# Energy Conservation Program: Certification, Compliance, and Enforcement for Consumer Products and Commercial and Industrial Equipment

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2011-3146

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** March 7, 2011
- **Citation:** 76 FR 12422

## Text

DEPARTMENT OF ENERGY
10 CFR Parts 429, 430 and 431
[Docket No. EERE-2010-BT-CE-0014]
RIN 1904-AC23
Energy Conservation Program: Certification, Compliance, and Enforcement for Consumer Products and Commercial and Industrial Equipment

AGENCY:

Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION:

Final rule.

SUMMARY:

The U.S. Department of Energy (DOE or the “Department”) is adopting revisions to its existing certification, compliance, and enforcement regulations for certain consumer products and commercial and industrial equipment covered under the Energy Policy and Conservation Act of 1975, as amended (EPCA or the “Act”). These regulations provide for sampling plans used in determining compliance with existing standards, manufacturer submission of compliance statements and certification reports to DOE, maintenance of compliance records by manufacturers, and the availability of enforcement actions for improper certification or noncompliance with an applicable standard. Ultimately, the provisions being adopted in this final rule will allow DOE to enforce systematically the applicable energy and water conservation standards for covered products and covered equipment and provide for more accurate, comprehensive information about the energy and water use characteristics of products sold in the United States.

DATES:

Effective Dates:
The amendments to Parts 429 (except §§ 429.12 through 429.54), 430 (except Appendix A to Subpart B of Part 430 and Appendix B to Subpart B of Part 430), and 431 are effective April 6, 2011.

The amendments to §§ 429.12 through 429.54 are effective July 5, 2011.

The amendments to Appendix A to Subpart B of Part 430 and Appendix B to Subpart B of Part 430 are effective November 28, 2011.

The incorporation by reference of the standards listed in this rule is approved by the Director of the Federal Register as of April 6, 2011.

ADDRESSES:

This rulemaking can be identified by docket number EERE-2010-BT-CE-0014 and/or Regulatory Identification Number (RIN) 1904-AC23.

Docket:
For access to the docket to read background documents, or comments received, go to the
Federal eRulemaking Portal
at
http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Telephone: 202-586-6590. E-mail:
Ashley.Armstrong@ee.doe.gov
; and Ms. Laura Barhydt, U.S. Department of Energy, Office of the General Counsel, Forrestal Building, GC-32, 1000 Independence Avenue, SW., Washington, DC 20585. Telephone: 202-287-6122. E-mail:
Laura.Barhydt@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

This final rule incorporates by reference into Part 429 the following industry standards:

• ANSI/AHAM DW-1-1992, American National Standard, Household Electric Dishwashers, approved February 6, 1992, IBR approved for § 429.19.

Copies of ANSI/AHAM DW-1-1992 is available from the Association of Home Appliance Manufacturers, 1111 19th Street, NW., Suite 402, Washington, DC 20036, 202-872-5955, or go to
http://www.aham.org.

• International Organization for Standardization (ISO)/International Electrotechnical Commission, (“ISO/IEC 17025:2005(E)”), “General requirements for the competence of testing and calibration laboratories”, Second edition, May 15, 2005, IBR approved for § 429.104.

Copies of ISO/IEC 17025:2005(E) are available from the International Standards Organziation1, ch. de la Voie-Creuse CP 56 CH-1211 Geneva 20 Switzerland, telephone +41 22 749 01 11, or go to
http://www.iso.org/iso.

Table of Contents

I. Authority and Background

II. Summary of the Final Rule

A. Certification

B. Enforcement Testing

C. Reorganization

III. Discussion of Comments

A. Annual Certification Requirement

B. Revisions to Reporting Requirements

1. Reporting Sample Size and Total Number of Tests Performed

2. Reporting of Testing Data

3. Reporting Use of an ARM/AEDM or Other Alternative Method of Rating

4. Defining “distribute in commerce”

5. Product-Specific Revisions to Reporting Requirements

C. Certifying Entities and Third-Party Representation

D. Submission of Certification Reports

E. New Basic Model Filing, Basic Model Concept, and Notice of Discontinuance

1. New Model Filing and Basic Model Concept

2. Basic Model Numbering

3. Notice of Discontinuance

F. Certification Testing, Generally

G. Certification Testing Specific to Commercial HVAC and WH Equipment, Including the Use of AEDMs and VICPs

H. Records Retention and Confidentiality

1. Records Retention by Manufacturers

2. Confidentiality of Information

I. Enforcement Testing

1. Initiation of an Enforcement Action

2. Process Provided to Manufacturers During Enforcement Testing

3. Test Notice

4. Sampling for Enforcement Testing

5. Testing Done for Other Agencies

6. Test Unit Selection

7. Testing at Manufacturer's Option

8. Cost Allocation for Testing

9. Third-Party Laboratory Requirements for Enforcement Testing

10. Enforcement for Imports and Exports

J. Adjudication

1. Prohibited Acts

2. Penalties

3. Imposition of Additional Certification Testing Requirements as Remedy for Non-Compliance

4. Compromise and Settlement

K. Waivers

L. Additional Product Specific Issues

1. Entity Responsible for Certification and Compliance for Walk-In Coolers or Freezers (WICFs)

2. Basic Model Definition for Walk-In Coolers or Freezers (WICFs)

3. Basic Model and Manufacturer Model Number Reporting for Distribution Transformers, WICFs, and External Power Supplies.

M. Additional Issues for Which DOE Sought Comment in September 2010 NOPR

1. Verification Testing

2. Voluntary Industry Certification Programs

3. Certification, Compliance and Enforcement for Electric Motors

4. Revisions to Sampling Plans for Certification Testing

IV. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under the Regulatory Flexibility Act

1. Reasons for the Final Rule

2. Objectives of and Legal Basis for the Final Rule

3. Description and Estimated Number of Small Entities Regulated

4. Description and Estimate of Compliance Requirements

5. Duplication, Overlap, and Conflict With Other Rules and Regulations

6. Significant Alternatives to the Rule

C. Review Under the Paperwork Reduction Act

1. Description of the Requirements

2. Method of Collection

3. Data

D. Review Under the National Environmental Policy Act

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

V. Approval of the Office of the Secretary

I. Authority and Background

Title III of the Energy Policy and Conservation Act of 1975, as amended (“EPCA” or, in context, “the Act”) sets forth a variety of provisions designed to improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309) provides for the Energy Conservation Program for Consumer Products Other Than Automobiles. The National Energy Conservation Policy Act (NECPA), Public Law 95-619, amended EPCA to add Part A-1 of Title III, which established an energy conservation program for certain industrial equipment. (42 U.S.C. 6311-6317)
1

1
For editorial reasons, Parts B (consumer products) and C (commercial equipment) of Title III of EPCA were re-designated as parts A and A-1, respectively, in the United States Code.

Sections 6299-6305, and 6316 of EPCA authorize DOE to enforce compliance with the energy and water conservation standards (all non-product specific references herein referring to energy use and consumption include water use and consumption; all references to energy efficiency include water efficiency) established for certain consumer products and commercial equipment. (42 U.S.C. 6299-6305 (consumer products), 6316 (commercial equipment)) DOE has promulgated enforcement regulations that include specific certification and compliance requirements.
See
10 CFR part 430, subpart F; 10 CFR 430.23-25; 10 CFR part 431, subparts B, J, K, S, T, U, and V.

On September 16, 2010, the Department published in the
Federal Register
a Notice of Proposed Rulemaking regarding Certification, Compliance, and Enforcement for Consumer Products and Commercial and Industrial Equipment (September 2010 NOPR). 75 FR 56796. DOE subsequently published two correction notices, which addressed the public meeting date and an omission in the regulatory text. 75 FR 57410 (September 21, 2010) and 75 FR 61361 (October 5, 2010), respectively. A public meeting was held in Washington, DC, on September 30, 2010. The comment period for written submissions was scheduled to close on October 18. In response to multiple requests, DOE extended the comment period to close on October 29, 2010.

The September 2010 NOPR proposed to revise, consolidate and streamline the Department's existing certification, compliance, and enforcement regulations for certain consumer products and commercial and industrial equipment covered under EPCA.

II. Summary of the Final Rule

A. Certification

Today's rule revises the Department's current certification regulations to ensure that the Department has the information it needs to ensure that regulated products sold in the United States comply with the law. Currently, manufacturers of covered consumer products and commercial and industrial equipment must certify, by means of a compliance statement and a certification report, that each basic model meets the applicable energy conservation, water conservation, and/or design standard before distributing it in commerce within the United States.
See
10 CFR 430.62 (consumer products); 431.327 (metal halide lamp ballast) and 430.371 (certain commercial equipment). As proposed in the September 2010 NOPR, DOE is adopting an annual certification reporting requirement for all covered products and covered equipment. Additional details are discussed below. Such annual filings will provide DOE with comprehensive, up-to-date efficiency information about the regulated products sold in the United States at any given time—a necessary predicate to an effective enforcement program.

DOE believes it is also appropriate to provide more transparency in the certification report itself. In the September 2010 NOPR, DOE proposed to expand the information submitted by manufacturers, including general requirements applicable to all products and product-specific requirements. DOE also proposed to make clear that all non-proprietary certification information will be considered public information. As a result of stakeholder comments, DOE made some modifications to the product-specific information it is collecting and the public disclosure of such information in the final rule. These changes are discussed in more detail below. By requiring additional relevant data that affects the energy or water efficiency of a product to be supplied in the certification report, DOE will be able to more effectively enforce compliance with the conservation standards.

To provide manufacturers with sufficient time to transition to these new certification provisions, the effective date of the certification requirements is 120 days from the publication of the final rule in the
Federal Register
. Each basic model of covered product or covered equipment that has not previously been certified with the Department must be certified on or before July 5, 2011 using DOE's on-line certification tool (
i.e.,
the Compliance Certification Management System or CCMS) and the pre-formatted EXCEL templates.
See

https://www.regulations.doe.gov/ccms/
for additional information. For those basic models of covered products or covered equipment that have previously been certified with the Department, manufacturers are required to submit revised certification data pursuant to regulations being adopted as part of today's final rule in accordance with the annual report table in 10 CFR 429.12.

B. Enforcement Testing

The Department is modifying its regulations for enforcement testing to allow the Department to enforce the Federal efficiency standards proactively and fairly based on the circumstances of each case. In particular, today's rule makes three revisions to DOE's approach to enforcement testing that, although relatively minor, will significantly improve the effectiveness of DOE's enforcement program. First, the Department is removing the current regulatory provision that requires DOE to receive a written complaint alleging a violation of the standard before it can perform enforcement testing to determine a model's compliance. EPCA affords DOE with broad enforcement discretion, and DOE must be able to exercise that discretion proactively to ensure compliance and deter violations effectively. Second, today's rule allows the Department to select units for enforcement testing from retail, distribution, or manufacturer sources, depending on the circumstances, to ensure enforcement test results that are as unbiased, accurate, and representative as possible. Finally, the Department recognizes that the current regulatory approach to enforcement testing—involving DOE selected units and third party testing—may be impracticable for low-volume, custom-built products or where adequate laboratory facilities are unavailable. Thus, today's rule adopts an alternative approach to enforcement testing in such exceptional cases—allowing DOE-witnessed testing at the manufacturer's lab and/or reduced sample sizes—to permit effective enforcement testing without imposing unreasonable burdens on manufacturers.

C. Reorganization

With the exception of electric motors, in the September 2010 NOPR, DOE proposed to move all of the existing certification, compliance, and enforcement regulations currently scattered throughout parts 430 and 431 to a new Part 429. DOE additionally proposed to consolidate similar provisions for both consumer products and commercial and industrial equipment.

