general
duty to adhere to the following
requirements: (1) Eliminate drafting
errors and ambiguity; (2) write
regulations to minimize litigation; (3)
provide a clear legal standard for
affected conduct rather than a general
standard; and (4) promote simplification
and burden reduction. Regarding the
review required by section 3(a), section
3(b) of Executive Order 12988
specifically requires that each executive
agency make every reasonable effort to
ensure that when it issues a regulation,
the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly
specifies any effect on existing Federal
law or regulation; (3) provides a clear
legal standard for affected conduct
while promoting simplification and
burden reduction; (4) specifies the
retroactive effect, if any; (5) adequately
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defines key terms; and (6) addresses
other important issues affecting clarity
and general draftsmanship under any
guidelines issued by the Attorney
General. Section 3(c) of Executive Order
12988 requires Executive agencies to
review regulations in light of applicable
standards in sections 3(a) and 3(b) to
determine whether they are met or it is
unreasonable to meet one or more of
them. DOE has completed the required
review and has determined that, to the
extent permitted by law, this final rule
meets the relevant standards of
Executive Order 12988.
H. Review Under the Treasury and
General Government Appropriations
Act, 1999
Section 654 of the Treasury and
General Government Appropriations
Act, 1999 (Pub. L. 105–277) requires
Federal agencies to issue a Family
Policymaking Assessment for any rule
that may affect family well-being. This
final rule would not have any impact on
the autonomy or integrity of the family
as an institution. Accordingly, DOE has
concluded that it is not necessary to
prepare a Family Policymaking
Assessment.
G. Review Under the Unfunded
Mandates Reform Act of 1995
I. Review Under Executive Order 12630
Pursuant to Executive Order 12630,
‘‘Governmental Actions and Interference
with Constitutionally Protected Property
Rights,’’ 53 FR 8859 (March 18, 1988),
DOE has determined that this final rule
would not result in any takings that
might require compensation under the
Fifth Amendment to the U.S.
Constitution.
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/officegeneral-counsel under ‘‘Guidance &
Opinions’’ (Rulemaking)) DOE
examined this final rule according to
UMRA and its statement of policy and
has determined that the rule contains
neither an intergovernmental mandate,
nor a mandate that may result in the
expenditure by State, local, and Tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any year. Accordingly, no further
assessment or analysis is required under
UMRA.
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J. Review Under the Treasury and
General Government Appropriations
Act, 2001
Section 515 of the Treasury and
General Government Appropriations
Act, 2001 (44 U.S.C. 3516 note) provides
for Federal agencies to review most
disseminations of information to the
public under information quality
guidelines established by each agency
pursuant to general guidelines issued by
OMB. OMB’s guidelines were published
at 67 FR 8452 (Feb. 22, 2002), and
DOE’s guidelines were published at 67
FR 62446 (Oct. 7, 2002). DOE has
reviewed this final rule under the OMB
and DOE guidelines and has concluded
that it is consistent with the applicable
policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ‘‘Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use,’’ 66 FR 28355 (May
22, 2001), requires Federal agencies to
prepare and submit to OIRA at OMB, a
Statement of Energy Effects for any
proposed significant energy action. A
‘‘significant energy action’’ is defined as
any action by an agency that
promulgates or is expected to lead to
promulgation of a final rule, and that:
(1) Is a significant regulatory action
under Executive Order 12866, or any
successor order; and (2) is likely to have
a significant adverse effect on the
supply, distribution, or use of energy; or
(3) is designated by the Administrator of
OIRA as a significant energy action. For
any proposed significant energy action,
the agency must give a detailed
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statement of any adverse effects on
energy supply, distribution, or use
should the proposal be implemented,
and of reasonable alternatives to the
action and their expected benefits on
energy supply, distribution, and use.
DOE concluded that the regulatory
action in this document, which makes
clarifications to appendix A that guides
the Department in proposing energy
conservation standards is not a
significant energy action because it
would not have a significant adverse
effect on the supply, distribution, or use
of energy, nor has it been designated as
a significant energy action by the
Administrator of OIRA. Therefore, it is
not a significant energy action, and,
accordingly, DOE has not prepared a
Statement of Energy Effects for this final
rule.
disseminated and is available at the
following website:
www1.eere.energy.gov/buildings/
appliance_standards/peer_review.html.
Because available data, models, and
technological understanding have
changed since 2007, DOE has engaged
with the National Academy of Sciences
to review DOE’s analytical
methodologies to ascertain whether
modifications are needed to improve the
Department’s analyses. The results from
that review are expected later in 2021.
L. Review Consistent With OMB’s
Information Quality Bulletin for Peer
Review
On December 16, 2004, OMB, in
consultation with the Office of Science
and Technology Policy (OSTP), issued
its Final Information Quality Bulletin
for Peer Review (the Bulletin). 70 FR
2664 (Jan. 14, 2005). The Bulletin
establishes that certain scientific
information shall be peer reviewed by
qualified specialists before it is
disseminated by the Federal
Government, including influential
scientific information related to agency
regulatory actions. The purpose of the
bulletin is to enhance the quality and
credibility of the Government’s
scientific information. Under the
Bulletin, the energy conservation
standards rulemaking analyses are
‘‘influential scientific information,’’
which the Bulletin defines as ‘‘scientific
information the agency reasonably can
determine will have or does have a clear
and substantial impact on important
public policies or private sector
decisions.’’ Id. at 70 FR 2667.
In response to OMB’s Bulletin, DOE
conducted formal in-progress peer
reviews of the energy conservation
standards development process and
analyses and has prepared a Peer
Review Report pertaining to the energy
conservation standards rulemaking
analyses. Generation of this report
involved a rigorous, formal, and
documented evaluation using objective
criteria and qualified and independent
reviewers to make a judgment as to the
technical/scientific/business merit, the
actual or anticipated results, and the
productivity and management
effectiveness of programs and/or
projects. The ‘‘Energy Conservation
Standards Rulemaking Peer Review
Report,’’ dated February 2007, has been
V. Approval of the Office of the
Secretary
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M. Congressional Notification
As required by 5 U.S.C. 801, DOE will
report to Congress on the promulgation
of this rule prior to its effective date.
The report will state that it has been
determined that the rule is not a ‘‘major
rule’’ as defined by 5 U.S.C. 804(2).
The Secretary of Energy has approved
publication of this final rule.
List of Subjects in 10 CFR Part 430
Administrative practice and
procedure, Confidential business
information, Energy conservation,
Household appliances, Imports,
Incorporation by reference,
Intergovernmental relations, Small
businesses, Test procedures.
Signing Authority
This document of the Department of
Energy was signed on November 19,
2021 by Kelly J. Speakes-Backman,
Principal Deputy Assistant Secretary for
Energy Efficiency and Renewable
Energy, pursuant to delegated authority
from the Secretary of Energy. That
document with the original signature
and date is maintained by DOE. For
administrative purposes only, and in
compliance with requirements of the
Office of the Federal Register, the
undersigned DOE Federal Register
Liaison Officer has been authorized to
sign and submit the document in
electronic format for publication, as an
official document of the Department of
Energy. This administrative process in
no way alters the legal effect of this
document upon publication in the
Federal Register.
Signed in Washington, DC, on November
19, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S.
Department of Energy.
For the reasons stated in the
preamble, DOE amends part 430 of title
10 of the Code of Federal Regulations as
set forth below:
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PART 430—ENERGY CONSERVATION
PROGRAM FOR CONSUMER
PRODUCTS
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.
2. Appendix A to subpart C of part
430 is revised to read as follows:
■
Appendix A to Subpart C of Part 430—
Procedures, Interpretations, and
Policies for Consideration of New or
Revised Energy Conservation Standards
and Test Procedures for Consumer
Products and Certain Commercial/
Industrial Equipment
1. Objectives
2. Scope
3. Application
4. Setting Priorities for Rulemaking Activity
5. Coverage Determination Rulemakings
6. Process for Developing Energy
Conservation Standards
7. Policies on Selection of Standards
8. Test Procedures
9. ASHRAE Equipment
10. Direct Final Rules
11. Principles for Distinguishing Between
Effective and Compliance Dates
12. Principles for the Conduct of the
Engineering Analysis
13. Principles for the Analysis of Impacts on
Manufacturers
14. Principles for the Analysis of Impacts on
Consumers
15. Consideration of Non-Regulatory
Approaches
16. Cross-Cutting Analytical Assumptions
1. Objectives
This appendix establishes procedures,
interpretations, and policies to guide the
Department of Energy (‘‘DOE’’ or the
‘‘Department’’) in the consideration and
promulgation of new or revised appliance
energy conservation standards and test
procedures under the Energy Policy and
Conservation Act (EPCA). This appendix
applies to both covered consumer products
and covered commercial/industrial
equipment. The Department’s objectives in
establishing these procedures include:
(a) Provide for early input from
stakeholders. The Department seeks to
provide opportunities for public input early
in the rulemaking process so that the
initiation and direction of rulemakings is
informed by comment from interested
parties. DOE will be able to seek early input
from interested parties in determining
whether establishing new or amending
existing energy conservation standards will
result in significant savings of energy and is
economically justified and technologically
feasible. In the context of test procedure
rulemakings, DOE will be able to seek early
input from interested parties in determining
whether—
(1) Establishing a new or amending an
existing test procedure will better measure
the energy efficiency, energy use, water use
(as specified in EPCA), or estimated annual
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operating cost of a covered product/
equipment during a representative average
use cycle or period of use (for consumer
products); and
(2) Will not be unduly burdensome to
conduct.
(b) Increase predictability of the
rulemaking timetable. The Department seeks
to make informed, strategic decisions about
how to deploy its resources on the range of
possible standards and test procedure
development activities, and to announce
these prioritization decisions so that all
interested parties have a common
expectation about the timing of different
rulemaking activities. Further, DOE will offer
the opportunity to provide input on the
prioritization of rulemakings through a
request for comment as DOE begins
preparation of its Regulatory Agenda each
spring.
(c) Eliminate problematic design options
early in the process. The Department seeks to
eliminate from consideration, early in the
process, any design options that present
unacceptable problems with respect to
manufacturability, consumer utility, or
safety, so that the detailed analysis can focus
only on viable design options. DOE will be
able to eliminate from consideration design
options if it concludes that manufacture,
installation or service of the design will be
impractical, or that the design option will
have a material adverse impact on the utility
of the product, or if the design option will
have a material adverse impact on safety or
health. DOE will also be able to eliminate
from consideration proprietary design
options that represent a unique pathway to
achieving a given efficiency level. This
screening will be done at the outset of a
rulemaking.
(d) Fully consider non-regulatory
approaches. The Department seeks to
understand the effects of market forces and
voluntary programs on encouraging the
purchase of energy efficient products so that
the incremental impacts of a new or revised
standard can be accurately assessed and the
Department can make informed decisions
about where standards and voluntary
programs can be used most effectively. DOE
will continue to be able to support voluntary
efforts by manufacturers, retailers, utilities,
and others to increase product/equipment
efficiency.
(e) Conduct thorough analysis of impacts.
In addition to understanding the aggregate
social and private costs and benefits of
standards, the Department seeks to
understand the distribution of those costs
and benefits among consumers,
manufacturers, and others, as well as the
uncertainty associated with these analyses of
costs and benefits, so that any adverse
impacts on subgroups and uncertainty
concerning any adverse impacts can be fully
considered in selecting a standard. DOE will
be able to consider the variability of impacts
on significant groups of manufacturers and
consumers in addition to aggregate social and
private costs and benefits, report the range of
uncertainty associated with these impacts,
and take into account cumulative impacts of
regulation on manufacturers. The Department
will also be able to conduct appropriate
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analyses to assess the impact that new or
amended test procedures will have on
manufacturers and consumers.
(f) Use transparent and robust analytical
methods. The Department seeks to use
qualitative and quantitative analytical
methods that are fully documented for the
public and that produce results that can be
explained and reproduced, so that the
analytical underpinnings for policy decisions
on standards are as sound and well-accepted
as possible.
(g) Support efforts to build consensus on
standards. The Department seeks to
encourage development of consensus
proposals, including proposals developed in
accordance with the Negotiated Rulemaking
Act (5 U.S.C. 561 et seq.), for new or revised
standards because standards with such
broad-based support are likely to balance
effectively the various interests affected by
such standards.
2. Scope
The procedures, interpretations, and
policies described in this appendix apply to
rulemakings concerning new or revised
Federal energy conservation standards and
test procedures, and related rule documents
(i.e., coverage determinations) for consumer
products in Part A and commercial and
industrial equipment under Part A–1 of the
Energy Policy and Conservation Act (EPCA),
as amended, except covered ASHRAE
equipment in Part A–1 are governed
separately under section 9 in this appendix.
3. Application
(a) This appendix contains procedures,
interpretations, and policies that are
generally applicable to the development of
energy conservation standards and test
procedures. The Department may, as
necessary, deviate from this appendix to
account for the specific circumstances of a
particular rulemaking. In those instances
where the Department may find it necessary
or appropriate to deviate from these
procedures, interpretations or policies, DOE
will provide interested parties with notice of
the deviation and an explanation.
(b) If the Department concludes that
changes to the procedures, interpretations or
policies in this appendix are necessary or
appropriate, DOE will provide notice in the
Federal Register of modifications to this
appendix with an accompanying
explanation. DOE expects to consult with
interested parties prior to any such
modification.
(c) This appendix is not intended to, and
does not, create any right or benefit,
substantive or procedural, enforceable at law
or in equity.
4. Setting Priorities for Rulemaking Activity
(a) In establishing its priorities for
undertaking energy conservation standards
and test procedure rulemakings, DOE will
consider the following factors, consistent
with applicable legal obligations:
(1) Potential energy savings;
(2) Potential social and private, including
environmental or energy security, benefits;
(3) Applicable deadlines for rulemakings;
(4) Incremental DOE resources required to
complete the rulemaking process;
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(5) Other relevant regulatory actions
affecting the products/equipment;
(6) Stakeholder recommendations;
(7) Evidence of energy efficiency gains in
the market absent new or revised standards;
(8) Status of required changes to test
procedures; and
(9) Other relevant factors.
(b) DOE will offer the opportunity to
provide input on prioritization of
rulemakings through a request for comment
as DOE begins preparation of its Regulatory
Agenda each spring.
5. Coverage Determination Rulemakings
(a) DOE has discretion to conduct
proceedings to determine whether additional
consumer products and commercial/
industrial equipment should be covered
under EPCA if certain statutory criteria are
met. (42 U.S.C. 6292 and 42 U.S.C. 6295(l) for
consumer products; 42 U.S.C. 6312 for
commercial/industrial equipment)
(b) If DOE determines to initiate the
coverage determination process, it will first
publish a notice of proposed determination,
providing an opportunity for public comment
of not less than 60 days, in which DOE will
explain how such products/equipment that it
seeks to designate as ‘‘covered’’ meet the
statutory criteria for coverage and why such
coverage is ‘‘necessary or appropriate’’ to
carry out the purposes of EPCA. In the case
of commercial equipment, DOE will follow
the same process, except that the Department
must demonstrate that coverage of the
equipment type is ‘‘necessary’’ to carry out
the purposes of EPCA.
(c) DOE will publish its final decision on
coverage as a separate notice, an action that
will be completed prior to the initiation of
any test procedure or energy conservation
standards rulemaking (i.e., DOE will not
issue any Requests for Information (RFIs),
Notices of Data Availability (NODAs), or any
other mechanism to gather information for
the purpose of initiating a rulemaking to
establish a test procedure or energy
conservation standard for the proposed
covered product/equipment prior to
finalization of the coverage determination). If
DOE determines that coverage is warranted,
DOE will proceed with its typical rulemaking
process for both test procedures and
standards. Specifically, DOE will finalize
coverage for a product/equipment at least 180
days prior to publication of a proposed rule
to establish a test procedure.
(d) If, during the substantive rulemaking
proceedings to establish test procedures or
energy conservation standards after
completing a coverage determination, DOE
finds it necessary and appropriate to expand
or reduce the scope of coverage, a new
coverage determination process will be
initiated and finalized prior to moving
forward with the test procedure or standards
rulemaking.
6. Process for Developing Energy
Conservation Standards
This section describes the process to be
used in developing energy conservation
standards for covered products and
equipment other than those covered
equipment subject to ASHRAE/IES Standard
90.1.
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(a) Early assessment—(1) Initiating the
rulemaking process. As the first step in any
proceeding to consider establishing or
amending any energy conservation standard,
DOE will publish a document in the Federal
Register announcing that DOE is considering
initiating a rulemaking proceeding. As part of
that document, DOE will solicit submission
of related comments, including data and
information on whether DOE should proceed
with the rulemaking, including whether any
new or amended rule would be cost effective,
economically justified, technologically
feasible, or would result in a significant
savings of energy. Based on the information
received in response to the notice and its
own analysis, DOE will determine whether to
proceed with a rulemaking for a new or
amended energy conservation standard or an
amended test procedure. If DOE determines
that a new or amended standard would not
satisfy applicable statutory criteria, DOE
would engage in notice and comment
rulemaking to issue a determination that a
new or amended standard is not warranted.
If DOE receives sufficient information
suggesting it could justify a new or amended
standard or the information received is
inconclusive with regard to the statutory
criteria, DOE would undertake the
preliminary stages of a rulemaking to issue or
amend an energy conservation standard, as
discussed further in paragraph (a)(2) of this
section.
(2) Preliminary rulemaking documents. If
the Department determines it is appropriate
to proceed with a rulemaking, the
preliminary stages of a rulemaking to issue or
amend an energy conservation standard that
DOE will undertake will be a Framework
Document and Preliminary Analysis, or an
Advance Notice of Proposed Rulemaking
(ANOPR). Requests for Information (RFI) and
Notices of Data Availability (NODA) could be
issued, as appropriate, in addition to these
preliminary stage documents.
(3) Continued evaluation of statutory
criteria. In those instances where the early
assessment either suggested that a new or
amended energy conservation standard might
be justified or in which the information was
inconclusive on this point, and DOE
undertakes the preliminary stages of a
rulemaking to establish or amend an energy
conservation standard, DOE may still
ultimately determine that such a standard is
not economically justified, technologically
feasible or would not result in a significant
savings of energy. Therefore, DOE will
examine the potential costs and benefits and
energy savings potential of a new or amended
energy conservation standard at the
preliminary stage of the rulemaking. DOE
notes that it will, consistent with its statutory
obligations, consider both cost effectiveness
and economic justification when issuing a
determination not to amend a standard.
(b) Design options—(1) General. Once the
Department has initiated a rulemaking for a
specific product/equipment but before
publishing a proposed rule to establish or
amend standards, DOE will typically identify
the product/equipment categories and design
options to be analyzed in detail, as well as
those design options to be eliminated from
further consideration. During the pre-
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proposal stages of the rulemaking, interested
parties may be consulted to provide
information on key issues through a variety
of rulemaking documents. The preliminary
stages of a rulemaking to issue or amend an
energy conservation standard that DOE will
undertake will be a framework document and
preliminary analysis, or an advance notice of
proposed rulemaking (ANOPR). Requests for
Information (RFI) and Notice of Data
Availability (NODA) could also be issued, as
appropriate.
(2) Identification and screening of design
options. During the pre-NOPR phase of the
rulemaking process, the Department will
typically develop a list of design options for
consideration. Initially, the candidate design
options will encompass all those
technologies considered to be technologically
feasible. Following the development of this
initial list of design options, DOE will review
each design option based on the factors
described in paragraph (b)(3) of this section
and the policies stated in section 7 of this
Appendix (i.e., Policies on Selection of
Standards). The reasons for eliminating or
retaining any design option at this stage of
the process will be fully documented and
published as part of the NOPR and as
appropriate for a given rule, in the pre-NOPR
documents. The technologically feasible
design options that are not eliminated in this
screening will be considered further in the
Engineering Analysis described in paragraph
(c) of this section.
(3) Factors for screening of design options.
The factors for screening design options
include:
(i) Technological feasibility. Technologies
incorporated in commercial products or in
working prototypes will be considered
technologically feasible.
(ii) Practicability to manufacture, install
and service. If mass production of a
technology under consideration for use in
commercially-available products (or
equipment) and reliable installation and
servicing of the technology could be achieved
on the scale necessary to serve the relevant
market at the time of the effective date of the
standard, then that technology will be
considered practicable to manufacture,
install and service.
(iii) Adverse Impacts on Product Utility or
Product Availability.
(iv) Adverse Impacts on Health or Safety.
(v) Unique-Pathway Proprietary
Technologies. Unique-Pathway Proprietary
Technologies. If a design option utilizes
proprietary technology that represents a
unique pathway to achieving a given
efficiency level, that technology will not be
considered further.
(c) Engineering analysis of design options
and selection of candidate standard levels.
After design options are identified and
screened, DOE will perform the engineering
analysis and the benefit/cost analysis and
select the candidate standard levels based on
these analyses. The results of the analyses
will be published in a Technical Support
Document (TSD) to accompany the
appropriate rulemaking documents.
(1) Identification of engineering analytical
methods and tools. DOE will select the
specific engineering analysis tools (or
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multiple tools, if necessary, to address
uncertainty) to be used in the analysis of the
design options identified as a result of the
screening analysis.
(2) Engineering and life-cycle cost analysis
of design options. DOE and its contractor will
perform engineering and life-cycle cost
analyses of the design options.
(3) Review by stakeholders. Interested
parties will have the opportunity to review
the results of the engineering and life-cycle
cost analyses. If appropriate, a public
workshop will be conducted to review these
results. The analyses will be revised as
appropriate on the basis of this input.
(4) New information relating to the factors
used for screening design options. If further
information or analysis leads to a
determination that a design option, or a
combination of design options, has
unacceptable impacts, that design option or
combination of design options will not be
included in a candidate standard level.
(5) Selection of candidate standard levels.
Based on the results of the engineering and
life-cycle cost analysis of design options and
the policies stated in paragraph (b) of this
section, DOE will select the candidate
standard levels for further analysis.
(d) Pre-NOPR Stage—(1) Documentation of
decisions on candidate standard selection.
(i) New or amended standards. If the early
assessment and screening analysis indicates
that continued development of a standard is
appropriate, the Department will publish
either:
(A) A notice accompanying a framework
document and, subsequently, a preliminary
analysis or;
(B) An ANOPR. The notice document will
be published in the Federal Register, with
accompanying documents referenced and
posted in the appropriate docket.
(ii) No new or amended standards. If DOE
determines at any point in the pre-NOPR
stage that no candidate standard level is
likely to produce the maximum improvement
in energy efficiency that is both
technologically feasible and economically
justified or constitute significant energy
savings, that conclusion will be announced
in the Federal Register with an opportunity
for public comment provided to stakeholders.
In such cases, the Department will proceed
with a rulemaking that proposes not to adopt
new or amended standards.
(2) Public comment and hearing. The
length of the public comment period for preNOPR rulemaking documents will vary
depending upon the circumstances of the
particular rulemaking, but will not be less
than 75 calendar days. For such documents,
DOE will determine whether a public hearing
is appropriate.
(3) Revisions based on comments. Based on
consideration of the comments received, any
necessary changes to the engineering analysis
or the candidate standard levels will be
made.
(e) Analysis of impacts and selection of
proposed standard level. After the pre-NOPR
stage, if DOE has determined preliminarily
that a candidate standard level is likely to
produce the maximum improvement in
energy efficiency that is both technologically
feasible and economically justified or
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constitute significant energy savings,
economic analyses of the impacts of the
candidate standard levels will be conducted.
The Department will propose new or
amended standards based on the results of
the impact analysis.
(1) Identification of issues for analysis. The
Department, in consideration of comments
received, will identify issues that will be
examined in the impacts analysis.
(2) Identification of analytical methods and
tools. DOE will select the specific economic
analysis tools (or multiple tools, if necessary,
to address uncertainty) to be used in the
analysis of the candidate standard levels.
(3) Analysis of impacts. DOE will conduct
the analysis of the impacts of candidate
standard levels.
(4) Factors to be considered in selecting a
proposed standard. The factors to be
considered in selection of a proposed
standard include:
(i) Impacts on manufacturers. The analysis
of private manufacturer impacts will include:
Estimated impacts on cash flow; assessment
of impacts on manufacturers of specific
categories of products/equipment and small
manufacturers; assessment of impacts on
manufacturers of multiple product-specific
Federal regulatory requirements, including
efficiency standards for other products and
regulations of other agencies; and impacts on
manufacturing capacity, plant closures, and
loss of capital investment.
(ii) Private impacts on consumers. The
analysis of consumer impacts will include:
Estimated private energy savings impacts on
consumers based on national average energy
prices and energy usage; assessments of
impacts on subgroups of consumers based on
major regional differences in usage or energy
prices and significant variations in
installation costs or performance; sensitivity
analyses using high and low discount rates
reflecting both private transactions and social
discount rates and high and low energy price
forecasts; consideration of changes to product
utility, changes to purchase rate of products,
and other impacts of likely concern to all or
some consumers, based to the extent
practicable on direct input from consumers;
estimated life-cycle cost with sensitivity
analysis; consideration of the increased first
cost to consumers and the time required for
energy cost savings to pay back these first
costs; and loss of utility.
(iii) Impacts on competition. The analysis
of impacts on competition will include an
industry concentration analysis.
(iv) Impacts on utilities. The analysis of
utility impacts will include estimated
marginal impacts on electric and gas utility
costs and revenues.
(v) National energy, economic, and
employment impacts. The analysis of
national energy, economic, and employment
impacts will include: Estimated energy
savings by fuel type; estimated net present
value of benefits to all consumers; and
estimates of the direct and indirect impacts
on employment by appliance manufacturers,
relevant service industries, energy suppliers,
suppliers of complementary and substitution
products, and the economy in general.
(vi) Impacts on the environment. The
analysis of environmental impacts will
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include estimated impacts on emissions of
carbon and relevant criteria pollutants, and
impacts on pollution control costs.
(vii) Impacts of non-regulatory approaches.
The analysis of energy savings and consumer
impacts will incorporate an assessment of the
impacts of market forces and existing
voluntary programs in promoting product/
equipment efficiency, usage, and related
characteristics in the absence of updated
efficiency standards.
(viii) New information relating to the
factors used for screening design options.
(f) Notice of proposed rulemaking—(1)
Documentation of decisions on proposed
standard selection. The Department will
publish a NOPR in the Federal Register that
proposes standard levels and explains the
basis for the selection of those proposed
levels, and will post on its website a draft
TSD documenting the analysis of impacts.
The draft TSD will also be posted in the
appropriate docket on www.regulations.gov.
As required by 42 U.S.C. 6295(p)(1) of EPCA,
the NOPR also will describe the maximum
improvement in energy efficiency or
maximum reduction in energy use that is
technologically feasible and, if the proposed
standards would not achieve these levels, the
reasons for proposing different standards.
(2) Public comment and hearing. There
will be not less than 75 days for public
comment on the NOPR, with at least one
public hearing or workshop. (42 U.S.C.
6295(p)(2) and 42 U.S.C. 6306).
(3) Revisions to impact analyses and
selection of final standard. Based on the
public comments received, DOE will review
the proposed standard and impact analyses,
and make modifications as necessary. If
major changes to the analyses are required at
this stage, DOE will publish a Supplemental
Notice of Proposed Rulemaking (SNOPR),
when required. DOE may also publish a
NODA or RFI, where appropriate.
(g) Final rule. The Department will publish
a Final Rule in the Federal Register that
promulgates standard levels, responds to
public comments received on the NOPR, and
explains how the selection of those standards
meets the statutory requirement that any new
or amended energy conservation standard
produces the maximum improvement in
energy efficiency that is both technologically
feasible and economically justified and
constitutes significant energy savings,
accompanied by a final TSD.
7. Policies on Selection of Standards
(a) Purpose. Section 6 describes the process
that will be used to consider new or revised
energy efficiency standards and lists a
number of factors and analyses that will be
considered at specified points in the process.
Department policies concerning the selection
of new or revised standards, and decisions
preliminary thereto, are described in this
section. These policies are intended to
elaborate on the statutory criteria provided in
42 U.S.C. 6295. The procedures described in
this section are intended to assist the
Department in making the determinations
required by EPCA and do not preclude DOE’s
consideration of any other information
consistent with the relevant statutory criteria.
The Department will consider pertinent
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information in determining whether a new or
revised standard is consistent with the
statutory criteria.
(b) Screening design options. These factors
will be considered as follows in determining
whether a design option will receive any
further consideration:
(1) Technological feasibility. Technologies
that are not incorporated in commercial
products or in commercially-viable, existing
prototypes will not be considered further.
(2) Practicability to manufacture, install
and service. If it is determined that mass
production of a technology in commercial
products and reliable installation and
servicing of the technology could not be
achieved on the scale necessary to serve the
relevant market at the time of the compliance
date of the standard, then that technology
will not be considered further.
(3) Impacts on product utility. If a
technology is determined to have significant
adverse impact on the utility of the product/
equipment to subgroups of consumers, or
result in the unavailability of any covered
product type with performance
characteristics (including reliability),
features, sizes, capacities, and volumes that
are substantially the same as products
generally available in the U.S. at the time, it
will not be considered further.
(4) Safety of technologies. If it is
determined that a technology will have
significant adverse impacts on health or
safety, it will not be considered further.
(5) Unique-pathway proprietary
technologies. If a technology has proprietary
protection and represents a unique pathway
to achieving a given efficiency level, it will
not be considered further, due to the
potential for monopolistic concerns.
(c) Identification of candidate standard
levels. Based on the results of the engineering
and cost/benefit analyses of design options,
DOE will identify the candidate standard
levels for further analysis. Candidate
standard levels will be selected as follows:
(1) Costs and savings of design options.
Design options that have payback periods
that exceed the median life of the product or
which result in life-cycle cost increases
relative to the base case, using typical fuel
costs, usage, and private discount rates, will
not be used as the basis for candidate
standard levels.
(2) Further information on factors used for
screening design options. If further
information or analysis leads to a
determination that a design option, or a
combination of design options, has
unacceptable impacts under the policies
stated in this Appendix, that design option
or combination of design options will not be
included in a candidate standard level.
(3) Selection of candidate standard levels.
Candidate standard levels, which will be
identified in the pre-NOPR documents and
on which impact analyses will be conducted,
will be based on the remaining design
options.
(i) The range of candidate standard levels
will typically include:
(A) The most energy-efficient combination
of design options;
(B) The combination of design options with
the lowest life-cycle cost; and
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(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 preNOPR documents will be considered to
determine whether any changes to the
candidate standard levels are needed before
proceeding to the analysis of impacts.
(e)(1) Selection of proposed standard.
Based on the results of the analysis of
impacts, DOE will select a standard level to
be proposed for public comment in the
NOPR. As required under 42 U.S.C.
6295(o)(2)(A), any new or revised standard
must be designed to achieve the maximum
improvement in energy efficiency that is
determined to be both technologically
feasible and economically justified.
(2) Statutory policies. The fundamental
policies concerning the selection of standards
include:
(i) A trial standard level will not be
proposed or promulgated if the Department
determines that it is not both technologically
feasible and economically justified. (42
U.S.C. 6295(o)(2)(A) and 42 U.S.C.
6295(o)(3)(B)) For a trial standard level to be
economically justified, the Secretary must
determine that the benefits of the standard
exceed its burdens by, to the greatest extent
practicable, considering the factors listed in
42 U.S.C. 6295(o)(2)(B)(i). A standard level is
subject to a rebuttable presumption that it is
economically justified if the payback period
is three years or less. (42 U.S.C.
6295(o)(2)(B)(iii))
(ii) If the Department determines that
interested persons have established by a
preponderance of the evidence that a
standard level is likely to result in the
unavailability in the United States of any
covered product/equipment type (or class)
with performance characteristics (including
reliability), features, sizes, capacities, and
volumes that are substantially the same as
products generally available in the U.S. at the
time of the determination, then that standard
level will not be proposed. (42 U.S.C.
6295(o)(4))
(iii) If the Department determines that a
standard level would not result in significant
conservation of energy, that standard level
will not be proposed. (42 U.S.C.
6295(o)(3)(B))
(f) Selection of a final standard. New
information provided in the public
comments on the NOPR and any analysis by
the Department of Justice concerning impacts
on competition of the proposed standard will
be considered to determine whether issuance
of a new or amended energy conservation
standard produces the maximum
improvement in energy efficiency that is both
technologically feasible and economically
justified and still constitutes significant
energy savings or whether any change to the
proposed standard level is needed before
proceeding to the final rule. The same
policies used to select the proposed standard
level, as described in this section, will be
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used to guide the selection of the final
standard level or a determination that no new
or amended standard is justified.
8. Test Procedures
(a) General. As with the early assessment
process for energy conservation standards,
DOE believes that early stakeholder input is
also very important during test procedure
rulemakings. DOE will follow an early
assessment process similar to that described
in the preceding sections discussing DOE’s
consideration of amended energy
conservation standards. Consequently, DOE
will publish a notice in the Federal Register
whenever DOE is considering initiation of a
rulemaking to amend a test procedure. In that
notice, DOE will request submission of
comments, including data and information
on whether an amended test procedure rule
would:
(1) Measurements. More accurately
measure energy efficiency, energy use, water
use (as specified in EPCA), or estimated
annual operating cost of a covered product
during a representative average use cycle or
period of use without being unduly
burdensome to conduct; or
(2) Reduce testing burden. DOE will review
comments submitted and, subject to statutory
obligations, determine whether it agrees with
the submitted information. If DOE
determines that an amended test procedure is
not justified at that time, it will not pursue
the rulemaking and will publish a notice in
the Federal Register to that effect. If DOE
receives sufficient information suggesting an
amended test procedure could more
accurately measure energy efficiency, energy
use, water use (as specified in EPCA), or
estimated annual operating cost of a covered
product during a representative average use
cycle or period of use and not be unduly
burdensome to conduct, reduce testing
burden, or the information received is
inconclusive with regard to these points,
DOE would undertake the preliminary stages
of a rulemaking to amend the test procedure,
as discussed further in the paragraphs that
follow in this section.
(b) Identifying the need to modify test
procedures. DOE will identify any necessary
modifications to established test procedures
prior to initiating the standards development
process. It will consider all stakeholder
comments with respect to needed test
procedure modifications. If DOE determines
that it is appropriate to continue the test
procedure rulemaking after the early
assessment process, it would provide further
opportunities for early public input through
Federal Register documents, including
NODAs and/or RFIs.
(c) Adoption of Industry Test Methods.
DOE will adopt industry test procedure
standards as DOE test procedures for covered
products and equipment, but only if DOE
determines that such procedures would not
be unduly burdensome to conduct and would
produce test results that reflect the energy
efficiency, energy use, water use (as specified
in EPCA) or estimated operating costs of that
equipment during a representative average
use cycle. DOE may also adopt industry test
procedure standards with modifications, or
craft its own procedures as necessary to
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ensure compatibility with the relevant
statutory requirements, as well as DOE’s
compliance, certification, and enforcement
requirements.
(d) Issuing final test procedure—(1)
Process. Test procedure rulemakings
establishing methodologies used to evaluate
proposed energy conservation standards will
be finalized prior to publication of a NOPR
proposing new or amended energy
conservation standards. Except as provided
in paragraph (d)(2) of this section, new test
procedures and amended test procedures that
impact measured energy use or efficiency
will be finalized at least 180 days prior to the
close of the comment period for:
(i) A NOPR proposing new or amended
energy conservation standards; or
(ii) A notice of proposed determination
that standards do not need to be amended.
With regards to amended test procedures,
DOE will state in the test procedure final rule
whether the amendments impact measured
energy use or efficiency.
(2) Exceptions. The 180-day period for new
test procedures and amended test procedures
that impact measured energy use or
efficiency specified in paragraph (d)(1) of this
section is not applicable to:
(i) Test procedures developed in
accordance with the Negotiated Rulemaking
Act or by interested persons that are fairly
representative of relevant points of view
(including representatives of manufacturers
of covered products, States, and efficiency
advocates), as determined by the Secretary;
or
(ii) Test procedure amendments limited to
calculation changes (e.g., use factor or adder).
Parties submitting a consensus
recommendation in accordance with
paragraph (i) of this section may specify a
time period between finalization of the test
procedure and the close of the comment for
a NOPR proposing new or amended energy
conservation standards or a notice of
proposed determination that standards do
not need to be amended.
