Energy Conservation Program for Appliance Standards: Procedures for Use in New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Commercial/Industrial Equipment
Federal RegisterFeb 14, 2020
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DEPARTMENT OF ENERGY
10 CFR Parts 430 and 431
[EERE-2017-BT-STD-0062]
RIN 1904-AD38
Energy Conservation Program for Appliance Standards: Procedures for Use in New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Commercial/Industrial Equipment
AGENCY:
Office of Energy Efficiency and Renewable Energy (EERE), Department of Energy.
ACTION:
Final rule.
SUMMARY:
The U.S. Department of Energy is updating and modernizing aspects of its current rulemaking method for considering new or revised energy conservation standards for consumer products and certain types of industrial equipment. The rule clarifies the process DOE will follow with respect to its application to these items, makes the specified rulemaking procedures binding on DOE, and revises certain provisions to bring consistency with existing statutory requirements. Other changes include expanding early opportunities for public input on the Appliance Program's priority setting and rulemaking activities, setting a significant energy savings threshold for updating standards, establishing a window between test procedure final rules and standards proposals, and delineating procedures for rulemaking under the separate direct final rule and negotiated rulemaking authorities.
DATES:
The effective date of this rule is April 14, 2020.
ADDRESSES:
The docket for this rulemaking, which includes
Federal Register
notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at
https://www.regulations.gov.
All documents in the docket are listed in the
https://www.regulations.gov
index. However, not all documents listed in the index may be publicly available, such as information that is exempt from public disclosure.
The docket web page can be found at:
https://www.regulations.gov/docket?D=EERE-2017-BT-STD-0062.
The docket web page contains instructions on how to access all documents, including public comments, in the docket.
FOR FURTHER INFORMATION CONTACT:
Ms. Francine Pinto, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585. Telephone: (202) 586-7432. Email:
Francine.Pinto@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Final Rule
II. Introduction
A. Authority
B. Background on the Process Rule
C. General Comments on DOE's Process Rule Proposal
III. Discussion of Specific Revisions to the Process Rule
A. The Process Rule Will Be Binding on the Department of Energy
B. The Process Rule Will Apply to Both Consumer Products and Commercial Equipment
C. The Application of the Process Rule to ASHRAE Equipment
D. Priority Setting
E. Coverage Determinations
F. Early Stakeholder Input To Determine the Need for Rulemaking
a. Early Assessment Review
b. Other Avenues for Early Stakeholder Input in the Rulemaking Process
G. Decision-Making Process for Issuing a Determination Not To Issue a New or Amended Energy Conservation Standard or an Amended Test Procedure
H. Significant Savings of Energy Threshold
1. Comments on the Proposed Threshold Approach
A. Comments Supporting the Proposed Threshold Approach
B. Comments Opposing the Proposed Threshold Approach
C. Comments Regarding DOE's Notice of Data Availability
2. Response to Comments on the Proposed Thresholds
A. Response to Comments Supporting the Proposed Threshold Approach
B. Response to Commenters Opposing DOE's Proposed Use of Thresholds
C. Response to Comments on the Notice of Data Availability
I. Finalization of Test Procedures Prior to Issuance of a Standards NOPR
J. Adoption of Industry Standards
K. Direct Final Rules
1. DOE's Authority Under the DFR Provision
2. Interested Persons Fairly Representative of Relevant Points of View
3. Adverse Comments
L. Negotiated Rulemaking
M. Other Revisions and Issues
1. DOE's Analytical Methodologies, Generally
a. Peer Review
b. Walk-Down
c. Other
2. Cumulative Regulatory Burden
3. Should DOE conduct retrospective reviews of the energy savings and costs of energy conservation standards?
4. Certification, Compliance, and Enforcement (CCE)-Related Issues
5. Other Issues
IV. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under Executive Orders 13771 and 13777
C. Economic Analysis
D. Review Under the Regulatory Flexibility Act
E. Review Under the Paperwork Reduction Act of 1995
F. Review Under the National Environmental Policy Act of 1969
G. Review Under Executive Order 13132
H. Review Under Executive Order 12988
I. Review Under the Unfunded Mandates Reform Act of 1995
J. Review Under the Treasury and General Government Appropriations Act, 1999
K. Review Under Executive Order 12630
L. Review Under the Treasury and General Government Appropriations Act, 2001
M. Review Under Executive Order 13211
N. Review Consistent With OMB's Information Quality Bulletin for Peer Review
O. Congressional Notification
V. Approval of the Office of the Secretary
I. Summary of the Final Rule
The United States Department of Energy (“DOE” or, in context, “the Department”) generally uses the procedures set forth in its “Procedures, Interpretations, and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products” (“Process Rule”),
see
10 CFR part 430, subpart C, appendix A, when prescribing energy conservation standards for both consumer products and commercial equipment pursuant to the Energy Policy and Conservation Act of 1975 (Pub. L. 94-163, codified at 42 U.S.C. 6291,
et seq.
), as amended (“EPCA”). In this document, DOE is updating and modernizing its Process Rule in the following major topics: (1) Requiring that the procedures outlined in the Process Rule are binding on the agency; (2) formalizing DOE's past practice of applying the Process Rule to both consumer products and commercial equipment; (3) clarifying the Process Rule's application with regard to equipment covered by ASHRAE Standard 90.1; (4) expanding the Process Rule to include test procedure rulemakings, as well as energy conservation standards rulemakings; (5) committing to both an “early look” process and other robust methods for early stakeholder input; (6) defining a significant energy savings threshold that must be met before DOE will update an energy conservation standard; (7) clarifying DOE's commitment to publish a test procedure six months before a related standards NOPR; (8) articulating DOE's authority under the Negotiated Rulemaking Act and EPCA's direct final rule (“DFR”) provision, while clarifying that negotiated rulemakings and DFRs are two separate processes with their own
sets of requirements; and (9) addressing other miscellaneous issues.
At this time DOE is not finalizing its prior proposal concerning the process by which DOE selects among alternative energy efficiency standards under EPCA (also known as the “walk-down” approach). In a separate but related action, DOE is publishing in this issue of the
Federal Register
, a proposed rule to amend this process, such that those standards achieve the “maximum improvement in energy efficiency, or in the case of showerheads, faucets, water closets, or urinals, water efficiency, which the Secretary determines is technologically feasible and economically justified.” (42 U.S.C. 6295(o)(2)(A)). In response to the concerns and requests for further explanation related to the economically rational consumer mentioned in DOE's prior proposal, DOE is: (1) Clarifying how impacts are considered in determining economic justification through the seven factors specified in EPCA; and (2) explaining that the requirement to determine economic justification based on comparisons across the full range of trial standard levels (TSLs) is consistent with EPCA. This proposal will respond to public comments requesting further clarity on DOE's initial proposal that in making the determination of economic justification, DOE would choose one TSL over other feasible TSLs after considering all relevant factors, including, but not limited to, energy savings, efficacy, product features, and life-cycle costs.
DOE continues to contemplate additional topics regarding its process for undertaking appliance standards rulemakings that may lead to additional rulemaking proceedings to update the Process Rule. In particular, DOE continues to think about potential changes to its analytical methodologies and models for assessing the costs and benefits of appliance standards rulemakings.
II. Introduction
A. Authority
In overview, the Department of Energy's Process Rule was developed to guide implementation of the Appliance Standards Program, which is conducted pursuant to Title III, Part B
1
of the Energy Policy and Conservation Act (“EPCA” or “the Act”), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), for consumer products, and Part C
2
for certain industrial equipment (42 U.S.C. 6311-6317, as codified), added by Public Law 95-619, Title IV, § 441(a).
3
1
For editorial reasons, upon codification in the U.S. Code, Part B was redesignated Part A.
2
For editorial reasons, upon codification in the U.S. Code, Part C was redesignated Part A-1.
3
All references to EPCA in this document refer to the statute as amended through America's Water Infrastructure Act of 2018, Public Law 115-270 (Oct. 23, 2018).
Under EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing; (2) labeling; (3) the establishment of Federal energy conservation standards; and (4) certification and enforcement procedures. The Federal Trade Commission (“FTC”) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product and covered equipment. (42 U.S.C. 6293 and 42 U.S.C. 6314) Manufacturers of covered products and covered equipment must use the prescribed DOE test procedure as the basis for certifying to DOE that their products and equipment comply with the applicable energy conservation standards adopted under EPCA and when making any other representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c), 42 U.S.C. 6295(s), 42 U.S.C. 6314(a), and 42 U.S.C. 6316(a)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA.
Id.
In addition, pursuant to EPCA, any new or amended energy conservation standard for covered products (and at least certain types of equipment) must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6316(a)) Furthermore, the new or amended standard must result in a significant conservation of energy (42 U.S.C. 6295(o)(3)(B), 42 U.S.C. 6313(a)(6), and 42 U.S.C. 6316(a)), and comply with any other applicable statutory provisions.
B. Background on the Process Rule
DOE conducted a formal effort between 1995 and 1996 to improve the process it follows to develop energy conservation standards for covered appliance products. This effort involved many different stakeholders, including manufacturers, energy-efficiency advocates, trade associations, state agencies, utilities, and other interested parties. The result was the publication of a final rule on July 15, 1996, titled, “Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products.” (61 FR 36974) This document was codified at 10 CFR part 430, subpart C, appendix A,
4
and became known colloquially as the “Process Rule.”
4
This final rule that amends the Process Rule is a legislative rule and therefore subject to the notice and comment requirements in the APA. (5 U.S.C. 553) Accordingly, DOE has conducted a “notice and comment” proceeding as evidenced by two public meetings and webinars and a robust period for written comments.
The Process Rule was designed to provide guidance to stakeholders as to how DOE would implement its rulemaking responsibilities under EPCA for the Appliance Program. As part of this enhanced process, supplementing the traditional notice-and-comment rulemaking process under the Administrative Procedure Act
5
(APA), DOE has invited and promoted extensive stakeholder involvement in its energy conservation standards and test procedure rulemakings. An important legacy of the Process Rule has been both to educate and learn from the many stakeholders who participate in DOE's appliance rulemaking efforts. Some of the successes that have resulted from the Process Rule include: (1) Greater involvement from a wider variety of stakeholders in DOE's appliance rulemaking process; (2) improved technical analyses in support of the appliance rules due to enhanced input from stakeholders at an early stage of the rulemaking process; (3) improved solutions to issues and problems because of increased stakeholder involvement; and (4) more open dialogue and improved relationships between stakeholders and also between stakeholders and DOE.
5
5 U.S.C. 551
et seq.
While there have been many positive results from the Process Rule, DOE came to understand through the intervening years that the Appliance Program might benefit from additional improvements to the Process Rule, as reflected in this document. These amendments address: (1) Processes that may no longer track the current legal requirements of EPCA; (2) processes that do not take into account the maturation of DOE's appliance program to the point that modernization is necessary; (3) that in many instances DOE has not rigorously followed the Process Rule; (4) the need for regulatory reform to reduce the costs and burdens of rulemaking; and (5) the need to clarify that the Process Rule applies to commercial/industrial equipment. In evaluating and seeking to
expand the positive impacts of the Process Rule, as well as remedying the above-described negative developments, this final rule addresses the changed landscape of the rulemaking process under EPCA, and endeavors to modernize the Process Rule.
6
6
In November 2010, DOE also issued a statement intended to expedite its rulemaking process. The statement is currently available at
http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf.
As reflected in this final rule, DOE has undertaken a thorough review of its Process Rule to determine the procedures it will follow in considering new or amended energy conservation standard and test procedures. As a result, this final rule supersedes those portions of the November 2010 statement pertaining to the elimination of these early rulemaking steps. DOE will revise its statement so as to conform to the amendments contained in this final rule.
On December 18, 2017, DOE issued an RFI (December 2017 RFI) to address potential improvements to the Process Rule so as to achieve meaningful burden reduction while continuing to achieve the Department's statutory obligations in the development of appliance energy conservation standards and test procedures. (82 FR 59992) Originally, the comment period for this RFI was scheduled to end on February 16, 2018. However, several stakeholders requested a 30-day extension to file comments.
7
Consequently, DOE extended the comment period until March 2, 2018. (83 FR 5374 (Feb. 7, 2018)) Subsequently, DOE posted a notice on its website on March 2, 2018, which stated that the comment period was further extended until March 5, 2018, due to a brief closure of the Federal government in the Washington, DC area.
7
See letter dated January 29, 2018 from Air-Conditioning, Heating, and Refrigeration Institute (“AHRI”), the Association of Home Appliance Manufacturers (“AHAM”), and the National Electrical Manufacturers Association (“NEMA”), to John Cymbalsky, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Buildings Technologies Program. [EERE-2017_BT-STD-0096, No. 17, p. 1]
To explore the issues in the December 2017 RFI, DOE convened a public meeting on January 9, 2018, which was attended by a wide range of stakeholders. The Department also simultaneously hosted a webinar, which was attended by approximately 150 additional persons.
After carefully reviewing the numerous public comments submitted on the December 2017 RFI and the issues raised at the January 2018 public meeting, DOE published a notice of proposed rulemaking (“NOPR”) regarding the Process Rule in the
Federal Register
on February 13, 2019. (84 FR 3910) This document responded to the RFI comments and proposed amendments to the Process Rule in a variety of areas, as discussed subsequently. Comments on the Process Rule NOPR were due by April 15, 2019.
To facilitate discussion of the issues in the February 2019 NOPR, DOE held a public meeting on March 21, 2019 in Washington, DC. The meeting was widely attended, both in person and via webinar. At the public meeting, numerous topics were discussed, including, but not limited to: (1) Making the Process Rule binding on DOE; (2) making the Process Rule applicable to both consumer products and commercial/industrial equipment; (3) explaining application of the Process Rule to ASHRAE equipment; (4) priority-setting; (5) the process for coverage determinations; (6) early assessment review for energy conservation standard and test procedure rulemakings; (7) consideration of a significant savings of energy threshold; (8) finalizing test procedures 180 days before issuance of a standards NOPR; (9) adoption of consensus standards as DOE test procedures; (10) direct final rules; (11) negotiated rulemakings; (12) analytical methodologies and peer review; (13) potential changes to the “walk-down approach” for assessing standard levels; (14) cumulative regulatory burden; (15) retrospective reviews of energy savings and costs for past standards; (16) certification, compliance, and enforcement issues, and (17) any other issues or topics raised by stakeholders. However, due to the large number of matters to be addressed and the significant public interest, DOE determined it necessary to carry over the public meeting to a second day and to extend the public comment period, actions which were announced in a
Federal Register
notice published on April 2, 2019. (84 FR 12527) Accordingly, a continuation of the NOPR public meeting was held on April 11, 2019, and the comment period on the NOPR was extended to May 6, 2019.
Overall, DOE experienced a high level of engagement from stakeholders and the interested public regarding potential changes to the Process Rule. Such comments provided important input to DOE's final rule to modernize and refine the Process Rule. The issues raised in the NOPR public comments are addressed subsequently in this document. Through the amendments adopted in this final rule, DOE expects that its revised Process Rule will increase transparency, foster public engagement, and achieve meaningful burden reduction, while at the same time continuing to meet the Department's statutory obligations under EPCA.
Commenters who provided written comments in response to DOE's NOPR consisted of the following parties:
Table of Commenters
Commenter(s)
Affiliation
Acronym, identifier
A.O. Smith
Manufacturer
A.O. Smith.
Acuity Brands
Manufacturer
Acuity.
Air-Conditioning, Heating, and Refrigeration Institute
Manufacturer Trade Group
AHRI.
Alliance to Save Energy
Advocacy Group
ASE.
American Council for an Energy Efficient Economy
Advocacy Group
ACEEE.
American Efficient
Energy Efficiency Consultancy
AE.
American Gas Association
Utility Trade Group
AGA.
American Lighting Association
Manufacturer Trade Group
ALA.
American Public Gas Association
Utility Trade Group
APGA.
American Public Power Association
Utility Trade Group
APPA.
American Society of Heating, Refrigeration, and Air Conditioning Engineers
Technical Society
ASHRAE.
Appliance Standards Awareness Project
(Joint Comments filed with ACEEE, Consumer Federation of America, Consumer Reports, National Consumer Law Center, NRDC, and NEEA)
Advocacy Group
ASAP, et al.
Appliance Standards Awareness Project 2
(Joint Comments filed with ACEEE, the California Energy Commission, Consumer Federation of America, Consumer Reports, National Consumer Law Center (on behalf of its low-income clients), and NEEA)
Advocacy Groups
ASAP, et al. 2.