In response to DOE's proposed new structure, DOE received several comments from interested parties on its September 2010 NOPR, some of which were organizational in nature. For example, a comment submitted by the National Electrical Manufacturers Association (NEMA) suggested grouping all the regulations that were relevant to a single product in a discrete portion of Part 429. (NEMA, No. 85.1 at p. 2) In response to these comments, and to provide additional clarity to Part 429 requirements, DOE has made the following changes to Part 429 in today's final rule:

• Consolidated general requirements into Subpart A.

• Consolidated all certification requirements into Subpart B, with the creation of product-specific sections for sampling plans and certification requirements. This is intended to simplify the presentation for manufacturers and others who need information on a single product. Also, each of the product-specific sections now specifies the relevant sampling equations to ensure certification requirements are clear;

• Added Appendix D to Subpart B which includes Student's t-distribution values for one-tailed confidence level calculations for product certification;

• Reorganized Subpart C to distinguish between enforcement measures and verification measures; and

• Incorporated a variety of editorial changes addressing certification, sampling plans, and enforcement.

DOE is adopting Part 429 in its entirety today and expects to integrate electric motors into this Part in a subsequent rulemaking.

III. Discussion of Comments

A. Annual Certification Requirement

Existing certification requirements direct most manufacturers of covered consumer products and commercial and industrial equipment to certify, by means of a compliance statement and a certification report, that each basic model meets the applicable energy conservation, water conservation, and/or design standard before distributing it in commerce within the United States.
See
10 CFR 430.62 (consumer products); 10 CFR 431.36, 430.371 (commercial equipment). In the September 2010 NOPR, DOE proposed moving to an annual certification reporting requirement for each basic model of covered product and covered equipment. Additionally, DOE proposed an annual filing schedule based generally upon the Federal Trade Commission (FTC) schedule for similar product types subject to annual reporting under the FTC's Appliance Labeling Rule. For commercial and industrial equipment, DOE proposed to align similar equipment types with the FTC schedule for consumer products.

Today's rule adopts a mandatory annual certification filing requirement (as opposed to an annual testing requirement) and sets out a reporting schedule aligned as closely as possible with the current FTC schedule for consumer products. Under DOE's self-certification enforcement framework, only products that have been certified to DOE by manufacturers as compliant with the applicable standards can be distributed in commerce in the United States. Annual filings will provide the Department with up-to-date and comprehensive efficiency information about regulated products sold in the United States—a necessary predicate to an effective enforcement program. Recognizing this, many commenters, including the Alliance for Water Efficiency (AWE), Underwriters Laboratories, Inc. (UL), Alliance Laundry Systems LLC (ALS), Northwest Energy Efficiency Alliance (NEEA), Earthjustice, and the Association of Home Appliance Manufacturers (AHAM), supported an annual filing requirement. (AWE, No. 38.1 at p. 3; UL, No. 60.1 at p. 1; ALS, No. 66.1 at p. 1; NEEA, No. 67.1 at p. 2; Earthjustice, Public Meeting Transcript, No. 103 at pp. 42-43; AHAM, No. 98.1 at p. 4) As one commenter put it: “Knowledge of what products are being distributed in commerce at any given time is the foundation of an effective certification and enforcement program. A one-time initial certification of compliance does not provide the needed level of knowledge.” (NEEA, No. 67.1 at p. 2)

A few commenters objected to the proposal, arguing that annual filing was not needed and would increase reporting burdens. The International Association of Plumbing and Mechanical Officials (IAPMO) and IAPMO R&T, for example, commented that the Department's existing certification requirements already provide sufficient assurance of compliance. (IAPMO, No. 36.1 at p. 1) Similarly, AO Smith opposed an annual certification requirement, commenting that such a requirement would unduly increase the level of reporting required by manufacturers. (AO Smith, No. 81.1 at p. 2) Although DOE recognizes that annual filing will increase the frequency with which manufactures must file reports, the record reflects that the increase in cost burden will be minimal. As NAMA explained, “annual certification does not cause an extreme economic burden and harm.” (NAMA, No. 72.1 at p. 2;
See also
Traulsen, No. 52.1, at p. 4 (“Annual certification should not be a major burden”)) DOE also believes that electronic reporting will reduce the burden of preparing certification reports. Accordingly, the Department believes that this minimal increase in cost burden is outweighed by the need to ensure that the Department and the public have accurate and comprehensive efficiency information. In addition, an annual filing establishes a set date for manufacturers to fulfill this reporting obligation, which should allow manufacturers to regularize their annual reporting practices, thereby lowering costs and enhancing compliance.

Several commenters suggested that DOE should impose annual testing requirements in addition to the proposed annual filing requirement. In particular, UL, ALS, the Natural Resources Defense Council (NRDC) and Earthjustice commented that while they are in support of establishing an annual certification requirement, such a requirement should include mandatory re-testing to validate the annual certification submissions, rather than merely re-submission of the original test data. (UL, No. 60.1 at p. 1; ALS, No. 66.1 at p. 2; NRDC, Public Meeting Transcript, No. 103 at p. 39; Earthjustice, Public Meeting Transcript, No. 103 at pp. 43-44) NRDC proposed regular recertification of basic models that would require new laboratory testing of currently produced models and not simply resubmission of old test data from the initial certification. NRDC stated that the frequency of such recertification should depend on product-specific factors as well as a production cycle, and whether there is any change in energy usage above a de minimus threshold. (NRDC, No. 39.1 at p. 2) Earthjustice further contended that since determining when a model has been modified can be very difficult, a re-testing, as opposed to a re-submission, requirement would help to alleviate this problem. (Earthjustice, Public Meeting Transcript, No. 103 at pp. 43-44)

While DOE recognizes these commenters' call for additional testing

after the initial certification to ensure continued compliance, the Department declines to adopt an annual testing requirement whereby manufacturers must annually re-test all certified products and equipment. As several commenters point out, such a requirement would impose considerable burdens on manufacturers. (
See, e.g.,
AHAM, No. 98.1 at p. 4; ALS, No. 66.1 at p. 2; Traulsen, No. 52.1 at p. 4) As AHAM further explains, requiring “costly and time consuming” annual re-certification testing “would likely be detrimental to innovation,” and “might threaten the viability to small manufacturers.” (AHAM, No. 98.1 at p. 4.) AHAM also pointed out that in light of DOE's additional testing and industry verification programs, the benefit to consumers from manufacturers' retesting certified products would be minimal. DOE agrees that the burdens of such a requirement would likely outweigh the benefits and is not requiring any new or additional testing to be performed as part of the annual filing requirement. It is instead a yearly submission of the ratings for all models a manufacturer has in distribution in that year. As discussed below, DOE continues to consider approaches to verification testing that would require subsequent testing of previously certified products, without an across the board annual re-testing requirement.

With regard to DOE's proposal in the September 2010 NOPR to align the annual certification reporting deadlines with the FTC's schedule, ALS, NEEA, IAMPO, the American Lighting Association (ALA), and AHAM submitted comments supporting harmonization with the FTC's reporting requirements. (ALS, No. 66.1 at p. 1; NEEA, No. 67.1 at p. 2; IAMPO, Public Meeting Transcript, No. 103 at p. 42; ALA, No. 97.1 at p. 1; AHAM, No. 98.1 at p. 4) Specifically, ALA commented that such consolidation of reporting requirements would improve the efficiency and reduce the cost of compliance. (ALA, No. 97.1 at p. 1) Delta Faucet submitted comments requesting that efforts be made to reduce the reporting burden and cost on manufacturers by combining the DOE and FTC reports into one template. (Delta Faucet, No. 94.1 at p. 2) Today's final rule consolidates the Department's certification reporting requirements with FTC's schedule only. DOE will continue to consider consolidating filings with the FTC or other government agencies in a future certification, compliance, and enforcement rulemaking.

B. Revisions to Reporting Requirements

In the September 2010 NOPR, DOE proposed to revise what information must be submitted as a part of a certification filing for DOE to better enforce its conservation standards. Specifically, DOE proposed to standardize to the extent possible the basic information required for certification of all covered products and covered equipment, setting out the basic requirements for every certification filing, followed by product-specific information requirements. DOE also proposed to require manufacturers to submit information related to waivers, exemptions, and approved alternative rating methodologies along with their certification submissions as appropriate. Lastly, DOE proposed to expand the product-specific information it was collecting with respect to each of the covered products and covered equipment to help DOE better understand the underlying attributes of the basic model's efficiency that impact the testing and certification data.

DOE generally received comments on the following issues related to its proposed revisions to the certification reporting requirements: (1) Reporting sample size and total number of tests performed; (2) reporting of testing data; (3) reporting use of an Alternate Rating Method (ARM)/Alternative Efficiency Determination Method (AEDM) or other alternative method of rating; (4) defining “distribute in commerce”; (5) product-specific revisions to reporting requirements. With the exception of the requirement for reporting the total number of tests performed, DOE is adopting all of the revisions to its reporting requirements proposed in the September 2010 NOPR. A discussion of specific stakeholder comments on these issues is presented below.

1. Reporting Sample Size and Total Number of Tests Performed

Under the rule adopted today, manufacturers must report the size of the sample tested, but need not report the number of tests performed. With regard to DOE's proposal to require annual reporting of sample size, DOE received comments in opposition from AHAM and NEEA. (AHAM, No. 98.1 at p. 4; NEEA, No. 67.1 at p. 6) NEEA argued that there are no compelling reasons to require submission of sampling plan information or data as part of certification. (NEEA, No. 67.1 at p. 6) The Department disagrees.

For purposes of certification testing, the determination that a basic model complies with the applicable conservation standard must be based on the sampling procedures, which are now found, by product, in 10 CFR Part 429. The sampling procedures provide that “a sample of sufficient size shall be tested to insure [compliance].” Unless the product-specific regulations specify otherwise, a minimum of two units must be tested to certify a basic model as compliant. This minimum is implicit in the requirement to calculate a mean—an average—which requires at least two values. Under no circumstances is a sample size of one (1) authorized. Manufacturers may need to test more than two samples depending on the variability of their sample. Therefore, the sample size can be an important element when evaluating the compliance of a basic model.

Consequently, the Department believes it is still important to request information regarding the sample size used in calculating the certification values submitted to DOE. As DOE has previously found,
see http://www.gc.energy.gov/documents/certification_samplingplan.pdf,
there is a significant amount of confusion in this area and DOE has attempted to clarify the sampling provisions, while maintaining the same level of tolerances, in the final rule. Sample size information that is submitted with the certification report will allow the Department to better understand how manufacturers are calculating their certified values. In the event the Department requests the test data underlying certification, manufacturers must provide the test data for each sample. DOE strongly encourages manufacturers to maintain records that clearly distinguished between each sample using unique identifiers like serial numbers and that provide a clear summary of how the appropriate statistics were applied to generate the certified ratings.

The September 2010 NOPR also proposed to require that manufacturers report the total number of tests per sample. AHAM, the Air-Conditioning, Heating and Refrigeration Institute (AHRI) and ALS objected to reporting the total number of tests performed in the annual certification report. (AHAM, No. 98.1 at p. 4; AHRI, No. 91.1 at pp. 9-10; ALS, No. 66.1 at p. 2) Specifically, AHAM commented that it failed to see how this information is necessary or useful to DOE. As the commenters suggest, this information may not be as helpful to understanding the certified values since the number of tests performed by unit can vary widely based upon a number of factors, including manufacturing practices and production lots. Therefore, DOE will not require the manufacturer to report the

total number of tests performed per sample. Manufacturers may not use multiple tests of a single unit as separate samples when applying the sampling procedures.

