Energy Conservation Program: Procedures, Interpretations, and Policies for Consideration of New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Certain Commercial/Industrial Equipment

DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2025-BT-STD-0001]

RIN 1904-AF72

Energy Conservation Program: Procedures, Interpretations, and Policies for Consideration of New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Certain Commercial/Industrial Equipment

AGENCY:

Office of Critical Minerals and Energy Innovation, Department of Energy.

ACTION:

Notice of proposed rulemaking and announcement of webinar.

SUMMARY:

The U.S. Department of Energy (“DOE” or “the Department”) proposes to update the Department's current rulemaking methodology titled, “Procedures, Interpretations, and Policies for Consideration of New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Certain Commercial/Industrial Equipment” (“Process Rule”). Specifically, DOE proposes to: make Appendix A binding on DOE for certain actions; amend objectives and considerations consistent with recent Executive orders and Department policies; add a definition of “significant energy savings”; re-instate the comparative analysis requirement, described as a “walk up” approach; include certain economic thresholds; re-instate the description of clear and convincing evidence; and revert to language from the 2020 Process Rule text, with minor edits, in several sections. In addition to requesting written comments on its proposal, DOE will also hold a public meeting to discuss this proposal and obtain additional input.

DATES:

Comments:

DOE will accept comments, data, and information regarding all aspects of this notice of proposed rulemaking (“NOPR”) no later than August 6, 2026.

Meeting:

DOE will hold a public meeting via webinar on Wednesday, July 15, 2026, from 1 to 4 p.m. ET. See section VI of this document, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.

ADDRESSES:

Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at

www.regulations.gov

under docket number EERE-2025-BT-STD-0001. Follow the instructions for submitting comments. Alternatively, interested persons may submit comments, identified by docket number EERE-2025-BT-STD-0001 and/or regulatory information number (“RIN”) 1904-AF72, by any of the following methods:

(1)

Email: ProcessRule2025STD0001@ee.doe.gov.

Include the docket number EERE-2025-BT-STD-0001 and/or RIN 1904-AF72 in the subject line of the message. Submit electronic comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form of encryption.

(2)

Postal Mail:

Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, Mailstop CM-5B, 1000 Independence Avenue SW, Washington, DC, 20585-0121. If possible, please submit all items on a compact disc (“CD”), in which case it is not necessary to include printed copies.

(3)

Hand Delivery/Courier:

Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, 1000 Independence Avenue SW, Washington, DC, 20585-0121. Telephone: (202) 287-1445. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies. No telefacsimiles (“faxes”) will be accepted. For detailed instructions on submitting comments and additional information on this process,

see

section VI (Public Participation) of this document.

Docket:

The docket for this activity, which includes

Federal Register

notices, comments, and other supporting documents/materials, is available for review at

www.regulations.gov.

All documents in the docket are listed in the

www.regulations.gov

index. However, not all documents listed in the index may be publicly available, such as information that is exempt from public disclosure.

The docket web page can be found at

www.regulations.gov/docket/EERE-2025-BT-STD-0001.

The docket web page contains instructions on how to access all documents, including public comments, in the docket.

See

section VI of this document for information on how to submit comments through

www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Appliance Standards Program, U.S. Department of Energy, Office of Critical Minerals and Energy Innovation, Building Technologies Office, CM-5B, 1000 Independence Avenue SW, Washington, DC, 20585-0121. Email:

ApplianceStandardsQuestions@ee.doe.gov.

Mr. Pete Cochran, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC, 20585-0121. Telephone: (202) 586-4798. Email:

Peter.Cochran@hq.doe.gov.

For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:

ApplianceStandardsQuestions@ee.doe.gov.

A plain language summary of the rule is also available on the Federal e-Rulemaking Portal at

www.regulations.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposal

II. Authority and Background

A. Authority

B. Background

III. Discussion of General Comments

A. General Support for or Opposition to Standards

B. General Support for or Opposition to Changes to the Process Rule

IV. Discussion of Comments and Proposed Revisions to Individual Sections of the Process Rule

A. Objectives (Section 1)

B. Scope (Section 2)

C. Application (Section 3)

D. Setting Priorities for Rulemaking Activity (Section 4)

E. Coverage Determination Rulemakings (Section 5)

F. Significant Energy Savings

1. Background

2. Proposed Threshold for Significant Energy Savings

G. Process For Developing Energy Conservation Standards (Section 6)

1. Early Assessment and Pre-NOPR Stages

2. Comment Periods

3. Factors To Be Considered in Selecting a Proposed Standard

a. Private Impacts on Consumers

b. Impacts on the Environment

H. Policies on Selection of Standards (Section 7)

1. Market Competition and Innovational

2. Analytic Approaches To Address Balancing Factors in EPCA

3. Selection of Standard Level

I. Test Procedures (Section 8)

1. Early Assessment and Pre-NOPR Stage

2. Comment Periods

3. 180-Day Period

4. Industry Standards

5. General

J. ASHRAE Equipment (Section 9)

1. Limited Circumstances and Clear and Convincing Evidence

2. Timelines and Triggers

K. Direct Final Rules (Section 10) and Negotiated Rulemaking

L. Principles for Distinguishing Between Effective and Compliance Dates (Section 11)

M. Other Comments

N. Topics Considered in Other Processes

1. Analytical Methodology

2. Product-Specific Comments

O. Severability

V. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under Additional Executive Orders and Presidential Memoranda

C. Review Under the Regulatory Flexibility Act

D. Review Under the Paperwork Reduction Act of 1995

E. Review Under the National Environmental Policy Act of 1969

F. Review Under Executive Order 13132

G. Review Under Executive Order 12988

H. Review Under the Unfunded Mandates Reform Act of 1995

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

J. Review Under Executive Order 12630

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

L. Review Under Executive Order 13211

M. Review Under the Information Quality Bulletin for Peer Review

VI. Public Participation

A. Participation in the Webinar

B. Procedure for Submitting Prepared General Statements for Distribution

C. Conduct of the Webinar

D. Submission of Comments

VII. Approval of the Office of the Secretary

I. Summary of the Proposal

In this NOPR, DOE is proposing revisions to the Procedures, Interpretations, and Policies for Consideration of New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Certain Commercial/Industrial Equipment, codified in the Code of Federal Regulations (“CFR”) at 10 CFR part 430, subpart C, appendix A, (“Appendix A” or the Process Rule), which DOE generally uses to prescribe energy conservation standards and test procedures for both consumer products and commercial equipment pursuant to the Energy Policy and Conservation Act of 1975 (EPCA), as amended (42 U.S.C. 6291,

et seq.;

42 U.S.C. 6311,

et seq.

). These proposed changes are intended to provide increased certainty in DOE's rulemaking processes for impacted stakeholders, and to better inform the Secretary in making his or her determination under EPCA regarding both whether to regulate and, when choosing to regulate, what standard level to select. In addition, as discussed further below, the proposed process changes reflect the best reading of the statute, consistent with

Loper Bright Enters

v.

Raimondo,

603 U.S. 369 (2024), and

Michigan

v.

EPA,

576 U.S. 743 (2015).

In this document, DOE proposes to make appendix A binding on DOE for certain actions; amend objectives and considerations consistent with statute and recent Executive Orders and Department policies; add a definition of “significant energy savings”; re-instate the comparative analysis requirement, described as a “walk up” approach; include certain economic thresholds; re-instate the description of clear and convincing evidence; and revert to language from the 2020 Process Rule text, with minor edits, in several sections. These proposed revisions are summarized in Table I.1.

EP07JY26.148

In addition, on January 20, 2025, the President issued Executive Order 14154, “Unleashing American Energy” (E.O. 14154). 90 FR 8353 (Jan. 29, 2025). That order stated the policy of the United States with regard to energy production and management. Among the stated elements of this policy, sections 1(f) through (h) of E.O. 14154 cite the intent to safeguard the American people's freedom to choose from a variety of goods and appliances, including but not limited to lightbulbs, dishwashers, washing machines, gas stoves, water heaters, toilets, and shower heads, and

to promote market competition and innovation within the manufacturing and appliance industries; to ensure that the global effects of a rule, regulation, or action shall, whenever evaluated, be reported separately from its domestic costs and benefits, in order to promote sound regulatory decision making and prioritize the interests of the American people; and to guarantee that all Executive departments and agencies (agencies) provide opportunity for public comment and rigorous, peer-reviewed scientific analysis. Section 6 of the Executive order also specifies policies for prioritizing accuracy in environmental analyses, specifically instructing that for Federal regulatory processes, “all agencies shall adhere to only the relevant legislated requirements for environmental considerations and any considerations beyond those requirements are eliminated.” Section 6 of the Executive order also provides instructions regarding consideration of greenhouse gas emissions and the “social cost of carbon.”

Consistent with E.O. 14154, the Department, among other actions, is evaluating existing policy regarding its approach for consideration of new or amended energy conservation standards and test procedures for consumer products and certain commercial and industrial equipment. The Department has tentatively determined that the changes proposed herein will provide certainty in DOE's rulemaking processes for impacted stakeholders and will allow the Secretary to make the best-informed determinations under EPCA regarding the regulation of covered products and equipment.

In addition to the specific issues discussed in this NOPR, DOE welcomes comment on all other aspects of the Process Rule that interested parties believe could be improved or should be maintained.

II. Authority and Background

A. Authority

The Energy Policy and Conservation Act, Public Law 94-163, as amended (“EPCA”),

1

authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. (42 U.S.C. 6291-6317, as codified). Title III, Part B

2

of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. (42 U.S.C. 6291-6309, as codified). Title III, Part C

3

of EPCA, added by Public Law 95-619, Title IV, section 441(a), established the Energy Conservation Program for Certain Industrial Equipment, which sets forth a variety of provisions designed to improve energy efficiency. (42 U.S.C. 6311-6317, as codified). Under EPCA, DOE's energy conservation program consists essentially of four parts: (1) testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA specifically include definitions (42 U.S.C. 6291; 42 U.S.C. 6311), test procedures (42 U.S.C. 6293; 42 U.S.C. 6314), labeling provisions (42 U.S.C. 6294; 42 U.S.C. 6315), energy conservation standards (42 U.S.C. 6295; 42 U.S.C. 6313), and the authority to require information and reports from manufacturers (42 U.S.C. 6296; 42 U.S.C. 6316).

1

All references to EPCA in this document refer to the statute as amended through Energy Act of 2020, Public Law 116-260 (Dec. 27, 2020), which reflects the last statutory amendments that impact parts A and A-1 of EPCA.

2

For editorial reasons, upon codification in the U.S. Code, Part B was redesignated as Part A.

3

For editorial reasons, upon codification in the U.S. Code, Part C was redesignated as Part A-1.

Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, water use (as applicable), or estimated annual operating cost of each covered product and covered equipment during a representative average use cycle or period of use, and the statute further requires that the test procedure not be unduly burdensome to conduct. (42 U.S.C. 6293; 42 U.S.C. 6314). Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their product complies with the applicable energy conservation standards and as the basis for any representations regarding the energy use or energy efficiency of the product. (42 U.S.C. 6293(c); 42 U.S.C. 6295(s); 42 U.S.C. 6314(d); and 42 U.S.C. 6316(a)). Similarly, DOE must use these test procedures to determine whether the products or equipment comply with the applicable energy conservation standards adopted pursuant to EPCA. (42 U.S.C. 6295(s); 42 U.S.C. 6316(a)).

DOE must follow specific statutory criteria for prescribing new or amended standards for covered products. EPCA requires that any new or amended energy conservation standard for covered products (and at least certain types of equipment) must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A); 42 U.S.C. 6313(a)(6)(A)-(C); 42 U.S.C. 6316(a)). Furthermore, for covered consumer products and certain covered equipment, 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. 6316(a)). For other covered equipment subject to ASHRAE Standard 90.1, the statute states that if DOE determines that a standard higher than the ASHRAE level is appropriate, the Department must determine that such standard would result in significant additional conservation of energy and be supported by clear and convincing evidence. (42 U.S.C. 6313(a)(6)(A)-(C)).

Moreover, DOE may not prescribe a standard: (1) for certain products, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B); 42 U.S.C. 6313(a)(6)(A)-(C); 42 U.S.C. 6316(a)). In determining whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i); 42 U.S.C. 6313(a)(6)(B)(ii); 42 U.S.C. 6316(a)). DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven statutory factors:

(1) The economic impact of the standard on the manufacturers and consumers;

(2) The savings in operating costs, throughout the estimated average life of the products (

i.e.,

life-cycle costs), compared with any increase in the price of, or in the initial charges for, or operating and maintaining expenses of, the products which are likely to result from the imposition of the standard;

(3) The total projected amount of energy, or as applicable, water, savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the products likely to result from the standard;

(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

(6) The need for national energy and water conservation; and

(7) Other factors DOE considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) 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)(A)-(C); and 42 U.S.C. 6316(a)) and comply

with any other applicable statutory provisions.

Further, EPCA establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii); 42 U.S.C. 6316(a)).

Additionally, EPCA provides that a rule prescribing an energy conservation standard for a type (or class) of covered products shall specify a level of energy use or efficiency higher or lower than that which applies (or would apply) for such type (or class) for any group of covered products which have the same function or intended use, if the Secretary determines that covered products within such group: (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard from that which applies (or will apply) to other products within such type (or class). (42 U.S.C.6295(q)(1)) In making a determination under this paragraph concerning whether a performance-related feature justifies the establishment of a higher or lower standard, the Secretary shall consider such factors as the utility to the consumer of such a feature, and such other factors as the Secretary deems appropriate. (

Id.

)

In 2020, DOE previously exercised permissible discretion in amending and making binding the Department's Process Rule. Since then, recent Supreme Court decisions—notably

Loper Bright Enterprises

v. Raimondo (603 U.S. 369 (2024))—provide further guidance on how agencies should interpret and apply applicable statutes. The decision in

Loper

not only bolsters the discretion exercised by the 2020 final rule but also supports this proposal as consistent with the “best read” of EPCA. In addition, other decisions, such as

Michigan

v.

EPA,

576 U.S. 743 (2015), further support DOE's proposed application of the balancing factors under at 42 U.S.C. 6295(o)(2)(B)(i). EPCA expressly requires that DOE “shall . . . determine whether the benefits of the standard exceed its burdens” and lists a broad array of seven balancing factors the Secretary must consider.

Id.

The procedures proposed here, and the proposal to make them binding on actions that may result in more stringent standards, will enhance the Department's ability to gather and weigh the relevant evidence needed to support a reasoned decision under EPCA's broad and inherently consumer-protective balancing factors.

See id.

(directing Secretary expressly to consider,

inter alia,

the economic impact on manufacturers and consumers, the comparative life-time operating cost savings versus increases in product purchase and maintenance costs, and any lessening in utility as a result of new standards);

see also id.

42 U.S.C. 6295(o)(3)(B) (forbidding the establishment of new standard if it will not result in “significant conservation” of energy or water);

cf. Michigan,

576 U.S. at 752 (noting irrationality of ignoring costs under even the vague “appropriate and necessary” standard).

B. Background

In July of 1996, DOE published a final rule in the

Federal Register

that codified DOE's “Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products” at 10 CFR part 430, subpart C, appendix A. 61 FR 36974 (July 15, 1996) (“July 1996 Final Rule”). The goal of the Process Rule was to increase transparency by elaborating on the procedures, interpretations, and policies that would guide the Department in establishing new or revised energy conservation standards for consumer products.