Attorneys General of California, Colorado, Connecticut, Illinois, Maine, Maryland, Michigan, Minnesota, New York, North Carolina, Oregon, Vermont, Washington, the Commonwealth of Massachusetts, the District of Columbia, and the City of New York
State, Local Governments
AG Joint Commenters.
Bradford White Corporation
Manufacturer
BWC.
Burnham Holdings, Inc. (dba U.S. Boiler Company)
Manufacturer
BHI.
California Energy Commission
State
CEC.
California Investor-Owned Utilities
Utilities
Cal-IOUs.
Connecticut Department of Energy & Environmental Protection
State
CT-DEEP.
Consumer Technology Association
Manufacturer Trade Group
CTA.
Earthjustice
Advocacy Group
Earthjustice.
GE Appliances
Manufacturer
GEA.
George Mason University—Antonin Scalia Law School, Administrative Law Clinic
Academic Institution
GMU Law.
George Washington University—Regulatory Studies Center
Academic Institution
GWU.
Hearth Products and Barbecue Association
Manufacturer Trade Group
HPBA.
Ingersoll Rand
Manufacturer
Ingersoll Rand.
Joint Industry Commenters
Manufacturer Trade Groups
Joint Commenters.
Lennox International
Manufacturer
Lennox.
Lutron
Manufacturer
Lutron.
Manufactured Housing Association for Regulatory Reform
Manufacturer Trade Group
MHARR.
Manufactured Housing Institute
Manufacturer Trade Group
MHI.
New Buildings Institute
Advocacy Group
NBI.
New York University School of Law—Institute for Policy Integrity
Academic Institution
NYU Law.
North American Association of Food Equipment Manufacturers
Manufacturer Trade Group
NAFEM.
National Electrical Manufacturers Association
Manufacturer Trade Group
NEMA.
National Propane Gas Association
Utility Trade Group
NPGA.
Natural Resources Defense Council
Advocacy Group
NRDC.
Northwest Power and Conservation Council
Interstate Compact
NPCC.
Northwest Energy Efficiency Alliance
Advocacy Group
NEEA.
Rheem
Manufacturer
Rheem.
Robert Bosch, LLC
Manufacturer
Bosch.
Samsung
Manufacturer
Samsung.
Sierra Club
Advocacy Group
Sierra Club.
Signify
Manufacturer
Signify.
Southern Co.
Utility
Southern.
Spire, Inc.
Utility
Spire.
Steinberg, Linda
None
Steinberg.
United Cool Air
Manufacturer
UCA.
Zero Zone
Manufacturer
Zero Zone.
C. General Comments on DOE's Process Rule Proposal
As explained in further detail in section II.B of this final rule, DOE's Process Rule was originally designed to provide guidance to stakeholders as to how DOE would implement its rulemaking responsibilities under EPCA for the Appliance Standards Program, including extensive opportunities for stakeholder involvement in energy conservation standards and test procedure proceedings. While many benefits arose from the 1996 Process Rule, DOE determined that further improvements are possible since circumstances have changed since it was developed 25 years ago, as reflected in the agency's proposal. DOE's intent in proposing an updated Process Rule was to increase transparency and public engagement and achieve meaningful burden reduction, while at the same time continuing to meet DOE's statutory obligations under EPCA. (84 FR 3910, 3911-3912 (Feb. 13, 2019)) Not surprisingly, DOE's proposal was met with a wide variety of viewpoints. The paragraphs that follow summarize these stakeholder comments,
8
followed by DOE's response.
8
When submitting their own individual comments, a number of organizations also explicitly signaled their endorsement of the comments prepared by others. Specifically, the ALA stated that it supports the detailed comments provided by the Joint Commenters. (ALA, No. 104 at p. 1) GEA expressed support for the comments of the Joint Commenters and incorporated them by reference into its own comments. (GEA, No. 125 at p. 1) NEMA stated that it supports the detailed Joint Comments of AHAM, AHRI, NEMA, and others. (NEMA, No. 107 at p. 2) Rheem supported the detailed comments provided by AHRI and the Joint Commenters. (Rheem, No. 101 at p. 1) NRDC stated that it signs onto and supports the comments submitted by the Appliance Standards Awareness Project and Earthjustice. (NRDC, No. 131 at p. 3)
A number of commenters expressed general support for DOE's Process Rule proposal. (Zero Zone, No. 102 at p. 1; Rheem, No. 101 at pp. 1-2; APGA, No. 106 at p. 2; BWC, No. 103 at p. 1) More specifically, AHRI praised DOE's responsiveness to stakeholder comments and adherence to the statutory principles of EPCA that it believes the agency had previously set aside. (AHRI, April 11, 2019 Public
Meeting Transcript at pp. 234) APGA stated that DOE's comprehensive and transparent proposal would improve the way the Department fulfills its responsibilities under EPCA. (APGA, No. 106 at p. 2) BWC suggested that DOE's proposed Process Rule changes have the potential to make the rulemaking process more objective and improve its execution. (BWC, No. 103 at p. 1)
According to GEA, the proposed Process Rule should help alleviate many unnecessary regulatory burdens on both the regulated community and the DOE. GEA suggested that the following portions of the proposed Process Rule are of particular importance: (1) That all processes in the rule are binding on DOE; (2) the proposed early assessment process; and (3) the requirement to demonstrate significant energy savings before a revised standard is set. (GEA, No. 125 at p. 2)
In their overall assessment, the Administrative Law Clinic at George Mason University's Antonin Scalia Law School (GM Law) found the proposed changes to DOE's Process Rule to be consistent with good regulatory principles and all governing law. GM Law supported the proposal as sound regulatory policy by promoting stakeholder input, predictability, and transparency. Furthermore, GM Law found DOE's proposal to comport with the D.C. Circuit's decision in
NRDC
v.
Herrington,
768 F.2d 1355, 1372-73 (D.C. Cir. 1985), and it characterized other commenters' suggestions to the contrary as unfounded. (GM Law, No. 105 at pp. 1-2)
The Joint Commenters expressed support for DOE's proposal as representing the Department's renewed commitment to sound procedural practices that will increase regulatory efficiency, provide all interested stakeholders with a common understanding regarding DOE regulatory process, and ensure appropriate and reasonable investment of resources into DOE's important energy efficiency initiatives. Overall, the Joint Commenters offered support for the goal of EPCA's appliance efficiency program (
i.e.,
maximizing improvements in energy savings that are technologically feasible and economically justified). However, to succeed, these commenters stated that DOE should act on a consistent and predictable procedural basis and have an analytical structure that accounts for practical and technological realities, while ensuring regulatory transparency, consistency, and rationality. The Joint Commenters stated their belief that the proposed rule will provide greater certainty, transparency, and predictability in DOE's promulgation of test procedures and amended rules, a point echoed by Rheem. (Joint Commenters, No. 112 at p. 1; Rheem, No. 101 at pp. 1-2)
NEMA stated its understanding that the Process Rule NOPR did not add any steps to the rulemaking process, and added that concerns raised by certain other stakeholders about meeting deadlines can be addressed by appropriate project management solutions. (NEMA, No. 107 at p. 2)
Finally, while supporting the Process Rule proposal generally, Lennox expressed concern that the proposed Process Rule revisions may have weakened certain protections against regulations that are not economically justified. The commenter stated that in the prior version of the Process Rule, presumptions had existed against regulations such as those that: (1) Result in a negative return on investment for the industry or would significantly reduce the value of the industry; (2) would be the direct cause of plant closures, significant losses in domestic manufacturer employment, or significant losses of capital investment by domestic manufacturers; or (3) would have a significant adverse impact on the environment or energy security. Lennox argued that these presumptions against regulation have been eliminated in the revised Process Rule, which now only identifies these as “considerations.” (Compare “Considerations in assessing economic justification” in current Process Rule section 5(e)(3)(i)(A)-(C) versus proposed Process Rule section 7(e)(2)(i)(A)-(C)). Lennox recommended that these presumptions against regulation should be re-instituted and protections strengthened for avoiding these obviously deleterious impacts, because doing so provides valuable transparency and regulatory predictability regarding DOE decision-making. (Lennox, No. 133 at p. 8)
Other commenters opposed DOE's proposed Process Rule changes for a variety of reasons. For example, while ASE acknowledged that there are some improvements associated with the Process Rule NOPR, it stated that most of the proposed changes would likely complicate the program, add redundancy, remove flexibility, and make it more difficult to comply with statutory deadlines. More specifically, ASE expressed concerns that many of the proposed provisions of the Process Rule NOPR could have the effect of making it more difficult for DOE to follow the law, because they would likely slow the program down, remove flexibility to respond to stakeholders and make course corrections during rulemakings, and remove the prospect of negotiations leading to direct final rules. Instead, ASE stressed the need for a program that is transparent, predictable, robust, steady, and meets its statutory deadlines. (ASE, No. 108 at pp. 1-2)
The AGs Joint Comment opposed DOE's Process Rule proposal, arguing that it would unlawfully impede DOE's energy conservation standards rulemakings and frustrate the purpose of EPCA. Furthermore, the AGs Joint Comment stated that DOE's proposed revisions to the Process Rule are unnecessary, counterproductive, and likely to slow or halt energy efficiency rulemakings, while exposing DOE to frequent litigation. The AGs then argued that in its proposal, DOE has misinterpreted factors which EPCA requires DOE to consider and has favored elements of industry which oppose energy efficiency standards. These commenters also stated that DOE's allocation of resources to an unnecessary Process Rule NOPR, which introduces obstacles and new procedural hurdles to meeting EPCA's core statutory requirements in a timely manner, is contrary to the statute because it puts the agency further behind on its statutorily-mandated deadlines for energy conservation standards. The AGs Joint Comment also argued that the Process Rule NOPR proposes to add unnecessary procedural steps for the establishment of standards and adding administrative barriers which make it more difficult to complete the rulemaking process. These commenters found this to be particularly troubling when DOE is already behind on so many rulemakings. Consequently, the AGs recommended that DOE withdraw its proposal. (AGs Joint Comment, No. 111 at pp. 1-2, 4-5)
Overall, NRDC's comments opposed DOE's proposed revisions to the Process Rule as jeopardizing issuance of cost-effective energy conservation standards. NRDC stated that although all stakeholders agree that the standards process should be transparent, predictable, and flexible, DOE's proposal does not advance those goals. (NRDC, No. 131 at p. 2) Instead, NRDC stated that the proposed changes to the Process Rule, when considered together, would make it substantially more difficult for DOE to set standards. The commenter argued that DOE has not shown why additional steps are necessary, how they would improve the program, or how the extended process could be completed in the timeframe required by law, particularly in light of the number of statutorily-mandated
rulemaking deadlines that the Department has already missed. (NRDC, No. 131 at pp. 3-4) Along the same lines, the Cal-IOUs posed two key questions for DOE to address: (1) How will adopting these [proposed] Process Rule provisions help DOE meet EPCA requirements, specifically with respect to rulemaking timelines? (2) How do the provisions in the NOPR regarding industry test procedures help DOE independently assess the representativeness and enforceability of DOE test procedures? (Cal-IOUs, No. 124 at p. 2)
NRDC argued that it is premature and inappropriate for DOE to move forward with the Process Rule because its proposal was unclear on a number of key issues (
e.g.,
ordering and timeframe for various rulemaking steps, how DOE would comply with statutory deadlines, how test procedures would be established, details around the significant energy savings threshold, and changes to the “walk-down” methodology), thereby depriving NRDC and others an adequate opportunity to comment. (NRDC, No. 131 at p. 3) Similarly, PG&E argued that it is premature for DOE to move to a final rule, because the Process Rule NOPR poses too many unknowns and has sparked too much confusion, a situation which could lead to litigation. Instead, PG&E urged DOE to provide further clarification and an additional opportunity for stakeholders comment on the clarified proposal in order to allow for meaningful input. (PG&E, April 11, 2019 Public Meeting Transcript at p. 227)
Southern California Edison encouraged DOE to use its discretion to see what to improve, but it also stated that it does not want DOE to lose its flexibility. (Southern California Edison, April 11, 2019 Public Meeting Transcript at pp. 222-223) ACEEE stated that it was surprised that the revised Process Rule does not incorporate regulatory review requirements from Congress, and it also suggested that any general rulemaking timeline envisioned by DOE should include test procedures as well as standards. (ACEEE, March 21, 2019 Public Meeting Transcript at p. 143, 206)
In response, DOE appreciates the many comments expressing a deep interest in its Process Rule proposal, through which the Department strives to simultaneously increase transparency and predictability, foster public participation, reduce unnecessary burdens, and conserve scarce public and private resources, all while ensuring compliance with applicable statutory requirements. DOE acknowledges the many comments suggesting that the Department's Process Rule proposal makes substantial progress in advancing these objectives, gains which the agency seeks to fully realize through promulgation of this final rule. DOE proposed these changes to address identified shortfalls in its implementation of the Process Rule in recent years. Consequently, as NEMA pointed out, DOE did not add a host of cumbersome new steps to its rulemaking process, but it is instead adopting a narrowly tailored update to the Process Rule. In its only new procedural step, DOE has added an early assessment provision to gauge whether there are sufficiently changed circumstances to justify moving forward with an energy conservation standards or test procedure rulemaking. The early assessment process would add, at most, one brief additional comment period, but in cases where technologies and costs have not significantly changed since the last rulemaking, there is the potential to obviate the need for additional rulemaking, thereby allowing resources to be rapidly channeled to other rulemakings where economically justified and significant energy savings are possible. Otherwise, this final rule largely reflects a faithful implementation of provisions already in place, albeit with certain modifications intended to facilitate operation of the Appliance Standards Program and to address changes in the statute since the original Process Rule was promulgated.
For the reasons that follow, DOE finds the concerns raised by opponents of the Process Rule NOPR to be theoretical, and unpersuasive. DOE needs a clear and effective process to facilitate execution of its statutory mandate for energy conservation standards and test procedures under EPCA. Many commenters have expressed the need for updates to DOE's Process Rule, a position the agency has acknowledged and with which it agrees. For example, in recent years, DOE frequently failed to meet the Process Rule's guidance that “[f]inal, modified test procedures will be issued prior to the NOPR on proposed standards.” (
See
section 7(c) of 10 CFR part 430, subpart C, appendix A) There is general agreement that the preferred regulatory approach in this context is to have a final test procedure in place to inform the accompanying standard-setting rulemaking, but DOE has frequently deviated from the Process Rule and conducted test procedure and standards rulemakings concurrently. Likewise, while the Process Rule applied only to rulemakings for consumer products, there has been little opposition to DOE's past application of the Process Rule to covered commercial and industrial equipment. Moreover, DOE has gained significant rulemaking experience under the Appliance Standards Program over the past 25 years since the Process Rule was first adopted. Accordingly, amendments to the Process Rule present a natural and logical evolution of DOE's rulemaking process.
DOE likewise does not agree with comments that the Department's Process Rule proposal would complicate or add redundancy to the regulatory process. With the exception of the early assessment and associated comment period, the amended Process Rule reflected in this final rule contains the same basic elements found in the 1996 Process Rule. Take again, the example of ensuring that a test procedure change is finalized prior to issuance of an energy conservation standards NOPR, which was also a provision in the previous Process Rule. While some commenters might consider that a complication, others could rightly call that an important procedural safeguard. As explained in detail elsewhere in this document, the procedural changes to the Process Rule adopted in this final rule are intended to address identified problems, not to complicate or unnecessarily delay DOE's rulemaking process.
Although several commenters asserted that the proposed changes to DOE's Process Rule would negatively impact the agency's ability to complete rulemakings and meet statutory deadlines, DOE disagrees. DOE is cognizant of its legal obligations under EPCA, and the Department anticipates being able to fulfill the requirements of both the statute and the Process Rule. The amended Process Rule has the potential to streamline DOE's rulemaking through the use of the early assessment, which can better enable the Department to satisfy its statutory time constraints. By meeting its obligations within the allotted timeframes, DOE would not need commenters' recommended flexibility to waive the procedural safeguards of the Process Rule. Thus, commenters' arguments that DOE's Process Rule proposal would cause the Department to miss statutory deadlines and improperly delay rulemakings are speculative, at best.
In response to the AGs Joint Comment that DOE has misinterpreted the statute, the Department disagrees and has addressed specific claims to that effect at appropriate places elsewhere in this document. Regarding the AGs Joint Comment's assertion that the Process
Rule proposal has incorporated provisions favoring industry, DOE once again disagrees. In many ways, DOE has merely updated the Process Rule to better reflect its current practice, and in other areas, it has made modifications to faithfully meet the requirements of the statute, to increase public participation, and to institute procedural safeguards to the benefit of all stakeholders.