2. Reporting of Testing Data

A number of commenters urged DOE to require that manufacturers report all test data for all covered products and equipment in support of the certified value reported to DOE. (
See, e.g.,
NRDC, No. 80.1 at 4) NEEA stated that it supports the submission of non-regulatory metrics data from which the metric is derived. (NEEA, No. 67.1 at p. 2) Several manufacturers, however, strongly opposed reporting test results as part of the annual certification requirement. (Traulsen, No. 52.1 at p. 4; ALS, No. 66.1 at p. 2; BSH, No. 89.1 at p. 4) Specifically, Traulsen noted that providing such detailed data would compromise its product designs and competitive advantage. (Traulsen, No. 52.1 at p. 4) ALS stated that such a requirement would necessitate a huge undertaking by DOE to manage the submission and recordkeeping of all data for all the covered products under DOE's charge. (ALS, No. 66.1 at p. 2)

The Department did not propose in the September 2010 NOPR to require submission of test data in the certification report, and such a requirement is not part of this final rule. While the Department believes that test data is a key factor in helping the Department understand the certified rating, DOE does not believe it is necessary to collect test data from all manufacturers at this time. Instead, DOE is hoping that by expanding the certification data that the Department is collecting and providing additional clarity in the regulations as to the processes manufacturers must follow to determine the certified ratings DOE will be in a better position to understand the data underlying compliance. Although DOE is not mandating that manufacturers submit test data along with each certification report at this time, the Department's regulations continue to require manufacturers to retain test data records in an easily accessible format and provide them to the Department upon request.

3. Reporting Use of an ARM/AEDM or Other Alternative Method of Rating

From the comments, it appears there is general support for requiring manufacturers to submit information related to waivers, exemptions, and approved alternative rating methodologies along with their certification submissions. (
See, e.g.,
NEEA No. 67.1 at 3) NEEA, for example, strongly supported the requirement that manufacturers report this information as part of the certification process. GE Prolec Distribution Transformers (GE Prolec) commented that, due to high volume designs and volume variations, manufacturers that use an AEDM for certification should have to update the AEDM substantiation each year and include this in the annual recertification process. (GE Prolec, No. 95.1 at p. 4) ABB Inc (ABB) noted that there is no approval process for an AEDM and, as such, the requirement to include the approval date should be removed from the certification report. (ABB, No. 53.1 at pp. 11-12) Currently, the regulations provide for use of an alternative rating method only for residential central air conditioners and heat pumps, commercial heating, ventilation, air-conditioning, and water heating equipment (HVAC and WH), electric motors, and distribution transformers. While ABB is correct that certain products, such as commercial HVAC and WH equipment do not require approval of the AEDM before it is used, other products, like residential central air conditioners and heat pumps, do. Thus, these approvals are product-specific. DOE has clarified this in the final rule, which states that the information should be submitted, if applicable. The product-specific templates, which will be available for use with the new online submission system, will also be product-specific and consistent with DOE's regulations.

DOE also believes that manufacturers need the ability to specify that they have not performed actual testing but have modeled or simulated testing through the use of an ARM or AEDM or have used an alternative testing method authorized through a test procedure waiver, as the certification report itself requires the manufacturer to certify that it has tested the model. Providing alternative rating or alternative testing information in the certification report allows the manufacturer to make a more accurate certification statement to the Department. Similarly, in order to make an accurate certification statement to the Department, a manufacturer needs to identify any basic model that is being certified in accordance with an exception to the applicable standard. Accordingly, DOE adopts this requirement in today's final rule to provide an accurate reflection of the test procedures or exceptions used as a basis for the certification.

4. Defining “distribute in commerce”

EPCA's standards and DOE's certification and compliance requirements apply to covered products and equipment that are “distribute[d] in commerce.” A number of commenters requested that the Department adopt a definition of “distribution in commerce” in its regulations. Mitsubishi Electric & Electronics USA, Inc. (MEUS) stated its concern that the definition of “introduction into commerce” is so broad it requires manufacturers to certify before providing information to the distribution base. As a solution, MEUS recommended that DOE de-link certification with “introduce into commerce.” (MEUS, No. 86.1 at p. 5) Additionally, NEEA expressed its concern that the definition of “distribute in commerce” would require certification prior to a decision to actually market the product. (NEEA, Public Meeting Transcript No. 67.1 at p. 336) Traulsen commented that DOE should define “distribution in commerce” as a published price. (Traulsen, No. 52.1 at p. 4)

EPCA defines “distribute in commerce” as “to sell in commerce, to import, to introduce or deliver for introduction into commerce, or to hold for sale or distribution after introduction into commerce.” (
See
42 U.S.C. 6291 (16).) The Department recognizes that products may be imported for prototyping, research, field testing, or trade shows while the product is still being developed or before it may be available to the general public for a price. But the Department's interpretation of this term and the application of the statute's definition will necessarily depend on a particular manufacturer's production practices, business decisions, and the facts and circumstances of a particular case. Therefore, DOE is reluctant to dictate a single point in time for all manufacturers when the product development process stops and when distribution in commerce begins. As such, the Department declines to add a precise definition of “distribution in commerce” into its regulations. Instead, in each case, DOE will look to a number of factors to determine whether a model of a regulated product has been “distributed in commerce.” Such factors will include the following:

• Whether units of the model have been sold or offered for sale in exchange for monetary compensation;

• Whether units have been included in marketing material made available to the public (
e.g.,
on Web sites or in catalogs);

• Whether the manufacturer has distributed marketing material that includes a claim or statements regarding the product's efficiency;

• Whether a unit has been shown at trade show; and

• The number of units produced, distributed, imported, and/or sold.

A model must be certified to DOE as compliant with the applicable standard prior to distribution in commerce, but the exact point at which any particular model has, in fact, been distributed in commerce may vary considerably across product types and manufacturers.

5. Product-Specific Revisions to Reporting Requirements

In the September 2010 NOPR, the Department proposed including reporting requirements for products that did not previously have to submit information, including those added to DOE's programs by the Energy Independence and Security Act of 2007. In addition, the Department sought comment on expanding its sampling plans for certification to “features” other than the regulatory metrics. As an example, DOE suggested that the actual storage volume of a residential water heater may be a metric that should be subject to sampling requirements.

Today's rule extends the reporting requirements to all products regulated under EPCA, but does not impose sampling plans for features other than the regulatory metric. The Department's certification requirements are the foundation of DOE's compliance and enforcement framework and will be mandatory for all products regulated by EPCA.

Commenters generally disagreed, however, with the approach of extending the sampling plans beyond the regulatory metrics. For example, AO Smith commented that DOE should only test products for values that are covered in the current regulations, such as energy efficiency. (AO Smith, No. 81.1 at p. 3) Similarly, Bradford White Corporation commented that adding sampling plans and tolerances for other features of products is redundant and burdensome. (BWC, No. 45.1 at p. 2) While DOE is not adopting sampling plans for features other than the regulatory metrics at this time, DOE is expanding its product-specific certification requirements to require this type of information in the certification report.

DOE believes information about features that affect the energy-efficiency of the product is essential for DOE to audit compliance and for consumers to make informed decisions about product purchases. In addition, DOE notes that manufacturers have this information on hand and typically provide it in their marketing materials, on their Web site, or to product retailers. DOE's current regulations already request this type of information for certain products and equipment and requiring this information in the certification report is consistent with DOE's adoption of a more uniform approach to certification. In some instances, product or equipment feature information is necessary to determine how to apply DOE's test procedures. Thus, DOE believes this type of information is essential to any verification testing and enforcement testing that may be conducted by the Department. To help interested parties identify the new product-specific information to be submitted in certification reports, DOE has included this on a product-by-product basis throughout Part 429.

C. Certifying Entities and Third-Party Representation

Current certification regulations allow either the manufacturer or private labeler to submit certification reports and compliance statements for each basic model. DOE proposed, in the September 2010 NOPR, to require that manufacturers be solely responsible for submitting the certification reports to DOE. Under this proposal, the certification burden would be placed on the manufacturer, and not the private labeler, although the manufacturer would still have the option of electing to have its private labeler act as a third-party filer and submit the certification report on the manufacturer's behalf. With regard to third-party filers, DOE proposed in the September 2010 NOPR to make clear in its regulations that it may refuse to accept certification reports from a third party with a history of poor performance. A discussion of comments on this issue is below.

In today's rule, DOE is adopting its proposed requirement that manufacturers be solely responsible for submitting certification reports, which would include manufacturer information, as well as private labeler information and/or brand information, where appropriate. AWE and BWC submitted comments supporting DOE's proposal to hold the manufacturer solely responsible for submitting certification reports to DOE. (AWE, No. 38.1 at p. 2; BWC, No. 45.1 at p. 2) The Department considered NEEA's suggestion that the party responsible for introducing the product into commerce in the U.S. should be responsible for certification, whether that is a manufacturer, third-party private labeler, or an importer. (NEEA, No. 67.1 at p. 3) The Department notes that, pursuant to EPCA, an importer is a manufacturer and is included in DOE's proposal. While NEEA's suggestion has some conceptual appeal, the Department believes that such an approach would create confusion and be difficult to administer as it may be unclear who is the party responsible for introducing the product into commerce in a particular case. (
See, e.g.,
above discussion regarding the definition of distribution in commerce.) Another commenter, the NEMA Motor & Generator Section, argued that DOE should continue to permit the private labeler to submit certification reports on electric motors as the information required is well known by the private labelers. (NEMA, No. 85.1 at p. 23) DOE believes that, in most cases, the manufacturer, rather than the private labeler, is one that tests a model and therefore is in the best position to provide certification information to the Department and to retain the underlying test data as required by the rules. DOE reiterates, however, that under today's rule, a manufacturer may elect to have its private labeler act as a third-party filer and submit the certification report on the manufacturer's behalf.

Commenters generally supported DOE's proposal to continue to allow third parties to submit certification reports to DOE on behalf of the manufacturer, as long as the third party does not have a history of poor performance. (
See, e.g.,
AHAM, No. 98.1 at p. 6; BWC, No. 45.1 at p. 3) The Department notes that although a manufacturer is ultimately responsible for submission of the certification reports to DOE, it is a criminal violation for third parties to make knowingly false statements to the government. AHAM and BSH suggest that DOE notify the manufacturer or private labeler when the third-party it has selected has not met DOE's requirements given that the manufacturer or private labeler is the party that bears the ultimate liability for the report. (AHAM, No. 98.1 at p. 6; BSH, No. 89.1 at p. 4) DOE agrees that manufacturers should be notified in such cases by the third-party certified barred from submitting on behalf of manufacturers. DOE may also publish on its Web site a list of third-party certifiers barred from submitting certification reports. Intertek, UL and Earthjustice requested that DOE provide more specificity regarding when DOE will deem a third-party submitter to have a history of poor performance. (Intertek, No. 88.1 at p. 2; UL, No. 60.1 at p. 2; Earthjustice, No. 83.1 at p. 3) DOE clarifies that there is not a set of specific circumstances that must be met for a third-party certifier to have a history of poor performance. However, in each case, DOE will look at circumstances, such as the number of certification violations involving the

third party, including number of reoccurrences, the scope and type of the violations (
e.g.,
was certain data missing or was there a failure to file altogether), the willingness of a third-party certifier to cooperate with DOE, and any corrective actions taken to prevent recurring problems.

D. Submission of Certification Reports

In the September 2010 NOPR, DOE proposed to remove the certified mail and e-mail options for filing certification data that are currently allowed in DOE's regulations and make electronic submission of certification reports through the Compliance and Certification Management System (CCMS) found at
http://www.regulations.doe.gov/ccms
the sole method of submission. CCMS will have sample templates for all covered products and covered equipment available for manufacturers to use when submitting certification data to DOE.

