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Rule2021-25725

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

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Published

December 13, 2021

Effective

January 12, 2022

Issuing agencies

Energy Department

Abstract

The U.S. Department of Energy (``DOE'' or the ``Department'') is revising the Department's ``Procedures, Interpretations, and Policies for Consideration of New or Revised Energy Conservation Standards and Test Procedures for Consumer Products and Certain Commercial/Industrial Equipment.'' The revisions are consistent with longstanding DOE practice and would remove unnecessary obstacles to DOE's ability to meet its statutory obligations under the Energy Policy and Conservation Act (``EPCA'').

Full Text

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<title>Federal Register, Volume 86 Issue 236 (Monday, December 13, 2021)</title>
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[Federal Register Volume 86, Number 236 (Monday, December 13, 2021)]
[Rules and Regulations]
[Pages 70892-70931]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-25725]

[[Page 70891]]

Vol. 86

Monday,

No. 236

December 13, 2021

Part II

Department of Energy

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10 CFR Part 430

Energy Conservation Program for Appliance Standards: Procedures,
Interpretations, and Policies for Consideration in New or Revised
Energy Conservation Standards and Test Procedures for Consumer Products
and Commercial/Industrial Equipment; Final Rule

Federal Register / Vol. 86 , No. 236 / Monday, December 13, 2021 /
Rules and Regulations

[[Page 70892]]

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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2021-BT-STD-0003]
RIN 1904-AF13

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

ACTION: Final rule.

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SUMMARY: The U.S. Department of Energy (``DOE'' or the ``Department'')
is revising the Department's ``Procedures, Interpretations, and
Policies for Consideration of New or Revised Energy Conservation
Standards and Test Procedures for Consumer Products and Certain
Commercial/Industrial Equipment.'' The revisions are consistent with
longstanding DOE practice and would remove unnecessary obstacles to
DOE's ability to meet its statutory obligations under the Energy Policy
and Conservation Act (``EPCA'').

DATES: This rule is effective January 12, 2022.

ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, comments, and other supporting documents/materials,
is available for review at <a href="http://www.regulations.gov">www.regulations.gov</a>. All documents in the
docket are listed in the <a href="http://www.regulations.gov">www.regulations.gov</a> 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: <a href="http://www.regulations.gov/docket/EERE-2021-BT-STD-0003">www.regulations.gov/docket/EERE-2021-BT-STD-0003</a>. The
docket web page contains instructions on how to access all documents,
including public comments, in the docket.

FOR FURTHER INFORMATION CONTACT:
Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC, 20585-0121. Email:
<a href="/cdn-cgi/l/email-protection#2d6c5d5d41444c434e487e594c43494c5f495e7c58485e594442435e6d484803494248034a425b"><span class="__cf_email__" data-cfemail="c687b6b6aaafa7a8a5a395b2a7a8a2a7b4a2b597b3a3b5b2afa9a8b586a3a3e8a2a9a3e8a1a9b0">[email&#160;protected]</span></a>.
Mr. Pete Cochran, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585.
Telephone: (202) 586-9496. Email: <a href="/cdn-cgi/l/email-protection#59093c2d3c2b771a363a312b3837193128773d363c773e362f"><span class="__cf_email__" data-cfemail="762613021304583519151e041718361e075812191358111900">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule
II. Authority and Background
A. Authority
B. Background
III. Discussion of Specific Revisions to Appendix A
A. Restoring the Department's Discretion To Depart From the
General Guidance in Appendix A
B. Significant Energy Savings Threshold
C. Determinations of Economic Justification
D. Adoption of Industry Test Standards
E. Finalization of Test Procedures Prior to Issuance of a
Standards Proposal
F. Direct Final Rules
G. Negotiated Rulemaking
H. Other Topics
IV. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act of 1995
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Consistent With OMB's Information Quality Bulletin for
Peer Review
M. Congressional Notification
V. Approval of the Office of the Secretary

I. Summary of the Final Rule

In July of 1996, the United States Department of Energy (``DOE'' or
``the Department'') issued a final rule that codified DOE's
``Procedures, Interpretations and Policies for Consideration of New or
Revised Energy Conservation Standards for Consumer Products'' at 10 CFR
part 430, subpart C, appendix A (``appendix A''). 61 FR 36974 (July 15,
1996) (``July 1996 Final Rule''). The July 1996 Final Rule acknowledged
that the guidance contained in appendix A would not be applicable to
every rulemaking and that the circumstances of a particular rulemaking
should dictate application of these generally applicable practices. 61
FR 36979.
On February 14, 2020, DOE published a final rule (``February 2020
Final Rule'') in the Federal Register that made significant revisions
to appendix A. 85 FR 8626. DOE also published a companion final rule on
August 19, 2020 (``August 2020 Final Rule''), that clarified how DOE
would conduct a comparative analysis across all trial standard levels
when determining whether a particular trial standard level was
economically justified. See 85 FR 50937. Contrary to the July 1996
Final Rule, the revisions made in the February 2020 Final Rule sought
to create a standardized rulemaking process that was binding on the
Department. 85 FR 8626, 8634. In creating this one-size-fits-all
approach, the February 2020 Final Rule and the August 2020 Final Rule
also added additional steps to the rulemaking process that are not
required by any applicable statute.
Subsequent events have caused DOE to reconsider the merits of a
one-size-fits-all rulemaking approach to establishing and amending
energy conservations standards and test procedures. Two of these events
are particularly salient. First, on October 30, 2020, a coalition of
non-governmental organizations filed suit under EPCA alleging that DOE
has failed to meet rulemaking deadlines for 25 different consumer
products and commercial equipment.\1\ On November 9, 2020, a coalition
of States filed a virtually identical lawsuit.\2\ In response to these
lawsuits, DOE has reconsidered whether the benefits of a one-size-fits-
all rulemaking approach outweigh the increased difficulty such an
approach poses in meeting DOE's statutory deadlines and obligations
under EPCA. As mentioned previously, the July 1996 Final Rule allowed
for ``case-specific deviations and modifications of the generally
applicable rule.'' \3\ This allowed DOE to tailor rulemaking procedures
to fit the specific circumstances of a particular rulemaking. For
example, under the July 1996 Final Rule, minor modifications to a test
procedure would not automatically result in a 180-day delay before DOE
could issue a notice of proposed energy conservation standards.
Eliminating these unnecessary delays would better enable DOE to clear
this backlog of missed rulemaking deadlines in a timely manner and meet
future obligations and deadlines under EPCA while not affecting the
ability of any interested person, including small entities, to
participate in DOE's rulemaking process. Further, the sooner new or
amended energy conservation standards eliminate less-efficient covered
products and equipment from the market, the

[[Page 70893]]

greater the resulting energy savings and environmental benefits.
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\1\ Natural Resources Defense Council v. DOE, Case No. 20-cv-
9127 (S.D.N.Y. 2020).
\2\ State of New York v. DOE, Case No. 20-cv-9362 (S.D.N.Y.
2020).
\3\ 61 FR 36974, 36979.
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Second, on January 20, 2021, the White House issued Executive Order
13990, ``Protecting Public Health and the Environment and Restoring
Science to Tackle the Climate Crisis.'' 86 FR 7037 (Jan. 25, 2021).
Section 1 of that Order lists a number of policies related to the
protection of public health and the environment, including reducing
greenhouse gas emissions and bolstering the Nation's resilience to
climate change. Id. at 86 FR 7037, 7041. Section 2 of the Order
instructs all agencies to review ``existing regulations, orders,
guidance documents, policies, and any other similar agency actions
(agency actions) promulgated, issued, or adopted between January 20,
2017, and January 20, 2021, that are or may be inconsistent with, or
present obstacles to, [these policies].'' Id. Agencies are then
directed, as appropriate and consistent with applicable law, to
consider suspending, revising, or rescinding these agency actions and
to immediately commence work to confront the climate crisis. Id. Under
that same section, for certain explicitly enumerated agency actions,
including the February 2020 and the August 2020 Final Rules, the Order
directs agencies to consider publishing for notice and comment a
proposed rule suspending, revising, or rescinding the agency action
within a specific time frame. Under this mandate, DOE is directed to
propose any major revisions to these two rules by March 2021, with any
remaining revisions to be proposed by June 2021. Id. at 86 FR 7038.
In light of these events, DOE has identified several aspects of the
February 2020 and the August 2020 Final Rules that present obstacles to
DOE's ability to expeditiously clear the backlog of missed rulemaking
deadlines while meeting future obligations under EPCA. In accordance
with E.O. 13990, DOE proposed major revisions to appendix A in a notice
of proposed rulemaking (NOPR) that was published on April 12, 2021
(``April 2021 NOPR''). 86 FR 18901. DOE proposed additional revisions
to appendix A in a second NOPR that was published on July 7, 2021
(``July 2021 NOPR''). 86 FR 35668. DOE is addressing the proposed
revisions from the April 2021 NOPR in this document. DOE will address
the additional revisions proposed in the July 2021 NOPR in a separate
final rule.
In this document, DOE is: (1) Restoring DOE's discretion to depart
from the general guidance in appendix A; (2) removing the recently-
added threshold for determining when the significant energy savings
criterion is met; (3) removing the recently-added requirement to
conduct a comparative analysis as part of DOE's analysis of economic
justification under the factors listed in 42 U.S.C. 6295(o)(2)(B)(i);
(4) reverting to DOE's 1996 guidance regarding completion of test
procedure rulemakings prior to issuance of a NOPR for an energy
conservation standards rulemaking; (5) clarifying that DOE may make
modifications to industry test procedure standards to comply with the
requirements of EPCA, as well as for certification, compliance, and
enforcement purposes; (6) reverting to DOE's prior practice on direct
final rules; and (7) clarifying that DOE will conduct negotiated
rulemakings in accordance with the Negotiated Rulemaking Act (``NRA''),
Public Law 104-320 (5 U.S.C. 561, et seq.). These revisions are
summarized in the following table.

List of Revisions in This Document
------------------------------------------------------------------------
Proposed revisions
Section in April 2021 NOPR Final revisions
------------------------------------------------------------------------
1. Objectives............... Revise language to Revise language to
be consistent with be consistent with
the newly proposed new Section 3;
Section 3. revise paragraph
(g) to specifically
reference consensus
recommendations
developed through
negotiated
rulemakings.
2. Scope.................... No revisions No revisions in this
proposed in this document.
document.
3. Mandatory Application of Replace with new Replace with new
the Process Rule. Section 3, Section 3,
``Application''. ``Application.''
4. Setting Priorities for No revisions No revisions in this
Rulemaking Activity. proposed in this document.
document.
5. Coverage Determination Eliminate the 180- Eliminate the 180-
Rulemakings. day period in day period in
paragraph (c) paragraph (c)
between between
finalization of DOE finalization of DOE
test procedures and test procedures and
issuance of a NOPR issuance of a NOPR
proposing new or proposing new or
amended energy amended energy
conservation conservation
standards. standards.
6. Process for Developing Eliminate paragraph Eliminate paragraph
Energy Conservation (b), ``Significant (b), ``Significant
Standards. Savings of Energy''. Savings of
Energy.''
7. Policies on Selection of Eliminate text in Eliminate text in
Standards. paragraph (e)(2)(i) paragraph (e)(2)(i)
requiring DOE to requiring DOE to
conduct a conduct a
comparative comparative
analysis when analysis when
determining whether determining whether
a proposed standard a proposed standard
level is level is
economically economically
justified. justified.
8. Test Procedures.......... Clarify in paragraph Clarify in paragraph
(c) that DOE may (c) that DOE may
revise consensus revise consensus
industry test industry test
procedure standards procedure standards
for compliance, for compliance,
certification, and certification, and
enforcement enforcement
purposes; eliminate purposes; revise
the 180-day period application of the
in paragraph (d) 180-day period in
between paragraph (d).
finalization of DOE
test procedures and
issuance of a NOPR
proposing new or
amended energy
conservation
standards.
9. ASHRAE Equipment......... No revisions No revisions in this
proposed in this document.
document.
10. Direct Final Rules...... Revise section to Revise section to
clarify that DOE clarify that DOE
will implement its will implement its
direct final rule direct final rule
authority on a case- authority on a case-
by-case basis. by-case basis.
11. Negotiated Rulemaking Eliminate section... Eliminate section.
Process.
12. Principles for No revisions No revisions in this
Distinguishing Between proposed in this document.
Effective and Compliance document.
Dates.
13. Principles for the No revisions No revisions in this
Conduct of the Engineering proposed in this document.
Analysis. document.

[[Page 70894]]

14. Principles for the Eliminate incorrect Eliminate incorrect
Analysis of Impacts on cross reference. cross reference.
Manufacturers.
15. Principles for the No revisions No revisions in this
Analysis of Impacts on proposed in this document.
Consumers. document.
16. Consideration of Non- No revisions No revisions in this
Regulatory Approaches. proposed in this document.
document.
17. Cross-Cutting Analytical No revisions No revisions in this
Assumptions. proposed in this document.
document.
------------------------------------------------------------------------
* As part of the revisions, sections and subsections have been
renumbered as required.

II. Authority and Background

A. Authority

Title III, Parts B \4\ and C \5\ of the Energy Policy and
Conservation Act, as amended, (``EPCA'' or ``the Act''), Public Law 94-
163 (42 U.S.C. 6291-6317, as codified), established the Energy
Conservation Program for Consumer Products and Certain Industrial
Equipment.\6\ Under EPCA, DOE's energy conservation program for covered
products consists essentially of four parts: (1) Testing; (2)
certification and enforcement procedures; (3) establishment of Federal
energy conservation standards; and (4) labeling. Subject to certain
criteria and conditions, DOE is required to develop test procedures to
measure the energy efficiency, energy use, or estimated annual
operating cost of each covered product and covered equipment during a
representative average use cycle or period of use. (42 U.S.C. 6293; 42
U.S.C. 6314) Manufacturers of covered products and covered equipment
must use the prescribed DOE test procedure when certifying to DOE that
their products and equipment comply with the applicable energy
conservation standards adopted under EPCA and when making any other
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c); 42 U.S.C. 6295(s); 42 U.S.C.
6314(a); and 42 U.S.C. 6316(a)) Similarly, DOE must use these test
procedures to determine whether the products comply with energy
conservation standards adopted pursuant to EPCA. (42 U.S.C. 6295(s); 42
U.S.C. 6316(a))
---------------------------------------------------------------------------

\4\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\5\ Part C was added by Public Law 95-619, Title IV, section
441(a). For editorial reasons, upon codification in the U.S. Code,
Part C was redesignated Part A-1.
\6\ All references to EPCA in this document refer to the statute
as amended through Energy Act of 2020, Public Law 116-260 (Dec. 27,
2020).
---------------------------------------------------------------------------

In addition, pursuant to EPCA, any new or amended energy
conservation standard for covered products (and at least certain types
of equipment) must be designed to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A); 42 U.S.C. 6316(a)) In determining
whether a standard is economically justified, EPCA requires DOE, to the
greatest extent practicable, to consider the following seven factors:
(1) The economic impact of the standard on the manufacturers and
consumers; (2) the savings in operating costs, throughout the estimated
average life of the products (i.e., life-cycle costs), compared with
any increase in the price of, or in the initial charges for, or
operating and maintaining expenses of, the products which are likely to
result from the imposition of the standard; (3) the total projected
amount of energy, or as applicable, water, savings likely to result
directly from the imposition of the standard; (4) any lessening of the
utility or the performance of the products likely to result from the
imposition of the standard; (5) the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from the imposition of the standard; (6) the need for
national energy and water conservation; and (7) other factors DOE finds
relevant. (42 U.S.C. 6295(o)(2)(B)(i)) Furthermore, the new or amended
standard must result in a significant conservation of energy (42 U.S.C.
6295(o)(3)(B); 42 U.S.C. 6313(a)(6); and 42 U.S.C. 6316(a)) and comply
with any other applicable statutory provisions.

B. Background

DOE conducted an effort between 1995 and 1996 to improve the
process it follows to develop energy conservation standards for covered
appliance products. As part of this effort, DOE reached out to many
different stakeholders, including manufacturers, energy-efficiency
advocates, trade associations, State agencies, utilities, and other
interested parties for input on the procedures, interpretations, and
policies used by DOE in considering whether to issue new or amended
energy conservation standards. This process resulted in publication of
the July 1996 Final Rule which codified these procedures,
interpretations, and policies in appendix A. The goal of the July 1996
Final Rule was to elaborate on the procedures, interpretations, and
policies that would guide the Department in establishing new or revised
energy conservation standards for consumer products. The rule was
issued without notice and comment under the Administrative Procedure
Act's (``APA'') exception for ``interpretative rules, general
statements of policy, or rules of agency organization, procedure, or
practice.'' (5 U.S.C. 553(b)(A))
On December 18, 2017, DOE issued a request for information
(``RFI'') on potential revisions to appendix A. 82 FR 59992. DOE
subsequently published a NOPR regarding appendix A in the Federal
Register on February 13, 2019. 84 FR 3910. On July 26, 2019, DOE
subsequently issued a notice of data availability (``NODA'') in the
Federal Register. 84 FR 36037 (``July 2019 NODA''). After considering
the comments it received DOE then published a final rule in the Federal
Register on February 14, 2020, which significantly revised appendix A.
85 FR 8626.
While DOE issued the July 1996 Final Rule without notice and
comment as an interpretative rule, general statement of policy, or rule
of agency organization, procedure, or practice, the February 2020 Final
Rule was issued with notice and comment. For several reasons, as stated
throughout the April 2021 NOPR and this document, DOE believes appendix
A is best described and utilized not as a legislative rule but instead
as generally applicable guidance that may guide, but not bind, the
Department's rulemaking process. The revisions finalized in this
document are intended to clarify this point. In accordance with
Executive Order 13990, DOE used a notice and comment process to revise
appendix A. 86 FR 7037. DOE held a public webinar for the April 2021
NOPR on April 23, 2021.