(e) Effective Date of Test Procedures. If
required only for the evaluation and issuance
of updated efficiency standards, use of the
modified test procedures typically will not be
required until the implementation date of
updated standards.
9. ASHRAE Equipment
(a) EPCA provides that ASHRAE
equipment are subject to unique statutory
requirements and their own set of timelines.
More specifically, pursuant to EPCA’s
statutory scheme for covered ASHRAE
equipment, DOE is required to consider
amending the existing Federal energy
conservation standards and test procedures
for certain enumerated types of commercial
and industrial equipment (generally,
commercial water heaters, commercial
packaged boilers, commercial airconditioning 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
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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 morestringent 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.
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10. Direct Final Rules
In accordance with 42 U.S.C. 6295(p)(4),
on receipt of a joint proposal, including a
consensus recommendation developed in
accordance with the Negotiated Rulemaking
Act (5 U.S.C. 561 et seq.), that is submitted
by interested persons that are fairly
representative of relevant points of view,
DOE may issue a direct final rule (DFR)
establishing energy conservation standards
for a covered product or equipment if DOE
determines the recommended standard is in
accordance with 42 U.S.C. 6295(o) or 42
U.S.C. 6313(a)(6)(B) as applicable. To be
‘‘fairly representative of relevant points of
view’’ the group submitting a joint statement
must, where appropriate, include larger
concerns and small businesses in the
regulated industry/manufacturer community,
energy advocates, energy utilities,
consumers, and States. However, it will be
necessary to evaluate the meaning of ‘‘fairly
representative’’ on a case-by-case basis,
subject to the circumstances of a particular
rulemaking, to determine whether fewer or
additional parties must be part of a joint
statement in order to be ‘‘fairly representative
of relevant points of view.’’
11. Principles for Distinguishing Between
Effective and Compliance Dates
(a) Dates, generally. The effective and
compliance dates for either DOE test
procedures or DOE energy conservation
standards are typically not identical, and
these terms should not be used
interchangeably.
(b) Effective date. The effective date is the
date a rule is legally operative after being
published in the Federal Register.
(c) Compliance date. (1) For test
procedures, the compliance date is the
specific date when manufacturers are
required to use the new or amended test
procedure requirements to make
representations concerning the energy
efficiency or use of a product, including
certification that the covered product/
equipment meets an applicable energy
conservation standard.
(2) For energy conservation standards, the
compliance date is the specific date upon
which manufacturers are required to meet the
new or amended standards for applicable
covered products/equipment that are
distributed in interstate commerce.
12. Principles for the Conduct of the
Engineering Analysis
(a) The purpose of the engineering analysis
is to develop the relationship between
efficiency and cost of the subject product/
equipment. The Department will use the
most appropriate means available to
determine the efficiency/cost relationship,
including an overall system approach or
engineering modeling to predict the
reduction in energy use or improvement in
energy efficiency that can be expected from
individual design options as discussed in
paragraphs (b) and (c) of this section. From
this efficiency/cost relationship, measures
such as payback, life-cycle cost, and energy
savings can be developed. The Department
will identify issues that will be examined in
the engineering analysis and the types of
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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 costefficiency curve for the product/equipment.
The cost efficiency curve and any necessary
models will be available to stakeholders
during the pre-NOPR stage of the rulemaking.
13. Principles for the Analysis of Impacts on
Manufacturers
(a) Purpose. The purpose of the
manufacturer analysis is to identify the likely
private impacts of efficiency standards on
manufacturers. The Department will analyze
the impact of standards on manufacturers
with substantial input from manufacturers
and other interested parties. This section
describes the principles that will be used in
conducting future manufacturing impact
analyses.
(b) Issue identification. In the impact
analysis stage, the Department will identify
issues that will require greater consideration
in the detailed manufacturer impact analysis.
Possible issues may include identification of
specific types or groups of manufacturers and
concerns over access to technology.
Specialized contractor expertise, empirical
data requirements, and analytical tools
required to perform the manufacturer impact
analysis also would be identified at this
stage.
(c) Industry characterization. Prior to
initiating detailed impact studies, the
Department will seek input on the present
and past industry structure and market
characteristics. Input on the following issues
will be sought:
(1) Manufacturers and their current and
historical relative market shares;
(2) Manufacturer characteristics, such as
whether manufacturers make a full line of
models or serve a niche market;
(3) Trends in the number of manufacturers;
(4) Financial situation of manufacturers;
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Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Rules and Regulations
(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
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16:54 Dec 10, 2021
Jkt 256001
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.
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Fmt 4701
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(2) [Reserved]
14. Principles for the Analysis of Impacts on
Consumers
(a) Early consideration of impacts on
consumer utility. The Department will
consider at the earliest stages of the
development of a standard whether
particular design options will lessen the
utility of the covered products/equipment to
the consumer. See paragraph (b) of section 6.
(b) Impacts on product/equipment
availability. The Department will determine,
based on consideration of information
submitted during the standard development
process, whether a proposed standard is
likely to result in the unavailability of any
covered product/equipment type with
performance characteristics (including
reliability), features, sizes, capacities, and
volumes that are substantially the same as
products/equipment generally available in
the U.S. at the time. DOE will not promulgate
a standard if it concludes that it would result
in such unavailability.
(c) Department of Justice review. As
required by law, the Department will solicit
the views of the Department of Justice on any
lessening of competition likely to result from
the imposition of a proposed standard and
will give the views provided full
consideration in assessing economic
justification of a proposed standard. In
addition, DOE may consult with the
Department of Justice at earlier stages in the
standards development process to seek its
preliminary views on competitive impacts.
(d) Variation in consumer impacts. The
Department will use regional analysis and
sensitivity analysis tools, as appropriate, to
evaluate the potential distribution of impacts
of candidate/trial standard levels among
different subgroups of consumers. The
Department will consider impacts on
significant segments of consumers in
determining standards levels. Where there
are significant negative impacts on
identifiable subgroups, DOE will consider the
efficacy of voluntary approaches as a means
to achieve potential energy savings.
(e) Payback period and first cost. (1) In the
assessment of consumer impacts of
standards, the Department will consider LifeCycle Cost, Payback Period, and Cost of
Conserved Energy to evaluate the savings in
operating expenses relative to increases in
purchase price. The Department also
performs sensitivity and scenario analyses
when appropriate. The results of these
analyses will be carried throughout the
analysis and the ensuing uncertainty
described.
(2) If, in the analysis of consumer impacts,
the Department determines that a candidate/
trial standard level would result in a
substantial increase in product/equipment
first costs to consumers or would not pay
back such additional first costs through
energy cost savings in less than three years,
Department will assess the likely impacts of
such a standard on low-income households,
product/equipment sales and fuel switching,
as appropriate.
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Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Rules and Regulations
15. Consideration of Non-Regulatory
Approaches
The Department recognizes that nonregulatory 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.
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16. Cross-Cutting Analytical Assumptions
In selecting values for certain cross-cutting
analytical assumptions, DOE expects to
continue relying upon the following sources
and general principles:
(a) Underlying economic assumptions. The
appliance standards analyses will generally
use the same economic growth and
development assumptions that underlie the
most current Annual Energy Outlook (AEO)
published by the Energy Information
Administration (EIA).
(b) Analytic time length. The appliance
standards analyses will use two time
lengths—30 years and another time length
that is specific to the standard being
considered such as the useful lifetime of the
product under consideration. As a sensitivity
case, the analyses will also use a 9-year
regulatory timeline in analyzing the effects of
the standard.
(c) Energy price and demand trends.
Analyses of the likely impact of appliance
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16:54 Dec 10, 2021
Jkt 256001
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 energyefficiency 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.
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Fmt 4701
Sfmt 9990
70931
(h) Environmental impacts. (1) DOE
calculates emission reductions of carbon
dioxide, sulfur dioxide, nitrogen oxides,
methane, nitrous oxides, and mercury likely
to be avoided by candidate/trial standard
levels based on an emissions analysis that
includes the two components described in
paragraphs (h)(2) and (3) of this section.
(2) The first component estimates the effect
of potential candidate/trial standard levels on
power sector and site combustion emissions
of carbon dioxide, nitrogen oxides, sulfur
dioxide, mercury, methane, and nitrous
oxide. DOE develops the power sector
emissions analysis using a methodology
based on DOE’s latest Annual Energy
Outlook. For site combustion of natural gas
or petroleum fuels, the combustion emissions
of carbon dioxide and nitrogen oxides are
estimated using emission intensity factors
from the Environmental Protection Agency.
(3) The second component of DOE’s
emissions analysis estimates the effect of
potential candidate/trial standard levels on
emissions of carbon dioxide, nitrogen oxides,
sulfur dioxide, mercury, methane, and
nitrous oxide due to ‘‘upstream activities’’ in
the fuel production chain. These upstream
activities include the emissions related to
extracting, processing, and transporting fuels
to the site of combustion as detailed in DOE’s
Fuel-Fuel-Cycle Statement of Policy (76 FR
51281 (August 18, 2011)). DOE will consider
the effects of the candidate/trial standard
levels on these emissions after assessing the
seven factors required to demonstrate
economic justification under EPCA.
Consistent with Executive Order 13783,
dated March 28, 2017, when monetizing the
value of changes in reductions in CO2 and
nitrous oxides emissions resulting from its
energy conservation standards regulations,
including with respect to the consideration of
domestic versus international impacts and
the consideration of appropriate discount
rates, DOE ensures, to the extent permitted
by law, that any such estimates are consistent
with the guidance contained in OMB Circular
A–4 of September 17, 2003 (Regulatory
Analysis).
[FR Doc. 2021–25725 Filed 12–10–21; 8:45 am]
BILLING CODE 6450–01–P
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]]>Agencies
[Federal Register Volume 86, Number 236 (Monday, December 13, 2021)]
[Rules and Regulations]
[Pages 70892-70931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25725]
[[Page 70891]]
Vol. 86
Monday,
No. 236
December 13, 2021
Part II
Department of Energy
-----------------------------------------------------------------------
10 CFR Part 430
Energy Conservation Program for Appliance Standards: Procedures,
Interpretations, and Policies for Consideration in New or Revised
Energy Conservation Standards and Test Procedures for Consumer Products
and Commercial/Industrial Equipment; Final Rule
Federal Register / Vol. 86 , No. 236 / Monday, December 13, 2021 /
Rules and Regulations
[[Page 70892]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
10 CFR Part 430
[EERE-2021-BT-STD-0003]
RIN 1904-AF13
Energy Conservation Program for Appliance Standards: Procedures,
Interpretations, and Policies for Consideration in New or Revised
Energy Conservation Standards and Test Procedures for Consumer Products
and Commercial/Industrial Equipment
AGENCY: Office of Energy Efficiency and Renewable Energy (EERE),
Department of Energy.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The U.S. Department of Energy (``DOE'' or the ``Department'')
is revising the Department's ``Procedures, Interpretations, and
Policies for Consideration of New or Revised Energy Conservation
Standards and Test Procedures for Consumer Products and Certain
Commercial/Industrial Equipment.'' The revisions are consistent with
longstanding DOE practice and would remove unnecessary obstacles to
DOE's ability to meet its statutory obligations under the Energy Policy
and Conservation Act (``EPCA'').
DATES: This rule is effective January 12, 2022.
ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, comments, and other supporting documents/materials,
is available for review at www.regulations.gov. All documents in the
docket are listed in the www.regulations.gov index. However, not all
documents listed in the index may be publicly available, such as
information that is exempt from public disclosure. The docket web page
can be found at: www.regulations.gov/docket/EERE-2021-BT-STD-0003. The
docket web page contains instructions on how to access all documents,
including public comments, in the docket.
FOR FURTHER INFORMATION CONTACT:
Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC, 20585-0121. Email:
[email protected].
Mr. Pete Cochran, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585.
Telephone: (202) 586-9496. Email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Final Rule
II. Authority and Background
A. Authority
B. Background
III. Discussion of Specific Revisions to Appendix A
A. Restoring the Department's Discretion To Depart From the
General Guidance in Appendix A
B. Significant Energy Savings Threshold
C. Determinations of Economic Justification
D. Adoption of Industry Test Standards
E. Finalization of Test Procedures Prior to Issuance of a
Standards Proposal
F. Direct Final Rules
G. Negotiated Rulemaking
H. Other Topics
IV. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act of 1995
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Consistent With OMB's Information Quality Bulletin for
Peer Review
M. Congressional Notification
V. Approval of the Office of the Secretary
I. Summary of the Final Rule
In July of 1996, the United States Department of Energy (``DOE'' or
``the Department'') issued a final rule that codified DOE's
``Procedures, Interpretations and Policies for Consideration of New or
Revised Energy Conservation Standards for Consumer Products'' at 10 CFR
part 430, subpart C, appendix A (``appendix A''). 61 FR 36974 (July 15,
1996) (``July 1996 Final Rule''). The July 1996 Final Rule acknowledged
that the guidance contained in appendix A would not be applicable to
every rulemaking and that the circumstances of a particular rulemaking
should dictate application of these generally applicable practices. 61
FR 36979.
On February 14, 2020, DOE published a final rule (``February 2020
Final Rule'') in the Federal Register that made significant revisions
to appendix A. 85 FR 8626. DOE also published a companion final rule on
August 19, 2020 (``August 2020 Final Rule''), that clarified how DOE
would conduct a comparative analysis across all trial standard levels
when determining whether a particular trial standard level was
economically justified. See 85 FR 50937. Contrary to the July 1996
Final Rule, the revisions made in the February 2020 Final Rule sought
to create a standardized rulemaking process that was binding on the
Department. 85 FR 8626, 8634. In creating this one-size-fits-all
approach, the February 2020 Final Rule and the August 2020 Final Rule
also added additional steps to the rulemaking process that are not
required by any applicable statute.
Subsequent events have caused DOE to reconsider the merits of a
one-size-fits-all rulemaking approach to establishing and amending
energy conservations standards and test procedures. Two of these events
are particularly salient. First, on October 30, 2020, a coalition of
non-governmental organizations filed suit under EPCA alleging that DOE
has failed to meet rulemaking deadlines for 25 different consumer
products and commercial equipment.\1\ On November 9, 2020, a coalition
of States filed a virtually identical lawsuit.\2\ In response to these
lawsuits, DOE has reconsidered whether the benefits of a one-size-fits-
all rulemaking approach outweigh the increased difficulty such an
approach poses in meeting DOE's statutory deadlines and obligations
under EPCA. As mentioned previously, the July 1996 Final Rule allowed
for ``case-specific deviations and modifications of the generally
applicable rule.'' \3\ This allowed DOE to tailor rulemaking procedures
to fit the specific circumstances of a particular rulemaking. For
example, under the July 1996 Final Rule, minor modifications to a test
procedure would not automatically result in a 180-day delay before DOE
could issue a notice of proposed energy conservation standards.
Eliminating these unnecessary delays would better enable DOE to clear
this backlog of missed rulemaking deadlines in a timely manner and meet
future obligations and deadlines under EPCA while not affecting the
ability of any interested person, including small entities, to
participate in DOE's rulemaking process. Further, the sooner new or
amended energy conservation standards eliminate less-efficient covered
products and equipment from the market, the
[[Page 70893]]
greater the resulting energy savings and environmental benefits.
---------------------------------------------------------------------------
\1\ Natural Resources Defense Council v. DOE, Case No. 20-cv-
9127 (S.D.N.Y. 2020).
\2\ State of New York v. DOE, Case No. 20-cv-9362 (S.D.N.Y.
2020).
\3\ 61 FR 36974, 36979.
---------------------------------------------------------------------------
Second, on January 20, 2021, the White House issued Executive Order
13990, ``Protecting Public Health and the Environment and Restoring
Science to Tackle the Climate Crisis.'' 86 FR 7037 (Jan. 25, 2021).
Section 1 of that Order lists a number of policies related to the
protection of public health and the environment, including reducing
greenhouse gas emissions and bolstering the Nation's resilience to
climate change. Id. at 86 FR 7037, 7041. Section 2 of the Order
instructs all agencies to review ``existing regulations, orders,
guidance documents, policies, and any other similar agency actions
(agency actions) promulgated, issued, or adopted between January 20,
2017, and January 20, 2021, that are or may be inconsistent with, or
present obstacles to, [these policies].'' Id. Agencies are then
directed, as appropriate and consistent with applicable law, to
consider suspending, revising, or rescinding these agency actions and
to immediately commence work to confront the climate crisis. Id. Under
that same section, for certain explicitly enumerated agency actions,
including the February 2020 and the August 2020 Final Rules, the Order
directs agencies to consider publishing for notice and comment a
proposed rule suspending, revising, or rescinding the agency action
within a specific time frame. Under this mandate, DOE is directed to
propose any major revisions to these two rules by March 2021, with any
remaining revisions to be proposed by June 2021. Id. at 86 FR 7038.
In light of these events, DOE has identified several aspects of the
February 2020 and the August 2020 Final Rules that present obstacles to
DOE's ability to expeditiously clear the backlog of missed rulemaking
deadlines while meeting future obligations under EPCA. In accordance
with E.O. 13990, DOE proposed major revisions to appendix A in a notice
of proposed rulemaking (NOPR) that was published on April 12, 2021
(``April 2021 NOPR''). 86 FR 18901. DOE proposed additional revisions
to appendix A in a second NOPR that was published on July 7, 2021
(``July 2021 NOPR''). 86 FR 35668. DOE is addressing the proposed
revisions from the April 2021 NOPR in this document. DOE will address
the additional revisions proposed in the July 2021 NOPR in a separate
final rule.
In this document, DOE is: (1) Restoring DOE's discretion to depart
from the general guidance in appendix A; (2) removing the recently-
added threshold for determining when the significant energy savings
criterion is met; (3) removing the recently-added requirement to
conduct a comparative analysis as part of DOE's analysis of economic
justification under the factors listed in 42 U.S.C. 6295(o)(2)(B)(i);
(4) reverting to DOE's 1996 guidance regarding completion of test
procedure rulemakings prior to issuance of a NOPR for an energy
conservation standards rulemaking; (5) clarifying that DOE may make
modifications to industry test procedure standards to comply with the
requirements of EPCA, as well as for certification, compliance, and
enforcement purposes; (6) reverting to DOE's prior practice on direct
final rules; and (7) clarifying that DOE will conduct negotiated
rulemakings in accordance with the Negotiated Rulemaking Act (``NRA''),
Public Law 104-320 (5 U.S.C. 561, et seq.). These revisions are
summarized in the following table.
List of Revisions in This Document
------------------------------------------------------------------------
Proposed revisions
Section in April 2021 NOPR Final revisions
------------------------------------------------------------------------
1. Objectives............... Revise language to Revise language to
be consistent with be consistent with
the newly proposed new Section 3;
Section 3. revise paragraph
(g) to specifically
reference consensus
recommendations
developed through
negotiated
rulemakings.
2. Scope.................... No revisions No revisions in this
proposed in this document.
document.
3. Mandatory Application of Replace with new Replace with new
the Process Rule. Section 3, Section 3,
``Application''. ``Application.''
4. Setting Priorities for No revisions No revisions in this
Rulemaking Activity. proposed in this document.
document.
5. Coverage Determination Eliminate the 180- Eliminate the 180-
Rulemakings. day period in day period in
paragraph (c) paragraph (c)
between between
finalization of DOE finalization of DOE
test procedures and test procedures and
issuance of a NOPR issuance of a NOPR
proposing new or proposing new or
amended energy amended energy
conservation conservation
standards. standards.
6. Process for Developing Eliminate paragraph Eliminate paragraph
Energy Conservation (b), ``Significant (b), ``Significant
Standards. Savings of Energy''. Savings of
Energy.''
7. Policies on Selection of Eliminate text in Eliminate text in
Standards. paragraph (e)(2)(i) paragraph (e)(2)(i)
requiring DOE to requiring DOE to
conduct a conduct a
comparative comparative
analysis when analysis when
determining whether determining whether
a proposed standard a proposed standard
level is level is
economically economically
justified. justified.
8. Test Procedures.......... Clarify in paragraph Clarify in paragraph
(c) that DOE may (c) that DOE may
revise consensus revise consensus
industry test industry test
procedure standards procedure standards
for compliance, for compliance,
certification, and certification, and
enforcement enforcement
purposes; eliminate purposes; revise
the 180-day period application of the
in paragraph (d) 180-day period in
between paragraph (d).
finalization of DOE
test procedures and
issuance of a NOPR
proposing new or
amended energy
conservation
standards.
9. ASHRAE Equipment......... No revisions No revisions in this
proposed in this document.
document.
10. Direct Final Rules...... Revise section to Revise section to
clarify that DOE clarify that DOE
will implement its will implement its
direct final rule direct final rule
authority on a case- authority on a case-
by-case basis. by-case basis.
11. Negotiated Rulemaking Eliminate section... Eliminate section.
Process.
12. Principles for No revisions No revisions in this
Distinguishing Between proposed in this document.
Effective and Compliance document.
Dates.
13. Principles for the No revisions No revisions in this
Conduct of the Engineering proposed in this document.
Analysis. document.
[[Page 70894]]
14. Principles for the Eliminate incorrect Eliminate incorrect
Analysis of Impacts on cross reference. cross reference.
Manufacturers.
15. Principles for the No revisions No revisions in this
Analysis of Impacts on proposed in this document.
Consumers. document.
16. Consideration of Non- No revisions No revisions in this
Regulatory Approaches. proposed in this document.
document.
17. Cross-Cutting Analytical No revisions No revisions in this
Assumptions. proposed in this document.
document.
------------------------------------------------------------------------
* As part of the revisions, sections and subsections have been
renumbered as required.
II. Authority and Background
A. Authority
Title III, Parts B \4\ and C \5\ of the Energy Policy and
Conservation Act, as amended, (``EPCA'' or ``the Act''), Public Law 94-
163 (42 U.S.C. 6291-6317, as codified), established the Energy
Conservation Program for Consumer Products and Certain Industrial
Equipment.\6\ Under EPCA, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing; (2)
certification and enforcement procedures; (3) establishment of Federal
energy conservation standards; and (4) labeling. Subject to certain
criteria and conditions, DOE is required to develop test procedures to
measure the energy efficiency, energy use, or estimated annual
operating cost of each covered product and covered equipment during a
representative average use cycle or period of use. (42 U.S.C. 6293; 42
U.S.C. 6314) Manufacturers of covered products and covered equipment
must use the prescribed DOE test procedure when certifying to DOE that
their products and equipment comply with the applicable energy
conservation standards adopted under EPCA and when making any other
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c); 42 U.S.C. 6295(s); 42 U.S.C.
6314(a); and 42 U.S.C. 6316(a)) Similarly, DOE must use these test
procedures to determine whether the products comply with energy
conservation standards adopted pursuant to EPCA. (42 U.S.C. 6295(s); 42
U.S.C. 6316(a))
---------------------------------------------------------------------------
\4\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\5\ Part C was added by Public Law 95-619, Title IV, section
441(a). For editorial reasons, upon codification in the U.S. Code,
Part C was redesignated Part A-1.
\6\ All references to EPCA in this document refer to the statute
as amended through Energy Act of 2020, Public Law 116-260 (Dec. 27,
2020).
---------------------------------------------------------------------------
In addition, pursuant to EPCA, any new or amended energy
conservation standard for covered products (and at least certain types
of equipment) must be designed to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A); 42 U.S.C. 6316(a)) In determining
whether a standard is economically justified, EPCA requires DOE, to the
greatest extent practicable, to consider the following seven factors:
(1) The economic impact of the standard on the manufacturers and
consumers; (2) the savings in operating costs, throughout the estimated
average life of the products (i.e., life-cycle costs), compared with
any increase in the price of, or in the initial charges for, or
operating and maintaining expenses of, the products which are likely to
result from the imposition of the standard; (3) the total projected
amount of energy, or as applicable, water, savings likely to result
directly from the imposition of the standard; (4) any lessening of the
utility or the performance of the products likely to result from the
imposition of the standard; (5) the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from the imposition of the standard; (6) the need for
national energy and water conservation; and (7) other factors DOE finds
relevant. (42 U.S.C. 6295(o)(2)(B)(i)) Furthermore, the new or amended
standard must result in a significant conservation of energy (42 U.S.C.
6295(o)(3)(B); 42 U.S.C. 6313(a)(6); and 42 U.S.C. 6316(a)) and comply
with any other applicable statutory provisions.
B. Background
DOE conducted an effort between 1995 and 1996 to improve the
process it follows to develop energy conservation standards for covered
appliance products. As part of this effort, DOE reached out to many
different stakeholders, including manufacturers, energy-efficiency
advocates, trade associations, State agencies, utilities, and other
interested parties for input on the procedures, interpretations, and
policies used by DOE in considering whether to issue new or amended
energy conservation standards. This process resulted in publication of
the July 1996 Final Rule which codified these procedures,
interpretations, and policies in appendix A. The goal of the July 1996
Final Rule was to elaborate on the procedures, interpretations, and
policies that would guide the Department in establishing new or revised
energy conservation standards for consumer products. The rule was
issued without notice and comment under the Administrative Procedure
Act's (``APA'') exception for ``interpretative rules, general
statements of policy, or rules of agency organization, procedure, or
practice.'' (5 U.S.C. 553(b)(A))
On December 18, 2017, DOE issued a request for information
(``RFI'') on potential revisions to appendix A. 82 FR 59992. DOE
subsequently published a NOPR regarding appendix A in the Federal
Register on February 13, 2019. 84 FR 3910. On July 26, 2019, DOE
subsequently issued a notice of data availability (``NODA'') in the
Federal Register. 84 FR 36037 (``July 2019 NODA''). After considering
the comments it received DOE then published a final rule in the Federal
Register on February 14, 2020, which significantly revised appendix A.
85 FR 8626.
While DOE issued the July 1996 Final Rule without notice and
comment as an interpretative rule, general statement of policy, or rule
of agency organization, procedure, or practice, the February 2020 Final
Rule was issued with notice and comment. For several reasons, as stated
throughout the April 2021 NOPR and this document, DOE believes appendix
A is best described and utilized not as a legislative rule but instead
as generally applicable guidance that may guide, but not bind, the
Department's rulemaking process. The revisions finalized in this
document are intended to clarify this point. In accordance with
Executive Order 13990, DOE used a notice and comment process to revise
appendix A. 86 FR 7037. DOE held a public webinar for the April 2021
NOPR on April 23, 2021.
[[Page 70895]]
In response to the April 2021 NOPR and public webinar, DOE received
comments from the following parties:
Table of Commenters
------------------------------------------------------------------------
Acronym,
Commenter(s) Affiliation identifier
------------------------------------------------------------------------
A.O. Smith...................... Manufacturer...... A.O. Smith.
Air-Conditioning, Heating, and Manufacturer Trade AHRI.
Refrigeration Institute. Group.
Air-Conditioning, Heating, and Manufacturer Trade Joint Industry
Refrigeration Institute (AHRI), Groups. Commenters.
AMCA International (AMCA),
American Lighting Association
(ALA), Association of Home
Appliance Manufacturers (AHAM),
Consumer Technology Association
(CTA), Hearth, Patio & Barbecue
Association (HPBA), Heating,
Air-conditioning &
Refrigeration Distributors
International (HARDI),
Information Technology Industry
Council (ITI), International
Sign Association (ISA),
Manufactured Housing Institute
(MHI), National Association of
Manufacturers (NAM), National
Electrical Manufacturers
Association (NEMA), North
American Association of Food
Equipment Manufacturers
(NAFEM), Power Tool institute,
Inc. (PTI), and Plumbing
Manufacturers International
(PMI).
American Gas Association, Utility Trade AGA.
American Public Gas Group.
Association, Spire, Inc., and
Spire Missouri, Inc.
American Lighting Association... Manufacturer Trade ALA.
Group.
Americans for Prosperity........ Advocacy Group.... AFP.
Anonymous....................... Individual........
Anonymous....................... Individual........
Appliance Standards Awareness Advocacy Group.... Joint Advocacy
Project. Commenters.
(Joint Comments filed with the
American Council for an Energy-
Efficient Economy, Consumer
Federation of America, and
National Consumer Law Center).
Attorneys General of California, State, Local State Commenters.
Colorado, Connecticut, Governments.
Illinois, Maine, Maryland,
Michigan, Minnesota, Nevada,
New Jersey, New York, Oregon,
Pennsylvania, Vermont,
Washington, the Commonwealth of
Massachusetts, the District of
Columbia, and the City of New
York.
Bradford White Corporation...... Manufacturer...... BWC.
California Energy Commission.... State............. CEC.
California Investor-Owned Utilities......... Cal-IOUs.
Utilities.
John Cannon..................... Individual........
Carrier Corporation............. Manufacturer...... Carrier.
Crown Boiler Company............ Manufacturer...... Crown Boiler.
Edison Electric Institute....... Utility Trade EEI.
Group.
GE Appliances................... Manufacturer...... GEA.
Goodman Manufacturing Company, Manufacturer...... Goodman.
L.P.
Grundfos Americas Corporation... Manufacturer...... Grundfos.
Ahmed Ahmed Hamdi............... Individual........
Hoshizaki America, Inc.......... Manufacturer...... Hoshizaki.
Hussmann Corporation............ Manufacturer...... Hussmann.
Hydraulic Institute............. Manufacturer Trade HI.
Group.
Hydronic Industry Alliance-- Manufacturer Trade HIA.
Commercial. Group.
Institute for Policy Integrity-- Academic IPR.
New York University School of Institution.
Law.
Lennox International............ Manufacturer...... Lennox.
Lutron.......................... Manufacturer...... Lutron.
Manufactured Housing Institute.. Manufacturer Trade MHI.
Group.
New Yorker Boiler Company, Inc.. Manufacturer...... New Yorker Boiler.
North American Association of Manufacturer Trade NAFEM.
Food Equipment Manufacturers. Group.
National Propane Gas Association Utility Trade NPGA.
Group.
Natural Resources Defense Advocacy Groups... Joint
Council, Earthjustice & Sierra Environmentalist
Club. Commenters.
Nortek Global HVAC, LLC......... Manufacturer...... Nortek.
Northwest Power and Conservation Advocacy Group.... NPCC.
Council.
Northwest Energy Efficiency Advocacy Group.... NEEA.
Alliance.
Signify......................... Manufacturer...... Signify.
Small Business Administration Federal Government SBA Office of
(SBA) Office of Advocacy. Agency. Advocacy.
Southern Company................ Utility........... Southern.
Sullivan-Palatek, Inc........... Manufacturer...... Sullivan-Palatek.
Sara Taylor..................... Individual........
Trane Technologies.............. Manufacturer...... Trane.
Unico, Inc...................... Manufacturer...... Unico.
U.S. Boiler Company............. Manufacturer...... U.S. Boiler.
Weil-McLain Company............. Manufacturer...... Weil-McLain.
Westinghouse Lighting Manufacturer...... Westinghouse.
Corporation.
Whirlpool Corporation........... Manufacturer...... Whirlpool.
Zero Zone, Inc.................. Manufacturer...... Zero Zone.
------------------------------------------------------------------------
[[Page 70896]]
III. Discussion of Specific Revisions to Appendix A
A. Restoring the Department's Discretion To Depart From the General
Guidance in Appendix A
One of the most significant changes made to appendix A in the
February 2020 Final Rule was to turn what had been guidance on usual
practices for issuing new or amended energy conservation standards and
test procedures into binding requirements. In contrast, the July 1996
Final Rule contained procedures, interpretations, and policies that DOE
believed would be appropriate for general use in conducting energy
conservation standard and test procedure rulemakings. However, in the
July 1996 Final Rule, DOE also acknowledged the possibility that the
usual practices would not be appropriate for every rulemaking and that
the circumstances of a particular rulemaking should dictate application
of these generally applicable practices, subject to public notice
explaining any such deviations. 61 FR 36974, 36979.
In making appendix A binding, DOE made a policy determination at
the time it issued the February 2020 Final Rule that ``promot[ing] a
rulemaking environment that is both predictable and consistent''
outweighed the need for ``flexibility to fit the appropriate process to
the appliance standard or test procedure at issue.'' February 2020
Final Rule, 85 FR 8626, 8633-8634. Additionally, in response to
comments that mandatory application of appendix A could conflict with
DOE's statutory obligations under EPCA (e.g., rulemaking deadlines),
DOE stated its policy view that the February 2020 Final Rule had been
drafted to closely follow and implement EPCA. Id. at 85 FR 8634.
As noted in its April 2021 proposal, DOE is reconsidering its
policy judgment in weighing the predictability of a one-size-fits-all
approach against the negative effects that a mandatory application of
appendix A would have on DOE's ability to meet the statutory deadlines
established under EPCA and other applicable requirements. Under EPCA,
DOE is required to review energy conservation standards for covered
products and equipment at least once every six years to determine
whether a more-stringent standard would result in significant
conservation of energy and is technologically feasible and economically
justified. (42 U.S.C. 6295(m)(1); 42 U.S.C. 6313(a)(6)(C); 42 U.S.C.
6316(a)) Similarly, DOE is also required to review test procedures for
covered products and equipment at least once every seven years to
determine whether improvements can be made. (42 U.S.C. 6293(b)(1); 42
U.S.C. 6314(a)(1)(A)) DOE currently has energy conservation standards
and test procedures in place for more than 60 categories of covered
products and equipment and is typically working on anywhere from 50 to
100 rulemakings (for both energy conservation standards and test
procedures) at any one time. Consequently, DOE has often been unable to
meet its rulemaking deadlines, and with the February 2020 Final Rule
mandating procedural steps that make the rulemaking process lengthier
than EPCA requires, implementation of this binding process would make
it even more difficult to clear the existing backlog of missed
rulemaking deadlines in a timely manner and meet future rulemaking
deadlines.
Among the steps that EPCA does not require--but the February 2020
Final Rule does--is for DOE to issue rulemaking documents in advance of
a NOPR. The February 2020 Final Rule mandates use of an early
assessment RFI and either an advanced notice of proposed rulemaking
(``ANOPR'') or a framework document with a preliminary analysis. While
DOE recognizes the importance of gathering early stakeholder input and
has proposed to maintain opportunities for pre-NOPR input in the July
2021 NOPR,\7\ such input may not be necessary or useful in all cases.
For instance, EPCA requires DOE to revisit a determination that
standards do not need to be amended within three years. (42 U.S.C.
6295(m)(3)(B)) In such cases, particularly with respect to covered
products and equipment that have gone through multiple rounds of
rulemakings and for which there has been negligible change to the
market and relevant technology, a pre-NOPR publication may provide
limited value. Thus, DOE may be able to directly issue a notice of
proposed determination that standards do not need to be amended.
Stakeholders would still have the opportunity to comment on the
proposed determination. And, in the event that DOE receives new
information in response to the notice of proposed determination, DOE
can issue supplemental rulemaking documents before proceeding to a
final rule or determination.
---------------------------------------------------------------------------
\7\ 86 FR 35668, 35669.
---------------------------------------------------------------------------
The February 2020 Final Rule also required that DOE finalize test
procedure rulemakings establishing methodologies used to evaluate
proposed energy conservation standards at least 180 days prior to
publication of a NOPR proposing new or amended energy conservation
standards. DOE stated that this requirement would allow stakeholders to
provide more effective comments on the proposed energy conservation
standards. 85 FR 8626, 8676. DOE acknowledges the importance of
established methodologies for measuring energy use and energy
efficiency when evaluating potential amendments to the energy
conservation standards. Whether a potential energy conservation
standard is technologically feasible and economically justified will be
dependent, in part, on how the energy use of a product is measured. As
discussed in section III.E of this document, DOE is requiring that new
test procedures and amended test procedures that impact measured energy
use or efficiency be finalized at least 180 days prior to the close of
the comment period for: (i) A NOPR proposing new or amended energy
conservation standards; or (ii) a notice of proposed determination that
standards do not need to be amended. However, this 180-day period may
not always be necessary. For example, DOE will typically use an
industry test procedure as the basis for a new DOE test procedure. If
DOE adopts the industry test procedure without modification,
stakeholders should already be familiar with the test procedure. In
such cases, requiring the new test procedure to be finalized 180 days
prior to the close of the comment period for a NOPR proposing new
energy conservation standards would offer little benefit to
stakeholders while delaying DOE's promulgation of new energy
conservation standards.