The Department received few comments on this issue, with the majority of commenters supporting the move to exclusive use of the CCMS for certification. Specifically, NEEA commented that the proposed move to electronic filing for certification will reduce manufacturer compliance burdens and should allow for consistency of filed data from one Federal agency to another (NEEA, No. 67.1 at p. 3). Similarly, GE Prolec supported the CCMS approach, but also noted that there is currently no CCMS template for distribution transformers. (GE Prolec, No. 95.1 at p. 11; Public Meeting Transcript, No. 103 at p. 143) GE Prolec requested that it be able to review and comment on a proposed template for distribution transformers before it is finalized. DOE received one comment from First Co. opposing the use of CCMS as the sole method of certification because it would take time and a significant amount of work for manufacturers. First Co. suggested that the new CCMS only filing requirement should not become effective prior to July 1, 2011, to allow a reasonable period of time before converting to an electronic-only filing system. (First Co., No. 76.1 at p. 2)

DOE believes the availability of electronic filing through the CCMS system should reduce compliance burdens, streamline the process, and provide the Department with needed information in a standardized, more accessible form. This electronic filing system will also ensure that records are recorded in a permanent, systematic way and enable the Department to move towards a public, searchable database. Thus, in this final rule DOE removes the certified mail and e-mail options for filing certification data that are currently allowed in DOE's regulations. DOE notes that the CCMS requires users to apply to use the system by filling out a registration form, signing a compliance statement, and receiving a personal password. Due to the number of user requests the Department expects to receive by the compliance date of the certification requirements being adopted in today's final rule, DOE strongly encourages users to set-up their accounts well in advance of the deadline. In addition, the CCMS templates with the new requirements for all covered products and covered equipment should be online shortly after the publication of today's final rule. The Department also encourages manufacturers, to the extent possible, to fill out these templates in advance of the compliance date in case questions arise.

E. New Basic Model Filing, Basic Model Concept, and Notice of Discontinuance

1. New Model Filing and Basic Model Concept

In addition to the new annual certification requirement discussed above, DOE's September 2010 NOPR retained the existing regulatory requirement that any new basic model be certified before distribution in commerce. The Department explained that this requirement would apply to newly manufactured and produced basic models, as well as models that have been modified in a way that decreases a model's efficiency or increases its consumption and thus constitutes a new basic model. In connection with this requirement, the Department solicited comments on whether, and if so how, the Department should clarify the basic model concept to better identify whether and how energy or water use characteristics of a product may vary across different models in a basic model group. The Department's current regulations provide product-specific basic model definitions, which typically state that models within the same basic model group have “essentially identical” energy or water use characteristics. 10 CFR 430.2; 431.62, 431.172, 431.192, 431.202, 431.222, and 431.292. In the September 2010 NOPR, DOE asked how manufacturers determine that a particular model constitutes a new basic model, the difference in the energy use characteristics a typical change may have on a per product basis, and whether DOE should adopt a regulation requiring that a model be recertified as a new basic model if modifications impact the energy or water characteristics by a given
de minimus
percentage.

In response to DOE's questions, several manufacturers provided detailed product and manufacturer-specific information as to how they determine and make changes to basic model groupings. (
See, e.g.,
Rheem, No. 79.1 at pp. 1-3; First Co., No. 76.1 at p. 1) Others, like NRDC, urged DOE to adopt specific and stringent product-specific thresholds for increases in energy consumption or decreases in energy efficiency that must be deemed a new basic model. (
See, e.g.,
NRDC, No. 80.1 at p. 2)

More generally, commenters recognized the importance of the basic model concept and sought additional clarification on the matter. (
See, e.g.,
AHAM, No. 98.1 at pp. 2-3 (seeking “clear and uniform rules” for “determining that a particular model constitutes a new basic model”); NRDC, No. 80.1 at pp. 2-3) Some commenters offered ideas for adopting a general definition of the basic model concept. Consumers Union, for example, urged DOE to establish that any differences in electrical and mechanical parts and any significant changes in functional volumes, capacity or water usage should be categorized as different basic models. (Consumers Union, No. 74.1 at p. 2) Along similar lines, NRDC suggested that DOE look to California's definition of `basic model” as a model along with an additional requirement that products within a basic model have similar efficiency and energy performance. (NRDC No. 80.1 at p. 2) NEEA cited California's approach, but also recommended that DOE allow for conservative ratings and simply require that all models in a basic model grouping have the same certified efficiency rating, on the ground that manufacturers certify compliance with a minimum standard rather than a performance level. (NEEA, No. 67.1 at pp. 4-5)

A number of manufacturers and trade associations urged DOE to allow manufacturers to rate their products conservatively, so long as the ratings are supported by the test results and comply with the applicable standard. As Rheem explained, conservative ratings ensure performance for consumers that is the same or better than the rating, while giving manufacturers “the flexibility to address fluctuations in component pricing or availability without the added burden of re-rating an appliance for every change.” (Rheem, No. 79.1 at p. 3) Whirlpool similarly noted that manufacturers may rate products conservatively “to allow for natural fluctuation in component

tolerances and similar unit-to-unit variances.” (Whirlpool, No. 78.1 at p. 1) Reflecting manufacturers' desire for flexibility, AHAM proposed that, rather than establishing de minimus percentages, DOE should require manufacturers to certify changes to a basic model as a new basic model “when the test results no longer support the rated value,” explaining that results support a rated value when they demonstrate higher energy efficiency or lower energy consumption than the rating. (AHAM, No. 98.1 at p. 3) AO Smith advocated for a requirement that basic models have the same critical components and control logic along with a de minimus percentage that reasonably compares to enforcement sampling provisions. (AO Smith, No. 81.1 at pp. 1-2)

Although all of these commenters expressed varying approaches to the basic model concept, there was general agreement that a modification to a model that would increase energy or water consumption—such that testing would no longer support the rated value—should constitute a new basic model that must be certified to DOE. (
See, e.g.,
AHAM, No. 98.1 at pp. 2-3; NRDC, No. 80.1 at pp. 2-3) The existing regulations already require certification of a new basic model if a modification results in an increase in energy or water consumption beyond the rated amount, and DOE is retaining that requirement.

DOE agrees with the comments that the `basic model' concept is fundamental to the conservation standards regulatory framework. It allows manufacturers to group like models for purposes of fulfilling the Department's certification requirements, thereby reducing the burden placed on manufacturers by streamlining the amount of testing they must do to rate the efficiencies of their products. At the same time, the basic model provides the relevant basis for Departmental enforcement actions, including determinations of non-compliance.

Accordingly, to clarify the basic model concept, today's rule centralizes and aligns the existing product-specific basic model definitions in a general definition, which provides (with some exceptions noted in the regulatory text) that a basic model means “all units of a given type of product (or class thereof) manufactured by one manufacturer, having the same primary energy source, and which have essentially identical electrical, physical, and functional (or hydraulic) characteristics that affect energy consumption, energy efficiency, water consumption, or water efficiency.” Although in some cases, the language of this general definition differs slightly from the precise language of the product-specific definitions, DOE emphasizes that this clarification reflects DOE's intent to maintain the status quo until a future rulemaking. This change is intended to provide a single, uniform definition of the basic model using language that permits what the Department understands to be the current practice—the grouping together of individual models with essentially (but not necessarily exactly) identical energy or water efficiency characteristics.

The Department is not, at this time, adopting threshold de minimus changes that would trigger the creation of a new basic model or otherwise establishing set criteria for what is meant by “essentially identical” characteristics. The record suggests that identifying specific percentages is a complicated matter, particularly given that there may be significant variations among manufacturers and products with respect to basic model groupings. Thus, the Department continues to review the bases for more precise, product-specific limitations on which models can be grouped together as a basic model. DOE hopes to address this in the next phase of the certification, compliance, and enforcement rulemaking and will take all of the comments in the record into account at that time. DOE understands that, in the meantime, today's rule will permit flexibility in determining how manufacturers choose to group individual models with essentially, but not exactly, identical energy or water efficiency characteristics. DOE encourages manufacturers to adopt a reasonable approach to basic model groupings and to certify as a single basic model individual models with only superficial differences, such as product finishes. Furthermore, the Department provides the following guidance on DOE's basic model certification and compliance obligations.

First, all models identified in a certification report as being the same basic model must have the same certified efficiency rating. With this rulemaking, manufacturers may elect to group individual models into basic models at their discretion to the extent the models have essentially identical electrical, physical, and functional (or hydraulic) characteristics that affect energy efficiency, energy consumption, water consumption, or water efficiency. However, the rated efficiency certification and representations of all of the individual models represented by a given basic model must be the same. Additionally, if a manufacturer wishes to change the certified rating of a particular model, this change constitutes the creation of a new basic model that must be certified to the Department.

Second, any individual model that is modified resulting in performance that is less efficient than the rated level when tested in accordance with the DOE test procedures in Parts 430 and 431 and the applicable sampling plans in Part 429 must be re-rated as a new basic model and certified to DOE. Certified ratings must be supported by tested values that are at least as efficient as the rating when the applicable sampling plans in Part 429 are applied.

Third, manufacturers may rate models conservatively, meaning the tested performance of the model(s) must be at least as good as the certified rating, after applying the appropriate sampling plan. The sampling plans are designed to create conservative ratings, which ensures that consumers get—at a minimum—the efficiency indicated by the certified rating. In this final rule, DOE allows manufacturers to use conservative ratings beyond those provided by the sampling plans. If DOE determines that any individual model within a basic model does not meet an applicable conservation standard, however, all models within the basic model group will be deemed non-compliant. Thus, as NEEA explained “the larger the basic model group, the larger the risk associated with a compliance failure.” (NEEA, No. 67.1 at p. 5)

Finally, under the certification requirements adopted today, unless otherwise specified, manufacturers must identify in their certification reports the individual models that are included in each basic model. The Department's approach to certification, compliance, and enforcement depends on DOE having information about which individual models are covered by a given basic model.

2. Basic Model Numbering

In the September 2010 NOPR, DOE proposed that manufacturers must designate a new basic model number when an existing model is modified such that a new basic model is created to permit transparency and improve consumer awareness. Several commenters, including AHAM, NEEA, Whirlpool, and ALS, expressed support for DOE's proposal to require a new number for a new basic model so long as a new basic model is created only when test results no longer support the rated value. (
See, e.g.,
ALS, No. 66.1 at p. 1; Whirlpool, No. 78.1 at pp. 1-2; AHAM, No. 98.1 at p. 3; NEEA, No. 67.1 at p. 5) A number of manufacturers, however, objected to the new basic

model number requirement as costly, administratively burdensome, and disruptive to the marketplace. (
See, e.g.,
Traulsen, No. 52.1 at p. 1 (estimating a 25% increase in marketing costs); Delta, No. 94.1 at p. 1 (describing increased burden from updating literature, advertising materials, and installation instructions); and AO Smith, No. 81.1 at p. 1 (emphasizing the stress to their customers from model number changes))

In light of these comments, the Department will not require a new basic model number when a manufacturer creates a new basic model unless DOE has determined that the basic model is non-compliant with the standard. If manufacturers—on their own—seek to certify a new basic model, DOE will not require that they designate new model numbers to avoid unnecessary advertising, marketing, and consumer related costs. But, should DOE determine that a basic model does not comply with the applicable standard, manufacturers cannot certify any of the model numbers included in that basic model using the same model numbers certified in the basic model determined noncompliant. If, for example, a manufacturer wishes to make changes to a noncompliant basic model to bring it into compliance, that modified model(s) must be recertified as a new basic model, with a new model number(s).
See
10 CFR 429.114(d). We reiterate that, in such cases, the Department is not requiring any particular numbering system or convention, only that it has a new basic model number to distinguish it from the noncompliant basic model. The Department believes that new model numbers are warranted in such cases to prevent consumer confusion and permit the Department to monitor compliance effectively.