[[Page 70895]]

In response to the April 2021 NOPR and public webinar, DOE received
comments from the following parties:

Table of Commenters
------------------------------------------------------------------------
Acronym,
Commenter(s) Affiliation identifier
------------------------------------------------------------------------
A.O. Smith...................... Manufacturer...... A.O. Smith.
Air-Conditioning, Heating, and Manufacturer Trade AHRI.
Refrigeration Institute. Group.
Air-Conditioning, Heating, and Manufacturer Trade Joint Industry
Refrigeration Institute (AHRI), Groups. Commenters.
AMCA International (AMCA),
American Lighting Association
(ALA), Association of Home
Appliance Manufacturers (AHAM),
Consumer Technology Association
(CTA), Hearth, Patio & Barbecue
Association (HPBA), Heating,
Air-conditioning &
Refrigeration Distributors
International (HARDI),
Information Technology Industry
Council (ITI), International
Sign Association (ISA),
Manufactured Housing Institute
(MHI), National Association of
Manufacturers (NAM), National
Electrical Manufacturers
Association (NEMA), North
American Association of Food
Equipment Manufacturers
(NAFEM), Power Tool institute,
Inc. (PTI), and Plumbing
Manufacturers International
(PMI).
American Gas Association, Utility Trade AGA.
American Public Gas Group.
Association, Spire, Inc., and
Spire Missouri, Inc.
American Lighting Association... Manufacturer Trade ALA.
Group.
Americans for Prosperity........ Advocacy Group.... AFP.
Anonymous....................... Individual........
Anonymous....................... Individual........
Appliance Standards Awareness Advocacy Group.... Joint Advocacy
Project. Commenters.
(Joint Comments filed with the
American Council for an Energy-
Efficient Economy, Consumer
Federation of America, and
National Consumer Law Center).
Attorneys General of California, State, Local State Commenters.
Colorado, Connecticut, Governments.
Illinois, Maine, Maryland,
Michigan, Minnesota, Nevada,
New Jersey, New York, Oregon,
Pennsylvania, Vermont,
Washington, the Commonwealth of
Massachusetts, the District of
Columbia, and the City of New
York.
Bradford White Corporation...... Manufacturer...... BWC.
California Energy Commission.... State............. CEC.
California Investor-Owned Utilities......... Cal-IOUs.
Utilities.
John Cannon..................... Individual........
Carrier Corporation............. Manufacturer...... Carrier.
Crown Boiler Company............ Manufacturer...... Crown Boiler.
Edison Electric Institute....... Utility Trade EEI.
Group.
GE Appliances................... Manufacturer...... GEA.
Goodman Manufacturing Company, Manufacturer...... Goodman.
L.P.
Grundfos Americas Corporation... Manufacturer...... Grundfos.
Ahmed Ahmed Hamdi............... Individual........
Hoshizaki America, Inc.......... Manufacturer...... Hoshizaki.
Hussmann Corporation............ Manufacturer...... Hussmann.
Hydraulic Institute............. Manufacturer Trade HI.
Group.
Hydronic Industry Alliance-- Manufacturer Trade HIA.
Commercial. Group.
Institute for Policy Integrity-- Academic IPR.
New York University School of Institution.
Law.
Lennox International............ Manufacturer...... Lennox.
Lutron.......................... Manufacturer...... Lutron.
Manufactured Housing Institute.. Manufacturer Trade MHI.
Group.
New Yorker Boiler Company, Inc.. Manufacturer...... New Yorker Boiler.
North American Association of Manufacturer Trade NAFEM.
Food Equipment Manufacturers. Group.
National Propane Gas Association Utility Trade NPGA.
Group.
Natural Resources Defense Advocacy Groups... Joint
Council, Earthjustice & Sierra Environmentalist
Club. Commenters.
Nortek Global HVAC, LLC......... Manufacturer...... Nortek.
Northwest Power and Conservation Advocacy Group.... NPCC.
Council.
Northwest Energy Efficiency Advocacy Group.... NEEA.
Alliance.
Signify......................... Manufacturer...... Signify.
Small Business Administration Federal Government SBA Office of
(SBA) Office of Advocacy. Agency. Advocacy.
Southern Company................ Utility........... Southern.
Sullivan-Palatek, Inc........... Manufacturer...... Sullivan-Palatek.
Sara Taylor..................... Individual........
Trane Technologies.............. Manufacturer...... Trane.
Unico, Inc...................... Manufacturer...... Unico.
U.S. Boiler Company............. Manufacturer...... U.S. Boiler.
Weil-McLain Company............. Manufacturer...... Weil-McLain.
Westinghouse Lighting Manufacturer...... Westinghouse.
Corporation.
Whirlpool Corporation........... Manufacturer...... Whirlpool.
Zero Zone, Inc.................. Manufacturer...... Zero Zone.
------------------------------------------------------------------------

[[Page 70896]]

III. Discussion of Specific Revisions to Appendix A

A. Restoring the Department's Discretion To Depart From the General
Guidance in Appendix A

One of the most significant changes made to appendix A in the
February 2020 Final Rule was to turn what had been guidance on usual
practices for issuing new or amended energy conservation standards and
test procedures into binding requirements. In contrast, the July 1996
Final Rule contained procedures, interpretations, and policies that DOE
believed would be appropriate for general use in conducting energy
conservation standard and test procedure rulemakings. However, in the
July 1996 Final Rule, DOE also acknowledged the possibility that the
usual practices would not be appropriate for every rulemaking and that
the circumstances of a particular rulemaking should dictate application
of these generally applicable practices, subject to public notice
explaining any such deviations. 61 FR 36974, 36979.
In making appendix A binding, DOE made a policy determination at
the time it issued the February 2020 Final Rule that ``promot[ing] a
rulemaking environment that is both predictable and consistent''
outweighed the need for ``flexibility to fit the appropriate process to
the appliance standard or test procedure at issue.'' February 2020
Final Rule, 85 FR 8626, 8633-8634. Additionally, in response to
comments that mandatory application of appendix A could conflict with
DOE's statutory obligations under EPCA (e.g., rulemaking deadlines),
DOE stated its policy view that the February 2020 Final Rule had been
drafted to closely follow and implement EPCA. Id. at 85 FR 8634.
As noted in its April 2021 proposal, DOE is reconsidering its
policy judgment in weighing the predictability of a one-size-fits-all
approach against the negative effects that a mandatory application of
appendix A would have on DOE's ability to meet the statutory deadlines
established under EPCA and other applicable requirements. Under EPCA,
DOE is required to review energy conservation standards for covered
products and equipment at least once every six years to determine
whether a more-stringent standard would result in significant
conservation of energy and is technologically feasible and economically
justified. (42 U.S.C. 6295(m)(1); 42 U.S.C. 6313(a)(6)(C); 42 U.S.C.
6316(a)) Similarly, DOE is also required to review test procedures for
covered products and equipment at least once every seven years to
determine whether improvements can be made. (42 U.S.C. 6293(b)(1); 42
U.S.C. 6314(a)(1)(A)) DOE currently has energy conservation standards
and test procedures in place for more than 60 categories of covered
products and equipment and is typically working on anywhere from 50 to
100 rulemakings (for both energy conservation standards and test
procedures) at any one time. Consequently, DOE has often been unable to
meet its rulemaking deadlines, and with the February 2020 Final Rule
mandating procedural steps that make the rulemaking process lengthier
than EPCA requires, implementation of this binding process would make
it even more difficult to clear the existing backlog of missed
rulemaking deadlines in a timely manner and meet future rulemaking
deadlines.
Among the steps that EPCA does not require--but the February 2020
Final Rule does--is for DOE to issue rulemaking documents in advance of
a NOPR. The February 2020 Final Rule mandates use of an early
assessment RFI and either an advanced notice of proposed rulemaking
(``ANOPR'') or a framework document with a preliminary analysis. While
DOE recognizes the importance of gathering early stakeholder input and
has proposed to maintain opportunities for pre-NOPR input in the July
2021 NOPR,\7\ such input may not be necessary or useful in all cases.
For instance, EPCA requires DOE to revisit a determination that
standards do not need to be amended within three years. (42 U.S.C.
6295(m)(3)(B)) In such cases, particularly with respect to covered
products and equipment that have gone through multiple rounds of
rulemakings and for which there has been negligible change to the
market and relevant technology, a pre-NOPR publication may provide
limited value. Thus, DOE may be able to directly issue a notice of
proposed determination that standards do not need to be amended.
Stakeholders would still have the opportunity to comment on the
proposed determination. And, in the event that DOE receives new
information in response to the notice of proposed determination, DOE
can issue supplemental rulemaking documents before proceeding to a
final rule or determination.
---------------------------------------------------------------------------

\7\ 86 FR 35668, 35669.
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The February 2020 Final Rule also required that DOE finalize test
procedure rulemakings establishing methodologies used to evaluate
proposed energy conservation standards at least 180 days prior to
publication of a NOPR proposing new or amended energy conservation
standards. DOE stated that this requirement would allow stakeholders to
provide more effective comments on the proposed energy conservation
standards. 85 FR 8626, 8676. DOE acknowledges the importance of
established methodologies for measuring energy use and energy
efficiency when evaluating potential amendments to the energy
conservation standards. Whether a potential energy conservation
standard is technologically feasible and economically justified will be
dependent, in part, on how the energy use of a product is measured. As
discussed in section III.E of this document, DOE is requiring that new
test procedures and amended test procedures that impact measured energy
use or efficiency be finalized at least 180 days prior to the close of
the comment period for: (i) A NOPR proposing new or amended energy
conservation standards; or (ii) a notice of proposed determination that
standards do not need to be amended. However, this 180-day period may
not always be necessary. For example, DOE will typically use an
industry test procedure as the basis for a new DOE test procedure. If
DOE adopts the industry test procedure without modification,
stakeholders should already be familiar with the test procedure. In
such cases, requiring the new test procedure to be finalized 180 days
prior to the close of the comment period for a NOPR proposing new
energy conservation standards would offer little benefit to
stakeholders while delaying DOE's promulgation of new energy
conservation standards.
These examples illustrate what was clearly understood in the July
1996 Final Rule--that the procedures, interpretations, and policies
laid out in appendix A that are generally applicable to DOE's
rulemaking program should be determined on a case-by-case basis based
on the individual circumstances of a given rulemaking. 61 FR 36974,
36979. Accordingly, in the April 2021 NOPR, the Department proposed
reverting back to the original, non-binding status of appendix A. DOE
requested comments, information, and data on whether appendix A should
be non-binding or, alternatively, whether the rule should remain
binding but with revised provisions.
In addition, consistent with its proposal to revert appendix A back
to non-binding guidance, DOE's April 2021 NOPR also proposed clarifying
that appendix A does not create legally enforceable rights. DOE does
not intend for departures from the generally

[[Page 70897]]

applicable guidance contained in appendix A to serve as the basis for
potential procedural legal challenges. DOE's proposed clarification,
like the general approach contained in the July 1996 Final Rule, would
not impact the ability of a party to raise a challenge regarding the
substantive merits of a given rulemaking or the procedural steps
delineated under EPCA or the APA. (See 42 U.S.C. 6306 (applying
judicial review to EPCA's consumer product provisions) and 42 U.S.C.
6316(a)-(b) (extending the application of 42 U.S.C. 6306 to commercial
and industrial equipment)) DOE sought comment on this proposed
clarification as well. 86 FR 18901, 18905.
Comments in Favor of DOE's Proposal To Restore the Non-Binding Nature
of Appendix A
A number of commenters favored DOE's proposed approach. For
example, the Joint Environmentalist Commenters reasoned that it is
impossible for DOE to create a binding, one-size-fits-all procedure
that would adequately address all the unique situations and
requirements of DOE's myriad rulemakings. In their view, neither the
Administrative Procedure Act (APA) nor EPCA compel such a rigid
approach. They argued that the rulemaking process created by the
February 2020 Final Rule is more onerous and more time consuming than
the one enacted by Congress or adopted in the July 1996 Final Rule.
These commenters argued that DOE cannot afford to waste time in
addressing its statutory mandate and rulemaking backlog, and they
supported DOE's attempt to restore flexibility to appendix A by
returning it to non-binding guidance, thereby allowing DOE to respond
appropriately to the unique circumstances of a particular rulemaking.
(Joint Environmentalist Commenters, No. 31 at p. 2) \8\
---------------------------------------------------------------------------

\8\ The parenthetical reference provides a reference for
information located in the docket of this rulemaking. (Docket No.
EERE-2021-BT-STD-0003, which is maintained at <a href="http://www.regulations.gov">www.regulations.gov</a>).
The references are arranged as follows: (Commenter name, comment
docket ID number, page of that document).
---------------------------------------------------------------------------

Similarly, the CA IOUs urged DOE to return appendix A to its
previous status as non-binding guidance, which they argued would
restore predictability and certainty to the rulemaking process. These
commenters argued that each DOE rulemaking is unique, making the
inflexible blanket approach followed in the February 2020 Final Rule
one that could result in missed opportunities for increased energy and
water efficiency and delay DOE's timely completion of its statutory
obligations (including elimination of the current backlog of
rulemakings). Furthermore, the CA IOUs argued that a binding appendix A
opened DOE up to additional avenues of legal challenge, first on the
basis of appendix A itself and then on the potentially conflicting
requirements of appendix A and EPCA. They suggested that a binding
appendix A increases uncertainty and reduces the ability for all
parties to plan for the future, so they encouraged DOE to expand its
reasoning for this rulemaking action to clarify DOE's position for
future Administrations. However, in the interest of transparency, the
CA IOUs also recommended that DOE should alert stakeholders and
document when the agency finds it necessary to deviate from the
guidance embodied in appendix A; however, the commenters stated that
even this provision should be non-binding. (CA IOUs, No. 34 at pp. 1,
2, 6)
The CEC also agreed with DOE's proposal to return appendix A to a
non-binding status as a means to enable DOE to retain the flexibility
to adapt to the unique circumstances of each rulemaking. It argued
generally that unless DOE adopted its proposed approach, following the
February 2020 Final Rule would lead to worse air pollution, higher
greenhouse gas emissions, unnecessary consumption of water, less-
efficient products, and higher energy bills. It further argued that
DOE's proposal would ensure necessary flexibility while providing the
regulated community with sufficient certainty, encouraging innovation,
saving consumers money, improving efficiency, making progress on the
backlog of missed deadline rulemakings, and limiting unnecessary
greenhouse gas emissions. (CEC, No. 35 at pp. 1-2, 11)
Furthermore, the CEC asserted that the self-imposed administrative
barriers in the February 2020 Final Rule would lead to continued
delays, market uncertainty, lost energy savings, and harm to consumers.
Although the CEC encouraged DOE to be as transparent, consistent, and
predictable as possible in its rulemakings, it cautioned that strict
adherence to all of the February 2020 Final Rule's required elements
will lead to further delay regarding already overdue energy
conservation standards and test procedure rulemakings. It reasoned that
a mandatory appendix A would provide additional opportunities for
procedural challenges, which would create additional costs and
unnecessary market uncertainties that would limit innovation and
undermine achievable energy savings. In its view, EPCA's mandatory
procedures regarding the setting of standards and test procedures
control, and to the extent that any appendix A provisions conflict with
EPCA, those regulatory requirements would be unlawful. For all these
reasons, the CEC stated that appendix A should be returned to guidance
status. (CEC, No. 35 at p. 3)
The Joint Advocacy Commenters also favored returning appendix A to
general guidance and restoring DOE's discretion to depart from that
guidance in appropriate cases. These commenters recognized the
importance of having a predictable process for industry stakeholders
and encouraged DOE to strive to adhere to the procedures set forth in
appendix A, while stressing the need for DOE to have the flexibility to
adjust the process to cover the range of issues which may arise in
individual rulemakings. According to the Joint Advocacy Commenters,
departing from appendix A's general practice may sometimes be necessary
to avoid uncertainty for manufacturers and/or to avoid unnecessary
delays. As an example, they noted how appendix A details the analytical
practices DOE uses in rulemaking and argued that DOE should not need to
go through rulemaking to change appendix A each time it wishes to
modify its analytical processes to reflect best practices. They also
expressed concern that the February 2020 Final Rule's binding
provisions could conflict with statutory requirements and increase
litigation solely on the issue of whether DOE has followed the
prescribed procedures. For these reasons, the commenters argued that
applying these guidelines to a specific rulemaking should be determined
on a case-by-case basis and that appendix A should be returned to its
original, non-binding status. (Joint Advocacy Commenters, No. 38 at pp.
1-2; Joint Advocacy Commenters (Appendix I), No. 38 at pp. 1, 2)
The State Commenters argued that application of appendix A should
be determined on a case-by-case basis so that DOE is accorded the
latitude and discretion to pursue the most appropriate approach to
gathering, analyzing, and synthesizing stakeholder input for different
standards. In their view, this procedural flexibility will help ensure
that DOE is able to fulfill its statutory mandates as efficiently as
possible and with minimal delay and litigation risk. (State Commenters,
No. 29 at p. 8) The commenters also noted that making appendix A
binding on all rulemakings--including where doing so conflicts with
EPCA--exposes DOE to increased litigation that would further delay
promulgation of final standards

[[Page 70898]]

on statutorily mandated timelines. (State Commenters, No. 29 at p. 8)
NPCC and NEEA supported DOE's April 2021 proposal, noting that the
current version of appendix A contains unnecessary obstacles to DOE's
ability to meet its obligations under EPCA. (NPCC, No. 12 at pp. 1-2;
NEEA, No. 43 at p. 2) NEEA also asserted that many of the changes in
the 2020 Final Rule were unclear and confusing and that they
handicapped DOE's ability to effectively and efficiently adopt
standards and test procedures so as to achieve maximum economic and
environmental benefits for the Nation--thereby making it more difficult
for DOE to meet rulemaking deadlines, and resulting in less national
energy savings. (NEEA, No. 43 at pp. 1-2) NPCC supported DOE's effort
to revert back to non-binding guidance and to restore the flexibility
that DOE once had under the 1996 version of appendix A. (NPCC, No. 12
at p. 3) Similarly, NEEA supported DOE's ability to address each
rulemaking individually, but in furtherance of transparency, it urged
DOE to clearly state in a particular rulemaking when it intended to
depart from the procedures outlined in appendix A, along with the
reasons for that departure. (NEEA, No. 43 at p. 2)
Comments Opposing DOE's Proposal
DOE also received a number of comments opposing its proposed
removal of the mandatory application of appendix A. In AHRI's and BWC's
views, appendix A should remain mandatory so as to provide certainty,
transparency, and consistency in the rulemaking process DOE uses to
implement its energy conservation standards program. (AHRI, No. 25 at
p. 1-2; BWC, No. 24 at p. 1) AHRI also asserted that the Department's
proposal fails to address or acknowledge DOE's stated reason for making
the February 2020 Final Rule binding--namely that of promoting a
predictable and consistent rulemaking environment where all
stakeholders know what to expect during the rulemaking process--and
DOE's proposal does not provide any explanation as to why the record
before the agency no longer warrants ensuring that it provide a
predictable and consistent rulemaking process. (AHRI, No. 25 at p. 7)
AFP also argued that appendix A should remain binding. It dismissed
DOE's stated reasons for making appendix A non-binding--namely to aid
in meeting deadlines and to allow it to meet unspecified ``statutory
obligations''--noting that with over two decades of rulemakings, DOE
has rarely met its statutory deadlines even when appendix A was non-
binding. In AFP's view, DOE offered no justification in its proposal as
to why this situation would change now. (AFP, No. 36 at p. 2) AFP
asserted that the three examples offered by DOE in favor of making
appendix A non-binding were flawed. It argued that with respect to
DOE's ability to meet its statutory deadlines and ``other applicable
requirements,'' DOE offered no explanation as to what comprised the
latter. (AFP, No. 36 at pp. 2-3) It also argued that although DOE
stated that changes or additions to EPCA's procedural requirements may
affect DOE's ability to meet the relevant rulemaking deadlines, DOE
failed to show how a non-binding appendix A will either help in meeting
these statutory requirements or what will be different from DOE's
historic practices. AFP offered similar criticisms with respect to
DOE's statements regarding how the mandatory application of appendix
A's requirements for early assessment RFIs and ANOPRs may affect DOE's
ability to meet statutory deadlines and how having a binding appendix A
would also make it more difficult to meet those statutory obligations.
(AFP, No. 36 at pp. 2-3)
AFP also referenced DOE's statements to Congress regarding the
Department's ability to satisfy the requisite statutory deadlines, in
which DOE explained that the Appliance Standards Program has
historically had difficulties in meeting its statutorily-required
rulemaking obligations, including when appendix A was non-binding.
(AFP, No. 36 at p. 3) The commenter asserted that the proposal did not
explain how making appendix A non-binding will yield results different
from the past, and that DOE should hold itself accountable for
complying with its own procedures to ensure that the public will have
confidence in the transparency and fairness of DOE's rulemaking
process. (AFP, No. 36 at pp. 3, 5)
Commenters Favoring a Mandatory Appendix A Coupled With Well-Defined
Exceptions
Additionally, there were also commenters who favored the use of
limited, well-defined exceptions to appendix A while maintaining its
overall mandatory approach. A number of manufacturers favored an
approach that would retain the mandatory nature of appendix A (along
with the certainty and predictability it offered), while building in
additional flexibility for DOE, and objected to returning appendix A to
its prior status as guidance. (Carrier, No. 26 at pp. 1-2; Nortek, No.
19 at p. 2; GEA, No. 20 at pp. 2-3; Lennox, No. 18 at p. 2; A.O. Smith,
No. 27 at p. 2; Goodman, No. 22 at p. 2; Trane, No. 23 at p. 2) Nortek
and GEA added that if Appendix A becomes non-binding, DOE should add
both a mandatory public notice and comment provision that must be
followed whenever the agency intends to deviate from appendix A and a
rule-specific explanation for the deviation, followed by an opportunity
for public comment before the agency proceeds with such deviation.
(Nortek, No. 19 at p. 2; GEA, No. 20 at pp. 2-3; see also Goodman, No.
22 at p. 2 (asserting that DOE should explain its deviation)) Carrier,
Lennox, A.O. Smith, and Trane offered that if DOE required more
flexibility (such as making more expeditious, non-material, technical
adjustments to test procedures), DOE should tailor those provisions of
appendix A where that added flexibility is needed, rather than making
Appendix A non-binding. (Carrier, No. 26 at p. 4; Lennox, No. 18 at p.
2; A.O. Smith, No. 27 at p. 3; Trane, No. 23 at p. 20). A.O. Smith
suggested that DOE should propose to add a clear ``exception clause''
that would permit DOE to deviate from appendix A when certain criteria
are met, namely: (1) Consensus agreements; (2) negotiated rulemakings;
and (3) test procedure rulemakings that are addressing clarifications
necessary to provide clarity to the market, reduce uncertainty, and
provide a level playing field. (A.O. Smith, No. 27 at p. 2) In A.O.
Smith's view, this limited exception would recognize those
circumstances where deviations from appendix A are necessary and the
expediting of the rulemaking process is reasonable. (A.O. Smith, No. 27
at pp. 2-3) Carrier suggested that DOE should retain its current early
assessment requirement (i.e., that an early assessment be conducted
prior to the issuance of a standards NOPR) but that the current rule be
modified to permit DOE the ability to use the most efficient early
assessment method available. (Carrier, No. 26 at p. 1) The commenter
offered a similar approach with respect to the current 180-day buffer
period between the finalizing of a test procedure rule and the proposal
for new or amended energy conservation standards. (Carrier, No. 26 at
p. 2)
AGA objected to DOE's proposal to make appendix A non-binding and
noted that because the 1996 version of appendix A had not been binding
on DOE, it held little value. The commenter stated that in 2016, DOE
frequently ignored appendix A, and its non-binding nature effectively
conflicted with the need for an orderly and predictable regulatory
process. (AGA,