These examples illustrate what was clearly understood in the July
1996 Final Rule--that the procedures, interpretations, and policies
laid out in appendix A that are generally applicable to DOE's
rulemaking program should be determined on a case-by-case basis based
on the individual circumstances of a given rulemaking. 61 FR 36974,
36979. Accordingly, in the April 2021 NOPR, the Department proposed
reverting back to the original, non-binding status of appendix A. DOE
requested comments, information, and data on whether appendix A should
be non-binding or, alternatively, whether the rule should remain
binding but with revised provisions.
In addition, consistent with its proposal to revert appendix A back
to non-binding guidance, DOE's April 2021 NOPR also proposed clarifying
that appendix A does not create legally enforceable rights. DOE does
not intend for departures from the generally
[[Page 70897]]
applicable guidance contained in appendix A to serve as the basis for
potential procedural legal challenges. DOE's proposed clarification,
like the general approach contained in the July 1996 Final Rule, would
not impact the ability of a party to raise a challenge regarding the
substantive merits of a given rulemaking or the procedural steps
delineated under EPCA or the APA. (See 42 U.S.C. 6306 (applying
judicial review to EPCA's consumer product provisions) and 42 U.S.C.
6316(a)-(b) (extending the application of 42 U.S.C. 6306 to commercial
and industrial equipment)) DOE sought comment on this proposed
clarification as well. 86 FR 18901, 18905.
Comments in Favor of DOE's Proposal To Restore the Non-Binding Nature
of Appendix A
A number of commenters favored DOE's proposed approach. For
example, the Joint Environmentalist Commenters reasoned that it is
impossible for DOE to create a binding, one-size-fits-all procedure
that would adequately address all the unique situations and
requirements of DOE's myriad rulemakings. In their view, neither the
Administrative Procedure Act (APA) nor EPCA compel such a rigid
approach. They argued that the rulemaking process created by the
February 2020 Final Rule is more onerous and more time consuming than
the one enacted by Congress or adopted in the July 1996 Final Rule.
These commenters argued that DOE cannot afford to waste time in
addressing its statutory mandate and rulemaking backlog, and they
supported DOE's attempt to restore flexibility to appendix A by
returning it to non-binding guidance, thereby allowing DOE to respond
appropriately to the unique circumstances of a particular rulemaking.
(Joint Environmentalist Commenters, No. 31 at p. 2) \8\
---------------------------------------------------------------------------
\8\ The parenthetical reference provides a reference for
information located in the docket of this rulemaking. (Docket No.
EERE-2021-BT-STD-0003, which is maintained at www.regulations.gov).
The references are arranged as follows: (Commenter name, comment
docket ID number, page of that document).
---------------------------------------------------------------------------
Similarly, the CA IOUs urged DOE to return appendix A to its
previous status as non-binding guidance, which they argued would
restore predictability and certainty to the rulemaking process. These
commenters argued that each DOE rulemaking is unique, making the
inflexible blanket approach followed in the February 2020 Final Rule
one that could result in missed opportunities for increased energy and
water efficiency and delay DOE's timely completion of its statutory
obligations (including elimination of the current backlog of
rulemakings). Furthermore, the CA IOUs argued that a binding appendix A
opened DOE up to additional avenues of legal challenge, first on the
basis of appendix A itself and then on the potentially conflicting
requirements of appendix A and EPCA. They suggested that a binding
appendix A increases uncertainty and reduces the ability for all
parties to plan for the future, so they encouraged DOE to expand its
reasoning for this rulemaking action to clarify DOE's position for
future Administrations. However, in the interest of transparency, the
CA IOUs also recommended that DOE should alert stakeholders and
document when the agency finds it necessary to deviate from the
guidance embodied in appendix A; however, the commenters stated that
even this provision should be non-binding. (CA IOUs, No. 34 at pp. 1,
2, 6)
The CEC also agreed with DOE's proposal to return appendix A to a
non-binding status as a means to enable DOE to retain the flexibility
to adapt to the unique circumstances of each rulemaking. It argued
generally that unless DOE adopted its proposed approach, following the
February 2020 Final Rule would lead to worse air pollution, higher
greenhouse gas emissions, unnecessary consumption of water, less-
efficient products, and higher energy bills. It further argued that
DOE's proposal would ensure necessary flexibility while providing the
regulated community with sufficient certainty, encouraging innovation,
saving consumers money, improving efficiency, making progress on the
backlog of missed deadline rulemakings, and limiting unnecessary
greenhouse gas emissions. (CEC, No. 35 at pp. 1-2, 11)
Furthermore, the CEC asserted that the self-imposed administrative
barriers in the February 2020 Final Rule would lead to continued
delays, market uncertainty, lost energy savings, and harm to consumers.
Although the CEC encouraged DOE to be as transparent, consistent, and
predictable as possible in its rulemakings, it cautioned that strict
adherence to all of the February 2020 Final Rule's required elements
will lead to further delay regarding already overdue energy
conservation standards and test procedure rulemakings. It reasoned that
a mandatory appendix A would provide additional opportunities for
procedural challenges, which would create additional costs and
unnecessary market uncertainties that would limit innovation and
undermine achievable energy savings. In its view, EPCA's mandatory
procedures regarding the setting of standards and test procedures
control, and to the extent that any appendix A provisions conflict with
EPCA, those regulatory requirements would be unlawful. For all these
reasons, the CEC stated that appendix A should be returned to guidance
status. (CEC, No. 35 at p. 3)
The Joint Advocacy Commenters also favored returning appendix A to
general guidance and restoring DOE's discretion to depart from that
guidance in appropriate cases. These commenters recognized the
importance of having a predictable process for industry stakeholders
and encouraged DOE to strive to adhere to the procedures set forth in
appendix A, while stressing the need for DOE to have the flexibility to
adjust the process to cover the range of issues which may arise in
individual rulemakings. According to the Joint Advocacy Commenters,
departing from appendix A's general practice may sometimes be necessary
to avoid uncertainty for manufacturers and/or to avoid unnecessary
delays. As an example, they noted how appendix A details the analytical
practices DOE uses in rulemaking and argued that DOE should not need to
go through rulemaking to change appendix A each time it wishes to
modify its analytical processes to reflect best practices. They also
expressed concern that the February 2020 Final Rule's binding
provisions could conflict with statutory requirements and increase
litigation solely on the issue of whether DOE has followed the
prescribed procedures. For these reasons, the commenters argued that
applying these guidelines to a specific rulemaking should be determined
on a case-by-case basis and that appendix A should be returned to its
original, non-binding status. (Joint Advocacy Commenters, No. 38 at pp.
1-2; Joint Advocacy Commenters (Appendix I), No. 38 at pp. 1, 2)
The State Commenters argued that application of appendix A should
be determined on a case-by-case basis so that DOE is accorded the
latitude and discretion to pursue the most appropriate approach to
gathering, analyzing, and synthesizing stakeholder input for different
standards. In their view, this procedural flexibility will help ensure
that DOE is able to fulfill its statutory mandates as efficiently as
possible and with minimal delay and litigation risk. (State Commenters,
No. 29 at p. 8) The commenters also noted that making appendix A
binding on all rulemakings--including where doing so conflicts with
EPCA--exposes DOE to increased litigation that would further delay
promulgation of final standards
[[Page 70898]]
on statutorily mandated timelines. (State Commenters, No. 29 at p. 8)
NPCC and NEEA supported DOE's April 2021 proposal, noting that the
current version of appendix A contains unnecessary obstacles to DOE's
ability to meet its obligations under EPCA. (NPCC, No. 12 at pp. 1-2;
NEEA, No. 43 at p. 2) NEEA also asserted that many of the changes in
the 2020 Final Rule were unclear and confusing and that they
handicapped DOE's ability to effectively and efficiently adopt
standards and test procedures so as to achieve maximum economic and
environmental benefits for the Nation--thereby making it more difficult
for DOE to meet rulemaking deadlines, and resulting in less national
energy savings. (NEEA, No. 43 at pp. 1-2) NPCC supported DOE's effort
to revert back to non-binding guidance and to restore the flexibility
that DOE once had under the 1996 version of appendix A. (NPCC, No. 12
at p. 3) Similarly, NEEA supported DOE's ability to address each
rulemaking individually, but in furtherance of transparency, it urged
DOE to clearly state in a particular rulemaking when it intended to
depart from the procedures outlined in appendix A, along with the
reasons for that departure. (NEEA, No. 43 at p. 2)
Comments Opposing DOE's Proposal
DOE also received a number of comments opposing its proposed
removal of the mandatory application of appendix A. In AHRI's and BWC's
views, appendix A should remain mandatory so as to provide certainty,
transparency, and consistency in the rulemaking process DOE uses to
implement its energy conservation standards program. (AHRI, No. 25 at
p. 1-2; BWC, No. 24 at p. 1) AHRI also asserted that the Department's
proposal fails to address or acknowledge DOE's stated reason for making
the February 2020 Final Rule binding--namely that of promoting a
predictable and consistent rulemaking environment where all
stakeholders know what to expect during the rulemaking process--and
DOE's proposal does not provide any explanation as to why the record
before the agency no longer warrants ensuring that it provide a
predictable and consistent rulemaking process. (AHRI, No. 25 at p. 7)
AFP also argued that appendix A should remain binding. It dismissed
DOE's stated reasons for making appendix A non-binding--namely to aid
in meeting deadlines and to allow it to meet unspecified ``statutory
obligations''--noting that with over two decades of rulemakings, DOE
has rarely met its statutory deadlines even when appendix A was non-
binding. In AFP's view, DOE offered no justification in its proposal as
to why this situation would change now. (AFP, No. 36 at p. 2) AFP
asserted that the three examples offered by DOE in favor of making
appendix A non-binding were flawed. It argued that with respect to
DOE's ability to meet its statutory deadlines and ``other applicable
requirements,'' DOE offered no explanation as to what comprised the
latter. (AFP, No. 36 at pp. 2-3) It also argued that although DOE
stated that changes or additions to EPCA's procedural requirements may
affect DOE's ability to meet the relevant rulemaking deadlines, DOE
failed to show how a non-binding appendix A will either help in meeting
these statutory requirements or what will be different from DOE's
historic practices. AFP offered similar criticisms with respect to
DOE's statements regarding how the mandatory application of appendix
A's requirements for early assessment RFIs and ANOPRs may affect DOE's
ability to meet statutory deadlines and how having a binding appendix A
would also make it more difficult to meet those statutory obligations.
(AFP, No. 36 at pp. 2-3)
AFP also referenced DOE's statements to Congress regarding the
Department's ability to satisfy the requisite statutory deadlines, in
which DOE explained that the Appliance Standards Program has
historically had difficulties in meeting its statutorily-required
rulemaking obligations, including when appendix A was non-binding.
(AFP, No. 36 at p. 3) The commenter asserted that the proposal did not
explain how making appendix A non-binding will yield results different
from the past, and that DOE should hold itself accountable for
complying with its own procedures to ensure that the public will have
confidence in the transparency and fairness of DOE's rulemaking
process. (AFP, No. 36 at pp. 3, 5)
Commenters Favoring a Mandatory Appendix A Coupled With Well-Defined
Exceptions
Additionally, there were also commenters who favored the use of
limited, well-defined exceptions to appendix A while maintaining its
overall mandatory approach. A number of manufacturers favored an
approach that would retain the mandatory nature of appendix A (along
with the certainty and predictability it offered), while building in
additional flexibility for DOE, and objected to returning appendix A to
its prior status as guidance. (Carrier, No. 26 at pp. 1-2; Nortek, No.
19 at p. 2; GEA, No. 20 at pp. 2-3; Lennox, No. 18 at p. 2; A.O. Smith,
No. 27 at p. 2; Goodman, No. 22 at p. 2; Trane, No. 23 at p. 2) Nortek
and GEA added that if Appendix A becomes non-binding, DOE should add
both a mandatory public notice and comment provision that must be
followed whenever the agency intends to deviate from appendix A and a
rule-specific explanation for the deviation, followed by an opportunity
for public comment before the agency proceeds with such deviation.
(Nortek, No. 19 at p. 2; GEA, No. 20 at pp. 2-3; see also Goodman, No.
22 at p. 2 (asserting that DOE should explain its deviation)) Carrier,
Lennox, A.O. Smith, and Trane offered that if DOE required more
flexibility (such as making more expeditious, non-material, technical
adjustments to test procedures), DOE should tailor those provisions of
appendix A where that added flexibility is needed, rather than making
Appendix A non-binding. (Carrier, No. 26 at p. 4; Lennox, No. 18 at p.
2; A.O. Smith, No. 27 at p. 3; Trane, No. 23 at p. 20). A.O. Smith
suggested that DOE should propose to add a clear ``exception clause''
that would permit DOE to deviate from appendix A when certain criteria
are met, namely: (1) Consensus agreements; (2) negotiated rulemakings;
and (3) test procedure rulemakings that are addressing clarifications
necessary to provide clarity to the market, reduce uncertainty, and
provide a level playing field. (A.O. Smith, No. 27 at p. 2) In A.O.
Smith's view, this limited exception would recognize those
circumstances where deviations from appendix A are necessary and the
expediting of the rulemaking process is reasonable. (A.O. Smith, No. 27
at pp. 2-3) Carrier suggested that DOE should retain its current early
assessment requirement (i.e., that an early assessment be conducted
prior to the issuance of a standards NOPR) but that the current rule be
modified to permit DOE the ability to use the most efficient early
assessment method available. (Carrier, No. 26 at p. 1) The commenter
offered a similar approach with respect to the current 180-day buffer
period between the finalizing of a test procedure rule and the proposal
for new or amended energy conservation standards. (Carrier, No. 26 at
p. 2)
AGA objected to DOE's proposal to make appendix A non-binding and
noted that because the 1996 version of appendix A had not been binding
on DOE, it held little value. The commenter stated that in 2016, DOE
frequently ignored appendix A, and its non-binding nature effectively
conflicted with the need for an orderly and predictable regulatory
process. (AGA,
[[Page 70899]]
No. 33 at pp. 3-4) Reversing the February 2020 Final Rule's mandatory
nature would, in its view, be a serious mistake in light of AGA's past
experience with having a non-binding version of appendix A in place.
(AGA, No. 33 at p. 4) AGA argued that concerns over the rigidity of the
February 2020 Final Rule--which AGA acknowledged to be the case with
respect to some requirements--can be addressed through the revision of
those requirements or by providing exceptions in appropriate
circumstances, all without resorting to making appendix A non-binding.
(AGA, No. 33 at pp. 4-5)
NPGA stated that while DOE's April 2021 NOPR has identified a
number of rulemaking scenarios where different procedures may be
beneficial, the agency's ability to make unilateral decisions about
when and how to implement different rulemaking procedures lacks
transparency. (NPGA, No. 15 at p. 2) It stressed the importance of
getting stakeholder input regarding the potential feasibility and
energy savings of rulemaking actions as soon in the process as
possible. For that reason, NPGA supported the continued use of the
``early look'' provisions to solicit public comments on new regulatory
actions. However, it agreed with DOE that different rulemaking
approaches may be better suited in some cases for soliciting
stakeholder input, so in the alternative, NPGA suggested that DOE
should propose a new structure or minimum requirements that must be
satisfied to justify an agency decision to deviate from appendix A and
seek stakeholder information in response. (NPGA, No. 15 at pp. 2, 3)
NPGA also argued that businesses need regulatory predictability and
that DOE's proposal to largely operate on a case-by-case basis would
make it difficult for manufacturers to have confidence in such
rulemakings. It urged DOE to prepare and finalize regulations in an
orderly fashion with a fair opportunity for all stakeholders to share
information with the agency. (NPGA, No. 15 at p. 3)
Crown Boiler (along with fellow boiler manufacturers U.S. Boiler
and New Yorker Boiler who both filed nearly identical responses)
opposed DOE's proposed change to make appendix A non-binding. Although
Crown Boiler acknowledged that in some cases it may make sense for DOE
to have flexibility in adapting the rulemaking process to different
situations, the commenter asserted that when DOE did have such
discretion in the past, the Department abused it. Crown Boiler argued
that where deviation from appendix A is necessary, DOE should be
required to justify such deviation in writing after soliciting
stakeholder input. If DOE is deviating frequently from appendix A,
Crown Boiler stated that further amendments to appendix A may be
required, but the solution should not be to scrap the binding nature of
the process. (Crown Boiler, No. 10 at pp. 2-3; U.S. Boiler, No. 11 at
p. 3; and New Yorker Boiler, No. 13 at pp. 2-3)
ALA urged DOE to retain the binding aspects of appendix A but
recognized that a one-size-fits-all approach may not always be
practical. It argued that retaining the binding aspects of the February
2020 Final Rule will allow DOE to meet its statutory obligations and
eliminate time-wasting negotiations on process and procedures. (ALA,
No. 28 at p. 2) ALA suggested that if appendix A becomes non-binding,
DOE should ensure consistency such as through applying at least a 180-
day period between finalizing a test procedure and proposing standards
when major changes affecting energy consumption measurements are at
issue, although the commenter concluded that a shorter time frame may
be warranted for changes that do not impact measured energy
performance. In its view, this change will ensure the best outcome in
setting appropriate standards and reduce undue burden--particularly on
small business entities who have limited resources with which to fully
participate in DOE's rulemakings. (ALA, No. 28 at 2)
Lutron stated that it understands DOE's desire to increase
flexibility and improve efficiency by restoring DOE's discretion to
depart from appendix A's general guidance. It did not oppose such
changes as a general matter, but the company argued that certain
aspects should remain mandatory, specifically: (1) Test procedures must
be finalized before energy conservation standards are proposed; (2) New
test procedures or test procedure amendments that impact measured
energy must have an adequate lead time between finalization of that
test procedure and a new or amended standards proposal; and (3) There
should be some form of stakeholder engagement before issuance of a
notice of proposed rulemaking for energy conservation standards.
(Lutron, No. 16 at p. 2) Lutron suggested that DOE should revert to the
language in section 14(a) of the July 1996 Final Rule, which required
DOE to make a finding that it is necessary and appropriate to deviate
from the procedure specified in appendix A, to explain why, and to
provide interested parties an opportunity to comment. The commenter
also argued that DOE should clarify that any such deviations will be
rule-specific and done on a case-by-case basis, rather than being
broadly applicable. (Lutron, No. 16 at p. 2)
Both Grundfos and HI disagreed with DOE's proposal to return
appendix A to guidance and noted that manufacturers are held to the
strict requirements of the regulations, so DOE should likewise be
expected to define a clear and consistent method for how it intends to
manage its process to create/update those regulations, thereby
providing stakeholders with needed predictability and consistency--as
well as a means of enforcing those provisions through legally
enforceable rights. They did not favor a case-by-case approach and
stressed that such an approach would be at odds with the need for
consistency, predictability, and transparency in DOE's regulatory
process. However, these commenters also offered a middle ground,
suggesting that appendix A should be binding, but with clear,
thoughtful, and well-constructed flexibility to ensure DOE can meet the
applicable requirements of EPCA. (Grundfos, No. 37 at pp. 1, 2; HI, No.
42 at pp. 1, 2)
The SBA Office of Advocacy stated that appendix A should remain
binding while allowing for exceptions in certain instances. (SBA Office
of Advocacy, No. 14 at p. 4) It stated that, among other things,
without clear-cut processes for how the agency will promulgate
standards, small businesses are not able to participate meaningfully in
commenting and are not able to provide the types of substantive
technical comments necessary to determine whether a particular test
procedure is feasible. (SBA Office of Advocacy, No. 14 at p. 4)
NAFEM opposed restoring DOE's discretion to depart from appendix
A's general provisions and asserted that if DOE is concerned about
unnecessary delays, the Department could amend the rule by including
the option of using a NODA for early assessment instead of relegating
the whole appendix A to being optional guidance. (NAFEM, No. 30 at p.
4) NAFEM added that the April 2021 NOPR makes clear that DOE is seeking
additional insulation from having to follow any rule or having any
provisions that would impinge on its unbridled discretion by removing
any legal impediment to its actions. (NAFEM, No. 30 at p. 4) In NAFEM's
view, removing accountability and allowing for unlimited discretion
will not provide economic stability or efficiency in the EPCA
rulemaking process. (NAFEM, No. 30 at p. 4)
The Joint Industry Commenters also strongly opposed DOE's proposal
to eliminate the mandatory nature of the
[[Page 70900]]
February 2020 Final Rule. (Joint Industry Commenters, No. 40 at p. 4)
They suggested instead that DOE should ensure the rule is tailored to
its needs and provides the needed flexibility such that the agency can
follow it regularly. (Joint Industry Commenters, No. 40 at p. 5). If
DOE reverts back to a non-binding version of appendix A, the Joint
Industry Commenters suggested DOE consider adding the following: (1)
Provide parties with notice and explanation of why a deviation from
appendix A is necessary and appropriate; (2) clarify that deviations
can only be established on a case-by-case basis; (3) provide
stakeholders with the opportunity to comment on the need for the
deviation; and (4) maintain the mandatory nature of the rule for
certain provisions, including: (a) A requirement to finalize test
procedures before issuing proposed energy conservation standards with a
180-day lead-in period for new test procedures or amended test
procedures that impact measured energy use or efficiency, and (b) an
opportunity for early stakeholder input prior to issuance of proposed
energy conservation standards. (Joint Industry Commenters, No. 40 at
pp. 6-7)
DOE's Response to Comments
DOE first notes that the majority of commenters, both in support of
and against restoring the Department's discretion to depart from the
general guidance in Appendix A, have noted the merits of providing DOE
with some measure of flexibility in its rulemaking processes. (See,
e.g., Carrier, No. 26 at pp. 1-2 (favoring a more flexible application
of the procedures in appendix A); Nortek, No. 19 at p. 2 (suggesting
DOE provide rule-specific explanations when deviations are needed);
A.O. Smith, No. 27 at p. 3 (preferring a binding process with
reasonable exceptions over the current rigid approach); AGA, No. 33 at
pp. 4-5 (noting that the rigidity imposed by the current requirements
can be mitigated by providing for exceptions in certain circumstances);
State Commenters, No. 29 at p. 8 (noting that procedural flexibility
will help ensure that DOE is able to fulfill its statutory mandates as
efficiently as possible with minimal delay and litigation risk); Joint
Environmentalist Commenters, No. 31 at p. 2 (discussing the importance
of allowing DOE to respond appropriately to the unique circumstances of
a particular rulemaking)) Where commenters differ is on how to
implement this flexibility. Some commenters, such as the Joint
Environmentalist Commenters, support making appendix A non-binding to
allow DOE the necessary flexibility to respond to the unique
circumstances of a particular rulemaking, while other commenters, such
as the Joint Industry Commenters, support retaining the current,
binding nature of appendix A with modifications to ensure procedures
are tailored to DOE's needs and provide the needed flexibility such
that DOE can follow it regularly. (Joint Environmentalist Commenters,
No. 31 at p. 2; Joint Industry Commenters, No. 40 at p. 5)
After carefully considering these comments, DOE is finalizing the
proposal from the April 2021 to revert appendix A back to its original
status as non-binding guidance. That being said, DOE recognizes the
merits in both approaches and believes the revisions to appendix A
finalized in this document represent the best combination of these two
approaches. Accordingly, DOE is also modifying appendix A to reduce the
need for departures from the generally-applicable guidance by
accounting for specific circumstances surrounding a rulemaking. For
example, in section III.E of this document, DOE is implementing
guidance on when a 180-day period between finalization of a test
procedure and the end of the comment period for an associated standards
proposal is warranted. These changes will result in fewer departures
from the procedures laid out in appendix A. However, as noted
previously, DOE currently has energy conservation standards and test
procedures in place for more than 60 categories of covered products and
equipment and is typically working on anywhere from 50 to 100
rulemakings. Further these covered products and equipment encompass a
wide variety of industries. For certain covered products and equipment,
such as commercial package air conditioning and heat pumps, there are
established trade organizations that represent a majority of
manufacturers and that are able to compile comprehensive datasets.
External power supplies, on the other hand, are used in a wide range of
products and do not fall neatly into a single trade organization. As a
result, DOE may need to tailor its rulemaking approach to account for
the lack of consolidated information for a given covered product. This
is just one example of how DOE has had to adapt its rulemaking process
due to varying circumstances across covered products/equipment.
Consequently, it is simply not feasible to anticipate every instance of
when flexibility or an exception to the generally applicable procedures
of appendix A would be warranted for the more than 60 categories of
covered products and equipment that DOE regulates. As such, in addition
to the specific instances where DOE is incorporating flexibility into
appendix A, DOE believes it is imperative that the Department have the
discretion to depart from the generally-applicable guidance in appendix
A.
Several commenters expressed concern that reverting to the prior,
longstanding use of appendix A as non-binding guidance would reduce
certainty, transparency, and consistency in the rulemaking process DOE
uses to implement its Appliance Standards Program. (See, e.g., AHRI,
No. 25 at p. 1-2; BWC, No. 24 at p. 1) NAFEM went so far as to state
that a non-binding appendix A would allow for unbridled discretion in
the rulemaking process by removing any legal impediment to DOE's
actions. (NAFEM, No. 30 at p. 4) In response, DOE notes that reverting
appendix A to non-binding guidance has no effect on the procedures that
are already required under EPCA. DOE will continue to follow those
statutory requirements and strive to continue to meet the related
deadlines that EPCA prescribes. For example, EPCA requires that a test
procedure or standards proposal be published for public comment, that
comment periods be of specified minimum durations, and that notice of
determinations be subject to notice and comment before DOE publishes a
final determination not to amend a given set of standards for covered
products and equipment. (See 42 U.S.C. 6293(b)(2) (prescribing minimum
comment period for test procedure proposed rulemakings); 42 U.S.C.
6295(m)(2) (prescribing minimum comment period for proposed
determinations); and 42 U.S.C. 6295(p)(2) (prescribing minimum comment
period for standards proposed rulemakings)) Further, DOE will continue
to ensure new or amended energy conservation standards and test
procedures meet applicable statutory criteria in EPCA (e.g., standards
result in the maximum improvement in energy efficiency that is
technologically feasible and economically justified). Taken together,
all of these requirements establish a consistent, predictable
rulemaking process. NAFEM's concerns about unbridled discretion and a
lack of any legal impediment to DOE's actions are unfounded. As
discussed above, EPCA restrains DOE's discretion in several areas and
specifies a more detailed rulemaking process than that laid out in the
Administrative Procedure Act.
As for comments regarding the transparency of DOE's rulemaking
[[Page 70901]]
process, DOE notes that appendix A is an agency construction--a
provision that was developed not only to address how DOE will conduct
energy conservation standards and test procedure rulemakings but also
to provide transparency to DOE's rulemaking process. As stated
throughout this rulemaking, DOE is making appendix A non-binding in
recognition of the fact that DOE should be able to tailor its
rulemaking process to best fit the unique circumstances of a particular
rulemaking, not to reduce transparency in its rulemaking process. That
being said, DOE recognizes that deviations from appendix A without
notice or explanation are not conducive to a transparent rulemaking
process. Accordingly, DOE is modifying its proposed approach from the
April 2021 NOPR to more closely match the original appendix A by
providing the public with notice and an explanation of any deviations
to the generally applicable guidance of appendix A. These deviations
will be narrowly tailored to the individual rulemaking at issue and
will not be applied on an across-the-board basis.
In response to those commenters who criticized DOE's proposal and
noted the Department's past inability to meet statutory deadlines even
under a non-binding appendix A, DOE acknowledges the difficulties it
has had in meeting these requirements in the past. DOE will continue to
strive to meet these deadlines, and the removal of the mandatory
provisions imposed by the 2020 February Final Rule (which tended to
lengthen the rulemaking process) will provide DOE with a greater chance
of success in doing so. Reserving this discretionary flexibility will
aid in DOE's ability to focus its various resources in meeting the
deadlines imposed under EPCA (or any other potential deadlines, such as
those imposed pursuant to court order). Furthermore, DOE's past
difficulty in meeting these deadlines when appendix A's provisions were
not mandatory only further highlights the need for the agency to have
more flexibility in carrying out a given rulemaking, not less, as the
February 2020 Final Rule dictates.
Finally, DOE agrees with those commenters who suggested that the
removal of the binding nature of appendix A would reduce the overall
scope of DOE's litigation risk and avoid scenarios where appendix A
requirements may conflict with statutory requirements in EPCA. Reducing
litigation risk, among other things, provides added certainty to DOE's
rulemaking process. DOE also notes that removing the potential for
procedural challenges stemming from a set of self-imposed requirements
does not affect the ability of interested parties to bring substantive
legal challenges under the relevant statutory provisions, such as the
APA and EPCA. This change should contribute to DOE's ability to satisfy
its statutory obligations in a timely manner.
For the aforementioned reasons, DOE is finalizing the proposal from
the April 2021 NOPR to restore DOE's discretion to depart from the
generally-applicable guidance of appendix A, subject to the
modification discussed above requiring notice and explanation for each
deviation.
B. Significant Energy Savings Threshold
As DOE noted in the preamble to the April 2021 NOPR, the Secretary
of Energy may not prescribe an amended or new energy conservation
standard if the Secretary determines that such standard will not result
in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B); 42
U.S.C. 6313(a)(6)(A)(ii)(II); and 42 U.S.C. 6316(a)) Congress did not
define the statutory term ``significant conservation of energy,'' and,
for several decades prior to the February 2020 Final Rule, DOE also did
not provide specific guidance or a numerical threshold for determining
what constitutes significant conservation of energy. Instead, DOE
determined on a case-by-case basis whether a particular rulemaking
would result in a significant conservation of energy.
In a departure from this practice, the February 2020 Final Rule
added a numerical threshold for significant conservation of energy that
currently applies to all energy conservation standards rulemakings for
both covered products and equipment. That threshold requires an energy
conservation standard to result in either: (1) A 0.30 quad reduction in
site energy use over a 30-year analysis period or (2) a 10-percent
reduction in site energy use over that same period. DOE explained in
the February 2020 Final Rule its expectation that the threshold would
ensure that economically-justified standards would be developed, while
also making the rulemaking process more predictable. 85 FR 8626, 8670.
As DOE explained in its April 2021 proposal, the Department is
reconsidering its policy views on whether this numerical threshold
allows DOE to fully consider whether an energy conservation standard
would result in significant conservation of energy. 86 FR 18901, 18905.
In particular, DOE is reevaluating whether the significance of energy
savings offered by a new or amended energy conservation standard can be
determined without knowledge of the specific circumstances surrounding
a given rulemaking.
As noted in the April 2021 NOPR, a uniform numerical threshold for
site energy savings does not account for differences in primary energy
and full-fuel-cycle (``FFC'') effects for different covered products
and equipment when determining whether energy savings are significant.
Id. Primary energy and FFC effects include the energy consumed in
electricity production (depending on load shape), in distribution and
transmission, and in extracting, processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum fuels). For example, 1 quad
of site electricity energy consumption in 2022 corresponds to
approximately 3.05 quads of FFC energy consumption (for a generic end-
use load shape). By contrast, 1 quad of site natural gas or oil energy
consumption in 2022 corresponds to 1.11 and 1.17 quads of FFC energy
consumption, respectively.\9\ Thus, FFC effects present a more complete
picture of the impacts of potential energy conservation standards,
including greenhouse gas emissions, and would allow DOE to more fully
consider the impacts of potential energy conservation standards during
its rulemaking processes. This is especially important in light of the
fact that the United States has now rejoined the Paris Agreement and
will exert leadership in confronting the climate crisis.\10\
---------------------------------------------------------------------------
\9\ See Coughlin, K. Projections of Full-Fuel-Cycle Energy and
Emissions Metrics. (2013). LBNL-6025E; Energy information
Administration Annual Energy Outlook 2021 (available at: https://www.eia.gov/outlooks/aeo).
\10\ See Executive Order 14008, ``Tackling the Climate Crisis at
Home and Abroad,'' 86 FR 7619 (Feb. 1, 2021).
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Additionally, DOE pointed out in the April 2021 NOPR that some
covered products and equipment have most of their energy consumption
occur during periods of peak energy demand--a condition that a uniform
numerical threshold does not capture. 86 FR 18901, 18905. The impacts
of these products on the energy infrastructure can be more significant
than those from products with relatively constant site energy use
demand. For example, whereas consumer refrigerators operate 24 hours
per day, 365 days per year, central air conditioners typically operate
during only part of the year, including periods of peak demand (i.e.,
during the hottest summer days), a factor that is likely to impact grid
reliability. Thus, reducing energy use
[[Page 70902]]
during periods of peak demand has a more significant impact as it helps
reduce stress on energy infrastructure. But the current threshold for
determining whether energy savings are significant does not allow DOE
to assign greater significance to energy savings that have a greater
impact on reducing the stress on U.S. energy infrastructure. FFC and
grid impacts are but two examples of any number of factors that cannot
be fully accounted for when using DOE's current uniform threshold for
significant conservation of energy.
Accordingly, DOE sought comment on whether to eliminate the current
threshold for determining significant conservation of energy and to
revert to its prior practice of making such determinations on a case-
by-case basis or on any suggested alternatives. Commenter responses on
this issue are summarized in the ensuing paragraphs, followed by the
Department's response.
Comments Supporting Removal of the Significant Energy Savings Threshold
A number of commenters supported DOE's proposal to remove the
February 2020 Final Rule's significant energy savings threshold. For
example, in expressing support for DOE's proposal, NPCC noted its
initial objection to the threshold when it was first proposed by DOE.
(NPCC, No. 12 at p. 3) NEEA held a similar view, asserting that the
threshold was overly prescriptive and would prevent DOE from adopting
standards that save energy and are economically justified. The
commenter provided hypothetical examples of what it viewed as anomalous
results that might occur if the significant energy saving threshold
were to be used in its current form. (NEEA, No. 43 at p. 2 (noting that
DOE would be able to implement a standards rulemaking resulting in 0.1
quads of energy savings if it represented 11% of site energy use but
would be unable to implement two separate rulemakings resulting in 0.2
quads and 8% of site energy use reduction each))
Some commenters also argued that the particular facts and
circumstances need to be fully considered by DOE before it can make a
determination regarding the significance of the energy savings
involved. (State Commenters, No. 29 at p. 8; CEC, No. 35 at p. 5)
Several Commenters also argued that the current significant energy
savings threshold is both an unreasonable interpretation of EPCA and in
conflict with existing case law. (State Commenters, No. 29 at p. 9
(asserting that the threshold violated EPCA, case law, and
congressional intent, and would result in lost public benefits); Joint
Environmentalist Commenters, No. 31 at pp. 3-4) (asserting that the
threshold violated EPCA and judicial precedent); CEC, No. 35 at pp. 4-5
(citing NRDC v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985) and
asserting that energy savings are significant if they are not
``genuinely trivial'')) The CEC further argued that using a mandatory
significant energy savings threshold as an initial consideration would
allow DOE to side-step its obligations to evaluate the costs and
benefits of any energy conservation opportunity that is not genuinely
trivial, which is particularly important for technologies that may
currently have a small market share but which could consume significant
amounts of energy in the future (e.g., electric vehicle supply
equipment). It also warned that a static significant energy savings
threshold could be abused in situations where products could be split
into numerous categories in order to ensure that no product meets the
threshold, such that no standards may be established or amended. (CEC,
No. 35 at pp. 4-5)
The Joint Environmentalist Commenters characterized the adoption of
the significant energy savings threshold as a ``harmful change'' that
is inflexible. They argued that many of DOE's previously adopted energy
conservation standards would not have met the 2020 February Final
Rule's threshold, despite providing billions of dollars in utility bill
savings, avoided health harms, and reduced greenhouse gas emissions.