We note that designating new model numbers for a new basic model may be prudent in some circumstances even when it is not required by today's rule. DOE enforcement efforts will be based on the basic model number. A manufacturer that increases the efficiency of a model may elect not to recertify it using a new basic model number. If, however, DOE tests an earlier-manufactured unit and determines the basic model to be non-compliant with the standard, the manufacturer will be required to cease distribution of all units of all models listed under that basic model number, even if modifications to the model may have made it compliant over time. Furthermore, we note, as Whirlpool's comment points out, that the FTC has issued a staff opinion stating that the failure to change model numbers when changing the efficiency rating of a product may be considered an unfair and deceptive practice in violation of Federal law. (Whirlpool, No. 78.1, at p. 2 (attaching FTC staff opinion letter))

3. Notice of Discontinuance

In the September 2010 NOPR, the Department proposed to require that manufacturers report a model as discontinued as a part of their annual filing following the date on which production of a model has ceased and it is no longer being sold or offered for sale by the manufacturer or private labeler. Several commenters sought additional clarity with respect to when a model has been discontinued. AHRI members, such as Daikin AC, urged DOE to adopt AHRI's approach, whereby models are discontinued when production has stopped, yet stock remains, and such models remain listed in AHRI's directory for 6 months. (
See, e.g.,
Daikin AC, No. 73.1 at p. 1) Other commenters argued that discontinuance should be defined with respect to when production has ceased and should not refer to commerce. (
See, e.g.,
BSH Home Appliance, No. 89.1 at p. 2; AHAM, No. 98.1 at p. 7) And one commenter suggested that DOE should simply remove all requirements for reporting discontinued models to DOE. (
See
ABB, No 53.1 at p. 8)

Today's rule retains the requirement that manufacturers or certifying parties (
i.e.,
third-party filers acting on behalf of a manufacturer) notify DOE in their annual certification filing when a model is no longer being produced and the manufacturer or private labeler is no longer offering it for sale. EPCA obligates DOE to ensure that all covered products distributed by manufacturers and private labelers in U.S. commerce comply with applicable Federal conservation standards. The reporting requirements for discontinued models—like the certification reporting requirements themselves—provide the Department with necessary information about the products that are being distributed in U.S. commerce and thus, which products are subject to DOE's regulatory regime. As one commenter put it, “knowledge of what covered products are being distributed in commerce at any given time is the foundation of an effective certification and enforcement program.” (NEEA, No. 67.1 at p. 2)

The Department's view of when a model is discontinued stems from EPCA's statutory framework. Although DOE understands that it may be easier for manufacturers to track production dates, the relevant information for DOE's compliance and enforcement efforts, and manufacturer or private labeler liability, does not stem from production, but from the distribution of a model in commerce by the regulated entity. Thus, the Department will consider a model to be discontinued when production has ceased and when the manufacturer (including importer) or private labeler is no longer offering the product for sale. To reduce the burden on manufacturers, today's rule no longer requires notification at the time of discontinuance, but rather requires that a model's discontinuance be reported to DOE as a part of the annual filing.

The Department emphasizes, moreover, that whether a model is discontinued depends on whether the manufacturer, importer, or private labeler has ceased production and stopped offering the model for sale. It does not depend upon distributor or retail sales and offerings. EPCA's standards and the Department's reporting obligations regulate manufacturers, importers, and private labelers. The certifying entity will know when it stops offering a model for sale, but would have no way of knowing when distributor or retail stock has been depleted. Thus, in the annual filing, the manufacturer or certifying entity should report basic models which are no longer being produced and that the manufacturer or private labeler is no longer offering for sale.

F. Certification Testing, Generally

Under existing regulations, the sampling procedures for certain consumer products and certain commercial and industrial equipment to be used for certification testing are set forth in sections 430.24, 431.65, 431.135, 431.174, 431.175, 431.197, 431.205, 431.225, 431.265, 431.295, and 431.328. In the September 2010 NOPR, DOE proposed to consolidate existing sampling provisions in Part 429 and establish sampling provisions for the types of consumer products and commercial equipment that do not currently have them. Further, DOE proposed the use of a statistically meaningful sampling procedure for selecting test specimens of consumer products and commercial and industrial equipment, which would require the manufacturer to select a sample at random from a production line and, after each unit or group of units is tested, either accept the sample or continue sampling and testing additional units until a rating determination can be made. DOE did not propose a specific sample size for each product because the sample size is determined by the validity of the sample

and how the mean compares to the standard, factors which cannot be determined in advance.

While DOE has moved the sampling plans for all covered products and covered equipment, except electric motors, to Part 429, DOE is not adopting any changes to the existing tolerances at this time. In this final rule, DOE restructured the presentation of the sampling plan and statistical information and included the Student's t-distribution values to help manufacturers in understanding the process behind calculating the certification values for each product. DOE hopes these changes, which are editorial in nature, provide the additional clarity that interested parties have been seeking regarding DOE's sampling procedures. Table III.1 demonstrates a mapping between the existing location in parts 430 and 431 and the future location in part 429 of the sampling plans that manufacturers apply to the test data in order to generate their certified ratings.

Table III.1—Current and Future Locations of the Provisions for Statistical Sampling Plans for Certification Testing

Product type

New regulation
citation in final rule

Existing regulation
citation

Residential refrigerators, refrigerator-freezers and freezers
10 CFR 429.14
10 CFR 430.24(a)-(b).

Room air conditioners
10 CFR 429.15
10 CFR 430.24(f).

Central air conditioners and heat pumps
10 CFR 429.16
10 CFR 430.24(m).

Residential water heaters
10 CFR 429.17
10 CFR 430.24(e).

Residential furnaces
10 CFR 429.18
10 CFR 430.24(n).

Dishwashers
10 CFR 429.19
10 CFR 430.24(c).

Residential clothes washers
10 CFR 429.20
10 CFR 430.24(j).

Residential clothes dryers
10 CFR 429.21
10 CFR 430.24(d).

Direct heating equipment
10 CFR 429.22
10 CFR 430.24(g) and 10 CFR 430.24(o).

Conventional cooking tops, conventional ovens, microwave ovens
10 CFR 429.23
10 CFR 430.24(i).

Pool heaters
10 CFR 429.24
10 CFR 430.24(p).

Fluorescent lamp ballasts
10 CFR 429.26
10 CFR 430.24(q).

General service fluorescent lamps, general service incandescent lamps, and incandescent reflector lamps
10 CFR 429.27
10 CFR 430.24(r).

Faucets
10 CFR 429.28
10 CFR 430.24(s).

Showerheads
10 CFR 429.29
10 CFR 430.24(t).

Water closets
10 CFR 429.30
10 CFR 430.24(u).

Urinals
10 CFR 429.31
10 CFR 430.24(v).

Ceiling fans
Design standard. Not applicable.

Ceiling fan light kits
10 CFR 429.33
10 CFR 430.24(w) and 10 CFR 430.24(x).

Torchieres
Design standard. Not applicable.

Bare or covered medium base compact fluorescent lamps
10 CFR 429.35
10 CFR 430.24(y).

Dehumidifiers
10 CFR 429.36
10 CFR 430.24(z).

Class A external power supplies
10 CFR 429.37
10 CFR 430.24(bb).

Battery Chargers
10 CFR 429.39
10 CFR 430.24(aa).

Candelabra base incandescent lamps and intermediate base incandescent lamps
10 CFR 429.40
New per EISA 2007.

Electric motors
No change. (10 CFR 431.17)

Commercial refrigerators, freezers, and refrigerator-freezers
10 CFR 429.42
10 CFR 431.65.

Commercial heating, ventilating, air-conditioning (HVAC) equipment
10 CFR 429.43
10 CFR 431.173 through 10 CFR 431.175.

Commercial water heating (WH) equipment
10 CFR 429.44
10 CFR 431.173 through 10 CFR 431.175.

Automatic commercial ice makers
10 CFR 429.45
10 CFR § 431.135.

Commercial clothes washers
10 CFR 429.46
New per EISA 2007.

Distribution transformers
10 CFR 429.47
10 CFR 431.197.

Illuminated exit signs
10 CFR 429.48
10 CFR 431.205.

Traffic signal modules and pedestrian modules
10 CFR 429.49
10 CFR 431.225.

Commercial unit heaters
Design standard. Not applicable.

Commercial pre-rinse spray valves
10 CFR 429.51
10 CFR 431.265.

Refrigerated bottled or canned beverage vending machines
10 CFR 429.52
10 CFR 431.295.

Walk-in coolers and walk-in freezers
Design standard. Not applicable.

Metal halide lamp ballasts and fixtures
10 CFR 429.54
10 CFR 431.328

DOE sought comment on a variety of issues relating to sampling plans in the September 2010 NOPR. DOE is continuing to consider further changes to the sampling plans for certification testing of all consumer products, including: (1) Changes to the product-specific coefficients and the rationale for such changes; (2) whether DOE should continue to have different sampling plans for certification testing and enforcement testing; and (3) whether DOE should expand the submission of data requirements in the certification section to include test data and the details of the sampling procedures used for making representations of and certifying compliance with the energy and water use or efficiency. DOE will consider all of the comments submitted as part of this record as it continues any potential revisions in the next certification, compliance, and enforcement rulemaking.

G. Certification Testing Specific to Commercial HVAC and WH Equipment, Including the Use of AEDMs and VICPs

In the September 2010 NOPR, DOE proposed that one set of sampling procedures be used for certification testing of all types of commercial air-conditioning and water heating equipment (HVAC and WH) and for verification of the AEDM, regardless of participation in a voluntary industry certification program (VICP). DOE further proposed to allow all manufacturers of commercial HVAC and WH equipment, irrespective of participation in a VICP, to use both in-house testing facilities and independent laboratories at the manufacturer's discretion for certification testing.

In response to DOE's proposals, AHRI objected to the application of the more stringent non-VICP regulations to VICP participants. Specifically, AHRI stated that the certification testing requirements for VICPs should remain unchanged because changing them would actually be an advantage to those manufacturers that do not participate in a VICP. (AHRI, No. 91.1 at p. 8)

DOE does not agree with AHRI and is adopting its approach as proposed in the September 2010 NOPR. DOE believes that fair and equal treatment of all manufacturers of commercial HVAC and WH equipment is important regardless of participation in certification programs. While DOE recognizes that participation in industry programs can provide invaluable benefits to manufacturers, DOE does not believe the regulations for certification testing should be differentiated based on this factor. Certification sampling plans, which are applied to the certification testing results, have been established to capture the variances in manufacturing processes, testing methods, and materials. DOE does not believe these factors are influenced by participation in a VICP. As such, DOE is adopting identical provisions, which use certain provisions from the existing regulations, for both non-VICP and VICP participants.

H. Records Retention and Confidentiality

1. Records Retention by Manufacturers

In the September 2010 NOPR, DOE proposed to establish a record retention requirement for certification reports that would require the reports to be retained by the manufacturer as long as the model is being distributed in commerce and, for discontinued models, for two years from the date that production of a basic model has ceased and is no longer being distributed by the manufacturer. This requirement would be in addition to the records retention requirement for underlying certification test data, which existing regulations require manufacturers to maintain for two years. Records must be maintained such that they are readily accessible for review by DOE upon request.

In response to this proposal, BSH recommended that DOE strike the language proposed in the September 2010 NOPR requiring manufacturers to retain certification records for as long as the model is being distributed in commerce. Instead, BSH suggested that DOE simply state that records should be retained for two years from the date production ceased. (BSH, No. 89.1 at p. 4)

Although we recognize the date on which production ceases may be readily available to manufacturers, the Department's regulatory regime centers on the distribution of covered products in commerce, rather than manufacturers' production schedules. Thus, the Department is adopting in this final rule the requirement that certification records be retained for two years from the date that the manufacturer or certifying entity notified DOE that the basic model is no longer being distributed in commerce. As discussed above, the Department views a model as discontinued when the entity that certified the basic model (or the party represented by a third-party certifier) is no longer offering the model for sale. Accordingly, under today's rule, records must be retained for two years from the date of that submission. This approach creates a specific date known to both manufacturers and the Department and requires manufacturers to retain records for models in the distribution chain for a reasonable period of time after they are discontinued.