Regarding assertions of that commenters' confusion necessitates further proceedings, DOE notes that most commenters on the Process Rule NOPR did not make such claims in response to the agency's proposal. Instead, such confusion was limited to a small number of commenters who generally opposed DOE's proposal. DOE published a Process Rule RFI, convened an interactive public meeting on the RFI, published a Process Rule NOPR, convened two interactive public meetings on the NOPR, published a Notice of Data Availability (“NODA”) on the topic of its significant energy savings calculations, and accepted public comments through all of those mechanisms. In total, the Department has hosted three public meetings and solicited public comments for 197 days (
i.e.,
longer than 6 months) on potential changes to the Process Rule. DOE believes it articulated clearly the changes to the Process Rule that it was proposing and finds that there has been thorough discussion and opportunity for comment on virtually all the subjects mentioned by NRDC and PG&E.
9
In fact, the lengthy and detailed comments on all of the topics raised in the proposed Process Rule submitted by the very parties claiming confusion belie that assertion. DOE recognizes that it may never be possible to explain its proposals to the complete satisfaction of every stakeholder, but given its numerous publications and opportunities for public engagement on the Process Rule, as well as the detailed nature of the comments received, the agency has concluded that stakeholders were afforded an adequate opportunity to comment on the topics contained in this final rule.
9
The one exception involved the proposed changes to the “walk-down” methodology. DOE agrees that that topic will require further study before making a decision to move forward.
Regarding comments that DOE's amended Process Rule would invite increased litigation, the Department believes the opposite to be true. By having a transparent process with increased opportunity for public input that operates on a predictable schedule (
e.g.,
completion of test procedure prior to proposing standards), DOE anticipates a decreased incidence of litigation. And rather than frustrating the purpose of EPCA, DOE believes that this Process Rule final rule advances the purpose of EPCA by having better and more efficient procedures in place that allow the Department to better target its resources to those rulemakings which are technologically feasible, economically justified, and save a significant amount of energy.
Regarding the particular point made by Lennox about the Process Rule's considerations in assessing economic justification, DOE notes that in reorganizing the regulatory text, it did not intend to make substantive changes in this area regarding the analysis of economic justification criteria, nor did it discuss such action in the NOPR. DOE maintained the substance of those criteria, but it deleted a clear statement of the consequences that would flow from situations implicating those criteria (
i.e.,
deleting language stating “that standard level will be presumed not to be economically justified unless the Department determines that specifically identified expected benefits of the standard would outweigh this and any other expected adverse effects”). Although DOE's streamlined version of the regulatory text was not proposing to change how those criteria are applied, the Department understands that the absence of the deleted language could be misinterpreted as indicating a substantive change in approach. Accordingly, DOE is reinserting the regulatory text language raised by Lennox in its comments.
In response to ACEEE's suggestion that DOE incorporate regulatory review requirements from Congress in its proposal, the agency believes that a detailed and comprehensive recitation of applicable statutory requirements in the Process Rule is unnecessary. Those statutory requirements are a given, so instead, DOE endeavored to focus on the procedures it will follow to meet those requirements. Regarding ACEEE's suggestion that any general rulemaking timeline envisioned by DOE should include test procedures as well as standards, DOE believes that the regulatory text of the Process Rule adequately addresses the topic of test procedures, and DOE has already made clear the key timing provision that any test procedure rulemaking is to be completed prior to publication of a standards NOPR. Consequently, DOE has determined that no further clarifications are required on these topics.
In sum, DOE has determined that the changes to the Process Rule adopted in this final rule will provide for a program that is transparent, predictable, robust, steady, and which meets its statutory deadlines, just as ASE suggested.
III. Discussion of Specific Revisions to the Process Rule
A. The Process Rule Will Be Binding on the Department of Energy
In the December 2017 RFI, DOE asked stakeholders whether DOE should make compliance with the Process Rule mandatory. (82 FR 59992, 59997) At the January 9, 2018, Process Rule public meeting, most stakeholders agreed that the Process Rule should be binding on the Department, that is, the Department should be held accountable for complying with its own procedures so that the public will have confidence in the transparency and fairness of DOE's regulatory process. Others recommended that any amended Process Rule retain flexibility for DOE so that the agency is not restricted in its ability to respond to the circumstances of each rulemaking and to avoid increased litigation risk.
Similarly, in response to the NOPR, most commenters support DOE's inclusion of a provision providing for the mandatory nature of the Process Rule to the Department to hold DOE accountable to its own procedures, thereby increasing public confidence in the fairness of the regulatory process. Those commenters are as follows: AHAM March 21, 2019 Public Meeting Transcript, No. 87, at pp. 68-69; AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at p.10; AGA, March 21, 2019 Public Meeting Transcript, No. 87, at pp. 18-19; AGA, No. 114, at pp. 7-8; ALA, No. 104 at p. 2; APGA, March 21, 2019 Public Meeting Transcript, No. 87, at p. 14; APGA, No. 106 at p. 3; ASHRAE, No. 109 at p. 3; BWC, No. 103 at p. 1; CTA, No. 136 at p. 2; Danfoss, March 21, 2019 Public Meeting Transcript, No. 87, at p. 40; GEA, No. 125 at p. 2; GM Law, No. 105 at pp. 2, 4; GWU, No. 132 at p. 3; Joint Commenters, No. 112 at p. 2; Lennox, No. 133, at p. 2; Lutron, No. 137 at p. 2; NPCC, No. 94, at p. 4; NPGA, No. 110 at pp. 1-2; Rheem, No. 101 at p. 1; Southern Company, March 21, 2019 Public Meeting Transcript, No. 87, at p. 70; Southern Company, April 11, 2019 Public Meeting Transcript, No. 92, at p.233; Spire, March 21, 2019 Public Meeting Transcript, No. 87, at p. 37; Spire, No. 139, at p. 2; BHI, No. 135, at p. 1; and Westinghouse, March 21, 2019 Public Meeting Transcript, No. 87, at pp. 72-75; CTA, No. 136 at p. 2) Specifically, APGA added that if DOE merely makes changes to the “voluntary” guidelines, there is no
change to the status quo in which there are no consequences for not following the Process Rule. (APGA, No. 106 at p. 3)
Conversely, also in response to the NOPR, other stakeholders oppose requiring that the Process Rule be mandatory to the Department for three reasons. First, commenters state that such a provision would deprive the Department of needed flexibility during the rulemaking process; second, commenters state that such a provision could lead to additional litigation, thereby causing delay in the rulemaking process, and third, commenters state that there may be cases where adherence to the Process Rule creates a conflict with the statute.
For those commenters concerned that the Department would lose flexibility during the rulemaking process, some recommended a “limited or good cause exception” that the Department could use in certain circumstances. For instance, A.O. Smith stated the a “limited exception” clause would grant the Department limited authority to deviate from its Process Rule under certain criteria such as: Consensus agreements; negotiated rulemakings; test procedure rulemakings addressing clarifications necessary to provide clarity to the market, reduce uncertainty, and provide a level playing field; and rulemakings completed to fix errors. A.O. Smith recommended that such criteria be proposed in a supplemental notice of proposed rulemaking. Furthermore, A.O. Smith explained that this limited exception would not be meant to circumvent the integrity of the rulemaking process but recognize circumstances where process deviations are necessary and expediting the process is reasonable. (A.O. Smith, No. 127, at p. 2)
Another commenter, ASE opposed making the Process Rule binding, because it would take away DOE's flexibility to respond to unforeseen developments during the rulemaking process and leave the Department vulnerable to lawsuits filed by stakeholders opposed to standards based upon real or perceived departures from procedure. ASE seemed to favor adoption of a “good cause” exception to the Process Rule to provide the agency with some flexibility. ASE also suggested that DOE consider documenting any deviations from the Process Rule for public comment throughout the rulemaking process, particularly but not limited to when a statutory deadline was set to be missed. (ASE, No. 108 at pp. 2-3)
Furthermore, ASAP,
et al.
states that making the Process Rule binding would take away important flexibility that benefits all stakeholders and increases the potential for litigation. ASAP stated that at a minimum, it should include a “good cause” exception as was included in DOE's draft NOPR provided to OIRA. However, any “good cause exception” should not be restricted but should provide DOE with the necessary flexibility to address specific situations that arise. (ASAP, et al., No. 126 at pp. 1-3) Other commenters, including ACEEE (ACEEE, No. 123, at p. 3) and CT-DEEP (CT-DEEP, No. 93, at p. 2) agreed that a “good cause exception” should be included in the Process Rule if it is a mandatory requirement. Earthjustice suggested that if the Process Rule is going to be binding, there should be a procedure to deviate from the Process Rule. (Earthjustice, March 21, 2019 Public Meeting Transcript, No. 87, at p. 76) Westinghouse took the position that the Process Rule should be mandatory but also that flexibility should be provided. (Westinghouse, March 21, 2019 Public Meeting Transcript, No. 87, at pp. 72-75)
Several additional stakeholders voiced their concern that mandatory application of the Process Rule to the Department will generate additional litigation, which could create uncertainty in the market. (A.O. Smith, No. 127, at p. 2; ACEEE, No. 123, at p. 3; ASE, No. 108 at pp. 2;; ASAP, et al., No. 126 at pp. 1-2; AGs Joint Comment, No. 111 at pp. 5-6; CEC, April 11, 2019 Public Meeting Transcript, No. 92, at pp. 232-233; CEC, No. 121, at pp. 2-3; Cal-IOUs, No. 124, at pp. 3-4; Earthjustice, No. 134, at p. 2) Earthjustice believes that a mandatory Process Rule gives new leverage for parties seeking judicial review. (Earthjustice, No. 134, at p. 2) Further, Energy Solutions added that DOE would lose its discretion with mandatory binding requirements and wouldn't be able to address “one-off” issues. (Energy Solutions, March 21, 2019 Public Meeting Transcript, No. 87, at p. 72)
More specifically, the AGs Joint Comment argued that such litigation would not only delay completion of the rulemaking process, but simultaneously. It would frustrate DOE's stated objectives of increasing predictability and consistency, and likely deprive consumers and businesses the full and timely benefits of energy and cost savings associated with standards. (AGs Joint Comment, No. 111 at pp. 5-6)
Another commenter, the CEC states that if DOE continues to move forward with a binding process rule, it should include provisions that allow for substantial compliance with the Process Rule. (CEC, April 11, 2019 Public Meeting Transcript, No. 92, at pp. 232-233) In CEC's opinion, making the Process Rule binding will prevent DOE from responding quickly and effectively when it is in the interest of all stakeholders to do so and may make DOE more vulnerable to litigation challenges. (CEC, No. 121, at p. 2) Pointing to other instances where DOE needed to make modifications to its processes, the CEC noted that these changes brought about more effective means for gathering stakeholder input—
e.g.
shifting from using an ANOPR to other vehicles such as RFIs, Framework Documents, and NODAs. (CEC, No. 121, at p. 2) The CEC emphasized that DOE needs this flexibility to fit the appropriate process to the appliance standard or test procedure at issue. (CEC, No. 121, at p. 2) By making the Process Rule binding, the CEC asserted that DOE would be inviting stakeholders who are opposed to regulations to sue DOE for procedural violations that would not have changed the outcome of DOE's determination related to a given efficiency standard—which will in turn lead to delays in implementing the standard, lost energy savings to consumers, and regulatory uncertainty for manufacturers, distributors, and retailers. (CEC, No. 121, at pp. 2-3) To the contrary, the Joint Commenters disagree that binding DOE to the Process Rule will result in excessive litigation disrupting the goals of certainty and expediency. Most litigation stems from substantive defects caused by shortcutting the process and a binding process will reduce procedural litigation and result in better rules. (Joint Commenters, No. 112 at p. 2) AHRI also disagrees that a mandatory Process Rule would result in more litigation. (AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at p. 10)
Next, ASAP,
et al.,
the AG's Joint Comment, and Cal-IOUs raised the issue as to how to reconcile a mandatory Process Rule and DOE's adherence to the statutory requirements in EPCA. ASAP, et al. states that DOE compliance with the statute must take precedence over the Department's self-imposed restrictions in the Process Rule. (ASAP, et al., No. 126 at pp. 1-3) ASAP does not believe DOE is clear on how it would resolve a conflict between the Process Rule and the statute. (ASAP, March 21, 2019 Public Meeting Transcript, No. 87, at pp. 53, 62-63) Moreover, the AGs Joint Comment stated strong opposition to making the Process Rule binding, as opposed to guidance, because that would preclude DOE from having the procedural flexibility to take a different course of
action when necessary to meet statutory requirements, and a rigid application of the Process Rule would jeopardize DOE's ability to meet its legal obligations under EPCA. The AGs Joint Comment opposed what it categorized as unnecessary and time-consuming procedural steps (
e.g.,
coverage determination or test procedure restart requirements) that could further jeopardize DOE meeting its EPCA mandates. The AGs Joint Comment argued that because DOE's proposal failed to address how the Process Rule could be made mandatory while meeting its statutory duties, it has failed to provide sufficient detail to allow for meaningful and informed comment, as required under the APA. (AGs Joint Comment, No. 111 at p. 6) The AGs Joint Comment stated that if DOE does proceed to make the Process Rule binding, it should include a good cause waiver, particularly for use in cases where the Process Rule requirements would conflict with the text or purposes of EPCA. (AGs Joint Comment, No. 111 at p. 7)
The Cal-IOUs argued that the 1996 Process Rule had intended to be used as guidance and urged that DOE be mindful of this approach with respect to any new provisions or the “modernization” of the Process Rule, particularly with respect to any conflict between it and EPCA. (Cal-IOUs, No. 124, at p. 3) Another commenter, PG&E stated that making the Process Rule mandatory will impose added burdens on DOE and stakeholders which could prevent DOE from meeting its statutory obligations. PG&E urged DOE to use its resources to first catch-up on rulemakings that are past due and finalize pre-publication or consensus term sheets before introducing new procedures that will limit agency discretion and create more regulatory burden. (PG&E, March 21, 2019 Public Meeting Transcript, No. 87, at pp. 21-22; PG&E, April 11, 2019 Public Meeting Transcript, No. 92, at p. 228)
DOE has carefully considered all the comments on this matter and has determined that requiring mandatory compliance on the part of DOE with its own Process Rule would clearly promote a rulemaking environment that is both predictable and consistent (
i.e.,
one where all stakeholders know what to expect during the rulemaking process). In the past, DOE has been criticized by stakeholders for not following its Process Rule, and instead exercising its discretion on a case-by-case basis on procedural matters during the rulemaking process. Today, DOE is affirming language in the amended Process Rule to make clear that its provisions are binding on the agency. DOE believes that this approach will promote confidence, consistency, clarity, and transparency in the rulemaking process that some feel has been lacking in the past. Moreover, it has been the rare instance, if at all, where all parties in a rulemaking proceeding agreed that deviating from the Process Rule was advisable. Rather, it is DOE's experience that deviations from normal process has resulted in one or more parties raising issues that have slowed the regulatory process. Even on rulemaking matters DOE thought to be relatively simple and straight-forward, the same parties suggesting in comment that the Process Rule should provide for flexibility have sought more procedural steps and raised issues of DOE proceeding too quickly and without appropriate stakeholder interaction. Making the Process Rule binding on DOE should result in no party arguing that the process used by DOE was unfair or lacking. Furthermore, DOE believes that the argument that a binding Process Rule will generate increased litigation is highly speculative and, accordingly, is not an appropriate basis to reject the mandatory application of the amended Process Rule. Clearly, it is in the best interests of all stakeholders to work together during the rulemaking process so that DOE efforts to establish economically justified and technologically feasible energy conservation standards and promote meaningful burden reduction in the context of standards setting, compliance, and testing requirements can be achieved. And lastly, the amended Process Rule has been drafted to closely follow and implement EPCA. As such, following the Process Rule will mean that DOE will conduct its rulemaking activities to comply with all EPCA requirements.
After years of debate as to the nature of DOE's compliance with the current Process Rule, DOE believes it appropriate to increase public confidence in the fairness and predictability of the rulemaking process. Accordingly, DOE is adopting language in this final rule making the application of the Process Rule mandatory to the Department.