These commenters also argued that Congress intended for DOE to apply a
gradualist approach by requiring the reexamination of standards at
least every six years, and they reasoned that DOE cannot use a
significant energy savings threshold to short-circuit this statutory
requirement to reconsider standards at regular intervals. (Joint
Environmentalist Commenters, No. 31 at pp. 3-5)
The Joint Advocacy Commenters argued generally that adoption of the
proposals contained in the April 2021 NOPR would have the potential to
achieve very large consumer and climate benefits, while still providing
ample opportunity for stakeholder input throughout DOE's rulemaking
process. (Joint Advocacy Commenters, No. 38 at p. 1) Regarding the
threshold specifically, these commenters favored its removal because,
in their view, such an arbitrary threshold is inconsistent with the
relevant case law and congressional intent and has the potential to
sacrifice large savings for both consumers and businesses since site
energy savings of 0.30 quads (as provided in the threshold) are
equivalent to electricity bill savings of about $11 billion. The Joint
Advocacy Commenters further argued that the numerical threshold would
prevent DOE from pursuing a standard, even if such standard would
impose no costs, because the agency would never get to consider that
level of savings as part of the required analysis of economic
justification. These commenters also faulted the numerical threshold
for not allowing DOE to account for factors such as the increased
significance of energy savings that can reduce greenhouse gas emissions
or the specific circumstances associated with a given product. They
agreed with the April 2021 NOPR's arguments that the significant energy
savings threshold does not allow DOE to account for other relevant
considerations such as a potential standard's impact on peak demand and
reduction of stress on the electric grid, and they added that the
threshold could also prevent the successful conclusion of consensus
agreements. For these reasons, the Joint Advocacy Commenters
recommended that DOE should return to considering whether significant
energy savings are present on a case-by-case basis, as it has
historically done. (Joint Advocacy Commenters, No. 38 at pp. 2-3; Joint
Advocacy Commenters (Appendix I), No. 38 at pp. 1, 2, 9-11)
IPI also supported DOE's proposed removal of the significant energy
savings threshold and suggested that DOE should also consider other
factors besides climate effects when determining whether energy savings
are significant. (IPI, No. 17 at p. 1) In addition to supporting DOE's
stated reasons for removing the threshold, IPI argued that had the
threshold been in place when DOE set standards for commercial warm air
furnaces in 2016, the Nation would have had to forego 12.4 million
metric tons of CO2 emissions savings, as well as significant
reductions in criteria pollutants and consumer savings of $1 billion.
(IPI, No. 17 at p. 2) The commenter asserted that foregoing such
savings in the future by continuing to use the threshold would
significantly undermine commitments to U.S. leadership on climate
change and would bypass the ``cost-free chance[s] to save energy'' that
courts have said that Congress did not intend for DOE to pass up. (IPI,
No. 17 at pp. 2-3) In IPI's view, relying solely on numerical
thresholds is arbitrary (IPI, No. 17 at p. 3), and it agreed with the
April 2021 NOPR's observation that peak demand has a greater impact on
U.S. energy infrastructure compared to
[[Page 70903]]
non-peak demand. IPI stated that the timing of energy demand matters
not only in this context but also with respect to climate, health, and
consumer impacts, explaining that electricity generators that satisfy
peak demand can also be among the most-polluting generators and that
some consumers may experience increased electricity pricing during peak
demand periods. (IPI, No. 17 at pp. 3-4) As a result, in IPI's view,
energy savings for appliances that operate during peak demand periods
can have greater benefits for the climate, human health, and consumers
than the raw numbers show. For this reason, IPI argued that these
impacts should be considered when determining whether a given savings
level is significant. (IPI, No. 17 at p. 4)
IPI added that climate and health impacts should be incorporated
into DOE's reasoning for the removal of the current energy savings
threshold. (IPI, No. 17 at p. 4) In addition to DOE's reasoning that
the current threshold's link to site energy use does not permit DOE to
account for differences in primary energy and FFC effects for different
covered products, IPI contended that a given amount of site energy
usage will also be associated with different amounts of FFC emissions
depending on the fuel type used and that those different emissions will
likewise be associated with different climate and health impacts. The
commenter argued that these reasons favor DOE's consideration of
climate and health impacts when assessing the significance of energy
savings for a given standard and in repealing the February 2020 Final
Rule's numerical thresholds.\11\ (IPI, No. 17 at p. 4)
---------------------------------------------------------------------------
\11\ IPI also offered as additional support its comments to
DOE's prior proposals regarding appendix A in which it opposed the
use of a threshold for significant energy savings. (IPI, No. 17
(Attachment 4) (Comments dated March 16, 2020) at pp. 3-4)); IPI,
No. 17 (Attachment 5) (Comments dated May 6, 2019) at pp. 2-3)
---------------------------------------------------------------------------
The CA IOUs also supported removal of the significant energy
savings threshold, arguing that it directly conflicts with DOE's
ability to set energy conservation standards that achieve the maximum
energy savings that are technologically feasible and economically
justified. They characterized it as an ``arbitrary minimum savings
threshold'' and also faulted it for its potential to prevent DOE from
setting efficiency standards for emerging technologies that may have
relatively low market penetration currently but that present large
savings opportunities for the future. The CA IOUs argued that
appropriate Federal energy conservation standards could help reduce the
social cost of such technologies and accelerate their acceptance, and
accordingly, these commenters recommended that DOE should again
interpret significant energy savings to mean not ``genuinely trivial''
(referencing the Herrington case). (CA IOUs, No. 34 at pp. 2-3)
Finally, the proposed elimination of the significant energy savings
threshold was also supported by some manufacturers. A.O. Smith stated
that it did not believe that appendix A needed to include a significant
energy savings threshold, as the factors that EPCA requires DOE to
evaluate include both savings and cost. (A.O. Smith, No. 27 at p. 4)
Trane noted that, even with the current approach's ``10% improvement
backstop,'' this level of improvement could represent a significant
leap for many covered products that is simply impossible to achieve,
let alone be technically feasible. (Trane, No. 23 at p. 3). Instead,
Trane favored permitting DOE to use its own discretion, after carefully
weighing stakeholder input, as to whether potential cumulative energy
savings are significant enough to proceed with a standards rulemaking.
(Trane, No. 23 at p. 3)
Comments Opposing Removal of the Significant Energy Savings Threshold
A number of commenters opposed DOE's proposal to remove the current
threshold for significant energy savings. For example, in AHRI's view,
DOE's establishment of the current significant energy savings
threshold, rather than relying on a case-by-case determination, fell
within DOE's authority under EPCA. (AHRI, No. 25 at p. 7) Many
commenters asserted that the use of such a threshold would provide
consistency, predictability, certainty, stability, or some combination
of these elements, to regulated entities and stakeholders, and they
argued that it would ensure that DOE pursues economically-justified
standards. (AHRI, No. 25 at p. 7; Joint Industry Commenters, No. 40 at
p. 12; Goodman, No. 22 at p. 3; Lutron, No. 16 at p. 2; Zero Zone, No.
21 at p. 2; Grundfos, No. 37 at p. 2; HI, No. 42 at p. 2; AGA, No. 33
at p. 5; MHI, No. 32 at p. 2). The SBA Office of Advocacy made special
note that the threshold provides certainty to small businesses. (SBA
Office of Advocacy, No. 14 at p. 5) A number of commenters also
asserted that focusing on potential standards capable of satisfying the
threshold would help DOE prioritize its resources and meet its
statutory deadlines. (AHRI, No. 25 at pp. 7-8; Carrier, No. 26 at p. 2;
Crown Boiler, No. 10 at p. 2; Nortek, No. 19 at p. 3; BWC, No. 24 at
pp. 2-3; GEA, No. 20 at p. 3; Joint Industry Commenters, No. 40 at p.
12; ALA, No. 28 at 2; MHI, No. 32 at p. 2; AFP, No. 36 at pp. 1-2, 4;
SBA Office of Advocacy, No. 14 at p. 5) (See also U.S. Boiler, No. 11
at pp. 2-5 and New Yorker Boiler, No. 13 at pp. 2-4) \12\ GEA added
that if a rule is not going to make a meaningful difference in energy
consumption, DOE should make no new standard and return to the rule in
three years, pursuant to EPCA. (GEA, No. 20 at p. 3) NAFEM cautioned
that removing the threshold and leaving an undefined process will make
standards rulemakings more contentious and less efficient. (NAFEM, No.
30 at p. 5)
---------------------------------------------------------------------------
\12\ The comments from Crown Boiler will serve as the basis for
discussion of the positions taken by these commenters, as the
comments provided were essentially identical.
---------------------------------------------------------------------------
Some commenters also contended that by removing the threshold, DOE
would improperly be relying on factors outside of its statutory
authority when considering whether to adopt a given standard (e.g.,
rejoining of the U.S. to the Paris Agreement, reducing stress on energy
infrastructure, and considering greenhouse gas emissions). (AHRI, No.
25 at p. 8; AFP, No. 36 at pp. 4-5) These commenters argued that DOE's
consideration of ``significant conservation of energy'' is limited to
whether there is a significant conservation of electricity or fossil
fuels and does not extend to whether that conservation of energy would
have a significant impact on other DOE priorities such as reducing peak
demand, limiting stress on electricity infrastructure, or taking action
on climate change. (AHRI, No. 25 at p. 8; AFP, No. 36 at pp. 4-5). AGA
faulted DOE for proposing to remove the significant energy savings
threshold before having even had a chance to use it. (AGA, No. 33 at p.
5 (noting the same and requesting DOE first analyze previous appliance
efficiency rulemakings to provide context and a transparent rationale
for the threshold value (or lack thereof) that DOE would apply to
future rulemakings.)) ALA disfavored case-by-case determinations, and
the organization asserted that the economic cost of the regulatory
process and related testing should be weighed against the potential
energy savings over a determined period of time. (ALA, No. 28 at p. 2)
ALA noted its prior support for DOE's efforts to prioritize test
procedures and standards development to identify categories offering
consumers the most energy savings, and it argued that following this
approach would allow DOE to target its limited resources on those
products consuming the most
[[Page 70904]]
energy, thereby creating a baseline approach. (ALA, No. 28 at pp. 2-3)
AFP noted that the agency has devoted substantial time and effort to
rules producing little energy savings, while missing its deadlines 90
percent of the time. (AFP, No. 36 at pp. 1-2, 4 (citing DOE's own
finding that 40 percent of the 60 rules it had examined produced 6
percent of the overall energy efficiency savings))
While many commenters supported the continued use of the
significant energy savings threshold, some also recognized the need for
DOE to have some flexibility in how the threshold would be applied. For
example, while Carrier thought the threshold would apply in most
instances, it acknowledged that there may be some instances where
additional or alternative benefits may exist and suggested that DOE
revise appendix A to provide the agency with the ability to address
those unique cases (where appropriate) with notice and explanation.
(Carrier, No. 26 at p. 2) The Joint Industry Commenters and Nortek
reasoned that, even if appendix A became non-binding, DOE should retain
the significant energy savings threshold, because DOE could undertake a
deviation after giving the public notice and an opportunity for comment
should other factors lead DOE to conclude that doing so would satisfy
EPCA. (Joint Industry Commenters, No. 40 at p. 12; Nortek, No. 19 at p.
3) Goodman also offered alternatives to the complete removal of the
threshold, suggesting that DOE either: (1) Retain the current threshold
as a rebuttable presumption that, if met, would be deemed
``significant'' while savings levels falling under the threshold would
be presumed ``insignificant'' unless DOE demonstrates otherwise or (2)
define ``significant energy savings'' to be a value connected to the
average annual per-household energy use requirement specified in 42
U.S.C. 6292(b)(1)(B). (Goodman, No. 22 at p. 4) Lutron suggested that
if the current threshold causes problems in achieving the
Administration's energy conservation and climate goals, lowering the
threshold would be preferable to its removal. (Lutron, No. 16 at pp. 2-
3) NAFEM stated that if DOE removes the threshold, appendix A should be
revised to provide a list of all of the factors DOE may consider when
making a determination that energy savings are significant. (NAFEM, No.
30 at p. 5) ALA asserted that there should be some baseline approach to
setting standards to avoid wasting time and money, but it added that
using exact thresholds are unlikely to apply to all product types.
(ALA, No. 28 at p. 2)
Lennox suggested that DOE should issue a supplemental proposal with
an analytical basis for its approach to determining significant energy
savings, if the agency wants to consider eliminating its use of
``quantitative significance thresholds,'' including why a smaller
threshold may not be appropriate. (Lennox, No. 18 at p. 9). Lennox went
on to state that if DOE eliminates the use of thresholds, it should
restore and strengthen the prior version of appendix A, where
presumptions had existed against regulations such as those that would:
(1) Result in a negative return on investment for the industry; (2)
would significantly reduce the value of the industry; or (3) be the
direct cause of plant closures, significant losses in domestic
manufacturer employment, or significant losses of capital investment by
domestic manufacturers. (Lennox, No. 18 at pp. 9-10) (See also 10 CFR
part 430, subpart C, appendix A, section 5(e)(3) (2018))
Crown Boiler--in conjunction with both U.S. Boiler and New York
Boiler, who both filed essentially identical comments (see U.S. Boiler,
No. 11 at pp. 2-5 and New Yorker Boiler, No. 13 at pp. 2-4) \13\--made
a number of arguments, in addition to those noted earlier, in support
of the significant energy savings threshold. It argued that the
threshold is an acknowledgement by DOE that there is a point at which
projected energy (and carbon) savings become too small to be
statistically significant and its proposed removal would, in its view,
make appendix A less science-based, an action which would be in
conflict with Executive Order 13990. (Crown Boiler, No. 10 at p. 2)
Crown Boiler also stressed that energy efficiency standards have real
world impacts, including added cost for equipment and potential job
losses, and the commenter argued that DOE should be required to show a
degree of energy savings above a de minimis level before setting an
energy conservation standard. (Crown Boiler, No. 10 at p. 3) It further
added that there is a direct relationship between fuel consumption and
carbon emissions, and consequently, insignificant energy savings would
be expected to also translate into insignificant carbon reductions.
Crown Boiler reasoned that given these limitations, standards with a
low-yield potential for energy savings would not justify the imposition
of heavy regulatory burdens and DOE should avoid setting standards
simply for purposes of ``international virtue signaling'' and to
demonstrate leadership in confronting the climate crisis. (Crown
Boiler, No. 10 at p. 3)
---------------------------------------------------------------------------
\13\ The comments from Crown Boiler will serve as the basis for
discussion of the positions taken by these commenters.
---------------------------------------------------------------------------
Crown Boiler also noted that an insignificant reduction in energy
savings is highly unlikely to be realized entirely during a peak demand
period, and the commenter added that DOE itself considered the impact
that the significant energy savings threshold would have on potential
reductions in peak demand, but that it determined that it retained the
ability to consider the impacts of new standards on grid reliability if
these concerns impacted specific rulemakings. (Crown Boiler, No. 10 at
p. 3; see also 85 FR 8626, 8672 (Feb. 14, 2020)) Crown Boiler also
challenged DOE's view that eliminating the threshold would allow DOE to
consider potential source energy savings by pointing out that DOE had
noted that it believed it was statutorily obligated to utilize site
energy use when analyzing energy savings, and it asserted that the
April 2021 NOPR did not address DOE's ability to consider source energy
savings in this manner while still complying with EPCA. (Crown Boiler,
No. 10 at pp. 3-4)
Additionally, Crown Boiler asserted that DOE's only possible error
in setting its significant energy savings threshold was reducing it
from the originally proposed value of 0.5 quad to the 0.3 quad
threshold ultimately adopted. (Crown Boiler, No. 10 at p. 4) It pointed
to two energy conservation standard rules--the 2016 rule for
residential boilers and the 2020 rule for commercial boilers--as
highlighting the potential for negative impacts in the absence of a
threshold. The commenter asserted that each of these rules was expected
to result in only a 0.6 percent improvement in efficiency, for a total
of 0.16 quads and 0.27 quads over 30 years, respectively. Crown Boiler
argued that in exchange for these small gains, both gas and oil boilers
would face a significant reduction in their ability to work properly
when installed with sub-optimal vent systems. Moreover, Crown Boiler
argued that such boilers face an increased risk of reliability problems
that could reduce efficiency in the field over time, and that
manufacturers experienced a drain on engineering resources that would
have otherwise been allocated to more productive uses (such as research
into new technologies capable of operating on a higher concentration of
renewable fuels). Crown Boiler viewed these outcomes as real losses
that were traded for theoretical energy savings so low that it
[[Page 70905]]
raises questions as to whether DOE can credibly claim these predicted
saving as accurate. (Crown Boiler, No. 10 at p. 4)
DOE's Response to Comments
In response to these comments, DOE first notes that several
commenters discussed DOE's authority to establish a threshold for
determining whether energy savings are significant. As discussed in the
April 2021 NOPR, DOE proposed to remove the current numerical threshold
for determining whether energy savings are significant because it did
not allow DOE to consider the specific circumstances surrounding a
given rulemaking, not because DOE lacked the statutory authority to
establish a threshold. 86 FR 18901, 18905. As evidenced by the court's
decision in Herrington, it is clear that DOE may choose to establish a
numerical threshold as long as the threshold is consistent with the
policies behind the program. See Herrington, 768 F.2d at 1376 (``we do
not hold that the Act forbids DOE to set levels of significance for
each product type as a percentage of the energy consumed by that
product type, provided that the levels selected reasonably accommodate
the policies of the Act.''). However, while establishing a threshold is
permissible under EPCA, DOE does not believe it is the best course of
action. As discussed previously, a set numerical threshold does not
allow DOE to consider the specific circumstances (e.g., electric
infrastructure impacts, FFC effects, and greenhouse gas emissions)
surrounding a given rulemaking when determining whether energy savings
are significant.
As for the argument that DOE's determinations of significance for
energy savings should be limited to whether there is a significant
conservation of electricity or fossil fuels and that it should not
extend to the impacts of those energy savings, commenters seem to
suggest that the significance of energy savings can be determined
without consideration of the broader impacts of those savings. DOE does
not agree with this position, nor does EPCA compel such an approach. As
noted in Herrington, determining whether energy savings are significant
should be informed by the underlying policies of the Appliance
Standards Program. Id. DOE's Appliance Standards Program was created in
the 1970's in response to an energy supply crisis. See EPCA (noting in
the Act's description the law's intention ``[t]o increase domestic
energy supplies and availability; to restrain energy demand; to prepare
for energy emergencies; and for other purposes.'')
Congress expanded further on the intended policies underlying the
Appliance Standards Program in subsequent amendments to EPCA. For
example, the Energy Policy Act of 2005, Public Law 109-58 (Aug. 8,
2005), which, among other things, amended EPCA to establish energy
conservations standards for additional consumer products, was enacted
to ``ensure jobs for our future with secure, affordable, and reliable
energy.'' The Energy Independence and Security Act of 2007, Public Law
110-140 (Dec. 19, 2007), which similarly amended EPCA to establish new
energy conservation standards for consumer products and commercial
equipment, was enacted to ``move the United States toward greater
energy independence and security, to increase the production of clean
renewable fuels, to protect consumers, to increase the efficiency of
products, buildings, and vehicles, to promote research on and deploy
greenhouse gas capture and storage options, and to improve the energy
performance of the Federal Government, and for other purposes.'' Energy
conservation achieved through the Appliance Standards Program helps
achieve many of these policy objectives. For example, energy
conservation standards can increase grid reliability by decreasing peak
demand. Energy conservation standards also protect consumers by
reducing greenhouse gas and other pollutant emissions. As a result, and
in accordance with the court in Herrington, DOE believes any
determination of whether energy savings are significant should involve
some consideration of the potential impact of those energy savings on
the policy objectives underlying the Appliance Standards Program. Thus,
rather than being constrained in the manner suggested by these
commenters--i.e., that DOE is limited to determining significance
solely in terms of the amount of projected electricity or fossil fuel
energy savings--DOE is guided by the underlying policy objectives of
EPCA, as amended, governing the Appliance Standards Program when
determining whether potential energy savings are significant.
DOE also received several other comments disagreeing with DOE's
decision to consider the potential impacts of energy savings when
determining whether those energy savings are significant. Crown Boiler
commented that DOE itself had noted it was statutorily obligated to
utilize site energy use when analyzing energy savings. (Crown Boiler,
No. 10 at pp. 3-4) Crown Boiler also commented that DOE had determined
in the February 2020 Final Rule that it could address the impacts of
new standards on grid reliability in individual rulemakings.
In response, DOE first notes that Crown Boiler's claim that DOE
stated it was obligated to use site energy savings mischaracterizes
DOE's position in the February 2020 Final Rule. In that rule, DOE
stated that use of site energy savings was consistent with EPCA's
definition for ``energy use'' and the process followed by DOE when
determining whether to apply energy conservation standards to other
covered products. 85 FR 8626, 8668. But, even if Crown Boiler's claim
had been accurate, DOE did not propose to remove the threshold because
the use of site energy savings itself is problematic. Instead, DOE
proposed to remove the uniform numerical threshold because relying
solely on the threshold itself does not account for the specific
circumstances surrounding a given rulemaking. Nowhere is this
deficiency more evident than in the consideration of FFC effects for
electricity and natural gas where 1 quad of site electricity energy
consumption corresponds to approximately 3.05 quads of FFC energy
consumption, while 1 quad of site natural gas energy consumption
corresponds to 1.11 quads of FFC energy consumption. DOE will continue
to calculate potential site energy savings for energy conservation
standards. But DOE will determine the significance of those site energy
savings based on their impact, which may include impacts on FFC
savings, grid reliability, and greenhouse gas emissions. Crown Boiler's
second argument similarly misses the mark. DOE agrees that the impact
of new standards on grid reliability can be addressed during individual
rulemakings. But, that can only occur if the February 2020 Final Rule
threshold has been met.
In response to comments that eliminating a uniform numerical
threshold will reduce certainty and predictability in DOE's rulemaking
process (see, e.g., AHRI, No. 25 at p. 7; Joint Industry Commenters,
No. 40 at p. 12; Goodman, No. 22 at p. 3) or lead to an undefined
process that will make standards rulemakings more contentious and less
efficient (NAFEM, No. 30 at p. 5), DOE notes that elimination of the
numerical threshold will not change its rulemaking process. DOE will
continue to collect information and conduct analyses to determine if
new or amended standards would result in significant conservation of
energy and are technologically feasible and economically justified. If
these statutory criteria are met, DOE will propose new
[[Page 70906]]
or amended standards. Stakeholders will then have the opportunity to
comment on the proposed new or amended standards, including whether the
potential energy savings are significant. If new or amended standards
are subsequently issued in a final rule, manufacturers will typically
have between 3 and 5 years to come into compliance with the new or
amended standards. (See 42 U.S.C. 6295(m)(4)) This is a consistent
process based on well-established methodologies that have been
extensively used over the long lifetime of DOE's Appliance Standards
Program. As for claims that elimination of the uniform numerical
threshold will lead to less predictable rulemakings, DOE does not issue
new or amended energy conservation standards based solely on whether
the potential energy savings are significant. Any new or amended
standard must also be technologically feasible and economically
justified. Further, DOE only makes these determinations after
conducting a full analysis of all available information, including
information obtained during the rulemaking process. And, while DOE
acknowledges that a uniform numerical threshold makes for less
complicated significance determinations, it does so by ignoring the
very real differences, e.g., FFC effects and electrical grid impacts,
between energy savings across different rulemakings. DOE believes that
any benefits of this approach are more than outweighed by its failure
to account for the specific facts and circumstances surrounding an
individual rulemaking.
As for commenters such as ALA and AFP that asserted the uniform
numerical threshold would help DOE prioritize its resources and meet
its statutory deadlines, DOE notes that having a threshold can only
constrain DOE's ability to prioritize its resources. As discussed
previously, a uniform numerical threshold does not account for the
differences across covered products and equipment rulemakings, e.g.,
FFC effects. For example, under the threshold established in the
February 2020 Final Rule, DOE would not be able to prioritize a rule
that saves 0.25 quad of site energy and 0.6 quad of FFC energy over a
rule that saves 0.30 quad of site energy and 0.4 quad of FFC energy.
DOE assumes commenters also meant that the threshold would result in
more rulemakings resulting in determinations that standards do not need
to be amended, which would free up DOE resources. But, in many cases
the process for issuing a new or amended standard, in terms of the
number of Federal Register publications and opportunities for public
comment, is very similar to the process for issuing a final
determination not to amend a standard. Both typically involve the
issuance of pre-NOPR documents where DOE collects information and data
in order to determine whether a new or amended standard would satisfy
the relevant criteria in EPCA. DOE then uses these data and information
to prepare a proposal on whether a new or amended standard is
warranted. After reviewing public comments on the proposal, DOE issues
a final document that either establishes a new or amended standard or
determines that a new or amended standard is not warranted. Finally, a
determination not to amend standards must be revisited within 3 years,
while a decision to issue new or amended standards must be revisited
within 6 years. (42 U.S.C. 6295(m)) DOE believes the other revisions to
appendix A finalized in this document and the additional revisions that
were proposed in the July 2021 NOPR will have a much greater impact on
DOE's ability to meet its statutory deadlines.
As for the commenters who proposed a modified threshold, e.g., a
rebuttable presumption of significance or a lower threshold value, DOE
notes these approaches pose the same problem as the threshold set in
the February 2020 Final Rule. Namely, they assume on some level that
the significance of energy savings can be determined without
considering the specific circumstances surrounding a given rulemaking.
Additionally, DOE notes that it has never stated the threshold for
determining the significance of energy savings established in the
February 2020 Final Rule is too high. Rather, the issue is that any set
threshold ignores the very real differences in energy savings across
different rulemakings.
Several commenters discussed the potential economic impacts on
industry and consumers of DOE's proposal to remove the threshold for
determining whether energy savings are significant. DOE notes that a
determination that energy savings are significant is but one step in
the process of issuing new or amended standards. EPCA still requires,
among other things, that a new or amended standard be economically
justified, which includes the consideration of economic impacts on
manufacturers and consumers. (See 42 U.S.C. 6295(o)(2)(B)(i)(I)) DOE
will continue to follow these provisions and to perform the required
analyses to demonstrate and ensure that the relevant statutory criteria
are satisfied before setting (or amending) energy conservation
standards or deciding not to amend them.
With regards to Lennox's comment that, assuming the threshold is
eliminated, DOE should restore and strengthen prior provisions from the
July 1996 Final Rule, DOE will address these comments and the
additional revisions proposed in the July 2021 NOPR in a separate final
rule.
Finally, DOE does not agree with AGA's statement faulting the
Department for proposing to remove the significant energy savings
threshold before having even had a chance to use it. The effects of the
threshold established in the February 2020 Final Rule on the
Department's rulemaking processes were readily apparent on issuance of
the rule. As discussed throughout this document, the February 2020
Final Rule, including the significant energy savings threshold, does
not allow DOE to account for the particular circumstance of individual
rulemakings, e.g., FFC and electrical grid impacts.
Accordingly, for the aforementioned reasons, DOE has concluded that
determinations of significance for energy savings should be made on a
case-by-case basis. As a result, DOE is removing the significant energy
savings threshold.
C. Determinations of Economic Justification
Under EPCA, any new or amended standard must be designed to achieve
the maximum improvement in energy efficiency that is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A); 42
U.S.C. 6316(a)). To ensure that DOE meets this statutory mandate, DOE
employs a walk-down process to select energy conservation standard
levels. As a first step in the process, DOE screens out technologies
for improving energy efficiency that are not feasible. DOE then uses
the remaining technologies to create a range of trial standard levels
(``TSLs''). These TSLs typically include: (1) The most-stringent TSL
that is technologically feasible (i.e., the ``max-tech'' standard); (2)
the TSL with the lowest life-cycle cost; (3) a TSL with a payback
period of not more than three years; and (4) any TSLs that incorporate
noteworthy technologies or fill in large gaps between efficiency levels
of other TSLs. Beginning with the max-tech TSL, DOE then determines
whether a specific TSL is economically justified. In making that
determination, DOE determines, after reviewing public comments and
data, whether the benefits of the standard exceed its burdens by, to
the greatest extent practicable, considering the
[[Page 70907]]
seven factors described in 42 U.S.C. 6295(o)(2)(B)(i). (See also 42
U.S.C. 6313(a)(6)(B)(ii) (applying the seven factors to ASHRAE
equipment); 42 U.S.C. 6316(a) (applying the seven factors to non-ASHRAE
equipment)). If DOE determines that the max-tech TSL is economically
justified, the analysis ends, and DOE adopts the max-tech TSL as the
new or amended standard. However, if DOE determines that the max-tech
TSL is not economically justified, DOE walks down to consider the next-
most-stringent TSL. This walk-down process continues until DOE
determines that a TSL is economically justified or that none of the
TSLs are economically justified.
In the August 2020 Final Rule, DOE modified this process to require
that determinations of economic justification include a comparison of
the benefits and burdens of the selected TSL against the benefits and
burdens of the baseline case and all other TSLs. 85 FR 50937, 50944.
DOE stated its belief that such an approach would allow for more
reliable determinations that a specific TSL is economically justified.
Id. at 85 FR 50939. While the requirement to conduct a comparative
analysis affected DOE's process for determining whether a TSL is
economically justified, it did not dictate any particular outcome or
require DOE to modify its general approach of walking down from the
max-tech TSL.
DOE's decision to add a comparative analysis to the process for
determining whether a TSL is economically justified generated concern
among several stakeholders that DOE would use the comparative analysis
to select a TSL that maximizes net benefits, as opposed to the TSL that
maximizes energy savings and is technologically feasible and
economically justified. Id. DOE's statement in the August 2020 Final
Rule that ``the purpose of EPCA's seven factors is not to select the
standard that achieves the maximum improvement in energy efficiency, no
matter how minute an estimated cost savings'' added further confusion
to how DOE would use the comparative analysis in determining whether a
TSL is economically justified. 85 FR 50937, 50939 (emphasis added).
In light of the confusion and uncertainty around whether a
comparative analysis would result in DOE choosing the TSL that
maximizes net benefits as opposed to the TSL that represents the
maximum improvement in energy efficiency that is technologically
feasible and economically justified, DOE proposed to eliminate the
requirement to conduct a comparative analysis when determining whether
a specific TSL is economically justified in the April 2021 NOPR. 86 FR
18901, 18906. DOE received numerous comments on this proposal with some
commenters in favor of eliminating the comparative analysis and others
arguing that it should be retained.
Comments Supporting DOE's Proposal To Eliminate the Requirement To
Conduct a Comparative Analysis in Determining Economic Justification
In support of DOE's proposal to remove the requirement to conduct a
comparative analysis, several commenters expressed concern that the
comparative analysis could lead to DOE selecting a TSL that does not
represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified. (See e.g., Joint
Advocacy Commenters, No. 38 at p. 3; Grundfos, No. 37 at p. 3; CEC, No.
35 at p. 6; State Commenters, No. 29 at p. 9) Some commenters were
particularly concerned that the comparative analysis would result in
DOE choosing a TSL that maximizes net benefits instead of energy
savings. (Joint Environmentalist Commenters, No. 31 at p. 5; CA IOUs,
No. 34 at pp. 2-3) IPI commented that the approach would not be
transparent and allow DOE to define what is ``economically justified''
on any subset of adverse impacts to which DOE may happen to arbitrarily
assign controlling weight--a result that it asserted would be
inconsistent with statutory requirements and rational decision making.
(IPI, No. 17 (Attachment 4 (Comments dated March 16, 2020) at pp. 2-3;
IPI, No. 17 (Attachment 5 (Comments dated May 6, 2019) at pp. 3-4)
Comments Opposing DOE's Proposal To Eliminate the Requirement To
Conduct a Comparative Analysis in Determining Economic Justification
Other commenters opposed DOE's proposal to remove the requirement
to conduct a comparative analysis. For example, several commenters
stated the comparative analysis will ensure DOE, when faced with TSLs
with comparable savings, chooses the trial standard level with a less
severe negative impact. (See, e.g., MHI, No. 32 at p. 2; Lutron, No. 16
at p. 3; Joint Industry Commenters, No. 40 at pp. 12-13) NAFEM
commented that removal of the comparative analysis requirement could
result in energy conservation standards that save more energy at the
expense of product differentiation, refinement, and end-use
flexibility. (NAFEM, No. 30 at p. 5) SBA Office of Advocacy commented
that EPCA does not expressly prohibit an analysis of net benefits and
DOE does not provide justification as to why a net benefits approach is
inaccurate or otherwise prohibited, and instead merely states that the
elimination of the comparative analysis is to reduce uncertainty. (SBA
Office of Advocacy, No. 14 at p. 6) SBA Office of Advocacy also stated
that engaging in a comparative analysis would ensure that DOE is
considering the full scope of impacts of a particular standard and
would help DOE in moving towards better compliance with the Regulatory
Flexibility Act. (SBA Office of Advocacy, No. 14 at p. 7) Zero Zone
stated that DOE should retain the comparative analysis for standard
level selection, because the Department has not provided any evidence
of an actual problem using that approach. (Zero Zone, No. 21 at p. 2)
Finally, BWC stated that the comparative analysis would help DOE and
stakeholders better assess the TSLs against the applicable statutory
criteria. (BWC, No. 24 at p. 3)
DOE's Response to Comments
DOE first notes that both commenters in favor of the proposal to
eliminate the comparative analysis and those against its removal stated
that the comparative analysis could lead to the Department forgoing
energy savings in favor of increased economic benefits. (See, e.g.,
Joint Advocacy Commenters, No. 38 at p. 3; MHI, No. 32 at p. 2) Based
on these comments, it is clear that the comparative analysis generated
significant confusion and uncertainty about whether the process would
result in DOE selecting the TSL that results in the maximum improvement
in energy efficiency that is technologically feasible and economically
justified or a TSL that saves less energy but imposes lower costs on
manufacturers and consumers.
Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) In deciding whether a
proposed standard is economically justified, DOE must determine whether
the benefits of the standard exceed its burdens. (42 U.S.C.
6295(o)(2)(B)(i)) DOE must make this determination after receiving
comments on the proposed standard, and by considering, to the greatest
extent practicable, the seven statutory factors, which allow DOE to
consider the full breadth of impacts including benefits and costs,
along with other factors the Secretary considers relevant. In practice,
DOE determines an appropriate energy conservation
[[Page 70908]]
standard level for adoption by conducting a ``walk-down'' analysis of
the trial standard levels (TSLs) considered in the proposal, after
reviewing any public comments. DOE starts by analyzing the maximum
technologically feasible (max-tech) level to see whether the statutory
criteria for significant energy savings, technological feasibility, and
economic justification have been met. If the max-tech TSL fails to meet
any of these statutory criteria, DOE determines that it cannot adopt
that level, and it then moves to the next highest TSL and conducts the
same analysis. The agency continues in this manner until it reaches a
TSL that meets all of the statutory criteria. Once DOE arrives at such
level (if any), DOE is required under EPCA to choose that TSL because
it represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified. (See 42 U.S.C.
6295(o)(2)(A); 42 U.S.C. 6316(a))
With respect to the SBA Office of Advocacy's comments, DOE would
like to clarify two issues. First, DOE did not state in the April 2021
NOPR that conducting an analysis of net benefits is inaccurate or
otherwise prohibited by EPCA. The concern with the comparative
analysis, as discussed previously, is that the process would result in
the maximization of net benefits instead of energy savings that are
technologically feasible and economically justified, which is contrary
to the statute. As for ensuring DOE considers the full scope of impacts
of a particular TSL, the comparative analysis did not change the scope
of impacts considered by DOE for a particular TSL. The analysis
required DOE to compare the benefits and burdens of a TSL against the
benefits and burdens of the baseline case and all other TSLs. 85 FR
50937. But, as stated in the August 2020 Final Rule, the vast majority
of DOE's analytical work involves evaluating the seven factors for each
TSL (e.g., life-cycle costs, manufacturer impacts, total energy
savings). 85 FR 50937, 50941. For example, DOE performs a manufacturing
impact analysis to identify and quantify the impacts of any new or
amended energy conservation standards on manufacturers. As part of this
analysis, DOE uses the Government Regulatory Impact Model (``GRIM'') to
calculate cash flows using standard accounting principles and changes
in industry net present value (INPV) between the no-new-standards case
and each proposed TSL. The difference in INPV between the no-new-
standards case and each TSL represents the financial impact of the new
or amended energy conservation standard on manufacturers. The addition
of a comparative analysis has no effect on DOE's analysis of
manufacturing impacts.
The comments received in response to the April 2021 NOPR have
solidified DOE's concerns regarding the use of the comparative
analysis. DOE has no desire to create a situation where stakeholders
will question, and potentially challenge, whether the Department is
choosing a TSL that maximizes net benefits instead of the TSL that
represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified as required under
EPCA. Further, the process and criteria laid out in 42 U.S.C.