[[Page 70899]]

No. 33 at pp. 3-4) Reversing the February 2020 Final Rule's mandatory
nature would, in its view, be a serious mistake in light of AGA's past
experience with having a non-binding version of appendix A in place.
(AGA, No. 33 at p. 4) AGA argued that concerns over the rigidity of the
February 2020 Final Rule--which AGA acknowledged to be the case with
respect to some requirements--can be addressed through the revision of
those requirements or by providing exceptions in appropriate
circumstances, all without resorting to making appendix A non-binding.
(AGA, No. 33 at pp. 4-5)
NPGA stated that while DOE's April 2021 NOPR has identified a
number of rulemaking scenarios where different procedures may be
beneficial, the agency's ability to make unilateral decisions about
when and how to implement different rulemaking procedures lacks
transparency. (NPGA, No. 15 at p. 2) It stressed the importance of
getting stakeholder input regarding the potential feasibility and
energy savings of rulemaking actions as soon in the process as
possible. For that reason, NPGA supported the continued use of the
``early look'' provisions to solicit public comments on new regulatory
actions. However, it agreed with DOE that different rulemaking
approaches may be better suited in some cases for soliciting
stakeholder input, so in the alternative, NPGA suggested that DOE
should propose a new structure or minimum requirements that must be
satisfied to justify an agency decision to deviate from appendix A and
seek stakeholder information in response. (NPGA, No. 15 at pp. 2, 3)
NPGA also argued that businesses need regulatory predictability and
that DOE's proposal to largely operate on a case-by-case basis would
make it difficult for manufacturers to have confidence in such
rulemakings. It urged DOE to prepare and finalize regulations in an
orderly fashion with a fair opportunity for all stakeholders to share
information with the agency. (NPGA, No. 15 at p. 3)
Crown Boiler (along with fellow boiler manufacturers U.S. Boiler
and New Yorker Boiler who both filed nearly identical responses)
opposed DOE's proposed change to make appendix A non-binding. Although
Crown Boiler acknowledged that in some cases it may make sense for DOE
to have flexibility in adapting the rulemaking process to different
situations, the commenter asserted that when DOE did have such
discretion in the past, the Department abused it. Crown Boiler argued
that where deviation from appendix A is necessary, DOE should be
required to justify such deviation in writing after soliciting
stakeholder input. If DOE is deviating frequently from appendix A,
Crown Boiler stated that further amendments to appendix A may be
required, but the solution should not be to scrap the binding nature of
the process. (Crown Boiler, No. 10 at pp. 2-3; U.S. Boiler, No. 11 at
p. 3; and New Yorker Boiler, No. 13 at pp. 2-3)
ALA urged DOE to retain the binding aspects of appendix A but
recognized that a one-size-fits-all approach may not always be
practical. It argued that retaining the binding aspects of the February
2020 Final Rule will allow DOE to meet its statutory obligations and
eliminate time-wasting negotiations on process and procedures. (ALA,
No. 28 at p. 2) ALA suggested that if appendix A becomes non-binding,
DOE should ensure consistency such as through applying at least a 180-
day period between finalizing a test procedure and proposing standards
when major changes affecting energy consumption measurements are at
issue, although the commenter concluded that a shorter time frame may
be warranted for changes that do not impact measured energy
performance. In its view, this change will ensure the best outcome in
setting appropriate standards and reduce undue burden--particularly on
small business entities who have limited resources with which to fully
participate in DOE's rulemakings. (ALA, No. 28 at 2)
Lutron stated that it understands DOE's desire to increase
flexibility and improve efficiency by restoring DOE's discretion to
depart from appendix A's general guidance. It did not oppose such
changes as a general matter, but the company argued that certain
aspects should remain mandatory, specifically: (1) Test procedures must
be finalized before energy conservation standards are proposed; (2) New
test procedures or test procedure amendments that impact measured
energy must have an adequate lead time between finalization of that
test procedure and a new or amended standards proposal; and (3) There
should be some form of stakeholder engagement before issuance of a
notice of proposed rulemaking for energy conservation standards.
(Lutron, No. 16 at p. 2) Lutron suggested that DOE should revert to the
language in section 14(a) of the July 1996 Final Rule, which required
DOE to make a finding that it is necessary and appropriate to deviate
from the procedure specified in appendix A, to explain why, and to
provide interested parties an opportunity to comment. The commenter
also argued that DOE should clarify that any such deviations will be
rule-specific and done on a case-by-case basis, rather than being
broadly applicable. (Lutron, No. 16 at p. 2)
Both Grundfos and HI disagreed with DOE's proposal to return
appendix A to guidance and noted that manufacturers are held to the
strict requirements of the regulations, so DOE should likewise be
expected to define a clear and consistent method for how it intends to
manage its process to create/update those regulations, thereby
providing stakeholders with needed predictability and consistency--as
well as a means of enforcing those provisions through legally
enforceable rights. They did not favor a case-by-case approach and
stressed that such an approach would be at odds with the need for
consistency, predictability, and transparency in DOE's regulatory
process. However, these commenters also offered a middle ground,
suggesting that appendix A should be binding, but with clear,
thoughtful, and well-constructed flexibility to ensure DOE can meet the
applicable requirements of EPCA. (Grundfos, No. 37 at pp. 1, 2; HI, No.
42 at pp. 1, 2)
The SBA Office of Advocacy stated that appendix A should remain
binding while allowing for exceptions in certain instances. (SBA Office
of Advocacy, No. 14 at p. 4) It stated that, among other things,
without clear-cut processes for how the agency will promulgate
standards, small businesses are not able to participate meaningfully in
commenting and are not able to provide the types of substantive
technical comments necessary to determine whether a particular test
procedure is feasible. (SBA Office of Advocacy, No. 14 at p. 4)
NAFEM opposed restoring DOE's discretion to depart from appendix
A's general provisions and asserted that if DOE is concerned about
unnecessary delays, the Department could amend the rule by including
the option of using a NODA for early assessment instead of relegating
the whole appendix A to being optional guidance. (NAFEM, No. 30 at p.
4) NAFEM added that the April 2021 NOPR makes clear that DOE is seeking
additional insulation from having to follow any rule or having any
provisions that would impinge on its unbridled discretion by removing
any legal impediment to its actions. (NAFEM, No. 30 at p. 4) In NAFEM's
view, removing accountability and allowing for unlimited discretion
will not provide economic stability or efficiency in the EPCA
rulemaking process. (NAFEM, No. 30 at p. 4)
The Joint Industry Commenters also strongly opposed DOE's proposal
to eliminate the mandatory nature of the

[[Page 70900]]

February 2020 Final Rule. (Joint Industry Commenters, No. 40 at p. 4)
They suggested instead that DOE should ensure the rule is tailored to
its needs and provides the needed flexibility such that the agency can
follow it regularly. (Joint Industry Commenters, No. 40 at p. 5). If
DOE reverts back to a non-binding version of appendix A, the Joint
Industry Commenters suggested DOE consider adding the following: (1)
Provide parties with notice and explanation of why a deviation from
appendix A is necessary and appropriate; (2) clarify that deviations
can only be established on a case-by-case basis; (3) provide
stakeholders with the opportunity to comment on the need for the
deviation; and (4) maintain the mandatory nature of the rule for
certain provisions, including: (a) A requirement to finalize test
procedures before issuing proposed energy conservation standards with a
180-day lead-in period for new test procedures or amended test
procedures that impact measured energy use or efficiency, and (b) an
opportunity for early stakeholder input prior to issuance of proposed
energy conservation standards. (Joint Industry Commenters, No. 40 at
pp. 6-7)
DOE's Response to Comments
DOE first notes that the majority of commenters, both in support of
and against restoring the Department's discretion to depart from the
general guidance in Appendix A, have noted the merits of providing DOE
with some measure of flexibility in its rulemaking processes. (See,
e.g., Carrier, No. 26 at pp. 1-2 (favoring a more flexible application
of the procedures in appendix A); Nortek, No. 19 at p. 2 (suggesting
DOE provide rule-specific explanations when deviations are needed);
A.O. Smith, No. 27 at p. 3 (preferring a binding process with
reasonable exceptions over the current rigid approach); AGA, No. 33 at
pp. 4-5 (noting that the rigidity imposed by the current requirements
can be mitigated by providing for exceptions in certain circumstances);
State Commenters, No. 29 at p. 8 (noting that procedural flexibility
will help ensure that DOE is able to fulfill its statutory mandates as
efficiently as possible with minimal delay and litigation risk); Joint
Environmentalist Commenters, No. 31 at p. 2 (discussing the importance
of allowing DOE to respond appropriately to the unique circumstances of
a particular rulemaking)) Where commenters differ is on how to
implement this flexibility. Some commenters, such as the Joint
Environmentalist Commenters, support making appendix A non-binding to
allow DOE the necessary flexibility to respond to the unique
circumstances of a particular rulemaking, while other commenters, such
as the Joint Industry Commenters, support retaining the current,
binding nature of appendix A with modifications to ensure procedures
are tailored to DOE's needs and provide the needed flexibility such
that DOE can follow it regularly. (Joint Environmentalist Commenters,
No. 31 at p. 2; Joint Industry Commenters, No. 40 at p. 5)
After carefully considering these comments, DOE is finalizing the
proposal from the April 2021 to revert appendix A back to its original
status as non-binding guidance. That being said, DOE recognizes the
merits in both approaches and believes the revisions to appendix A
finalized in this document represent the best combination of these two
approaches. Accordingly, DOE is also modifying appendix A to reduce the
need for departures from the generally-applicable guidance by
accounting for specific circumstances surrounding a rulemaking. For
example, in section III.E of this document, DOE is implementing
guidance on when a 180-day period between finalization of a test
procedure and the end of the comment period for an associated standards
proposal is warranted. These changes will result in fewer departures
from the procedures laid out in appendix A. However, as noted
previously, DOE currently has energy conservation standards and test
procedures in place for more than 60 categories of covered products and
equipment and is typically working on anywhere from 50 to 100
rulemakings. Further these covered products and equipment encompass a
wide variety of industries. For certain covered products and equipment,
such as commercial package air conditioning and heat pumps, there are
established trade organizations that represent a majority of
manufacturers and that are able to compile comprehensive datasets.
External power supplies, on the other hand, are used in a wide range of
products and do not fall neatly into a single trade organization. As a
result, DOE may need to tailor its rulemaking approach to account for
the lack of consolidated information for a given covered product. This
is just one example of how DOE has had to adapt its rulemaking process
due to varying circumstances across covered products/equipment.
Consequently, it is simply not feasible to anticipate every instance of
when flexibility or an exception to the generally applicable procedures
of appendix A would be warranted for the more than 60 categories of
covered products and equipment that DOE regulates. As such, in addition
to the specific instances where DOE is incorporating flexibility into
appendix A, DOE believes it is imperative that the Department have the
discretion to depart from the generally-applicable guidance in appendix
A.
Several commenters expressed concern that reverting to the prior,
longstanding use of appendix A as non-binding guidance would reduce
certainty, transparency, and consistency in the rulemaking process DOE
uses to implement its Appliance Standards Program. (See, e.g., AHRI,
No. 25 at p. 1-2; BWC, No. 24 at p. 1) NAFEM went so far as to state
that a non-binding appendix A would allow for unbridled discretion in
the rulemaking process by removing any legal impediment to DOE's
actions. (NAFEM, No. 30 at p. 4) In response, DOE notes that reverting
appendix A to non-binding guidance has no effect on the procedures that
are already required under EPCA. DOE will continue to follow those
statutory requirements and strive to continue to meet the related
deadlines that EPCA prescribes. For example, EPCA requires that a test
procedure or standards proposal be published for public comment, that
comment periods be of specified minimum durations, and that notice of
determinations be subject to notice and comment before DOE publishes a
final determination not to amend a given set of standards for covered
products and equipment. (See 42 U.S.C. 6293(b)(2) (prescribing minimum
comment period for test procedure proposed rulemakings); 42 U.S.C.
6295(m)(2) (prescribing minimum comment period for proposed
determinations); and 42 U.S.C. 6295(p)(2) (prescribing minimum comment
period for standards proposed rulemakings)) Further, DOE will continue
to ensure new or amended energy conservation standards and test
procedures meet applicable statutory criteria in EPCA (e.g., standards
result in the maximum improvement in energy efficiency that is
technologically feasible and economically justified). Taken together,
all of these requirements establish a consistent, predictable
rulemaking process. NAFEM's concerns about unbridled discretion and a
lack of any legal impediment to DOE's actions are unfounded. As
discussed above, EPCA restrains DOE's discretion in several areas and
specifies a more detailed rulemaking process than that laid out in the
Administrative Procedure Act.
As for comments regarding the transparency of DOE's rulemaking

[[Page 70901]]

process, DOE notes that appendix A is an agency construction--a
provision that was developed not only to address how DOE will conduct
energy conservation standards and test procedure rulemakings but also
to provide transparency to DOE's rulemaking process. As stated
throughout this rulemaking, DOE is making appendix A non-binding in
recognition of the fact that DOE should be able to tailor its
rulemaking process to best fit the unique circumstances of a particular
rulemaking, not to reduce transparency in its rulemaking process. That
being said, DOE recognizes that deviations from appendix A without
notice or explanation are not conducive to a transparent rulemaking
process. Accordingly, DOE is modifying its proposed approach from the
April 2021 NOPR to more closely match the original appendix A by
providing the public with notice and an explanation of any deviations
to the generally applicable guidance of appendix A. These deviations
will be narrowly tailored to the individual rulemaking at issue and
will not be applied on an across-the-board basis.
In response to those commenters who criticized DOE's proposal and
noted the Department's past inability to meet statutory deadlines even
under a non-binding appendix A, DOE acknowledges the difficulties it
has had in meeting these requirements in the past. DOE will continue to
strive to meet these deadlines, and the removal of the mandatory
provisions imposed by the 2020 February Final Rule (which tended to
lengthen the rulemaking process) will provide DOE with a greater chance
of success in doing so. Reserving this discretionary flexibility will
aid in DOE's ability to focus its various resources in meeting the
deadlines imposed under EPCA (or any other potential deadlines, such as
those imposed pursuant to court order). Furthermore, DOE's past
difficulty in meeting these deadlines when appendix A's provisions were
not mandatory only further highlights the need for the agency to have
more flexibility in carrying out a given rulemaking, not less, as the
February 2020 Final Rule dictates.
Finally, DOE agrees with those commenters who suggested that the
removal of the binding nature of appendix A would reduce the overall
scope of DOE's litigation risk and avoid scenarios where appendix A
requirements may conflict with statutory requirements in EPCA. Reducing
litigation risk, among other things, provides added certainty to DOE's
rulemaking process. DOE also notes that removing the potential for
procedural challenges stemming from a set of self-imposed requirements
does not affect the ability of interested parties to bring substantive
legal challenges under the relevant statutory provisions, such as the
APA and EPCA. This change should contribute to DOE's ability to satisfy
its statutory obligations in a timely manner.
For the aforementioned reasons, DOE is finalizing the proposal from
the April 2021 NOPR to restore DOE's discretion to depart from the
generally-applicable guidance of appendix A, subject to the
modification discussed above requiring notice and explanation for each
deviation.

B. Significant Energy Savings Threshold

As DOE noted in the preamble to the April 2021 NOPR, the Secretary
of Energy may not prescribe an amended or new energy conservation
standard if the Secretary determines that such standard will not result
in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B); 42
U.S.C. 6313(a)(6)(A)(ii)(II); and 42 U.S.C. 6316(a)) Congress did not
define the statutory term ``significant conservation of energy,'' and,
for several decades prior to the February 2020 Final Rule, DOE also did
not provide specific guidance or a numerical threshold for determining
what constitutes significant conservation of energy. Instead, DOE
determined on a case-by-case basis whether a particular rulemaking
would result in a significant conservation of energy.
In a departure from this practice, the February 2020 Final Rule
added a numerical threshold for significant conservation of energy that
currently applies to all energy conservation standards rulemakings for
both covered products and equipment. That threshold requires an energy
conservation standard to result in either: (1) A 0.30 quad reduction in
site energy use over a 30-year analysis period or (2) a 10-percent
reduction in site energy use over that same period. DOE explained in
the February 2020 Final Rule its expectation that the threshold would
ensure that economically-justified standards would be developed, while
also making the rulemaking process more predictable. 85 FR 8626, 8670.
As DOE explained in its April 2021 proposal, the Department is
reconsidering its policy views on whether this numerical threshold
allows DOE to fully consider whether an energy conservation standard
would result in significant conservation of energy. 86 FR 18901, 18905.
In particular, DOE is reevaluating whether the significance of energy
savings offered by a new or amended energy conservation standard can be
determined without knowledge of the specific circumstances surrounding
a given rulemaking.
As noted in the April 2021 NOPR, a uniform numerical threshold for
site energy savings does not account for differences in primary energy
and full-fuel-cycle (``FFC'') effects for different covered products
and equipment when determining whether energy savings are significant.
Id. Primary energy and FFC effects include the energy consumed in
electricity production (depending on load shape), in distribution and
transmission, and in extracting, processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum fuels). For example, 1 quad
of site electricity energy consumption in 2022 corresponds to
approximately 3.05 quads of FFC energy consumption (for a generic end-
use load shape). By contrast, 1 quad of site natural gas or oil energy
consumption in 2022 corresponds to 1.11 and 1.17 quads of FFC energy
consumption, respectively.\9\ Thus, FFC effects present a more complete
picture of the impacts of potential energy conservation standards,
including greenhouse gas emissions, and would allow DOE to more fully
consider the impacts of potential energy conservation standards during
its rulemaking processes. This is especially important in light of the
fact that the United States has now rejoined the Paris Agreement and
will exert leadership in confronting the climate crisis.\10\
---------------------------------------------------------------------------

\9\ See Coughlin, K. Projections of Full-Fuel-Cycle Energy and
Emissions Metrics. (2013). LBNL-6025E; Energy information
Administration Annual Energy Outlook 2021 (available at: <a href="https://www.eia.gov/outlooks/aeo">https://www.eia.gov/outlooks/aeo</a>).
\10\ See Executive Order 14008, ``Tackling the Climate Crisis at
Home and Abroad,'' 86 FR 7619 (Feb. 1, 2021).
---------------------------------------------------------------------------

Additionally, DOE pointed out in the April 2021 NOPR that some
covered products and equipment have most of their energy consumption
occur during periods of peak energy demand--a condition that a uniform
numerical threshold does not capture. 86 FR 18901, 18905. The impacts
of these products on the energy infrastructure can be more significant
than those from products with relatively constant site energy use
demand. For example, whereas consumer refrigerators operate 24 hours
per day, 365 days per year, central air conditioners typically operate
during only part of the year, including periods of peak demand (i.e.,
during the hottest summer days), a factor that is likely to impact grid
reliability. Thus, reducing energy use