On February 14, 2020, DOE published a final rule in the

Federal Register

(“February 2020 Final Rule”) that significantly revised the Process Rule. 85 FR 8626. This rule made the specified rulemaking procedures binding on DOE and revised certain provisions to ensure consistency with existing statutory requirements. Other changes included 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 180-day window between test procedure final rules and standards proposals, specifying DOE's approach to adoption of industry test standards in its test procedures, and delineating procedures for rulemaking under the separate direct final rule and negotiated rulemaking authorities. DOE also published a companion final rule in the

Federal Register

on August 19, 2020 (“August 2020 Final Rule”), that clarified how DOE would conduct a comparative analysis across all trial standard levels when determining whether a particular trial standard level was economically justified. 85 FR 50937.

Subsequently, DOE published further amendments to the Process Rule, some of which reversed or modified amendments made in the February 2020 and August 2020 Final Rules. DOE published the first of these final rules in the

Federal Register

on December 13, 2021 (“December 2021 Final Rule”). 86 FR 70892. DOE published a second final rule with additional amendments to certain sections of the Process Rule in the

Federal Register

on April 8, 2024 (“April 2024 Final Rule”). 89 FR 24340. These amendments, among other things, reverted the Process Rule back to the non-binding status of the July 1996 Final Rule to allow DOE to tailor its rulemaking process to best fit the unique circumstances of a particular rulemaking and provide DOE with flexibility to be able to better meet statutory review requirements, and removed the significant energy savings threshold. 86 FR 70896-70906.

The following paragraphs summarize the origins and historical amendments to the individual sections of the Process Rule.

4

4

The full text of the current Process Rule is available at

www.ecfr.gov/current/title-10/chapter-II/subchapter-D/part-430/subpart-C/appendix-Appendix%20A%20to%20Subpart%20C%20of%20Part%20430.

(1)

Objectives

—This section was established in the July 1996 Final Rule and lays out the overall purpose of the Process Rule and its specific provisions. The February 2020 Final Rule made various editorial changes to this section.

(2)

Scope

—This section was established in the July 1996 Final Rule and identifies the types of rulemakings to which the Process Rule applies. This section was amended in the February 2020 Final Rule to clarify that the Process Rule applies to energy conservation standards and test procedures for both covered consumer products and commercial and industrial equipment.

(3)

Application

—This section was added in the February 2020 Final Rule and specified that the Process Rule would be binding on DOE. This section was subsequently amended in the December 2021 Final Rule to state that DOE has discretion to depart from the general guidance in Appendix A when it deems necessary or appropriate, with the stipulation that DOE will provide interested parties with notice of the deviation and an explanation.

(4)

Setting Priorities for Rulemaking Activity

—This section was established in the July 1996 Final Rule and

identifies the factors that DOE applies when determining its regulatory plans and formulation of inputs for the Regulatory Agenda. This section was amended in the February 2020 Final Rule to specify that DOE would offer an opportunity to provide input on prioritization of rulemakings through a request for comment as DOE begins preparation of its Regulatory Agenda each spring.

(5)

Coverage Determination Rulemakings

—This section was established in the February 2020 Final Rule and describes the process DOE would follow to establish coverage for consumer products and industrial equipment. Subsequent amendments in the December 2021 Final Rule and April 2024 Final Rule allow DOE to seek early stakeholder input through preliminary rulemaking documents prior to a proposed coverage determination, removed a previous requirement that final coverage determinations be published prior to the initiation of any test procedure or energy conservation standard rulemaking and at least 180 days prior to publication of a test procedure NOPR, and removed the previously required 180-day period between finalization of DOE test procedures and issuance of a NOPR proposing new or amended energy conservation standards.

(6)

Process for Developing Energy Conservation Standards

—This section was established in the July 1996 Final Rule and describes the process to be used in developing energy conservation standards for covered products and equipment other than those covered equipment subject to ASHRAE/IES Standard 90.1. The February 2020 Final Rule created an “early assessment” process for seeking stakeholder input prior to commencing a rule and committed to an initial rulemaking stage prior to a proposed rule (

e.g.,

a framework document or preliminary analysis). This rule also established a threshold of “significant energy savings” of 0.3 quads or 10-percent site savings over 30 years. Subsequent amendments in the December 2021 and April 2024 Final Rules removed the energy savings threshold requirement and the requirement for a separate early assessment request for information (“RFI”) but clarified that DOE will issue one or more documents during the pre-NOPR stage of a rulemaking.

(7)

Policies on Selection of Standards

—This section was established in the July 1996 Final Rule and describes Department policies concerning the selection of new or revised standards. The July 1996 Final Rule provided that DOE would implement the statutory mandate that any new or amended standard is designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. The February 2020 Final Rule made minor amendments to align with revisions elsewhere in in the Process Rule, while the August 2020 Final Rule added a clarification that DOE would conduct a comparative analysis across all trial standard levels when determining whether a level was economically justified. The December 2021 Final Rule amended this section to remove the requirement for a comparative analysis.

(8)

Test Procedures

—This section was established in the original July 1996 Final Rule and describes the process by which DOE would establish test procedures for covered products and equipment. The February 2020 Final Rule added an early assessment process for test procedures and generally committed that DOE would adopt consensus industry test procedures unless not consistent with EPCA. Consistent with other amendments in that rule, this section was also amended to require that DOE finalize a test procedure 180 days in advance of a standards proposal. The December 2021 Final Rule clarified that DOE may revise consensus industry test procedure standards for compliance, certification, and enforcement purposes, and revised application of the 180-day period to apply to the period between finalization of a test procedure and close of the comment period of a standards proposal (rather than publication of the proposal).

(9)

ASHRAE Equipment

—This section was created by the February 2020 Final Rule and describes the process DOE will follow for conducting rulemakings for equipment subject to the “ASHRAE trigger” provisions in EPCA that apply when ASHRAE Standard 90.1 is amended with respect to standards, test procedures, or design requirements applicable to such equipment. The April 2024 Final Rule added provisions to clarify application of the 6- and 7-year-lookback provisions for periodic review of standards and test procedures for ASHRAE equipment.

(10)

Direct Final Rules

—This section was established in the February 2020 Final Rule and describes how DOE would comply with EPCA requirements specific to publication of direct final rules, including the Department's interpretation of the term “fairly representative of relevant points of view” as it applies to interested stakeholders. It also stated that a negotiated rulemaking may not result in a direct final rule. The December 2021 Final Rule amended this section to clarify that DOE will implement its direct final rule authority under EPCA on a case-by-case basis including its evaluation of the meaning of “fairly representative”, subject to the circumstances of a particular rulemaking. It also removed the prohibition on a negotiated rulemaking culminating in a direct final rule.

(11)

Principles for Distinguishing Between Effective and Compliance Dates

—This section was established in the February 2020 Final Rule and provides clarification as to the distinction between the effective and compliance dates of a final rule. This section has not been amended since its original establishment.

(12)

Principles for the Conduct of the Engineering Analysis

—This section was established in the July 1996 Final Rule, and other than minor editorial changes, was not substantively amended in subsequent rulemakings.

(13)

Principles for the Analysis of Impacts on Manufacturers

—This section was established in the July 1996 Final Rule, and other than minor editorial changes, was not substantively amended in subsequent rulemakings.

(14)

Principles for the Analysis of Impacts on Consumers

—This section was established in the July 1996 Final Rule, and other than minor editorial changes, was not substantively amended in subsequent rulemakings.

(15)

Consideration of Non-Regulatory Approaches

—This section was established in the July 1996 Final Rule and identifies how DOE will consider the effects of non-regulatory efforts by manufacturers, utilities, and other interested parties to produce substantial efficiency improvements. Revisions in the February 2020 Final Rule removed a section discussing the Department's pursuit of voluntary programs where it appears that highly efficient products can obtain a significant market share but that less efficient products cannot be eliminated altogether because, for instance, of unacceptable adverse impacts on a significant subgroup of consumers.

(16)

Cross-Cutting Analytical Assumptions

—This section was established in the July 1996 Final Rule and sets outs the sources and general principles that DOE expects to continue relying upon in selecting values for certain cross-cutting analytical assumptions. This section was amended in the February 2020 Final Rule to specify that DOE would use two time lengths—30 years and another time length that is specific to the standard being considered, such as the useful

lifetime of the product under consideration, as well as a 9-year regulatory timeline as a sensitivity case. That rule also specified that DOE will endeavor to use robust price forecasting techniques in projecting future prices of products.

On April 17, 2025, DOE published in the

Federal Register

an RFI seeking comments and information from interested parties to assist DOE in identifying potential modifications to its Process Rule (“April 2025 RFI”). 90 FR 16093. DOE received comments in response to the April 2025 RFI from the interested parties listed in Table II.1.

BILLING CODE 6450-01-P

EP07JY26.149

EP07JY26.150

BILLING CODE 6450-01-C

A parenthetical

reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.

6

5

The Air-Conditioning, Heating, and Refrigeration Institute (AHRI); Air Movement and Control Association (AMCA) International; Association of Home Appliance Manufacturers (AHAM); Consumer Technology Association (CTA); Hearth, Patio & Barbecue Association (HPBA); Heating, Air-Conditioning, Refrigeration Distributors International (HARDI); National Association of Manufacturers (NAM); National Automatic Merchandising Association (NAMA); North American Association of Food Equipment Manufacturers (NAFEM); National Electrical Manufacturers Association (NEMA); Plumbing-Heating-Cooling Contractors Association (PHCC); Plumbing Manufacturers International (PMI); and Power Tool Institute (PTI).

6

The parenthetical reference provides a reference for information located in this rulemaking docket, Docket No. EERE-2025-BT-STD-0001, which is maintained at:

www.regulations.gov.

The references are arranged as follows: (commenter name, comment docket ID number at page of that document).

DOE received one comment pertaining to issues outside of the scope of this rulemaking and which, therefore, are not addressed in this document.

7

7

(TRG, No. 2 at pp. 1-4).

III. Discussion of General Comments

A. General Support for or Opposition to Standards

A number of commenters indicated general support for existing energy conservation standards. (Anonymous, No. 4 at p. 1; Anonymous, No. 6 at p.1; Ceres, No. 22 at p. 6; Lennox, No. 26 at p. 1; Rinnai, No. 11 at p. 2)

An individual commented that existing energy conservation standards still allow for a significant number of choices for consumers. (Anonymous, No. 6 at p. 1) Another individual commented that energy conservation standards drive engineering innovation, including for lighting and water-using products. (Anonymous, No. 3 at p. 1)

Several individuals commented on operating cost savings associated with energy conversation standards. An individual commented that energy efficient appliances reduce operating costs for consumers and asked DOE to continue enforcing standards. (Anonymous, No. 3 at p. 1) The individual also suggested DOE review studies documenting the value of energy conservation standards. (Anonymous, No. 3 at p. 1) Another individual commented that less-efficient appliances will cost consumers more to operate regardless of energy source or price and that DOE should continue to establish energy conservation standards to save consumers money. (Anonymous, No. 9 at p. 1) A third individual commented that E.O. 14154 is focused on reducing energy costs and burdens on consumers and that increasing energy efficiency is one of the best ways to reduce energy costs for consumers. The individual also commented that regulations should be backed by strong data and analysis and that research demonstrates that the energy savings associated with standards can be worth it, even if there is a higher up-front cost. (Anonymous, No. 10 at pp. 1-2).

Lennox commented to support the goals of DOE's appliance efficiency program to maximize improvements in energy savings for consumers that are technologically feasible and economically justified for finished products at the system level. (Lennox, No. 26 at p. 1).

Rinnai commented to support national energy efficiency standards and the principle of Federal preemption, which prevents State-level mandates that would destabilize markets and erode consumer choice. (Rinnai, No. 11 at p. 2).

An individual expressed opposition to energy conservation standards, commenting that efficiency standards have had a negative impact on reliability and that it would be preferable to have greater choice for lighting and appliances. (Anonymous, No. 5 at p. 1).

In response, DOE is not making any proposals with respect to the Appliance Standards Program itself, but instead, the Department is proposing certain revisions to the process by which it carries out its obligations under EPCA to adopt new or revised energy conservation standards and test procedures, as discussed in section IV of this document.

B. General Support for or Opposition to Changes to the Process Rule

This section discusses the comments in general support for or opposition to revising the current Process Rule. Specific comments related to specific Process Rule revisions are discussed in section IV of this document.

Several commenters expressed general support for revising the current Process Rule, as discussed in the following paragraphs.

BHI commented that DOE's existing rulemaking process is opaque, overly complex, and subject to agenda-driven manipulation. The commenter added that the resulting rules are often delayed, based on flawed analysis, and poorly documented, and that they impose undue regulatory burden and uncertainty on the industry, while leaving DOE open to litigation. (BHI, No. 16 at p. 2) BHI attached comments submitted to previous rulemakings

8

to illustrate the need for revisions. (BHI, No. 16 at pp. 1-2) BHI acknowledged that implementing the Process Rule changes as changes recommended in their comments for periodic reviews of standards as required under EPCA would likely result in an increased frequency with which new standards cannot be justified for a particular product. According to the commenter,

increasing standards for a particular product over time results in an appliance's efficiency approaching its theoretical limit, thereby suggesting that previous standards have done what EPCA intended; any process for standard setting should account for the reality that trivial energy gains will result in cost increases to consumers that yield little to no real-world payback by way of decreases in utility bills. (BHI, No. 16 at p. 6)

8

BHI attached previously submitted comments that were summarized as part of the rulemakings corresponding to the following dockets: Docket EERE 2019-BT-STD-0036, EERE-2021-BT-STD-003, EERE-2018-BT-STD-0018 related to Boilers, the Process Rule, and Non-Condensing Technology, respectively.

The Joint Commenters stated that the Process Rule should be clear, transparent, and reflect stakeholder consensus so that it will not be subject to policy swings by changing Administrations. (Joint Commenters, No. 24 at p. 3).

The Joint Gas Associations commented that the Process Rule should be revised to ensure protection of consumer choice, promote market competition and innovation, maintain fuel neutrality, and reduce regulatory burdens. (Joint Gas Associations, No. 25 at p. 7).

NRECA commented in support of DOE's efforts to revise the Process Rule in ways that would lead to more common sense outcomes when updating energy conservation standards. NRECA added that the Process Rule should be revised to enhance consumer choice and affordability. (NRECA, No. 17 at p. 2).

Rinnai commented that the Process Rule should be revised to ensure discipline, transparency, and public accountability. (Rinnai, No. 11 at p. 3).

DOE also received comments generally supporting revisions to return, fully or partially, to the Process Rule as amended at the beginning of 2020 (

i.e.,

the “2020 Process Rule”), as further discussed in the following paragraphs.

BHI, MHI, WM Technologies and Zero Zone commented that DOE should return to the 2020 Process Rule. (BHI, No. 16 at p. 2; MHI, No. 21 at p. 2; WM Technologies, No. 14 at pp. 1, 3; Zero Zone, No. 15 at p. 1). MHI noted that standards for water heaters, gas furnaces, showerheads, electric spas, and freezers would have been avoided with the 2020 Process Rule. (MHI, No. 21 at p. 2).