6295(o)(2)(B)(i) and 42 U.S.C. 6313(a)(6)(B)(ii) for determining
economic justification are already sufficiently robust, and any
potential, incremental improvement that may result from the use of a
comparative analysis is outweighed by the uncertainty it casts over
DOE's fulfillment of its statutory obligations under EPCA. As a result,
DOE is eliminating the requirement in appendix A to conduct a
comparative analysis when determining whether a TSL is economically
justified. Consistent with EPCA and past practice, DOE will determine
whether a TSL is economically justified after determining, based on the
factors listed in 42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C.
6313(a)(6)(B)(ii), whether the benefits of the standard exceed its
burdens.
D. Adoption of Industry Test Standards
The February 2020 Final Rule amended appendix A to require
adoption, without modification, of consensus industry test standards as
test procedures for covered products and equipment, unless such
standards do not meet the EPCA statutory criteria for test procedures.
85 FR 8626, 8678-8682, 8708. In essence, DOE sought to explain and
codify its established practice, which is to analyze the appropriate
industry consensus test standard, with the input of stakeholders and
the interested public, to: (1) Determine that the EPCA criteria are met
and use the consensus test standard as the Federal test procedure; (2)
modify the standard so that it complies with the statutory criteria, or
(3) reject the standard and develop an entirely new test procedure.
On further review, DOE has come to see that its attempt at
clarification may have had the opposite effect, creating the false
impression that DOE had put in place a new presumption for an ``as-is''
adoption of consensus industry test standards without meaningful
review. That was not DOE's intention, and accordingly, the Department
proposed to clarify in the April 2021 NOPR that while DOE will first
consider applicable consensus industry test standards, such test
standards must first undergo a thorough agency review to ensure that
they meet the requirements of the statute and are compatible with DOE's
compliance, certification, and enforcement (``CC&E'') regulations. 86
FR 18901, 18907.
Comments Supporting DOE's Clarification of Its Process for Adopting
Consensus Industry Standards
The majority of commenters generally supported or had no objections
to DOE's proposal to clarify that the Department will amend consensus
industry test standards as necessary to ensure compliance with both the
statutory requirements in EPCA and DOE's CC&E regulations. (See, e.g.,
State Commenters, No. 29 at p. 10; Lutron, No. 16 at p. 3; NEEA, No. 43
at p. 3; Joint Environmentalist Commenters, No. 31 at p. 6; Joint
Industry Commenters, No. 40 at p. 10) In citing their support for DOE's
proposal, several commenters stated that consensus industry test
standards are not generally designed for regulatory purposes and, as
such, modifications to ensure compliance with EPCA and DOE's CC&E
regulations are often necessary. (See, e.g., CA IOUs, No. 34 at p. 5;
Joint Advocacy Commenters, No. 38 at pp. 3-4) The CA IOUs and Joint
Environmentalist Commenters also favored DOE's proposal because it
would relieve stakeholders of the burden of having to participate in
both industry and DOE test procedure development processes. (CA IOUs,
No. 34 at p. 5; Joint Environmentalist Commenters, No. 31 at p. 6)
Aside from expressing their support for DOE's proposal, Lutron and
the Joint Industry Commenters also asked DOE to clarify in the
regulatory text of appendix A that industry test standards are
consensus test procedures, which usually involve more than just
industry stakeholders. (Lutron, No. 16 at p. 3; Joint Industry
Commenters, No. 40 at p. 10)
Comments Opposing DOE's Clarification of Its Process for Adopting
Consensus Industry Standards
Other commenters supported DOE's adoption of consensus industry
test standards with little or no modification. (See, e.g., Signify, No.
41 at p. 1; Lennox, No. 18 at p. 5; New Yorker Boiler, No. 13 at p. 5)
These commenters expressed a variety of reasons for
[[Page 70909]]
advocating for the adoption of consensus industry test standards. For
example, Crown Boiler and BWC stated that most consensus industry test
standards are developed by all interested stakeholders, including
manufacturers, industry advocates, regulators (including DOE), and
certification agency laboratories. (Crown Boiler, No. 10 at p. 5; BWC,
No. 24 at p. 3) Crown Boiler also noted that the committee members tend
to have decades of experience and that DOE should rely on these
committees to develop the test procedures. (Crown Boiler, No. 10 at p.
5) Some commenters stated that adopting consensus industry test
standards would reduce burden on both DOE and stakeholders. (See BWC,
No. 24 at p. 3 (stating that deviating from consensus industry test
procedures will add unnecessary workload for DOE staff); Signify, No.
41 at p. 1 (stating that changes to consensus industry test procedures
create unnecessary burden for industry and test laboratories)) Several
commenters also stated that adoption of consensus industry test
procedures would expedite DOE's test procedure rulemaking process and
allow stakeholders to address standards rulemakings sooner. (See, e.g.,
U.S. Boiler, No. 11 at pp. 5-6; GEA, No. 20 at p. 3) Finally, GEA
stated that adopting consensus industry test procedures would reduce
the likelihood of litigation over test procedures. (GEA, No. 20 at p.
3)
In order to avoid the need to make modifications to consensus
industry test procedures, several commenters encouraged DOE to
participate in the industry test standards development process as a way
to ensure that consensus industry test standards are compatible with
EPCA and DOE's CC&E regulations. (See, e.g., Signify, No. 41 at p. 1;
ALA, No. 28 at p. 3) Additionally, with regards to compatibility with
DOE's CC&E regulations, Lennox stated that DOE should consider ``the
potential need to modify the applicable CC&E requirements, not the
industry test procedure.'' (Lennox, No. 18 at p. 5).
DOE's Response to Comments
As an initial matter regarding the request that DOE clarify that
industry test standards are ``consensus'' test standards, DOE uses the
term ``consensus'' broadly to indicate a process in which multiple
stakeholders develop and finalize the industry test standard. The use
of the term ``consensus'' is not intended as an assessment of the
representativeness of those stakeholders involved in the process. In
certain cases, industry test standards were not developed by a group
that is fully representative of DOE's rulemaking stakeholders,
including energy-efficiency advocacy organizations, utilities, States,
consumer groups, etc. DOE notes that under section 301 of the
Department of Energy Organization Act (Pub. L. 95-91; 42 U.S.C. 7101),
DOE must comply with section 32 of the Federal Energy Administration
Act of 1974, as amended by the Federal Energy Administration
Authorization Act of 1977. (15 U.S.C. 788; ``FEAA'') Section 32
essentially provides in relevant part that, where a proposed rule
authorizes or requires use of commercial standards, DOE must inform the
public of the use and background of such standards. DOE must also
evaluate these standards as to whether they fully comply with the
requirements of section 32(b) of the FEAA (i.e., whether they were
developed in a manner that fully provides for public participation,
comment, and review). In addition, section 32(c) requires DOE to
consult with the Attorney General and the Chairman of the Federal Trade
Commission concerning the impact of the commercial or industry
standards on competition.
In response to the remaining comments, DOE first notes that
commenters have raised several valid points about the benefits of
adopting consensus industry test standards with little to no
modification (e.g., reducing test procedure development cost). That
said, these benefits cannot be realized at the expense of DOE's
statutory obligations. In accordance with EPCA, DOE must ensure that a
consensus industry test standard is reasonably designed to produce test
results that measure energy efficiency or use during a representative
average use cycle or period of use without being unduly burdensome to
conduct. (42 U.S.C. 6293(b)(3)) As a result, DOE has often found it
necessary to make modifications to an applicable consensus industry
test standard to ensure compliance with these statutory requirements.
For example, the DOE test procedure for dehumidifiers requires reduced
indoor ambient temperature conditions as compared to those specified in
the referenced industry test standard as DOE determined that the
reduced conditions are more representative of the product's average use
cycle as required by EPCA. 80 FR 45801, 45807 (July 31, 2015). As
another example, the DOE test procedure for portable air conditioners
includes several modifications to the industry test method that DOE
determined would provide results that are representative of typical
use. Specifically, in comparison to the industry test procedure, the
DOE test procedure requires a different set of indoor and outdoor test
conditions; an additional test condition for units with a dual-duct
configuration; and additional provisions to account for heat
transferred to the indoor conditioned space from the ducts and any
infiltration air from unconditioned spaces, which are not accounted for
in the industry test method. 81 FR 35241, 35250, 35248, 35253 (June 1,
2016).
Additionally, DOE notes that consensus industry test standards are
often designed to support industry certification programs with the goal
of verifying ratings within a tolerance specified by industry. DOE's
CC&E regulations, on the other hand, are designed to ensure, in
accordance with EPCA, that all products and equipment distributed in
commerce in the United States comply with applicable Federal energy and
water conservation standards. Furthermore, DOE's CC&E regulations seek
to establish a level playing field amongst industry participants and to
also help ensure that the utility bill savings that consumers expect
from energy and water conservation standards are being realized. For
example, in the past, DOE has had to specify airflow tolerances for
certain industry standard test conditions that are referenced for the
testing of certain categories of small, large, and very large air-
cooled commercial package air conditioners and heating equipment after
having determined that such tolerances are necessary to address
potential variation in the measured efficiency and cooling capacity of
the equipment. 80 FR 79655, 79659-79660 (Dec. 23, 2015). DOE also notes
that industry representatives and other stakeholders are welcome to
participate in the development and modification of the Department's
CC&E regulations.\14\ In fact, some of DOE's existing CC&E regulations
were developed by a negotiated rulemaking that resulted in a consensus
agreement amongst the Department, industry, and many diverse
stakeholders over, among other things, the allowance of simulations to
develop ratings under specific circumstances for commercial heating,
ventilation, and air-conditioning equipment; commercial water heaters;
and commercial refrigeration equipment. 80 FR 144 (Jan. 5, 2015).
---------------------------------------------------------------------------
\14\ For example, DOE recently asked for comment on a proposal
to amend the certification and reporting provisions for several
covered products and equipment. 86 FR 43120 (August 6, 2021).
---------------------------------------------------------------------------
DOE may also modify consensus industry test standards for other
[[Page 70910]]
reasons. For example, DOE is not required to adopt or align its test
procedures with sections of the consensus industry test standard that
are not necessary for the method of test for metric(s) included in the
DOE test procedure. For instance, sections of the industry test
procedure regarding selection of models for testing under an industry
certification program, verification of represented values and the
associated tolerances, and operational requirements need not be
referenced or aligned with under the DOE test procedure. This is
consistent with the Department's longstanding practice to only include
sections that are relevant to the method of test for metric(s) included
in the DOE test procedure, or that provide clarifications that help
promote understanding amongst regulated entities. Another instance
where DOE may need to deviate from a consensus industry test standard
is to address issues identified through DOE's test procedure waiver
process. For example, a manufacturer may seek a test procedure waiver
for a covered product that incorporates a new, innovative technology
that was not contemplated by the consensus industry test standard or
where some other deficiency in the test procedure forestalls successful
testing. In such cases, DOE is required to update the Federal test
procedure to eliminate the need for such a waiver. 10 CFR 430.27(l); 10
CFR 431.401(l).
Finally, although DOE has explained why the Department is often
required to modify consensus industry test standards, DOE agrees with
commenters that consensus industry test standards should serve as the
basis for Federal test procedures whenever possible.\15\ As a result,
DOE wishes to underscore the importance of the consensus industry test
procedure development process, including the need to ensure that a
broad cross-section of stakeholder interests are represented in the
development of such consensus industry standards. DOE believes that
consensus test standards that represent a consensus across all
stakeholders, not just industry, will be more likely to meet the
statutory requirements in EPCA and DOE's CC&E regulations. To that end,
DOE is committed to supporting the consensus industry standards
development process by participating on relevant industry standards
committees. However, DOE reiterates that the industry test standard
development process cannot supplant the Department's test procedure
rulemaking process, because DOE must still ensure that potential
Federal test procedures meet applicable statutory requirements in EPCA
and are compatible with DOE's CC&E regulations.
---------------------------------------------------------------------------
\15\ The National Technology Transfer and Advancement Act of
1995 (``NTTA''), Public Law 104-113, and the Office of Management
and Budget (``OMB'') Circular A-119, Federal Participation in the
Development and Use of Voluntary Consensus Standards and in
Conformity Assessment Activities, both direct Federal agencies to
adopt voluntary consensus standards unless they are inconsistent
with applicable law or otherwise impracticable.
---------------------------------------------------------------------------
Accordingly, for the aforementioned reasons, DOE is clarifying in
appendix A that consensus industry test standards must undergo a
thorough review to ensure that they meet the requirements of EPCA and
are compatible with DOE's CC&E regulations before being adopted as a
Federal test procedure.
E. Finalization of Test Procedures Prior to Issuance of a Standards
Proposal
In the February 2020 Final Rule, DOE adopted at section 8(d) of
appendix A, a requirement that Federal test procedures establishing
methodologies used to evaluate new or amended energy conservation
standards be finalized at least 180 days prior to publication of a NOPR
proposing new or amended energy conservation standards. 85 FR 8626,
8678, 8708. DOE explained that this approach would allow stakeholders
time to gain familiarity with the new or amended test procedure prior
to commenting on any proposed standards.
Upon further review, DOE has determined that, similar to other
provisions in the February 2020 Final Rule, a one-size-fits-all
requirement to finalize new or amended test procedures 180 days before
proposing standards does not allow DOE to account for the particular
circumstances of a rulemaking and may result in unnecessary delays. For
instance, as noted in the April 2021 NOPR, some test procedure
amendments may involve only minor modifications that do not change the
measured energy efficiency of a covered product or equipment. 86 FR
18901, 18907-18908. As a result, DOE proposed to remove this 180-day
spacing requirement and revert to the approach previously followed in
the July 1996 Final Rule that test procedure rulemakings be finalized
prior to publication of an energy conservation standards proposal,
which permitted DOE to appropriately adjust the length of time between
the test procedure final rule and an energy conservation standards
proposal. Id. DOE also sought comment on any alternatives to its
proposal, including whether DOE should retain a set period between
finalization of a test procedure and issuance of a standards NOPR. Id.
Comments Supporting DOE's Proposal To Eliminate the Requirement That
Test Procedures Be Finalized at Least 180 Days Prior to Issuance of a
Standards NOPR
Several commenters expressed their support for DOE's proposal in
the April 2021 NOPR. These commenters stated that the 180-day
requirement may not be necessary for all rulemakings and that DOE
should have the flexibility to determine the appropriate period between
finalization of new or amended test procedures and issuance of proposed
standards. (See, e.g., Joint Advocacy Commenters, No. 38 at pp. 4-5;
NEEA, No. 43 at pp. 3-4; CA IOUs, No. 34 at pp. 1, 3-4) Some of the
commenters cited negotiated rulemakings, where test procedures and
energy conservation standards are often considered and issued in
parallel, as an area where the 180-day requirement delays
implementation of consensus standards without providing a corresponding
benefit. (See, e.g., Joint Advocacy Commenters, No. 38 at pp. 4-5;
NEEA, No. 43 at pp. 3-4) Commenters also argued that minor
modifications to a test procedure may not warrant a lengthy delay
before issuance of a standards proposal. (See, e.g., NEEA, No. 43 at
pp. 3-4; Joint Environmentalist Commenters, No. 31 at p. 2) Finally,
Joint Advocacy Commenters expressed concern that the 180-day
requirement could lead to DOE foregoing certain test procedure
corrections in order to avoid delaying rulemakings. (Joint Advocacy
Commenters, No. 38 at pp. 4-5)
Comments Supporting the Requirement That Test Procedures Be Finalized
at Least 180 Days Prior to Issuance of a Standards NOPR
Several commenters asserted that the 180-day period is necessary to
allow stakeholders the opportunity to conduct testing and gain
familiarity with the new or amended test procedure so as to better
inform their understanding of the impacts of a proposed energy
conservation standard. (See, e.g., AHRI, No. 25 at p. 9; ALA, No. 28 at
p. 3; AGA, No. 33 at p. 5; BWC, No. 24 at p. 2) These commenters also
expressed a variety of other reasons for opposing removal of the 180-
day period between finalization of a test procedure and issuance of a
standards proposal. For instance, Zero Zone opposed eliminating the
180-day spacing between test procedure and energy conservation
standards rules, stating that DOE has not documented any
[[Page 70911]]
delays that would be caused if the 180-day waiting period were to be
applied. The SBA Office of Advocacy noted that small businesses have
limited resources and staff, and in many instances, they do not have
the ability to test their products on-site. According to the SBA Office
of Advocacy, small businesses must instead either hire an outside
laboratory to test the products and report back or pull employees from
other tasks to conduct such testing in-house. (SBA Office of Advocacy,
No. 14 at p. 5) BWC argued that the benefits of having a finalized test
procedure far outweigh any delay in complying with statutory deadlines,
particularly in light of EPCA's anti-backsliding provisions. (BWC, No.
24 at p. 2)
Comments Supporting Alternatives to DOE's Proposal
Numerous commenters recognized that a 180-day period between
finalization of a test procedure and issuance of a standards NOPR is
not always necessary. However, these commenters did not agree with
DOE's proposal to eliminate the 180-day period and determine the
appropriate period on a case-by-case basis. Instead, these commenters
suggested a variety of approaches for determining an appropriate length
of time between finalization of a test procedure and issuance of a
standards proposal. For instance, several commenters suggested revising
the relevant section of appendix A to allow DOE to shorten the 180-day
period through some formal mechanism, which would include an
opportunity for stakeholder input. (See, e.g., Carrier, No. 26 at p. 3;
Crown Boiler, No. 10 at pp. 4-5) Other commenters suggested that DOE
should list the limited circumstances under which it would deviate from
the 180-day period. (A.O. Smith, No. 27 at p. 4; Lennox, No. 18 at p.
4) Similarly, if DOE eliminates the requirement for a standardized 180-
day period, ALA requested that DOE provide clear and specific guidance
on when the 180-day period would be warranted. (ALA, No. 28 at p. 4)
Several other commenters urged DOE to retain the 180-day period when
the test procedure is new or makes significant changes that will impact
measured energy use or efficiency. (See, e.g., Lutron, No. 16 at pp. 2,
3-4, Joint Industry Commenters, No. 40 at p. 9; EEI, No. 9 at pp. 64-
65) Nortek acknowledged that there are situations where 180 days is not
necessary (e.g., minor technical corrections to a longstanding test
procedure), and in those cases, the company stated that it would be
supportive of a 90-day minimum. (Nortek, No. 19 at p. 3) Grundfos
recommended that DOE: (1) Include a proposed timeline in each test
procedure NOPR/final rule for input from stakeholders, and (2) conduct
a mandatory webinar for related input to be heard. The company reasoned
that such approach would provide DOE with the flexibility it desires,
while preventing DOE from defining arbitrary timelines without
negotiation. (Grundfos, No. 37 at pp. 1-2) While Goodman expressed
support for retaining the 180-day requirement, Goodman also stated
that, if DOE chooses to modify the 180-day period, the Department
should define the 180-day period as preferred but not mandatory in
appendix A and articulate with specificity and on the record its
reasons for choosing a lesser time period. (Goodman, No. 22 at p. 3)
DOE also received an alternative joint proposal from AHAM, ALA,
Hearth Patio and Barbecue Association (HPBA), NEMA, Plumbing
Manufacturers International (PMI), ASAP, and ACEEE. These stakeholders
suggested that DOE provide a 180-day time period between the
finalization of a new or amended test procedure and the end of the
comment period on the proposed standard. They also specified that DOE
could deviate from the 180-day requirement for negotiated rulemakings
and test procedure changes that are limited to calculation changes
(e.g., use factor or adder) (AHAM et al. Submission, No. 74 at pp. 2-3)
DOE Response to Comments
Commenters uniformly expressed support for finalizing test
procedures prior to proposing new or amended standards. (See, e.g.,
Carrier, No. 26, at p. 3; Lutron, No. 16 at pp. 2, 3-4; CA IOUs, No. 34
at pp. 1, 3-4; NEEA, No. 43 at pp. 3-4; Joint Industry Commenters, No.
40 at p. 8; Whirlpool, No. 9 at p. 36) For example, the CA IOUs
encouraged DOE to complete test procedure final rules before
publication of a NOPR for new or amended energy conservation standards
whenever possible (due to generally better outcomes in both
proceedings). (CA IOUs, No. 34 at pp. 1, 3-4) Where commenters differed
was on the minimum length of time between finalization of a test
procedure and issuance of a standards proposal--and under what
circumstances, if any, that period of time should be shortened (or
lengthened).
With respect to the comments in favor of DOE retaining the 180-day
requirement for all test procedure rulemakings, DOE agrees with the
majority of commenters who recognized that a 180-day period is not
necessary for all test procedure rulemakings (e.g., minor technical
corrections and negotiated rulemakings). As stated throughout this
rulemaking, DOE is amending appendix A to avoid situations where an
inflexible process lengthens a rulemaking without providing a
corresponding benefit. Thus, DOE is not establishing a minimum period
of time between finalization of a test procedure and issuance of a
standards proposal that would be applied across all of the Department's
rulemakings.
Nevertheless, while the majority of commenters recognized that the
180-day period was not necessary for every rulemaking, a large number
of commenters wanted more guidance on circumstances under which DOE
would provide stakeholders with sufficient time to become familiar with
a new or amended test procedure prior to having to comment on a
standards proposal. These commenters typically cited new test
procedures or test procedure amendments that impact measured energy use
as instances necessitating that DOE provide some period of time for
stakeholders to gain familiarity with the test procedure prior to
commenting on any proposed standards. (See, e.g., Joint Industry
Commenters, No. 40 at p. 9; Trane, No. 23 at p. 2)
In response to these comments, DOE first notes that it already
acknowledged in the April 2021 NOPR that there may be circumstances
where a longer rulemaking timeline is necessary to allow stakeholders
time to become familiar with a new or amended test procedure. See 86 FR
18901, 18908. Further, DOE's proposal to revert to the guidance
provided in the 1996 version of Appendix A that test procedures be
finalized prior to issuance of a standards proposal does not prevent
DOE from finalizing test procedures well in advance (i.e., 180 days or
more) of proposing new or amended energy conservation standards.
However, recognizing the importance of this issue to stakeholders,
DOE believes a modified version of its proposal from the April 2021
NOPR can meet the Department's goal of avoiding the inefficiencies and
unnecessary delays of a one-size-fits-all rulemaking approach while
assuring stakeholders they will have sufficient time to gain
familiarity with a new or amended test procedure prior to commenting on
a standards proposal. As such, DOE is adopting the proposal from the
April 2021 NOPR that test procedures be finalized prior to issuing a
standards proposal. However, in response to comments, DOE is also
adopting a
[[Page 70912]]
requirement that new test procedures or significant test procedure
amendments that impact measured energy use or efficiency be finalized
at least 180 days before the end of the comment period of a proposal
for new or amended standards. DOE will state in the test procedure
final rule whether this 180-day provision applies and why--i.e.,
because the test procedure is either new or the amendments impact
measured energy use or efficiency. While DOE is adopting the 180-day
period as requested by several commenters, DOE is tying the 180 days to
the end of the comment period instead of the issuance of the standards
proposal. DOE believes this is a better approach for two reasons.
First, it recognizes that the comment period, which is at least 60
days, also provides stakeholders with an opportunity to gain
familiarity with the new or amended test procedure. And second, it
provides DOE with more flexibility in issuing standards proposals,
which can benefit both DOE and stakeholders. For instance, if DOE needs
to meet a statutory deadline for issuing a standards NOPR, the
Department could choose to issue a standards NOPR with a longer comment
period in order to more quickly issue that NOPR after finalizing a new
or amended test procedure. In addition to helping DOE meet a statutory
deadline, the longer comment period would also give stakeholders more
time to comment on aspects of the standards proposal that are not
directly related to the test procedure. Finally, as suggested in the
AHAM et al. proposal, DOE is adopting exceptions to the 180-day
requirement for negotiated rulemakings and test procedure amendments
that only result in a calculational change. In the first instance,
stakeholders can determine the appropriate period between finalization
of the test procedure and issuance of a standards NOPR as part of their
negotiations. With regards to the second instance, calculational
changes do not require stakeholders to conduct new tests to determine
the effect of the test procedure change on measured energy use or
efficiency.
For the aforementioned reasons, DOE is finalizing the proposal from
the April 2021 NOPR that test procedures be finalized prior to issuance
of a standards proposal, subject to the modifications discussed above
establishing a minimum period of 180 days between the finalization of a
test procedure and the end of the standards NOPR comment period for,
with certain exceptions: (1) New test procedures; and (2) amended test
procedures that impact measured energy use or efficiency.
F. Direct Final Rules
As discussed in the April 2021 NOPR (see 86 FR 18901, 18908-18909),
the Energy Independence Security Act of 2007, Public Law 110-140 (Dec.
19, 2007), amended EPCA, in relevant part, to grant DOE authority to
issue a ``direct final rule'' (``DFR'') to establish energy
conservation standards in appropriate cases. Under this authority, DOE
may issue a DFR adopting energy conservation standards for a covered
product or equipment upon receipt of a joint proposal from a group of
``interested persons that are fairly representative of relevant points
of view (including representatives of manufacturers of covered
products, States, and efficiency advocates),'' provided DOE determines
the energy conservation standards recommended in the joint proposal
conform with the requirements of 42 U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B), as applicable. (42 U.S.C. 6295(p)(4)(A)) While these two
provisions contain many of the requirements DOE typically must satisfy
in issuing an energy conservation standard, such as the prohibition
against setting less-stringent standards (i.e., the ``anti-
backsliding'' requirement), they do not adopt all the requirements of a
typical energy conservation standard rulemaking. For example, 42 U.S.C.
6295(o) does not specify a mandatory time period between promulgation
of an energy conservation standard and the compliance date for that
standard (i.e., compliance period). DOE has looked to the joint
proposals to fill in these necessary details. This process had been
well-received by manufacturers, trade organizations, and energy
efficiency advocates, as it allowed more room for negotiation, which in
turn made it easier for stakeholders to reach a consensus agreement.
February 2020 Final Rule, 85 FR 8626, 8682-8683.
In a departure from this practice, DOE clarified in the February
2020 Final Rule that 42 U.S.C. 6295(p)(4) is a procedure for issuing a
DFR and not an independent grant of rulemaking authority. As such,
under the February 2020 Final Rule, any joint proposal submitted to DOE
under the DFR provision must identify a separate rulemaking authority
such as 42 U.S.C. 6295(m) (amendment of standards) or 42 U.S.C. 6295(n)
(petition for amended standard) and comply with the requirements (e.g.,
compliance periods) listed in that provision. Id. DOE also provided
additional guidance on the Department's interpretation of ``fairly
representative'' and obligations upon receipt of an adverse comment.
Id. at 85 FR 8683-8685.
In the April 2021 NOPR, DOE explained that it is reconsidering
whether these clarifications regarding the DFR process are appropriate
or necessary, for the reasons set forth subsequently. This
reconsideration begins with the language of the statute. The language
in 42 U.S.C. 6295(p)(4) is clear that DOE may issue standards
recommended by interested persons that are fairly representative of
relative points of view as a DFR when the recommended standards are in
accordance with 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as
applicable. There are no other requirements listed, which is consistent
with the unique circumstances of rules issued under the DFR provision.
DOE's overarching statutory mandate in issuing energy conservation
standards is to choose a standard that results in the maximum
improvement in energy efficiency that is technologically feasible and
economically justified--a requirement found in 42 U.S.C. 6295(o).
Many of the other requirements found in EPCA constrain DOE's
discretion in setting standards for the benefit of stakeholders. For
example, mandatory compliance periods are intended to give
manufacturers sufficient lead time to design new products and shift
manufacturing capacity as necessary. Similarly, EPCA provides that
manufacturers shall not be required to apply new standards to a product
with respect to which other new standards have been required during the
prior 6-year period. (42 U.S.C. 6295(m)(4)(B)) But, if manufacturers
agree to a shorter compliance period or two tiers of standards as part
of a consensus agreement submitted under the DFR provision, it would be
odd if DOE were then forced to deny such a proposal based upon
requirements designed to protect the interests of those same
manufacturers. That being said, DOE will still deny such a proposal if
it is not fairly representative of manufacturers' points of view. (42
U.S.C. 6295(p)(4)(A)) Similarly, DOE will also deny such a proposal if
it does not meet applicable criteria in 42 U.S.C. 6295(o), which, among
other things, require DOE to consider the economic impact on
manufacturers (including small manufacturers) and any possible
lessening of competition that may result from imposition of the
proposed standard. As to this latter point, pursuant to EPCA, DOE
receives a written determination from the Attorney General as to the
potential anti-competitive effects from any proposed energy
conservation standard. (See 42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii))
[[Page 70913]]
Issuing standards through a consensus agreement among stakeholders
is different than DOE's normal rulemaking process. There is a
corresponding difference in the statutory criteria that DOE must apply
to each process, one that is made clear by the language in 42 U.S.C.
6295(p)(4). Accordingly, DOE has proposed to eliminate the rigid
requirement that DFR submittals identify a separate rulemaking
authority and instead revert to the Department's prior practice of
evaluating DFR submittals based on the criteria laid out in 42 U.S.C.
6295(p)(4).
As discussed previously, DOE also provided additional guidance on
the Department's interpretation of ``fairly representative'' and
obligations upon receipt of an adverse comment. Upon reconsideration,
DOE believes that the additional guidance may be overly prescriptive in
some circumstances. For instance, the February 2020 Final Rule required
a group submitting a DFR proposal to include larger concerns and small
businesses in the regulated industry/manufacturer community, energy
advocates, energy utilities (as appropriate for the given covered
product or equipment), consumers, and States. 85 FR 8626, 8683. While
this list may be appropriate for some DFR proposals, it is not
universally applicable. For instance, some of DOE's regulated
industries do not have small business manufacturers (e.g., external
power supplies).\16\ DOE also stated it would publish in the Federal
Register any DFR proposal to obtain feedback as to whether the proposal
was submitted by a group that is fairly representative of relevant
points of view. Id. Once again, this may be good practice for some DFR
proposals (e.g., those concerning newly covered products or equipment),
but it may be unnecessary for most DFR proposals. The bulk of DOE's
covered products and equipment have gone through multiple rounds of
rulemakings, and DOE has become very familiar with the relevant points
of view for these covered products and equipment.
---------------------------------------------------------------------------
\16\ See 85 FR 30636, 30648 (May 20, 2020).
---------------------------------------------------------------------------
With respect to DOE's discussion of adverse comments in the
February 2020 Final Rule, DOE largely repeated the requirements listed
in 42 U.S.C. 6295(p)(4)(C). Namely, DOE will withdraw a DFR if one or
more adverse comments may provide a reasonable basis for withdrawing
the rule under 42 U.S.C. 6295(o), 42 U.S.C. 6313(a)(6)(B), or any other
applicable law. The one clarification DOE offered was that the
Department may consider comments as adverse, even if the issue was
brought up previously during the rulemaking process. Id. at 85 FR 8685.
However, this clarification does not offer any insight into how DOE
will determine whether an adverse comment provides a reasonable basis
for withdrawing the rule.
For these reasons, DOE considered whether the guidance contained in
the February 2020 Final Rule concerning DFRs is unnecessary or
redundant to the statutory language in 42 U.S.C. 6295(p)(4) and
proposed to add ``where appropriate'' to clarify that DOE retains the
discretion to determine what ``fairly representative'' means for a
given DFR submission on a case-by-case basis. Regardless of whether the
DFR section in appendix A is retained, deleted, or revised, DOE stated
that it will continue to evaluate DFR proposals in accordance with 42
U.S.C. 6295(p)(4).
DOE requested comments on the merits of its proposed revisions to
the DFR section, as well as any alternative approaches, such as
deletion of or amendments to the section or retention of aspects of
this section. Additionally, DOE sought comment regarding small business
perspectives and related impacts as to the proposed application of the
DFR provision of EPCA.
In response to the April 2021 NOPR, DOE received a considerable
number of comments on its proposal related to DFRs, which were
overwhelmingly supportive of DOE's proposed return to the Department's
historic approach to DFRs that was in place before adoption of the
February 2020 Final Rule. (Hamdi, No. 7 at p. 1; NPCC, No. 12 at p. 5;
Carrier, No. 26 at p. 3; A.O. Smith, No. 27 at p. 5; MHI, No. 32 at pp.
3-4; Nortek, No. 19 at p. 4; Joint Environmentalist Commenters, No. 31
at pp. 6-7; CA IOUs, No. 34 at p. 4; CEC, No. 35 at p. 7; Grundfos, No.
37 at p. 3; Joint Advocacy Commenters, No. 38 at pp. 5-6; Joint
Advocacy Commenters (appendix I), No. 38 at pp. 1, 2, 13-14; NEEA, No.
43 at p. 4; Lennox, No. 18 at p. 7; Goodman, No. 22 at p. 4; Trane, No.
23 at p. 3; Joint Industry Commenters, No. 40 at p. 16) However, there
were a few commenters who opposed DOE's proposal and instead supported
retention of the approach to DFRs contained in the February 2020 Final
Rule. (AGA, No. 33 at p. 6; AFP, No. 36 at p. 2; Anonymous, No. 39 at
p. 1) These comments and their rationale are discussed in further
detail in the paragraphs that follow.
Comments in Support of DOE's Proposal To Return to Its Prior Practice
Regarding the Use of the DFR Provision in EPCA
A number of commenters argued that a return to DOE's prior
interpretation of EPCA's DFR provisions are authorized by and
consistent with the statute's requirements. (Joint Environmentalist
Commenters, No. 31 at pp. 6-7; CEC, No. 35 at p. 7; Joint Advocacy
Commenters, No. 38 at p. 6; A.O. Smith, No. 27 at p. 5) On this point,
the Joint Environmentalist Commenters made the case that EPCA's DFR
provision at 42 U.S.C. 6295(p)(4) expressly authorizes DOE to accept a
proposed standard negotiated by a representative group of stakeholders,
provided that the proposal complies with 42 U.S.C. 6295(o) (residential
products) or 42 U.S.C. 6313(a)(6)(B) (commercial and industrial
products). The Joint Environmentalist Commenters disagreed with DOE's
interpretation in the February 2020 Final Rule that 42 U.S.C.
6295(p)(4) confers no independent grant of rulemaking authority upon
DOE, and, as a result DFRs must satisfy the statutory requirements
associated with another rulemaking authority, e.g., 42 U.S.C. 6295(m)
or 42 U.S.C. 6295(n). Instead, these commenters favored a return to
DOE's prior flexibility in this area (e.g., consideration of different
compliance timelines). (Joint Environmentalist Commenters, No. 31 at
pp. 6-7) Similarly, the CEC supported DOE's proposed interpretation in
the April 2021 NOPR that the direct final rule provision at 42 U.S.C.
6295(p)(4) grants the agency rulemaking authority separate and distinct
from its general authority to adopt energy conservation standards. The
commenter argued that the interpretation of that statutory provision
contained in the February 2020 Final Rule is inconsistent with the
language of the statute and congressional intent to facilitate DFRs.
Consequently, the CEC encouraged DOE to move forward with its proposal.
(CEC, No. 35 at p. 7)
The NPCC reasoned that the direct final rule provision enacted by
Congress was designed with the intent to streamline mutually agreed
upon standards. The NPCC stated that the current rule's requirement
that DOE first identify a separate and independent basis for a given
standards rulemaking adds unnecessary steps and requirements to the
direct final rule process. Consequently, the NPCC supported the removal
of this provision. (NPCC, No. 12 at p. 5) Likewise, Nortek stated that
it disagrees with DOE's decision in the February 2020 Final Rule to
define DFRs as a procedural tool and to eliminate the use of DFRs in
negotiated rulemaking. (Nortek, No. 19 at p. 4) Trane and Lennox also
agreed with DOE's proposal to eliminate the requirement for a separate
rulemaking
[[Page 70914]]
authority and to implement its DFR authority on a case-by-case basis,
evaluating consensus proposal submissions based on the criteria laid
out in 42 U.S.C. 6295(p)(4). (Trane, No. 23 at p. 3; Lennox, No. 18 at
p. 6)
Most of the commenters favored a return to DOE's prior approach to
DFRs because of the increased flexibility that approach provided.