[[Page 70902]]

during periods of peak demand has a more significant impact as it helps
reduce stress on energy infrastructure. But the current threshold for
determining whether energy savings are significant does not allow DOE
to assign greater significance to energy savings that have a greater
impact on reducing the stress on U.S. energy infrastructure. FFC and
grid impacts are but two examples of any number of factors that cannot
be fully accounted for when using DOE's current uniform threshold for
significant conservation of energy.
Accordingly, DOE sought comment on whether to eliminate the current
threshold for determining significant conservation of energy and to
revert to its prior practice of making such determinations on a case-
by-case basis or on any suggested alternatives. Commenter responses on
this issue are summarized in the ensuing paragraphs, followed by the
Department's response.
Comments Supporting Removal of the Significant Energy Savings Threshold
A number of commenters supported DOE's proposal to remove the
February 2020 Final Rule's significant energy savings threshold. For
example, in expressing support for DOE's proposal, NPCC noted its
initial objection to the threshold when it was first proposed by DOE.
(NPCC, No. 12 at p. 3) NEEA held a similar view, asserting that the
threshold was overly prescriptive and would prevent DOE from adopting
standards that save energy and are economically justified. The
commenter provided hypothetical examples of what it viewed as anomalous
results that might occur if the significant energy saving threshold
were to be used in its current form. (NEEA, No. 43 at p. 2 (noting that
DOE would be able to implement a standards rulemaking resulting in 0.1
quads of energy savings if it represented 11% of site energy use but
would be unable to implement two separate rulemakings resulting in 0.2
quads and 8% of site energy use reduction each))
Some commenters also argued that the particular facts and
circumstances need to be fully considered by DOE before it can make a
determination regarding the significance of the energy savings
involved. (State Commenters, No. 29 at p. 8; CEC, No. 35 at p. 5)
Several Commenters also argued that the current significant energy
savings threshold is both an unreasonable interpretation of EPCA and in
conflict with existing case law. (State Commenters, No. 29 at p. 9
(asserting that the threshold violated EPCA, case law, and
congressional intent, and would result in lost public benefits); Joint
Environmentalist Commenters, No. 31 at pp. 3-4) (asserting that the
threshold violated EPCA and judicial precedent); CEC, No. 35 at pp. 4-5
(citing NRDC v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985) and
asserting that energy savings are significant if they are not
``genuinely trivial'')) The CEC further argued that using a mandatory
significant energy savings threshold as an initial consideration would
allow DOE to side-step its obligations to evaluate the costs and
benefits of any energy conservation opportunity that is not genuinely
trivial, which is particularly important for technologies that may
currently have a small market share but which could consume significant
amounts of energy in the future (e.g., electric vehicle supply
equipment). It also warned that a static significant energy savings
threshold could be abused in situations where products could be split
into numerous categories in order to ensure that no product meets the
threshold, such that no standards may be established or amended. (CEC,
No. 35 at pp. 4-5)
The Joint Environmentalist Commenters characterized the adoption of
the significant energy savings threshold as a ``harmful change'' that
is inflexible. They argued that many of DOE's previously adopted energy
conservation standards would not have met the 2020 February Final
Rule's threshold, despite providing billions of dollars in utility bill
savings, avoided health harms, and reduced greenhouse gas emissions.
These commenters also argued that Congress intended for DOE to apply a
gradualist approach by requiring the reexamination of standards at
least every six years, and they reasoned that DOE cannot use a
significant energy savings threshold to short-circuit this statutory
requirement to reconsider standards at regular intervals. (Joint
Environmentalist Commenters, No. 31 at pp. 3-5)
The Joint Advocacy Commenters argued generally that adoption of the
proposals contained in the April 2021 NOPR would have the potential to
achieve very large consumer and climate benefits, while still providing
ample opportunity for stakeholder input throughout DOE's rulemaking
process. (Joint Advocacy Commenters, No. 38 at p. 1) Regarding the
threshold specifically, these commenters favored its removal because,
in their view, such an arbitrary threshold is inconsistent with the
relevant case law and congressional intent and has the potential to
sacrifice large savings for both consumers and businesses since site
energy savings of 0.30 quads (as provided in the threshold) are
equivalent to electricity bill savings of about $11 billion. The Joint
Advocacy Commenters further argued that the numerical threshold would
prevent DOE from pursuing a standard, even if such standard would
impose no costs, because the agency would never get to consider that
level of savings as part of the required analysis of economic
justification. These commenters also faulted the numerical threshold
for not allowing DOE to account for factors such as the increased
significance of energy savings that can reduce greenhouse gas emissions
or the specific circumstances associated with a given product. They
agreed with the April 2021 NOPR's arguments that the significant energy
savings threshold does not allow DOE to account for other relevant
considerations such as a potential standard's impact on peak demand and
reduction of stress on the electric grid, and they added that the
threshold could also prevent the successful conclusion of consensus
agreements. For these reasons, the Joint Advocacy Commenters
recommended that DOE should return to considering whether significant
energy savings are present on a case-by-case basis, as it has
historically done. (Joint Advocacy Commenters, No. 38 at pp. 2-3; Joint
Advocacy Commenters (Appendix I), No. 38 at pp. 1, 2, 9-11)
IPI also supported DOE's proposed removal of the significant energy
savings threshold and suggested that DOE should also consider other
factors besides climate effects when determining whether energy savings
are significant. (IPI, No. 17 at p. 1) In addition to supporting DOE's
stated reasons for removing the threshold, IPI argued that had the
threshold been in place when DOE set standards for commercial warm air
furnaces in 2016, the Nation would have had to forego 12.4 million
metric tons of CO<INF>2</INF> emissions savings, as well as significant
reductions in criteria pollutants and consumer savings of $1 billion.
(IPI, No. 17 at p. 2) The commenter asserted that foregoing such
savings in the future by continuing to use the threshold would
significantly undermine commitments to U.S. leadership on climate
change and would bypass the ``cost-free chance[s] to save energy'' that
courts have said that Congress did not intend for DOE to pass up. (IPI,
No. 17 at pp. 2-3) In IPI's view, relying solely on numerical
thresholds is arbitrary (IPI, No. 17 at p. 3), and it agreed with the
April 2021 NOPR's observation that peak demand has a greater impact on
U.S. energy infrastructure compared to

[[Page 70903]]

non-peak demand. IPI stated that the timing of energy demand matters
not only in this context but also with respect to climate, health, and
consumer impacts, explaining that electricity generators that satisfy
peak demand can also be among the most-polluting generators and that
some consumers may experience increased electricity pricing during peak
demand periods. (IPI, No. 17 at pp. 3-4) As a result, in IPI's view,
energy savings for appliances that operate during peak demand periods
can have greater benefits for the climate, human health, and consumers
than the raw numbers show. For this reason, IPI argued that these
impacts should be considered when determining whether a given savings
level is significant. (IPI, No. 17 at p. 4)
IPI added that climate and health impacts should be incorporated
into DOE's reasoning for the removal of the current energy savings
threshold. (IPI, No. 17 at p. 4) In addition to DOE's reasoning that
the current threshold's link to site energy use does not permit DOE to
account for differences in primary energy and FFC effects for different
covered products, IPI contended that a given amount of site energy
usage will also be associated with different amounts of FFC emissions
depending on the fuel type used and that those different emissions will
likewise be associated with different climate and health impacts. The
commenter argued that these reasons favor DOE's consideration of
climate and health impacts when assessing the significance of energy
savings for a given standard and in repealing the February 2020 Final
Rule's numerical thresholds.\11\ (IPI, No. 17 at p. 4)
---------------------------------------------------------------------------

\11\ IPI also offered as additional support its comments to
DOE's prior proposals regarding appendix A in which it opposed the
use of a threshold for significant energy savings. (IPI, No. 17
(Attachment 4) (Comments dated March 16, 2020) at pp. 3-4)); IPI,
No. 17 (Attachment 5) (Comments dated May 6, 2019) at pp. 2-3)
---------------------------------------------------------------------------

The CA IOUs also supported removal of the significant energy
savings threshold, arguing that it directly conflicts with DOE's
ability to set energy conservation standards that achieve the maximum
energy savings that are technologically feasible and economically
justified. They characterized it as an ``arbitrary minimum savings
threshold'' and also faulted it for its potential to prevent DOE from
setting efficiency standards for emerging technologies that may have
relatively low market penetration currently but that present large
savings opportunities for the future. The CA IOUs argued that
appropriate Federal energy conservation standards could help reduce the
social cost of such technologies and accelerate their acceptance, and
accordingly, these commenters recommended that DOE should again
interpret significant energy savings to mean not ``genuinely trivial''
(referencing the Herrington case). (CA IOUs, No. 34 at pp. 2-3)
Finally, the proposed elimination of the significant energy savings
threshold was also supported by some manufacturers. A.O. Smith stated
that it did not believe that appendix A needed to include a significant
energy savings threshold, as the factors that EPCA requires DOE to
evaluate include both savings and cost. (A.O. Smith, No. 27 at p. 4)
Trane noted that, even with the current approach's ``10% improvement
backstop,'' this level of improvement could represent a significant
leap for many covered products that is simply impossible to achieve,
let alone be technically feasible. (Trane, No. 23 at p. 3). Instead,
Trane favored permitting DOE to use its own discretion, after carefully
weighing stakeholder input, as to whether potential cumulative energy
savings are significant enough to proceed with a standards rulemaking.
(Trane, No. 23 at p. 3)
Comments Opposing Removal of the Significant Energy Savings Threshold
A number of commenters opposed DOE's proposal to remove the current
threshold for significant energy savings. For example, in AHRI's view,
DOE's establishment of the current significant energy savings
threshold, rather than relying on a case-by-case determination, fell
within DOE's authority under EPCA. (AHRI, No. 25 at p. 7) Many
commenters asserted that the use of such a threshold would provide
consistency, predictability, certainty, stability, or some combination
of these elements, to regulated entities and stakeholders, and they
argued that it would ensure that DOE pursues economically-justified
standards. (AHRI, No. 25 at p. 7; Joint Industry Commenters, No. 40 at
p. 12; Goodman, No. 22 at p. 3; Lutron, No. 16 at p. 2; Zero Zone, No.
21 at p. 2; Grundfos, No. 37 at p. 2; HI, No. 42 at p. 2; AGA, No. 33
at p. 5; MHI, No. 32 at p. 2). The SBA Office of Advocacy made special
note that the threshold provides certainty to small businesses. (SBA
Office of Advocacy, No. 14 at p. 5) A number of commenters also
asserted that focusing on potential standards capable of satisfying the
threshold would help DOE prioritize its resources and meet its
statutory deadlines. (AHRI, No. 25 at pp. 7-8; Carrier, No. 26 at p. 2;
Crown Boiler, No. 10 at p. 2; Nortek, No. 19 at p. 3; BWC, No. 24 at
pp. 2-3; GEA, No. 20 at p. 3; Joint Industry Commenters, No. 40 at p.
12; ALA, No. 28 at 2; MHI, No. 32 at p. 2; AFP, No. 36 at pp. 1-2, 4;
SBA Office of Advocacy, No. 14 at p. 5) (See also U.S. Boiler, No. 11
at pp. 2-5 and New Yorker Boiler, No. 13 at pp. 2-4) \12\ GEA added
that if a rule is not going to make a meaningful difference in energy
consumption, DOE should make no new standard and return to the rule in
three years, pursuant to EPCA. (GEA, No. 20 at p. 3) NAFEM cautioned
that removing the threshold and leaving an undefined process will make
standards rulemakings more contentious and less efficient. (NAFEM, No.
30 at p. 5)
---------------------------------------------------------------------------

\12\ The comments from Crown Boiler will serve as the basis for
discussion of the positions taken by these commenters, as the
comments provided were essentially identical.
---------------------------------------------------------------------------

Some commenters also contended that by removing the threshold, DOE
would improperly be relying on factors outside of its statutory
authority when considering whether to adopt a given standard (e.g.,
rejoining of the U.S. to the Paris Agreement, reducing stress on energy
infrastructure, and considering greenhouse gas emissions). (AHRI, No.
25 at p. 8; AFP, No. 36 at pp. 4-5) These commenters argued that DOE's
consideration of ``significant conservation of energy'' is limited to
whether there is a significant conservation of electricity or fossil
fuels and does not extend to whether that conservation of energy would
have a significant impact on other DOE priorities such as reducing peak
demand, limiting stress on electricity infrastructure, or taking action
on climate change. (AHRI, No. 25 at p. 8; AFP, No. 36 at pp. 4-5). AGA
faulted DOE for proposing to remove the significant energy savings
threshold before having even had a chance to use it. (AGA, No. 33 at p.
5 (noting the same and requesting DOE first analyze previous appliance
efficiency rulemakings to provide context and a transparent rationale
for the threshold value (or lack thereof) that DOE would apply to
future rulemakings.)) ALA disfavored case-by-case determinations, and
the organization asserted that the economic cost of the regulatory
process and related testing should be weighed against the potential
energy savings over a determined period of time. (ALA, No. 28 at p. 2)
ALA noted its prior support for DOE's efforts to prioritize test
procedures and standards development to identify categories offering
consumers the most energy savings, and it argued that following this
approach would allow DOE to target its limited resources on those
products consuming the most

[[Page 70904]]

energy, thereby creating a baseline approach. (ALA, No. 28 at pp. 2-3)
AFP noted that the agency has devoted substantial time and effort to
rules producing little energy savings, while missing its deadlines 90
percent of the time. (AFP, No. 36 at pp. 1-2, 4 (citing DOE's own
finding that 40 percent of the 60 rules it had examined produced 6
percent of the overall energy efficiency savings))
While many commenters supported the continued use of the
significant energy savings threshold, some also recognized the need for
DOE to have some flexibility in how the threshold would be applied. For
example, while Carrier thought the threshold would apply in most
instances, it acknowledged that there may be some instances where
additional or alternative benefits may exist and suggested that DOE
revise appendix A to provide the agency with the ability to address
those unique cases (where appropriate) with notice and explanation.
(Carrier, No. 26 at p. 2) The Joint Industry Commenters and Nortek
reasoned that, even if appendix A became non-binding, DOE should retain
the significant energy savings threshold, because DOE could undertake a
deviation after giving the public notice and an opportunity for comment
should other factors lead DOE to conclude that doing so would satisfy
EPCA. (Joint Industry Commenters, No. 40 at p. 12; Nortek, No. 19 at p.
3) Goodman also offered alternatives to the complete removal of the
threshold, suggesting that DOE either: (1) Retain the current threshold
as a rebuttable presumption that, if met, would be deemed
``significant'' while savings levels falling under the threshold would
be presumed ``insignificant'' unless DOE demonstrates otherwise or (2)
define ``significant energy savings'' to be a value connected to the
average annual per-household energy use requirement specified in 42
U.S.C. 6292(b)(1)(B). (Goodman, No. 22 at p. 4) Lutron suggested that
if the current threshold causes problems in achieving the
Administration's energy conservation and climate goals, lowering the
threshold would be preferable to its removal. (Lutron, No. 16 at pp. 2-
3) NAFEM stated that if DOE removes the threshold, appendix A should be
revised to provide a list of all of the factors DOE may consider when
making a determination that energy savings are significant. (NAFEM, No.
30 at p. 5) ALA asserted that there should be some baseline approach to
setting standards to avoid wasting time and money, but it added that
using exact thresholds are unlikely to apply to all product types.
(ALA, No. 28 at p. 2)
Lennox suggested that DOE should issue a supplemental proposal with
an analytical basis for its approach to determining significant energy
savings, if the agency wants to consider eliminating its use of
``quantitative significance thresholds,'' including why a smaller
threshold may not be appropriate. (Lennox, No. 18 at p. 9). Lennox went
on to state that if DOE eliminates the use of thresholds, it should
restore and strengthen the prior version of appendix A, where
presumptions had existed against regulations such as those that would:
(1) Result in a negative return on investment for the industry; (2)
would significantly reduce the value of the industry; or (3) be the
direct cause of plant closures, significant losses in domestic
manufacturer employment, or significant losses of capital investment by
domestic manufacturers. (Lennox, No. 18 at pp. 9-10) (See also 10 CFR
part 430, subpart C, appendix A, section 5(e)(3) (2018))
Crown Boiler--in conjunction with both U.S. Boiler and New York
Boiler, who both filed essentially identical comments (see U.S. Boiler,
No. 11 at pp. 2-5 and New Yorker Boiler, No. 13 at pp. 2-4) \13\--made
a number of arguments, in addition to those noted earlier, in support
of the significant energy savings threshold. It argued that the
threshold is an acknowledgement by DOE that there is a point at which
projected energy (and carbon) savings become too small to be
statistically significant and its proposed removal would, in its view,
make appendix A less science-based, an action which would be in
conflict with Executive Order 13990. (Crown Boiler, No. 10 at p. 2)
Crown Boiler also stressed that energy efficiency standards have real
world impacts, including added cost for equipment and potential job
losses, and the commenter argued that DOE should be required to show a
degree of energy savings above a de minimis level before setting an
energy conservation standard. (Crown Boiler, No. 10 at p. 3) It further
added that there is a direct relationship between fuel consumption and
carbon emissions, and consequently, insignificant energy savings would
be expected to also translate into insignificant carbon reductions.
Crown Boiler reasoned that given these limitations, standards with a
low-yield potential for energy savings would not justify the imposition
of heavy regulatory burdens and DOE should avoid setting standards
simply for purposes of ``international virtue signaling'' and to
demonstrate leadership in confronting the climate crisis. (Crown
Boiler, No. 10 at p. 3)
---------------------------------------------------------------------------

\13\ The comments from Crown Boiler will serve as the basis for
discussion of the positions taken by these commenters.
---------------------------------------------------------------------------

Crown Boiler also noted that an insignificant reduction in energy
savings is highly unlikely to be realized entirely during a peak demand
period, and the commenter added that DOE itself considered the impact
that the significant energy savings threshold would have on potential
reductions in peak demand, but that it determined that it retained the
ability to consider the impacts of new standards on grid reliability if
these concerns impacted specific rulemakings. (Crown Boiler, No. 10 at
p. 3; see also 85 FR 8626, 8672 (Feb. 14, 2020)) Crown Boiler also
challenged DOE's view that eliminating the threshold would allow DOE to
consider potential source energy savings by pointing out that DOE had
noted that it believed it was statutorily obligated to utilize site
energy use when analyzing energy savings, and it asserted that the
April 2021 NOPR did not address DOE's ability to consider source energy
savings in this manner while still complying with EPCA. (Crown Boiler,
No. 10 at pp. 3-4)
Additionally, Crown Boiler asserted that DOE's only possible error
in setting its significant energy savings threshold was reducing it
from the originally proposed value of 0.5 quad to the 0.3 quad
threshold ultimately adopted. (Crown Boiler, No. 10 at p. 4) It pointed
to two energy conservation standard rules--the 2016 rule for
residential boilers and the 2020 rule for commercial boilers--as
highlighting the potential for negative impacts in the absence of a
threshold. The commenter asserted that each of these rules was expected
to result in only a 0.6 percent improvement in efficiency, for a total
of 0.16 quads and 0.27 quads over 30 years, respectively. Crown Boiler
argued that in exchange for these small gains, both gas and oil boilers
would face a significant reduction in their ability to work properly
when installed with sub-optimal vent systems. Moreover, Crown Boiler
argued that such boilers face an increased risk of reliability problems
that could reduce efficiency in the field over time, and that
manufacturers experienced a drain on engineering resources that would
have otherwise been allocated to more productive uses (such as research
into new technologies capable of operating on a higher concentration of
renewable fuels). Crown Boiler viewed these outcomes as real losses
that were traded for theoretical energy savings so low that it