AHRI, BWC, the Joint Commenters, and Lennox commented in support of revising the Process Rule and of any changes largely consistent with the 2020 Process Rule. (AHRI, No. 28 at p. 1; BWC, No. 34 at p. 1; Joint Commenters, No. 24 at p. 2; Lennox, No. 26 at p. 2) Specifically, Lennox stated that they support re-instituting the five key Process Rule measures from the 2020 Process Rule: (1) DOE's compliance with the Process Rule must be mandatory and binding on DOE; (2) test procedures should be finalized by DOE 180 days before proposing new energy conservation standards; (3) reasonable and mandatory minimum public comment periods should be provided; (4) minimum threshold values for significant energy savings should be reinstated; and (5) comparative analysis across trial standard levels should be reinstated. (Lennox, No. 26 at p. 2). BWC added that the 2020 Process Rule was not a “one-size-fits-all” approach and provided DOE with extensive regulatory flexibility. (BWC, No. 34 at p. 3).

Several commenters opposed changes to the current Process Rule and generally stated that the current Process Rule is adequate. (Joint Advocates, No. 31 at p. 1; State Agencies, No. 33 at pp. 1-2; Ceres, No. 22 at p. 6; Anonymous, No. 4 at p. 1).

The Joint Advocates added that the current Process Rule already provides detailed rulemaking guidance that addresses the topics discussed in the April 2025 RFI. For example, the Joint Advocates argued that the current Process Rule already includes consumer choice and market competition and innovation protections; it also considers manufacturer impacts, including regulatory burden, and it provides detailed guidance on cost and benefit analysis and the public comment and review process. (Joint Advocates, No. 31 at p. 1).

The State Agencies added that the current Process Rule appropriately provides guidance and should not be modified. The State Agencies argued that repeated changes to the Process Rule have led to market uncertainty. In addition, the State Agencies further argued that any changes to the Process Rule would increase regulatory burden and recommended that DOE should not pursue any further rulemakings related to Process Rule, including a separate analytical methodology RFI. (State Agencies, No. 33 at pp. 1-2).

An individual commented that there was a lack of evidence to suggest that there are substantial flaws in existing rules or the current process to establish them. (Anonymous, No. 4 at p. 1).

AUX stated that the current Process Rule is essential to fostering innovation, ensuring affordable and environmentally-friendly products, and balancing regulatory certainty and flexibility for manufacturers without overburdening manufacturers. AUX added that the existing Process Rule has driven innovation in residential HVAC, leading to more-efficient products that often exceed standards and providing significant cost savings to consumers. (AUX, No. 7 at pp. 1-2).

The CA IOUs stated that they support the objectives of the Process Rule and recommended that any changes should enhance these goals while aligning with EPCA's purpose of achieving cost-effective energy savings. The CA IOUs emphasized the importance of maintaining flexibility to address appliance-specific issues, complying with EPCA and the Administrative Procedure Act, and ensuring equitable implementation. The commenters suggested that DOE should evaluate issues on a case-by-case basis within the context of each individual rulemaking rather than being pre-determined by a set of generalized assumptions. The CA IOUs further cautioned against frequent changes to the Process Rule, which create uncertainty, instead urging DOE to prioritize consistency and to focus on improvements grounded either in established practices or ones widely supported by stakeholders. (CA IOUs, No. 32 at pp. 1-2).

NEEA commented that DOE should maintain a consistent Process Rule to provide a predictable and accessible regulatory process and prevent additional regulatory burden. (NEEA, No. 36 at p. 1).

In response, DOE has reviewed the current Process Rule, the 2020 Process Rule, and the general comments received in response to the April 2025 RFI. Based on this review and an evaluation of comments received on specific Process Rule topics, DOE is proposing revisions to the current Process Rule to return largely to the 2020 Process Rule with some modifications, as discussed in further detail in section IV of this document.

IV. Discussion of Comments and Proposed Revisions to Individual Sections of the Process Rule

The following sections discuss comments received relating to individual sections of the Process Rule, DOE's responses, and the proposed revisions to the Process Rule. DOE requests comments, data, and information regarding these proposals and all aspects of this notice of proposed rulemaking.

A. Objectives (Section 1)

This section was established in the July 1996 Final Rule and lays out the overall purpose of the Process Rule and its specific provisions. The February 2020 Final Rule made various editorial changes to this section. The December 2021 Final Rule added support for proposals developed in accordance with the Negotiated Rulemaking Act (5 U.S.C. 561

et seq.

).

DOE did not receive any comments specific to the Objectives section of the Process Rule, other than general comments related to negotiations, as discussed in section IV.K of this document.

As discussed in the April 2025 RFI, DOE requested information to ensure consistency with recently issued Executive orders while continuing to satisfy the Department's statutory obligations. 90 FR 16093 (April 17, 2025). Consistent with this goal, DOE is proposing to include a new section in the Objectives section of the Process Rule to clearly specify the Department's goals of preserving availability of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding as prescribed by EPCA. Such goals also safeguard the American people's freedom to choose from a variety of goods and appliances (including but not limited to lightbulbs, dishwashers, washing machines, gas stoves, water heaters, toilets, and shower heads); promote market competition and innovation within the manufacturing and appliance industries; ensure that the global effects of a rule, regulation, or action shall, whenever evaluated, be reported separately from its domestic costs and benefits (energy savings and efficiency), in order to promote sound regulatory decision making and prioritize the interests of the American people; and guarantee opportunities for public comment and rigorous, peer-reviewed scientific analysis. (42 U.S.C. 6295(o)-(p)). These objectives also support the policies specified in Executive Order 14154.

Consistent with the statutory requirements of EPCA, DOE additionally has the goal of eliminating counterproductive requirements that raise the costs of home appliances.

9

DOE is proposing to include this goal within the objectives section of the Process Rule.

9

See

“Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis” (Available at:

https://www.whitehouse.gov/presidential-actions/2025/01/delivering-emergency-price-relief-for-american-families-and-defeating-the-cost-of-living-crisis/

).

B. Scope (Section 2)

This section was established in the July 1996 Final Rule and identifies the types of rulemakings to which the Process Rule applies. This section was amended in the February 2020 Final Rule to clarify that the Process Rule applies to both covered consumer products and commercial and industrial equipment, except covered ASHRAE equipment, which is governed separately under section 9 of the appendix.

The Joint Gas Associations stated that a revised process Rule should apply to both consumer products and industrial and commercial equipment, except for ASHRAE equipment. (Joint Gas Associations, No. 25 at p. 30).

In response, DOE notes that the current Process Rule has this same scope as recommended by Joint Gas Associations, with ASHRAE covered separately in its own section. DOE is not proposing any revisions to the Scope section of the Process Rule.

C. Application (Section 3)

This section was added to the Process Rule by the February 2020 Final Rule and specified that the Process Rule would be binding on DOE. This section was subsequently amended in the December 2021 Final Rule to provide DOE with discretion to depart from the general guidance in Appendix A when it deems it necessary or appropriate to do so, with the stipulation that DOE will provide interested parties with notice of the deviation and an explanation.

In the April 2025 RFI, DOE requested comments on whether reintroducing a provision making the Process Rule mandatory would better enable the Department to comply with its obligations under the statute and applicable Executive orders. 90 FR 16093, 16100 (April 17, 2025).

In response to the April 2025 RFI, many commenters supported mandatory application of the Process Rule, generally to provide certainty to stakeholders. (Joint commenters, No. 24 at p. 3; AHRI, No. 28 at p. 13; Joint Gas Associations, No. 25 at pp. 7, 10-11; ASHRAE, No. 12 at p. 2; BWC, No. 34 at p. 1; MHI, No. 21 at p. 3; NAHB, No. 19 at p. 5; NEMA, No. 23 at pp. 2-3; NAFEM, No. 13 at p. 7; ONE Gas, No. 37 at p. 2; Rinnai, No. 11 at pp. 3, 11-12; WM Technologies, No. 14 at p. 3; Zero Zone, No. 15 at p. 3; BHI, No. 16 at p. 2) AHRI and BHI noted that mandatory application should reduce litigation risk. (AHRI, No. 28 at p. 13; BHI, No. 16 at p. 2).

Several of the commenters supporting mandatory application also acknowledged that some changes or flexibility may need to be included. PHTA stated that some areas should have well thought out deviations. (PHTA, No. 27 at p. 1) The Joint Commenters stated that any flexibility needed should be built into the rule. (Joint Commenters, No. 24 at p. 3) NAFEM stated that its recommended revisions should be included if the rule becomes mandatory. (NAFEM, No. 13 at p. 7) Lennox stated that if made binding, the Process Rule should require DOE to actively explore negotiated rulemakings for all major new standards. (Lennox, No. 26 at pp. 11-12).

In addition, Zero Zone emphasized the value of public comment in making any changes to the Process Rule. (Zero Zone, No. 15 at p. 3) BHI suggested that Congress should cement this rule as law to avoid the pendulum swinging between Administrations. (BHI, No. 16 at p. 2).

Two commenters opposed mandatory application of the Process Rule. The Joint Advocates stated that an overly rigid approach could result in missed energy and water savings opportunities, delay rulemakings, and increase potential for procedural litigation. (Joint Advocates, No. 31 at p. 4) The State Agencies stated that flexibility is needed, and that making the Process Rule mandatory would increase regulatory burden. They noted that if the Process Rule is to be made mandatory, additional opportunities for public comment should be provided to make sure all potential provisions are carefully considered. (State Agencies, No. 33 at p. 2).

Upon review, DOE has tentatively determined that there is a reasonable basis for making the Process Rule binding for certain actions, while retaining greater flexibility for other actions. Any ECS-related action undertaken by DOE must adhere to the requirements outlined by EPCA.

See

42 U.S.C. 6295; 42 U.S.C. 6311-6313. When the Secretary must make a statutory determination (

e.g.,

regarding whether to regulate; or whether a proposed standard is technologically feasible and economically justified; or whether the benefits of a proposed standard exceed its burdens), DOE may offer the public additional transparency regarding circumstances when the Department will follow the requirements under EPCA more narrowly or will follow additional procedures. The Secretary has discretion under EPCA to implement additional procedures in support of careful consideration of statutory factors that weigh heavily in his determinations.

In the Process Rule, DOE is proposing that all procedures for regulatory actions (actions that may increase ECS stringency relative to existing requirements) will be binding requirements for the Department, which will provide much-needed certainty to stakeholders and will reflect the Secretary's careful consideration and

weighing of the balancing factors for economic justification and other requirements under EPCA. (

See

42 U.S.C. 6295(o)). This approach recognizes, per EPCA, that regulatory changes often increase manufacturer costs and usually result in the need for design modifications that necessitate substantial investments of engineering resources, production line conversions, and other related manufacturing alterations or revisions to testing regimes. (

See

42 U.S.C. 6295(o)(2)(B)(i), (m)). EPCA acknowledges the time, detailed analysis, and notice required in prescribing new or amended standards by establishing a minimum allowable period between further regulatory rulemakings; clearly articulated factors for a determination of economic justification; and required procedures for notice, comment, and transparency of record. (

See

42 U.S.C. 6295(

l

), (m), (o), (p)). It behooves DOE to proceed with caution when enacting efficiency standards that may adversely affect consumers by pricing them out of the market for new or replacement appliances or eliminating useful characteristics of covered products. (

See

42 U.S.C. 6295(o)(2)(B)(i)). New standards are also likely to present more challenges when evaluating economic effects, including lack of pertinent data on consumer response and reliance on assumptions. When reweighing evidence in other actions, such as for certain deregulatory actions, however, hindsight may provide a wealth of information. Moreover, DOE must meet strict evidentiary standards when issuing rules, including more stringent energy conservation standards, under 42 U.S.C. 6293, 6294, or 6295. Under 42 U.S.C. 6306(b)(2), when petitioned by an aggrieved party, a court may not affirm a ule unless DOE's rule is supported by “substantial evidence.” Likewise, 42 U.S.C. 6313(b)(6)(A)(ii)(II) requires “clear and convincing evidence” to support a heightened standard for certain commercial equipment. This is true even when the Department has limited information to evaluate such complex factors as “the economic impact of the standard on the manufacturers and on the consumers of the products” and a comparison of the “operating costs throughout the estimated average life of the covered product” against “any increase in the price . . . or maintenance expenses of[] the covered products” with respect to products that may not be brought to market until some years after the regulatory action is finalized. (42 U.S.C. 6295(o)(2)(B)(i);

see, e.g., id.

42 U.S.C. 6295(

l

)(2), (m)(4), (n)(5) (requiring delays of up to five years before new standards may be enforced on manufacturers))

As noted previously and as EPCA acknowledges, regulatory actions typically justify the need for early stakeholder involvement and ample opportunities for public input. That is why it is crucial that DOE regulatory actions provide sufficient opportunity for public input so that stakeholders have adequate time to analyze and provide thoughtful comments, data, and information to the agency before it finalizes a proposed regulatory action. Not only does a properly structured process provide regulatory certainty and prevent the imposition of unnecessary or unjustified costs on manufacturers, but it also ensures that consumers do not face excessive costs or the loss of important performance-related features. This holds true for both energy conservation standards and test procedure rulemakings, because if a test procedure does not properly measure a covered product's energy efficiency or energy use, energy conservation standards may be set at an inappropriate level. And it is important to remember that EPCA establishes the minimum requirements to issue new rules. For example, EPCA requires a comment period of not less than 60 days for proposed standards and test procedures. (42 U.S.C. 6295(p)(2), 6293(b)(2)). But there is no maximum comment period limit for a proposed standards rule and the limit for a proposed test procedure rule is 270 days.

Id.

Similarly, EPCA only requires that DOE publish a notice of proposed rulemaking before issuing a final rule or final determination not to amend standards. (42 U.S.C. 6295(p)(1)). But again, that is the minimum requirement. And while these procedural requirements may be sufficient for revisiting a determination not to amend standards that was made less than 3 years ago in a market where there has been no technological advances in efficiency, for all the reasons discussed previously, a more comprehensive, structured process is warranted before implementing rules that impose new obligations and costs on regulated parties and consumers. Consequently, the proposed Process Rule sets forth procedural elements (including early assessment opportunities and preliminary documents), temporal spacing between key elements, and minimum comment periods to facilitate rulemakings that are robust and best meet all applicable statutory requirements. Making these procedures binding on DOE would further safeguard the achievement of these important objectives. While DOE acknowledges the concerns raised by some commenters about an overly rigid approach, the Department has tentatively determined that the Process Rule, as proposed to be amended in this NOPR, contains sufficient flexibility to address those stakeholder concerns.

Certain actions, in contrast, may present a very different set of situations that may warrant a different approach and may not necessitate the same level of advance outreach, lengthened comment periods, or lead time, as compared to regulatory actions. In some circumstances, where DOE determines that deregulation is appropriate, it may be that DOE has recognized, with the benefit of hindsight and additional real-world information gathered as a new standard or test procedure is implemented, or a test procedure later determined to be unduly burdensome to conduct (in violation of 42 U.S.C. 6293(b)(3) or 42 U.S.C. 6314(a)(2)). In such instances, consumers may experience a reduction in product choice, a loss of valuable features, and/or an unjustified increase in first costs. Alternatively, an unanticipated change in market conditions or error in analysis may result in hardships or barriers to compliance for manufactures. Deregulatory actions are intended to remedy these suboptimal outcomes, and in some cases, DOE does not believe that there is the same need for procedural protections for deregulatory actions as there is for regulatory actions, for the reasons that follow. Over time, DOE has exercised discretion in expediting certain deregulatory actions. For example, DOE has conducted test procedure rulemakings on an expedited timeline to address limited-scope issues (

e.g.,

the rulemaking to amend test cloth specifications for clothes dryer and clothes washer testing was initiated with a NOPR

10

and did not have a pre-proposal document).