B. The Process Rule Will Apply to Both Consumer Products and Commercial Equipment
By its terms (and specifically by its title), the 1996 Process Rule applies only to consumer products. However, in practice, DOE has routinely followed the procedures set forth in the Process Rule when establishing standards for commercial equipment. In its December 2017 RFI, DOE requested comment as to whether the agency should amend the Process Rule to clarify that it is equally applicable to the consideration of standards for commercial equipment. (82 FR 59992, 59996) At the January 9, 2018, Process Rule public meeting, DOE also asked stakeholders how the agency should treat equipment covered by the American National Standards Institute (“ANSI”)/American Society of Heating, Refrigerating, and Air-Conditioning Engineers (“ASHRAE”)/Illuminating Engineering Society of North America (“IESNA”) Standard 90.1 (“ASHRAE Standard 90.1”), if DOE were to amend the Process Rule to include commercial equipment. DOE pointed out that EPCA provides a separate set of procedural requirements and timelines for ASHRAE equipment that are different than those in the Process Rule. (DOE, January 9, 2018 Public Meeting Transcript at pp. 183-184)
Commenters agree with the principle that the Process Rule procedures should explicitly apply to both new and amended energy conservation standards for both covered consumer products and industrial and commercial covered equipment, but with modified provisions specific to ASHRAE equipment. (Acuity, No. 95, at p. 2; AHRI, March 21, 2019 Public Meeting Transcript, No. 87, at p. 87; ASE, No. 108 at p. 3; ACEEE, No. 123, at p. 1; AGA, No. 114, at pp. 8-9; ASAP, March 21, 2019 Public Meeting Transcript, No. 87, at p. 88; ASAP, et al., No. 126 at pp 1, 3; BWC, No. 103 at p. 1-2; CEC, No. 121, at p. 3; Edison Electric Institute, March 21, 2019 Public Meeting Transcript, No. 87, at p. 87; GM Law, No. 105 at p. 3; GWU, No. 132 at p. 3; Joint Commenters, No. 112 at p. 2; Lennox, No. 133, at p. 2; NAFEM, No. 122, at p. 2; NPCC, No. 94 at p. 4; NPGA, No. 110 at p.1; Cal-IOUs, No. 124, at p. 4; Rheem, No. 101 at p. 1; Spire, No. 139, at p. 24; BHI, No. 135, at p. 2) Only one commenter, the Cal-IOUs, supported expanding the scope of the Process Rule to include covered commercial and industrial equipment as long as the Process Rule is not binding. (Cal-IOUs, No. 124, at p. 4) This commenter did not explain the rationale for its position.
DOE agrees with commenters that a modernized Process Rule should apply to both consumer products and industrial and commercial equipment, and that the Process Rule must contain language that clarifies this coverage. Historically, DOE has applied the Process Rule to both consumer and industrial and commercial rulemakings. The final rule makes clear that this practice will continue. To promote a
consistent process that reduces the regulatory burden of the rulemaking process, DOE will apply the same procedures in the Process Rule to both consumer products and industrial and commercial equipment rulemakings, except as discussed in section III.C for ASHRAE equipment. The Joint Commenters clearly articulated the rationale for such a decision as follows, there are no cogent reasons for treating the rulemaking process for commercial equipment differently than for consumer products. The benefits of a well-defined, consistent process apply regardless of product or equipment type. ASHRAE equipment holds unique status in EPCA and therefore must be considered separately. (Joint Commenters, No. 112 at p. 2)
Accordingly, DOE has concluded that formally applying the Process Rule to commercial and industrial equipment will enhance the consideration of such equipment by ensuring that there is proper time and information before the agency prior to promulgation of new or amended regulations.
C. The Application of the Process Rule to ASHRAE Equipment
In the February 13, 2019 Process Rule NOPR, DOE explained its proposed approach as to how the agency should treat ASHRAE equipment subject to ASHRAE Standard 90.1,
Energy Standard for Buildings Except Low-Rise Residential Buildings,
in the event DOE were to amend the Process Rule so as to formally apply to commercial equipment. (84 FR 3910, 3914-3916) As statutory background, EPCA provides, in relevant part, that ASHRAE equipment is subject to unique statutory requirements and its own set of timelines. More specifically, pursuant to EPCA's statutory scheme for covered ASHRAE equipment, DOE is required to consider amending the existing Federal energy conservation standards for certain enumerated types of commercial and industrial equipment (generally, commercial water heaters, commercial packaged boilers, commercial air-conditioning and heating equipment, and packaged terminal air conditioners and heat pumps) when ASHRAE Standard 90.1 is amended with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) For each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must adopt amended energy conservation standards at the new efficiency level in ASHRAE Standard 90.1 as the uniform national standard for such equipment, unless DOE determines by rule, and supported by clear and convincing evidence, that a more-stringent standard would result in significant additional conservation of energy and is technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(I)-(II)); 84 FR 3910, 3914 (Feb. 13, 2019)
The Process Rule NOPR examined numerous topics, including the need to address ASHRAE equipment explicitly in the Process Rule, the level of deference to be accorded to ASHRAE (and the openness of that process), the “clear and convincing evidence” standard for establishing standard levels more stringent than those adopted in ASHRAE Standard 90.1, and DOE's interpretation of EPCA's ASHRAE trigger provisions (and related implementation). In response to the NOPR, several stakeholders expressed their views as to how DOE should handle ASHRAE equipment, including concerns regarding each of the topics raised in the NOPR. Each of these matters will be addressed in the paragraphs that follow, including public comments received and DOE's responses.
The Need for ASHRAE Equipment To Be Addressed Separately
In the Process Rule NOPR, DOE stated that it tentatively determined that the amended Process Rule will contain a new section that clearly delineates the procedure DOE will follow for evaluating amendments to ASHRAE Standard 90.1 and conducting related rulemakings. DOE noted that it would first reiterate its statutory obligations for ASHRAE equipment in this new section of the Process Rule. In the event that DOE determines that it is appropriate to conduct a rulemaking seeking to adopt standards for ASHRAE equipment more stringent than those in ASHRAE Standard 90.1, all of the Process Rule requirements would apply. However, for the typical situation wherein DOE is adopting the ASHRAE Standard 90.1 level(s), DOE would follow the EPCA statutory requirements rather than the Process Rule requirements. (84 FR 3910, 3915 (Feb. 13, 2019))
Many commenters supported (or did not object to) DOE's proposal to have the Process Rule separately and specifically address ASHRAE equipment. (AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 10, 95; Spire, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 100-101; Rheem, No. 101 at p. 1; NRDC, No. 131 at pp. 14-15; Spire, No. 139 at p. 5; BHI, No. 135 at p. 2) For example, ASHRAE expressed support for the clarification in DOE's proposal regarding the extent to which it would rely on ASHRAE Standard 90.1, an outcome which the commenter suggested would achieve the clear statutory intent of EPCA and would result in a less costly and burdensome rulemaking process. (ASHRAE, April 11, 2019 Public Meeting Transcript, No. 92 at pp. 224, 226) The CEC also supported the inclusion of a means to facilitate the adoption of ASHRAE 90.1 levels for commercial equipment. (CEC, No. 121 at p. 3) Similarly, the AGA expressed support for the Process Rule NOPR's proposal that in the event that DOE conducts a rulemaking to establish more-stringent standards for covered ASHRAE equipment, DOE would follow the procedures established in the Process Rule, while still complying with EPCA's ASHRAE-specific deadlines. AGA also agreed with the Department's proposal in the NOPR to add a section into the Process Rule to clearly define the process used to adopt ASHRAE 90.1 equipment standards and also define a mechanism when a more-stringent equipment efficiency standard over the ASHRAE level can be pursued. (AGA, No. 114 at p. 10) The Joint Commenters also supported the Department's proposed approach to rulemakings for ASHRAE equipment, agreeing that the Process Rule should apply to commercial equipment covered by ASHRAE 90.1 standards only in the case where standards rulemakings for ASHRAE equipment are prompted by a six-year review or where DOE proposes standard levels more stringent than those in ASHRAE Standard 90.1. (Joint Commenters, No. 112 at p. 2)
ASHRAE expressed support for DOE's inclusion of a new section in its proposed Process Rule that clearly delineates the procedure DOE will follow for evaluating amendments to ASHRAE Standard 90.1 and conducting related rulemakings with respect to equipment covered by ASHRAE Standard 90.1. ASHRAE lauded DOE's decision to follow EPCA's mandate and adopt the revised ASHRAE levels, except in very limited circumstances. It also agreed with DOE's assessment that adopting the amended ASHRAE Standard 90.1 levels as its regular practice will result in reduced regulatory burden on stakeholders and will promote consistency and simplicity when DOE is addressing ASHRAE equipment. (ASHRAE, No. 109 at pp. 2-3)
However, several parties sought clarification as to how DOE's proposal would alter the agency's historical treatment of ASHRAE equipment and expressed concern that the Department would deviate from the relevant statutory requirements. For example, Danfoss argued that the Process Rule
should not apply to ASHRAE equipment when DOE is adopting the standard levels in Standard 90.1 because the ASHRAE process already has requirements for fairness and transparency, but if DOE should decide that a more-stringent standard is warranted, then the Process Rule should apply. (Danfoss, March 21, 2019 Public Meeting Transcript, No. 87 at p. 40)
Lennox stated that the Process Rule should apply to commercial equipment except when it would conflict with special statutory provisions specific to commercial equipment rulemaking, such as provisions for adopting ASHRAE 90.1 industry standards. Although it found section 2 of the proposed Process Rule to be generally consistent with this principle, Lennox nonetheless urged DOE to clarify this point. For commercial equipment covered by ASHRAE Standard 90.1, Lennox noted that DOE must adopt the industry standard unless “clear and convincing evidence” dictates otherwise (
i.e.,
by supporting more-stringent standards). If DOE simply adopts ASHRAE 90.1 standards, Lennox stated that the additional provisions in the Process Rule are not necessary. However, Lennox suggested that additional Process Rule processes and transparency enhancements may apply to commercial equipment covered by ASHRAE 90.1 standards where: (1) Energy conservation standard rulemakings for such ASHRAE products are prompted by a six-year review or (2) DOE proposes standard levels over-and-above those in ASHRAE 90.1, albeit in either case subject to the “clear and convincing evidence” standard. Again, Lennox stated that although this structure is consistent with section 9 of the proposed Process Rule and DOE should clarify this in the final rule preamble. For instance, Lennox stated that in the “very limited circumstances” when DOE seeks to go beyond standards established by ASHRAE 90.1 for equipment covered by those standards, relevant Process Rule provisions may include many of those in Process Rule section 1 (Objectives) and sections 6 and 7 (which provide details on selecting standards, albeit these would apply only in those “very limited circumstances” when DOE considers going beyond ASHRAE standards and would be subject to the “clear and convincing evidence” standard). Lennox also argued for the potential continued applicability of section 8 (
e.g.,
finalizing a test procedure in advance of considering any amended energy conservation standard), sections 10 and 11 (on DFRs and negotiated rulemakings), and sections 13 to 17 (on engineering analyses, assessment of impacts on manufacturers and consumers, considering non-regulatory approaches, and cross-cutting analytical assumptions, all again subject to the “clear and convincing evidence” standard). Because of the potentially broader applicability of other Process Rule provisions beyond the ASHRAE-specific section 9, the Process Rule should include a clause whereby, or otherwise clarify, the Process Rule applies to ASHRAE equipment: (1) Except when doing so would conflict with the ASHRAE-specific provisions and (2) in the two limited circumstances mentioned above when DOE might go beyond ASHRAE-specified levels for ASHRAE products (albeit subject to the “clear and convincing evidence” standard). (Lennox, No. 133 at p. 3)
Bosch stated that the DOE proposal to adopt the revised ASHRAE levels for standards as its regular practice, except in limited circumstances, represents a significant change to the current rulemaking process, as DOE would be deferring a considerable portion of its rulemaking work to a non-governmental organization. Instead, Bosch countered that DOE has a clear and statutory obligation to conduct a full and sufficient evaluation of proposed ASHRAE amendments and not to simply defer to a separate industry standards organization. The commenter argued that instead of reducing regulatory burden, DOE's proposal to defer to ASHRAE would create new burdens for manufacturers by requiring companies to devote significant time and resources to engaging in the ASHRAE process. Also, Bosch stated that the proposal does not adequately address whether the levels set through the ASHRAE standards-setting process are sufficient or are updated within an appropriate period of time, unlike the six-year EPCA look-back review, thereby hindering regulatory certainty. Based upon the foregoing reasoning, Bosch requested that DOE reconsider this portion of its proposal. (Bosch, No. 113 at pp. 3-4) Along these same lines, the CA IOUs indicated that DOE's proposal with respect to deferring to industry standards—such as those promulgated by ASHRAE—would have the effect of the agency ignoring its statutory mandate to critically assess whether a given test procedure requires amending. (CA IOUs, No. 124 at p. 5) The AGs Joint Comment similarly argued that DOE's proposed modifications to its approach to regulating ASHRAE equipment amounts to an abdication of its duties to assess Standard 90.1 and engage in related rulemaking. (AGs Joint Comment, No. 111 at p. 12)
In contrast, the Joint Commenters expressed strong support for the expectation that DOE would adopt revised ASHRAE levels except in “very limited circumstances,” because they argued that historically, when DOE has exceeded the ASHRAE proposed levels, it has imposed disproportionate harm on industry segments in pursuit of inconsequential energy efficiency benefits. (Joint Commenters, No. 112 at p. 2)
Ingersoll Rand stated that it supports alignment of overlapping product energy efficiency requirements between ASHRAE Standard 90.1 and DOE appliance standards, in terms of both stringency and effective dates. However, Ingersoll Rand acknowledged that EPCA grants DOE some limited discretion when considering amending appliance standards under 42 U.S.C. 6313(a)(6)(A). Consequently, the commenter agreed with the Department's proposal that if standards established under ASHRAE Standard 90.1 are adopted by DOE, the rulemaking does not need to follow the Process Rule, but if the Department analyzes whether there is clear and convincing evidence to justify more-stringent standards, such rulemaking would need to abide by the Process Rule. However, Ingersoll Rand disagreed with the Department's interpretation that ASHRAE not acting to amend the energy efficiency requirements for DOE-covered products is tantamount to a decision that the existing standards remain in place. Ingersoll Rand stated that in this scenario, DOE has proposed to hold revisions to appliance standards under 42 U.S.C. 6313(a)(6)(C) to the same “very high bar” as if ASHRAE had revised the energy efficiency standards for these products in Standard 90.1. The commenter stated the while it expects ASHRAE to update these standards when it is economically justified and technologically feasible to do so, it is also conceivable that this process could be delayed for procedural reasons, given the nature of the ASHRAE consensus-based standards process. If the review of these standards is triggered by the 6-year-lookback provision at 42 U.S.C. 6313(a)(6)(C)(i), Ingersoll Rand encouraged DOE to consider standards for the appropriate equipment as it would any other standard under the Process Rule. Ingersoll Rand reasoned that such approach would ensure that any new appliance standards remain technologically feasible and economically justified per DOE's analysis (and including any ASHRAE analysis), without further delaying the
appropriate updates to these standards. (Ingersoll Rand, No. 118 at p. 2)
Other commenters were more skeptical of DOE's proposed approach to ASHRAE equipment in the Process Rule NOPR and raised a number of concerns. ACEEE commented that applying the full Process Rule to ASHRAE products is not workable. According to ACEEE, DOE's proposal states that all of the Process Rule requirements would apply to a decision to go beyond ASHRAE levels, but it does not explain how an analysis and public comment period on the ASHRAE levels followed by early assessment, framework, full analysis, draft rule, and final rule, including three additional public comment periods, would all be accomplished within the statutory limit of 30 months (
i.e.,
the statutory time limit for adopting more-stringent standards). ACEEE argued that “the law (
i.e.,
EPCA) recognizes that substantial analysis and public input occur in the ASHRAE process, and the procedure for setting modified requirements should reflect that.” (ACEEE, No. 123 at p. 2) The CA IOUs contended that EPCA prescribed a specific set of conditions for DOE to follow with regard to setting standards for ASHRAE equipment and commented that DOE is required to follow EPCA. (CA IOUs, No. 124 at p. 4-5)
Finally, ASAP sought clarification as to whether ASHRAE equipment would be subject to the early assessment process under the proposed Process Rule. (ASAP, April 11, 2019 Public Meeting Transcript, No. 92 at p. 196)
In response, DOE recognizes its specific obligations under EPCA vis-à-vis ASHRAE equipment and makes clear that it is continually striving to meet those obligations. And, the Department must have a process for doing so. As with other commercial equipment, DOE has applied the Process Rule to ASHRAE equipment to the extent permitted by statute, even though 10 CFR part 430, subpart C, Appendix A technically applies to “consumer products.” DOE has found the principles embodied in the Process Rule to be beneficial to both stakeholders and the agency, without distinction as to whether a consumer product or commercial/industrial equipment is at issue. After considering public comments, in this final rule, DOE has decided to make its existing practice more clear and transparent by explicitly addressing the applicability of the Process Rule to ASHRAE equipment and incorporating the key statutory timelines, as well as to clarify how DOE will conduct rulemakings for ASHRAE equipment. To the extent DOE can articulate a clear and rational process for implementing related statutory requirements, the agency anticipates that it would improve consistency across its ASHRAE rulemakings, thereby reducing burdens on manufacturers of such equipment and increasing benefits to consumers.