[[Page 70905]]

raises questions as to whether DOE can credibly claim these predicted
saving as accurate. (Crown Boiler, No. 10 at p. 4)
DOE's Response to Comments
In response to these comments, DOE first notes that several
commenters discussed DOE's authority to establish a threshold for
determining whether energy savings are significant. As discussed in the
April 2021 NOPR, DOE proposed to remove the current numerical threshold
for determining whether energy savings are significant because it did
not allow DOE to consider the specific circumstances surrounding a
given rulemaking, not because DOE lacked the statutory authority to
establish a threshold. 86 FR 18901, 18905. As evidenced by the court's
decision in Herrington, it is clear that DOE may choose to establish a
numerical threshold as long as the threshold is consistent with the
policies behind the program. See Herrington, 768 F.2d at 1376 (``we do
not hold that the Act forbids DOE to set levels of significance for
each product type as a percentage of the energy consumed by that
product type, provided that the levels selected reasonably accommodate
the policies of the Act.''). However, while establishing a threshold is
permissible under EPCA, DOE does not believe it is the best course of
action. As discussed previously, a set numerical threshold does not
allow DOE to consider the specific circumstances (e.g., electric
infrastructure impacts, FFC effects, and greenhouse gas emissions)
surrounding a given rulemaking when determining whether energy savings
are significant.
As for the argument that DOE's determinations of significance for
energy savings should be limited to whether there is a significant
conservation of electricity or fossil fuels and that it should not
extend to the impacts of those energy savings, commenters seem to
suggest that the significance of energy savings can be determined
without consideration of the broader impacts of those savings. DOE does
not agree with this position, nor does EPCA compel such an approach. As
noted in Herrington, determining whether energy savings are significant
should be informed by the underlying policies of the Appliance
Standards Program. Id. DOE's Appliance Standards Program was created in
the 1970's in response to an energy supply crisis. See EPCA (noting in
the Act's description the law's intention ``[t]o increase domestic
energy supplies and availability; to restrain energy demand; to prepare
for energy emergencies; and for other purposes.'')
Congress expanded further on the intended policies underlying the
Appliance Standards Program in subsequent amendments to EPCA. For
example, the Energy Policy Act of 2005, Public Law 109-58 (Aug. 8,
2005), which, among other things, amended EPCA to establish energy
conservations standards for additional consumer products, was enacted
to ``ensure jobs for our future with secure, affordable, and reliable
energy.'' The Energy Independence and Security Act of 2007, Public Law
110-140 (Dec. 19, 2007), which similarly amended EPCA to establish new
energy conservation standards for consumer products and commercial
equipment, was enacted to ``move the United States toward greater
energy independence and security, to increase the production of clean
renewable fuels, to protect consumers, to increase the efficiency of
products, buildings, and vehicles, to promote research on and deploy
greenhouse gas capture and storage options, and to improve the energy
performance of the Federal Government, and for other purposes.'' Energy
conservation achieved through the Appliance Standards Program helps
achieve many of these policy objectives. For example, energy
conservation standards can increase grid reliability by decreasing peak
demand. Energy conservation standards also protect consumers by
reducing greenhouse gas and other pollutant emissions. As a result, and
in accordance with the court in Herrington, DOE believes any
determination of whether energy savings are significant should involve
some consideration of the potential impact of those energy savings on
the policy objectives underlying the Appliance Standards Program. Thus,
rather than being constrained in the manner suggested by these
commenters--i.e., that DOE is limited to determining significance
solely in terms of the amount of projected electricity or fossil fuel
energy savings--DOE is guided by the underlying policy objectives of
EPCA, as amended, governing the Appliance Standards Program when
determining whether potential energy savings are significant.
DOE also received several other comments disagreeing with DOE's
decision to consider the potential impacts of energy savings when
determining whether those energy savings are significant. Crown Boiler
commented that DOE itself had noted it was statutorily obligated to
utilize site energy use when analyzing energy savings. (Crown Boiler,
No. 10 at pp. 3-4) Crown Boiler also commented that DOE had determined
in the February 2020 Final Rule that it could address the impacts of
new standards on grid reliability in individual rulemakings.
In response, DOE first notes that Crown Boiler's claim that DOE
stated it was obligated to use site energy savings mischaracterizes
DOE's position in the February 2020 Final Rule. In that rule, DOE
stated that use of site energy savings was consistent with EPCA's
definition for ``energy use'' and the process followed by DOE when
determining whether to apply energy conservation standards to other
covered products. 85 FR 8626, 8668. But, even if Crown Boiler's claim
had been accurate, DOE did not propose to remove the threshold because
the use of site energy savings itself is problematic. Instead, DOE
proposed to remove the uniform numerical threshold because relying
solely on the threshold itself does not account for the specific
circumstances surrounding a given rulemaking. Nowhere is this
deficiency more evident than in the consideration of FFC effects for
electricity and natural gas where 1 quad of site electricity energy
consumption corresponds to approximately 3.05 quads of FFC energy
consumption, while 1 quad of site natural gas energy consumption
corresponds to 1.11 quads of FFC energy consumption. DOE will continue
to calculate potential site energy savings for energy conservation
standards. But DOE will determine the significance of those site energy
savings based on their impact, which may include impacts on FFC
savings, grid reliability, and greenhouse gas emissions. Crown Boiler's
second argument similarly misses the mark. DOE agrees that the impact
of new standards on grid reliability can be addressed during individual
rulemakings. But, that can only occur if the February 2020 Final Rule
threshold has been met.
In response to comments that eliminating a uniform numerical
threshold will reduce certainty and predictability in DOE's rulemaking
process (see, e.g., AHRI, No. 25 at p. 7; Joint Industry Commenters,
No. 40 at p. 12; Goodman, No. 22 at p. 3) or lead to an undefined
process that will make standards rulemakings more contentious and less
efficient (NAFEM, No. 30 at p. 5), DOE notes that elimination of the
numerical threshold will not change its rulemaking process. DOE will
continue to collect information and conduct analyses to determine if
new or amended standards would result in significant conservation of
energy and are technologically feasible and economically justified. If
these statutory criteria are met, DOE will propose new

[[Page 70906]]

or amended standards. Stakeholders will then have the opportunity to
comment on the proposed new or amended standards, including whether the
potential energy savings are significant. If new or amended standards
are subsequently issued in a final rule, manufacturers will typically
have between 3 and 5 years to come into compliance with the new or
amended standards. (See 42 U.S.C. 6295(m)(4)) This is a consistent
process based on well-established methodologies that have been
extensively used over the long lifetime of DOE's Appliance Standards
Program. As for claims that elimination of the uniform numerical
threshold will lead to less predictable rulemakings, DOE does not issue
new or amended energy conservation standards based solely on whether
the potential energy savings are significant. Any new or amended
standard must also be technologically feasible and economically
justified. Further, DOE only makes these determinations after
conducting a full analysis of all available information, including
information obtained during the rulemaking process. And, while DOE
acknowledges that a uniform numerical threshold makes for less
complicated significance determinations, it does so by ignoring the
very real differences, e.g., FFC effects and electrical grid impacts,
between energy savings across different rulemakings. DOE believes that
any benefits of this approach are more than outweighed by its failure
to account for the specific facts and circumstances surrounding an
individual rulemaking.
As for commenters such as ALA and AFP that asserted the uniform
numerical threshold would help DOE prioritize its resources and meet
its statutory deadlines, DOE notes that having a threshold can only
constrain DOE's ability to prioritize its resources. As discussed
previously, a uniform numerical threshold does not account for the
differences across covered products and equipment rulemakings, e.g.,
FFC effects. For example, under the threshold established in the
February 2020 Final Rule, DOE would not be able to prioritize a rule
that saves 0.25 quad of site energy and 0.6 quad of FFC energy over a
rule that saves 0.30 quad of site energy and 0.4 quad of FFC energy.
DOE assumes commenters also meant that the threshold would result in
more rulemakings resulting in determinations that standards do not need
to be amended, which would free up DOE resources. But, in many cases
the process for issuing a new or amended standard, in terms of the
number of Federal Register publications and opportunities for public
comment, is very similar to the process for issuing a final
determination not to amend a standard. Both typically involve the
issuance of pre-NOPR documents where DOE collects information and data
in order to determine whether a new or amended standard would satisfy
the relevant criteria in EPCA. DOE then uses these data and information
to prepare a proposal on whether a new or amended standard is
warranted. After reviewing public comments on the proposal, DOE issues
a final document that either establishes a new or amended standard or
determines that a new or amended standard is not warranted. Finally, a
determination not to amend standards must be revisited within 3 years,
while a decision to issue new or amended standards must be revisited
within 6 years. (42 U.S.C. 6295(m)) DOE believes the other revisions to
appendix A finalized in this document and the additional revisions that
were proposed in the July 2021 NOPR will have a much greater impact on
DOE's ability to meet its statutory deadlines.
As for the commenters who proposed a modified threshold, e.g., a
rebuttable presumption of significance or a lower threshold value, DOE
notes these approaches pose the same problem as the threshold set in
the February 2020 Final Rule. Namely, they assume on some level that
the significance of energy savings can be determined without
considering the specific circumstances surrounding a given rulemaking.
Additionally, DOE notes that it has never stated the threshold for
determining the significance of energy savings established in the
February 2020 Final Rule is too high. Rather, the issue is that any set
threshold ignores the very real differences in energy savings across
different rulemakings.
Several commenters discussed the potential economic impacts on
industry and consumers of DOE's proposal to remove the threshold for
determining whether energy savings are significant. DOE notes that a
determination that energy savings are significant is but one step in
the process of issuing new or amended standards. EPCA still requires,
among other things, that a new or amended standard be economically
justified, which includes the consideration of economic impacts on
manufacturers and consumers. (See 42 U.S.C. 6295(o)(2)(B)(i)(I)) DOE
will continue to follow these provisions and to perform the required
analyses to demonstrate and ensure that the relevant statutory criteria
are satisfied before setting (or amending) energy conservation
standards or deciding not to amend them.
With regards to Lennox's comment that, assuming the threshold is
eliminated, DOE should restore and strengthen prior provisions from the
July 1996 Final Rule, DOE will address these comments and the
additional revisions proposed in the July 2021 NOPR in a separate final
rule.
Finally, DOE does not agree with AGA's statement faulting the
Department for proposing to remove the significant energy savings
threshold before having even had a chance to use it. The effects of the
threshold established in the February 2020 Final Rule on the
Department's rulemaking processes were readily apparent on issuance of
the rule. As discussed throughout this document, the February 2020
Final Rule, including the significant energy savings threshold, does
not allow DOE to account for the particular circumstance of individual
rulemakings, e.g., FFC and electrical grid impacts.
Accordingly, for the aforementioned reasons, DOE has concluded that
determinations of significance for energy savings should be made on a
case-by-case basis. As a result, DOE is removing the significant energy
savings threshold.

C. Determinations of Economic Justification

Under EPCA, any new or amended standard must be designed to achieve
the maximum improvement in energy efficiency that is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A); 42
U.S.C. 6316(a)). To ensure that DOE meets this statutory mandate, DOE
employs a walk-down process to select energy conservation standard
levels. As a first step in the process, DOE screens out technologies
for improving energy efficiency that are not feasible. DOE then uses
the remaining technologies to create a range of trial standard levels
(``TSLs''). These TSLs typically include: (1) The most-stringent TSL
that is technologically feasible (i.e., the ``max-tech'' standard); (2)
the TSL with the lowest life-cycle cost; (3) a TSL with a payback
period of not more than three years; and (4) any TSLs that incorporate
noteworthy technologies or fill in large gaps between efficiency levels
of other TSLs. Beginning with the max-tech TSL, DOE then determines
whether a specific TSL is economically justified. In making that
determination, DOE determines, after reviewing public comments and
data, whether the benefits of the standard exceed its burdens by, to
the greatest extent practicable, considering the

[[Page 70907]]

seven factors described in 42 U.S.C. 6295(o)(2)(B)(i). (See also 42
U.S.C. 6313(a)(6)(B)(ii) (applying the seven factors to ASHRAE
equipment); 42 U.S.C. 6316(a) (applying the seven factors to non-ASHRAE
equipment)). If DOE determines that the max-tech TSL is economically
justified, the analysis ends, and DOE adopts the max-tech TSL as the
new or amended standard. However, if DOE determines that the max-tech
TSL is not economically justified, DOE walks down to consider the next-
most-stringent TSL. This walk-down process continues until DOE
determines that a TSL is economically justified or that none of the
TSLs are economically justified.
In the August 2020 Final Rule, DOE modified this process to require
that determinations of economic justification include a comparison of
the benefits and burdens of the selected TSL against the benefits and
burdens of the baseline case and all other TSLs. 85 FR 50937, 50944.
DOE stated its belief that such an approach would allow for more
reliable determinations that a specific TSL is economically justified.
Id. at 85 FR 50939. While the requirement to conduct a comparative
analysis affected DOE's process for determining whether a TSL is
economically justified, it did not dictate any particular outcome or
require DOE to modify its general approach of walking down from the
max-tech TSL.
DOE's decision to add a comparative analysis to the process for
determining whether a TSL is economically justified generated concern
among several stakeholders that DOE would use the comparative analysis
to select a TSL that maximizes net benefits, as opposed to the TSL that
maximizes energy savings and is technologically feasible and
economically justified. Id. DOE's statement in the August 2020 Final
Rule that ``the purpose of EPCA's seven factors is not to select the
standard that achieves the maximum improvement in energy efficiency, no
matter how minute an estimated cost savings'' added further confusion
to how DOE would use the comparative analysis in determining whether a
TSL is economically justified. 85 FR 50937, 50939 (emphasis added).
In light of the confusion and uncertainty around whether a
comparative analysis would result in DOE choosing the TSL that
maximizes net benefits as opposed to the TSL that represents the
maximum improvement in energy efficiency that is technologically
feasible and economically justified, DOE proposed to eliminate the
requirement to conduct a comparative analysis when determining whether
a specific TSL is economically justified in the April 2021 NOPR. 86 FR
18901, 18906. DOE received numerous comments on this proposal with some
commenters in favor of eliminating the comparative analysis and others
arguing that it should be retained.
Comments Supporting DOE's Proposal To Eliminate the Requirement To
Conduct a Comparative Analysis in Determining Economic Justification
In support of DOE's proposal to remove the requirement to conduct a
comparative analysis, several commenters expressed concern that the
comparative analysis could lead to DOE selecting a TSL that does not
represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified. (See e.g., Joint
Advocacy Commenters, No. 38 at p. 3; Grundfos, No. 37 at p. 3; CEC, No.
35 at p. 6; State Commenters, No. 29 at p. 9) Some commenters were
particularly concerned that the comparative analysis would result in
DOE choosing a TSL that maximizes net benefits instead of energy
savings. (Joint Environmentalist Commenters, No. 31 at p. 5; CA IOUs,
No. 34 at pp. 2-3) IPI commented that the approach would not be
transparent and allow DOE to define what is ``economically justified''
on any subset of adverse impacts to which DOE may happen to arbitrarily
assign controlling weight--a result that it asserted would be
inconsistent with statutory requirements and rational decision making.
(IPI, No. 17 (Attachment 4 (Comments dated March 16, 2020) at pp. 2-3;
IPI, No. 17 (Attachment 5 (Comments dated May 6, 2019) at pp. 3-4)
Comments Opposing DOE's Proposal To Eliminate the Requirement To
Conduct a Comparative Analysis in Determining Economic Justification
Other commenters opposed DOE's proposal to remove the requirement
to conduct a comparative analysis. For example, several commenters
stated the comparative analysis will ensure DOE, when faced with TSLs
with comparable savings, chooses the trial standard level with a less
severe negative impact. (See, e.g., MHI, No. 32 at p. 2; Lutron, No. 16
at p. 3; Joint Industry Commenters, No. 40 at pp. 12-13) NAFEM
commented that removal of the comparative analysis requirement could
result in energy conservation standards that save more energy at the
expense of product differentiation, refinement, and end-use
flexibility. (NAFEM, No. 30 at p. 5) SBA Office of Advocacy commented
that EPCA does not expressly prohibit an analysis of net benefits and
DOE does not provide justification as to why a net benefits approach is
inaccurate or otherwise prohibited, and instead merely states that the
elimination of the comparative analysis is to reduce uncertainty. (SBA
Office of Advocacy, No. 14 at p. 6) SBA Office of Advocacy also stated
that engaging in a comparative analysis would ensure that DOE is
considering the full scope of impacts of a particular standard and
would help DOE in moving towards better compliance with the Regulatory
Flexibility Act. (SBA Office of Advocacy, No. 14 at p. 7) Zero Zone
stated that DOE should retain the comparative analysis for standard
level selection, because the Department has not provided any evidence
of an actual problem using that approach. (Zero Zone, No. 21 at p. 2)
Finally, BWC stated that the comparative analysis would help DOE and
stakeholders better assess the TSLs against the applicable statutory
criteria. (BWC, No. 24 at p. 3)
DOE's Response to Comments
DOE first notes that both commenters in favor of the proposal to
eliminate the comparative analysis and those against its removal stated
that the comparative analysis could lead to the Department forgoing
energy savings in favor of increased economic benefits. (See, e.g.,
Joint Advocacy Commenters, No. 38 at p. 3; MHI, No. 32 at p. 2) Based
on these comments, it is clear that the comparative analysis generated
significant confusion and uncertainty about whether the process would
result in DOE selecting the TSL that results in the maximum improvement
in energy efficiency that is technologically feasible and economically
justified or a TSL that saves less energy but imposes lower costs on
manufacturers and consumers.
Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) In deciding whether a
proposed standard is economically justified, DOE must determine whether
the benefits of the standard exceed its burdens. (42 U.S.C.
6295(o)(2)(B)(i)) DOE must make this determination after receiving
comments on the proposed standard, and by considering, to the greatest
extent practicable, the seven statutory factors, which allow DOE to
consider the full breadth of impacts including benefits and costs,
along with other factors the Secretary considers relevant. In practice,
DOE determines an appropriate energy conservation

[[Page 70908]]

standard level for adoption by conducting a ``walk-down'' analysis of
the trial standard levels (TSLs) considered in the proposal, after
reviewing any public comments. DOE starts by analyzing the maximum
technologically feasible (max-tech) level to see whether the statutory
criteria for significant energy savings, technological feasibility, and
economic justification have been met. If the max-tech TSL fails to meet
any of these statutory criteria, DOE determines that it cannot adopt
that level, and it then moves to the next highest TSL and conducts the
same analysis. The agency continues in this manner until it reaches a
TSL that meets all of the statutory criteria. Once DOE arrives at such
level (if any), DOE is required under EPCA to choose that TSL because
it represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified. (See 42 U.S.C.
6295(o)(2)(A); 42 U.S.C. 6316(a))
With respect to the SBA Office of Advocacy's comments, DOE would
like to clarify two issues. First, DOE did not state in the April 2021
NOPR that conducting an analysis of net benefits is inaccurate or
otherwise prohibited by EPCA. The concern with the comparative
analysis, as discussed previously, is that the process would result in
the maximization of net benefits instead of energy savings that are
technologically feasible and economically justified, which is contrary
to the statute. As for ensuring DOE considers the full scope of impacts
of a particular TSL, the comparative analysis did not change the scope
of impacts considered by DOE for a particular TSL. The analysis
required DOE to compare the benefits and burdens of a TSL against the
benefits and burdens of the baseline case and all other TSLs. 85 FR
50937. But, as stated in the August 2020 Final Rule, the vast majority
of DOE's analytical work involves evaluating the seven factors for each
TSL (e.g., life-cycle costs, manufacturer impacts, total energy
savings). 85 FR 50937, 50941. For example, DOE performs a manufacturing
impact analysis to identify and quantify the impacts of any new or
amended energy conservation standards on manufacturers. As part of this
analysis, DOE uses the Government Regulatory Impact Model (``GRIM'') to
calculate cash flows using standard accounting principles and changes
in industry net present value (INPV) between the no-new-standards case
and each proposed TSL. The difference in INPV between the no-new-
standards case and each TSL represents the financial impact of the new
or amended energy conservation standard on manufacturers. The addition
of a comparative analysis has no effect on DOE's analysis of
manufacturing impacts.
The comments received in response to the April 2021 NOPR have
solidified DOE's concerns regarding the use of the comparative
analysis. DOE has no desire to create a situation where stakeholders
will question, and potentially challenge, whether the Department is
choosing a TSL that maximizes net benefits instead of the TSL that
represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified as required under
EPCA. Further, the process and criteria laid out in 42 U.S.C.
6295(o)(2)(B)(i) and 42 U.S.C. 6313(a)(6)(B)(ii) for determining
economic justification are already sufficiently robust, and any
potential, incremental improvement that may result from the use of a
comparative analysis is outweighed by the uncertainty it casts over
DOE's fulfillment of its statutory obligations under EPCA. As a result,
DOE is eliminating the requirement in appendix A to conduct a
comparative analysis when determining whether a TSL is economically
justified. Consistent with EPCA and past practice, DOE will determine
whether a TSL is economically justified after determining, based on the
factors listed in 42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C.
6313(a)(6)(B)(ii), whether the benefits of the standard exceed its
burdens.