(Joint Environmentalist Commenters, No. 31 at pp. 6-7; CA IOUs, No. 34
at p. 4; Joint Advocacy Commenters, No. 38 at p. 6; Joint Advocacy
Commenters (Appendix I), No. 38 at pp. 1, 2, 13-14) For example,
Carrier characterized DOE's earlier direct final rule process as an
efficient, cost-effective regulatory process for both the government
and stakeholders, a point echoed by MHI and NEEA. (Carrier, No. 26 at
p. 3; MHI, No. 32 at pp. 3-4; NEEA, No. 43 at p. 4) A.O. Smith stated
that applying the DFR authority in a flexible manner, so as to permit
consideration of measures such as alternative compliance dates, dual
metrics, phased-in compliance by product/equipment class, and two-
tiered standards, is both permitted under EPCA and essential to
maintain as part of the Program's structure. The company supports the
use of the DFR authority in this manner because it affords
manufacturers with flexibility for consensus-based or negotiated
solutions. (A.O. Smith, No. 27 at p. 5) The CA IOUs made a similar
point, arguing that DOE's pre-2020 Final Rule guidance for direct final
rules may lead to more nuanced and detailed approaches to test
procedures and energy conservation standards through utilization of the
mechanisms cited by A.O. Smith. (CA IOUs, No. 34 at p. 4) MHI added the
DFRs can incentivize the consensus process. (MHI, No. 32 at pp. 3-4)
Citing the ability to utilize those same mechanisms, the Joint
Advocacy Commenters reasoned that many of the other EPCA requirements
beyond those included in 42 U.S.C. 6295(o) and 42 U.S.C. 6313(a)(6)(B)
are for the benefit of stakeholders, but they are arguably unnecessary
in the context of DFRs. For example, the Joint Advocacy Commenters
stated that other EPCA provisions specify lead times for compliance so
as to provide manufacturers with sufficient time to comply with a new
standard, but such considerations are not necessary when manufacturers
negotiate an agreement subjecting themselves to a different compliance
date. (Joint Advocacy Commenters, No. 38 at pp. 5-6; Joint Advocacy
Commenters (Appendix I), No. 38 at pp. 1, 2, 13-14)
There was considerable discussion and overlap of issues between
appendix A's DFRs and negotiated rulemaking provisions, because in the
past, most DFRs have arisen out of that type of rulemaking proceeding.
A number of commenters stressed that in contrast to the restriction in
the February 2020 Final Rule, negotiated rulemakings should once again
be permitted to result in a consensus recommendation that leads to a
DFR. (Grundfos, No. 37 at p. 3; NEEA, No. 43 at p. 4; Lennox, No. 18 at
p. 7) Generally, commenters pointed to the statutory protections
associated with both DFRs and negotiated rulemaking as adequate to
ensure the fairness, transparency, and integrity of the process, as
explained subsequently.
For example, NEEA noted how the DFR provisions already provide
several safeguards, including a requirement that the consensus
recommendation for standards be fairly representative of relevant
points of view and the potential for a DFR to be withdrawn upon receipt
of one or more adverse comments (leading to further notice and comment
rulemaking). Particularly where there is a consensus agreement, NEEA
argued that further comment beyond that provided by the DFR would be
redundant. (NEEA, No. 43 at p. 4) Similarly, MHI asserted that the
interested persons that are fairly representative of relevant points of
view who participate in that process will have taken the time during or
in advance of the rulemaking to exchange views and reach a common or
joint understanding of what level of energy efficiency or energy use
will reasonably strike a balance between benefits and burdens. (MHI,
No. 32 at pp. 3-4). Consequently, MHI argued that DOE should give
substantial weight to the consensus views of these participants in
light of their competing interests. (MHI, No. 32 at p. 4) Furthermore,
the Joint Industry Commenters stated that, ``[a]t a minimum, the
`relevant points of view' are likely to reflect the views of the
persons who will bear the heaviest burden of implementing the
regulatory mandate and the responsibility for certifying compliance
(manufacturers, specifically those who make and use the covered
product), the persons who are active in promoting the maximum
improvement in energy savings (energy efficiency advocates), and
representatives of the country's citizens who are expected to realize
net benefits from a mandatory rule (States).'' (Joint Industry
Commenters, No. 40 at p. 16)
However, the Joint Advocacy Commenters cautioned that the February
2020 Final Rule's additional guidance regarding what constitutes a
``fairly representative'' group of stakeholders and its clarification
regarding adverse comments may be overly prescriptive, a position in
agreement with DOE's April 2021 NOPR. (Joint Advocacy Commenters, No.
38 at pp. 5-6; Joint Advocacy Commenters (appendix I), No. 38 at pp. 1,
2, 13-14) Along these lines, Lennox also warned that appendix A should
not go further than the statutory language regarding participants
(i.e., manufacturers, States, and efficiency advocates) to also include
``energy utilities, consumers,'' per the February 2020 Final Rule.
Instead, Lennox stated that it supports amending appendix A to include
the language ``where appropriate'' regarding parties, thereby avoiding
any unnecessary constraints to the DFR process. (Lennox, No. 18 at pp.
6-7)
In a more neutral posture, NAFEM took the position that this is not
a critical issue, arguing that it is not overly concerned either with
DOE maximizing its use of DFR when issues are routine and non-
controversial, or even to reflect the results of a well-conducted
negotiated rulemaking, so long as DOE can overcome the other statutory
issues it identifies with such negotiated rulemakings. (NAFEM, No. 30
at pp. 6-7)
A few commenters provided suggestions for potential process
improvements. For example, although Grundfos supported DOE's proposal
that a negotiated rulemaking may culminate in a term sheet recommending
a DFR, the commenter suggested that before such recommendation is
accepted, DOE should be required to publish a determination (with
supporting reasoning) that the Appliance Standards and Rulemaking
Federal Advisory Committee (ASRAC) Working Group meets the EPCA
requirement to be ``fairly representative of relevant points of view.''
(Grundfos, No. 37 at p. 3)
The Joint Advocacy Commenters stated that although they have no
qualms about retaining the DFR section of appendix A with the
modifications proposed, they alternatively support removal of that
section, because the statute already provides sufficient guidance
regarding DOE's DFR authority. (Joint Advocacy Commenters, No. 38 at p.
6)
Comments Opposing DOE's Proposal To Return To Its Prior Practice
Regarding the Use of the DFR Provision in EPCA
Three commenters provided dissenting views in opposition to DOE's
proposal regarding DFRs as set forth in the April 2021 NOPR. (AGA, No.
33 at p. 6; AFP, No. 36 at p. 2; Anonymous,
[[Page 70915]]
No. 39 at p. 1) These commenters largely supported the approach to DFRs
presented in the February 2020 Final Rule, for the reasons that follow.
AFP supported the reasoning DOE provided in its 2020 Final Rule
indicating that the DFR statutory provision does not provide an
independent grant of rulemaking authority (i.e., outlining its own set
of substantive requirements when establishing or amending a standard)
but is instead only a procedural process for issuing a standard
authorized under another provision of EPCA. In AFP's view, nothing in
EPCA permits DOE to interpret the DFR provision as a means to evade
EPCA's requirements with respect to compliance periods, energy
efficiency metrics, or other factors. (AFP, No. 36 at p. 2) An
anonymous commenter expressed similar views, quoting extensively from
that portion of the February 2020 Final Rule final rule making the case
that the DFR provision does not create any additional flexibility with
regard to such statutory requirements. (Anonymous, No. 39 at p. 1)
AGA stated that the February 2020 Final Rule contains appropriate
and necessary clarifications and requirements to help ensure that
negotiated rulemakings and direct final rules are treated distinctly
from each other and not conflated. (AGA, No. 33 at p. 6) Rather than
making a broad change, AGA suggested that it would be preferable for
DOE to allow for divergences from the current set of requirements where
the need for such divergences is appropriately substantiated by DOE. It
added that a DFR and its accompanying process should be consistent with
EPCA and the APA and that since a DFR is issued without prior notice
and comment, the process for these rules should only be used when DOE
has deemed that rule to be routine or noncontroversial in accordance
with the relevant statutory requirements. (AGA, No. 33 at p. 6)
DOE Response to Comments
After careful consideration of these comments, DOE has decided to
adopt the identified changes to its DFR process along the lines
proposed in the April 2021 NOPR. In essence, DOE has concluded that it
is appropriate to return to its historic practice for DFRs in place
prior to the February 2020 Final Rule. DOE agrees with the commenters
who argued that the February 2020 Final Rule's interpretation of EPCA's
DFR provision (i.e., as a purely procedural one) is not the best
reading of the statute, and DOE disagrees with those commenters such as
AFP and AGA, who support the opposite statutory reading. Instead, DOE
is reverting to its longstanding interpretation that the DFR provision
conveys upon DOE a substantive grant of rulemaking authority, thereby
allowing stakeholders to negotiate over more aspects of the energy or
water conservation standard, e.g., compliance periods, so long as the
requirements of 42 U.S.C. 6295(o) (and 42 U.S.C. 6313(a)(6)(B), as
applicable) are met.
DOE has determined that the February 2020 Final Rule imposed
certain unnecessary restrictions upon the use of DFRs, thereby limiting
DOE's flexibility, program efficiency, and the usefulness of this
important regulatory tool provided by Congress. In the past, DFRs--
arising from both consensus agreement submissions and negotiated
rulemakings--have frequently utilized measures such as alternative
compliance dates, dual metrics, phased-in compliance by product/
equipment class, and two-tiered standards. These measures have
typically resulted in greater overall energy savings more quickly, an
outcome which the Department finds consistent with the energy-saving
purposes of EPCA, and DOE agrees with MHI that the Department should
give such consensus recommendations appropriate weight.
In providing a streamlined process for DFRs, Congress built in
certain safeguards in the relevant statutory provision, namely the
requirement that a joint statement recommending an energy or water
conservation standard must be ``fairly representative of relevant
points of view (including representatives of manufacturers of covered
products, States, and efficiency advocates)'' and the potential for
withdrawal of a DFR upon receipt of one or more adverse comments. (42
U.S.C. 6295(p)(4)(A) and (C)) However, because each rulemaking
proceeding is different (in terms of both issues and stakeholders), DOE
has concluded that it is beneficial for the agency to assess
representativeness and any adverse comments on a case-by-case basis.
For example, if there are no small business manufacturers producing a
certain covered product, that should not preclude consideration of a
consensus agreement or a negotiated rulemaking leading to a DFR.
Unfortunately, in seeking to clarify DOE's DFR process, the February
2020 Final Rule inadvertently imposed a one-size-fits-all regime that
may not be appropriate for all proceedings.
DOE is not adopting the suggestion of Grundfos that before such a
consensus recommendation is accepted, the Department should be required
to publish a determination (with supporting reasoning) that an ASRAC
Working Group meets the EPCA requirement to be ``fairly representative
of relevant points of view.'' If an interested party has concerns as to
representativeness, this issue may be addressed in a comment on the DFR
(potentially as an ``adverse'' comment). Particularly given the
numerous statutory deadlines DOE faces for energy conservation
rulemakings, the agency does not find it reasonable to put in place a
separate comment opportunity for this narrow issue, as a consolidated
comment opportunity would suffice and serve the same purpose.
Thus, in this final rule, DOE is retaining the expanded list of
potentially representative parties (i.e., beyond the statutorily
required manufacturers, States, and efficiency advocates) but adding
``where appropriate'' in recognition of the fact that there is no set
group of relevant points of view across all rulemakings. DOE
anticipates that such an approach will encourage consensus agreement
and DFRs, consistent with the requirements of EPCA. Similarly, DOE is
removing discussion of adverse comments from appendix A, so as not to
limit the Department's ability to consider the merits of such comments
on a case-by-case basis.
In addition, DOE is also returning to its historic practice that a
negotiated rulemaking may result in a term sheet with recommendations
culminating in a DFR. (For further discussion of negotiated rulemaking,
see section G of this final rule.) The Department has concluded that
the contrary position taken in the February 2020 Final Rule was an
overly restrictive interpretation not compelled by EPCA or the NRA.
Upon further consideration, DOE now sees the applicable provisions of
these two statutory sources can be read in harmony to allow for DFRs to
arise from such proceedings, a result consistent with 5 U.S.C. 561,
Purpose, of the NRA which states, ``Nothing in this subchapter shall be
construed as an attempt to limit innovation and experimentation with
the negotiated rulemaking process or with other innovative rulemaking
procedures otherwise authorized by law.'' DOE does not agree with the
more restrictive approach recommended by the AGA, because it could
unnecessarily limit use of the provision Congress placed in statute.
Consequently, DOE is clarifying that a negotiated rulemaking can result
in a DFR.
DOE notes that even if the position taken in the February 2020 rule
was not erroneous, as a matter of policy, a
[[Page 70916]]
negotiated rulemaking can still result in a direct final rule. DOE's
independent (and separate) authority to initiate a direct final rule
does not preclude the possibility that it may be the product of a
negotiated rulemaking. The consensus agreement contemplated under DOE's
authority under 42 U.S.C. 6295(p)(4) only requires that DOE receive a
joint statement from specified interested parties and that the
recommended standard(s) be in accordance with 42 U.S.C. 6295(o) or 42
U.S.C. 6313(a)(6)(B), as applicable.
For the aforementioned reasons, DOE is finalizing its proposed
revisions to the DFR section of appendix A, thereby restoring
flexibility to the process and allowing the Department to tailor its
approach to the needs of individual energy conservation standard or
test procedure rulemakings on a case-by-case basis. DOE concludes that
retention of a revised DFR section as part of appendix A will provide
additional clarity for interested parties.
G. Negotiated Rulemaking
As discussed in the April 2021 NOPR (see 86 FR 18901, 18909-18911),
the Department adopted a new section 11, Negotiated Rulemaking Process,
in the February 2020 Final Rule to set forth the procedures that DOE
would follow when using negotiated rulemaking under the Appliance
Standards Program. 85 FR 8626, 8708-8709. These provisions discussed
DOE's historical use of negotiated rulemaking, along with a few
modifications to the agency's past approach. 85 FR 8626, 8685-8686. As
that final rule explained, negotiated rulemaking is a process by which
an agency attempts to develop a consensus proposal for regulation in
consultation with interested parties, thereby addressing comments from
stakeholders before issuing a proposed rule. This process is conducted
in accordance with the requirements of the NRA. To facilitate potential
negotiated rulemakings, DOE established the Appliance Standards and
Rulemaking Federal Advisory Committee (``ASRAC'') to comply with the
Federal Advisory Committee Act, Public Law 92-463 (5 U.S.C. App. 2). As
part of the DOE process, working groups have been established as
subcommittees of ASRAC, from time to time, for specific products, with
one member from the ASRAC committee attending and participating in the
meetings of the specific working group. Ultimately, the working group
reports to ASRAC, and ASRAC itself votes on whether to make a
recommendation to DOE to adopt a consensus agreement. The negotiated
rulemaking process allows real-time adjustments to the analyses as the
working group is considering them. Furthermore, it allows parties with
differing viewpoints and objectives to negotiate face-to-face regarding
the terms of a potential standard. Additionally, it encourages
manufacturers to provide data for the analyses in a more direct manner,
thereby helping to better account for manufacturer concerns. DOE
recognizes the value of this process and encourages submission of joint
stakeholder recommendations.
The February 2020 Final Rule also discussed the following key
points related to negotiated rulemaking at 85 FR 8626, 8685:
Negotiated rulemakings will go through the ASRAC process
outlined above, and the appropriateness of a negotiated rulemaking for
any given rulemaking will be determined on a case-by-case basis.
In making this determination, DOE will use a convener to
ascertain, in consultation with relevant stakeholders, whether review
for a given product or equipment type would be conducive to negotiated
rulemaking, with the agency evaluating the convener's recommendation
before reaching a decision on such matter.
The following five factors militate in favor of a
negotiated rulemaking: (1) Stakeholders have commented in favor of
negotiated rulemaking in response to the initial rulemaking notice; (2)
the rulemaking analysis or underlying technologies in question are
complex, and DOE can benefit from external expertise and/or real-time
changes to the analysis based on stakeholder feedback, information, and
data; (3) the current standards have already been amended one or more
times; (4) stakeholders from differing points of view are willing to
participate; and (5) DOE determines that the parties may be able to
reach an agreement.
If a negotiated rulemaking is initiated, a neutral and
independent facilitator, who is not a DOE employee or consultant, shall
be present at all ASRAC working group meetings.
DOE will set aside a portion of each ASRAC working group
meeting to receive input and data from non-members of the ASRAC working
group.
Finally, a negotiated rulemaking in which DOE participates
under the ASRAC process will not result in the issuance of a DFR, and
further, any potential term sheet upon which an ASRAC working group
reaches consensus must comply with all of the provisions of EPCA under
which the rule is authorized.
After further consideration, DOE tentatively determined in the
April 2021 NOPR that further changes to its approach to negotiated
rulemaking are necessary and appropriate. Although section 11 of
appendix A largely mirrors the process DOE has followed when the
Department has determined, on a case-by-case basis, that such
alternative rulemaking procedures would be useful to supplement the
normal notice-and-comment rulemaking process, DOE proposed in the April
2021 NOPR to make certain modifications to the process articulated in
that section. On a number of points, DOE proposed to revert to the
approach it employed prior to promulgation of the February 2020 Final
Rule. The following paragraphs outline the proposed changes from the
April 2021 NOPR.
First, DOE would clarify that although the Department has
frequently used facilitators and considered whether to use convenors in
past negotiated rulemakings, the use of such individuals is left to
agency discretion and is not required under the NRA (see 5 U.S.C.
563(b)). A ``convenor'' performs the task of canvassing various
interested parties regarding the potential and feasibility of achieving
consensus in a particular matter. In contrast, a ``facilitator'' helps
guide the discussion among the participants to a negotiated rulemaking.
While DOE recognizes the value of using a convenor and/or a facilitator
in certain cases, there are also instances where DOE can adequately
assess whether a given situation is ripe for a consensus-based approach
through negotiated rulemaking. These instances may occur where DOE has
accumulated years or decades of experience with setting standards with
a particular product or equipment, or where DOE is approached by
concerned stakeholders. In those instances, it may not be necessary to
expend the time and/or resources associated with the use of a convenor.
Consequently, DOE proposed to eliminate the requirement for use of a
convenor and a facilitator and to instead retain discretion to utilize
the services of such individuals in appropriate cases. This change in
approach would allow the agency to conserve resources and avoid delay
where such services are not necessary.
Second, DOE proposed that the list of factors militating in favor
of a negotiated rulemaking, as currently articulated at section
11(a)(3) of appendix A, are neither mandatory nor exclusive. The NRA
already sets forth factors for consideration at 5 U.S.C. 563(a).
Because the factors set forth in section 11(a)(3) of appendix A may not
be appropriate in all cases, DOE proposed
[[Page 70917]]
to no longer be bound by this list when determining whether it is
appropriate to convene a negotiated rulemaking. Instead, the Department
proposed to consider the factors articulated under 5 U.S.C. 563(a), as
well as any other considerations relevant to the specific product/
equipment proceeding in question.
Third, DOE proposed to revert to its prior approach, which would
allow for a negotiated rulemaking to result in a term sheet
recommending promulgation of a DFR under 42 U.S.C. 6295(p)(4). (See
section III.F of this document for a more complete discussion of DFRs.)
DOE tentatively concluded that the approach adopted in the February
2020 Final Rule (i.e., that a negotiated rulemaking must result in a
proposed rule followed by a final rule) was an overly restrictive
reading of the NRA. While 5 U.S.C. 563(a) discusses issuance of a
proposed rule and a final rule, 42 U.S.C. 6295(p)(4) (under EPCA)
already mandates publication of a proposed rule simultaneously with a
DFR--and in the event of an adverse comment that may provide a
reasonable basis for withdrawal, DOE is required to conduct further
rulemaking under the proposed rule, proceeding to a final rule, if
appropriate. (42 U.S.C. 6295(p)(4)(C)(i)(II)) Furthermore, at 5 U.S.C.
561, Purpose, the NRA states, ``Nothing in this subchapter shall be
construed as an attempt to limit innovation and experimentation with
the negotiated rulemaking process or with other innovative rulemaking
procedures otherwise authorized by law.'' In light of the above, DOE
has tentatively concluded that these relevant legal authorities can be
read in harmony and do not preclude the possibility of a negotiated
rulemaking that results in a recommendation to implement the body's
consensus through a DFR. Accordingly, DOE proposed to revert to its
prior position on this topic.
In light of these proposed modifications, DOE tentatively concluded
that section 11 of the revised appendix A would become largely
redundant of the NRA requirements to which the agency is already
subject, and therefore, the Department found section 11 to be
unnecessary and proposed its removal. DOE noted, however, that its
proposal to remove this section from appendix A in no way reflected a
change in the Department's perception of the value of negotiated
rulemaking or its intention to use negotiated rulemaking in appropriate
cases. Similarly, this proposal was not expected to affect DOE's
practice of providing opportunities for public comment and access to
working group documents and meetings/webinars throughout the negotiated
rulemaking process. DOE requested comments on the merits of this
proposed approach including comments regarding the proposed complete
removal of section 11, as well as any alternatives to this proposal,
such as amendments or revisions to the section or retention of aspects
of section 11. See generally April 2021 NOPR 86 FR 18901, 18909-18911.
In response to the April 2021 NOPR, DOE received a considerable
number of comments on its proposal related to the topic of negotiated
rulemaking, which like the comments on the proposed DFR provisions,
were overwhelmingly supportive of both the negotiated rulemaking
mechanism itself and DOE's proposal to return to the Department's
historic approach to such rulemakings that was in place before adoption
of the February 2020 Final Rule. (Hamdi, No. 7 at p. 1; NPCC, No. 12 at
p. 5; Carrier, No. 26 at p. 3; ALA, No. 28 at p. 4; CEC, No. 35 at p.
7; Joint Advocacy Commenters, No. 38 at p. 7; Joint Advocacy Commenters
(appendix I), No. 38 at pp. 1, 2, 15; NEEA, No. 43 at p. 4; Lennox, No.
18 at pp. 8-9; Goodman, No. 22 at p. 3; Nortek, No. 19 at p. 4; CEC,
No. 35 at p. 7; CA IOUs, No. 34 at p. 4) A small minority of commenters
either favored the approach to negotiated rulemaking contained in the
February 2020 Final Rule or otherwise expressed concern with the
proposal set forth in the April 2021 NOPR. (AGA, No. 33 at p. 6; MHI,
No. 32 at pp. 1-2) All of these comments and their rationale are
discussed in further detail in the paragraphs that follow.
Comments in Support of DOE's Proposal Regarding Negotiated Rulemaking
Commenters generally agreed that DOE's use of negotiated
rulemakings has yielded substantial benefits. For example, ALA stated
that negotiated rulemakings implemented through DOE's ASRAC process
have produced significant energy savings by allowing a collaborative
effort among interested parties that can be faster, more transparent,
and less contentious than the normal rulemaking process. (ALA, No. 28
at p. 4)
A number of commenters favored a return to DOE's prior practice
regarding negotiated rulemaking because of the increased flexibility
that approach provided. On this point, the Joint Environmentalist
Commenters generally opposed what they characterized as the
unnecessarily strict limits and restrictions related to negotiated
rulemaking in the February 2020 Final Rule, beyond the requirements of
the NRA, so these commenters expressed support for returning
flexibility to the process for negotiated rulemakings. (Joint
Environmentalist Commenters, No. 31 at pp. 6-7; CA IOUs, No. 34 at p.
4) The CA IOUs argued that the use of negotiated rulemaking (in
combination with DFRs) offers flexibility and can lead to more nuanced
and detailed approaches to test procedures and standards, such as
staged standards, different compliance dates, and multiple efficiency
standards. The CA IOUs added that it has been their experience that
direct negotiations between stakeholders has resulted in energy
conservation standards that are quicker and easier for industry to
implement and that save more energy overall than would have been
achievable through the conventional rulemaking process. (CA IOUs, No.
34 at p. 4) The CEC added that a reversion back to DOE's prior,
effective negotiated rulemaking practice is based on and consistent
with the requirements of the NRA. (CEC, No. 35 at p. 7) GEA described
negotiated rulemaking with direct final rules as a powerful tool for
fast progress that reduce the use of DOE resources. GEA added that
negotiated rulemaking offers all stakeholders an opportunity for
increased control, decreases the likelihood of litigation, and provides
an opportunity for solutions outside the scope of EPCA's analytical
framework and for the consideration and resolution of standards and
test procedures for multiple products at once. (GEA, No. 20 at p. 3)
NEEA also stated that negotiated rulemakings (in combination with DFRs)
can lead to more efficient rulemaking. (NEEA, No. 43 at p. 4)
As discussed previously, there was considerable discussion and
overlap of issues between appendix A's DFR and negotiated rulemaking
provisions, because in the past, most DFRs arose out of that type of
rulemaking proceeding. A number of commenters stressed that in contrast
to the restriction in the February 2020 Final Rule, negotiated
rulemakings should once again be permitted to result in a term sheet
with a consensus recommendation that leads to a DFR. (NPCC, No. 12 at
p. 5; Carrier, No. 26 at p. 4; MHI, No. 32 at p. 3; Nortek, No. 19 at
p. 4; Joint Environmentalist Commenters, No. 31 at pp. 6-7; Joint
Advocacy Commenters, No. 38 at p. 7; Joint Advocacy Commenters
(appendix I), No. 38 at pp. 1, 2, 15; NEEA, No. 43 at p. 4; NAFEM, No.
30 at p. 7; Joint Industry Commenters, No. 40 at p. 15) On this point,
A.O. Smith argued that the
[[Page 70918]]
approach contained in the February 2020 Final Rule undermines DOE's own
authority under EPCA. In A.O. Smith's view, DOE's past application of
the DFR provision to permit a DFR to result from a negotiated
rulemaking has ensured that the DFR's ``fairly representative''
requirement has been met, and the commenter asserted that the
negotiated rulemaking process has been an important advancement and
addition to the Appliance Standards Program, and for these reasons, its
use should continue. A.O. Smith also asserted that applying the DFR
provision in this manner meets the goal of Congress to promote
consensus agreements that reflect broad input from interested parties
who can fashion agreements that best promote the aims of the statute.
It added that when DOE receives a consensus agreement consistent with
the DFR process, that act alone is sufficient to satisfy the statute so
long as 42 U.S.C. 6295(o) (or 42 U.S.C. 6313(a)(6)(B) as applicable)
are met. (A.O. Smith, No. 27 at p. 5)
Commenters also addressed the individual proposed changes regarding
negotiated rulemakings that DOE presented in the April 2021 NOPR. On
the topic of convenors and facilitators, most stakeholders expressed
support for DOE's proposal to make their use discretionary in
appropriate cases. (NPCC, No. 12 at p. 5; Carrier, No. 26 at p. 3;
Grundfos, No. 37 at p. 3) Commenters offered the following views. The
Joint Industry Commenters agreed that a convenor and a facilitator may
not be necessary in every negotiated rulemaking, and the Joint Advocacy
Commenters added that use of facilitators and convenors is not required
under the NRA. (Joint Industry Commenters, No. 40 at p. 15; Joint
Advocacy Commenters, No. 38 at p. 7) Similarly, NAFEM stated that
although it generally acknowledges the benefits of facilitators in
appropriate cases, DOE and stakeholders have experience as to when
engagement of facilitators would be helpful. (NAFEM, No. 30 at p. 7)
However, Grundfos argued that DOE has sufficient experience with these
roles to clearly define in appendix A when their use would be
warranted. (Grundfos, No. 37 at p. 3)
Once again, DOE proposed in the April 2021 NOPR to clarify that the
list of factors militating in favor of a negotiated rulemaking, as
currently articulated at section 11(a)(3) of appendix A, are neither
mandatory nor exclusive. Because the specified factors may not be
appropriate in all cases, DOE reasoned that it should no longer be
bound by this list when determining whether it is appropriate to
convene a negotiated rulemaking, but instead proposed to consider the
factors articulated under 5 U.S.C. 563(a), as well as any other
considerations relevant to the specific product/equipment proceeding in
question. In response, commenters offered the following input. Carrier
and the Joint Advocacy Commenters agreed that the factors favoring a
negotiated rulemaking currently listed in Section 11(a)(3) of appendix
A are not exclusive, and the Joint Advocacy Commenters also pointed out
that they are not mandatory. (Carrier, No. 26 at pp. 3-4; Joint
Advocacy Commenters, No. 38 at p. 7) The Joint Industry Commenters
likewise stated that they have no objection to DOE eliminating the list
of factors in appendix A militating in favor of a negotiated
rulemaking, and, instead considering the factors under 5 U.S.C. 563(a).
(Joint Industry Commenters, No. 40 at p. 15)
Among commenters who generally supported DOE's proposal regarding
negotiated rulemaking, there was mixed reaction as to how best to
address section 11 of appendix A (Negotiated Rulemaking Process). Some
commenters recommended that section 11 should be eliminated (as the
Department proposed in the April 2021 NOPR). (NPCC, No. 12 at p. 5;
Joint Advocacy Commenters, No. 38 at p. 7; NEEA, No. 43 at p. 4) Other
commenters recommended that section 11 should be retained with
revisions. (Carrier, No. 26 at p. 4; Grundfos, No. 37 at p. 3; Joint
Industry Commenters, No. 40 at pp. 14-15; Lennox, No. 18 at pp. 8-9)
Commenters favoring removal of section 11 offered the following
reasoning in support of their position. The Joint Advocacy Commenters
agreed that DOE's proposal complies with the requirements of the NRA
and that given the existing NRA requirements, section 11 of the
February 2020 Final Rule is unnecessary and should be removed. (Joint
Advocacy Commenters, No. 38 at p. 7) NEEA stated its agreement with
DOE's proposal to remove the language related to negotiated rulemaking
from appendix A, arguing that the NRA already sufficiently specifies
that process. The commenter asserted that the negotiated rulemaking
provisions of the February 2020 Final Rule did not clarify that process
and that it may have added unnecessary burden in some cases. (NEEA, No.
43 at p. 4)
Commenters who favored retention of section of 11 with revisions
offered the following reasoning in support of that view, including any
specific language offered. Grundfos argued that a modified version of
section 11 of appendix A should be allowed to remain in the regulation,
because it assists stakeholders in understanding how that process will
work under the NRA. (Grundfos, No. 37 at p. 3) Along those same lines,
Carrier suggested that DOE should expressly state its modified process
for negotiated rulemakings by updating the current text of section 11
to: (1) Provide the flexibility to determine whether a convener or
facilitator is needed; (2) provide the flexibility to consider factors
beyond those currently listed in Section 11(a)(3); and (3) allow the
promulgation of a direct final rule from a negotiated rulemaking.
(Carrier, No. 26, at p. 4) Finally, the Joint Industry Commenters also
stated that DOE should reinsert several aspects of the July 1996 Final
Rule, which include the following: First, DOE should include the
following statement from the July 1996 Final Rule: ``[u]nder the
guidelines in this appendix, DOE will support the development and
submission of consensus recommendations for standards by representative
groups of interested parties to the fullest extent possible.'' Second,
DOE should indicate that it will consider deferring its rulemaking
analysis while a representative group of interested parties works to
develop joint recommendations on standards. Third, DOE should propose a
consensus recommendation submitted by a breadth of interested parties
so long as it met the applicable statutory criteria. Lastly, DOE should
give substantial weight to consensus recommendations. (Joint Industry
Commenters, No. 40 at pp. 14-15) MHI recommended inclusion of nearly
identical language as that suggested by the Joint Industry Commenters.
(MHI, No. 32 at p. 3)
While Lennox is generally supportive of DOE's clarifications
regarding the negotiated rulemaking process, the company suggests
retaining an abbreviated version of appendix A's section on negotiated
rulemaking. (Lennox, No. 18 at p. 8). Lennox offered the following
suggested modifications. First, Lennox stated that DOE could retain the
substance of the first two sentences in section 11(a)(1) indicating
``In those instances where negotiated rulemaking is determined to be
appropriate, DOE will comply with the requirements of the Negotiated
Rulemaking Act (NRA) (5 U.S.C. 561-570) and the requirements of the
Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2). To facilitate
potential negotiated rulemakings, and to comply with the requirements
of the NRA and the FACA, DOE established the Appliance Standards and
Rulemaking
[[Page 70919]]
Federal Advisory Committee (ASRAC).'' Similarly, Lennox argued that DOE
could retain some or all of section 11(a)(4) whereby ``DOE will provide
notice in the Federal Register of its intent to form an ASRAC working
group (including a request for nominations to serve on the committee),
announcement of the selection of working group members (including their
affiliation), and announcement of public meetings and the subject
matter to be addressed.'' Furthermore, according to Lennox, DOE has not
explained why it is deleting appendix A subsections 11(b) and (c), and
the commenters believes these subsections seem appropriate. For
instance, Lennox pointed out that subsection 11(c) merely states ``A
negotiated rulemaking may be used to develop energy conservation
standards, test procedures, product coverage, and other categories of
rulemaking activities.'' Lennox opined that retaining this language
seems a helpful clarification on the potential scope of negotiated
rulemaking. Subsection 11(b) states ``DOE's role in the negotiated
rulemaking process is to participate as a member of a group attempting
to develop a consensus proposal for energy conservation standards [and
the commenter noted that `test procedures or other rulemaking
activities' should be added here] for a particular product/equipment
and to provide technical/analytical advice to the negotiating parties
and legal input where needed to support the development of a potential
consensus recommendation in the form of a term sheet.'' Again, Lennox
argued that this language seems to be a helpful clarification, and the
commenter asserted that DOE does not explain the reasons for deleting
this particular subsection. Moreover, Lennox argued that appendix A
should affirmatively indicate a negotiated rulemaking (e.g., through
ASRC) can lead directly to a DFR. (Lennox, No. 18 at pp. 8-9)
Comments Opposing DOE's Proposal Regarding Negotiated Rulemaking
Finally, some commenters expressed opposition to or concern about
the April 2021 NOPR's proposed changes to the negotiated rulemaking
section of appendix A. Specifically, AGA stated that although it
supports the use of negotiated rulemakings, it had previously sought to
include provisions in appendix A to promote and require full
participation. In AGA's view, DOE's current proposal to remove appendix
A's provisions regarding negotiated rulemakings should not be adopted
because the current set of requirements are critical elements to help
ensure full participation in the negotiated rulemaking process. (AGA,
No. 33 at p. 6) Furthermore, MHI asserted that the negotiated
rulemaking process that it experienced as part of its efforts to assist
in the development of energy conservation standards for manufactured
homes resulted in certain stakeholders having an outsized influence,
which led to skewed outcomes. In MHI's view, the proposed rule that
resulted from that negotiated rulemaking would have had a detrimental
impact on the ability of consumers to afford a manufactured home. MHI
argued that any DOE standard-setting process should be transparent,
allow for input from all affected stakeholders, and provide a
reasonable cost-benefit analysis before engaging in a rulemaking that
can have significant impacts on industry and consumers. (MHI, No. 32 at
pp. 1-2)
DOE's Response to Comments
After careful consideration of these comments, DOE has decided to
adopt the identified changes to its negotiated rulemaking process along
the lines proposed in the April 2021 NOPR. In essence, DOE has
concluded that it is appropriate to return to its historic practice for
negotiated rulemaking in place prior to the February 2020 Final Rule.
DOE agrees with the commenters who argued that in attempting to codify
DOE's existing practice, appendix A provisions in section 11,
Negotiated Rulemaking Process, imposed certain unnecessary restrictions
that were beyond the requirements of the NRA, thereby limiting DOE's
flexibility and the usefulness of this important regulatory tool.
Consequently, through this final rule, DOE is restoring its flexibility
in the context of the negotiated rulemaking process, thereby allowing
the Department to tailor its approach to the needs of individual energy
conservation standard or test procedure rulemakings on a case-by-case
basis.
To be clear, DOE hereby reiterates its strong support for
negotiated rulemakings and consensus agreements in appropriate cases,
and the Department acknowledges the substantial benefits of such
mechanisms mentioned by commenters. DOE and many stakeholders have
considerable experience with negotiated rulemakings, including those
conducted under the auspices of ASRAC. DOE is familiar with the
circumstances under which a negotiated rulemaking is most likely to
have the potential to be successful, and the Department is also aware
when the services of a convenor or facilitatory would be useful.