DOE also seeks to make clear that different procedures and timelines apply under EPCA, depending upon whether the Department is adopting the levels contained in ASHRAE Standard 90.1 or more-stringent standards. When ASHRAE 90.1 is amended with respect to the standard level or design requirements applicable under that standard to specific products enumerated in EPCA, DOE is “triggered” to adopt those measures as the uniform national standard (unless DOE finds clear and convincing evidence that adoption of more stringent levels for the product would result in significant additional energy savings and is technologically feasible and economically justified). When DOE determines to adopt the levels in ASHRAE Standard 90.1 as uniform national standards, it will generally follow the specific procedures and timelines set forth in the statute (
i.e.,
a truncated process under EPCA which directs DOE to adopt ASHRAE's consensus standards within 18 months). The other Process Rule procedures are generally not applicable to that specific case and will not be required. However, where DOE finds clear and convincing evidence to support more-stringent standards (as required either under EPCA's ASHRAE “trigger” or 6-year-lookback provisions), the statute's analytical requirements and longer 30-month timeline are more akin to DOE's typical rulemaking process, so DOE believes it appropriate to apply the Process Rule in such cases. DOE has made a clarification to this effect in the Process Rule's regulatory text (see sections 2 and 9).
Specifically in response to ASAP, DOE would not apply the early assessment process to ASHRAE trigger rulemakings because DOE must undertake such rulemaking pursuant to 42 U.S.C. 6313(a)(6)(A), so the early assessment's inquiry as to whether a rulemaking is necessary would not be relevant. Under the statutory process for ASHRAE, DOE is obligated to publish a NODA presenting potential energy savings from the ASHRAE action. DOE plans to use that vehicle to perform the early assessment for ASHRAE regarding whether there is potentially clear and convincing evidence to adopt a more stringent standard. In addition, DOE will conduct an early assessment for rulemakings for ASHRAE equipment that are initiated pursuant to the 6-year-lookback under 42 U.S.C. 6313(a)(6)(C), because in such cases, DOE is not statutorily obligated to adopt a level set by ASHRAE and may ultimately determine that no new standard is warranted.
DOE disputes ACEEE's assertion that applying the Process Rule to rulemakings that go beyond ASHRAE Standard 90.1 levels is unworkable, because DOE has been successfully applying most of those provisions to its ASHRAE rulemakings already. The only new step DOE has added to the rulemaking process through its revised Process Rule is the “early assessment” (applicable only to ASHRAE 6-year-lookback rulemakings, not ASHRAE “trigger” rulemakings). DOE sees no reason why through sound management principles and proper scheduling that it cannot satisfy the applicable provisions of the Process Rule while meeting relevant statutory deadlines. In contrast to ACEEE's view, DOE envisions this final rule's process improvements as increasing the opportunity for public input and strengthening rulemaking analyses.
DOE is not deferring its statutory duties for standard setting to an outside organization (
i.e.,
ASHRAE) through these Process Rule amendments. The Department is committed to undertaking the necessary review, consistent with the EPCA timelines, to determine whether more-stringent standards are appropriate, both under its ASHRAE trigger and 6-year-lookback authority, as it always has. DOE is making clear that in doing so, it must meet the statutory requirement that the more-stringent standard level be supported by clear and convincing evidence. EPCA's statutory structure demonstrates a strong Congressional preference for adoption of ASHRAE levels, except in extraordinary cases where a high evidentiary hurdle has been surmounted. In this way, Congress sought to ensure that more-stringent standards have objectively recognized benefits that unquestionably justify their costs. DOE simply intends for the Process Rule to reflect these statutory requirements, not deviate from them or inappropriately shift responsibility to ASHRAE. Consequently, DOE will continue to perform all necessary review and analyses consistent with its statutory obligations, and stakeholders should not incur any additional responsibilities in terms of either the DOE rulemaking or participation in the ASHRAE Standard 90.1 process.
Openness of/Deference to the ASHRAE Standards Development Process
In the Process Rule NOPR, the Department explained its tentative decision that going forward, DOE would anticipate adopting the revised ASHRAE levels as contemplated by EPCA, except in very limited circumstances. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) DOE reasoned that its commitment to adopting the amended ASHRAE Standard 90.1 levels as its regular practice would result in reducing the regulatory burden on stakeholders and would promote consistency and simplicity when addressing ASHRAE equipment. 84 FR 3910, 3915 (Feb. 13, 2019).
There was considerable difference of opinion as to the openness of the ASHRAE standards development process expressed by stakeholders both at the March 21, 2019 public meeting and in written comments on the Process Rule NOPR. At the March 21, 2019 public meeting, various stakeholders debated the level of access to participation in the ASHRAE process. (March 21, 2019 Public Meeting Transcript, No. 87 at pp. 99-108) Some commenters suggested that despite the technical expertise of ASHRAE Standard 90.1 committees, there are barriers to participation in that process in terms of time and money, which stand in contrast to the DOE regulatory process. For example, NEEA argued that although it does like certain aspects of the ASHRAE process, on balance, it has not found the ASHRAE process to be a viable pathway for bringing forth innovative proposals, as they are frequently blocked in committees. In contrast, NEEA believes that DOE has an open process which allows all interested stakeholders to make a meaningful contribution. Consequently, NEEA encouraged DOE to consider alternative processes when seeking to regulate ASHRAE equipment. (Northwest Energy Efficiency Alliance, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 105-106)
Such commenters suggested that while the ASHRAE process may appear to be open, the commenter expressed its view that the deck is often stacked against their meaningful participation. Along these lines, PG&E disagreed with DOE's proposed approach, asserting that ASHRAE is dominated by the manufacturers that will benefit by test procedures made by that organization. (PG&E, March 21, 2019 Public Meeting Transcript, No. 87 at p. 93) The CA IOUs indicated that ASHRAE decisions are based on a simple majority vote and that industry representative members are typically the most vocal and have the most influence over whatever test procedures (or standards) are ultimately adopted by ASHRAE. (CA IOUs, No. 124 at p. 5) PG&E added that ASHRAE “enforcement” requirements are less rigorous than DOE enforcement requirements in terms of the tolerances put around the requirements in an ASHRAE test procedure versus a DOE test procedure. (PG&E, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 93-94)
Energy Solutions stated that when there is an open ASHRAE Standard 90.1 process or when there is an opportunity for public review of related documents, DOE should notify stakeholders of the Appliance Standards Program so that interested parties will be better aware of such activities. (Energy Solutions, March 21, 2019 Public Meeting Transcript, No. 87 at p. 105)
Other stakeholders offered a vigorous defense of the openness, fairness, and transparency of the ASHRAE process. ASHRAE itself stated that it stands behind its standards development process and believes that the results generated by this process are robust. According to ASHRAE, all proposed changes to ASHRAE Standard 90.1 are open for public review, which allows interested parties to provide input into development of the standard and reach consensus, thereby ensuring publication of a document that has been rigorously examined, questioned, and defended. The organization defended its consensus process as ensuring buy-in and reflecting input from energy advocates, building owners, design professionals, utilities, manufacturers, and representatives from DOE, and other materially-affected and interested parties. ASHRAE refuted the criticism that DOE's use of privately-developed consensus standards such as ASHRAE's relies too heavily on industry, which may create potential conflicts of interest. With respect to this criticism, ASHRAE emphasized that one does not need to be an ASHRAE member to participate in the ASHRAE standards development process. In addition, the organization argued that the 47 voting members on the Standing Standards Project Committee (SSPC) 90.1 have broad representation, and of the 19 industry voting members, only nine come from industries that have a material interest in equipment covered by potential DOE regulations. (ASHRAE, No. 109 at pp. 2-3)
ASHRAE further pointed out that the National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113) has directed Federal agencies to adopt voluntary industry consensus standards unless inconsistent with the law or impracticable. According to ASHRAE, since 1998, the Executive Office of the President has supported this statute through issuing and re-issuing Office of Management and Budget (OMB) Circular A-119, which mandates that administrative agencies rely on consensus standards. ASHRAE concluded that EPCA and DOE's proposal are consistent with these directives. (ASHRAE, No. 109 at p. 3)
BWC expressed support for DOE's adoption of revised standard levels set by ASHRAE, as that organization is a consensus body that permits a variety of stakeholders to participate. (BWC, No. 103 at p. 2) Similarly, BHI expressed support for the Department's approach to rulemakings for ASHRAE Standard 90.1 equipment, as consistent with the statutory requirements of 42 U.S.C. 6313. BHI also recommended adding a clear statement to the Process Rule indicating that a DOE representative will attend all ASHRAE 90.1 committee meetings to: (1) Avoid unnecessary delays in publishing the analysis of the potential energy savings of the amended energy conservation standard, or (2) advocate for a more-stringent standard when the Department has clear and convincing evidence of significant additional conservation of energy that is technically feasible and technologically justified, or (3) avoid delays in publishing a no-new-standard notification if ASHRAE 90.1 is not amended. (BHI, No. 135 at p. 2)
AGA stated that national codes and standards activities conducted by organizations such as ASHRAE and the International Code Council, among others, are very important to the natural gas industry. In recent history, the commenter pointed out that DOE has become more involved in these non-governmental organizations, such as by participating in standards and code body proceedings as advocates of requirements and generally becoming more active in these types of organizations. Although AGA acknowledged that DOE's governing statute permits the Department to be involved in such organizations, it argued that such participation should be limited to the presentation of peer-reviewed research/analysis and the review of codes. For example, it is appropriate for DOE to evaluate and analyze codes, such as when the International Energy Conservation Code issues codes to improve energy efficiency in buildings, but such evaluations and related determinations may appear less than arm's length if the Department has had a role in creating the codes. In other words, AGA argued
that to maintain the independent nature of DOE's reviews of non-governmental codes and standards, it would be prudent for the Department to step back and not be intimately involved in the creation of codes and standards that it may be called on to evaluate. (AGA, No. 114 at p. 31)
As these comments reflect, commenters on DOE's Process Rule NOPR offered a variety of opinions about the ASHRAE Standard 90.1 review committee process. Although the technical expertise of the committee members was generally not questioned, there was considerable debate as to the openness, fairness, and transparency of the ASHRAE process. However, it is not DOE's place to judge that process, because in EPCA (
see
42 U.S.C. 6313(a)(6)(A)), Congress clearly and explicitly assigned ASHRAE a role in that regulatory regime, as discussed previously. Consequently, DOE does not have authority to alter ASHRAE's statutory role, but instead must follow the relevant statutory requirements, as reflected in the Process Rule.
Specifically, under the statute, DOE must adopt the standard levels in ASHRAE Standard 90.1, unless DOE finds clear and convincing evidence that adoption of more stringent levels for the equipment would result in significant additional energy savings and is technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A) and (C)(i)) Similarly, DOE must adopt the test procedures for ASHRAE equipment specified in ASHRAE Standard 90.1, and DOE must update those test procedures each time the ASHRAE test procedures are amended, unless DOE has clear and convincing evidence to show that such test procedure amendments are not reasonably designed to produce test results which reflect energy efficiency, energy use, and estimated operating costs of a type of industrial equipment (or class thereof) during a representative average use cycle (as determined by the Secretary) or are unduly burdensome to conduct. (42 U.S.C. 6314(a)(2)-(4)) DOE notes that the statutory scheme, which directs DOE to adopt ASHRAE technical standards and test procedures unless further EPCA provisions command otherwise, comports with the requirements of the National Technology Transfer and Advancement Act of 1995 and OMB Circular A-119.
DOE understands Energy Solutions' desire for stakeholders of the Appliance Standards Program to be made aware of open ASHRAE Standard 90.1 matters or when there is an opportunity for public review of related documents, in order to more effectively participate in standard-setting for the ASHRAE equipment subject to DOE regulation. Although DOE participates in the ASHRAE committee process, it does not control that process and may not always be aware of the complete or up to date relevant information, so DOE does not find it feasible to assume responsibility for the messaging role suggested by Energy Solutions. However, DOE notes that ASHRAE's website offers interested parties the opportunity to subscribe to listservers to be automatically notified via email when activities and information related to various project committees are available. (Available at:
https://www.ashrae.org/technical-resources/standards-and-guidelines/options-to-stay-current.)
DOE believes that the availability of such listservers provides the notice of ongoing ASHRAE activities sought by Energy Solutions in its comment.
DOE agrees with AGA's cautionary statement that the Department must be careful to remain impartial in terms of its role in the ASHRAE committee process, particularly since DOE is statutorily obligated to adopt ASHRAE standards and test procedures, unless they fail to meet other applicable statutory requirements. DOE may serve a neutral role in ASHRAE proceedings (
e.g.,
analyzing or evaluating—but not creating—drafts of ASHRAE standards and test procedures, advising committee members as to the requirements and limitations imposed by EPCA), and will not inappropriately direct or coerce an outcome.
Finally, in response to BHI and as noted in the preceding paragraphs, DOE participates in the standards review process of the ASHRAE Standard 90.1 Committee. Although not required by the statute, such participation helps inform DOE's ASHRAE-related rulemakings for both standards and test procedures. As a result of its participation, the Department does not see a need to formally include such provisions in the Process Rule or to prescribe the appropriate participation of the DOE representative.
The “Clear and Convincing Evidence” Standard for ASHRAE Equipment
The Process Rule NOPR also tentatively took the position that for DOE to utilize its statutory authority to establish more-stringent standards than the amendments to ASHRAE Standard 90.1 pursuant to 42 U.S.C. 6313(a)(6)(A)(ii)(II), DOE will be required to meet a very high bar to demonstrate the “clear and convincing evidence” threshold that is articulated in that subsection. The NOPR stated that when evaluating whether it can proceed with a rulemaking to potentially establish more-stringent standards from those adopted by ASHRAE, DOE will seek, from interested parties and the public, data and information to assist in making that determination, prior to publishing a proposed rule to adopt more-stringent standards. DOE's proposal further stated that “clear and convincing evidence” would exist only if:
Given the circumstances, facts, and data that exist for a particular ASHRAE amendment, DOE determines there is no substantial doubt that the more-stringent standard would result in a significant additional conservation of energy and is technologically feasible and economically justified.
In the Process Rule NOPR, DOE stated that this high bar would mean that only in extraordinary circumstances would DOE conduct a rulemaking to establish more-stringent standards for covered ASHRAE equipment. 84 FR 3910, 3915 (Feb. 13, 2019).
Although the “clear and convincing evidence” requirement is explicitly set forth in the statute, DOE's proposal in the Process Rule NOPR to clarify that evidentiary standard drew considerable discussion and debate. A number of commenters welcomed the clarification regarding what some had viewed as an opaque process with no indication that a higher evidentiary standard had been met. Other commenters were concerned about DOE's proposed clarifications regarding “clear and convincing evidence” and seemed to prefer the Department's prior approach of simply assessing the evidentiary basis for amended standards more stringent than the levels in ASHRAE Standard 90.1 on a case-by-case basis. Still other commenters posed follow-up questions to try to better understand how a “clear and convincing evidence” standard would be applied in this context. These comments are summarized and addressed in the following paragraphs.