10

See,

FR 87903 (Nov. 5,2024), which led to a final rule publication at 90 FR 5519 (Jan. 17, 2025)

First, deregulatory actions are not likely to require costly changes to manufacturing lines or production facilities, as would be expected to accompany more stringent standards. In contrast to regulatory actions, deregulation may reduce costs, and potential savings may trickle down to consumer, especially in highly competitive markets. A newly deregulated area frees industry from associated compliance mandates and presents more business options, which will of course entail the independent weighing of potential costs and benefits by industry before taking action.

Second, because deregulatory actions open up new, less burdensome options to manufacturers (and indirectly to consumers), those same procedural safeguards (

e.g.,

preliminary documents, required spacing of rulemaking steps, and extended comment periods) may not be necessary. With the increased flexibility that comes from deregulation, industry and consumers may choose to maintain course or adjust, but are not compelled to take any action, unlike with regulatory actions, which by their nature limit choice and force action. Furthermore, DOE believes that there is also a temporal element to deregulatory actions, in that there is value in providing substantive relief to consumers and manufacturers as soon as possible. Accordingly, following all of the procedural steps proposed in the Process Rule would in certain circumstances run counter to providing deregulatory relief as soon as possible. Finally, DOE may choose to add to the standards determination process thresholds rooted in EPCA's required considerations for economic justification. When those thresholds, which reflect the Secretary's discretion in weighing EPCA's balancing factors, indicate a determination not to further regulate, DOE may consider that analysis sufficient under the requirements of EPCA and may choose to forego more detailed analyses. (42 U.S.C. 6295(o)). Though such an action is not deregulatory, it offers the kind of certainty and timely notice contemplated by EPCA, and these considerations may outweigh the additional procedural steps merited for increases in stringency. Consequently, DOE proposes not to make all Process Rule provisions binding on the Department for actions that are not likely to increase stringency for affected entities (

e.g.,

certain deregulatory actions or determinations not to further regulate). In such instances, the Department may choose to apply those provisions as may be appropriate in any particular action so as to maintain flexibility and to provide relief without undue delay in appropriate cases.

Moreover, in contrast to a regulatory action imposing new standards that will result in estimated, but uncertain, impacts on the market, it will often be the case that DOE has a wealth of information to rely on in making a deregulatory decision with respect to a test procedure or standard under consideration. Both the Department and stakeholders will have data and experience gathered during the implementation of an existing standard that will provide greater certainty without the need for an extended period of evidence building and development of estimates and projections.

DOE has not identified any statutory or other legal impediments to a bifurcated approach to the binding nature of the Process Rule that distinguishes between regulatory and other actions. DOE has discretion to set its own procedures for conducting rulemaking proceedings, as long as such procedures also incorporate any relevant statutory requirements set forth in EPCA (

e.g.,

a minimum 60-day comment period for NOPRs). In crafting those procedures, DOE is at liberty to tailor those procedures to address identified concerns (as discussed previously) or to provide a more flexible and expedited process where the same concerns are not found to exist.

It is DOE's view that this approach would allow DOE to best meet the statutory requirements of EPCA, including preventing the unavailability of performance-related features. (42 U.S.C. 6295(o)(4)). DOE also believe that this approach is consistent with numerous comments on the April 2025 RFI which generally supported mandatory application of the Process Rule but acknowledged the potential need for flexibility in certain situations. Furthermore, this approach is consistent with the objectives set forth in various Executive orders and Presidential memoranda. For example, section 2(f) of Executive Order (E.O.) 14154, “Unleashing American Energy,” 90 FR 8353 (Jan. 29, 2025), states that it is the policy of the United States to safeguard the American people's freedom to choose from a variety of goods and appliances, including but not limited to lightbulbs, dishwashers, washing machines, gas stoves, water heaters, toilets, and shower heads, and to promote market competition and innovation within the manufacturing and appliance industries. In addition, the Presidential memorandum titled “Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis,” 90 FR 8245 (Jan. 28, 2025), directs agencies to take appropriate actions to, among other things, “eliminate counterproductive requirements that raise the cost of home appliances.”

In summary, DOE has tentatively concluded that a bifurcated approach to the binding nature of the Process Rule which distinguishes between regulatory and other actions would be appropriate for several reasons. DOE believes that it best suits the Department's model outcome for deregulatory situations, in that it would allow DOE to provide expedited relief to stakeholders in terms of cost savings, reduced regulatory burdens, and protection of performance-related features. Along these lines, it would also be consistent with the views of many commenters and would allow DOE to implement what it believes is the best reading of the statutory provisions of EPCA, including applicable evidentiary standards, as well as practical differences between regulatory and deregulatory actions such as informational asymmetries. It would also support the Administration's priorities in terms of advancing appliance affordability and preserving consumer choice.

As such, DOE proposes to revise section 3 of the Process Rule to specify its mandatory application as described in this section. DOE requests comment on this proposal and on any alternate approaches to mandatory application that best achieve transparency and opportunities for public comment while allowing for flexibility for certain deregulatory actions.

D. Setting Priorities for Rulemaking Activity (Section 4)

This section was established in the July 1996 Final Rule and identifies the factors that DOE applies when determining its regulatory plans and formulation of inputs for the Regulatory Agenda. This section was amended in the February 2020 Final Rule to specify that DOE would offer the opportunity to provide input on prioritization of rulemakings through a request for comment as DOE begins preparation of its Regulatory Agenda each spring.

In the April 2025 RFI, DOE generally requested comments and information on whether and how the Process Rule should be amended to specify rulemaking prioritization and timelines, consistent with EPCA's requirements. 90 FR 16093, 16100 (April 17, 2025).

The Joint Advocates stated that the current Process Rule already describes the prioritization process for rulemaking activity, so no amendment is needed. (Joint Advocates, No. 31 at p. 4).

The State Agencies stated that EPCA already establishes timelines for standards to be revised. The State Agencies added that the current Process Rule allows for reasonable timelines, and that the Process Rule should not be amended to provide specific rulemaking prioritization and timelines. They further stated that any potential changes must be justified by DOE after thorough consideration of impacts and burdens. (State Agencies, No. 33 at p. 2).

The Joint Gas Associations stated that DOE should focus on the potential energy savings and the potential economic benefits as an initial screen

for determining its priorities. The Joint Gas Associations argued that such focus is important, because if DOE determines the proposed regulatory activity does not provide sufficient energy savings or is not cost-effective, there is no need to review the other factors. The Joint Gas Associations also supported stakeholder input in the rulemaking process and with regard to setting priorities, and they stated that commenting on the Regulatory Agenda would provide stakeholders with a chance to weigh in on these priorities. (Joint Gas Associations, No. 25 at pp. 35-36).

Upon review, DOE has tentatively determined that DOE's statutory review requirements and the current Process Rule adequately describe the prioritization setting framework as recommended by commenters. Specifically, DOE is statutorily required to review energy conservation standards and test procedures at intervals specified by EPCA. Additionally, DOE acknowledges the benefits of considering energy savings and potential economic benefits in prioritizing rulemakings, as recommended by the Joint Gas Associations, which are already specified in section 4 of the Process Rule.

As discussed in section IV.A of this document, DOE is proposing to specify that the Department's objectives include protecting consumer choice in covered products and equipment and eliminating counterproductive requirements that increase the costs of appliances. DOE is proposing to include these objectives in the list of factors DOE will consider when establishing rulemaking priorities, and requests comment on their inclusion.

Section 6 of Executive Order 14154 specifies policies for prioritizing accuracy in environmental analyses, specifically instructing that for Federal regulatory processes, “all agencies shall adhere to only the relevant legislated requirements for environmental considerations and any considerations beyond those requirements are eliminated.” Consistent with this direction, DOE is proposing to remove the consideration of environmental factors as specified in section 4(a)(2) of the Process Rule and to instead refer to potential social and private costs and benefits.

DOE has also considered the requirement to request comment as DOE begins preparation of its Regulatory Agenda each spring. DOE's rulemaking reviews are largely driven by statutory timelines, with consideration of the factors outlined in section 4 of the Process Rule. DOE's goal is to limit regulatory burden for stakeholders, and the Department has tentatively determined that there is little additional benefit provided by the current request for comment specified in section 4 of the Process Rule. Therefore, DOE is proposing to clarify in the Process Rule that DOE will request comment on rulemaking prioritization only when circumstances weigh towards doing so. Such circumstances may include Executive Orders or other Administration initiatives or meaningful shifts in policy on which the Department would benefit from broad and early public comment. Consequently, this would move from being a prescriptive annual publication from DOE for stakeholder review to a discretionary action considered on a case-by-case basis, thereby limiting the burden associated with reviewing DOE's rulemaking documents while providing the benefit of public comment when needed. DOE notes that stakeholders may contact DOE regarding rulemaking priorities, independent of a published request for comment.

E. Coverage Determination Rulemakings (Section 5)

This section was established in the February 2020 Final Rule and describes the process DOE would follow to establish coverage for new consumer products and industrial equipment under the applicable statutory criteria of EPCA. Subsequent amendments in the December 2021 Final Rule and April 2024 Final Rule allowed DOE to seek early stakeholder input through preliminary rulemaking documents prior to a proposed coverage determination, removed a previous requirement that final coverage determinations be published prior to the initiation of any test procedure or energy conservation standard rulemaking and at least 180 days prior to publication of a test procedure NOPR, and removed the previously required 180-day period between finalization of DOE test procedures and issuance of a NOPR proposing new or amended energy conservation standards.

In the April 2025 RFI, DOE generally requested comments and information on whether and how the Process Rule should be amended to specify rulemaking prioritization and timelines, consistent with EPCA's requirements. 90 FR 16093, 16100 (April 17, 2025). Timing of coverage determinations falls within the scope of this request.

Lennox commented that DOE should require that coverage determinations be finalized at least 180 days prior to the publication of a TP NOPR for newly-covered products/equipment. The commenter argued that it is a misuse of DOE, manufacturer, and other stakeholder resources to attempt to address substantive regulatory issues until the products have been clearly and specifically defined. (Lennox, No. 26 at p. 11).

Lennox also commented that coverage determination comment periods should be at least 60 days. (Lennox, No. 26 at p. 8-9).

In response, as discussed previously, DOE is largely proposing to revert to the language in the 2020 Process Rule, including for the section on coverage determinations. As mentioned, the 2020 Process Rule required that final coverage determinations be published prior to the initiation of any test procedure or energy conservation standard rulemaking and at least 180 days prior to publication of a test procedure NOPR. DOE understands that the 180 day-period provides regulated entities with both regulatory certainty and time to reallocate capital in preparation for compliance requirements. With regard to the comment period, both the current and 2020 Process Rule include a comment period of at least 60 days, so DOE is not proposing any changes specific to this requirement.

Several commenters discussed the process that they believe DOE should follow to establish coverage for consumer products and industrial equipment, as described in this section. On this topic, Strauch commented that DOE should focus on covered products required by statute under EPCA and not expand coverage to other consumer products and industrial equipment. (Strauch, No. 18 at p. 1).

The Joint Gas Associations supported a Process Rule that limits any expansion of coverage to those narrow circumstances that satisfy the statutory requirements and purpose of EPCA. (The Joint Gas Associations, No. 25 at p. 33).

Lennox and WM Technologies stated that standards should apply to only the finished product/system level, and not to sub-systems or components. Lennox and WM Technologies further stated that component-level regulation increases burden (

e.g.,

regulatory complexity, consumer costs) and/or limits innovation. WM Technologies added that component-level and finished-product-level tests are different from each other and could produce test results that are not compatible. (Lennox, No. 26 at pp. 1, 4-5; WM Technologies, No. 14 at pp. 2-3)

In response, both the current and the 2020 Process Rule state that DOE has discretion to conduct proceedings to

determine whether additional products or equipment should be covered or whether to reduce the scope of coverage under EPCA if certain statutory requirements are met, including if such coverage is necessary or appropriate to carry out the purpose of EPCA. Section 5 of appendix A. Furthermore, the statute includes definitions for the terms “consumer product” and “industrial equipment” that determine the product level subject to regulation. Finally, DOE plans to consider issues related to component-level regulation on a case-by-case basis. At this time, DOE does not believe it is necessary to provide additional context with respect to the statutory requirements and is not proposing any additional changes to the Coverage Determination Rulemakings section of the Process Rule.

F. Significant Energy Savings

1. Background

Under EPCA, any new or amended energy conservation standard must result in significant conservation of energy or, in the case of ASHRAE equipment, significant additional conservation of energy.

11

(42 U.S.C. 6295(o)(3)(B); 42 U.S.C. 6313(a)(6)(A)(ii)(II); 42 U.S.C. 6316(a)). However, EPCA does not define “significant” as it relates to the amount of energy savings projected to result from an energy conservation standard. While DOE has generally addressed the significance of energy savings on a case-by-case basis in the context of individual energy conservation standards rulemakings, DOE has twice established sets of numerical thresholds to determine whether energy savings are significant.

11

For ASHRAE equipment, the baseline for comparison is the potential energy savings from the industry standard (

i.e.,

ASHRAE Standard 90.1). Thus, DOE can only issue a more-stringent standard if the additional energy savings are significant. (

See

42 U.S.C. 6313(a)(6)(A)(ii)(II)).

In a final rule published in the

Federal Register

on December 22, 1982, DOE adopted three tests for determining whether an energy conservations standard would result in significant energy savings. 47 FR 57198 (December 1982 Final Rule). The first test deemed energy savings significant if the standard would result in the saving of 10,000 barrels per day (bpd) of oil or the saving of natural gas equivalent to 10,000 bpd of oil over the period of the average life of the product. The second test deemed energy savings significant if the standard would result in the saving of one percent of national electricity use over the period of the average life of the product. The third test deemed energy savings significant if the standard would reduce product energy consumption by 16.67 percent.

Id.

at 47 FR 57209. In

Natural Resources Defense Council

v.

Herrington,

768 F.2d 1355 (D.C. Cir. 1985), the court held that, while Congress gave DOE considerable discretion to define significant energy savings, DOE's three tests were inconsistent with the purposes of EPCA.

Id.

at 1383.

In 2017, DOE once again initiated inquiry on the topic of a significant energy savings threshold in a request for information (RFI) published in the

Federal Register

on December 18, 2017. 82 FR 59992, 59997. Subsequently, in the February 2019 Process Rule NOPR, DOE proposed a threshold-based analysis for determining whether energy savings are significant. 84 FR 3910, 3923 (Feb. 13, 2019). Subsequent to the February 2019 NOPR, DOE published in the

Federal Register

a notice of data availability (NODA) on July 26, 2019, which presented its energy savings data in terms of site energy usage. 84 FR 36037 (July 2019 NODA).

DOE's proposal generated significant comments both in support and in opposition, with the most salient points presented in the paragraphs that follow. (These comments are summarized in the February 2020 final rule, followed by DOE's responses.

See

85 FR 8626, 8656-8676 (Feb. 14, 2020).)

Commenters supporting the significant energy savings threshold argued that it would support consistency across energy conservation standards rulemakings, alleviate unnecessary regulatory burdens and uncertainty on industry, assist the Department and industry with resource allocation, and help mitigate consumer cost impacts.