Consequently, rather than having a mandatory but non-exhaustive list of
factors for consideration for initiation of a negotiated rulemaking,
DOE believes that it is better for the Department to be able to
consider all relevant circumstances, so it has decided that the
February 2020 Final Rule's list of factors is unnecessary and overly
restrictive, and therefore, it should be eliminated. Similarly, because
of limited resources and the need for rulemaking efficiency, DOE has
decided to eliminate the required use of convenors and facilitators as
part of every negotiated rulemaking, but to instead employ such
individuals on a case-by-case basis when the agency determines it
appropriate.
DOE also agrees with the vast majority of commenters that,
consistent with the agency's historic approach, it should be
permissible for a negotiated rulemaking to result in a term sheet with
recommendations that culminate in a DFR. DOE has concluded that
contrary provisions in the February 2020 Final Rule were driven by an
interpretation of EPCA not compelled by the statute. For the reasons
explained in the April 2021 NOPR, DOE has once again concluded that the
DFR provision at 42 U.S.C. 6295(p)(4) constitutes substantive authority
which offers DOE some flexibility for rulemakings with consensus
agreements, as long as the requirements of 42 U.S.C. 6295(o) (or 42
U.S.C. 6313(a)(6)(B) as applicable) are met. When the negotiated
rulemaking process has been combined with a DFR, it has been possible
to implement agreements with staged standards, different compliance
dates, and multiple efficiency standards. Typically, such process has
achieved greater energy savings, done so more expeditiously, and
reduced the risk of litigation. DOE agrees with AGA and MHI as to the
importance of public participation in its negotiated rulemaking
process, and that is why ASRAC meetings are open to the public with
opportunities for non-Working Group member input. DOE does not agree
with MHI that members of any ASRAC negotiating committee have more
influence than others, given the balance of various points of view that
is required by ASRAC. DOE also notes that EPCA itself imposes a
requirement that any joint statement recommending an energy
conservation standard must be fairly representative of relevant points
of view (see 42 U.S.C. 6295(p)(4)(A)). DOE has concluded that these
measures provide adequate safeguard in terms of public participation.
As for the suggestion from Joint Industry Commenters that DOE
reinsert several statements regarding negotiated
[[Page 70920]]
rulemaking from the July 1996 Final Rule, DOE believes that the
statements are either unnecessary or potentially in tension with the
Department's obligations and authority under EPCA. First, the
Objectives section of appendix A already contains a statement
encouraging the development of consensus recommendations for new or
revised standards. DOE has also clarified in the Objectives section
that this support and encouragement extends to consensus
recommendations developed in accordance with the NRA. Second, with
regards to potentially delaying a rulemaking analysis while
stakeholders work to develop a consensus recommendation, DOE believes
it would be ill-advised in many situations to curtail its own
rulemaking analysis in the hopes that stakeholders come to a consensus
agreement in time to meet a statutory deadline. With respect to
affording substantial weight to consensus recommendations and issuing
them as proposals, EPCA already contains criteria for evaluating
consensus proposals. (See 42 U.S.C. 6295(p)(4)(A)) DOE will determine
whether to issue a consensus agreement as a proposal in accordance with
these criteria.
In light of the changes being adopted for negotiated rulemaking as
part of this final rule, DOE sees little reason to retain a separate
section of appendix A dedicated to negotiated rulemaking. What remains
essentially grants DOE the same level of flexibility accorded to it
under the NRA, and it is noted that the Department's past attempt to
clarify its existing process produced some level of confusion.
Furthermore, DOE's prior, longstanding negotiated rulemaking practice
has generally been transparent, open to the public, and well understood
by interested stakeholders. Consequently, for these reasons, DOE has
concluded that inclusion of a section on negotiated rulemaking in
appendix A is unnecessary and susceptible to generating further
confusion, so, therefore, the Department is removing such section
entirely.
H. Other Topics
In addition to receiving comments on the proposed revisions to
appendix A set forth in the April 2021 NOPR, DOE received numerous
other comments related to appendix A. These comments fall primarily
into two categories: (1) Comments related to aspects of appendix A not
addressed in the April 2021 NOPR; and (2) comments challenging the
basis for the rulemaking. Regarding the first category, DOE will
address these comments and the additional revisions proposed in the
July 2021 NOPR in a separate final rule.
As to the second category, several commenters stated that since the
February 2020 Final Rule has only been in effect for a limited period
of time DOE has not had sufficient experience with the rule to
establish a reasonable basis for determining that modifications are
needed to help meet the Department's statutory obligations under EPCA.
(See, e.g., AHRI, No. 25 at p. 7; Crown Boiler, No. 10 at p. 2) DOE
does not agree with these comments. First, many of the effects of the
February 2020 Final Rule on the Department's rulemaking processes were
readily apparent on issuance of the rule. The February 2020 Final Rule
created a one-size-fits-all rulemaking process that was binding on DOE.
Further, the February 2020 Final Rule and the August 2020 Final Rule
added additional, mandatory steps to the rulemaking process that are
not required by any applicable statute. These mandatory provisions,
among other things, added steps to the rulemaking process and required
buffer periods (i.e., delays) between certain rulemaking actions.
Further, since the February 2020 Final Rule became effective on April
14, 2020, DOE has had to conduct additional rulemaking steps (early
assessment RFIs) \17\ and delay other rulemaking actions in accordance
with the binding provisions of the February 2020 Final Rule.
Consequently, these provisions increased both the length of the
rulemaking process and the overall resource burdens on DOE by requiring
additional steps that may not always be needed under the circumstances
of a given rulemaking. In addition, as stated throughout the April 2021
NOPR and this final rule, DOE is not revising appendix A because the
February 2020 Final Rule revisions offered no policy benefits or were
otherwise legally deficient. Instead, DOE is revising appendix A
because it unnecessarily constrains DOE's ability to readily meet its
considerable statutorily-imposed rulemaking obligations under EPCA.
From a practical perspective, applying a mandatory, one-size-fits-all
rulemaking process does not allow the Department to account for the
specific circumstances of a particular rulemaking. For example, the
February 2020 Final Rule required that all test procedures be finalized
at least 180 days prior to issuance of an associated standards
proposal. DOE recognizes that in certain cases a delay between
finalization of a test procedure and issuance of a standards proposal
is necessary for stakeholders to gain familiarity with the new test
procedure before having to comment on proposed standards. However, that
is not the case for all of DOE's test procedure rulemakings, such as
those instances where DOE makes minor, technical amendments to the test
procedure that do not affect measured energy use or efficiency. In such
cases, there is no need to delay a standards proposal for 180 days,
especially when DOE is striving to meet rulemaking deadlines and facing
lawsuits regarding missed rulemaking deadlines.
---------------------------------------------------------------------------
\17\ See ``Energy Conservation Program: Energy Conservation
Standards for Certain Commercial and Industrial Equipment; Early
Assessment Review; Refrigerated Bottled or Canned Beverage Vending
Machines,'' 85 FR 35394 (June 10, 2020); ``Energy Conservation
Program: Test Procedures for Certain Commercial and Industrial
Equipment; Early Assessment Review; Pumps,'' 85 FR 60734 (Sept. 28,
2020).
---------------------------------------------------------------------------
AHRI also disagreed with DOE's statement that appendix A is best
described and utilized as generally applicable guidance that may guide,
but not bind, the Department's rulemaking process. AHRI stated that the
modifications proposed in the April 2021 NOPR are not enough to render
appendix A as an interpretive rule that is not binding on DOE and does
not require notice and comment rulemaking procedures. AHRI went on to
state that appendix A promulgates rules governing specific contexts
such that it amounts to an exhaustive framework designed to cabin its
discretion. (AHRI, No. 25 at pp. 11-12)
DOE disagrees with AHRI's characterization of the revisions made to
appendix A in this document. As DOE has made clear throughout the April
2021 NOPR and this document, the purpose of these revisions to appendix
A is to ensure that DOE is not bound by a rigid, one-size-fits-all
rulemaking process that does not account for the specific circumstances
of a rulemaking. This rule does not cabin DOE's discretion. Instead,
this rule restores DOE's discretion to tailor its rulemaking processes
to, among things, avoid unnecessary delays and burdens on the
Department's rulemaking resources.
Finally, AHRI also argued that DOE's proposal did not consider the
regulated community's reliance on the February 2020 Final Rule's
procedures in the context of ongoing proceedings for test procedures
and energy conservation standards. In its view, the regulated community
has a significant interest in both the regulations relating to test
procedures and energy conservation standards that DOE develops, as well
as the process in promulgating those regulations. These regulatory
actions, it argued, trigger a complex series of
[[Page 70921]]
business and governance decisions by the regulated community requiring
precise planning and budgeting to respond to those actions. AHRI argued
that by proposing to rescind appendix A six months after the rule
itself took effect and without addressing concerns related to the
regulated community's efforts to prepare for adjustments related to the
February and August 2020 Final Rules, DOE has not considered these
serious reliance interests. (AHRI, No. 25 at p. 12) Citing Nat'l Urban
League v. Ross, 977 F.3d 770 (9th Cir. 2020), AHRI emphasized that
there is no specific length of time for which a rule must have been in
place for serious reliance interests to exist, and in certain cases, a
shorter period of time may be sufficient to create those interests in
light of the surrounding circumstances. (AHRI, No. 25 at pp. 12-13) As
a result, AHRI argued that given the link between test procedures and
standards--including the process by which DOE develops them--and the
regulated community's critical organizational and financial obligations
to achieve compliance, it has clearly demonstrated that the regulated
entities have serious reliance interests in the February 2020 Final
Rule. (AHRI, No. 25 at p. 13)
DOE notes that AHRI's stated reliance interests are general in
nature, and at no point does AHRI detail with any specificity what
those specific reliance interests are or their extent. While it is true
that, at the time of the NOPR's publication, appendix A in its current
form had been in effect for a six-month period, this fact alone, in
spite of AHRI's views to the contrary, does not lend itself towards
establishing a particularly strong reliance interest. When coupled with
DOE's clearly stated intention to further modify appendix A to enhance
DOE's flexibility in addressing the considerable rulemaking obligations
imposed by EPCA, any purported reliance interest that interested
parties may claim to have regarding the various provisions that DOE
sought to make in its April 2021 proposal--and that are being finalized
in this document--are further diminished.\18\
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\18\ The effective date for the August 2020 Final Rule was
October 19, 2020, and a NOPR proposing changes to appendix A was
published in the Federal Register on April 12, 2021. Consequently,
while nearly a year has passed since the promulgation of appendix
A's stricter requirements, the public--including all interested
industry parties--have been on notice since the release of the April
2021 NOPR as to DOE's intentions to modify these requirements. As
such, stakeholders have been accorded lead time to modify their
expectations and plans regarding the prospective functioning of
DOE's regulatory process for the Appliance Standards Program and any
reliance on them have been necessarily diminished.
---------------------------------------------------------------------------
To elaborate on these points, DOE notes that in establishing its
reliance interests, AHRI relied upon bare assertions to that effect.
Thus, DOE has been presented with no credible evidence of the reliance
interests or impacts at stake as a result of DOE's change to appendix
A. See, Kiewit Power Construction v. Sec'y, Department of Labor, 959
F.3d 381, 399 (D.C. Cir. 2020) (noting the absence of reliance concerns
where a regulation existed for less than four months). Compare, Encino
Motorcars v. Navarro, 126 S. Ct. 2117, 2126-2127 (2016) (finding
reliance interests on the part of regulated employers were implicated
in an agency's attempt to change that agency's decades-old approach in
an opposite manner). Moreover, to the extent that reliance interests
may exist, DOE does not believe that, based on the current record,
these reliance interests were as significant as AHRI claims. If such
reliance interest did exist and were as significant as AHRI claims, DOE
expects that the commenter would have demonstrated such reliance with
some particularity, but AHRI did not. Presumably, reliance interests
could not form until such time as DOE finalized its changes to appendix
A; at earliest, the clock could have started February 14, 2020, but
even then, stakeholders knew that at least one important aspect of
appendix A (i.e., the comparative analysis of potential standard
levels) was still undergoing ongoing rulemaking, with such provision
not being finalized until August 19, 2020. Further, Executive Order
13990, which directed DOE to consider suspending, revising, or
rescinding the February and August 2020 Final Rules, was issued on
January 20, 2021. Given that DOE once again proposed changes to
appendix A on April 12, 2021, the intervening period arguably left very
little time for significant reliance interests to develop or strongly
attach. Furthermore, as evidenced by the earlier review/revision
process for appendix A, stakeholders were aware that DOE's internal
procedures are subject to change, and such fact should have tempered
their reliance expectations.
DOE also notes that in those instances where rulemakings are
currently underway, the Department is following the existing
requirements of appendix A by providing early assessment requests for
information to the public to help DOE decide its next steps with
respect to test procedure and energy conservation standard rulemaking
activities--thereby mitigating any harm to the reliance interests of
interested parties. DOE also notes that interested parties will have a
transition period (the 30 days between publication of this final rule
and its effective date) in which to adjust to the application of the
version of appendix A being adopted in this final rule. Consequently,
under the current set of circumstances, DOE has seen no evidence of
``serious reliance interests'' regarding a rule that governed DOE's
rulemaking procedures and was only in effect for 6 months. See, FCC v.
Fox Television, 556 U.S. 502, 514-15 (2009) (noting an agency need not
conduct a more searching review beyond explaining its reasons for
reversing course and accounting for any ``serious reliance interests''
that may be present). And assuming arguendo that some limited reliance
interests were found to exist, the agency has clearly stated its
reasons regarding the need to change course consistent with and in
light of the Department's EPCA obligations.
IV. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866
This regulatory action is a significant regulatory action under
section 3(f)(4) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993). Accordingly, this final
regulatory action was subject to review under the Executive order by
the Office of Information and Regulatory Affairs (OIRA) in the Office
of Management and Budget (OMB).
The revisions contained in this final regulatory action are
procedural changes designed to improve DOE's ability to meet its
rulemaking obligations and deadlines under EPCA. These revisions would
not impose any regulatory costs or burdens on stakeholders, nor would
they limit public participation in DOE's rulemaking process. Instead,
these revisions would allow DOE to tailor its rulemaking processes to
fit the facts and circumstances of a particular rulemaking for a
covered product or equipment.
DOE currently has energy conservation standards and test procedures
in place for more than 60 categories of covered products and equipment
and is typically working on anywhere from 50 to 100 rulemakings (for
both energy conservation standards and test procedures) at any one
time. Further, these rulemakings are all subject to deadlines.
Typically, review cycles for energy conservation standards and test
procedures for covered products are 6 and 7 years, respectively.
[[Page 70922]]
(42 U.S.C. 6295(m)(1); 42 U.S.C. 6293(b)(1)) Additionally, if DOE
decides not to amend an energy conservation standard for a covered
product, the subsequent review cycle is shortened to 3 years. (42
U.S.C. 6295(m)(3)(B)) It is challenging to meet these cyclical
deadlines for more than 60 categories of covered products and
equipment. In fact, as previously discussed, DOE is currently facing
two lawsuits that allege DOE has failed to meet rulemaking deadlines
for 25 different consumer products and commercial equipment. In order
to meet these rulemaking deadlines, DOE cannot afford the
inefficiencies that come with a one-size-fits-all rulemaking approach.
For example, having to issue an early assessment RFI followed by an
ANOPR to collect early stakeholder input when a NODA would accomplish
the same purpose unnecessarily lengthens the rulemaking process and
wastes limited DOE resources. Similarly, having to delay issuance of a
proposed energy conservation standard for 180 days because of a minor
modification to a test procedure makes it more difficult for DOE to
meet rulemaking deadlines, while offering no benefit to stakeholders.
The revisions contained in this document allow DOE to eliminate these
types of inefficiencies that lengthen the rulemaking process and waste
DOE resources, while not affecting the ability of the public to
participate in the rulemaking process. Eliminating inefficiencies that
lengthen the rulemaking process allows DOE to more quickly develop
energy conservation standards that deliver the environmental benefits,
including reductions in greenhouse gas emissions, that DOE is directed
to implement under E.O. 13990. Further, the sooner new or amended
energy conservation standards eliminate less-efficient covered products
and equipment from the market, the greater the resulting energy savings
and environmental benefits.
Further, the revisions contained in this document would not dictate
any particular rulemaking outcome in an energy conservation standard or
test procedure rulemaking. DOE will continue to calculate the
regulatory costs and benefits of new and amended energy conservation
standards and test procedures issued under EPCA in future, individual
rulemakings.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by
the Small Business Regulatory Enforcement Fairness Act of 1996)
requires preparation of an initial regulatory flexibility analysis
(IRFA) for any rule that by law must be proposed for public comment and
a final regulatory flexibility analysis (FRFA) for any such rule that
an agency adopts as a final rule, unless the agency certifies that the
rule, if promulgated, will not have a significant economic impact on a
substantial number of small entities. A regulatory flexibility analysis
examines the impact of the rule on small entities and considers
alternative ways of reducing negative effects. Also, as required by
Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the DOE rulemaking process. 68 FR 7990. DOE has made
its procedures and policies available on the Office of the General
Counsel's website at: https://energy.gov/gc/office-general-counsel.
This final rule details generally applicable guidance that may
guide, but not bind, the Department's rulemaking process. The revisions
are intended to improve DOE's ability to meet the obligations and
deadlines outlined in EPCA by allowing DOE to tailor its rulemaking
procedures to fit the specific facts and circumstances of a particular
covered product or equipment, while not affecting the ability of any
interested person, including small entities, to participate in DOE's
rulemaking process. Because this final rule imposes no regulatory
obligations on the public, including small entities, and does not
affect the ability of any interested person, including small entities,
to participate in DOE's rulemaking process, DOE certifies that this
final rule will not have a significant economic impact on a substantial
number of small entities, and, therefore, no final regulatory
flexibility analysis is required. Mid-Tex Elec. Co-Op, Inc. v.
F.E.R.C., 773 F.2d 327 (1985).
C. Review Under the Paperwork Reduction Act of 1995
Manufacturers of covered products/equipment must certify to DOE
that their products comply with any applicable energy conservation
standards. In certifying compliance, manufacturers must test their
products according to the DOE test procedures for such products/
equipment, including any amendments adopted for those test procedures,
on the date that compliance is required. DOE has established
regulations for the certification and recordkeeping requirements for
all covered consumer products and commercial equipment. 76 FR 12422
(March 7, 2011); 80 FR 5099 (Jan. 30, 2015). The collection-of-
information requirement for certification and recordkeeping is subject
to review and approval by OMB under the Paperwork Reduction Act (PRA).
This requirement has been approved by OMB under OMB control number
1910-1400. Public reporting burden for the certification is estimated
to average 30 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
Specifically, this final rule, addressing clarifications to
appendix A itself, does not contain any collection of information
requirement or revisions to existing information collections that would
trigger the PRA.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969,
DOE has analyzed this proposed action in accordance with NEPA and DOE's
NEPA implementing regulations (10 CFR part 1021). DOE has determined
that this rule qualifies for categorical exclusion under 10 CFR part
1021, subpart D, appendix A5 because it is an interpretive rulemaking
that does not change the environmental effect of the rule and meets the
requirements for application of a categorical exclusion. See 10 CFR
1021.410. DOE has also determined that this rule qualifies for
categorical exclusion under 10 CFR part 1021, subpart D, appendix A6
because it is strictly procedural and meets the requirements for
application of a categorical exclusion. See 10 CFR 1021.410. Therefore,
DOE has determined that promulgation of this rule is not a major
Federal action significantly affecting the quality of the human
environment within the meaning of NEPA, and does not require an
Environmental Assessment or an Environmental Impact Statement.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 10,
1999), imposes certain requirements on Federal agencies formulating and
implementing
[[Page 70923]]
policies or regulations that preempt State law or that have federalism
implications. The Executive order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive order also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735. DOE has examined this final rule and has
determined that it will not have a substantial direct effect on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. It will primarily affect the procedure by
which DOE develops proposed rules to revise energy conservation
standards and test procedures. EPCA governs and prescribes Federal
preemption of State regulations that are the subject of DOE's
regulations adopted pursuant to the statute. In such cases, States can
petition DOE for exemption from such preemption to the extent, and
based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) Therefore,
Executive Order 13132 requires no further action.
F. Review Under Executive Order 12988
Regarding the review of existing regulations and the promulgation
of new regulations, section 3(a) of Executive Order 12988, ``Civil
Justice Reform,'' 61 FR 4729 (Feb. 7, 1996), imposes on Federal
agencies the general duty to adhere to the following requirements: (1)
Eliminate drafting errors and ambiguity; (2) write regulations to
minimize litigation; (3) provide a clear legal standard for affected
conduct rather than a general standard; and (4) promote simplification
and burden reduction. Regarding the review required by section 3(a),
section 3(b) of Executive Order 12988 specifically requires that each
executive agency make every reasonable effort to ensure that when it
issues a regulation, the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
agencies to review regulations in light of applicable standards in
sections 3(a) and 3(b) to determine whether they are met or it is
unreasonable to meet one or more of them. DOE has completed the
required review and has determined that, to the extent permitted by
law, this final rule meets the relevant standards of Executive Order
12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. (Pub. L. 104-4, sec. 201 (codified at 2 U.S.C. 1531))
For a proposed regulatory action likely to result in a rule that may
cause the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a proposed ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. (62 FR 12820) (This policy is also available at https://www.energy.gov/gc/office-general-counsel under ``Guidance & Opinions''
(Rulemaking)) DOE examined this final rule according to UMRA and its
statement of policy and has determined that the rule contains neither
an intergovernmental mandate, nor a mandate that may result in the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any year.
Accordingly, no further assessment or analysis is required under UMRA.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This final rule would not have any impact on the autonomy or integrity
of the family as an institution. Accordingly, DOE has concluded that it
is not necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to Executive Order 12630, ``Governmental Actions and
Interference with Constitutionally Protected Property Rights,'' 53 FR
8859 (March 18, 1988), DOE has determined that this final rule would
not result in any takings that might require compensation under the
Fifth Amendment to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review
most disseminations of information to the public under information
quality guidelines established by each agency pursuant to general
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452
(Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446
(Oct. 7, 2002). DOE has reviewed this final rule under the OMB and DOE
guidelines and has concluded that it is consistent with the applicable
policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any proposed significant
energy action. A ``significant energy action'' is defined as any action
by an agency that promulgates or is expected to lead to promulgation of
a final rule, and that: (1) Is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy; or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed
[[Page 70924]]
statement of any adverse effects on energy supply, distribution, or use
should the proposal be implemented, and of reasonable alternatives to
the action and their expected benefits on energy supply, distribution,
and use.
DOE concluded that the regulatory action in this document, which
makes clarifications to appendix A that guides the Department in
proposing energy conservation standards is not a significant energy
action because it would not have a significant adverse effect on the
supply, distribution, or use of energy, nor has it been designated as a
significant energy action by the Administrator of OIRA. Therefore, it
is not a significant energy action, and, accordingly, DOE has not
prepared a Statement of Energy Effects for this final rule.
L. Review Consistent With OMB's Information Quality Bulletin for Peer
Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have or does have a clear and
substantial impact on important public policies or private sector
decisions.'' Id. at 70 FR 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. Generation of this
report involved a rigorous, formal, and documented evaluation using
objective criteria and qualified and independent reviewers to make a
judgment as to the technical/scientific/business merit, the actual or
anticipated results, and the productivity and management effectiveness
of programs and/or projects. The ``Energy Conservation Standards
Rulemaking Peer Review Report,'' dated February 2007, has been
disseminated and is available at the following website:
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences to review DOE's analytical methodologies to ascertain whether
modifications are needed to improve the Department's analyses. The
results from that review are expected later in 2021.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is not a ``major rule''
as defined by 5 U.S.C. 804(2).
V. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Incorporation by reference, Intergovernmental relations, Small
businesses, Test procedures.
Signing Authority
This document of the Department of Energy was signed on November
19, 2021 by Kelly J. Speakes-Backman, Principal Deputy Assistant
Secretary for Energy Efficiency and Renewable Energy, pursuant to
delegated authority from the Secretary of Energy. That document with
the original signature and date is maintained by DOE. For
administrative purposes only, and in compliance with requirements of
the Office of the Federal Register, the undersigned DOE Federal
Register Liaison Officer has been authorized to sign and submit the
document in electronic format for publication, as an official document
of the Department of Energy. This administrative process in no way
alters the legal effect of this document upon publication in the
Federal Register.
Signed in Washington, DC, on November 19, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons stated in the preamble, DOE amends part 430 of
title 10 of the Code of Federal Regulations as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
1. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
0
2. Appendix A to subpart C of part 430 is revised to read as follows:
Appendix A to Subpart C of Part 430--Procedures, Interpretations, and
Policies for Consideration of New or Revised Energy Conservation
Standards and Test Procedures for Consumer Products and Certain
Commercial/Industrial Equipment
1. Objectives
2. Scope
3. Application
4. Setting Priorities for Rulemaking Activity
5. Coverage Determination Rulemakings
6. Process for Developing Energy Conservation Standards
7. Policies on Selection of Standards
8. Test Procedures
9. ASHRAE Equipment
10. Direct Final Rules
11. Principles for Distinguishing Between Effective and Compliance
Dates
12. Principles for the Conduct of the Engineering Analysis
13. Principles for the Analysis of Impacts on Manufacturers
14. Principles for the Analysis of Impacts on Consumers
15. Consideration of Non-Regulatory Approaches
16. Cross-Cutting Analytical Assumptions
1. Objectives
This appendix establishes procedures, interpretations, and
policies to guide the Department of Energy (``DOE'' or the
``Department'') in the consideration and promulgation of new or
revised appliance energy conservation standards and test procedures
under the Energy Policy and Conservation Act (EPCA). This appendix
applies to both covered consumer products and covered commercial/
industrial equipment. The Department's objectives in establishing
these procedures include:
(a) Provide for early input from stakeholders. The Department
seeks to provide opportunities for public input early in the
rulemaking process so that the initiation and direction of
rulemakings is informed by comment from interested parties. DOE will
be able to seek early input from interested parties in determining
whether establishing new or amending existing energy conservation
standards will result in significant savings of energy and is
economically justified and technologically feasible. In the context
of test procedure rulemakings, DOE will be able to seek early input
from interested parties in determining whether--
(1) Establishing a new or amending an existing test procedure
will better measure the energy efficiency, energy use, water use (as
specified in EPCA), or estimated annual
[[Page 70925]]
operating cost of a covered product/equipment during a
representative average use cycle or period of use (for consumer
products); and
(2) Will not be unduly burdensome to conduct.
(b) Increase predictability of the rulemaking timetable. The
Department seeks to make informed, strategic decisions about how to
deploy its resources on the range of possible standards and test
procedure development activities, and to announce these
prioritization decisions so that all interested parties have a
common expectation about the timing of different rulemaking
activities. Further, DOE will offer the opportunity to provide input
on the prioritization of rulemakings through a request for comment
as DOE begins preparation of its Regulatory Agenda each spring.
(c) Eliminate problematic design options early in the process.
The Department seeks to eliminate from consideration, early in the
process, any design options that present unacceptable problems with
respect to manufacturability, consumer utility, or safety, so that
the detailed analysis can focus only on viable design options. DOE
will be able to eliminate from consideration design options if it
concludes that manufacture, installation or service of the design
will be impractical, or that the design option will have a material
adverse impact on the utility of the product, or if the design
option will have a material adverse impact on safety or health. DOE
will also be able to eliminate from consideration proprietary design
options that represent a unique pathway to achieving a given
efficiency level. This screening will be done at the outset of a
rulemaking.
(d) Fully consider non-regulatory approaches. The Department
seeks to understand the effects of market forces and voluntary
programs on encouraging the purchase of energy efficient products so
that the incremental impacts of a new or revised standard can be
accurately assessed and the Department can make informed decisions
about where standards and voluntary programs can be used most
effectively. DOE will continue to be able to support voluntary
efforts by manufacturers, retailers, utilities, and others to
increase product/equipment efficiency.
(e) Conduct thorough analysis of impacts. In addition to
understanding the aggregate social and private costs and benefits of
standards, the Department seeks to understand the distribution of
those costs and benefits among consumers, manufacturers, and others,
as well as the uncertainty associated with these analyses of costs
and benefits, so that any adverse impacts on subgroups and
uncertainty concerning any adverse impacts can be fully considered
in selecting a standard. DOE will be able to consider the
variability of impacts on significant groups of manufacturers and
consumers in addition to aggregate social and private costs and
benefits, report the range of uncertainty associated with these
impacts, and take into account cumulative impacts of regulation on
manufacturers. The Department will also be able to conduct
appropriate analyses to assess the impact that new or amended test
procedures will have on manufacturers and consumers.
(f) Use transparent and robust analytical methods. The
Department seeks to use qualitative and quantitative analytical
methods that are fully documented for the public and that produce
results that can be explained and reproduced, so that the analytical
underpinnings for policy decisions on standards are as sound and
well-accepted as possible.
(g) Support efforts to build consensus on standards. The
Department seeks to encourage development of consensus proposals,
including proposals developed in accordance with the Negotiated
Rulemaking Act (5 U.S.C. 561 et seq.), for new or revised standards
because standards with such broad-based support are likely to
balance effectively the various interests affected by such
standards.
2. Scope
The procedures, interpretations, and policies described in this
appendix apply to rulemakings concerning new or revised Federal
energy conservation standards and test procedures, and related rule
documents (i.e., coverage determinations) for consumer products in
Part A and commercial and industrial equipment under Part A-1 of the
Energy Policy and Conservation Act (EPCA), as amended, except
covered ASHRAE equipment in Part A-1 are governed separately under
section 9 in this appendix.
3. Application
(a) This appendix contains procedures, interpretations, and
policies that are generally applicable to the development of energy
conservation standards and test procedures. The Department may, as
necessary, deviate from this appendix to account for the specific
circumstances of a particular rulemaking. In those instances where
the Department may find it necessary or appropriate to deviate from
these procedures, interpretations or policies, DOE will provide
interested parties with notice of the deviation and an explanation.
(b) If the Department concludes that changes to the procedures,
interpretations or policies in this appendix are necessary or
appropriate, DOE will provide notice in the Federal Register of
modifications to this appendix with an accompanying explanation. DOE
expects to consult with interested parties prior to any such
modification.
(c) This appendix is not intended to, and does not, create any
right or benefit, substantive or procedural, enforceable at law or
in equity.
4. Setting Priorities for Rulemaking Activity
(a) In establishing its priorities for undertaking energy
conservation standards and test procedure rulemakings, DOE will
consider the following factors, consistent with applicable legal
obligations:
(1) Potential energy savings;
(2) Potential social and private, including environmental or
energy security, benefits;
(3) Applicable deadlines for rulemakings;
(4) Incremental DOE resources required to complete the
rulemaking process;
(5) Other relevant regulatory actions affecting the products/
equipment;
(6) Stakeholder recommendations;
(7) Evidence of energy efficiency gains in the market absent new
or revised standards;
(8) Status of required changes to test procedures; and
(9) Other relevant factors.
(b) DOE will offer the opportunity to provide input on
prioritization of rulemakings through a request for comment as DOE
begins preparation of its Regulatory Agenda each spring.
5. Coverage Determination Rulemakings
(a) DOE has discretion to conduct proceedings to determine
whether additional consumer products and commercial/industrial
equipment should be covered under EPCA if certain statutory criteria
are met. (42 U.S.C. 6292 and 42 U.S.C. 6295(l) for consumer
products; 42 U.S.C. 6312 for commercial/industrial equipment)
(b) If DOE determines to initiate the coverage determination
process, it will first publish a notice of proposed determination,
providing an opportunity for public comment of not less than 60
days, in which DOE will explain how such products/equipment that it
seeks to designate as ``covered'' meet the statutory criteria for
coverage and why such coverage is ``necessary or appropriate'' to
carry out the purposes of EPCA. In the case of commercial equipment,
DOE will follow the same process, except that the Department must
demonstrate that coverage of the equipment type is ``necessary'' to
carry out the purposes of EPCA.
(c) DOE will publish its final decision on coverage as a
separate notice, an action that will be completed prior to the
initiation of any test procedure or energy conservation standards
rulemaking (i.e., DOE will not issue any Requests for Information
(RFIs), Notices of Data Availability (NODAs), or any other mechanism
to gather information for the purpose of initiating a rulemaking to
establish a test procedure or energy conservation standard for the
proposed covered product/equipment prior to finalization of the
coverage determination). If DOE determines that coverage is
warranted, DOE will proceed with its typical rulemaking process for
both test procedures and standards. Specifically, DOE will finalize
coverage for a product/equipment at least 180 days prior to
publication of a proposed rule to establish a test procedure.
(d) If, during the substantive rulemaking proceedings to
establish test procedures or energy conservation standards after
completing a coverage determination, DOE finds it necessary and
appropriate to expand or reduce the scope of coverage, a new
coverage determination process will be initiated and finalized prior
to moving forward with the test procedure or standards rulemaking.
6. Process for Developing Energy Conservation Standards
This section describes the process to be used in developing
energy conservation standards for covered products and equipment
other than those covered equipment subject to ASHRAE/IES Standard
90.1.
[[Page 70926]]
(a) Early assessment--(1) Initiating the rulemaking process. As
the first step in any proceeding to consider establishing or
amending any energy conservation standard, DOE will publish a
document in the Federal Register announcing that DOE is considering
initiating a rulemaking proceeding. As part of that document, DOE
will solicit submission of related comments, including data and
information on whether DOE should proceed with the rulemaking,
including whether any new or amended rule would be cost effective,
economically justified, technologically feasible, or would result in
a significant savings of energy. Based on the information received
in response to the notice and its own analysis, DOE will determine
whether to proceed with a rulemaking for a new or amended energy
conservation standard or an amended test procedure. If DOE
determines that a new or amended standard would not satisfy
applicable statutory criteria, DOE would engage in notice and
comment rulemaking to issue a determination that a new or amended
standard is not warranted. If DOE receives sufficient information
suggesting it could justify a new or amended standard or the
information received is inconclusive with regard to the statutory
criteria, DOE would undertake the preliminary stages of a rulemaking
to issue or amend an energy conservation standard, as discussed
further in paragraph (a)(2) of this section.
(2) Preliminary rulemaking documents. If the Department
determines it is appropriate to proceed with a rulemaking, the
preliminary stages of a rulemaking to issue or amend an energy
conservation standard that DOE will undertake will be a Framework
Document and Preliminary Analysis, or an Advance Notice of Proposed
Rulemaking (ANOPR). Requests for Information (RFI) and Notices of
Data Availability (NODA) could be issued, as appropriate, in
addition to these preliminary stage documents.
(3) Continued evaluation of statutory criteria. In those
instances where the early assessment either suggested that a new or
amended energy conservation standard might be justified or in which
the information was inconclusive on this point, and DOE undertakes
the preliminary stages of a rulemaking to establish or amend an
energy conservation standard, DOE may still ultimately determine
that such a standard is not economically justified, technologically
feasible or would not result in a significant savings of energy.
Therefore, DOE will examine the potential costs and benefits and
energy savings potential of a new or amended energy conservation
standard at the preliminary stage of the rulemaking. DOE notes that
it will, consistent with its statutory obligations, consider both
cost effectiveness and economic justification when issuing a
determination not to amend a standard.
(b) Design options--(1) General. Once the Department has
initiated a rulemaking for a specific product/equipment but before
publishing a proposed rule to establish or amend standards, DOE will
typically identify the product/equipment categories and design
options to be analyzed in detail, as well as those design options to
be eliminated from further consideration. During the pre-proposal
stages of the rulemaking, interested parties may be consulted to
provide information on key issues through a variety of rulemaking
documents. The preliminary stages of a rulemaking to issue or amend
an energy conservation standard that DOE will undertake will be a
framework document and preliminary analysis, or an advance notice of
proposed rulemaking (ANOPR). Requests for Information (RFI) and
Notice of Data Availability (NODA) could also be issued, as
appropriate.
(2) Identification and screening of design options. During the
pre-NOPR phase of the rulemaking process, the Department will
typically develop a list of design options for consideration.