D. Adoption of Industry Test Standards

The February 2020 Final Rule amended appendix A to require
adoption, without modification, of consensus industry test standards as
test procedures for covered products and equipment, unless such
standards do not meet the EPCA statutory criteria for test procedures.
85 FR 8626, 8678-8682, 8708. In essence, DOE sought to explain and
codify its established practice, which is to analyze the appropriate
industry consensus test standard, with the input of stakeholders and
the interested public, to: (1) Determine that the EPCA criteria are met
and use the consensus test standard as the Federal test procedure; (2)
modify the standard so that it complies with the statutory criteria, or
(3) reject the standard and develop an entirely new test procedure.
On further review, DOE has come to see that its attempt at
clarification may have had the opposite effect, creating the false
impression that DOE had put in place a new presumption for an ``as-is''
adoption of consensus industry test standards without meaningful
review. That was not DOE's intention, and accordingly, the Department
proposed to clarify in the April 2021 NOPR that while DOE will first
consider applicable consensus industry test standards, such test
standards must first undergo a thorough agency review to ensure that
they meet the requirements of the statute and are compatible with DOE's
compliance, certification, and enforcement (``CC&E'') regulations. 86
FR 18901, 18907.
Comments Supporting DOE's Clarification of Its Process for Adopting
Consensus Industry Standards
The majority of commenters generally supported or had no objections
to DOE's proposal to clarify that the Department will amend consensus
industry test standards as necessary to ensure compliance with both the
statutory requirements in EPCA and DOE's CC&E regulations. (See, e.g.,
State Commenters, No. 29 at p. 10; Lutron, No. 16 at p. 3; NEEA, No. 43
at p. 3; Joint Environmentalist Commenters, No. 31 at p. 6; Joint
Industry Commenters, No. 40 at p. 10) In citing their support for DOE's
proposal, several commenters stated that consensus industry test
standards are not generally designed for regulatory purposes and, as
such, modifications to ensure compliance with EPCA and DOE's CC&E
regulations are often necessary. (See, e.g., CA IOUs, No. 34 at p. 5;
Joint Advocacy Commenters, No. 38 at pp. 3-4) The CA IOUs and Joint
Environmentalist Commenters also favored DOE's proposal because it
would relieve stakeholders of the burden of having to participate in
both industry and DOE test procedure development processes. (CA IOUs,
No. 34 at p. 5; Joint Environmentalist Commenters, No. 31 at p. 6)
Aside from expressing their support for DOE's proposal, Lutron and
the Joint Industry Commenters also asked DOE to clarify in the
regulatory text of appendix A that industry test standards are
consensus test procedures, which usually involve more than just
industry stakeholders. (Lutron, No. 16 at p. 3; Joint Industry
Commenters, No. 40 at p. 10)
Comments Opposing DOE's Clarification of Its Process for Adopting
Consensus Industry Standards
Other commenters supported DOE's adoption of consensus industry
test standards with little or no modification. (See, e.g., Signify, No.
41 at p. 1; Lennox, No. 18 at p. 5; New Yorker Boiler, No. 13 at p. 5)
These commenters expressed a variety of reasons for

[[Page 70909]]

advocating for the adoption of consensus industry test standards. For
example, Crown Boiler and BWC stated that most consensus industry test
standards are developed by all interested stakeholders, including
manufacturers, industry advocates, regulators (including DOE), and
certification agency laboratories. (Crown Boiler, No. 10 at p. 5; BWC,
No. 24 at p. 3) Crown Boiler also noted that the committee members tend
to have decades of experience and that DOE should rely on these
committees to develop the test procedures. (Crown Boiler, No. 10 at p.
5) Some commenters stated that adopting consensus industry test
standards would reduce burden on both DOE and stakeholders. (See BWC,
No. 24 at p. 3 (stating that deviating from consensus industry test
procedures will add unnecessary workload for DOE staff); Signify, No.
41 at p. 1 (stating that changes to consensus industry test procedures
create unnecessary burden for industry and test laboratories)) Several
commenters also stated that adoption of consensus industry test
procedures would expedite DOE's test procedure rulemaking process and
allow stakeholders to address standards rulemakings sooner. (See, e.g.,
U.S. Boiler, No. 11 at pp. 5-6; GEA, No. 20 at p. 3) Finally, GEA
stated that adopting consensus industry test procedures would reduce
the likelihood of litigation over test procedures. (GEA, No. 20 at p.
3)
In order to avoid the need to make modifications to consensus
industry test procedures, several commenters encouraged DOE to
participate in the industry test standards development process as a way
to ensure that consensus industry test standards are compatible with
EPCA and DOE's CC&E regulations. (See, e.g., Signify, No. 41 at p. 1;
ALA, No. 28 at p. 3) Additionally, with regards to compatibility with
DOE's CC&E regulations, Lennox stated that DOE should consider ``the
potential need to modify the applicable CC&E requirements, not the
industry test procedure.'' (Lennox, No. 18 at p. 5).
DOE's Response to Comments
As an initial matter regarding the request that DOE clarify that
industry test standards are ``consensus'' test standards, DOE uses the
term ``consensus'' broadly to indicate a process in which multiple
stakeholders develop and finalize the industry test standard. The use
of the term ``consensus'' is not intended as an assessment of the
representativeness of those stakeholders involved in the process. In
certain cases, industry test standards were not developed by a group
that is fully representative of DOE's rulemaking stakeholders,
including energy-efficiency advocacy organizations, utilities, States,
consumer groups, etc. DOE notes that under section 301 of the
Department of Energy Organization Act (Pub. L. 95-91; 42 U.S.C. 7101),
DOE must comply with section 32 of the Federal Energy Administration
Act of 1974, as amended by the Federal Energy Administration
Authorization Act of 1977. (15 U.S.C. 788; ``FEAA'') Section 32
essentially provides in relevant part that, where a proposed rule
authorizes or requires use of commercial standards, DOE must inform the
public of the use and background of such standards. DOE must also
evaluate these standards as to whether they fully comply with the
requirements of section 32(b) of the FEAA (i.e., whether they were
developed in a manner that fully provides for public participation,
comment, and review). In addition, section 32(c) requires DOE to
consult with the Attorney General and the Chairman of the Federal Trade
Commission concerning the impact of the commercial or industry
standards on competition.
In response to the remaining comments, DOE first notes that
commenters have raised several valid points about the benefits of
adopting consensus industry test standards with little to no
modification (e.g., reducing test procedure development cost). That
said, these benefits cannot be realized at the expense of DOE's
statutory obligations. In accordance with EPCA, DOE must ensure that a
consensus industry test standard is reasonably designed to produce test
results that measure energy efficiency or use during a representative
average use cycle or period of use without being unduly burdensome to
conduct. (42 U.S.C. 6293(b)(3)) As a result, DOE has often found it
necessary to make modifications to an applicable consensus industry
test standard to ensure compliance with these statutory requirements.
For example, the DOE test procedure for dehumidifiers requires reduced
indoor ambient temperature conditions as compared to those specified in
the referenced industry test standard as DOE determined that the
reduced conditions are more representative of the product's average use
cycle as required by EPCA. 80 FR 45801, 45807 (July 31, 2015). As
another example, the DOE test procedure for portable air conditioners
includes several modifications to the industry test method that DOE
determined would provide results that are representative of typical
use. Specifically, in comparison to the industry test procedure, the
DOE test procedure requires a different set of indoor and outdoor test
conditions; an additional test condition for units with a dual-duct
configuration; and additional provisions to account for heat
transferred to the indoor conditioned space from the ducts and any
infiltration air from unconditioned spaces, which are not accounted for
in the industry test method. 81 FR 35241, 35250, 35248, 35253 (June 1,
2016).
Additionally, DOE notes that consensus industry test standards are
often designed to support industry certification programs with the goal
of verifying ratings within a tolerance specified by industry. DOE's
CC&E regulations, on the other hand, are designed to ensure, in
accordance with EPCA, that all products and equipment distributed in
commerce in the United States comply with applicable Federal energy and
water conservation standards. Furthermore, DOE's CC&E regulations seek
to establish a level playing field amongst industry participants and to
also help ensure that the utility bill savings that consumers expect
from energy and water conservation standards are being realized. For
example, in the past, DOE has had to specify airflow tolerances for
certain industry standard test conditions that are referenced for the
testing of certain categories of small, large, and very large air-
cooled commercial package air conditioners and heating equipment after
having determined that such tolerances are necessary to address
potential variation in the measured efficiency and cooling capacity of
the equipment. 80 FR 79655, 79659-79660 (Dec. 23, 2015). DOE also notes
that industry representatives and other stakeholders are welcome to
participate in the development and modification of the Department's
CC&E regulations.\14\ In fact, some of DOE's existing CC&E regulations
were developed by a negotiated rulemaking that resulted in a consensus
agreement amongst the Department, industry, and many diverse
stakeholders over, among other things, the allowance of simulations to
develop ratings under specific circumstances for commercial heating,
ventilation, and air-conditioning equipment; commercial water heaters;
and commercial refrigeration equipment. 80 FR 144 (Jan. 5, 2015).
---------------------------------------------------------------------------

\14\ For example, DOE recently asked for comment on a proposal
to amend the certification and reporting provisions for several
covered products and equipment. 86 FR 43120 (August 6, 2021).
---------------------------------------------------------------------------

DOE may also modify consensus industry test standards for other

[[Page 70910]]

reasons. For example, DOE is not required to adopt or align its test
procedures with sections of the consensus industry test standard that
are not necessary for the method of test for metric(s) included in the
DOE test procedure. For instance, sections of the industry test
procedure regarding selection of models for testing under an industry
certification program, verification of represented values and the
associated tolerances, and operational requirements need not be
referenced or aligned with under the DOE test procedure. This is
consistent with the Department's longstanding practice to only include
sections that are relevant to the method of test for metric(s) included
in the DOE test procedure, or that provide clarifications that help
promote understanding amongst regulated entities. Another instance
where DOE may need to deviate from a consensus industry test standard
is to address issues identified through DOE's test procedure waiver
process. For example, a manufacturer may seek a test procedure waiver
for a covered product that incorporates a new, innovative technology
that was not contemplated by the consensus industry test standard or
where some other deficiency in the test procedure forestalls successful
testing. In such cases, DOE is required to update the Federal test
procedure to eliminate the need for such a waiver. 10 CFR 430.27(l); 10
CFR 431.401(l).
Finally, although DOE has explained why the Department is often
required to modify consensus industry test standards, DOE agrees with
commenters that consensus industry test standards should serve as the
basis for Federal test procedures whenever possible.\15\ As a result,
DOE wishes to underscore the importance of the consensus industry test
procedure development process, including the need to ensure that a
broad cross-section of stakeholder interests are represented in the
development of such consensus industry standards. DOE believes that
consensus test standards that represent a consensus across all
stakeholders, not just industry, will be more likely to meet the
statutory requirements in EPCA and DOE's CC&E regulations. To that end,
DOE is committed to supporting the consensus industry standards
development process by participating on relevant industry standards
committees. However, DOE reiterates that the industry test standard
development process cannot supplant the Department's test procedure
rulemaking process, because DOE must still ensure that potential
Federal test procedures meet applicable statutory requirements in EPCA
and are compatible with DOE's CC&E regulations.
---------------------------------------------------------------------------

\15\ The National Technology Transfer and Advancement Act of
1995 (``NTTA''), Public Law 104-113, and the Office of Management
and Budget (``OMB'') Circular A-119, Federal Participation in the
Development and Use of Voluntary Consensus Standards and in
Conformity Assessment Activities, both direct Federal agencies to
adopt voluntary consensus standards unless they are inconsistent
with applicable law or otherwise impracticable.
---------------------------------------------------------------------------

Accordingly, for the aforementioned reasons, DOE is clarifying in
appendix A that consensus industry test standards must undergo a
thorough review to ensure that they meet the requirements of EPCA and
are compatible with DOE's CC&E regulations before being adopted as a
Federal test procedure.

E. Finalization of Test Procedures Prior to Issuance of a Standards
Proposal

In the February 2020 Final Rule, DOE adopted at section 8(d) of
appendix A, a requirement that Federal test procedures establishing
methodologies used to evaluate new or amended energy conservation
standards be finalized at least 180 days prior to publication of a NOPR
proposing new or amended energy conservation standards. 85 FR 8626,
8678, 8708. DOE explained that this approach would allow stakeholders
time to gain familiarity with the new or amended test procedure prior
to commenting on any proposed standards.
Upon further review, DOE has determined that, similar to other
provisions in the February 2020 Final Rule, a one-size-fits-all
requirement to finalize new or amended test procedures 180 days before
proposing standards does not allow DOE to account for the particular
circumstances of a rulemaking and may result in unnecessary delays. For
instance, as noted in the April 2021 NOPR, some test procedure
amendments may involve only minor modifications that do not change the
measured energy efficiency of a covered product or equipment. 86 FR
18901, 18907-18908. As a result, DOE proposed to remove this 180-day
spacing requirement and revert to the approach previously followed in
the July 1996 Final Rule that test procedure rulemakings be finalized
prior to publication of an energy conservation standards proposal,
which permitted DOE to appropriately adjust the length of time between
the test procedure final rule and an energy conservation standards
proposal. Id. DOE also sought comment on any alternatives to its
proposal, including whether DOE should retain a set period between
finalization of a test procedure and issuance of a standards NOPR. Id.
Comments Supporting DOE's Proposal To Eliminate the Requirement That
Test Procedures Be Finalized at Least 180 Days Prior to Issuance of a
Standards NOPR
Several commenters expressed their support for DOE's proposal in
the April 2021 NOPR. These commenters stated that the 180-day
requirement may not be necessary for all rulemakings and that DOE
should have the flexibility to determine the appropriate period between
finalization of new or amended test procedures and issuance of proposed
standards. (See, e.g., Joint Advocacy Commenters, No. 38 at pp. 4-5;
NEEA, No. 43 at pp. 3-4; CA IOUs, No. 34 at pp. 1, 3-4) Some of the
commenters cited negotiated rulemakings, where test procedures and
energy conservation standards are often considered and issued in
parallel, as an area where the 180-day requirement delays
implementation of consensus standards without providing a corresponding
benefit. (See, e.g., Joint Advocacy Commenters, No. 38 at pp. 4-5;
NEEA, No. 43 at pp. 3-4) Commenters also argued that minor
modifications to a test procedure may not warrant a lengthy delay
before issuance of a standards proposal. (See, e.g., NEEA, No. 43 at
pp. 3-4; Joint Environmentalist Commenters, No. 31 at p. 2) Finally,
Joint Advocacy Commenters expressed concern that the 180-day
requirement could lead to DOE foregoing certain test procedure
corrections in order to avoid delaying rulemakings. (Joint Advocacy
Commenters, No. 38 at pp. 4-5)
Comments Supporting the Requirement That Test Procedures Be Finalized
at Least 180 Days Prior to Issuance of a Standards NOPR
Several commenters asserted that the 180-day period is necessary to
allow stakeholders the opportunity to conduct testing and gain
familiarity with the new or amended test procedure so as to better
inform their understanding of the impacts of a proposed energy
conservation standard. (See, e.g., AHRI, No. 25 at p. 9; ALA, No. 28 at
p. 3; AGA, No. 33 at p. 5; BWC, No. 24 at p. 2) These commenters also
expressed a variety of other reasons for opposing removal of the 180-
day period between finalization of a test procedure and issuance of a
standards proposal. For instance, Zero Zone opposed eliminating the
180-day spacing between test procedure and energy conservation
standards rules, stating that DOE has not documented any

[[Page 70911]]

delays that would be caused if the 180-day waiting period were to be
applied. The SBA Office of Advocacy noted that small businesses have
limited resources and staff, and in many instances, they do not have
the ability to test their products on-site. According to the SBA Office
of Advocacy, small businesses must instead either hire an outside
laboratory to test the products and report back or pull employees from
other tasks to conduct such testing in-house. (SBA Office of Advocacy,
No. 14 at p. 5) BWC argued that the benefits of having a finalized test
procedure far outweigh any delay in complying with statutory deadlines,
particularly in light of EPCA's anti-backsliding provisions. (BWC, No.
24 at p. 2)
Comments Supporting Alternatives to DOE's Proposal
Numerous commenters recognized that a 180-day period between
finalization of a test procedure and issuance of a standards NOPR is
not always necessary. However, these commenters did not agree with
DOE's proposal to eliminate the 180-day period and determine the
appropriate period on a case-by-case basis. Instead, these commenters
suggested a variety of approaches for determining an appropriate length
of time between finalization of a test procedure and issuance of a
standards proposal. For instance, several commenters suggested revising
the relevant section of appendix A to allow DOE to shorten the 180-day
period through some formal mechanism, which would include an
opportunity for stakeholder input. (See, e.g., Carrier, No. 26 at p. 3;
Crown Boiler, No. 10 at pp. 4-5) Other commenters suggested that DOE
should list the limited circumstances under which it would deviate from
the 180-day period. (A.O. Smith, No. 27 at p. 4; Lennox, No. 18 at p.
4) Similarly, if DOE eliminates the requirement for a standardized 180-
day period, ALA requested that DOE provide clear and specific guidance
on when the 180-day period would be warranted. (ALA, No. 28 at p. 4)
Several other commenters urged DOE to retain the 180-day period when
the test procedure is new or makes significant changes that will impact
measured energy use or efficiency. (See, e.g., Lutron, No. 16 at pp. 2,
3-4, Joint Industry Commenters, No. 40 at p. 9; EEI, No. 9 at pp. 64-
65) Nortek acknowledged that there are situations where 180 days is not
necessary (e.g., minor technical corrections to a longstanding test
procedure), and in those cases, the company stated that it would be
supportive of a 90-day minimum. (Nortek, No. 19 at p. 3) Grundfos
recommended that DOE: (1) Include a proposed timeline in each test
procedure NOPR/final rule for input from stakeholders, and (2) conduct
a mandatory webinar for related input to be heard. The company reasoned
that such approach would provide DOE with the flexibility it desires,
while preventing DOE from defining arbitrary timelines without
negotiation. (Grundfos, No. 37 at pp. 1-2) While Goodman expressed
support for retaining the 180-day requirement, Goodman also stated
that, if DOE chooses to modify the 180-day period, the Department
should define the 180-day period as preferred but not mandatory in
appendix A and articulate with specificity and on the record its
reasons for choosing a lesser time period. (Goodman, No. 22 at p. 3)
DOE also received an alternative joint proposal from AHAM, ALA,
Hearth Patio and Barbecue Association (HPBA), NEMA, Plumbing
Manufacturers International (PMI), ASAP, and ACEEE. These stakeholders
suggested that DOE provide a 180-day time period between the
finalization of a new or amended test procedure and the end of the
comment period on the proposed standard. They also specified that DOE
could deviate from the 180-day requirement for negotiated rulemakings
and test procedure changes that are limited to calculation changes
(e.g., use factor or adder) (AHAM et al. Submission, No. 74 at pp. 2-3)
DOE Response to Comments
Commenters uniformly expressed support for finalizing test
procedures prior to proposing new or amended standards. (See, e.g.,
Carrier, No. 26, at p. 3; Lutron, No. 16 at pp. 2, 3-4; CA IOUs, No. 34
at pp. 1, 3-4; NEEA, No. 43 at pp. 3-4; Joint Industry Commenters, No.
40 at p. 8; Whirlpool, No. 9 at p. 36) For example, the CA IOUs
encouraged DOE to complete test procedure final rules before
publication of a NOPR for new or amended energy conservation standards
whenever possible (due to generally better outcomes in both
proceedings). (CA IOUs, No. 34 at pp. 1, 3-4) Where commenters differed
was on the minimum length of time between finalization of a test
procedure and issuance of a standards proposal--and under what
circumstances, if any, that period of time should be shortened (or
lengthened).
With respect to the comments in favor of DOE retaining the 180-day
requirement for all test procedure rulemakings, DOE agrees with the
majority of commenters who recognized that a 180-day period is not
necessary for all test procedure rulemakings (e.g., minor technical
corrections and negotiated rulemakings). As stated throughout this
rulemaking, DOE is amending appendix A to avoid situations where an
inflexible process lengthens a rulemaking without providing a
corresponding benefit. Thus, DOE is not establishing a minimum period
of time between finalization of a test procedure and issuance of a
standards proposal that would be applied across all of the Department's
rulemakings.
Nevertheless, while the majority of commenters recognized that the
180-day period was not necessary for every rulemaking, a large number
of commenters wanted more guidance on circumstances under which DOE
would provide stakeholders with sufficient time to become familiar with
a new or amended test procedure prior to having to comment on a
standards proposal. These commenters typically cited new test
procedures or test procedure amendments that impact measured energy use
as instances necessitating that DOE provide some period of time for
stakeholders to gain familiarity with the test procedure prior to
commenting on any proposed standards. (See, e.g., Joint Industry
Commenters, No. 40 at p. 9; Trane, No. 23 at p. 2)
In response to these comments, DOE first notes that it already
acknowledged in the April 2021 NOPR that there may be circumstances
where a longer rulemaking timeline is necessary to allow stakeholders
time to become familiar with a new or amended test procedure. See 86 FR
18901, 18908. Further, DOE's proposal to revert to the guidance
provided in the 1996 version of Appendix A that test procedures be
finalized prior to issuance of a standards proposal does not prevent
DOE from finalizing test procedures well in advance (i.e., 180 days or
more) of proposing new or amended energy conservation standards.
However, recognizing the importance of this issue to stakeholders,
DOE believes a modified version of its proposal from the April 2021
NOPR can meet the Department's goal of avoiding the inefficiencies and
unnecessary delays of a one-size-fits-all rulemaking approach while
assuring stakeholders they will have sufficient time to gain
familiarity with a new or amended test procedure prior to commenting on
a standards proposal. As such, DOE is adopting the proposal from the
April 2021 NOPR that test procedures be finalized prior to issuing a
standards proposal. However, in response to comments, DOE is also
adopting a