Id.

at 85 FR 8656-8658.

Commenters opposing the significant energy savings threshold argued that it was inconsistent with the

Herrington

decision, that it would sacrifice energy and cost savings, and that any such level would be arbitrary.

Id.

at 85 FR 8658-8662. It was also argued that a simple threshold does not account for the importance of saving energy at different times of day, such as at times of peak grid demand.

Id.

at 85 FR 8660.

After considering comments received and applying a uniform approach with respect to the energy usage examined, DOE decided to adopt a significant energy savings threshold in the February 2020 Process Rule final rule, but it adjusted the numerical value of the threshold to account for concerns raised by commenters. In that rule, DOE adopted two tests for determining whether an energy conservation standard would result in significant energy savings. The primary test deemed energy savings significant if the standard would result in a 10-percent reduction in site energy use over a 30-year period.

Id.

at 85 FR 8675. The second test deemed energy savings significant if the standard would save 0.3 quads of site energy use over a 30-year period. DOE found that these thresholds would have significantly reduced rulemaking burden over the history of the energy conservation standards program while retaining over 95 percent of the energy savings.

Id.

DOE explained its conclusion that the adopted approach was consistent with the court's holding in

Herrington. See id.

at 85 FR 8669. The final rule pointed to that portion of the court's decision in

Herrington

noting that DOE could establish a threshold for significant energy savings as long as the selected level reasonably accommodates the policies of EPCA.

Id.

at 85 FR 8675. This language in the

Herrington

opinion is particularly noteworthy because it provides a judicial interpretation as to the best reading of EPCA vis-à-vis the “significant conservation of energy” provision. Under

Loper Bright Enterprises

v.

Raimondo,

603 U.S. 369 (2024), it is the province of Article III courts to determine the best reading of ambiguous statutory provisions. Consequently, the

Herrington

court's pronouncement as to the permissibility of a threshold for significant energy savings suggests that DOE is on firm ground in proposing such a threshold as part of the Process Rule.

However, before these significant energy savings tests were ever utilized in a DOE rulemaking, the Department changed course and eliminated these tests from its regulations in the December 2021 Final Rule, thereby reverting once again to assessing on a case-by-case basis whether a new or amended energy conservation standard would result in significant conservation of energy. 86 FR 70892, 70893 (Dec. 13, 2021). As discussed in the April 2021 Process Rule NOPR, DOE proposed to remove the current numerical threshold for determining whether energy savings are significant for a number of reasons; however, DOE did not claim that establishing a threshold was outside its authority under EPCA. 86 FR 18901, 18905 (April 12, 2021).

In light of E.O. 14154, “Unleashing American Energy,” 90 FR 8353 (Jan. 29, 2025), and the Presidential Memorandum of January 20, 2025, “Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis,” 90 FR 8245 (Jan. 28, 2025), DOE has decided to once again examine the potential for using

tests or numerical thresholds in determining whether energy savings from a standard would be significant. Specifically, section 2(f) of E.O. 14154 provides that it is the policy of the United States “to safeguard the American people's freedom to choose from a variety of goods and appliances, including but not limited to lightbulbs, dishwashers, washing machines, gas stoves, water heaters, toilets, and shower heads, and to promote market competition and innovation within the manufacturing and appliance industries.” 90 FR 8353, 8353 (Jan. 29, 2025). Furthermore, the Presidential Memorandum of January 20, 2025, in relevant part, orders the heads of all Executive departments and agencies to “eliminate counterproductive requirements that raise the cost of home appliances.” 90 FR 8245, 8245 (Jan. 28, 2025).

For these reasons, in the April 2025 RFI, DOE requested comments on ways to reduce regulatory burden, mentioning the threshold value for energy savings as an example of such an opportunity. 90 FR 16093, 16097 (April 17, 2025). DOE received several comments in response to the April 2025 RFI related to whether DOE should establish criteria or thresholds to define the term “significant energy savings.” Two commenters opposed adding a significant energy savings threshold. (ASHRAE, No. 12 at pp. 2-3; NEEA, No. 36 at pp. 1-2). ASHRAE stated that there is no widely agreed to definition and that DOE should focus on achieving efficiency improvements on an individual basis, and NEEA stated that smaller incremental jumps are less burdensome and suggested assessing burden on an individual product basis. (

Id.

) Several commenters were supportive of a threshold. (AHRI, No. 28 at p. 11; BWC, No. 34 at pp. 4-5; BHI, No. 16 at pp. 2-3; Joint Gas Associations, No. 25 at p. 27; Lennox, No. 26 at pp. 2-4; MHI, No. 21 at p. 3; Strauch, No. 18 at p. 1; NAHB, No. 19 at p. 4; NEMA, No. 23 at pp. 4-5; NRECA, No. 17 at p. 2; ONE Gas, No. 37 at p. 5; Rinnai, No. 11 at p. 9; Strauch, No. 18 at p. 1; Zero Zone, No. 15 at p. 3) BWC, MHI, NAHB, and NEMA supported the thresholds from the February 2020 Process Rule. (BWC, No. 34 at pp. 4-5; MHI, No. 21 at p. 3; NAHB, No. 19 at p. 4; NEMA, No. 23 at pp. 4-5) Lennox supported a threshold of 0.3 quads or a 5-percent improvement in site energy savings. (Lennox, No. 26 at pp. 2-4) The Joint Gas Associations recommended that DOE utilize source energy when evaluating critical energy policy decisions and include the anticipated reduction of source energy consumption and impact of overall source energy consumption in the market sector, noting that gas products are at a disadvantage when using site savings due to differing site-to-source factors. (Joint Gas Associations, No. 25 at p. 19-21, 27) In addition, the Joint Gas Associations stated that any energy savings associated with fuel switching should not be permitted to be used to justify a standard. (Joint Gas Associations, No. 25 at p. 21).

Energy conservation standards that reduce consumer choice and raise costs while delivering minimal energy savings to the consumer and the Nation are counterproductive as contrary to the statutory considerations outlined in EPCA. Establishing a reasonable, consistent methodology for determining significant energy savings ensures compliance with both the requirements of EPCA, as well as the policies and objectives set forth in these additional Executive Actions, and is responsive to the majority of stakeholder comments.

2. Proposed Threshold for Significant Energy Savings

One of the complicating factors in establishing tests or thresholds for determining significant energy savings has always been the vast difference in energy use amongst covered products and equipment. For example, the regulated site energy use of covered products and equipment ranges from less than 1 quad over a 30-year period to over 500 quads.

12

In

Herrington,

the court acknowledged that DOE may reasonably regard energy savings as not significant for a high-consumption appliance, even if the same amount would be significant for a low-consumption appliance.

Natural Resources Defense Council

v.

Herrington,

768 F.2d 1355, 1376 (D.C. Cir. 1985). As a result, the court held that EPCA does not forbid DOE from setting a significant energy savings threshold as a percentage of the energy consumed by a covered product or equipment, provided that the selected level reasonably accommodates the policies of EPCA.

Id.

Keeping in mind these important considerations, DOE has tentatively concluded that a percentage-based threshold is the best way to reduce regulatory burdens while meeting the policy objectives of EPCA.

12

The range is based on the standby energy use for microwave ovens compared to the energy use of electric motors.

As for the specific percentage, DOE agrees with the court in

Herrington

that a significant energy savings threshold must show some awareness of the range of energy savings Congress thought worth pursuing.

Id.

at 1377. Since the inception of the program, DOE has issued 86 rules establishing energy conservation standards for covered products and equipment with a total site energy savings of 83.5 quads.

13

Without a significant energy savings threshold in place, DOE has generally adopted standards unless the energy savings would be genuinely trivial.

14

For example, DOE has adopted standards that would result in 0.016 (Ceiling Fan light Kits), 0.02 (Microwave Ovens), and 0.044 (Beverage Vending Machines) quads of site energy savings over a 30-year period.

15

Because the criterion for significant energy savings has, therefore, been almost without meaning (other than that trivial energy savings are not significant), DOE has essentially established standards based solely on what is economically justified and technologically feasible under EPCA. As a result, the energy savings from these standards are already close to the upper range of energy savings that is even achievable under EPCA, let alone the amount of energy savings that Congress thought was worth pursuing as “significant.”

13

See supporting table available in

www.regulations.gov/docket/EERE-2025-BT-STD-0001.

This includes final rules published from 1989 to 2025.

14

See, e.g., Energy Conservation Program: Energy Conservation Standards for Dehumidifiers,

81 FR 38338, 38346 (June 13, 2016)(finding energy savings to be nontrivial and, therefore, “significant” within the meaning of section 325 of EPCA).

15

See supporting table available in

www.regulations.gov/docket/EERE-2025-BT-STD-0001.

Knowing that a reasonable threshold for significant energy savings can help achieve the energy conservation objective of EPCA while reducing regulatory burden, DOE evaluated potential energy savings percentage thresholds based on what percentage of energy savings from past standards rulemakings would have been retained under a new, proposed threshold. In conducting this evaluation, however, it rapidly became apparent that it would be difficult to accommodate the policies of EPCA solely using a percentage threshold. For example, on January 17, 2001, DOE published standards for consumer water heaters that were projected to result in 4.6 quads of source energy savings. 66 FR 4474, 4475. However, those energy savings only represented a 4-percent reduction in energy use of consumer water heaters over the analysis period. As a result, similar to the February 2020 Final Rule, DOE is proposing a second threshold that would be based on the cumulative amount of energy saved over the 30-year

analysis period. The second threshold would account for situations where standards result in significant energy savings in absolute terms that may be achieved through small percentage reductions in energy use for covered products and equipment that use more energy (

e.g.,

water heaters and central air conditioners and heat pumps).

In proposing these thresholds, DOE notes that the choice of site energy vs. source (or primary) energy is important. Site energy consumption refers to energy use at the site of the relevant equipment. For electricity from the grid, source (or primary) energy consumption is equal to the heat content of the fuels used to generate that electricity (which accounts for losses associated with the generation, transmission, and distribution of electricity).

For natural gas, oil, and propane, source energy is equivalent to site energy. Full-fuel-cycle (FFC) energy includes source energy and all energy consumed in extracting, processing, and transporting or distributing primary fuels, which are referred to as upstream activities. For natural gas, FFC energy includes leakage in upstream activities. This distinction is important, as some covered products and equipment may only use a single type of fuel (

e.g.,

central air conditioners and heat pumps (electricity)), while others may use multiple types of fuel (

e.g.,

water heaters (gas, oil, and electricity)). As the National Academies report

16

noted, for products that use multiple fuel types or when more than one fuel can be used for the same application, comparison of just the site energy will lead to incorrect inferences about the potential for energy conservation. The report stated that for these products, measuring full-fuel-cycle energy consumption would provide a more complete picture of energy used, allowing comparison across many different products. Based on ensuring an equitable treatment of different energy sources, DOE has tentatively determined that a significant energy savings threshold based on FFC rather than site energy use is appropriate. DOE also notes that a threshold based on FFC energy savings is consistent with DOE's historic practice of presenting projected energy savings from a rule in terms of FFC savings.

16

National Research Council (2009),

Review of Site (Point-of-Use) and Full-Fuel-Cycle Measurement Approaches to DOE/EERE Building Appliance Energy-Efficiency Standards: Letter Report.

Washington, DC: The National Academies Press (Available at:

www.nationalacademies.org/publications/12670

).

Similar to the approach taken in the February 2020 Process Rule final rule, DOE has evaluated how various potential significant energy savings thresholds would have impacted DOE's past rulemakings. 85 FR 8626, 8675 (Feb. 14, 2020). Based on this evaluation, DOE notes that a threshold based on a 10-percent reduction in FFC energy use over a 30-year period or a 2 quad reduction in FFC energy use over a 30-year period would retain 91.5 percent of the energy savings from the program while eliminating 35 percent of the rulemakings (30 of 86 rulemakings).

17

This is a clear indication that establishing a threshold for significant energy savings can yield enormous benefits and reduce burdens without frustrating the energy conservation purposes of EPCA. Manufacturers typically incur significant conversion costs to redesign models for compliance with new or amended standards, and higher production costs associated with amended standards are passed on to consumers as higher up-front purchase costs. As discussed earlier in this paragraph, DOE estimates that without a threshold, 35 percent of DOE's rulemakings have imposed those costs on the market, while contributing to less than 9 percent of the total energy savings from the program.

17

This evaluation is based on the FFC energy savings as presented in the final rules published from 1989 through 2025. The conversion of site to FFC energy use and energy savings varies by rulemaking based on both the energy source considered for the product or equipment at issue and on the site-to-FFC multipliers current at the time of that analysis.

Further, DOE notes that failure to meet the threshold in a rulemaking for a covered product or equipment does not foreclose the possibility of a future rulemaking for that same product/equipment achieving significant energy savings. One of the purposes of a threshold for significant energy savings is to prevent a process where DOE amends an energy conservation standard every time there is an incremental improvement in energy efficiency for a covered product or equipment which does not rise to a “significant” level. For example, the 2017 final rule for walk-in coolers and freezers was estimated to save 0.85 quads FFC over 30 years, representing an 8-percent reduction in FFC energy use. 82 FR 31808 (July 10, 2017). These energy savings would not meet the threshold of significant energy savings proposed in this NOPR. However, DOE's next walk-in coolers and freezers final rule published in 2024 was estimated to save 1.6 quads FFC over 30 years, representing a 6-percent reduction in FFC energy use. 89 FR 104616 (Dec. 23, 2024).

18

These values also would not meet the proposed thresholds for significant energy savings, but the combined energy use reduction of the two final rules would represent over 2 quads of FFC energy savings. This example indicates how the proposed energy savings thresholds would allow DOE to continue establishing amended energy conservation standards, when appropriate, while avoiding the burdensome process of the market complying with frequent incremental changes to DOE's standards. DOE has tentatively determined that this balance of achieving significant energy savings while limiting the burden of rulemakings with lower energy savings, either on a percentage or quads basis, ensures that DOE's actions are consistent with EPCA while providing certainty as to how DOE will apply statutory requirements.

18

This final rule was subsequently withdrawn by DOE on May 20, 2025, after the President signed a resolution of disapproval under the Congressional Review Act. 90 FR 21391.

Based upon this analysis, DOE proposes to amend the current Process Rule to include the provisions regarding significant energy savings from the 2020 Process rule, but to consider “significant energy savings” as at least a 10-percent reduction in FFC energy use over a 30-year period or a 2 quad reduction in FFC energy use over a 30-year period. DOE also proposes to add this language specific to ASHRAE equipment and “significant additional conservation of energy” in section 9. DOE requests comment on these proposed thresholds and may also consider alternative thresholds ranging from 5 to 15 percent or from 0.5 quads to 5 quads FFC energy reduction over a 30-year period. These other thresholds and an analysis of their application to past DOE rulemakings can be found in the rulemaking docket.

19

As discussed earlier in this section, DOE has tentatively determined that these proposed thresholds best balance the energy savings associated with the program while limiting the burden associated with rulemakings projected to save less energy, either on a percentage or quads basis. DOE also requests comment on its tentative determination that thresholds should be based on FFC energy use.

19

See supporting table available in

www.regulations.gov/docket/EERE-2025-BT-STD-0001.