Initially, the candidate design options will encompass all those
technologies considered to be technologically feasible. Following
the development of this initial list of design options, DOE will
review each design option based on the factors described in
paragraph (b)(3) of this section and the policies stated in section
7 of this Appendix (i.e., Policies on Selection of Standards). The
reasons for eliminating or retaining any design option at this stage
of the process will be fully documented and published as part of the
NOPR and as appropriate for a given rule, in the pre-NOPR documents.
The technologically feasible design options that are not eliminated
in this screening will be considered further in the Engineering
Analysis described in paragraph (c) of this section.
(3) Factors for screening of design options. The factors for
screening design options include:
(i) Technological feasibility. Technologies incorporated in
commercial products or in working prototypes will be considered
technologically feasible.
(ii) Practicability to manufacture, install and service. If mass
production of a technology under consideration for use in
commercially-available products (or equipment) and reliable
installation and servicing of the technology could be achieved on
the scale necessary to serve the relevant market at the time of the
effective date of the standard, then that technology will be
considered practicable to manufacture, install and service.
(iii) Adverse Impacts on Product Utility or Product
Availability.
(iv) Adverse Impacts on Health or Safety.
(v) Unique-Pathway Proprietary Technologies. Unique-Pathway
Proprietary Technologies. If a design option utilizes proprietary
technology that represents a unique pathway to achieving a given
efficiency level, that technology will not be considered further.
(c) Engineering analysis of design options and selection of
candidate standard levels. After design options are identified and
screened, DOE will perform the engineering analysis and the benefit/
cost analysis and select the candidate standard levels based on
these analyses. The results of the analyses will be published in a
Technical Support Document (TSD) to accompany the appropriate
rulemaking documents.
(1) Identification of engineering analytical methods and tools.
DOE will select the specific engineering analysis tools (or multiple
tools, if necessary, to address uncertainty) to be used in the
analysis of the design options identified as a result of the
screening analysis.
(2) Engineering and life-cycle cost analysis of design options.
DOE and its contractor will perform engineering and life-cycle cost
analyses of the design options.
(3) Review by stakeholders. Interested parties will have the
opportunity to review the results of the engineering and life-cycle
cost analyses. If appropriate, a public workshop will be conducted
to review these results. The analyses will be revised as appropriate
on the basis of this input.
(4) New information relating to the factors used for screening
design options. If further information or analysis leads to a
determination that a design option, or a combination of design
options, has unacceptable impacts, that design option or combination
of design options will not be included in a candidate standard
level.
(5) Selection of candidate standard levels. Based on the results
of the engineering and life-cycle cost analysis of design options
and the policies stated in paragraph (b) of this section, DOE will
select the candidate standard levels for further analysis.
(d) Pre-NOPR Stage--(1) Documentation of decisions on candidate
standard selection.
(i) New or amended standards. If the early assessment and
screening analysis indicates that continued development of a
standard is appropriate, the Department will publish either:
(A) A notice accompanying a framework document and,
subsequently, a preliminary analysis or;
(B) An ANOPR. The notice document will be published in the
Federal Register, with accompanying documents referenced and posted
in the appropriate docket.
(ii) No new or amended standards. If DOE determines at any point
in the pre-NOPR stage that no candidate standard level is likely to
produce the maximum improvement in energy efficiency that is both
technologically feasible and economically justified or constitute
significant energy savings, that conclusion will be announced in the
Federal Register with an opportunity for public comment provided to
stakeholders. In such cases, the Department will proceed with a
rulemaking that proposes not to adopt new or amended standards.
(2) Public comment and hearing. The length of the public comment
period for pre-NOPR rulemaking documents will vary depending upon
the circumstances of the particular rulemaking, but will not be less
than 75 calendar days. For such documents, DOE will determine
whether a public hearing is appropriate.
(3) Revisions based on comments. Based on consideration of the
comments received, any necessary changes to the engineering analysis
or the candidate standard levels will be made.
(e) Analysis of impacts and selection of proposed standard
level. After the pre-NOPR stage, if DOE has determined preliminarily
that a candidate standard level is likely to produce the maximum
improvement in energy efficiency that is both technologically
feasible and economically justified or
[[Page 70927]]
constitute significant energy savings, economic analyses of the
impacts of the candidate standard levels will be conducted. The
Department will propose new or amended standards based on the
results of the impact analysis.
(1) Identification of issues for analysis. The Department, in
consideration of comments received, will identify issues that will
be examined in the impacts analysis.
(2) Identification of analytical methods and tools. DOE will
select the specific economic analysis tools (or multiple tools, if
necessary, to address uncertainty) to be used in the analysis of the
candidate standard levels.
(3) Analysis of impacts. DOE will conduct the analysis of the
impacts of candidate standard levels.
(4) Factors to be considered in selecting a proposed standard.
The factors to be considered in selection of a proposed standard
include:
(i) Impacts on manufacturers. The analysis of private
manufacturer impacts will include: Estimated impacts on cash flow;
assessment of impacts on manufacturers of specific categories of
products/equipment and small manufacturers; assessment of impacts on
manufacturers of multiple product-specific Federal regulatory
requirements, including efficiency standards for other products and
regulations of other agencies; and impacts on manufacturing
capacity, plant closures, and loss of capital investment.
(ii) Private impacts on consumers. The analysis of consumer
impacts will include: Estimated private energy savings impacts on
consumers based on national average energy prices and energy usage;
assessments of impacts on subgroups of consumers based on major
regional differences in usage or energy prices and significant
variations in installation costs or performance; sensitivity
analyses using high and low discount rates reflecting both private
transactions and social discount rates and high and low energy price
forecasts; consideration of changes to product utility, changes to
purchase rate of products, and other impacts of likely concern to
all or some consumers, based to the extent practicable on direct
input from consumers; estimated life-cycle cost with sensitivity
analysis; consideration of the increased first cost to consumers and
the time required for energy cost savings to pay back these first
costs; and loss of utility.
(iii) Impacts on competition. The analysis of impacts on
competition will include an industry concentration analysis.
(iv) Impacts on utilities. The analysis of utility impacts will
include estimated marginal impacts on electric and gas utility costs
and revenues.
(v) National energy, economic, and employment impacts. The
analysis of national energy, economic, and employment impacts will
include: Estimated energy savings by fuel type; estimated net
present value of benefits to all consumers; and estimates of the
direct and indirect impacts on employment by appliance
manufacturers, relevant service industries, energy suppliers,
suppliers of complementary and substitution products, and the
economy in general.
(vi) Impacts on the environment. The analysis of environmental
impacts will include estimated impacts on emissions of carbon and
relevant criteria pollutants, and impacts on pollution control
costs.
(vii) Impacts of non-regulatory approaches. The analysis of
energy savings and consumer impacts will incorporate an assessment
of the impacts of market forces and existing voluntary programs in
promoting product/equipment efficiency, usage, and related
characteristics in the absence of updated efficiency standards.
(viii) New information relating to the factors used for
screening design options.
(f) Notice of proposed rulemaking--(1) Documentation of
decisions on proposed standard selection. The Department will
publish a NOPR in the Federal Register that proposes standard levels
and explains the basis for the selection of those proposed levels,
and will post on its website a draft TSD documenting the analysis of
impacts. The draft TSD will also be posted in the appropriate docket
on www.regulations.gov. As required by 42 U.S.C. 6295(p)(1) of EPCA,
the NOPR also will describe the maximum improvement in energy
efficiency or maximum reduction in energy use that is
technologically feasible and, if the proposed standards would not
achieve these levels, the reasons for proposing different standards.
(2) Public comment and hearing. There will be not less than 75
days for public comment on the NOPR, with at least one public
hearing or workshop. (42 U.S.C. 6295(p)(2) and 42 U.S.C. 6306).
(3) Revisions to impact analyses and selection of final
standard. Based on the public comments received, DOE will review the
proposed standard and impact analyses, and make modifications as
necessary. If major changes to the analyses are required at this
stage, DOE will publish a Supplemental Notice of Proposed Rulemaking
(SNOPR), when required. DOE may also publish a NODA or RFI, where
appropriate.
(g) Final rule. The Department will publish a Final Rule in the
Federal Register that promulgates standard levels, responds to
public comments received on the NOPR, and explains how the selection
of those standards meets the statutory requirement that any new or
amended energy conservation standard produces the maximum
improvement in energy efficiency that is both technologically
feasible and economically justified and constitutes significant
energy savings, accompanied by a final TSD.
7. Policies on Selection of Standards
(a) Purpose. Section 6 describes the process that will be used
to consider new or revised energy efficiency standards and lists a
number of factors and analyses that will be considered at specified
points in the process. Department policies concerning the selection
of new or revised standards, and decisions preliminary thereto, are
described in this section. These policies are intended to elaborate
on the statutory criteria provided in 42 U.S.C. 6295. The procedures
described in this section are intended to assist the Department in
making the determinations required by EPCA and do not preclude DOE's
consideration of any other information consistent with the relevant
statutory criteria. The Department will consider pertinent
information in determining whether a new or revised standard is
consistent with the statutory criteria.
(b) Screening design options. These factors will be considered
as follows in determining whether a design option will receive any
further consideration:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in commercially-viable,
existing prototypes will not be considered further.
(2) Practicability to manufacture, install and service. If it is
determined that mass production of a technology in commercial
products and reliable installation and servicing of the technology
could not be achieved on the scale necessary to serve the relevant
market at the time of the compliance date of the standard, then that
technology will not be considered further.
(3) Impacts on product utility. If a technology is determined to
have significant adverse impact on the utility of the product/
equipment to subgroups of consumers, or result in the unavailability
of any covered product type with performance characteristics
(including reliability), features, sizes, capacities, and volumes
that are substantially the same as products generally available in
the U.S. at the time, it will not be considered further.
(4) Safety of technologies. If it is determined that a
technology will have significant adverse impacts on health or
safety, it will not be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving
a given efficiency level, it will not be considered further, due to
the potential for monopolistic concerns.
(c) Identification of candidate standard levels. Based on the
results of the engineering and cost/benefit analyses of design
options, DOE will identify the candidate standard levels for further
analysis. Candidate standard levels will be selected as follows:
(1) Costs and savings of design options. Design options that
have payback periods that exceed the median life of the product or
which result in life-cycle cost increases relative to the base case,
using typical fuel costs, usage, and private discount rates, will
not be used as the basis for candidate standard levels.
(2) Further information on factors used for screening design
options. If further information or analysis leads to a determination
that a design option, or a combination of design options, has
unacceptable impacts under the policies stated in this Appendix,
that design option or combination of design options will not be
included in a candidate standard level.
(3) Selection of candidate standard levels. Candidate standard
levels, which will be identified in the pre-NOPR documents and on
which impact analyses will be conducted, will be based on the
remaining design options.
(i) The range of candidate standard levels will typically
include:
(A) The most energy-efficient combination of design options;
(B) The combination of design options with the lowest life-cycle
cost; and
[[Page 70928]]
(C) A combination of design options with a payback period of not
more than three years.
(ii) Candidate standard levels that incorporate noteworthy
technologies or fill in large gaps between efficiency levels of
other candidate standard levels also may be selected.
(d) Pre-NOPR Stage. New information provided in public comments
on any pre-NOPR documents will be considered to determine whether
any changes to the candidate standard levels are needed before
proceeding to the analysis of impacts.
(e)(1) Selection of proposed standard. Based on the results of
the analysis of impacts, DOE will select a standard level to be
proposed for public comment in the NOPR. As required under 42 U.S.C.
6295(o)(2)(A), any new or revised standard must be designed to
achieve the maximum improvement in energy efficiency that is
determined to be both technologically feasible and economically
justified.
(2) Statutory policies. The fundamental policies concerning the
selection of standards include:
(i) A trial standard level will not be proposed or promulgated
if the Department determines that it is not both technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42
U.S.C. 6295(o)(3)(B)) For a trial standard level to be economically
justified, the Secretary must determine that the benefits of the
standard exceed its burdens by, to the greatest extent practicable,
considering the factors listed in 42 U.S.C. 6295(o)(2)(B)(i). A
standard level is subject to a rebuttable presumption that it is
economically justified if the payback period is three years or less.
(42 U.S.C. 6295(o)(2)(B)(iii))
(ii) If the Department determines that interested persons have
established by a preponderance of the evidence that a standard level
is likely to result in the unavailability in the United States of
any covered product/equipment type (or class) with performance
characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the U.S. at the time of the determination,
then that standard level will not be proposed. (42 U.S.C.
6295(o)(4))
(iii) If the Department determines that a standard level would
not result in significant conservation of energy, that standard
level will not be proposed. (42 U.S.C. 6295(o)(3)(B))
(f) Selection of a final standard. New information provided in
the public comments on the NOPR and any analysis by the Department
of Justice concerning impacts on competition of the proposed
standard will be considered to determine whether issuance of a new
or amended energy conservation standard produces the maximum
improvement in energy efficiency that is both technologically
feasible and economically justified and still constitutes
significant energy savings or whether any change to the proposed
standard level is needed before proceeding to the final rule. The
same policies used to select the proposed standard level, as
described in this section, will be used to guide the selection of
the final standard level or a determination that no new or amended
standard is justified.
8. Test Procedures
(a) General. As with the early assessment process for energy
conservation standards, DOE believes that early stakeholder input is
also very important during test procedure rulemakings. DOE will
follow an early assessment process similar to that described in the
preceding sections discussing DOE's consideration of amended energy
conservation standards. Consequently, DOE will publish a notice in
the Federal Register whenever DOE is considering initiation of a
rulemaking to amend a test procedure. In that notice, DOE will
request submission of comments, including data and information on
whether an amended test procedure rule would:
(1) Measurements. More accurately measure energy efficiency,
energy use, water use (as specified in EPCA), or estimated annual
operating cost of a covered product during a representative average
use cycle or period of use without being unduly burdensome to
conduct; or
(2) Reduce testing burden. DOE will review comments submitted
and, subject to statutory obligations, determine whether it agrees
with the submitted information. If DOE determines that an amended
test procedure is not justified at that time, it will not pursue the
rulemaking and will publish a notice in the Federal Register to that
effect. If DOE receives sufficient information suggesting an amended
test procedure could more accurately measure energy efficiency,
energy use, water use (as specified in EPCA), or estimated annual
operating cost of a covered product during a representative average
use cycle or period of use and not be unduly burdensome to conduct,
reduce testing burden, or the information received is inconclusive
with regard to these points, DOE would undertake the preliminary
stages of a rulemaking to amend the test procedure, as discussed
further in the paragraphs that follow in this section.
(b) Identifying the need to modify test procedures. DOE will
identify any necessary modifications to established test procedures
prior to initiating the standards development process. It will
consider all stakeholder comments with respect to needed test
procedure modifications. If DOE determines that it is appropriate to
continue the test procedure rulemaking after the early assessment
process, it would provide further opportunities for early public
input through Federal Register documents, including NODAs and/or
RFIs.
(c) Adoption of Industry Test Methods. DOE will adopt industry
test procedure standards as DOE test procedures for covered products
and equipment, but only if DOE determines that such procedures would
not be unduly burdensome to conduct and would produce test results
that reflect the energy efficiency, energy use, water use (as
specified in EPCA) or estimated operating costs of that equipment
during a representative average use cycle. DOE may also adopt
industry test procedure standards with modifications, or craft its
own procedures as necessary to ensure compatibility with the
relevant statutory requirements, as well as DOE's compliance,
certification, and enforcement requirements.
(d) Issuing final test procedure--(1) Process. Test procedure
rulemakings establishing methodologies used to evaluate proposed
energy conservation standards will be finalized prior to publication
of a NOPR proposing new or amended energy conservation standards.
Except as provided in paragraph (d)(2) of this section, new test
procedures and amended test procedures that impact measured energy
use or efficiency will be finalized at least 180 days prior to the
close of the comment period for:
(i) A NOPR proposing new or amended energy conservation
standards; or
(ii) A notice of proposed determination that standards do not
need to be amended. With regards to amended test procedures, DOE
will state in the test procedure final rule whether the amendments
impact measured energy use or efficiency.
(2) Exceptions. The 180-day period for new test procedures and
amended test procedures that impact measured energy use or
efficiency specified in paragraph (d)(1) of this section is not
applicable to:
(i) Test procedures developed in accordance with the Negotiated
Rulemaking Act or by interested persons that are fairly
representative of relevant points of view (including representatives
of manufacturers of covered products, States, and efficiency
advocates), as determined by the Secretary; or
(ii) Test procedure amendments limited to calculation changes
(e.g., use factor or adder). Parties submitting a consensus
recommendation in accordance with paragraph (i) of this section may
specify a time period between finalization of the test procedure and
the close of the comment for a NOPR proposing new or amended energy
conservation standards or a notice of proposed determination that
standards do not need to be amended.
(e) Effective Date of Test Procedures. If required only for the
evaluation and issuance of updated efficiency standards, use of the
modified test procedures typically will not be required until the
implementation date of updated standards.
9. ASHRAE Equipment
(a) EPCA provides that ASHRAE equipment are subject to unique
statutory requirements and their own set of timelines. More
specifically, pursuant to EPCA's statutory scheme for covered ASHRAE
equipment, DOE is required to consider amending the existing Federal
energy conservation standards and test procedures for certain
enumerated types of commercial and industrial equipment (generally,
commercial water heaters, commercial packaged boilers, commercial
air-conditioning and heating equipment, and packaged terminal air
conditioners and heat pumps) when ASHRAE Standard 90.1 is amended
with respect to standards and test procedures applicable to such
equipment. Not later than 180 days after the amendment of the
standard, the Secretary will publish in the Federal Register for
public comment an
[[Page 70929]]
analysis of the energy savings potential of amended energy
efficiency standards. For each type of equipment, EPCA directs that
if ASHRAE Standard 90.1 is amended, not later than 18 months after
the date of publication of the amendment to ASHRAE Standard 90.1,
DOE must adopt amended energy conservation standards at the new
efficiency level in ASHRAE Standard 90.1 as the uniform national
standard for such equipment, or amend the test procedure referenced
in ASHRAE Standard 90.1 for the equipment at issue to be consistent
with the applicable industry test procedure, respectively, unless--
(1) DOE determines by rule, and supported by clear and
convincing evidence, that a more-stringent standard would result in
significant additional conservation of energy and is technologically
feasible and economically justified; or
(2) The test procedure would not meet the requirements for such
test procedures specified in EPCA. In such case, DOE must adopt the
more stringent standard not later than 30 months after the date of
publication of the amendment to ASHRAE/IES Standard 90.1 for the
affected equipment.
(b) For ASHRAE equipment, DOE will adopt the revised ASHRAE
levels or the industry test procedure, as contemplated by EPCA,
except in very limited circumstances. With respect to DOE's
consideration of standards more-stringent than the ASHRAE levels or
changes to the industry test procedure, DOE will do so only if it
can meet a very high bar to demonstrate the ``clear and convincing
evidence'' threshold. Clear and convincing evidence would exist only
where the specific facts and data made available to DOE regarding a
particular ASHRAE amendment demonstrates that there is no
substantial doubt that a standard more stringent than that contained
in the ASHRAE Standard 90.1 amendment is permitted because it would
result in a significant additional amount of energy savings, is
technologically feasible and economically justified, or, in the case
of test procedures, that the industry test procedure does not meet
the EPCA requirements. DOE will make this determination only after
seeking data and information from interested parties and the public
to help inform the Agency's views. DOE will seek from interested
stakeholders and the public data and information to assist in making
this determination, prior to publishing a proposed rule to adopt
more-stringent standards or a different test procedure.
(c) DOE's review in adopting amendments based on an action by
ASHRAE to amend Standard 90.1 is strictly limited to the specific
standards or test procedure amendment for the specific equipment for
which ASHRAE has made a change (i.e., determined down to the
equipment class level). DOE believes that ASHRAE not acting to amend
Standard 90.1 is tantamount to a decision that the existing standard
remain in place. Thus, when undertaking a review as required by 42
U.S.C. 6313(a)(6)(C), DOE would need to find clear and convincing
evidence, as defined in this section, to issue a standard more
stringent than the existing standard for the equipment at issue.
10. Direct Final Rules
In accordance with 42 U.S.C. 6295(p)(4), on receipt of a joint
proposal, including a consensus recommendation developed in
accordance with the Negotiated Rulemaking Act (5 U.S.C. 561 et
seq.), that is submitted by interested persons that are fairly
representative of relevant points of view, DOE may issue a direct
final rule (DFR) establishing energy conservation standards for a
covered product or equipment if DOE determines the recommended
standard is in accordance with 42 U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B) as applicable. To be ``fairly representative of
relevant points of view'' the group submitting a joint statement
must, where appropriate, include larger concerns and small
businesses in the regulated industry/manufacturer community, energy
advocates, energy utilities, consumers, and States. However, it will
be necessary to evaluate the meaning of ``fairly representative'' on
a case-by-case basis, subject to the circumstances of a particular
rulemaking, to determine whether fewer or additional parties must be
part of a joint statement in order to be ``fairly representative of
relevant points of view.''
11. Principles for Distinguishing Between Effective and Compliance
Dates
(a) Dates, generally. The effective and compliance dates for
either DOE test procedures or DOE energy conservation standards are
typically not identical, and these terms should not be used
interchangeably.
(b) Effective date. The effective date is the date a rule is
legally operative after being published in the Federal Register.
(c) Compliance date. (1) For test procedures, the compliance
date is the specific date when manufacturers are required to use the
new or amended test procedure requirements to make representations
concerning the energy efficiency or use of a product, including
certification that the covered product/equipment meets an applicable
energy conservation standard.
(2) For energy conservation standards, the compliance date is
the specific date upon which manufacturers are required to meet the
new or amended standards for applicable covered products/equipment
that are distributed in interstate commerce.
12. Principles for the Conduct of the Engineering Analysis
(a) The purpose of the engineering analysis is to develop the
relationship between efficiency and cost of the subject product/
equipment. The Department will use the most appropriate means
available to determine the efficiency/cost relationship, including
an overall system approach or engineering modeling to predict the
reduction in energy use or improvement in energy efficiency that can
be expected from individual design options as discussed in
paragraphs (b) and (c) of this section. From this efficiency/cost
relationship, measures such as payback, life-cycle cost, and energy
savings can be developed. The Department will identify issues that
will be examined in the engineering analysis and the types of
specialized expertise that may be required. DOE will select
appropriate contractors, subcontractors, and expert consultants, as
necessary, to perform the engineering analysis and the impact
analysis. Also, the Department will consider data, information, and
analyses received from interested parties for use in the analysis
wherever feasible.
(b) The engineering analysis begins with the list of design
options developed in consultation with the interested parties as a
result of the screening process. The Department will establish the
likely cost and performance improvement of each design option.
Ranges and uncertainties of cost and performance will be
established, although efforts will be made to minimize uncertainties
by using measures such as test data or component or material
supplier information where available. Estimated uncertainties will
be carried forward in subsequent analyses. The use of quantitative
models will be supplemented by qualitative assessments as
appropriate.
(c) The next step includes identifying, modifying, or developing
any engineering models necessary to predict the efficiency impact of
any one or combination of design options on the product/equipment. A
base case configuration or starting point will be established, as
well as the order and combination/blending of the design options to
be evaluated. DOE will then perform the engineering analysis and
develop the cost-efficiency curve for the product/equipment. The
cost efficiency curve and any necessary models will be available to
stakeholders during the pre-NOPR stage of the rulemaking.
13. Principles for the Analysis of Impacts on Manufacturers
(a) Purpose. The purpose of the manufacturer analysis is to
identify the likely private impacts of efficiency standards on
manufacturers. The Department will analyze the impact of standards
on manufacturers with substantial input from manufacturers and other
interested parties. This section describes the principles that will
be used in conducting future manufacturing impact analyses.
(b) Issue identification. In the impact analysis stage, the
Department will identify issues that will require greater
consideration in the detailed manufacturer impact analysis. Possible
issues may include identification of specific types or groups of
manufacturers and concerns over access to technology. Specialized
contractor expertise, empirical data requirements, and analytical
tools required to perform the manufacturer impact analysis also
would be identified at this stage.
(c) Industry characterization. Prior to initiating detailed
impact studies, the Department will seek input on the present and
past industry structure and market characteristics. Input on the
following issues will be sought:
(1) Manufacturers and their current and historical relative
market shares;
(2) Manufacturer characteristics, such as whether manufacturers
make a full line of models or serve a niche market;
(3) Trends in the number of manufacturers;
(4) Financial situation of manufacturers;
[[Page 70930]]
(5) Trends in product/equipment characteristics and retail
markets including manufacturer market shares and market
concentration; and
(6) Identification of other relevant regulatory actions and a
description of the nature and timing of any likely impacts.
(d) Cost impacts on manufacturers. The costs of labor, material,
engineering, tooling, and capital are difficult to estimate,
manufacturer-specific, and usually proprietary. The Department will
seek input from interested parties on the treatment of cost issues.
Manufacturers will be encouraged to offer suggestions as to possible
sources of data and appropriate data collection methodologies.
Costing issues to be addressed include:
(1) Estimates of total private cost impacts, including product/
equipment-specific costs (based on cost impacts estimated for the
engineering analysis) and front-end investment/conversion costs for
the full range of product/equipment models.
(2) Range of uncertainties in estimates of average cost,
considering alternative designs and technologies which may vary cost
impacts and changes in costs of material, labor, and other inputs
which may vary costs.
(3) Variable cost impacts on particular types of manufacturers,
considering factors such as atypical sunk costs or characteristics
of specific models which may increase or decrease costs.
(e) Impacts on product/equipment sales, features, prices, and
cost recovery. In order to make manufacturer cash-flow calculations,
it is necessary to predict the number of products/equipment sold and
their sale price. This requires an assessment of the likely impacts
of price changes on the number of products/equipment sold and on
typical features of models sold. Past analyses have relied on price
and shipment data generated by economic models. The Department will
develop additional estimates of prices and shipments by drawing on
multiple sources of data and experience including: Actual shipment
and pricing experience; data from manufacturers, retailers, and
other market experts; financial models, and sensitivity analyses.
The possible impacts of candidate/trial standard levels on consumer
choices among competing fuels will be explicitly considered where
relevant.
(f) Measures of impact. The manufacturer impact analysis will
estimate the impacts of candidate/trial standard levels on the net
cash flow of manufacturers. Computations will be performed for the
industry as a whole and for typical and atypical manufacturers. The
exact nature and the process by which the analysis will be conducted
will be determined by DOE, with input from interested parties, as
appropriate. Impacts to be analyzed include:
(1) Industry net present value, with sensitivity analyses based
on uncertainty of costs, sales prices, and sales volumes;
(2) Cash flows, by year; and
(3) Other measures of impact, such as revenue, net income, and
return on equity, as appropriate. DOE also notes that the
characteristics of a typical manufacturers worthy of special
consideration will be determined in consultation with manufacturers
and other interested parties and may include: Manufacturers
incurring higher or lower than average costs; and manufacturers
experiencing greater or fewer adverse impacts on sales. Alternative
scenarios based on other methods of estimating cost or sales impacts
also will be performed, as needed.
(g) Cumulative Impacts of Other Federal Regulatory Actions. (1)
The Department will recognize and seek to mitigate the overlapping
effects on manufacturers of new or revised DOE standards and other
regulatory actions affecting the same products or equipment. DOE
will analyze and consider the impact on manufacturers of multiple
product/equipment-specific regulatory actions. These factors will be
considered in setting rulemaking priorities, conducting the early
assessment as to whether DOE should proceed with a standards
rulemaking, assessing manufacturer impacts of a particular standard,
and establishing compliance dates for a new or revised standard
that, consistent with any statutory requirements, are appropriately
coordinated with other regulatory actions to mitigate any cumulative
burden.
(2) If the Department determines that a proposed standard would
impose a significant impact on product or equipment manufacturers
within approximately three years of the compliance date of another
DOE standard that imposes significant impacts on the same
manufacturers (or divisions thereof, as appropriate), the Department
will, in addition to evaluating the impact on manufacturers of the
proposed standard, assess the joint impacts of both standards on
manufacturers.
(3) If the Department is directed to establish or revise
standards for products/equipment that are components of other
products/equipment subject to standards, the Department will
consider the interaction between such standards in setting
rulemaking priorities and assessing manufacturer impacts of a
particular standard. The Department will assess, as part of the
engineering and impact analyses, the cost of components subject to
efficiency standards.
(h) Summary of quantitative and qualitative assessments. The
summary of quantitative and qualitative assessments will contain a
description and discussion of uncertainties. Alternative estimates
of impacts, resulting from the different potential scenarios
developed throughout the analysis, will be explicitly presented in
the final analysis results.
(1) Key modeling and analytical tools. In its assessment of the
likely impacts of standards on manufacturers, the Department will
use models that are clear and understandable, feature accessible
calculations, and have clearly explained assumptions. As a starting
point, the Department will use the Government Regulatory Impact
Model (GRIM). The Department will also support the development of
economic models for price and volume forecasting. Research required
to update key economic data will be considered.
(2) [Reserved]
14. Principles for the Analysis of Impacts on Consumers
(a) Early consideration of impacts on consumer utility. The
Department will consider at the earliest stages of the development
of a standard whether particular design options will lessen the
utility of the covered products/equipment to the consumer. See
paragraph (b) of section 6.
(b) Impacts on product/equipment availability. The Department
will determine, based on consideration of information submitted
during the standard development process, whether a proposed standard
is likely to result in the unavailability of any covered product/
equipment type with performance characteristics (including
reliability), features, sizes, capacities, and volumes that are
substantially the same as products/equipment generally available in
the U.S. at the time. DOE will not promulgate a standard if it
concludes that it would result in such unavailability.
(c) Department of Justice review. As required by law, the
Department will solicit the views of the Department of Justice on
any lessening of competition likely to result from the imposition of
a proposed standard and will give the views provided full
consideration in assessing economic justification of a proposed
standard. In addition, DOE may consult with the Department of
Justice at earlier stages in the standards development process to
seek its preliminary views on competitive impacts.
(d) Variation in consumer impacts. The Department will use
regional analysis and sensitivity analysis tools, as appropriate, to
evaluate the potential distribution of impacts of candidate/trial
standard levels among different subgroups of consumers. The
Department will consider impacts on significant segments of
consumers in determining standards levels. Where there are
significant negative impacts on identifiable subgroups, DOE will
consider the efficacy of voluntary approaches as a means to achieve
potential energy savings.
(e) Payback period and first cost. (1) In the assessment of
consumer impacts of standards, the Department will consider Life-
Cycle Cost, Payback Period, and Cost of Conserved Energy to evaluate
the savings in operating expenses relative to increases in purchase
price. The Department also performs sensitivity and scenario
analyses when appropriate. The results of these analyses will be
carried throughout the analysis and the ensuing uncertainty
described.
(2) If, in the analysis of consumer impacts, the Department
determines that a candidate/trial standard level would result in a
substantial increase in product/equipment first costs to consumers
or would not pay back such additional first costs through energy
cost savings in less than three years, Department will assess the
likely impacts of such a standard on low-income households, product/
equipment sales and fuel switching, as appropriate.
[[Page 70931]]
15. Consideration of Non-Regulatory Approaches
The Department recognizes that non-regulatory efforts by
manufacturers, utilities, and other interested parties can result in
substantial efficiency improvements. The Department intends to
consider the likely effects of non-regulatory initiatives on
product/equipment energy use, consumer utility and life-cycle costs,
manufacturers, competition, utilities, and the environment, as well
as the distribution of these impacts among different regions,
consumers, manufacturers, and utilities. DOE will attempt to base
its assessment on the actual impacts of such initiatives to date,
but also will consider information presented regarding the impacts
that any existing initiative might have in the future. Such
information is likely to include a demonstration of the strong
commitment of manufacturers, distribution channels, utilities, or
others to such non-regulatory efficiency improvements. This
information will be used in assessing the likely incremental impacts
of establishing or revising standards, in assessing--where
possible--appropriate compliance dates for new or revised standards,
and in considering DOE support of non-regulatory initiatives.
16. Cross-Cutting Analytical Assumptions
In selecting values for certain cross-cutting analytical
assumptions, DOE expects to continue relying upon the following
sources and general principles:
(a) Underlying economic assumptions. The appliance standards
analyses will generally use the same economic growth and development
assumptions that underlie the most current Annual Energy Outlook
(AEO) published by the Energy Information Administration (EIA).
(b) Analytic time length. The appliance standards analyses will
use two time lengths--30 years and another time length that is
specific to the standard being considered such as the useful
lifetime of the product under consideration. As a sensitivity case,
the analyses will also use a 9-year regulatory timeline in analyzing
the effects of the standard.
(c) Energy price and demand trends. Analyses of the likely
impact of appliance standards on typical users will generally adopt
the mid-range energy price and demand scenario of the EIA's most
current AEO. The sensitivity of such estimated impacts to possible
variations in future energy prices are likely to be examined using
the EIA's high and low energy price scenarios.
(d) Product/equipment-specific energy-efficiency trends, without
updated standards. Product/equipment-specific energy-efficiency
trends will be based on a combination of the efficiency trends
forecast by the EIA's residential and commercial demand model of the
National Energy Modeling System (NEMS) and product-specific
assessments by DOE and its contractors with input from interested
parties.
(e) Price forecasting. DOE will endeavor to use robust price
forecasting techniques in projecting future prices of products.
(f) Private Discount rates. For residential and commercial
consumers, ranges of three different real discount rates will be
used. For residential consumers, the mid-range discount rate will
represent DOE's approximation of the average financing cost (or
opportunity costs of reduced savings) experienced by typical
consumers. Sensitivity analyses will be performed using discount
rates reflecting the costs more likely to be experienced by
residential consumers with little or no savings and credit card
financing and consumers with substantial savings. For commercial
users, a mid-range discount rate reflecting DOE's approximation of
the average real rate of return on commercial investment will be
used, with sensitivity analyses being performed using values
indicative of the range of real rates of return likely to be
experienced by typical commercial businesses. For national net
present value calculations, DOE would use the Administration's
approximation of the average real rate of return on private
investment in the U.S. economy. For manufacturer impacts, DOE
typically uses a range of real discount rates which are
representative of the real rates of return experienced by typical
U.S. manufacturers affected by the program.
(g) Social discount rates. Social discount rates as specified in
OMB Circular A-4 will be used in assessing social effects such as
costs and benefits.
(h) Environmental impacts. (1) DOE calculates emission
reductions of carbon dioxide, sulfur dioxide, nitrogen oxides,
methane, nitrous oxides, and mercury likely to be avoided by
candidate/trial standard levels based on an emissions analysis that
includes the two components described in paragraphs (h)(2) and (3)
of this section.
(2) The first component estimates the effect of potential
candidate/trial standard levels on power sector and site combustion
emissions of carbon dioxide, nitrogen oxides, sulfur dioxide,
mercury, methane, and nitrous oxide. DOE develops the power sector
emissions analysis using a methodology based on DOE's latest Annual
Energy Outlook. For site combustion of natural gas or petroleum
fuels, the combustion emissions of carbon dioxide and nitrogen
oxides are estimated using emission intensity factors from the
Environmental Protection Agency.
(3) The second component of DOE's emissions analysis estimates
the effect of potential candidate/trial standard levels on emissions
of carbon dioxide, nitrogen oxides, sulfur dioxide, mercury,
methane, and nitrous oxide due to ``upstream activities'' in the
fuel production chain. These upstream activities include the
emissions related to extracting, processing, and transporting fuels
to the site of combustion as detailed in DOE's Fuel-Fuel-Cycle
Statement of Policy (76 FR 51281 (August 18, 2011)). DOE will
consider the effects of the candidate/trial standard levels on these
emissions after assessing the seven factors required to demonstrate
economic justification under EPCA. Consistent with Executive Order
13783, dated March 28, 2017, when monetizing the value of changes in
reductions in CO2 and nitrous oxides emissions resulting
from its energy conservation standards regulations, including with
respect to the consideration of domestic versus international
impacts and the consideration of appropriate discount rates, DOE
ensures, to the extent permitted by law, that any such estimates are
consistent with the guidance contained in OMB Circular A-4 of
September 17, 2003 (Regulatory Analysis).
[FR Doc. 2021-25725 Filed 12-10-21; 8:45 am]
BILLING CODE 6450-01-P