DOE also clarifies that, under its maintenance of records requirement, a manufacturer must retain the certification records, including test reports, which underlie the
each
certification of a model. As an example, if a basic model is certified to DOE on April 1, 2011, the test report underlying that certification report must be retained such that it can be provided to the Department upon request. A test report generated at a later date will not be sufficient. If the basic model is recertified to DOE on April 1, 2012, based on a different test report, the new test report underlying that certification report must be retained, in addition to the certification report underlying the 2011 certification.

2. Confidentiality of Information

In the September 2010 NOPR, DOE proposed to clarify in its regulations that the following information submitted pursuant to the certification requirements is considered public record: The manufacturer's name, brand name, model number(s), and all of the product-specific information submitted on the certification report. In addition, the Department retained the current approach whereby certifying entities seeking to withhold other information submitted to the Department from public disclosure must provide redacted copies at the time of submission.

In response, a number of commenters expressed strong support for public access to certification data. (
See, e.g.,
AWE, No. 38.1 at p. 2; NRDC, No. 80.1 at p. 6, NEEA, No. 67.1 at p. 3; Earthjustice, No. 83.1 at p. 2) As one commenter explained: “Providing the public with a ready means to access efficiency testing results strengthens the incentive for manufacturers to follow the law and helps ensure that they will be held accountable if they failed to meet efficiency standards.” (
See
Lish, No. 58.1 at p. 2) Several commenters encouraged DOE to establish a public online database as the repository for all product and equipment information to increase transparency and public access. (
See, e.g.,
NRDC, No. 80.1 at p. 6; NEEA, No. 67.1 at p. 3, First Co., No. 76.1 at p. 3) First Company, for example, offered “strong support for the development of a single DOE/FTC list of certified equipment that is published and publicly available on the DOE Web site,” that would include certification reports and notices of discontinuance. (First Co., No. 76.1 at p. 3)

As for the specific information to be considered as a matter of public record, several parties objected to making public the business relationship between a manufacturer and private labeler of a covered product. Delta Faucet, for example, commented that certification information related to private labelers should be segregated and kept confidential due to concerns for contracting with potential customers and release of such information to competitors. (Delta, No. 94.1 at p. 1) Similarly, AHAM recognized that who manufactures a privately labeled product “may be valid and valuable information to DOE as a regulator,” but that this information “is not publicly known and, in many cases, would harm companies' competitive postures if * * * such arrangements were disclosed.” (AHAM, No. 98.1 at p. 6) First Company suggested that, to avoid consumer confusion, only the following information should be made public for central air conditioners and heat pumps: “manufacturer name, private labeler name, brand name, basic model number, individual model numbers covered by that basic model, capacity, SEER and HSPF (if applicable) of the model.” (First Co., No. 76.1 at p. 3)

AHAM further opposed making CT(l), CT(m) and standard temperature sensor location information for refrigerators, refrigerator-freezers, and freezers available to the public because they would reveal confidential information. (AHAM, No. 98.1 at p. 6) AHAM also asserted that certification information should only be made public once the product is released into commerce. AHAM believes that releasing such information prior to the product's release will deflate product launches and release information to competitors before it is otherwise known. (AHAM, No. 98.1 at pp. 6-7)

The Department believes that making data accessible to the public provides increased transparency and accountability to the Department's regulatory regime. At the same time, the Department recognizes that certain information may be confidential in nature and exempt by law from public disclosure. To balance these interests, the final rule adopts the following framework for addressing the public disclosure of information submitted to DOE under Part 429, while protecting valid claims of confidential business information.

First, certain categories of certification information will be considered a matter of public record that DOE intends to make available to the public on its Web site. The Department is developing a public, searchable database that will allow the public ready access to certain certification information for covered products. This certification database is still being developed, and the Department hopes to make it available to interested parties in the coming year. While this will be a DOE database, we are continuing to work with FTC and EPA on establishing a consolidated Federal database of energy and water efficiency information.

Using this database, the Department intends to publicize the following certification information for covered products: The brand name, model number(s), and product-specific certification information for which no confidentiality concerns have been raised. With respect to manufacturer and private labeler information, we understand from the comments that there may be heightened competitive sensitivity attached to the identity of manufacturers and private labelers of certain products. We also note that the FTC has chosen not to publicize this information on its Web site. In recognition of this, the Department will follow the FTC's approach and publicize brand information in lieu of information that reveals business relationships between manufacturers and private labelers. Although DOE has decided not to include the manufacturer and brand relationship on the public database, the Department still requires this information be submitted as part of the certification report to the Department and it will be subject to the confidentiality provisions outlined below.

DOE also intends to publish in the public database product-specific information that is already available or is readily available, such as the energy or water ratings and volume measurements. Though some of this information is technical, no party has deemed it proprietary and it will increase the accountability of manufacturers' self-certification and DOE's compliance and enforcement activities. DOE will not publicize the CT(l), CT(m) and standard temperature sensor location for refrigerators and freezers in light of the concerns that this information would reveal design details of the control mechanisms of a product that manufacturers treat as confidential. All other product-specific certification information will be made publicly available.

Once the database is available, these public categories of certification information will be posted promptly upon receipt and remain available until DOE receives a notice of discontinuance. With respect to AHAM's concerns about the posting of information prior to product launch, we note that manufacturers can wait to file a certification report until a model is about to be distributed in commerce. Furthermore, DOE believes that instances in which the entirety of a certification filing must be kept confidential will be exceedingly rare. Should such instances occur, manufacturers should contact DOE, in advance, and provide a full explanation of the extenuating circumstances justifying such confidential treatment.

Second, for all other information submitted pursuant to Part 429, today's rule provides a mechanism for submitting parties to claim confidentiality on a case-by-case basis at the time of submission. Any person submitting information or data pursuant to Part 429 that the person believes to be confidential and exempt by law from public disclosure should submit via an attachment to CCMS: (1) A request for confidential treatment; (2) one complete copy, and (3) one copy from which the information believed to be confidential has been deleted or redacted. The request for confidential treatment must contain a comprehensive statement of the reasons for withholding the information from disclosure, including: (1) A description of the specific items for which confidential treatment is sought, (2) whether and why such items are customarily treated as confidential within the industry, (3) whether the information is generally known by or available from other sources, (4) whether the information has previously been made available to others without obligation concerning its confidentiality, (5) an explanation of the competitive injury to the submitting person that would result from public disclosure, (6) a date upon which such information might lose its confidential nature due to the passage of time, (7) why disclosure of the information would be contrary to the public interest; and (8) any other information that the party seeking confidential treatment believes may be useful in assessing whether its request for confidentiality should be granted.

DOE may defer acting on any requests for confidentiality until DOE receives a request for the disclosure of the information covered by the request. The information will be treated as confidential until DOE acts on the request and all subsequent appeal proceedings have been exhausted. In response to a request for the disclosure of information, DOE will review the submitter's views, but will make its own determination with regard to any claim that information submitted be exempt from public disclosure. If the

Department denies a request for confidentiality in whole or in part, seven days' notice of that determination will be given to the submitter pursuant to 10 CFR 1004.11(e) before the information is disclosed.

This approach provides submitters with an opportunity to express claims of confidentiality with particularity at the time the information is submitted, including a request for information to remain confidential for a set period of time, such as prior to a public product launch. Furthermore, it will allow the Department to determine whether a particular piece of information is exempt from public disclosure by law on a case-by-case, fact specific basis. In this way DOE can both consider confidentiality claims effectively and respond to disclosure requests promptly, while protecting against unlawful disclosure of information.

I. Enforcement Testing

1. Initiation of an Enforcement Action

The current regulations provide for enforcement testing only upon DOE's receipt of written information that a covered product or covered equipment may be violating a standard. 10 CFR 430.70(a); 10 CFR 431.373(a). In the September 2010 NOPR, DOE proposed to revise its procedures to make clear that, pursuant to section 6296 of EPCA, the Department retains the discretion to request data, test, or examine the standard compliance of any covered product or covered equipment at any time, and to initiate enforcement investigations and actions based on a belief that a covered product or covered equipment is not compliant with an applicable standard. 75 FR 56803; 56825.

Today's rule removes the requirement that DOE must receive a written complaint alleging a violation of the standard before it can perform enforcement testing to determine a model's compliance. The Department's need to exercise its discretion under the statute and enforce regulations proactively was recognized by a number of comments in the record. Consumer's Union and the Appliance Standards Awareness Project, for example, submitted comments in support of the Department's revision to its regulations to make clear that DOE, on its own, can initiate enforcement actions. (Consumer's Union, No. 74.1 at p. 3; Appliance Standards Awareness Project, Public Meeting Transcript, No. 103 at p. 21) Additionally, IAPMO R&T encouraged DOE to continue to seek companies that are not complying with the testing and reporting requirements so as to ensure a level, competitive playing field. (IAPMO R&T, No. 36.1 and 66.1 at p. 1)

Some commenters urged DOE to retain the existing limit on its discretion and require that it receive written information of a standards violation before testing to determine whether a product is compliant. Specifically, ABB requested that DOE retain the original requirement that a formal complaint must exist prior to the initiation of formal testing. (ABB, No. 53.1 at p. 11) AHRI also commented that the proposed change was unwarranted because DOE should have some reason for initiating an investigation of compliance or at least give preference to written information. (AHRI, No. 91.1 at p. 10)

The Department continues to believe that it is essential to align its regulations with its broad statutory authority under EPCA to initiate enforcement investigations and actions to determine if a covered product or covered equipment is compliant. This will ensure that the Department can enforce its regulations in a timely, effective manner as Congress intended. The enforcement program simply cannot be as effective if the Department can only initiate enforcement testing upon the receipt of an external complaint—DOE must be able to monitor compliance and test products at its own discretion.

Today's final rule reflects the Department's authority to monitor compliance by requesting data and testing products, at any time, and to initiate enforcement investigations and actions based on a belief that a covered product or covered equipment may not be compliant with an applicable standard. This authority comes directly from the statute,
see
42 U.S.C. 6296, which obligates the Department to ensure that all covered products and equipment comply with applicable Federal conservation standards. In addition, the Department's ability to request records, test products, and examine design standard compliance, at any time, is crucial to the deterrent effect of the Department's enforcement efforts. The Department believes its authority to take these actions will serve to encourage compliance.

Other commenters requested clarification regarding the criteria under which DOE will initiate an enforcement action. (
See
AWE, No. 38.1 at pp. 2-3; American Panel Corporation, No. 59.1 at p. 3; Royal Vendors Inc., No. 64.1 at p. 2; Hill Phoenix, No. 70.1 at p. 1) For example, American Panel Corporation suggested there should be written criteria setting conditions under which DOE may initiate enforcement testing without information from a third party. (American Panel Corporation, No. 59.1 at p. 3) Further, Ingersoll Rand expressed concerns because the September 2010 NOPR did not define the process that will be used to initiate enforcement testing. (Ingersoll Rand, No. 6.1 at p. 3) Similarly, NAMA noted its objection to DOE's ability to initiate enforcement testing at any time without notification, urging DOE to define the causes that would trigger an enforcement investigation. (NAMA, No. 11.1 at p. 6) NEMA commented that DOE should revise its regulations to require that DOE may initiate an investigation of compliance upon verified belief that a basic model may not be compliant. (NEMA, No. 26.1 at p. 11)

In practice, the Department's enforcement actions and how it chooses to exercise its enforcement authority will be dictated by the facts on a case-by-case basis. However, the Department understands commenters' desire for a greater understanding of the factors that DOE will use to guide the exercise of its enforcement discretion. We also recognize the importance of providing notice to regulated entities and making the Department's practices as transparent as possible. To provide further clarity, notice, and accountability, the Department plans to issue a policy statement on enforcement, which will address the types of factors and circumstances it will consider in deciding whether to initiate an enforcement action. The Department will make this policy statement available on its Web site in the near future.