As noted, a number of commenters supported the Process Rule NOPR's proposed clarification of the “clear and convincing evidence” standard in the context of DOE's rulemaking process for ASHRAE equipment. (AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at p. 12; Joint Commenters, No. 112 at pp. 2-3; NAFEM, No. 122 at p. 2; AGA, No. 114 at p. 10; ASHRAE, No. 109 at pp. 2-3) On this topic, AHRI stated that it agrees that a formal declaration of what “clear and convincing evidence” means and how it will be implemented increases certainty by increasing transparency and reflects the congressional intent expressed through EPCA. (AHRI, March 21, 2019 Public Meeting Transcript, No. 87 at p. 12)
Similarly, ASHRAE expressed appreciation for DOE's position that it would only consider standards more stringent than the ASHRAE levels if such standards can meet a very high bar to demonstrate the “clear and convincing” evidence threshold mandated by EPCA. (ASHRAE, No. 109 at pp. 2-3) The AGA commented that the proposal makes it clear that DOE will adopt the action taken by ASHRAE except in those circumstances where the Department, pursuant to a defined process and parameters, determines a more-stringent standard is appropriate. (AGA, No. 114 at p. 10)
The Joint Commenters and NAFEM concurred with the definition of “clear and convincing evidence” proposed by DOE with one minor edit, suggesting to add the word “specific” before “circumstances, facts, and data.” NAFEM sought this addition to clarify that DOE cannot make a determination on its general understanding, but instead must base its determination upon specific information related to the equipment class standards subject to ASHRAE revision. In seeking to justify more stringent standards than the ASHRAE level, the Joint Commenters expressed a similar rationale in support of an evidentiary standard that requires demonstration of specific facts and evidence to support a higher standard or that an industry consensus test procedure is demonstrably unreasonable. (Joint Commenters, No. 112 at pp. 2-3; NAFEM, No. 122 at p. 2)
Although Spire agreed with the direction of DOE's approach, it suggested taking matters a step further. Rather than envisioning the possibility that ASHRAE Standard 90.1 levels and more-stringent DOE levels could each save a significant additional amount of energy and be technologically feasible and economically justified, Spire argued that the statute's use of a “clear and convincing” standard should be interpreted as a presumption that the industry consensus standards are going to be adequate, unless there is clear evidence that they are not, at which point such presumption is rebutted. (Spire, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 114-115) In its written comments, Spire reiterated its point by suggesting that DOE's approach to application of the “clear and convincing” standard should be modified to clarify that DOE would only go beyond the ASHRAE Standard 90.1 levels when DOE determines (supported by clear and convincing evidence) that “only” a more-stringent standard would result in significant additional conservation of energy and is technologically feasible and economically justified. (Spire, No. 139, at p. 19)
In contrast to these viewpoints, another group of commenters disfavored DOE's proposed approach to applying the “clear and convincing evidence” standard in the ASHRAE context. A number of commenters challenged DOE's attempted clarification as a legal matter, characterizing it as an improper reinterpretation of the relevant statutory provision. For example, Earthjustice faulted DOE's Process Rule NOPR for assert[ing]—without substantiation—that the `clear and convincing evidence' threshold is only met when `there is no substantial doubt that the more stringent standard would result in a significant additional conservation of energy, is technologically feasible and economically justified.' 84 FR 3915. According to Earthjustice, the cited DOE language is a legal interpretation for the statutory requirement for “clear and convincing evidence,” but the NOPR is devoid of any statutory or case law authority supporting the proposition that evidence is only “clear and convincing” when it leaves “no substantial doubt.” The commenter argued that the NOPR's failure to provide a clear foundation (
e.g.,
discussing how the term “clear and convincing” has been interpreted in other contexts) deprives stakeholders a meaningful opportunity to comment on the claimed equivalency. For example, Earthjustice referenced a U.S. Court of Appeal for the District of Columbia Circuit case finding “[t]he clear and convincing standard `generally requires the trier of fact, in viewing each party's pile of evidence, to reach a firm conviction of the truth on the evidence about which he or she is certain.'”
Parsi
v.
Daioleslam,
778 F.3d 116, 131 (DC Cir. 2015) (quoting
United States
v.
Montague,
40 F.3d 1251, 1255 (DC Cir. 1994)). The commenter questioned whether one could arrive at a “firm conviction” while recognizing the existence of “substantial doubt.” Earthjustice argued that the Process Rule NOPR does not answer that question and leaves stakeholders uncertain as to the extent to which the proposed amendments to the Process Rule comply with EPCA. (Earthjustice, No. 134 at p. 2; Earthjustice, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 125-126)
The AGs Joint Comment also questioned DOE's effort in the NOPR to clarify what would constitute “clear and convincing evidence,” as would justify the adoption of more-stringent standards than those set forth in ASHRAE Standard 90.1. Specifically, in the NOPR DOE tried to clarify the matter by suggesting that there would be “no substantial doubt” on the part of the decision-maker that such standards are warranted. However, the AGs Joint Comment argued that such description is either the same as the statutory “clear and convincing evidence” standard (in which case it is purposeless and arbitrary) or more restrictive (in which case it would be contrary to EPCA and improperly cede authority to ASHRAE). (AGs Joint Comment, No. 111 at p. 13) On this same point, NRDC stated that in its assessment, DOE's statements about “no substantial doubt” and going beyond ASHRAE “only in extraordinary circumstances” appear to be more narrow and restrictive than Congress's intent. The commenter stated that it does not find DOE's attempts to define “clean and convincing” to be either necessary or helpful. NRDC also argued that DOE has failed to disclose where it got this definition and on which legal authorities it is relying, thereby frustrating the public's ability to meaningfully comment on the proposal. (NRDC, No. 131 at pp. 14-15) NRDC reminded DOE that it does not have the power to redefine “clear and convincing” so as to make it something closer to a “beyond a reasonable doubt” standard. (NRDC, March 21, 2019 Public Meeting Transcript, No. 87 at p. 121)
The CEC also opposed DOE's attempt to clarify the “clear and convincing” standard when pursuing standards more stringent than those contained in ASHRAE Standard 90.1. In the CEC's view, the “clear and convincing” standard has already been defined by case law, so further regulatory clarification is irrelevant. The CEC also argued that raising the evidentiary level to meet this standard—as it alleged that DOE has attempted to do—would leave significant, cost-effective, and technologically feasible energy savings on the table at a time when manufacturers are already redesigning equipment to meet ASHRAE 90.1. (CEC, No. 121 at p. 3)
The CA IOUs claimed that DOE's proposal to interpret the phrase “clear and convincing” to mean “no substantial doubt” ignores historical context for standard and test procedure improvements to the detriment of consumers. (CA IOUs, No. 124 at p. 4) The CA IOUs cited the 2016 commercial unitary air conditioners (CUAC) direct final rule
10
(DFR) as an example of how DOE properly applied the clear and convincing threshold previously. (CA IOUs, No. 124 at pp. 4-5)
10
81 FR 2420 (Jan. 15, 2016).
Other commenters focused on the potential practical effects of DOE's proposed clarification of the statute's clear and convincing evidence requirement in the context of ASHRAE equipment. For example, ACEEE criticized DOE's attempt to clarify the term “clear and convincing,” arguing that a new “no substantial doubt” criterion for ASHRAE products would add uncertainty. As the commenter correctly pointed out, Congress required “clear and convincing evidence” for the Department to go beyond ASHRAE levels for such equipment. ACEEE characterized DOE's change in terminology from a legal term of art to a financial term as more of a substitution for, than an interpretation of, congressional intent, which would introduce a new term that would need to be interpreted, and would likely be subject to litigation. If interpreted to be more stringent than the congressional requirement, ACEEE argued that it would prevent the Department from adopting standards or test procedures that best meet the legal requirements. Finally, ACEEE asserted that the Department has failed to demonstrate a problem with the legislative language as would justify the need to change it. (ACEEE, No. 123 at p. 4)
ASAP also questioned what it views as the leap from an evidentiary requirement of “clear and convincing” to “no substantial doubt,” and the commenter expressed concern that DOE would adopt ASHRAE Standard 90.1 levels without consideration of other alternatives, thereby eliminating the potential for negotiations and cooperation among stakeholders, a point with which NEEA agreed. According to ASAP, DOE's proposed language could make the process a “one way street,” which presumably means that ASHRAE would drive or monopolize DOE's standard-setting process. (ASAP, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 111-112, 115, 119; NEEA, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 116-7)
Instead, ASAP argued that there is no need to interpret the “clear and convincing evidence” threshold as part of the Process Rule, because DOE to date has appropriately interpreted that threshold. According to ASAP, DOE's proposal to consider levels beyond the ASHRAE levels only in “extraordinary circumstances” could sacrifice very large energy and economic savings, outcomes which the commenter does not believe reflects the intent of Congress. Even though DOE has adopted the ASHRAE levels in most cases over the past decade, ASAP, et al. offered concern that DOE's proposed changes are attempting to severely restrict the Department's ability to consider standards higher than the ASHRAE levels, as the agency has appropriately and effectively done in the past. (ASAP,
et al.,
No. 126 at pp. 2, 3-5)
CT-DEEP cautioned DOE from using the “clear and convincing” standard prescribed by EPCA with respect to setting standards higher than those contained in ASHRAE Standard 90.1 as a means “to avoid the responsibility of evaluating the potential for more stringent standards by setting the bar at `no substantial doubt that the more stringent standard would result in a significant additional conservation of energy.'” (CT-DEEP, No. 93 at p. 3)
NPCC disagreed with DOE”s application of the “clear and convincing evidence” standard with respect to establishing energy conservation standards more stringent than the ones adopted by ASHRAE, arguing that such approach would mean that DOE could only set more-stringent standards in extraordinary circumstances. Instead, NPCC urged DOE to use the seven existing EPCA criteria at 42 U.S.C. 6295(o) when determining whether to establish more-stringent standards for ASHRAE equipment, consistent with the approach to other products. (NPCC, No. 94 at p. 4; NPCC, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 122-123)
Finally and in contrast to the several commenters who sought to validate DOE's current process vis-à-vis “clear and convincing evidence,” the AGs Joint Comment asserted that DOE's proposed revision improperly applied the clear and convincing evidence standard and ASHRAE deference when it is conducting its six-year-lookback review under 42 U.S.C. 6313(a)(6)(C). Instead, these commenters suggested that a six-year-lookback analysis should be conducted using a preponderance of the evidence standard, arguing that DOE has misinterpreted the relevant provisions of EPCA and risks failing to promulgate standards when they are warranted under the statute. (AGs Joint Comment, No. 111 at pp. 13-14)
Similarly, Earthjustice argued that DOE has improperly applied the “clear and convincing” evidence requirement to instances where the statute only requires a showing of substantial evidence. Earthjustice asserted that ASHRAE's failure to amend the standards applicable to a type of covered equipment under ASHRAE/IES Standard 90.1 does not justify applying the “clear and convincing” standard to DOE's 6-year review obligation under 42 U.S.C. 6313(a)(6)(C), a result which it argues is foreclosed by the plain text of the statute. According to the commenter, EPCA explicitly requires that clear and convincing evidence support any determination to adopt a standard more stringent than an amended Standard 90.1 requirement (pursuant to 42 U.S.C. 6313(a)(6)(A)(ii)(II)), but the statute does not apply this unique standard outside of that context (
see
42 U.S.C. 6306 (applying “substantial evidence” standard to other DOE rules)). Instead, Earthjustice argued that when DOE considers amending standards for equipment in the absence of ASHRAE action, EPCA requires that DOE apply the “criteria” imposed under 42 U.S.C. 6313(a)(6)(A) if determining that standards do not need to be amended and the “criteria and procedures” applicable under 42 U.S.C. 6313(a)(6)(B) if proposing amended standards. (42 U.S.C. 6313(a)(6)(C)(i)) Accordingly, the commenter reasoned that the “criteria” governing any determination not to amend the current standards for covered equipment are that adoption of a more-stringent standard for the equipment would not “result in significant additional conservation of energy and [be] technologically feasible and economically justified” (see 42 U.S.C. 6313(a)(6)(A)(ii)(II)). Under Earthjustice's theory, Congress's decision to withhold the procedures applicable under 42 U.S.C. 6313(a)(6)(A) from any determinations not to amend in the context of a 6-year review means the evidentiary burden applicable under 42 U.S.C. 6313(a)(6)(A) does not apply to 6-year reviews. (Earthjustice, No. 134, at pp. 2-3)
In response to these comments on the Process Rule NOPR, DOE emphasizes that in discussing the need for “clear and convincing evidence” in the context of more-stringent standard levels for ASHRAE equipment, the Department was simply explaining the existing requirements of the statute, rather than seeking to change or reinterpret those requirements. Specifically, EPCA provides that in order to adopt a more-stringent standard, DOE must determine, by rule published in the
Federal Register
, and supported by clear and convincing evidence, that adoption of a uniform national standard more stringent than the amended ASHRAE/IES Standard 90.1 for the product would result in significant additional conservation of energy and is technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) The language of the statute makes clear that Congress intended to establish a high bar for DOE to go beyond the levels in ASHRAE
Standard 90.1, an intention clearly reflected by its decision to require a heightened evidentiary standard. Thus, the statute itself demonstrates that Congress intended for DOE to adopt the ASHRAE levels, except for in extraordinary circumstances where the “clear and convincing evidence” standard has been met. In the Process Rule NOPR, DOE summarized the relevant ASHRAE-related statutory requirements and sought to explain how it implements its legislative mandate. A number of commenters supported DOE's clarification efforts as promoting transparency, but others mistakenly believed that DOE was proposing substantive and inappropriate changes. However, given that DOE proposed no change to the existing statutory requirement, nor could it do so, commenters were not deprived of any opportunity to comment, contrary to what Earthjustice and NRDC suggest. Furthermore, by simply following the requirements of the statute regarding the need for clear and convincing evidence, DOE does not anticipate that there would be the basis for enhanced litigation risk or successful legal challenges.
In the Process Rule NOPR, DOE offered language to explain its understanding of Congress's clear and convincing evidence requirement and how the Department has implemented that requirement. Specifically, DOE stated that “clear and convincing evidence” would exist only if:
Given the circumstances, facts, and data that exist for a particular ASHRAE amendment, DOE determines there is no substantial doubt that the more-stringent standard would result in a significant additional conservation of energy and is technologically feasible and economically justified.
Rather than changing the definition in question, DOE has found this language consistent with how that term has historically been interpreted and defined in the civil context in Federal Circuit and District Courts throughout the United States. The Ninth Circuit Court of Appeals has defined the “clear and convincing” standard as requiring the evidence “to be so clear as to leave no substantial doubt [and] sufficiently strong to command the unhesitating assent of every reasonable mind.”
Ittella Foods, Inc.
v.
Zurich Ins. Co.,
98 Fed. Appx. 689, 691 (9th Cir. 2004) (internal citations omitted). Similarly, the Eighth Circuit Court of Appeals has defined, “clear and convincing evidence” as “leav[ing] no substantial doubt,”
Hunt
v.
Pan American Energy,
540 F.2d 894, 901 (8th Cir. 1976), and the Second Circuit Court of Appeals stated, “[c]lear and convincing proof is highly probable and leaves no substantial doubt,”
Dongguk University
v.
Yale University,
734 F.3d 113, 123 (2d Cir. 2013) (internal citations omitted).
11
Further, the
Handbook of Federal Evidence,
which consists of materials designed to aid in understanding Federal evidentiary rules, also defines “clear and convincing evidence” in civil cases as requiring that “evidence be so clear as to leave no substantial doubt” and describes this standard of proof to only be sustained if the evidence induces a reasonable belief that the facts asserted are highly probably true. (
Handbook of Federal Evidence,
§ 301:5 Burden of Persuasion, Incidence and Measure in Civil Cases (8th ed., 2018))
11
Federal District Courts in circuits around the country have provided similar definitions of “clear and convincing evidence” in the civil context.
See Mandel
v.
Boston Phoenix, Inc.,
492 F. Supp. 2d 26, 29 (D. Mass. 2007) (“The meaning of the term `clear and convincing evidence'—evidence so clear as to leave no substantial doubt.”),
Jersey Const., Inc.
v.
Pennoni Assoc., Inc.,
1993 WL 2999 (E.D. Pa. 1993) (citing
Joseph's
v.
Pizza Hut of America, Inc.,
733 F. Supp. 222, 223-24 (W.D.Pa.1989), aff'd, 899 F.2d 1217 (3d Cir. 1990) (“Clear and convincing evidence is evidence that leaves no substantial doubt . . . establishes not only that the proposition at issue is probable, but also that it is highly probable.”),
Hanna Coal Co., Inc.
v.
I.R.S.,
218 B.R. 825, 829 fn 2 (W.D. Va. 1997) (“Clear and convincing evidence leaves no substantial doubt in your mind. It is proof that establishes in your mind, not only [that] the proposition at issue is probable, but also that it is highly probable.”),
Gentry
v.