As discussed, DOE plans to review its analytical methods for evaluating potential new or amended standards as part of a separate process. To the extent that DOE's analytical methods may change in a way that would impact any eventual energy savings threshold (

e.g.,

analyzing energy savings over a time period other than 30 years), DOE would consider any corresponding adjustments needed to the energy savings thresholds in a subsequent proceeding. DOE requests comment and information on any such alternative analysis and corresponding adjustments, either as part of this proceeding or the separate proceeding focusing on analytical methodologies.

DOE also recognizes that EPCA established separate sections for consumer products and for certain industrial equipment,

20

recognizing the distinct uses and markets for these categories of equipment and products. Additionally, the model redesign cycles and product and equipment lifetimes also may be distinct between these categories, impacting the tradeoff of energy savings and burden associated with amended standards. DOE may consider an alternate approach under which it establishes different thresholds for covered products and equipment. To illustrate that approach, for example, DOE could alternatively specify that “significant energy savings” for covered products means at least a 10-percent reduction in energy use over a 30-year period or a 1 quad reduction in FFC energy use over a 30-year period; whereas for covered equipment significant energy savings may mean at least a 10-percent reduction in energy use over a 30-year period or a 2 quad reduction in FFC energy use over a 30-year period. DOE requests comment on whether such an alternative approach may be appropriate, as well as the specific thresholds that should be applied, for example thresholds in the range from 5 to 15 percent or from 0.5 quads to 5 quads FFC energy reduction over a 30-year period.

21

20

42 U.S.C. 6291-6309 and 42 U.S.C. 6311-6317, respectively.

21

See supporting table available in

www.regulations.gov/docket/EERE-2025-BT-STD-0001.

DOE also requests comment on further alternative approaches, such as setting distinct thresholds, in terms of percentage and total FFC energy use reduction over a 30-year period (or as noted earlier over alternative analysis periods), according to the type of covered products and equipment in residential, commercial, and industrial sectors. For example, would there be a benefit to establishing separate thresholds for consumer heating and cooling equipment as compared to consumer appliances (

e.g.,

refrigerators, dishwashers, and clothes washers and dryers)? DOE specifically requests comments on whether specific thresholds should be applied to: (1) consumer heating and cooling products; (2) consumer appliances (such as refrigerators, dishwashers, and washers and dryers); (3) consumer water heating products; (4) consumer electronics; (5) other covered products; (6) commercial heating and cooling equipment; (7) commercial water heating equipment; (8) commercial refrigeration equipment; and (9) other covered equipment. DOE requests comment on this further disaggregated threshold approach, and on whether the 10-percent and 2 quads FFC energy use reduction over a 30-year period, or higher or lower alternatives, may be appropriate for each product or equipment grouping. DOE also acknowledges that implementation of such an approach may require further clarification regarding specific product classifications. DOE requests comment on whether further implementation guidance would be helpful and any recommendations from affected stakeholders on how to best implement such an alternate approach.

G. Process For Developing Energy Conservation Standards (Section 6)

This section was first established in the July 1996 Final Rule and describes the process DOE follows in developing energy conservation standards for covered products and equipment other than those covered equipment subject to ASHRAE/IES Standard 90.1. The February 2020 Final Rule created an “early assessment” process for seeking stakeholder input prior to commencing a rule and committed to an initial rulemaking stage prior to a proposed rule (

e.g.,

an advanced notice of proposed rulemaking (“ANOPR”) or a framework document and preliminary analysis). This rule also established a threshold for “significant energy savings” of 0.3 quads or 10 percent site savings over 30 years. Subsequent amendments in the December 2021 and April 2024 Final Rules removed the energy savings threshold requirement and the requirement for a separate early assessment RFI but clarified that DOE will issue one or more documents during the pre-NOPR stage of a rulemaking, which could include a framework document, RFI, notice of data availability (“NODA”), preliminary analysis, or ANOPR.

1. Early Assessment and Pre-NOPR Stages

Several commenters supported reinstating an early assessment stage in the process for developing energy conservation standards or in general support of a formal early assessment process for both energy conservation standards and test procedure rulemakings.

22

22

See

also section IV.J.1 of this document with regard to early assessments for test procedures.

AHRI expressed support for an early assessment process for the amendment of existing standards. (AHRI, No. 28 at p. 8). NAHB recommended that DOE reinstate the early assessment process for soliciting stakeholder feedback well in advance of commencing an energy conservation standards rulemaking, as this reduces regulatory burden. (NAHB, No. 19 at p. 3). The Joint Gas Associations stated that a formal early assessment process can increase the efficiency of DOE's rulemaking process, as it could lead to a prompt, early decision in favor of more productive use of rulemaking resources. (Joint Gas Associations, No. 25 at p. 25). NEMA stated that the scope of coverage for a rulemaking should be thoroughly researched and addressed in a robust RFI phase to ensure clarity and consideration of all relevant data and stakeholder input before the NOPR is issued. NEMA also stated that this would reduce the likelihood of a rule that is inconsistent with the statute and, thus, vulnerable to legal challenge. NEMA recommended re-adoption of the approach in the 2020 Process Rule to mandate use of an early assessment RFI and either an ANOPR or a framework document with a preliminary analysis. (NEMA, No. 23 at pp. 7-8).

Several commenters also expressed support for requiring a pre-NOPR stage in the process for developing energy conservation standards; however, there was no consistency in recommending what that stage should be. Commenters stated that this requirement can be fulfilled with either an ANOPR or framework document with a preliminary analysis (AHRI, No. 28 at p. 8), an ANOPR or a preliminary analysis (APPA, No. 20 at p. 4; EEI, No. 35 at p. 4), or an ANOPR or a framework document or a preliminary analysis (NAHB, No. 19 at pp. 3-4). The Joint Gas Associations stated that the Process Rule should include multiple avenues such as an ANOPR, NODA, RFI, or NOPR/SNOPR and that DOE should explain why it determined which publication was appropriate (

e.g.,

NODA instead of ANOPR). (Joint Gas Associations, No. 25 at p. 26).

In response, DOE agrees with commenters that a formal early assessment provides an important opportunity for public input and provides regulatory certainty to stakeholders. As such, DOE is proposing to return to the language in the 2020 Process Rule regarding early assessment.

While commenters did not all agree on what stages of a rulemaking should follow an early assessment, DOE has tentatively decided that specifying limited pathways as opposed to numerous options provides more regulatory certainty to stakeholders. As such, DOE also proposes to return to the language in the 2020 Process Rule regarding publishing either a Framework Document and Preliminary Analysis, or an ANOPR. DOE requests comment on these proposals.

DOE notes that the procedural requirements of section 6 of Appendix A do not apply to direct final rules. The procedural requirements for direct final rules are specified in EPCA. (42 U.S.C. 6295(p)(4)).

2. Comment Periods

When developing energy conservation standards, the current Process Rule specifies that the length of the public comment period for pre-NOPR rulemaking documents may vary depending on the circumstances of the particular rulemaking and will be determined on a case-by-case basis. At the NOPR stage, the current Process Rule specifies that there will be no less than 60 days for public comment on the NOPR, with at least one public hearing or workshop, consistent with EPCA requirements. (42 U.S.C. 6295(p)(2); 42 U.S.C. 6306; 42 U.S.C. 6316(a)-(b)).

See

Sections 6(a)(6) and 6(b)(2) of appendix A. In contrast, the February 2020 Process rule had included a minimum comment period of 75 calendar days for pre-NOPR and NOPR rulemaking documents. 85 FR 8626, 8705-8706 (Feb. 14, 2020).

The April 2025 RFI requested comments on whether and how the Process Rule should be amended to modify public comment and review procedures for rulemakings, consistent with EPCA's requirements. 90 FR 16093, 16098 (April 17, 2025).

In response to the April 2025 RFI, several commenters expressed support for mandatory minimum comment periods in the Process Rule. AHRI stated that taking the time to allow for meaningful input is more likely to result in a streamlined process and better outcomes, and it may also reduce the likelihood of litigation. (AHRI, No. 28 at p. 9). BWC stated that a mandatory minimum comment period is ultimately beneficial to DOE, as it will allow stakeholders the full amount of time to potentially identify inaccuracies, issues, or errors that can then be adjusted and make both test procedures and energy conservation standards for covered products more robust. (BWC, No. 34 at p. 3). The Joint Gas Associations stated that the minimum statutorily specified opportunities for public input are generally inadequate and that longer comment periods should be the norm and specified in the Process Rule. (Joint Gas Associations, No. 25 at pp. 24-25).

Several commenters recommended specific comment period lengths. BWC recommended that DOE re-adopt the February 2020 Process Rule provisions, which would extend the mandatory length of comment periods to 75 days for both NOPR and pre-NOPR notices. (BWC, No. 34 at p. 2). AHRI stated that 75 days is an appropriate length of time to gather comments in early phases of a rulemaking, but 60 days should be the minimum. AHRI further stated that if DOE believes a particular step dictates a shorter or longer comment period, it can deviate from the Process Rule and provide an explanation in the notice. (AHRI, No. 28 at pp. 9-10). AHRI also stated that if DOE shortens the comment period to 60 days, DOE should continue to freely grant reasonable requests for extension. (AHRI, No. 28 at p. 10) Rinnai recommended minimum public comment periods of 60 days for initial notices and 45 days for supplemental notices. (Rinnai, No. 11 at pp. 3, 5, 10) Lennox stated that the comment periods specified in the Process Rule should be binding so as to allow for a reasonable minimum comment period in order for stakeholders to properly review and respond to the document in question. (Lennox, No. 26 at p. 2). Lennox recommended that NOPRs have comment periods of at least 60 days from the date of publication in the

Federal Register

. Lennox also recommended that pre-NOPR documents have comment periods of at least 60 days (for the first pre-NOPR notice in a docket) or 30 days (for subsequent notices if those subsequent notices do not raise material new issues that require engineering or technical analysis). Lennox also recommended that SNOPRs and other post-NOPR documents have comment periods of at least 30 days. (Lennox, No. 26 at pp. 8-9).

Other commenters stated that public comment periods specified in the existing Process Rule are sufficient. The State Agencies stated that the current public comment and review process is robust, accessible, transparent, and has resulted in thousands of comments from across the Nation to inform DOE proceedings. The State Agencies also requested that if DOE does propose changing the public comment periods, that it also provide justification and an opportunity for additional public comment on how the proposed changes to the Process Rule would result in an improved public comment and review process. (State Agencies, No. 33 at p. 2). NEEA recommended that DOE should maintain the current public comment and review process as codified in the Process Rule that allows for early and meaningful public engagement. The commenter stated that the current rule embeds EPCA's statutory comment requirements and provides structured opportunities for stakeholder input throughout the rulemaking process, including at the proposal stage and, in some cases, earlier through pre-rulemaking notices or stakeholder meetings. NEEA expressed opposition to any changes that would diminish the structure, duration, or significance of public comment periods. (NEEA, No. 36 at p. 2).

ACCA stated that minimum public comment periods alone are not sufficient if the procedures themselves remain opaque or are overly reliant on technical modeling that is inaccessible to small businesses. (ACCA, No. 38 at p. 3).

In response, DOE has reviewed the comments received regarding the appropriate comment periods for various documents. DOE has tentatively determined that a minimum 75-day comment period best addresses the public comments received, as it ensures stakeholders will be provided with a meaningful opportunity for public comment on every rulemaking document. Though several public comments indicate that a 60-day comment period is typically sufficient for a NOPR, commenters representative of a wide swath of affected entities also support reinstatement of the 75-day comment period. Therefore, DOE proposes to reinstate the comment periods from the 2020 Process Rule. Additionally, DOE already makes available its analytical models and technical documentation, with at least one public hearing or workshop, for all stakeholders to review during the comment period. DOE has tentatively determined that this approach is sufficiently accessible to all interested parties. Further consideration of analytical methodologies will be addressed in a separate process, as discussed in section IV.N.1 of this document.

3. Factors To Be Considered in Selecting a Proposed Standard

Section 6 of the Process Rule includes a list of factors to be considered in selecting a proposed standard. This list is largely the same in the current Process Rule as in the 2020 Process Rule, but DOE is proposing to re-instate the language in the 2020 Process Rule

for consistency. In addition, DOE is proposing minor wording changes to certain of the factors, including those discussed in the subsequent paragraphs, consistent with statutory requirements and best practices.

a. Private Impacts on Consumers

Section 6(a)(5)(iv)(B) of the Process Rule specifies that at the pre-NOPR stage, DOE will consider various factors when selecting a proposed standard, including an analysis of private impacts on consumers, including estimates of energy savings, consideration of subgroups, and other assessments of the range of impacts. As discussed, Executive Order 14154 states that it is the policy of the Department to safeguard the American people's freedom to choose from a variety of goods and appliances, including but not limited to lightbulbs, dishwashers, washing machines, gas stoves, water heaters, toilets, and shower heads. Consistent with this Executive order, DOE is proposing to add protection of consumer choice to the list of factors DOE will assess in considering the private impacts on consumer of any potential standards level. As discussed in section IV. H of this document, DOE is also proposing to add consideration of certain private economic impacts to the existing paragraph.

b. Impacts on the Environment

Section 6(a)(5)(iv)(F) of the Process Rule specifies that at the pre-NOPR stage, DOE will consider various factors when selecting a proposed standard, including an analysis of environmental impacts and estimated impacts on emissions of carbon and relevant criteria pollutants. Under EPCA, the Secretary has discretion to weigh “other factors the Secretary considers relevant.” (42 U.S.C. 6295(o)(2)(B)(i)(VII)). Previously, the Secretary made a determination this consideration of environmental and emissions impacts was relevant. Currently, however, given other considerations germane to 42 U.S.C. 6295(o), the Secretary has tentatively determined that the specifics of section 6(a)(5)(iv)(F) of the Process Rule as written are no longer relevant as an additional factor for his consideration, and instead, DOE is proposing that this factor simply refer to “Other factors the Secretary considers relevant.” This proposal is also consistent with the policies specified in the Executive order. More specifically, section 6 of Executive Order 14154 specifies policies for prioritizing accuracy in environmental analyses, specifically instructing that for Federal regulatory processes, all agencies shall adhere to only the relevant legislated requirements for environmental considerations, and any considerations beyond those requirements are eliminated.

H. Policies on Selection of Standards (Section 7)

This section was established in the July 1996 Final Rule and describes the Department policies concerning the selection of new or revised standards. The February 2020 Final Rule made minor amendments to align with revisions elsewhere in in the Process Rule, while the August 2020 Final Rule added a clarification that DOE would conduct a comparative analysis across all trial standard levels when determining whether a level was economically justified. The December 2021 Final Rule amended this section to remove the requirement for a comparative analysis and to remove a section related to considerations in assessing economic justification.

1. Market Competition and Innovation

The April 2025 RFI requested comment on whether and how the Process Rule should be updated to provide additional detail on how DOE's rulemaking process can promote market competition and innovation within the manufacturing and appliance industries and on DOE's historical analysis of potential impacts of any lessening of competition under 42 U.S.C. 6295(o)(2)(B)(i)(V). 90 FR 16093, 16098 (April 17, 2025).

DOE received several comments in support of using standards to promote market competition.