2. Process Provided to Manufacturers During Enforcement Testing

Under the current regulations, DOE initially reviews the underlying test data supporting the certification and provides the manufacturer with an opportunity to come in and meet with the Department upon receipt of information regarding a potential standards violation. 10 CFR 430.70(a); 10 CFR 431.373(a). In the September 2010 NOPR, DOE proposed to allow DOE, at any time, to request any information relevant to determining compliance, including the certification and test data. 75 FR 56825. In addition, DOE removed the provision requiring DOE to offer to meet with the manufacturer prior to initiating testing.
Id.

Several commenters expressed concerns that removing these provisions would deprive manufacturers of the ability to respond in a timely and informed way to allegations of noncompliance. AHRI, for example,

commented that DOE should retain the requirement in its current regulations that DOE review underlying data provided by the manufacturer and offer the manufacturer the opportunity to meet with DOE to verify the compliance of the model(s) in question before initiating enforcement testing. (AHRI, No. 91.1 at p. 10) Similarly, AHAM argued that before a finding of noncompliance, DOE should communicate with the manufacturer or private labeler during the testing process and invite them to witness testing. (AHAM, No. 98.1 at p. 11) Additionally, AHAM stated that DOE should provide manufacturers with copies of test reports, regardless of whether the product is found to be compliant.
Id.
Traulsen also commented that DOE should provide the manufacturer with an opportunity to witness testing or, at a minimum, review the data and equipment prior to any final rulings. (Traulsen, No. 52.1 at p. 7)

The Department will continue to afford manufacturers due process and an opportunity to respond to allegations in the course of an enforcement investigation. The Department's forthcoming enforcement policy statement will provide additional guidance and detail on the enforcement process. However, in light of the comments, we address a few issues here as well. With respect to the manufacturer's certification test data, the Department agrees with interested parties that reviewing the data underlying the certifications prior to initiating enforcement testing is in an important step in the investigative process because it can reveal additional details that are not apparent in the certification data. Thus, the Department typically reviews the underlying certification data and test reports supporting the certification report prior to proceeding to enforcement testing. However, because there may be rare circumstances where expedited testing is necessary, DOE believes it is important to maintain flexibility by providing DOE with authority to request records and initiate testing at any time. DOE also agrees that manufacturers should have access to enforcement test data. DOE expects to provide the manufacturer with the test data reports after the enforcement testing has been completed. The Department will also return any test units provided by the manufacturer (or at the manufacturer's expense) once the case is officially closed.

3. Test Notice

DOE's current regulations require manufacturers to ship units for enforcement testing within five working days once they have been identified by DOE. 10 CFR 430.70(a)(v); 10 CFR 431.373(a)(v). In the September 2010 NOPR, DOE proposed to reduce the time period by which a manufacturer must ship test units of a basic model to the testing laboratory pursuant to a test notice from 5 to 2 days. 75 FR 56826.

In today's rule, the Department (1) retains the current regulation's five working day shipping rule for high volume, off-the-shelf products and (2) adopts a flexible window for low volume, custom built products. As discussed below, many of the commenters suggested that DOE separate built-to-order from pre-manufactured, off-the-shelf products, giving built-to-order products a longer time period to ship the basic model. The Department agrees and adopts this approach. To ensure that manufacturers have an adequate amount of time to ship test units for such low volume, built-to-order products, the Department is establishing separate shipping time periods by which a manufacturer must ship test units of a basic model for different groups of products.

For off-the-shelf products, which can be acquired at the retail level, DOE is retaining the current five-day window to ship a basic model to a test laboratory in the event a manufacturer receives a notice for enforcement testing from DOE. The record reflects that reducing the time frame from five to two days would impose a significant burden. In particular, JVC, Royal Vendors Inc., ALS, NEEA, Hill Phoenix, Ingersoll Rand, Delta Faucet, AHAM, AHRI, Manitowoc Ice, Craig Industries, Traulsen, GE Prolec, Kysor Panel Systems, and the Appliance Standards Awareness Project generally commented that two days is too short and would work an undue hardship on the manufacturer, distributor or dealer from whom the test samples are being acquired. (JVC, No. 56.1 at p. 1; Royal Vendors Inc., No. 64.1 at p. 2; ALS, No. 66.1 at p. 3, NEEA, No. 67.1 at p. 7; Hill Phoenix, No. 70.1 at p. 2, Ingersoll Rand, No. 6.1 at p. 4; Delta Faucet, No. 94.1at p. 2; AHAM, No. 98.1 at p. 9, AHRI, No. 92.1 at p. 10; Manitowoc Ice, Public Meeting Transcript, No. 103 at pp. 174-175; Craig Industries, Public Meeting Transcript, No. 103 at pp. 179-180; Traulsen, No. 52.1 at p. 6; GE Prolec, No. 95.1 at p. 6; Kysor Panel Systems, Public Meeting Transcript, No. 103 at p. 182; ASAP, Public Meeting Transcript, No. 103 at pp. 183-184)

For products like low-volume or built-to-order models that are unavailable upon receipt of the test notice at the manufacturer's facility, warehouse, distribution chain, or retailer, DOE will work with the manufacturer to obtain units as quickly as possible for a pending enforcement case. The comments in the record support a longer timeframe and a more flexible approach for these types of products. In particular, BWC, American Panel, AO Smith, NEMA, MEUS, NAMA, and ABB generally noted that the existing 5 days is too short, especially for custom, built-to-order products, which require a longer lead time to manufacture. (BWC, No. 45.1 at p. 3; American Panel, No. 59.1 at p. 3; AO Smith, No. 81.1 at p. 4; NEMA, No. 85.1 at p. 5, MEUS, Public Meeting Transcript, No. 103 at p. 183; NAMA, No. 25.2 at p. 5; ABB, No. 53.1 at p. 10) Some of these commenters also suggested a one-size-fits-all approach is impractical for a number of products. For example, American Panel asserted that 3 to 15 days are required to manufacture custom Walk-In Coolers or Freezers (WICFs). (American Panel, No. 59.1 at p. 3) Further, BWC asserted that 30 days is a more appropriate time period for shipping water heater test units, especially niche products, which are almost entirely built-to-order. (BWC, No. 45.1 at p. 3) Today's rule adopts a flexible approach in response to commenters' concern that it may not be feasible for low volume or built-to-order products to comply with a few days lead time for shipping test units for enforcement testing purposes.

4. Sampling for Enforcement Testing

The existing sampling procedures to be used for enforcement testing are set forth in Appendix B to Subpart F of Part 430 (consumer products), Appendix B to Subpart K of Part 431 (distribution transformers), Appendix C to Subpart S of Part 431 (metal halide lamp ballast), and Appendix D to Subpart T of Part 431 (certain commercial equipment).The sampling plan for enforcement testing of consumer products requires testing an initial sample of four products. Then, depending on the variation in the testing results of the initial sample, a second sample size of up to 16 additional units may need to be tested to make a determination of compliance or non-compliance per the current regulations. (Appendix B to Subpart F of Part 430)

For commercial products, DOE's existing regulations are similar to those of consumer products except there are provisions for testing a sample of less

than four products for commercial heating, ventilation, air-conditioning, and water heating equipment when the full sample cannot be obtained. In addition, the tolerances for certain commercial products are different due to the equipment-specific attributes such as manufacturing practices and testing procedures.

In the September 2010 NOPR, DOE proposed to increase the maximum sample size for enforcement testing of all products to 21 units. 75 FR 56826. DOE proposed this increase in the maximum number of units to account for the test sample needed for certain types of consumer lighting products. 75 FR 56804.

In addition, DOE recognized that a sample size of 20 total units under the existing regulations may not always be available for basic models that are low-volume or built-to-order. To accommodate these circumstances and reduce burden on manufacturers, DOE proposed to modify the existing sampling procedures to account for low-volume and built-to-order basic models. 75 FR 56803-804; 56826. Further, DOE proposed to retain the discretion to determine whether the basic model qualifies as low-volume or built-to-order. DOE proposed to make such determination by evaluating the number of units of a given basic model available at the manufacturer's site and all distributors.
Id.

Today's rule makes two general changes to the current enforcement sampling regulations. First, it increases the maximum number of units that may be tested to 21. Second, it adopts new, flexible sampling provisions for low volume or custom-built products. Together, these provisions permit the Department to identify units for enforcement testing effectively, depending on the circumstances of a particular case.

First, for high-volume, consumer products and commercial equipment, DOE retains its sampling plan proposal, under which DOE tests an initial sample size of four units per basic model and, depending on the variability of the test results, may test up to 17 additional units, as required, for enforcement testing. DOE believes this is the best approach to provide robust test results and ensure that products are not incorrectly found out of compliance. DOE notes that with the exception of increasing the maximum sample size for off-the-shelf products from 20 to 21—which reflects the test sample needed for certain types of consumer lighting products—the sampling provisions for enforcement testing are nearly identical to the current provisions found in DOE's regulations and those currently being used for enforcement testing.

Second, DOE agrees with many of the comments on the importance of flexibility where units are not available for testing, especially in the case of low-volume or built-to-order basic models. American Panel Corporation stated its belief that DOE should allow for additional sampling based on analysis of the first sample(s) since the initial testing of products could be impacted by testing queues of as much as six months. (American Panel Corporation, No. 59.1 at p. 3) Ingersoll Rand recommended that DOE consider the nature and the cost of the product under test. (Ingersoll Rand, Public Meeting Transcript, No. 103 at p. 319 and No. 6.1 at p. 3) General Electric Lighting encouraged DOE to do computer simulation of enforcement testing to ensure that DOE has a high degree of confidence that DOE will not produce a false signal of non-compliance. (General Electric Lighting, Public Meeting Transcript, No. 103 at p. 229) IAPMO R&T stated its support for DOE's current proposal for enforcement testing. (IAPMO R&T, No. 36.1 at p. 2) Royal Vendors misunderstood DOE's proposal and commented that an initial sample size of four units and an additional sample size of up to 21 units is troublesome because of the unit cost, which could be burdensome and the availability of those units could be difficult to obtain. (Royal Vendors, No. 64.1 at p. 2) NAMA opposed the enforcement sampling size procedures as they related to beverage vending machines because the manufacturers do not have the economic capacity to warehouse up to 20 beverage vending machines of each basic model. NAMA urged DOE to use its discretion when fewer than two beverage vending machines of a given model are available for testing within 30 days of the test notice. (NAMA, No. 25.1 at pp. 4-5) Hoshizaki America, Inc. stated its belief that test samples should be minimized for commercial equipment, generally, because these units can be costly to make and house if limited machines are sold each year. (Hoshizaki America, Inc. No. 75.1 at p. 1)

Recognizing these concerns, DOE has decided to adopt several enforcement sampling provisions that take account of low-volume or built-to-order consumer products and commercial equipment. First, DOE specifies provisions for certain covered products and equipment where there is a lower volume market and manufacturing tends to be more customized. These include automatic commercial ice makers, commercial refrigeration equipment, refrigerated bottled or canned vending machines, commercial HVAC and WH equipment, and distribution transformers. The initial sample size of these units matches that of high-volume consumer and commercial equipment, which is four units.

Second, DOE is including a provision that provides for testing of fewer than four units if they are unavailable at the time the test notice is received. While these provisions were proposed in the September 2010 NOPR, DOE has attempted to clarify them to aid manufacturers in determining the exact sample size required for enforcement testing depending on product or equipment type.

Finally, DOE has also included a general provision applicable to all covered products and covered equipment, which allows DOE to use its discretion in determining the sample size when covered products and covered equipment are generally unavailable. DOE will use many of the considerations that interested parties noted above in their comments, including the availability of units and the availability of third-party testing facilities to run the DOE test procedure.