Hershey Co.,
687 F. Supp. 2d 711, 724 (M.D. Tenn. 2010) (“Evidence is clear and convincing when it leaves no serious or substantial doubt about the correctness of the conclusions drawn.”),
Sala
v.
U.S.,
552 F. Supp. 2d 1157, 1162 (D. Colo. 2007) (“Clear and convincing evidence leaves no substantial doubt in your mind. It is proof that establishes in your mind, not only [that] the proposition at issue is probable, but also that it is highly probable.”),
Tobinick
v.
Novella,
108 F. Supp. 3d 1299, 1309 (S.D. Fla. 2015) (“The burden of proof by clear and convincing evidence requires a finding of high probability. The evidence must be so clear as to leave no substantial doubt. It must be sufficiently strong to command the unhesitating assent of every reasonable mind.”).
Regarding NRDC's argument that the “clear and convincing evidence” standard is a term of legal art, of which Congress was aware when they adopted the language, and that DOE does not have the power to redefine “clear and convincing evidence” to make it closer to “beyond a reasonable doubt,” as exhibited in the above paragraph, DOE is not redefining the standard, and DOE's provision for “clear and convincing evidence” is consistent with how it has been regularly defined in Federal Courts for many years. Accordingly, DOE agrees with NRDC that Congress was cognizant of the common law and accepted definition of “clear and convincing evidence” when implementing 42 U.S.C. 6313(a)(6)(A)(ii)(II); the definition of “clear and convincing evidence” as evidence that is so clear as to leave “no substantial doubt” can be traced to a 1899 California Supreme Court decision, decided far before 42 U.S.C. 6313(a)(6)(A)(ii)(II) was enacted.
Sheehan
v.
Sullivan,
126 Cal. 189, 193 (1899) (defining clear and convincing evidence as clear, explicit, and unequivocal; so clear as to leave no substantial doubt). Again, this language has been reiterated by Federal Courts in the many years since.
Given DOE's commitment to meet its statutory duty to determine whether more-stringent standards are appropriate for ASHRAE equipment under either the ASHRAE trigger or the 6-year-lookback authority, the concerns expressed by CT-DEEP and ASAP that DOE will use the requirement for clear and convincing evidence to avoid its responsibility to consider whether the criteria for more-stringent standards have been met is unfounded. DOE will continue to evaluate the potential for more-stringent standards as a routine part of its ASHRAE rulemaking process. As part of that process, DOE will ensure that all three statutory criteria are met (
i.e.,
that there is clear and convincing evidence that a more stringent standard can achieve significant additional energy savings, technological feasibility, and economic justification); DOE cannot focus on only one factor (economic justification criteria), as NPCC suggested, because the statute is clear in terms of the criteria that must be considered. By following the requirements of the statute, there is no risk of forgone energy and economic savings as ASAP suggests, nor harm to consumers as the CEC asserts. Moreover, there should not be any impediments in the context of negotiated rulemakings, because DOE will always consider alternate standard levels, provided they comport with all applicable statutory requirements. In light of the tenets of the ASHRAE-related provisions Congress wrote into the statute, there is little incentive for gamesmanship on the part of ASHRAE, because if that organization fails to consider amended standards or only adopts weak standards, DOE's obligation to consider more-stringent standards will resolve that problem.
In terms of the technical modification suggested by the Joint Commenters and NAFEM—suggesting to add the word “specific” to the definition of “clear and convincing evidence” right before “circumstances, facts, and data,” DOE agrees with these commenters that the agency cannot make a determination on its general understanding, but instead
must base its determination upon specific information related to the equipment class standards subject to ASHRAE revision. Such specific circumstances, facts, and data are necessary to support a finding that a standard higher than that contained in ASHRAE Standard 90.1 is permitted or that an industry consensus test procedure is demonstrably unreasonable. Consequently, DOE is adding the word “specific,” as recommended by these commenters.
DOE does not agree with Spire's recommended interpretation of “clear and convincing evidence” so as to provide a presumption that the industry consensus standards are going to be adequate, unless there is clear evidence that they are not, at which point such presumption is rebutted. Again, Spire suggested that DOE's approach to application of the “clear and convincing” standard should be modified to clarify that DOE would only go beyond the ASHRAE Standard 90.1 levels when DOE determines (supported by clear and convincing evidence) that “only” a more-stringent standard would result in significant additional conservation of energy and is technologically feasible and economically justified. Although the statute presumes that ASHRAE Standard 90.1 levels are going to be adequate (given the requirement for DOE to adopt them when triggered), it also contemplates that a more-stringent standard, supported by clear and convincing evidence, could exist which would result in significant additional energy savings and be technologically feasible and economically justified. Spire would not only ask DOE to prove a negative, but also to reject a more-stringent standard that meets the statutory criteria on that basis. DOE finds no basis in the statute to support such a reading, and consequently, the Department declines to adopt Spire's suggested interpretation.
Finally, DOE would address the comments from the AGs Joint Comment and Earthjustice suggesting that the Department should not apply the “clear and convincing evidence” standard and ASHRAE deference when the agency is conducting a 6-year-lookback review rulemaking under 42 U.S.C. 6313(a)(6)(C), but instead use a preponderance of the evidence standard. Notwithstanding any past DOE statements to the contrary, the plain language of the statute does not support such a reading.
Under the 6-year-lookback, the statute provides that every six years, DOE shall conduct an evaluation of each class of covered equipment and shall publish either: (1) A notice of determination that standards for the product do not need to be amended, based on the criteria established under subparagraph (A) (42 U.S.C. 6313(a)(6)(A)) or (2) a notice of proposed rulemaking including new proposed standards based upon the criteria and procedures established under subparagraph (B) (42 U.S.C. 6313(a)(6)(B)). These commenters focus on the distinction that Congress directed DOE to subsection (A) when DOE makes a finding that no new standard is warranted (
i.e.,
the provision containing the “clear and convincing evidence” requirement), but directed the agency to subsection (B) when proposing to adopt more stringent standards, thereby presuming that an ordinary preponderance of evidence standard should apply. The commenters' interpretation is difficult to square with the statute on more than one level. First, it seems illogical that Congress would hold DOE to two different evidentiary standard levels that involve essentially the same standard-setting decision. Under the commenter's interpretation, DOE would issue a notice of determination that a product does not need to be amended when there is no clear and convincing evidence to support a more-stringent standard (applying the criteria of subparagraph (A)), but would be able to issue a proposed rule for those same more-stringent standards using the preponderance of the evidence standard. Such reading seems unworkable in practice. However, Congress arguably foreclosed that anomalous result when it directed that the proposed rule to amend the standard be based on the
criteria and procedures
established under subparagraph (B). (42 U.S.C 6313 (a)(6)(C)(i)(II)) In parsing the economic justification provisions of that subsection, the statute prominently states, “In determining whether a standard is economically justified
for the purposes of subparagraph (A)(ii)(II),
the Secretary shall . . . determine whether the benefits of the standard exceed the burden of the proposed standard by to the maximum extent practicable, considering . . . .” (42 U.S.C. 6313(a)(6)(B)(ii) (Emphasis added)) Thus, in determining whether it is appropriate to set a more-stringent standard, 42 U.S.C. 6313(a)(6)(B) clearly references 42 U.S.C. 6313(a)(6)(A)(ii)(II), which contained the “clear and convincing evidence” requirement. In other words, 42 U.S.C. 6313(a)(6)(C) references 42 U.S.C. 6313(a)(6)(B), which references 42 U.S.C. 6313(a)(6)(A). The explicit language of the statute furthers congressional intent that DOE should defer to ASHRAE in most cases when setting uniform national standards for covered equipment within that organization's purview. Consequently, DOE affirms its understanding that the statute's clear and convincing evidence requirement applies in the context of both ASHRAE trigger and 6-year-lookback rulemakings.
A handful of commenters raised other viewpoints regarding the “clear and convincing evidence” standard or questions regarding how DOE would implement its proposed clarifications. Among this group, Southern Company asked DOE to provide more specificity regarding what “high standard for overriding ASHRAE” means. (Southern Company, March 21, 2019 Public Meeting Transcript, No. 87 at p. 113) In response to this question, DOE refers back to the statutory scheme because the Department is not changing the standard for review regarding when it is appropriate to adopt levels more stringent than those set forth in ASHRAE Standard 90.1 as uniform national standards. Under 42 U.S.C. 6313(a)(6)(A)(ii)(II), EPCA makes clear that DOE may adopt more-stringent levels only where the Department determines, supported by clear and convincing evidence, that adoption of a more-stringent standard would result in significant additional conservation of energy and is technologically feasible and economically justified. As discussed previously, the case law makes clear that “clear and convincing evidence” is a level higher than a preponderance of the evidence, and as explained in the paragraphs immediately above, the statute applies this evidentiary requirement to both ASHRAE “trigger” and 6-year-lookback rulemakings. Thus, under the statutory scheme, DOE believes it reasonable to expect that in most cases, Federal standards will be set at a level corresponding to those in ASHRAE Standard 90.1.
Regarding “clear and convincing” evidence, Ingersoll Rand stated that it had in the past assumed that DOE would only consider alternative energy efficiency requirements if there were clear and convincing evidence that such standards would save a significant amount of energy, be technologically feasible, and be economically justified when compared to both the existing appliance standards and those contained in the updated version of ASHRAE Standard 90.1. As part of DOE's process under 42 U.S.C. 6313(a)(6), Ingersoll Rand reasoned that DOE should review the same analysis developed by the ASHRAE Standard
90.1 development committee to justify revisions to the energy efficiency requirements for these products. The commenter stated that it does not interpret the proposed definition for “clear and convincing evidence” as a departure from this process. (Ingersoll Rand, No. 118 at p. 2)
In response, DOE generally agrees with Ingersoll Rand, in that the Department thoroughly considers the existing uniform national standard (for both ASHRAE trigger and 6-year-lookback rulemakings) and the ASHRAE standard (for trigger rulemakings
12
). In conducting the comprehensive review and analysis in support of its rulemaking under the ASHRAE trigger, DOE would anticipate examining the work of the ASHRAE Standard 90.1 Committee, to the extent it is publicly available.
12
DOE does not anticipate the need to examine the ASHRAE levels in the context of a 6-year-lookback rulemaking, because the existing Federal standard already would reflect either the level in ASHRAE Standard 90.1 or a more-stringent level supported by clear and convincing evidence.
Spire commented that any evidence on which DOE relies in support of the adoption of an energy conservation standard—including ASHRAE equipment—must be made available for review and public comment during the rulemaking process and with adequate time to do so. (Spire, No. 97 at p. 9; Spire, No. 139 (Attachment C)) In response, DOE strives to make as much of the data underlying its appliance standards rulemakings publicly available to the greatest extent possible through posting of such information to the docket for that rulemaking. However, because it is frequently the case that some portion of the relevant data on which the agency makes its decision is proprietary in nature, DOE makes such data available in aggregated and anonymized form. DOE has determined that this approach is sufficient to allow interested stakeholders to understand the rationale for DOE's decision while appropriately protecting confidential information.
EEI argued that if DOE is going to revise ASHRAE equipment standards, it will publish a proposed rule for public comment, so even if the evidentiary bar is raised, there is still an open process with the opportunity for parties to suggest changes. (EEI, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 124-125) In response, DOE agrees with EEI's understanding that it is the Department's standard practice to issue a proposed rulemaking with an opportunity for public comment prior to adopting any new or revised Federal standards for covered ASHRAE equipment. However, DOE would once again clarify that it may not and is not changing the statute's “clear and convincing evidence” requirement for adopting levels more stringent than those contained in ASHRAE Standard 90.1 as uniform national standards.
Interpretations of the ASHRAE “Trigger” Provisions and Other ASHRAE Issues
The Process Rule NOPR also sought to address certain issues of statutory interpretation regarding EPCA's ASHRAE trigger provisions. Making clear that DOE will adopt the action taken by ASHRAE except in rare circumstances raises the question as to when DOE is triggered by ASHRAE action in amending Standard 90.1. In the February 13, 2019 Process Rule NOPR, DOE proposed to clarify its interpretation of the ASHRAE trigger provision in this context. For example, if ASHRAE acts to amend its standard at the equipment class level for air-cooled variable refrigerant flow (VRF) multi-split air conditioners greater than or equal to 135,000 Btu/h, is DOE triggered to consider amended standards: (1) Only for the specific equipment class(es) actually amended in ASHRAE Standard 90.1; (2) for the entire equipment category of VRF equipment, or (3) for the entire covered equipment type of small commercial package air conditioning and heating equipment? EPCA does not specifically define the term “amended” in the context of ASHRAE Standard 90.1. (84 FR 3910, 3915) Although the statute is not entirely clear on this matter, DOE has maintained a consistent position for over a decade, at least since it interpreted what would constitute an “amended standard” in a final rule published in the
Federal Register
on March 7, 2007. 72 FR 10038. In that rule, DOE stated that the statutory triggering event requiring DOE to adopt uniform national standards based on ASHRAE action is for ASHRAE to change a standard for any of the equipment listed in EPCA section 342(a)(6)(A)(i) (42 U.S.C. 6313(a)(6)(A)(i)) by increasing the efficiency level for that equipment.
Id.
at 72 FR 10042. In other words, if the revised ASHRAE Standard 90.1 leaves the standard level unchanged or lowers the standard, as compared to the level specified by the uniform national standard adopted pursuant to EPCA, DOE does not have authority to conduct a rulemaking to consider a higher standard for that equipment pursuant to 42 U.S.C. 6313(a)(6)(A). DOE subsequently reiterated this position in final rules published in the
Federal Register
on July 22, 2009 (74 FR 36312, 36313), May 16, 2012 (77 FR 28928, 28937), and July 17, 2015 (80 FR 42614, 42617).
However, in the American Energy Manufacturing Technical Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012), Congress modified several provisions related to ASHRAE Standard 90.1 equipment. In relevant part, DOE must act whenever ASHRAE Standard 90.1's “standard level or design requirements under that standard” are amended. (42 U.S.C. 6313(a)(6)(A)(i)) Furthermore, that statutory amendment required that DOE must conduct an evaluation of each class of covered equipment in ASHRAE Standard 90.1 “every 6 years.” (42 U.S.C. 6313(a)(6)(C)(i))
In practice, DOE's review in making this assessment of ASHRAE's actions has been strictly limited to the specific standards for the specific equipment for which ASHRAE has made a change (
i.e.,
determined down to the equipment class level). In the Process Rule NOPR, DOE stated that it believes that this is the best reading of the statutory provisions discussed previously, because if ASHRAE were to change the standard for a single equipment class, but DOE then considered itself triggered at the equipment category level or equipment type level, the process would arguably no longer comport with the statutory scheme. More specifically, in such cases, DOE would be addressing certain classes of ASHRAE equipment for which standards had not changed, so it would be impossible for DOE to adopt the ASHRAE level as the statute envisions (as, in most cases, it would already be the same as the existing Federal standard). Instead, DOE could only consider adoption of more-stringent standard levels. Such interpretation would arguably run counter to the “follow ASHRAE” statutory structure set in place by Congress. Furthermore, Congress specifically and recently added a 6-year-lookback provision for covered ASHRAE equipment at 42 U.S.C. 6313(a)(6)(C)(i), a provision which instructs DOE in terms of how and when to address covered equipment upon which ASHRAE has not acted in a timely manner. Furthermore, DOE believes that ASHRAE not acting to amend Standard 90.1 is tantamount to a decision that the existing standard should remain in place. DOE believes it is reasonable to assume that, in revising ASHRAE Standard 90.1, ASHRAE would consider an entire equipment category before deciding to adopt a revised standard for only one or more classes of equipment in that category.
Thus, for equipment classes for which it was not triggered, DOE would act under its 6-year-lookback authority at 42 U.S.C. 6313(a)(6)(C) to issue a standard more stringent than the existing standard for the product, provided that there exists clear and convincing evidence, as defined above, to support such decision.