Lennox commented that DOE should support domestic manufacturers by promulgating reasonable standards and enforcing compliance to prevent the entry of low-cost, non-compliant imports. (Lennox, No. 26 at p. 5)

NEMA commented that competition benefits from reasonable and consistent efficiency rules that provide a stable and level playing field. NEMA further stated that predictability and consistency in the Appliance Standards Program are essential to reduce regulatory burden. In addition, the commenter argued that sudden changes can jeopardize investments made and inventory already created, which rely on current standards and test procedures. NEMA added that the testing of products and certification is highly beneficial in protecting manufacturers and consumers against misrepresentations of performance. (NEMA, No. 23 at pp. 3-4, 6)

Ceres commented that Federal appliance standards are critical for regulatory clarity, market consistency, and innovation incentives and provide a reduction in complexity and cost associated with meeting a patchwork of State-level regulations. Ceres added that for manufacturers, this consistency simplifies product design, production planning, and distribution logistics, thereby enabling more efficient economies of scale and streamlining compliance processes compared to having to meet different local energy efficiency rules. (Ceres, No. 22 at p. 1)

The Joint Advocates commented that efficiency standards promote market competition and innovation and cited a study

23

showing that regulations can enhance competition by creating market pressure that motivates innovation, leveling the playing field during transitions, and providing certainty that investments in efficiency improvements will be valued in the future. The Joint Advocates also pointed to another study

24

which concluded that as standards take effect, the price of older, but still-compliant products drops, and manufacturers are then incentivized to innovate so they can introduce new premium models with novel features and higher efficiency, resulting in better products that benefit all consumers. (Joint Advocates, No. 31 at p. 3)

23

M. E. Porter & C. van der Linde, “Toward a New Conception of the Environment-Competitiveness Relationship,” Journal of Economic Perspectives, 1995, Vol. 9, No. 4, pp. 97-118 (Available at:

www.aeaweb.org/articles?id=10.1257/jep.9.4.97

) (Last accessed July 31, 2025).

24

A. Brucal & M.J. Roberts, “Do energy efficiency standards hurt consumers? Evidence from household appliance sales,” Journal of Environmental Economics and Management, 2019, Vol. 96, pp. 88-107 (Available at:

www.sciencedirect.com/science/article/pii/S0095069617307647

) (Last accessed July 31, 2025).

DOE also received several comments indicating that changes to the Process Rule are not needed to promote competition and innovation.

Ceres, the Joint Advocates, Lennox, and the State Agencies commented that the existing Process Rule and/or current statute is sufficient to protect competition and innovation. (Ceres, No. 22 at p. 1; Joint Advocates, No. 31 at p. 2; Lennox, No. 26 at p. 5; State Agencies, No. 33 at p. 2)

Specifically, Ceres stated that the current statute already promotes market competition and innovation by directing DOE not to consider new standards or amendments that cannot be scaled to meet the market and energy conservation needs. Ceres added that completely changing the current Process Rule would ultimately reduce market competition and product availability across the Nation and put U.S.

manufacturers at a disadvantage in the global marketplace. (Ceres, No. 22 at pp. 1-2)

The Joint Advocates commented that the Process Rule already includes market competition and innovation protections, including the requirement to consult with both the U.S. Attorney General and the Department of Justice in evaluating any lessening of market competition, as well as the requirement to consider the practicability to manufacture, install, and service a given technology before giving it further consideration in a rulemaking. The Joint Advocates added that the Process Rule further states that DOE will not consider technology options that cannot be scaled to meet the market need or that are proprietary. (Joint Advocates, No. 31 at pp. 2-3)

The State Agencies commented that any potential changes to the Process Rule must be analyzed across the full range of technologies covered by the Appliance Standards Program and must consider manufacturer innovation. The State Agencies stated that consideration of market competition and innovation needs no further elaboration within the Process Rule and is only appropriate at the individual rulemaking level. (State Agencies, No. 33 at pp. 1-2)

DOE received several comments recommending specific changes to the Process Rule to promote competition and innovation.

ACCA commented that recent policies have favored electrification, ignoring the energy resilience benefits of dual-fuel systems and significant barrier to full electrification. The commenter stated that such policies risk increasing market concentration, as fewer manufacturers are capable of producing compliant units and fewer contractors are equipped to install them correctly. ACCA added that pursuing full electrification could also raise costs, reduce service availability, and unintentionally burden grid infrastructure with additional seasonal loads. (ACCA, No. 38 at p. 2)

APPA stated that standards can create market distortions that negatively impact competition and innovation. APPA commented that as smart and artificial intelligence technologies become more prevalent, DOE should ensure that regulations do not eliminate innovative technologies or worsen supply chain issues. Specifically, with rising demand and existing challenges for distribution transformers such as higher costs and longer procurement times, the commenter urged DOE to avoid adopting standards that worsen these issues for minimal efficiency gains. APPA further stated that standards should not create situations where only one U.S. manufacturer has patents to make the product or key components of a product. (APPA, No. 20 at pp. 2-3)

Similarly, EEI commented that regulations should not eliminate innovative technologies. As an example, EEI stated that DOE should use annual energy metrics, where possible, instead of separate standby, off, and active-mode metrics. EEI explained that annual energy metrics support innovation by allowing manufacturers to consider trading off higher standby energy use for a “smart appliance” with lower overall annual energy use. (EEI, No. 35 at pp. 3-4)

NEMA commented that the Process Rule should explicitly require DOE to consider how a rule will affect investment and whether it will harm U.S. industry, innovation, and ultimately consumers. NEMA added that DOE should consider the impact its decisions have on investment by American companies related to innovation. (NEMA, No. 23 at pp. 3-4, 6)

After reviewing the comments received, DOE has tentatively determined that the current Process Rule Objectives should be amended to include additional provisions stating that it is DOE's policy to promote market competition and innovation consistent with the requirements of EPCA.

See

section IV.A of this document for further discussion. DOE remains cognizant of these issues and notes that the current statute and Process Rule already include mechanisms to consider the potential impacts from industry concentration, manufacturing capacity, employment, and other relevant issues. In response to ACCA, DOE notes that potential standards for products using different fuels are evaluated separately with their own economic justification. In response to APPA, DOE notes that the screening analysis already considers impacts related to proprietary technologies. In response to EEI, DOE notes that it will consider the appropriate metric in individual rulemakings, keeping in mind the requirements in EPCA related to standby mode and off mode energy use at 42 U.S.C. 6295(gg). In response to NEMA, DOE notes that it has received more specific comments related to how DOE should analyze manufacturer impacts, as discussed in section IV.N.2 of this document; the Department will analyze these issues in a separate proceeding.

2. Analytic Approaches To Address Balancing Factors in EPCA

The April 2025 RFI requested comments on whether and how the Process Rule should be updated to provide additional detail on how DOE's rulemaking process satisfies the statutory requirements for establishing new or amended energy conservation standards. 90 FR 16093, 16099 (April 17, 2025). DOE received comments related to how the Process Rule should approach analyzing the potential effects of efficiency levels, including incorporation of the statutory factors, which inform the agency's choice of a standard level.

Several commenters supported the provisions in the current Process Rule. The Joint Advocates and the State Agencies stated that the current Process Rule and EPCA already outline the detailed statutory criteria that DOE must follow in each rulemaking. (Joint Advocates, No. 31 at p. 1; State Agencies, No. 33 at p. 2) NEEA recommended that DOE should maintain its current approach in the Process Rule to assess economic viability. Specifically, the commenter encouraged DOE to maintain a comprehensive assessment of economic impacts that considers life-cycle cost savings, avoided energy system costs, macroeconomic impacts, and economic impacts to consumers. NEEA further recommended against redefining “economically justified” to have a narrow focus on short payback periods or “first cost analysis,” which would undervalue long-term economic benefits. NEEA added that overlooking broader energy system costs and macroeconomic impacts will limit the ability to accelerate production of energy-intensive industries and limit economic growth potential. (NEEA, No. 36 at p. 3)

Several other commenters made specific recommendations regarding additional thresholds or evaluations DOE should make when assessing potential standards.

The Joint Gas Associations generally support an approach where DOE evaluates the cost-effectiveness of a standard versus its possible level of enhanced efficiency and added that any process of evaluation must include balancing potential energy savings with the cost of implementation. (Joint Gas Associations, No. 25 at p. 26)

When selecting a standard level, in addition to including a definition for “significant energy savings” (

See

section IV.F of this document for additional discussion on this issue), AHRI commented that the Process rule

should also incorporate other factors including: (1) a cost-benefit analysis for consumers and manufacturers into the definition of “significant energy savings”; (2) thresholds or benchmarks that explain how DOE evaluates marginal energy savings in relation to consumer burden, product costs, and feature trade-offs; and (3) a methodology for comparing energy savings as it relates to the cost of compliance, particularly for products where existing efficiency levels are already high or marginal gains in energy savings require a steep expense. (AHRI, No. 28 at p. 11)

NAFEM commented that the Process Rule should specify a clear rule regarding payback period (“PBP”) that can satisfy EPCA's requirement that standards be economically justified. The commenter argued that lengthy PBPs (sometimes exceeding the product's average lifetime) are impractical and not economically justified for small businesses that often operate on short planning horizons and may never recoup the cost of higher-efficiency equipment. NAFEM added that lengthy PBPs would lead small businesses to repair old equipment or purchase less-efficient refurbished units, thereby undermining EPCA's energy efficiency goals. (NAFEM, No. 13 at pp. 5-6)

NAHB commented that standards should be set strictly based on cost-effectiveness to the consumer. NAHB added that greater weight should be given to the 7-percent discount rate, as a 3-percent is not realistic in the real estate development context. (NAHB, No. 19 at p. 5)

ONE Gas commented that DOE should implement a

de minimis

threshold for consumer savings at both the individual covered product and national levels. ONE Gas added that the

de minimis

test should be applied in the Framework Document phase and resolved at the Preliminary Analysis phase. (ONE Gas, No. 37 at p. 5)

Rinnai commented that the Process Rule should include provisions requiring DOE to conduct an affordability analysis and not set standards if some populations, such as low- or middle-income households, face net costs or excessive payback periods. (Rinnai, No. 11 at p. 12, 13) In addition, Rinnai stated that the Process Rule should require a quantitative assessment of impacts on low-income and senior households, with explicit criteria that flag when negative outcomes exceed defined thresholds. (Rinnai, No. 11 at p. 8) Further, Rinnai commented that the Process Rule should require that a standard not be set if analysis shows marginal or negative life-cycle cost outcomes, payback periods close to the product lifespan, or disproportionate burdens on low-income or senior consumers. (Rinnai, No. 11 at p. 9)

The Joint Gas Associations commented that DOE's rules should not harm any customers and should not increase costs for low-income and senior households. The Joint Gas Associations added that the Process Rule should include some criteria for fully evaluating the cost impacts on customers, in particular low-income and senior households. (Joint Gas Associations, No. 25 at pp. 17-18) The Joint Gas Associations further commented that the Process Rule should require a minimum

25

three-year payback period threshold for DOE to propose a new or revised standard. (Joint Gas Associations, No. 25 at p. 27)

25

DOE understands the reference to a “minimum three-year payback period” in this comment to mean that DOE should only establish standards with estimated payback periods of three years or less.

The Joint Gas Associations recommended that the Process Rule should state that DOE will utilize source energy when evaluating critical energy policy decisions and that it will seek comments on the best method to use when evaluating energy efficiency measures, which may not always be the existing site-to-source conversion. (Joint Gas Associations, No. 25 at pp. 19-21) In addition, the Joint Gas Associations stated that any energy savings associated with fuel switching should not be permitted to be used to justify a standard. (Joint Gas Associations, No. 25 at p. 21)

APPA commented that DOE should ensure that standards do not result in significantly higher upfront costs or greater total system energy losses. (APPA, No. 20 at p. 2)

ACCA recommended that the Process Rule should incorporate field-based efficiency data and installation quality metrics in the Department's cost-benefit analysis and determination of significant conservation of energy. (ACCA, No. 38 at p. 2) In response, DOE anticipates further additions and refinements to the Department's life-cycle cost analysis and payback period methodology, as well as all energy conservation standards rulemaking analytical methodologies, will be addressed in the forthcoming Analytic Framework update. Further public input will be invited on suggestions to update and improve the agency's subgroup and distributional impact analyses, such as those involving low-income senior citizens and small entities. Further public comment is also solicited in response to this proposal.

Statutory Factors and Analysis

Pursuant to EPCA, any new or amended energy conservation standard for covered products (and at least certain types of equipment) must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A); 42 U.S.C. 6316(a)). In determining whether a standard is economically justified, EPCA requires DOE, to the greatest extent practicable, to consider the following seven factors: (1) The economic impact of the standard on the manufacturers and consumers; (2) the savings in operating costs, throughout the estimated average life of the products (

i.e.,

life-cycle costs), compared with any increase in the price of, or in the initial charges for, or operating and maintaining expenses of, the products which are likely to result from the imposition of the standard; (3) the total projected amount of energy, or as applicable, water, savings likely to result directly from the standard; (4) any lessening of the utility or the performance of the products likely to result from the standard; (5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard; (6) the need for national energy and water conservation; and (7) other factors DOE finds relevant. (42 U.S.C. 6295(o)(2)(B)(i); (p)). As part of its consideration of these seven factors, DOE conducts and publishes an analysis in a technical support document (also known as a regulatory impact analysis (RIA)). This analysis accompanies the proposed and final rules in fulfillment of the agency's statutorily required responsibilities to provide the public with the opportunity to comment on DOE's consideration of the factors for economic justification, technological feasibility, and other factors required by EPCA. (

See

42 U.S.C. 6295(p)). 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.

The Secretary determines whether a standard achieves the maximum improvement in energy efficiency

26

given that the standard must be both technologically feasible and economically justified. This determination is made after conducting analysis required by EPCA and considering views and comments

furnished with respect to a proposed standard. To best inform this determination, DOE proposes a “walk up” approach to evaluating prospective standards. By taking a “walk up” approach, DOE can compare each progressively more stringent standard (each increase in energy efficiency and each incremental increase in costs) to both the status quo and the standard just below it. This allows the agency and interested public to assess at each possible standard level the incremental increases in energy or water savings relative to the incremental increases in costs, including those arising out of changes in consumer choice and satisfaction. The 2020 Process Rule referred to this framework as the “comparative” approach. To reflect the general framework of that comparative approach, as well forthcoming analytic updates consistent with 42 U.S.C. 6295(o)(2)(B), this proposal refers to this concept as a “walk up.”

26

“or in the case of showerheads, faucets, water closets, or urinals, water efficiency” 42 U.S.C. 6295(o)(2).

As part of the EPCA analysis, DOE must estimate benefits of possible higher efficiency standards, including those the statute directs DOE to consider estimated energy savings and potential operating cost savings over the average life of a covered product. (42 U.S.C. 6295(o)(2)(B)(i)(II)-(III), (VII)). In estimating these anticipated benefits, DOE must also anticipate consumer behavioral changes that may temper or increase energy or cost savings, such as increased product usage (often referred to as the “rebound effect”), refurbishing of old products or purchase of used products, or substitution effects like using more energy- or water-intensive settings more frequently in response to negative impacts on product performance, or reduced costs to controlling HVAC systems due to Apps.