5. Testing Done for Other Agencies

DOE proposed to allow units tested using the applicable DOE test procedure by DOE or another Federal agency, pursuant to other provisions or programs, to count toward units in the test sample for enforcement testing, so long as the testing is done in accordance with the DOE test procedures and certification testing provisions. 75 FR 56804. The record does not reflect any specific comments on this issue and DOE continues to believe the Department should not have to duplicate efforts taken by itself or by other agencies to re-test units that have already been tested by the Federal government using DOE's test procedure. Thus, DOE is adopting this provision, as proposed, in the final rule.

6. Test Unit Selection

Currently, DOE must obtain units for testing directly from the manufacturer's facility or another location specified by the manufacturer. In the September 2010 NOPR, DOE proposed to revise its test unit selection provisions for enforcement testing to allow DOE to select the units of a basic model to be tested from the manufacturer, a distributor, or directly from a retailer. 75 FR 56826. For low-volume or built-to-order products, DOE proposed that it would determine the most reliable method of selecting units that are

representative of those sold to consumers.
Id.

In today's rule DOE is adopting in its regulations that DOE may select units of a basic model to be tested for enforcement purposes from a distributor, a retailer, or the manufacturer. Reliable enforcement testing requires the selection and testing of an unbiased sample that is representative of the units distributed in commerce. Based on DOE's experience, it is necessary to obtain units from diverse sources to allow for an unbiased, representative, and sufficient sample to produce the most reliable testing. A number of commenters supported DOE's proposal to obtain test units from retailers and distributors, as well as directly from the manufacturer. (AWE, No. 38.1 at p. 3; NEEA, No. 67.1 at p. 7; NRDC, No. 80.1 at p. 6)

Some commenters objected to this change, arguing that test units should come directly from the manufacturer. BWC stated this was necessary since not every manufacturer distributes their product through the retail channel. (NAMA, No. 25.1 at pp. 5-6; BWC, No. 10049 at p. 3; AHRI, No. 92.1 at p. 10) Commenters also noted that DOE's approach of obtaining test units from retailers would be too burdensome for products with limited or no stock. For example, Craig Industries stated that a WICF test unit is not stocked and would therefore have to be built by the manufacturer and then shipped to DOE at a cost of approximately $6,000 per unit under DOE's test unit selection process. (Craig Industries, Public Meeting Transcript, No. 103 at p. 192) As described above, however, DOE did not propose and is not adopting a process to select exclusively from retail sources. Today's rule broadens the potential sources of units for testing. DOE is not changing from a manufacturer-supplied process to an exclusively retail-supplied process.

NAMA and AHRI further argued against selecting units from distributors or retailers because the manufacturer cannot be held responsible for equipment once it is out of their control. (NAMA, No. 25.1 at pp. 5-6; AHRI, No. 92.1 at p. 10) DOE agrees that manufacturers should not be held responsible for most post-production modifications; however, unaltered equipment should function as intended whether it is obtained directly from the manufacturer or through the manufacturer's normal distribution channels. NAMA also questioned whether DOE is considering testing used or rebuilt equipment that has been modified by the purchasers, which would not provide a valid test of compliance. (NAMA, No. 25.1 at pp. 5-6) DOE has previously stated that its authority does not extend to rebuilt and refurbished equipment, and DOE does not plan to test equipment not covered by regulation.
See, e.g.,
74 FR 44920. Similarly, DOE is not adopting any change to the existing regulatory requirement that no quality control, testing or assembly be performed on units selected for testing. Therefore, irrespective of the source (retail, distributor or manufacturer), DOE intends to obtain and test units to which no alterations have been made. More generally, DOE believes that selecting units from the retailer or distributor may often provide DOE with the best representation of a typical unit that is distributed in commerce.

DOE recognizes that for low-volume and built-to-order basic models that are not available from retailers or distributors, the only method of obtaining these units, in many cases, is from the manufacturer. Manufacturers of low-volume and built-to-order basic models also explained that they will most likely not have inventory available for enforcement testing. (
See e.g.,
GE Prolec No. 95.1 at pp. 5-6) In such cases, DOE does not intend to require manufacturers to produce units simply for the purpose of enforcement testing. Doing so exclusively could be burdensome and wasteful and could risk introducing bias in the enforcement test sample. Rather, DOE will work with the manufacturer to identify units for enforcement testing, which may include similar alternative models. Moreover, DOE is also adopting a provision in today's final rule, which allows DOE to use its discretion to perform enforcement testing at a manufacturer's laboratory when there are extenuating circumstances, which make testing at a third-party laboratory impracticable or inadvisable. In these rare instances, the manufacturer's lab must also be accredited to the International Organization for Standardization (ISO)/International Electrotechnical Commission (IEC) 17025, “General requirements for the competence of testing and calibration laboratories”, Second edition, May 15, 2005, (ISO/IEC 17025:2005(E)) and DOE will witness the testing. DOE believes this will also facilitate the enforcement process of low-volume and built-to-order products.

Other commenters expressed concern about the mechanism by which manufacturers would be notified of unit selection when units are obtained from retailers or distributors. AO Smith noted that if DOE adopts the approach of selecting test units from retailers, then a clear definition of cost would need to be established as well as a method of notifying a manufacturer that a unit was selected and obtained from a certain supplier. (AO Smith, No. 81.1 at p. 3) AHRI requested that DOE clarify that a manufacturer's reimbursement to the retailer is limited to providing a replacement product without any additional monetary compensation. (AHRI, No. 92.1 at p. 10; AHRI, Public Meeting Transcript, No. 103 at pp. 191-192) AO Smith also commented that although obtaining samples from a distributor or retailer may be a reasonable idea to prevent pre-selection of units by the manufacturer, it will be difficult (if not impossible) to administer. (AO Smith, No. 81.1 at p. 3)

DOE believes that obtaining units from a distributor or retailer will be relatively straightforward, as manufacturers have specified distributors as sources under the current regulations and have arranged some form of compensation to facilitate the transfer of the units to DOE's specified test lab directly from the distributors. Furthermore, DOE is adopting a process that includes the issuance of a test notice, which will specify the source of units for testing. Therefore, the manufacturer will be aware of the selection of units and can make arrangements to compensate the retailer for the units selected for testing. As stated earlier, DOE will communicate with manufacturers during the enforcement process and keep them informed about the investigation. Today's rule does not specify the form of reimbursement the manufacturer provides to the retailer. Such reimbursement may take the form of a replacement unit, monetary compensation, a voucher, or any other mechanism upon which the manufacturer and retailer agree.

Some of the commenters supporting the rule urged DOE to go farther, recommending that DOE adopt a preference for retail selection and obtain samples for testing from the manufacturer only if no retail product is available. NEEA and NRDC, for example, requested that DOE develop a protocol for enforcement testing that would establish off-the-shelf testing as the preferred method for acquiring products. (NEEA, No. 67.1 at pp. 7-8; NRDC, No. 80.1 at p. 6) NEEA further suggested that DOE's prioritization process for sourcing products for testing should be aligned to the Energy Star program's prioritization process. (NEEA, No. 67.1 at pp. 7-8)

The Department declines to adopt a systematic preference for sourcing products for enforcement testing from either retail or manufacturer sources. As

the comments reflect, retail sources may be preferred in some instances, while manufacturer sources will be more effective in others. Thus, the Department retains the discretion to select units in the manner most appropriate in a particular case to achieve our goals of unbiased, representative, and sufficient samples. Testing an unbiased sample and obtaining that sample quickly when DOE has identified a potentially noncompliant product is necessary to ensure the American public is receiving the energy efficiency promised by the Federal efficiency standards. The Department will consider many factors when determining where to obtain units, including unit availability and shipping times. DOE realizes that basic models may not always be available from the retailer or distributer, such as if the unit is a seasonal product like a room air conditioner. Consequently, DOE is retaining its discretion to obtain basic models from the manufacturer, a retailer, a distributor, or some combination thereof.

7. Testing at Manufacturer's Option

After the Department has tested a model and determined through statistical analysis that it does not meet the applicable standard, the existing regulations allow a manufacturer to do additional testing at DOE's selected lab at the manufacturer's expense. In the September 2010 NOPR, the Department proposed to remove these sections because manufacturers can perform additional testing on their own at any time.

The Department is removing the regulatory provision governing manufacturer testing because it is both unnecessary—given that manufacturers are free to perform additional testing on their own at any time—and otherwise delays the finality of a compliance determination. In written comments, AHRI, ABB, and NEMA opposed removal of the provisions allowing additional testing at the manufacturer's option. (AHRI, No. 92.1 at p. 11; ABB, No. 53.1 at p. 9, NEMA, No. 85.1 at p. 11) In particular, AHRI commented that this provision provides a safeguard against a “false negative” conclusion and provides manufacturers with fair, due-process in enforcement testing. (AHRI, No. 92.1 at p. 5) AHAM further commented that while it recognizes the Department is interested in minimizing delay in the enforcement process, this should not be at the expense of the Department being fair and obtaining accurate results. (AHAM, Public Meeting Transcript, No. 103 at p. 244)

The Department disagrees that removing the manufacturer optional testing provision will result in unfairness or inaccurate test results. Manufacturers can perform additional testing on their own and provide test results to DOE at any time. There is no need for a regulatory provision to give them this option. Moreover, DOE's enforcement testing is based on a statistically valid sample size. Once the Department has completed its enforcement testing, allowing for any additional testing serves no purpose other than to increase the testing sample size. As NEEA's comment explained, if the enforcement testing is done in a statistically rigorous way (according to procedure, within specified tolerances), then the only impact of further testing, regardless of who does it, is delay in the enforcement process. (NEEA, No. 67.1 at p. 8) Furthermore, under the existing (and proposed) regulation, manufacturers are prohibited from distributing the model in commerce during any additional manufacturer-elected testing, so delay in moving the adjudication process forward works to the disadvantage of the manufacturer.

Raising concerns about the possibility of defects in the tested units, MEUS, Johnson Controls, and Manitowoc Food Service generally commented that it is necessary for manufacturers to have the ability to test the same units that DOE has tested for there to be a determination that a component was defective. (MEUS, Public Meeting Transcript, No. 103 at pp. 233-234; Johnson Controls, Public Meeting Transcript, No. 103 at pp. 233-234; and Manitowoc Food Service, Public Meeting Transcript, No. 103 at pp. 242-243) Similarly, Owens Corning stated at the public meeting that it is imperative for manufacturers to retest a product that has been determined to be out of spec by an outside laboratory to determine whether it was the product or the outside laboratory's test that was at fault. (Owens Corning, Public Meeting Transcript, No. 103 at pp. 226-227) Such comments, however, reflect a misunderstanding of DOE's current regulations, which do not allow the manufacturer (1) to test the same units tested by DOE, (2) to observe the additional testing permitted by the regulation, or (3) to select the test lab for manufacturer-elected testing. Furthermore, today's final rule retains the current regulatory provision addressing defective units, allowing DOE to test a replacement unit if a selected unit is inoperative or is found to be in noncompliance due to failure of the unit to operate according to the manufacturer's design and operating instructions.

Other commenters expressed concerns about variability or uncertainty surrounding how an outside laboratory would conduct enforcement testing, and whether the laboratory would conduct the test in a manner similar to that of the manufacturer. NEMA, for example, asserted that manufacturers of distribution transformers should have some ability to challenge the results of an independent test lab that does not have proven, established experience with the particular product tested. (NEMA, No. 85.1 at p. 11) Similarly, GE Appliances and Lighting asserted that because variability questions exist among laboratories, where labs can test the same or similar products and get very different results, it is difficult for manufacturers to feel comfortable and validate those results. (GE Appliances and Lighting, Public Meeting Transcript, No. 103 at pp. 241-242)

As discussed below, DOE's enforcement testing will be done by appropriately qualified, ISO/IEC 17025:2005 accredited laboratories. However, in recognition of the concerns of the rare instances when laboratories may be unavailable to test certain products or eq

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2011-3146. Public record. Not legal advice.