Commenters raised a number of other issues of statutory interpretation which would be expected to impact how the revised Process Rule would treat ASHRAE equipment, each of which is addressed below. Again, consistent with its long-standing interpretation, the Department proposed to define the ASHRAE “trigger” to be applicable only to those equipment classes where ASHRAE Standard 90.1 has adopted an increase to the efficiency level as compared to the current Federal standard for that specific equipment class. Most commenters supported DOE's interpretation regarding EPCA's ASHRAE trigger provision. BWC agreed with DOE's proposal to limit its changes to those specific equipment classes where ASHRAE has made a change, even though other similar equipment types were left untouched. (BWC, No. 103 at p. 2) The Joint Commenters also supported DOE's clarification that ASHRAE's revision of one equipment class's performance standards or test method does not trigger DOE's statutory obligation to initiate a rulemaking on all related equipment classes, explaining that DOE is correct to decline to initiate additional rulemaking on related products that were never considered by the consensus body. (Joint Commenters, No. 112 at p. 3) Similarly, Lennox agreed with DOE's clarification that ASHRAE's revision of one equipment class's performance standard or test method does not trigger DOE's statutory obligation to initiate a rulemaking on all related equipment classes. Lennox stated that this clarification will avoid the artificial imperative to initiate a rulemaking on a product class that was not addressed by ASHRAE. (Lennox, No. 133 at p. 3)
However, one commenter appeared to favor a different interpretation of the ASHRAE trigger, under which triggering would result in a significantly broader rulemaking action. A.O. Smith raised a number of questions seeking additional clarification regarding DOE's interpretation in the Process Rule NOPR of the statutory provisions related to ASHRAE equipment (particularly the “ASHRAE trigger” and 6-year-lookback which would lead to rulemaking action). The commenter's inquiries were focused on packaged boilers, storage water heaters, instantaneous water heaters, and unfired hot water storage tanks, although DOE notes that the issues raised would apply more broadly to the full suite of covered ASHRAE equipment. (A.O. Smith, No. 127 at pp. 7-8)
First, A.O. Smith asked, if the ASHRAE trigger only applies to those specific equipment classes where ASHRAE Standard 90.1 has increased the efficiency level, how will the Department handle the other equipment classes within the same product category or within the same covered product that ASHRAE 90.1 did not address? In other words, how does the statutory requirement by which, every six years, the Secretary shall conduct an evaluation of each class of covered equipment and shall publish either: (a) A notice of the determination of the Secretary that standards for the product do not need to be amended, based on the criteria established in the statue; or (b) a notice of proposed rulemaking including new proposed standards based on the criteria and procedures established under subparagraph (B), apply to those equipment classes where ASHRAE 90.1 took no action? Would the Department conduct a separate “six-year look back” rulemaking to address those equipment classes where ASHRAE 90.1 took no action, or does the Department interpret ASHRAE 90.1 action on a single equipment class sufficient to satisfy the statutory requirement for the entire category or covered product? (A.O. Smith, No. 127 at p. 7)
As explained previously, EPCA contains two separate provisions pertaining to updating the standards for ASHRAE equipment, one for the ASHRAE trigger (
see
42 U.S.C. 6313(a)(6)(A)) and another for the 6-year-lookback (
see
42 U.S.C. 6313(a)(6)(C)). Under DOE's interpretation, these two statutory provisions act in harmony to ensure that the standards for all types of covered ASHRAE equipment are reviewed on a periodic basis and updated as appropriate. Although not compelled to do so by the statute, DOE may decide in appropriate cases to simultaneously conduct an ASHRAE trigger rulemaking (
i.e.,
for those equipment classes for which ASHRAE set a higher standard) and a 6-year-lookback rulemaking (
i.e.,
for those equipment classes where ASHRAE left levels unchanged or set a lower standard) so as to address all classes of an equipment category at the same time. In other cases, DOE may choose to bifurcate the rulemakings and to handle the non-triggered equipment classes on a schedule to comply with the requirement to review standards every six years. As a general principle, DOE believes it appropriate to weigh the benefits of expediency (
e.g.,
consolidated rulemaking, potentially earlier energy savings) against the burdens (
e.g.,
accelerated compliance and certification costs for non-triggered equipment) for any given ASHRAE rulemaking. DOE anticipates stakeholder feedback on this preliminary issue in response to publication of the ASHRAE NODA following an ASHRAE triggering event.
Second, A.O. Smith asked, if a metric is changed by ASHRAE Standard 90.1 for a given equipment class, does this trigger Department action? The new metric may or may not result in an increase in the efficiency level as compared to the Federal efficiency level. (A.O. Smith, No. 127 at p. 7)
In response, if ASHRAE maintained the existing regulating metric that serves as the basis for current Federal energy conservation standard (without changing those levels), DOE would not consider the addition of another metric to be a triggering event. However, if ASHRAE were to substitute a new metric and eliminate the existing metric entirely, DOE would need to, at a minimum, conduct a crosswalk to the existing metric to see if the changed ASHRAE Standard 90.1 levels would be more stringent than the current Federal standards, in which case DOE would be triggered for those equipment classes where ASHRAE established a higher standard. (DOE expects this latter scenario to likely be theoretical, as substantial market turmoil would conceivably accompany a wholesale exchange of metrics without the maintenance of a transitional metric.) Nonetheless, DOE would need to consider as a policy matter the appropriateness of transitioning to the new metric which ASHRAE has incorporated into Standard 90.1. If DOE determines that there is a sound scientific, technical, and policy basis for changing the metric underlying the Federal standard, it would pursue such change through notice-and-comment rulemaking.
Next, A.O. Smith stated that if the Department were to interpret the provisions as separate requirements under the statute, it could foresee a future where the Department is conducting two separate rulemakings (
i.e.,
one under EPCA's ASHRAE authority and another under EPCA's 6-year-lookback authority), which carry different processes under the proposed Process Rule, different analyses, and different compliance dates. According to A.O. Smith, this would be a very burdensome and costly interpretation
because it would require double the resources spanning many years to comply with the uncoordinated requirements for the different equipment classes within a given covered product. For example, the commenter stated that there are currently 10 equipment classes of commercial packaged boilers, each with a different energy conservation standard for which compliance is required. A.O. Smith asked, if ASHRAE Standard 90.1 adopts a more-stringent standard for only one of those ten equipment classes and the Department subsequently adopts that standard, would the Department continue to be triggered by the six-year lookback to conduct a regular review of the other 9 equipment classes within the covered equipment? If this is the case, A.O. Smith strongly urged the Department to revisit its narrowly-defined interpretation of the ASHRAE trigger due to the potential burdens associated with misaligned review cycles arising from the separate grants of authority under EPCA. (A.O. Smith, No. 127 at pp. 7-8)
On its face, A.O. Smith's comment makes what appears to be a reasonable argument. However, the Department emphasizes that all other commenters on this issue opposed the idea of shifting the ASHRAE trigger from the equipment class level to an equipment category or equipment type level. In addition to individual companies (BWC and Lennox), a Joint Comment by 10 major trade associations (ACCA, AHRI, AMCA International, ALA, AHAM, HARDI, HPBA, NAFEM, NEMA, and PMI)—representing hundreds of corporate members— all supported DOE's proposal and in opposition to the change suggested by A.O. Smith to remedy “misaligned review cycles.” DOE has concluded that there are regulatory burdens separate from participation in the rulemaking process that these commenters deem to outweigh the ones identified by A.O. Smith. Perhaps the Joint Commenters see some benefit in spacing out rulemakings and associated compliance expenditures. Regardless, DOE reasons that there are other avenues in appropriate cases to alleviate the concerns expressed by A.O. Smith.
As noted previously, DOE believes that its approach provides the best reading of the statutory provisions at issue, because if ASHRAE were to change the standard for a single equipment class, but DOE then considered itself triggered at the equipment category level or equipment type level, the process would arguably no longer comport with the statutory scheme. In such cases, DOE would be addressing certain classes of ASHRAE equipment for which standards had not changed, so it would be impossible for DOE to adopt the ASHRAE level as the statute envisions (as, in most cases, it would already be the same as the existing Federal standard). Instead, DOE could only consider adoption of more-stringent standard levels. Such interpretation would arguably run counter to the “follow ASHRAE” statutory structure set in place by Congress. Equipment classes which ASHRAE has decided to leave unchanged would remain subject to review under the statute's 6-year-lookback provision. Whether to consolidate ASHRAE trigger and 6-year-lookback rulemakings will likely hinge on the facts of a given situation. For example, if ASHRAE amends 9 out of 10 commercial packaged boiler equipment classes, it may make sense to immediately commence a 6-year-lookback rulemaking and to consolidate the rulemakings. However, the answer may conceivably be very different if ASHRAE acts to amend only one equipment class. Fortunately, DOE's amended Process Rule provides ample opportunity for stakeholders to weigh in on such issues through the prioritization process, an early assessment, or through comments on the ASHRAE NODA analyzing potential energy savings in response to an ASHRAE trigger. Through such mechanisms, DOE believes that it is possible to minimize, if not eliminate, the types of regulatory burdens about which A.O. Smith expressed concern.
Earthjustice challenged as unsupported DOE's statement in the NOPR that “ASHRAE not acting to amend Standard 90.1 is tantamount to a decision that the existing standard remain in place.” (84 FR 3910, 3916 (Feb. 13, 2019)). The commenter argued that DOE has not explained why that is a reasonable interpretation of ASHRAE's failure to amend a standard, or why that interpretation of ASHRAE inaction is consistent with the intent of Congress, which it argues has repeatedly amended 42 U.S.C. 6313(a)(6) to make clear that ASHRAE cannot shield covered equipment from strengthened DOE standards (
compare
42 U.S.C. 6313(a)(6)(C) (2010) (requiring DOE's review “[n]ot later than 6 years after issuance of any final rule establishing or amending a standard, as required for a product under this part”), with 42 U.S.C. 6313(a)(6)(C) (2019) (requiring DOE's review “Every 6 years” and establishing a deadline for action on equipment “as to which more than 6 years has elapsed since the most recent final rule establishing or amending a standard”)). (Earthjustice, No. 134 at p. 3)
In response to Earthjustice, DOE reasons that if ASHRAE acts to amend standards for certain equipment classes for an equipment category in Standard 90.1, that organization would have at a minimum reviewed the entirety of that equipment category. It would be illogical, confusing, and misleading to cherry-pick only select equipment classes within a category without reviewing the complete category, particularly since that could impose unnecessary burdens on industry and State code enforcement officials. Consequently, presuming this assumption is correct, in most cases, ASHRAE would be making an active decision to the extent it did not modify certain equipment classes within an equipment category. However, the matter is largely a philosophical debate, because such characterization of ASHRAE's action (or, in this case, non-action) does not have any impact on the subsequent steps DOE is required to take under EPCA. Where ASHRAE has not acted, DOE remains obligated to review the need for amended standards under DOE's 6-year-lookback authority. (42 U.S.C. 6313(a)(6)(C)) Pursuant to that statutory provision, DOE must adopt amended standards more stringent than the current standards, if there is clear and convincing evidence showing that such amended standards would result in significant additional conservation of energy and are technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II); 42 U.S.C. 6313(a)(6)(B)(ii); 42 U.S.C. 6313(a)(6)(C)(i)(II)) Because DOE must follow its legal obligations under EPCA, ASHRAE cannot shield covered equipment from potential amended energy conservation standards in the manner Earthjustice suggests.
Southern Company argued that DOE should (but has not always) examine the totality of ASHRAE actions in setting equipment standards, because there may be associated usage standards which are also part of the equation (
e.g.,
requiring occupancy sensors to limit the time lamps are on, which may justify a higher energy use per watt but save more energy overall). According to Southern Company, DOE needs to look at the totality of how equipment would be used under ASHRAE Standard 90.1, not just looking at a particular piece of equipment in isolation and judging that by DOE's rules, ASHRAE should have chosen a higher standard. (Southern Company, March 21, 2019 Public
Meeting Transcript, No. 87 at pp. 102-103)
In response, DOE acknowledges that ASHRAE action in Standard 90.1 may sometimes employ a suite of complementary provisions intended to provide operational and energy savings benefits. In doing so, ASHRAE is not bound by the legal constraints of EPCA, so the organization is free to approach issues from a more purely technical perspective, rather than a regulatory one. In contrast, DOE must meet its legal obligations under the statute—particularly 42 U.S.C. 6313(a)(6)(A)-(C) and applicable definitions under 42 U.S.C. 6311—in considering new or amended standards for ASHRAE equipment, whether acting under the ASHRAE trigger or 6-year-lookback. In general, DOE must adopt the levels set forth in ASHRAE Standard 90.1, unless DOE finds, supported by clear and convincing evidence, that more-stringent standards would result in significant additional energy savings and are technologically feasible and economically justified. Consequently, in conducting rulemakings for ASHRAE equipment, DOE must live within the parameters set forth in the statute.
PG&E argued there needs to be some form of verification of ASHRAE test procedures to ensure that they produce representative results. The company cited an example where through its own research, it was able to determine that an ASHRAE test procedure was producing results that were as much as 50 percent off, so the commenter recommended that a process be put in place to ensure that similar problems do not arise going forward. (PG&E, March 21, 2019 Public Meeting Transcript, No. 87 at pp. 123-124)
DOE agrees that there should be a robust assessment of industry consensus test procedures prior to adoption as Federal test procedures, as contemplated by the statute. EPCA clearly contemplates that the test procedures for ASHRAE equipment “shall be those generally accepted industry test procedures or rating procedures developed or recognized by [AHRI or ASHRAE] as referenced in ASHRAE/IES Standard 90.1.” The statute also directs that, when those industry test procedures are amended, DOE should amend the Federal test procedures to be consistent. The statute does require that such amended test procedures remain reasonably designed to produce test results that reflect the energy efficiency, energy use, and estimated operating costs of a type of industrial equipment (or class thereof) during a representative average use cycle and shall not be unduly burdensome to conduct. If the test procedure is a procedure for determining estimated annual operating costs, such amended procedure must continue to provide that such costs shall be calculated from measurements of energy use in a representative average-use cycle, and from representative average unit costs of the energy needed to operate such equipment during such cycle. (42 U.S.C. 6314(a)(2), (3), (4)(A)-(B)) If the amended industry consensus test procedures fail to meet these requirements, DOE may establish its own test procedure that meets the requirements of the statute. (42 U.S.C. 6314(a)(4)(C))
It is DOE's standard practice to undertake a review of amended industry consensus test procedures referenced in ASHRAE Standard 90.1 before proposing conforming amendments to the corresponding Federal test procedures. As part of the process, DOE seeks public comment on its proposed test procedures, and all substantive comments must be addressed prior to adoption of a test procedure final rule. DOE believes that thorough vetting by both the Department and the interested public offers a sound practice that satisfies these express statutory requirements, as demonstrated by the case in PG&E's example.
Southern Company argued that the proposed 0.5 quad threshold for significant energy savings should not apply to individual equipment lines in ASHRAE's standards (given that many involve equipment with smaller overall energy usage). The point was that for those equipment types, the threshold level may never be reached, so DOE would be left once again to await ASHRAE action, despite that fact that Congress had adopted a 6-year-lookback provision for ASHRAE. (Southern Company, March 21, 2019 Public Meeting Transcript, No. 87 at p. 122)
In response, DOE notes that while Southern Company made the argument at the March 21, 2019 public meeting that certain categories of ASHRAE equipment may have small shipments, energy consumption, or both, such that the energy savings potential would be limited and potentially never meet the proposed 0.5 quad threshold for significant energy savings, the commenter did not provide any further detail, data, or other evidence to support its claim. Southern Company then asserts that DOE's proposed threshold would prevent such equipment from ever being subject to the 6-year-look back at 42 U.S.C. 6313(a)(6)(C), thereby ceding too much control to ASHRAE.
If, for the sake of argument, DOE were to assume Southern Company's assessment of the market for ASHRAE equipment to be correct, the Department believes that the commenter has failed to consider all of the relevant provisions of EPCA, as well as the impact that the percentage savings prong of the energy savings threshold would have in such situations. First, in the ASHRAE context, Congress did include a requirement that more-stringent standards be supported by clear and convincing evidence showing that such standards would result in “significant additional conservation of energy” and be technologically feasible and economically justified (42 U.S.C. 6313(a)(6)(A)(ii)(II)), a provision which comes into play under both the ASHRAE trigger and the 6-year-lookback. By including such requirement for significant additional energy savings, Congress not only acted consistently with its overall approach of deferring to ASHRAE but also to explicitly point out that some equipment may have energy savings that are too small to justify the imposition of standards. The implication of Southern Company's argument would be to have DOE read the “significant additional energy savings” requirement out of the statute for at least some subset of ASHRAE equipment. DOE is not at liberty to follow that suggestion, but instead must give effect to all applicable statutory provisions.
Nonetheless, DOE is sensitive to the concern that such equipment not be put beyond the reach of energy conservation standards without proper consideration of the potential for significant additional energy savings. That is why DOE has also proposed to include a percentage energy savings prong as part of its significant energy savings threshold test. Under that prong, if covered ASRAE equipment could achieve a substantial energy
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