[[Page 70912]]

requirement that new test procedures or significant test procedure
amendments that impact measured energy use or efficiency be finalized
at least 180 days before the end of the comment period of a proposal
for new or amended standards. DOE will state in the test procedure
final rule whether this 180-day provision applies and why--i.e.,
because the test procedure is either new or the amendments impact
measured energy use or efficiency. While DOE is adopting the 180-day
period as requested by several commenters, DOE is tying the 180 days to
the end of the comment period instead of the issuance of the standards
proposal. DOE believes this is a better approach for two reasons.
First, it recognizes that the comment period, which is at least 60
days, also provides stakeholders with an opportunity to gain
familiarity with the new or amended test procedure. And second, it
provides DOE with more flexibility in issuing standards proposals,
which can benefit both DOE and stakeholders. For instance, if DOE needs
to meet a statutory deadline for issuing a standards NOPR, the
Department could choose to issue a standards NOPR with a longer comment
period in order to more quickly issue that NOPR after finalizing a new
or amended test procedure. In addition to helping DOE meet a statutory
deadline, the longer comment period would also give stakeholders more
time to comment on aspects of the standards proposal that are not
directly related to the test procedure. Finally, as suggested in the
AHAM et al. proposal, DOE is adopting exceptions to the 180-day
requirement for negotiated rulemakings and test procedure amendments
that only result in a calculational change. In the first instance,
stakeholders can determine the appropriate period between finalization
of the test procedure and issuance of a standards NOPR as part of their
negotiations. With regards to the second instance, calculational
changes do not require stakeholders to conduct new tests to determine
the effect of the test procedure change on measured energy use or
efficiency.
For the aforementioned reasons, DOE is finalizing the proposal from
the April 2021 NOPR that test procedures be finalized prior to issuance
of a standards proposal, subject to the modifications discussed above
establishing a minimum period of 180 days between the finalization of a
test procedure and the end of the standards NOPR comment period for,
with certain exceptions: (1) New test procedures; and (2) amended test
procedures that impact measured energy use or efficiency.

F. Direct Final Rules

As discussed in the April 2021 NOPR (see 86 FR 18901, 18908-18909),
the Energy Independence Security Act of 2007, Public Law 110-140 (Dec.
19, 2007), amended EPCA, in relevant part, to grant DOE authority to
issue a ``direct final rule'' (``DFR'') to establish energy
conservation standards in appropriate cases. Under this authority, DOE
may issue a DFR adopting energy conservation standards for a covered
product or equipment upon receipt of a joint proposal from a group of
``interested persons that are fairly representative of relevant points
of view (including representatives of manufacturers of covered
products, States, and efficiency advocates),'' provided DOE determines
the energy conservation standards recommended in the joint proposal
conform with the requirements of 42 U.S.C. 6295(o) or 42 U.S.C.
6313(a)(6)(B), as applicable. (42 U.S.C. 6295(p)(4)(A)) While these two
provisions contain many of the requirements DOE typically must satisfy
in issuing an energy conservation standard, such as the prohibition
against setting less-stringent standards (i.e., the ``anti-
backsliding'' requirement), they do not adopt all the requirements of a
typical energy conservation standard rulemaking. For example, 42 U.S.C.
6295(o) does not specify a mandatory time period between promulgation
of an energy conservation standard and the compliance date for that
standard (i.e., compliance period). DOE has looked to the joint
proposals to fill in these necessary details. This process had been
well-received by manufacturers, trade organizations, and energy
efficiency advocates, as it allowed more room for negotiation, which in
turn made it easier for stakeholders to reach a consensus agreement.
February 2020 Final Rule, 85 FR 8626, 8682-8683.
In a departure from this practice, DOE clarified in the February
2020 Final Rule that 42 U.S.C. 6295(p)(4) is a procedure for issuing a
DFR and not an independent grant of rulemaking authority. As such,
under the February 2020 Final Rule, any joint proposal submitted to DOE
under the DFR provision must identify a separate rulemaking authority
such as 42 U.S.C. 6295(m) (amendment of standards) or 42 U.S.C. 6295(n)
(petition for amended standard) and comply with the requirements (e.g.,
compliance periods) listed in that provision. Id. DOE also provided
additional guidance on the Department's interpretation of ``fairly
representative'' and obligations upon receipt of an adverse comment.
Id. at 85 FR 8683-8685.
In the April 2021 NOPR, DOE explained that it is reconsidering
whether these clarifications regarding the DFR process are appropriate
or necessary, for the reasons set forth subsequently. This
reconsideration begins with the language of the statute. The language
in 42 U.S.C. 6295(p)(4) is clear that DOE may issue standards
recommended by interested persons that are fairly representative of
relative points of view as a DFR when the recommended standards are in
accordance with 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as
applicable. There are no other requirements listed, which is consistent
with the unique circumstances of rules issued under the DFR provision.
DOE's overarching statutory mandate in issuing energy conservation
standards is to choose a standard that results in the maximum
improvement in energy efficiency that is technologically feasible and
economically justified--a requirement found in 42 U.S.C. 6295(o).
Many of the other requirements found in EPCA constrain DOE's
discretion in setting standards for the benefit of stakeholders. For
example, mandatory compliance periods are intended to give
manufacturers sufficient lead time to design new products and shift
manufacturing capacity as necessary. Similarly, EPCA provides that
manufacturers shall not be required to apply new standards to a product
with respect to which other new standards have been required during the
prior 6-year period. (42 U.S.C. 6295(m)(4)(B)) But, if manufacturers
agree to a shorter compliance period or two tiers of standards as part
of a consensus agreement submitted under the DFR provision, it would be
odd if DOE were then forced to deny such a proposal based upon
requirements designed to protect the interests of those same
manufacturers. That being said, DOE will still deny such a proposal if
it is not fairly representative of manufacturers' points of view. (42
U.S.C. 6295(p)(4)(A)) Similarly, DOE will also deny such a proposal if
it does not meet applicable criteria in 42 U.S.C. 6295(o), which, among
other things, require DOE to consider the economic impact on
manufacturers (including small manufacturers) and any possible
lessening of competition that may result from imposition of the
proposed standard. As to this latter point, pursuant to EPCA, DOE
receives a written determination from the Attorney General as to the
potential anti-competitive effects from any proposed energy
conservation standard. (See 42 U.S.C. 6295(o)(2)(B)(i)(V) and (ii))

[[Page 70913]]

Issuing standards through a consensus agreement among stakeholders
is different than DOE's normal rulemaking process. There is a
corresponding difference in the statutory criteria that DOE must apply
to each process, one that is made clear by the language in 42 U.S.C.
6295(p)(4). Accordingly, DOE has proposed to eliminate the rigid
requirement that DFR submittals identify a separate rulemaking
authority and instead revert to the Department's prior practice of
evaluating DFR submittals based on the criteria laid out in 42 U.S.C.
6295(p)(4).
As discussed previously, DOE also provided additional guidance on
the Department's interpretation of ``fairly representative'' and
obligations upon receipt of an adverse comment. Upon reconsideration,
DOE believes that the additional guidance may be overly prescriptive in
some circumstances. For instance, the February 2020 Final Rule required
a group submitting a DFR proposal to include larger concerns and small
businesses in the regulated industry/manufacturer community, energy
advocates, energy utilities (as appropriate for the given covered
product or equipment), consumers, and States. 85 FR 8626, 8683. While
this list may be appropriate for some DFR proposals, it is not
universally applicable. For instance, some of DOE's regulated
industries do not have small business manufacturers (e.g., external
power supplies).\16\ DOE also stated it would publish in the Federal
Register any DFR proposal to obtain feedback as to whether the proposal
was submitted by a group that is fairly representative of relevant
points of view. Id. Once again, this may be good practice for some DFR
proposals (e.g., those concerning newly covered products or equipment),
but it may be unnecessary for most DFR proposals. The bulk of DOE's
covered products and equipment have gone through multiple rounds of
rulemakings, and DOE has become very familiar with the relevant points
of view for these covered products and equipment.
---------------------------------------------------------------------------

\16\ See 85 FR 30636, 30648 (May 20, 2020).
---------------------------------------------------------------------------

With respect to DOE's discussion of adverse comments in the
February 2020 Final Rule, DOE largely repeated the requirements listed
in 42 U.S.C. 6295(p)(4)(C). Namely, DOE will withdraw a DFR if one or
more adverse comments may provide a reasonable basis for withdrawing
the rule under 42 U.S.C. 6295(o), 42 U.S.C. 6313(a)(6)(B), or any other
applicable law. The one clarification DOE offered was that the
Department may consider comments as adverse, even if the issue was
brought up previously during the rulemaking process. Id. at 85 FR 8685.
However, this clarification does not offer any insight into how DOE
will determine whether an adverse comment provides a reasonable basis
for withdrawing the rule.
For these reasons, DOE considered whether the guidance contained in
the February 2020 Final Rule concerning DFRs is unnecessary or
redundant to the statutory language in 42 U.S.C. 6295(p)(4) and
proposed to add ``where appropriate'' to clarify that DOE retains the
discretion to determine what ``fairly representative'' means for a
given DFR submission on a case-by-case basis. Regardless of whether the
DFR section in appendix A is retained, deleted, or revised, DOE stated
that it will continue to evaluate DFR proposals in accordance with 42
U.S.C. 6295(p)(4).
DOE requested comments on the merits of its proposed revisions to
the DFR section, as well as any alternative approaches, such as
deletion of or amendments to the section or retention of aspects of
this section. Additionally, DOE sought comment regarding small business
perspectives and related impacts as to the proposed application of the
DFR provision of EPCA.
In response to the April 2021 NOPR, DOE received a considerable
number of comments on its proposal related to DFRs, which were
overwhelmingly supportive of DOE's proposed return to the Department's
historic approach to DFRs that was in place before adoption of the
February 2020 Final Rule. (Hamdi, No. 7 at p. 1; NPCC, No. 12 at p. 5;
Carrier, No. 26 at p. 3; A.O. Smith, No. 27 at p. 5; MHI, No. 32 at pp.
3-4; Nortek, No. 19 at p. 4; Joint Environmentalist Commenters, No. 31
at pp. 6-7; CA IOUs, No. 34 at p. 4; CEC, No. 35 at p. 7; Grundfos, No.
37 at p. 3; Joint Advocacy Commenters, No. 38 at pp. 5-6; Joint
Advocacy Commenters (appendix I), No. 38 at pp. 1, 2, 13-14; NEEA, No.
43 at p. 4; Lennox, No. 18 at p. 7; Goodman, No. 22 at p. 4; Trane, No.
23 at p. 3; Joint Industry Commenters, No. 40 at p. 16) However, there
were a few commenters who opposed DOE's proposal and instead supported
retention of the approach to DFRs contained in the February 2020 Final
Rule. (AGA, No. 33 at p. 6; AFP, No. 36 at p. 2; Anonymous, No. 39 at
p. 1) These comments and their rationale are discussed in further
detail in the paragraphs that follow.
Comments in Support of DOE's Proposal To Return to Its Prior Practice
Regarding the Use of the DFR Provision in EPCA
A number of commenters argued that a return to DOE's prior
interpretation of EPCA's DFR provisions are authorized by and
consistent with the statute's requirements. (Joint Environmentalist
Commenters, No. 31 at pp. 6-7; CEC, No. 35 at p. 7; Joint Advocacy
Commenters, No. 38 at p. 6; A.O. Smith, No. 27 at p. 5) On this point,
the Joint Environmentalist Commenters made the case that EPCA's DFR
provision at 42 U.S.C. 6295(p)(4) expressly authorizes DOE to accept a
proposed standard negotiated by a representative group of stakeholders,
provided that the proposal complies with 42 U.S.C. 6295(o) (residential
products) or 42 U.S.C. 6313(a)(6)(B) (commercial and industrial
products). The Joint Environmentalist Commenters disagreed with DOE's
interpretation in the February 2020 Final Rule that 42 U.S.C.
6295(p)(4) confers no independent grant of rulemaking authority upon
DOE, and, as a result DFRs must satisfy the statutory requirements
associated with another rulemaking authority, e.g., 42 U.S.C. 6295(m)
or 42 U.S.C. 6295(n). Instead, these commenters favored a return to
DOE's prior flexibility in this area (e.g., consideration of different
compliance timelines). (Joint Environmentalist Commenters, No. 31 at
pp. 6-7) Similarly, the CEC supported DOE's proposed interpretation in
the April 2021 NOPR that the direct final rule provision at 42 U.S.C.
6295(p)(4) grants the agency rulemaking authority separate and distinct
from its general authority to adopt energy conservation standards. The
commenter argued that the interpretation of that statutory provision
contained in the February 2020 Final Rule is inconsistent with the
language of the statute and congressional intent to facilitate DFRs.
Consequently, the CEC encouraged DOE to move forward with its proposal.
(CEC, No. 35 at p. 7)
The NPCC reasoned that the direct final rule provision enacted by
Congress was designed with the intent to streamline mutually agreed
upon standards. The NPCC stated that the current rule's requirement
that DOE first identify a separate and independent basis for a given
standards rulemaking adds unnecessary steps and requirements to the
direct final rule process. Consequently, the NPCC supported the removal
of this provision. (NPCC, No. 12 at p. 5) Likewise, Nortek stated that
it disagrees with DOE's decision in the February 2020 Final Rule to
define DFRs as a procedural tool and to eliminate the use of DFRs in
negotiated rulemaking. (Nortek, No. 19 at p. 4) Trane and Lennox also
agreed with DOE's proposal to eliminate the requirement for a separate
rulemaking

[[Page 70914]]

authority and to implement its DFR authority on a case-by-case basis,
evaluating consensus proposal submissions based on the criteria laid
out in 42 U.S.C. 6295(p)(4). (Trane, No. 23 at p. 3; Lennox, No. 18 at
p. 6)
Most of the commenters favored a return to DOE's prior approach to
DFRs because of the increased flexibility that approach provided.
(Joint Environmentalist Commenters, No. 31 at pp. 6-7; CA IOUs, No. 34
at p. 4; Joint Advocacy Commenters, No. 38 at p. 6; Joint Advocacy
Commenters (Appendix I), No. 38 at pp. 1, 2, 13-14) For example,
Carrier characterized DOE's earlier direct final rule process as an
efficient, cost-effective regulatory process for both the government
and stakeholders, a point echoed by MHI and NEEA. (Carrier, No. 26 at
p. 3; MHI, No. 32 at pp. 3-4; NEEA, No. 43 at p. 4) A.O. Smith stated
that applying the DFR authority in a flexible manner, so as to permit
consideration of measures such as alternative compliance dates, dual
metrics, phased-in compliance by product/equipment class, and two-
tiered standards, is both permitted under EPCA and essential to
maintain as part of the Program's structure. The company supports the
use of the DFR authority in this manner because it affords
manufacturers with flexibility for consensus-based or negotiated
solutions. (A.O. Smith, No. 27 at p. 5) The CA IOUs made a similar
point, arguing that DOE's pre-2020 Final Rule guidance for direct final
rules may lead to more nuanced and detailed approaches to test
procedures and energy conservation standards through utilization of the
mechanisms cited by A.O. Smith. (CA IOUs, No. 34 at p. 4) MHI added the
DFRs can incentivize the consensus process. (MHI, No. 32 at pp. 3-4)
Citing the ability to utilize those same mechanisms, the Joint
Advocacy Commenters reasoned that many of the other EPCA requirements
beyond those included in 42 U.S.C. 6295(o) and 42 U.S.C. 6313(a)(6)(B)
are for the benefit of stakeholders, but they are arguably unnecessary
in the context of DFRs. For example, the Joint Advocacy Commenters
stated that other EPCA provisions specify lead times for compliance so
as to provide manufacturers with sufficient time to comply with a new
standard, but such considerations are not necessary when manufacturers
negotiate an agreement subjecting themselves to a different compliance
date. (Joint Advocacy Commenters, No. 38 at pp. 5-6; Joint Advocacy
Commenters (Appendix I), No. 38 at pp. 1, 2, 13-14)
There was considerable discussion and overlap of issues between
appendix A's DFRs and negotiated rulemaking provisions, because in the
past, most DFRs have arisen out of that type of rulemaking proceeding.
A number of commenters stressed that in contrast to the restriction in
the February 2020 Final Rule, negotiated rulemakings should once again
be permitted to result in a consensus recommendation that leads to a
DFR. (Grundfos, No. 37 at p. 3; NEEA, No. 43 at p. 4; Lennox, No. 18 at
p. 7) Generally, commenters pointed to the statutory protections
associated with both DFRs and negotiated rulemaking as adequate to
ensure the fairness, transparency, and integrity of the process, as
explained subsequently.
For example, NEEA noted how the DFR provisions already provide
several safeguards, including a requirement that the consensus
recommendation for standards be fairly representative of relevant
points of view and the potential for a DFR to be withdrawn upon receipt
of one or more adverse comments (leading to further notice and comment
rulemaking). Particularly where there is a consensus agreement, NEEA
argued that further comment beyond that provided by the DFR would be
redundant. (NEEA, No. 43 at p. 4) Similarly, MHI asserted that the
interested persons that are fairly representative of relevant points of
view who participate in that process will have taken the time during or
in advance of the rulemaking to exchange views and reach a common or
joint understanding of what level of energy efficiency or energy use
will reasonably strike a balance between benefits and burdens. (MHI,
No. 32 at pp. 3-4). Consequently, MHI argued that DOE should give
substantial weight to the consensus views of these participants in
light of their competing interests. (MHI, No. 32 at p. 4) Furthermore,
the Joint Industry Commenters stated that, ``[a]t a minimum, the
`relevant points of view' are likely to reflect the views of the
persons who will bear the heaviest burden of implementing the
regulatory mandate and the responsibility for certifying compliance
(manufacturers, specifically those who make and use the covered
product), the persons who are active in promoting the maximum
improvement in energy savings (energy efficiency advocates), and
representatives of the country's citizens who are expected to realize
net benefits from a mandatory rule (States).'' (Joint Industry
Commenters, No. 40 at p. 16)
However, the Joint Advocacy Commenters cautioned that the February
2020 Final Rule's additional guidance regarding what constitutes a
``fairly representative'' group of stakeholders and its clarification
regarding adverse comments may be overly prescriptive, a position in
agreement with DOE's April 2021 NOPR. (Joint Advocacy Commenters, No.
38 at pp. 5-6; Joint Advocacy Commenters (appendix I), No. 38 at pp. 1,
2, 13-14) Along these lines, Lennox also warned that appendix A should
not go further than the statutory language regarding participants
(i.e., manufacturers, States, and efficiency advocates) to also include
``energy utilities, consumers,'' per the February 2020 Final Rule.
Instead, Lennox stated that it supports amending appendix A to include
the language ``where appropriate'' regarding parties, thereby avoiding
any unnecessary constraints to the DFR process. (Lennox, No. 18 at pp.
6-7)
In a more neutral posture, NAFEM took the position that this is not
a critical issue, arguing that it is not overly concerned either with
DOE maximizing its use of DFR when issues are routine and non-
controversial, or even to reflect the results of a well-conducted
negotiated rulemaking, so long as DOE can overcome the other statutory
issues it identifies with such negotiated rulemakings. (NAFEM, No. 30
at pp. 6-7)
A few commenters provided suggestions for potential process
improvements. For example, although Grundfos supported DOE's proposal
that a negotiated rulemaking may culminate in a term sheet recommending
a DFR, the commenter suggested that before such recommendation is
accepted, DOE should be required to publish a determination (with
supporting reasoning) that the Appliance Standards and Rulemaking
Federal Advisory Committee (ASRAC) Working Group meets the EPCA
requirement to be ``fairly representative of relevant points of view.''
(Grundfos, No. 37 at p. 3)
The Joint Advocacy Commenters stated that although they have no
qualms about retaining the DFR section of appendix A with the
modifications proposed, they alternatively support removal of that
section, because the statute already provides sufficient guidance
regarding DOE's DFR authority. (Joint Advocacy Commenters, No. 38 at p.
6)
Comments Opposing DOE's Proposal To Return To Its Prior Practice
Regarding the Use of the DFR Provision in EPCA
Three commenters provided dissenting views in opposition to DOE's
proposal regarding DFRs as set forth in the April 2021 NOPR. (AGA, No.
33 at p. 6; AFP, No. 36 at p. 2; Anonymous,