27

(42 U.S.C. 6295(o)(2)(B)(i)(I)). In addition, under EPCA, DOE must estimate the costs of possible higher efficiency standards, including those the statute directs DOE to consider: increases in price, initial installation and maintenance costs; lessening of the utility or performance (such as potential negative impacts on product cleaning performance or differences in the brightness (lumens), hue or colors of light bulbs); lessening of market competition, such as increases in market consolidation or other changes in price-setting power, and other economic impacts to manufacturers and consumers. (42 U.S.C. 6295(o)(2)(B)(i)(I-II), (IV-VII)). In estimating these anticipated costs, DOE would be analyzing consumer welfare impacts and losses to consumers and producers from foregone consumption of good the market would otherwise offer (also known as dead weight loss in economic terms), and the behavioral changes that are likely to result from possible standards. Consumer welfare in economic terms refers to the general satisfaction and well-being consumers derive from their purchases and use of products. In other words, DOE's statutory considerations regarding impacts to consumers and manufacturers, increases in prices, maintenance costs, changes in utility and performance all translate to consumer welfare impacts and related changes in consumer behavior. Under EPCA, DOE further considers losses to society when producers are willing to offer a product at a particular price and consumers are willing to purchase that product at that particular price and that exchange will no longer occur as a result of a proposed standard. In particular, under EPCA, DOE may not prescribe new standards where the standard would likely result in domestic unavailability “in any covered product (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding.” (42 U.S.C. 6295(o)(4)). The unavailability of any of these characteristics translates once again to consumer welfare impacts and potential losses to society when the market is willing to make an exchange but for the standard. In other words, the loss of features such as consistently illuminated clocks in microwaves,

28

the window in an oven door,

29

or glass doors on beverage coolers,

30

changes to the layout of residential refrigerators and clothes washers and dryers, and dishwashers would limit consumer choices and impact consumer satisfaction and well-being. The agency “screened out” these feature losses from consideration in prior analyses, and requests comment on how such screening can be improved. DOE's forthcoming analytic framework RFI and update will also offer the public an opportunity to suggest methodological and data changes the better capture these consumer impacts.

27

See,

for example, DOE's previous consideration of potential negative impacts on clothes washer performance that could alter consumers' usage patterns at certain higher efficiency levels considered for the analysis. (89 FR 19026, 19117; March 15, 2024).

28

In the most recent energy conservation standards rulemaking for microwave ovens, DOE “screened out” from its analysis any consideration of automatic power-down of the clock display as a technology option for reducing the standby power of microwave ovens due to its impact on consumer utility. DOE found that while it is uncertain the extent to which consumers value the function of a continuous display clock, the loss of such function may result in significant loss of consumer utility. 78 FR 36316, 36362 (June 20, 2023).

29

In the most recent energy conservation standards rulemaking for conventional cooking products, DOE screened out from its analysis any consideration of energy savings that could be achieved through removal of the glass window in the oven door, in part due to the loss of consumer utility, possible adverse impacts on cooking certain types of delicate food items, and potential safety concerns.

See

section 4.2.1.3 of the Technical Support Document accompanying the February 14, 2024, direct final rule (89 FR 11434), available at

www.regulations.gov/document/EERE-2014-BT-STD-0005-12819.

30

In the most recent energy conservation standards rulemaking for miscellaneous refrigeration products, DOE screened out from its analysis any consideration of energy savings that could be achieved through the replacement of glass doors with solid doors, finding that solid doors would be much less desirable to consumers and the loss of the glass doors would have an adverse impact on consumer utility.

See

section 4.2.1.1 of the Technical Support Document accompanying the May 7, 2024, direct final rule (89 FR 38762), available at

www.regulations.gov/document/EERE-2020-BT-STD-0039-0037.

The main difference between the “walk down approach” and the “walk up approach” is that the walk down approach starts at the most stringent possible standard and “walks down” to different levels of stringency, presumptively stopping at the most-stringent standard that DOE determines is economically justified. This approach favors technological feasibility over economic justification, resulting in more stringent standards than may be appropriate under EPCA's balancing factors. In other words, under the walk down approach, DOE does not interpret the statute as requiring a netting of the benefits and costs in moving to a more progressively stringent standard. Meanwhile, the proposed approach “walks up” from the

status quo

to increasing levels of stringency. This approach allows both DOE and the public to compare easily a proposed standard's proposed energy and operating savings and economic impacts to the status quo and to the standard just below. For example, if the installation costs of a proposed water heater standard would increase by 106 percent relative to the status quo, the walk up approach would ensure that this impact is shown clearly on the cost side of the ledger. Also, other behavioral impacts that would temper estimated energy savings would be included, such as when consumers choose to repair or move to secondary markets when faced with such up-front costs. In other words, the walk up approach allows for balancing technological feasibility

and

economic justification with parity. At each increment of increased stringency,

the agency must consider costs. In addition, with the agency's forthcoming analytic update, the agency's cost and benefits estimates are expected expand beyond engineering concepts to further capture economic concepts such as consumer welfare and behavioral change impacts. When technology is not feasible, then incremental cost can be very high or even infinite. While DOE conducts an engineering-based technological feasibility check as part of its existing process the agency acknowledges that feasibility in economic terms is also related to costs. Given this, the economic justification analysis also has some collinearity to technological feasibility. For instance, it may be that at higher TSLs, from an engineering perspective, the required technologically has been determined `feasible' but that from an economic perspective the production costs are so high as to prevent widespread availability or consumption. Such technology would clearly not be found to be economically justified and from a lay person's market perspective might not be considered feasible. When technology is feasible, it may still fail at economic justification, and EPCA requires both conditions to be satisfied. The seven EPCA factors lay out different aspects of potential economic impacts to affected parties. DOE's analytic framework RFI will delve further into methodological and conceptual tools aimed at a more complete and updated analysis of these factors:

1. The economic impact of the standard on the manufacturers and consumers: this factor broadly lays out economic impacts to manufacturers and consumers should be taken into consideration in setting conservation standards regardless of whether those impacts may by readily quantifiable or not. Readily quantifiable effects include potential energy and water savings assuming that consumers' distribution of consumption of energy and water do not change over time appreciably. Currently, DOE folds some of these impacts into the agency's life-cycle and payback period analysis. Manufacturers' compliance costs are also readily quantifiable using information collected through government data collections, public comment, DOE's tear-down and other engineering efforts, purchase of proprietary information and others. There are other economic effects that are more difficult to capture on both consumer and manufacturer sides. Estimating changes in consumers' consumption of substitute (

e.g.,

used and refurbished appliances) and complimentary goods (

e.g.,

dryers if purchasing washers; detergent choices) as a result of a conservation standard is more difficult. For example, if a clothes washer energy and water conservation standard were to adversely impact cleaning or rinsing performance, consumers that experience any such negative impacts on product performance could potentially alter their usage patterns, for example by using more energy-intensive settings more frequently (

e.g.,

Extra-Hot temperature setting); using more water-intensive cycle options (

e.g.,

Deep Fill option; extra rinse cycles); using non-regulated cycles (

e.g.,

Heavy Duty cycle); or re-washing clothing that has not been cleaned sufficiently. Such changes to consumer usage patterns may counteract the energy and water savings that DOE has estimated would be achieved at the higher efficiency level (89 FR 19026, 19117; March 15, 2024). Similarly, if the same standard also affects how clothing is washed, then consumers may buy more powerful and expensive detergent (complimentary good) in reaction. Alternatively, if a new clothes washer standard materially increases purchase and installation costs for that appliance, consumers may choose not to purchase a clothes dryer when those purchases are very often bundled as complimentary goods. This change could result in losses to society from foregone market exchanges and losses in consumer satisfaction where preferences would typically lean towards a bundled purchase. In addition, new standards may cause manufacturers to divert resources away from improving features that consumers want. While not exhaustive, the above examples illustrate that quantitative estimates of potential energy and water savings and compliance costs may not capture important effects readily.

2. The savings in operating costs, throughout the estimated average life of the products (

i.e.,

life-cycle costs), compared with any increase in the price of, or in the initial charges for, or operating and maintaining expenses of, the products which are likely to result from the imposition of the standard: DOE is already explicitly taking this factor into consideration in the agency's life-cycle cost analysis and payback period analysis and recognizes there are elements of consumer behavior and welfare, as well as considerations of the useful life of the appliance, that are not currently captured in this analysis.

3. The total projected amount of energy, or as applicable, water savings likely to result directly from the standard: DOE already explicitly takes this factor into consideration in the agency's lifecycle analysis and national impact analysis and recognizes there are elements of consumer behavior and welfare, such as in earlier stated examples, that may affect these estimates that are not currently captured in this analysis.

4. Any lessening of the utility or the performance of the products likely to result from the standard: consumers value different attributes of products differently. Some may value the energy and/or water efficiency savings more than the cycle time in clothes washers. Others may value cycle time more than the energy and/or water efficiency savings. Others may place value in how effectively any residual detergent is rinsed from the clothing, or how much moisture is removed from the clothing during the final spin portion of the wash cycle. If changes in energy and/or water conservation standards were to lead to a reduction in certain aspects of cleaning or rinsing performance, then consumers may be less satisfied with their clothes washers. These types of effects may be more difficult to assess quantitatively than potential energy and/or water savings and compliance costs and nonetheless should be addressed. On the other hand, consumer purchases often reveal preferences for such functions, and by statute, DOE must consider these changes in utility and performance relative to products in existence at the time a regulation being contemplated.

5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard: lessening of competition is a concern that DOE takes seriously. Increases in market power or significant market consolidation would likely further reduce consumer choices and lead to material increases in the prices of covered products. DOE currently applies a market concentration index (HHI) in evaluating the lessening of market competition. While this index is a helpful indicator, DOE is considering other indicators of lessening competition. Market competition can decline when fewer manufacturers participate in the market or fewer manufacturers choose to produce some product categories. When consumer purchases do not decrease by much as prices rise (in economic terms: demand is relatively inelastic) and competition decreases, manufacturers are able to set prices higher without sharply reducing the number of units sold. For example, consumers often replace large appliances such as water heaters, heat pumps, air conditioners, or refrigerators when they break down, which may result in less price flexibility for the consumer. The result is greater benefits

for manufacturers (who sell fewer units at a higher price), reduced benefits for consumers (who buy fewer units at a higher price), and some loss to society (units that could have been produced and sold at lower prices are not produced and benefit no one). To account for the impacts of reduced competition, DOE is considering analysis that more formally incorporates consumer responsiveness to changes in price (price-elasticity of demand) and the likely price impacts in markets where high consolidation already exists.

6. The need for national energy and water conservation: enhanced energy efficiency, where economically justified, improves the Nation's energy security and strengthens the economy. Reduced electricity demand due to energy conservation standards is also likely to reduce the cost of maintaining the reliability of the electricity system, particularly during peak-load periods. DOE conducts a utility impact analysis to estimate how standards may affect the Nation's needed power generation capacity.

7. Other factors DOE finds relevant: In the past, the Secretary has exercised discretion under factor seven for considerations such as impacts of standards to certain subgroups such as small manufacturers or low-income senior citizens. DOE's comparative analysis can be applied to such distributional outcomes as well, and DOE continues to explore other discretionary considerations. One such consideration may be to explicitly state that the Secretary has determined that any proposed standard for which costs (including consumer welfare losses and losses to society from lost market exchanges) exceed benefits (including energy and operating cost savings) will presumptively be considered as not economically justified. More generally, the Secretary has sufficient discretion to apply a “walk up approach” under EPCA.

Energy Conservation and the Energy Paradox

The potential for appliance and other covered product buyers to voluntarily forego improvements in energy efficiency that seemingly offer savings exceeding their initial costs is one example of what is often termed the “energy efficiency gap” or “energy efficiency paradox.” Economic theory predicts that, holding all else equal, individuals will purchase more expensive energy-efficient appliances and other covered products if they expect future savings on energy expenditures to offset the higher upfront purchase costs.

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If buyers fully internalize the expected energy savings that result from higher efficiency in their appliances and other covered products purchase decisions, manufacturers will presumably supply any improvements that buyers demand, and appliances and other covered products prices will fully reflect future energy cost savings that consumers would realize from owning—and potentially reselling—more energy-efficient models if secondary markets exist. In this case, a regulation that induces increased energy efficiency of appliances and other covered products will impose net private costs on appliance and other covered product owners and can only result in social benefits through correcting other market failures (

e.g.,

imperfect information or internalizing other negative spillover effects). If instead, regulations are issued based on the premise that consumers systematically “undervalue” cost savings generated by improvements in energy efficiency when choosing among competing models, then more stringent energy efficiency standards may lead manufacturers to adopt improvements in energy efficiency that buyers would not choose despite the cost savings they offer.

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These additional up-front costs include more than just the cost of the technology necessary to improve energy economy; because consumers have a scarcity of resources, it also includes the opportunity cost of any other desirable features that consumers give up when they choose the more energy-efficient appliances and other covered products.

Whether the value of the resulting realized energy savings will improve consumer welfare depends on if and why consumers appear to undervalue future energy expenditures. If the apparent “undervaluation” is due to factors that are missing from the analysis—

e.g.,

tradeoffs with product functions and attributes such as cleaning performance, increased cycle times when in energy saver mode or changes in the starkness, warmth, or hue of light bulbs—these hidden or missing costs may be offsetting some or all of the value of energy savings and may not result in additional social benefits. The appearance of such a gap, between the level of energy efficiency that would minimize consumers' overall expenses and what they actually purchase, is typically based on engineering calculations that compare the initial cost of providing higher energy efficiency to the discounted present value of the resulting savings in future energy costs, and such analyses will not typically capture the above variables. If instead undervaluation is due to consumer or manufacturer inattention to future energy costs resulting from a market failure such as an information asymmetry, then the value of energy savings is a social benefit of the regulation. How potential buyers value improvements in the energy efficiency of new appliances and other covered products is therefore an important issue when assessing the benefits and costs of government regulation. There is a large empirical literature examining this issue that comes to varying conclusions about the extent that consumers value these future energy expenditures. As noted in the Office of Management and Budget (OMB) Circular A-4 (2003),

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“individual preferences of the affected population should be a guiding principle in the regulatory analysis.” This literature and its implications for DOE's analysis will be explored further in DOE's analytic framework update effort.

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Office of Management and Budget. (2003). Circular A-4: Regulatory Analysis:

https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4.

Walk Up Analysis

A “walk up” analysis takes a step-wise approach to estimating increasing levels of energy conservation and the related impacts on consumers and manufacturers. Starting at the status quo (baseline), the agency would analyze the increases in benefits (including energy savings) and costs (including manufacturer costs) associated with progressively more stringent TSLs. DOE would use these estimates to identify a preferred option that is technically feasible and economically justified. For the “walk up” analysis the Secretary could determine economic justification by relying on either incremental effects or by relying on net benefits. Both methods examine economic justification by comparing the monetized benefits and costs at different TSLs. Once these analyses are complete, the Secretary may consider these estimates along with additional factors as noted above in determining whether to set a standard and if so, what level of stringency to propose. DOE requests comment on all aspects of the proposed walk up approach.

Illustrative Example

In the following illustrative example, DOE presents an incremental walk up approach under three scenarios: (1) where DOE is not accounting for consumer welfare and market loss (dead weight loss) impacts; (2) where DOE captures some but not all consumer

welfare and market lost impacts or such impacts are relatively small; (3) where DOE robustly estimates consumer welfare and market loss impacts and those impacts are substantial. In addition, DOE presents a simple net benefits scenario.

The numbers used in the tables are for illustration only and do not reflect estimates for any particular policy.

Table 1 shown below compares monetized energy savings with monetized cost increases associated with tighter energy efficiency levels but does not include all the economic impacts envisioned by the statute (

e.g.,

consumer welfare and dead weight loss). For example, in goi

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