[[Page 70915]]

No. 39 at p. 1) These commenters largely supported the approach to DFRs
presented in the February 2020 Final Rule, for the reasons that follow.
AFP supported the reasoning DOE provided in its 2020 Final Rule
indicating that the DFR statutory provision does not provide an
independent grant of rulemaking authority (i.e., outlining its own set
of substantive requirements when establishing or amending a standard)
but is instead only a procedural process for issuing a standard
authorized under another provision of EPCA. In AFP's view, nothing in
EPCA permits DOE to interpret the DFR provision as a means to evade
EPCA's requirements with respect to compliance periods, energy
efficiency metrics, or other factors. (AFP, No. 36 at p. 2) An
anonymous commenter expressed similar views, quoting extensively from
that portion of the February 2020 Final Rule final rule making the case
that the DFR provision does not create any additional flexibility with
regard to such statutory requirements. (Anonymous, No. 39 at p. 1)
AGA stated that the February 2020 Final Rule contains appropriate
and necessary clarifications and requirements to help ensure that
negotiated rulemakings and direct final rules are treated distinctly
from each other and not conflated. (AGA, No. 33 at p. 6) Rather than
making a broad change, AGA suggested that it would be preferable for
DOE to allow for divergences from the current set of requirements where
the need for such divergences is appropriately substantiated by DOE. It
added that a DFR and its accompanying process should be consistent with
EPCA and the APA and that since a DFR is issued without prior notice
and comment, the process for these rules should only be used when DOE
has deemed that rule to be routine or noncontroversial in accordance
with the relevant statutory requirements. (AGA, No. 33 at p. 6)
DOE Response to Comments
After careful consideration of these comments, DOE has decided to
adopt the identified changes to its DFR process along the lines
proposed in the April 2021 NOPR. In essence, DOE has concluded that it
is appropriate to return to its historic practice for DFRs in place
prior to the February 2020 Final Rule. DOE agrees with the commenters
who argued that the February 2020 Final Rule's interpretation of EPCA's
DFR provision (i.e., as a purely procedural one) is not the best
reading of the statute, and DOE disagrees with those commenters such as
AFP and AGA, who support the opposite statutory reading. Instead, DOE
is reverting to its longstanding interpretation that the DFR provision
conveys upon DOE a substantive grant of rulemaking authority, thereby
allowing stakeholders to negotiate over more aspects of the energy or
water conservation standard, e.g., compliance periods, so long as the
requirements of 42 U.S.C. 6295(o) (and 42 U.S.C. 6313(a)(6)(B), as
applicable) are met.
DOE has determined that the February 2020 Final Rule imposed
certain unnecessary restrictions upon the use of DFRs, thereby limiting
DOE's flexibility, program efficiency, and the usefulness of this
important regulatory tool provided by Congress. In the past, DFRs--
arising from both consensus agreement submissions and negotiated
rulemakings--have frequently utilized measures such as alternative
compliance dates, dual metrics, phased-in compliance by product/
equipment class, and two-tiered standards. These measures have
typically resulted in greater overall energy savings more quickly, an
outcome which the Department finds consistent with the energy-saving
purposes of EPCA, and DOE agrees with MHI that the Department should
give such consensus recommendations appropriate weight.
In providing a streamlined process for DFRs, Congress built in
certain safeguards in the relevant statutory provision, namely the
requirement that a joint statement recommending an energy or water
conservation standard must be ``fairly representative of relevant
points of view (including representatives of manufacturers of covered
products, States, and efficiency advocates)'' and the potential for
withdrawal of a DFR upon receipt of one or more adverse comments. (42
U.S.C. 6295(p)(4)(A) and (C)) However, because each rulemaking
proceeding is different (in terms of both issues and stakeholders), DOE
has concluded that it is beneficial for the agency to assess
representativeness and any adverse comments on a case-by-case basis.
For example, if there are no small business manufacturers producing a
certain covered product, that should not preclude consideration of a
consensus agreement or a negotiated rulemaking leading to a DFR.
Unfortunately, in seeking to clarify DOE's DFR process, the February
2020 Final Rule inadvertently imposed a one-size-fits-all regime that
may not be appropriate for all proceedings.
DOE is not adopting the suggestion of Grundfos that before such a
consensus recommendation is accepted, the Department should be required
to publish a determination (with supporting reasoning) that an ASRAC
Working Group meets the EPCA requirement to be ``fairly representative
of relevant points of view.'' If an interested party has concerns as to
representativeness, this issue may be addressed in a comment on the DFR
(potentially as an ``adverse'' comment). Particularly given the
numerous statutory deadlines DOE faces for energy conservation
rulemakings, the agency does not find it reasonable to put in place a
separate comment opportunity for this narrow issue, as a consolidated
comment opportunity would suffice and serve the same purpose.
Thus, in this final rule, DOE is retaining the expanded list of
potentially representative parties (i.e., beyond the statutorily
required manufacturers, States, and efficiency advocates) but adding
``where appropriate'' in recognition of the fact that there is no set
group of relevant points of view across all rulemakings. DOE
anticipates that such an approach will encourage consensus agreement
and DFRs, consistent with the requirements of EPCA. Similarly, DOE is
removing discussion of adverse comments from appendix A, so as not to
limit the Department's ability to consider the merits of such comments
on a case-by-case basis.
In addition, DOE is also returning to its historic practice that a
negotiated rulemaking may result in a term sheet with recommendations
culminating in a DFR. (For further discussion of negotiated rulemaking,
see section G of this final rule.) The Department has concluded that
the contrary position taken in the February 2020 Final Rule was an
overly restrictive interpretation not compelled by EPCA or the NRA.
Upon further consideration, DOE now sees the applicable provisions of
these two statutory sources can be read in harmony to allow for DFRs to
arise from such proceedings, a result consistent with 5 U.S.C. 561,
Purpose, of the NRA which states, ``Nothing in this subchapter shall be
construed as an attempt to limit innovation and experimentation with
the negotiated rulemaking process or with other innovative rulemaking
procedures otherwise authorized by law.'' DOE does not agree with the
more restrictive approach recommended by the AGA, because it could
unnecessarily limit use of the provision Congress placed in statute.
Consequently, DOE is clarifying that a negotiated rulemaking can result
in a DFR.
DOE notes that even if the position taken in the February 2020 rule
was not erroneous, as a matter of policy, a

[[Page 70916]]

negotiated rulemaking can still result in a direct final rule. DOE's
independent (and separate) authority to initiate a direct final rule
does not preclude the possibility that it may be the product of a
negotiated rulemaking. The consensus agreement contemplated under DOE's
authority under 42 U.S.C. 6295(p)(4) only requires that DOE receive a
joint statement from specified interested parties and that the
recommended standard(s) be in accordance with 42 U.S.C. 6295(o) or 42
U.S.C. 6313(a)(6)(B), as applicable.
For the aforementioned reasons, DOE is finalizing its proposed
revisions to the DFR section of appendix A, thereby restoring
flexibility to the process and allowing the Department to tailor its
approach to the needs of individual energy conservation standard or
test procedure rulemakings on a case-by-case basis. DOE concludes that
retention of a revised DFR section as part of appendix A will provide
additional clarity for interested parties.

G. Negotiated Rulemaking

As discussed in the April 2021 NOPR (see 86 FR 18901, 18909-18911),
the Department adopted a new section 11, Negotiated Rulemaking Process,
in the February 2020 Final Rule to set forth the procedures that DOE
would follow when using negotiated rulemaking under the Appliance
Standards Program. 85 FR 8626, 8708-8709. These provisions discussed
DOE's historical use of negotiated rulemaking, along with a few
modifications to the agency's past approach. 85 FR 8626, 8685-8686. As
that final rule explained, negotiated rulemaking is a process by which
an agency attempts to develop a consensus proposal for regulation in
consultation with interested parties, thereby addressing comments from
stakeholders before issuing a proposed rule. This process is conducted
in accordance with the requirements of the NRA. To facilitate potential
negotiated rulemakings, DOE established the Appliance Standards and
Rulemaking Federal Advisory Committee (``ASRAC'') to comply with the
Federal Advisory Committee Act, Public Law 92-463 (5 U.S.C. App. 2). As
part of the DOE process, working groups have been established as
subcommittees of ASRAC, from time to time, for specific products, with
one member from the ASRAC committee attending and participating in the
meetings of the specific working group. Ultimately, the working group
reports to ASRAC, and ASRAC itself votes on whether to make a
recommendation to DOE to adopt a consensus agreement. The negotiated
rulemaking process allows real-time adjustments to the analyses as the
working group is considering them. Furthermore, it allows parties with
differing viewpoints and objectives to negotiate face-to-face regarding
the terms of a potential standard. Additionally, it encourages
manufacturers to provide data for the analyses in a more direct manner,
thereby helping to better account for manufacturer concerns. DOE
recognizes the value of this process and encourages submission of joint
stakeholder recommendations.
The February 2020 Final Rule also discussed the following key
points related to negotiated rulemaking at 85 FR 8626, 8685:
<bullet> Negotiated rulemakings will go through the ASRAC process
outlined above, and the appropriateness of a negotiated rulemaking for
any given rulemaking will be determined on a case-by-case basis.
<bullet> In making this determination, DOE will use a convener to
ascertain, in consultation with relevant stakeholders, whether review
for a given product or equipment type would be conducive to negotiated
rulemaking, with the agency evaluating the convener's recommendation
before reaching a decision on such matter.
<bullet> The following five factors militate in favor of a
negotiated rulemaking: (1) Stakeholders have commented in favor of
negotiated rulemaking in response to the initial rulemaking notice; (2)
the rulemaking analysis or underlying technologies in question are
complex, and DOE can benefit from external expertise and/or real-time
changes to the analysis based on stakeholder feedback, information, and
data; (3) the current standards have already been amended one or more
times; (4) stakeholders from differing points of view are willing to
participate; and (5) DOE determines that the parties may be able to
reach an agreement.
<bullet> If a negotiated rulemaking is initiated, a neutral and
independent facilitator, who is not a DOE employee or consultant, shall
be present at all ASRAC working group meetings.
<bullet> DOE will set aside a portion of each ASRAC working group
meeting to receive input and data from non-members of the ASRAC working
group.
<bullet> Finally, a negotiated rulemaking in which DOE participates
under the ASRAC process will not result in the issuance of a DFR, and
further, any potential term sheet upon which an ASRAC working group
reaches consensus must comply with all of the provisions of EPCA under
which the rule is authorized.
After further consideration, DOE tentatively determined in the
April 2021 NOPR that further changes to its approach to negotiated
rulemaking are necessary and appropriate. Although section 11 of
appendix A largely mirrors the process DOE has followed when the
Department has determined, on a case-by-case basis, that such
alternative rulemaking procedures would be useful to supplement the
normal notice-and-comment rulemaking process, DOE proposed in the April
2021 NOPR to make certain modifications to the process articulated in
that section. On a number of points, DOE proposed to revert to the
approach it employed prior to promulgation of the February 2020 Final
Rule. The following paragraphs outline the proposed changes from the
April 2021 NOPR.
First, DOE would clarify that although the Department has
frequently used facilitators and considered whether to use convenors in
past negotiated rulemakings, the use of such individuals is left to
agency discretion and is not required under the NRA (see 5 U.S.C.
563(b)). A ``convenor'' performs the task of canvassing various
interested parties regarding the potential and feasibility of achieving
consensus in a particular matter. In contrast, a ``facilitator'' helps
guide the discussion among the participants to a negotiated rulemaking.
While DOE recognizes the value of using a convenor and/or a facilitator
in certain cases, there are also instances where DOE can adequately
assess whether a given situation is ripe for a consensus-based approach
through negotiated rulemaking. These instances may occur where DOE has
accumulated years or decades of experience with setting standards with
a particular product or equipment, or where DOE is approached by
concerned stakeholders. In those instances, it may not be necessary to
expend the time and/or resources associated with the use of a convenor.
Consequently, DOE proposed to eliminate the requirement for use of a
convenor and a facilitator and to instead retain discretion to utilize
the services of such individuals in appropriate cases. This change in
approach would allow the agency to conserve resources and avoid delay
where such services are not necessary.
Second, DOE proposed that the list of factors militating in favor
of a negotiated rulemaking, as currently articulated at section
11(a)(3) of appendix A, are neither mandatory nor exclusive. The NRA
already sets forth factors for consideration at 5 U.S.C. 563(a).
Because the factors set forth in section 11(a)(3) of appendix A may not
be appropriate in all cases, DOE proposed

[[Page 70917]]

to no longer be bound by this list when determining whether it is
appropriate to convene a negotiated rulemaking. Instead, the Department
proposed to consider the factors articulated under 5 U.S.C. 563(a), as
well as any other considerations relevant to the specific product/
equipment proceeding in question.
Third, DOE proposed to revert to its prior approach, which would
allow for a negotiated rulemaking to result in a term sheet
recommending promulgation of a DFR under 42 U.S.C. 6295(p)(4). (See
section III.F of this document for a more complete discussion of DFRs.)
DOE tentatively concluded that the approach adopted in the February
2020 Final Rule (i.e., that a negotiated rulemaking must result in a
proposed rule followed by a final rule) was an overly restrictive
reading of the NRA. While 5 U.S.C. 563(a) discusses issuance of a
proposed rule and a final rule, 42 U.S.C. 6295(p)(4) (under EPCA)
already mandates publication of a proposed rule simultaneously with a
DFR--and in the event of an adverse comment that may provide a
reasonable basis for withdrawal, DOE is required to conduct further
rulemaking under the proposed rule, proceeding to a final rule, if
appropriate. (42 U.S.C. 6295(p)(4)(C)(i)(II)) Furthermore, at 5 U.S.C.
561, Purpose, the NRA states, ``Nothing in this subchapter shall be
construed as an attempt to limit innovation and experimentation with
the negotiated rulemaking process or with other innovative rulemaking
procedures otherwise authorized by law.'' In light of the above, DOE
has tentatively concluded that these relevant legal authorities can be
read in harmony and do not preclude the possibility of a negotiated
rulemaking that results in a recommendation to implement the body's
consensus through a DFR. Accordingly, DOE proposed to revert to its
prior position on this topic.
In light of these proposed modifications, DOE tentatively concluded
that section 11 of the revised appendix A would become largely
redundant of the NRA requirements to which the agency is already
subject, and therefore, the Department found section 11 to be
unnecessary and proposed its removal. DOE noted, however, that its
proposal to remove this section from appendix A in no way reflected a
change in the Department's perception of the value of negotiated
rulemaking or its intention to use negotiated rulemaking in appropriate
cases. Similarly, this proposal was not expected to affect DOE's
practice of providing opportunities for public comment and access to
working group documents and meetings/webinars throughout the negotiated
rulemaking process. DOE requested comments on the merits of this
proposed approach including comments regarding the proposed complete
removal of section 11, as well as any alternatives to this proposal,
such as amendments or revisions to the section or retention of aspects
of section 11. See generally April 2021 NOPR 86 FR 18901, 18909-18911.
In response to the April 2021 NOPR, DOE received a considerable
number of comments on its proposal related to the topic of negotiated
rulemaking, which like the comments on the proposed DFR provisions,
were overwhelmingly supportive of both the negotiated rulemaking
mechanism itself and DOE's proposal to return to the Department's
historic approach to such rulemakings that was in place before adoption
of the February 2020 Final Rule. (Hamdi, No. 7 at p. 1; NPCC, No. 12 at
p. 5; Carrier, No. 26 at p. 3; ALA, No. 28 at p. 4; CEC, No. 35 at p.
7; Joint Advocacy Commenters, No. 38 at p. 7; Joint Advocacy Commenters
(appendix I), No. 38 at pp. 1, 2, 15; NEEA, No. 43 at p. 4; Lennox, No.
18 at pp. 8-9; Goodman, No. 22 at p. 3; Nortek, No. 19 at p. 4; CEC,
No. 35 at p. 7; CA IOUs, No. 34 at p. 4) A small minority of commenters
either favored the approach to negotiated rulemaking contained in the
February 2020 Final Rule or otherwise expressed concern with the
proposal set forth in the April 2021 NOPR. (AGA, No. 33 at p. 6; MHI,
No. 32 at pp. 1-2) All of these comments and their rationale are
discussed in further detail in the paragraphs that follow.
Comments in Support of DOE's Proposal Regarding Negotiated Rulemaking
Commenters generally agreed that DOE's use of negotiated
rulemakings has yielded substantial benefits. For example, ALA stated
that negotiated rulemakings implemented through DOE's ASRAC process
have produced significant energy savings by allowing a collaborative
effort among interested parties that can be faster, more transparent,
and less contentious than the normal rulemaking process. (ALA, No. 28
at p. 4)
A number of commenters favored a return to DOE's prior practice
regarding negotiated rulemaking because of the increased flexibility
that approach provided. On this point, the Joint Environmentalist
Commenters generally opposed what they characterized as the
unnecessarily strict limits and restrictions related to negotiated
rulemaking in the February 2020 Final Rule, beyond the requirements of
the NRA, so these commenters expressed support for returning
flexibility to the process for negotiated rulemakings. (Joint
Environmentalist Commenters, No. 31 at pp. 6-7; CA IOUs, No. 34 at p.
4) The CA IOUs argued that the use of negotiated rulemaking (in
combination with DFRs) offers flexibility and can lead to more nuanced
and detailed approaches to test procedures and standards, such as
staged standards, different compliance dates, and multiple efficiency
standards. The CA IOUs added that it has been their experience that
direct negotiations between stakeholders has resulted in energy
conservation standards that are quicker and easier for industry to
implement and that save more energy overall than would have been
achievable through the conventional rulemaking process. (CA IOUs, No.
34 at p. 4) The CEC added that a reversion back to DOE's prior,
effective negotiated rulemaking practice is based on and consistent
with the requirements of the NRA. (CEC, No. 35 at p. 7) GEA described
negotiated rulemaking with direct final rules as a powerful tool for
fast progress that reduce the use of DOE resources. GEA added that
negotiated rulemaking offers all stakeholders an opportunity for
increased control, decreases the likelihood of litigation, and provides
an opportunity for solutions outside the scope of EPCA's analytical
framework and for the consideration and resolution of standards and
test procedures for multiple products at once. (GEA, No. 20 at p. 3)
NEEA also stated that negotiated rulemakings (in combination with DFRs)
can lead to more efficient rulemaking. (NEEA, No. 43 at p. 4)
As discussed previously, there was considerable discussion and
overlap of issues between appendix A's DFR and negotiated rulemaking
provisions, because in the past, most DFRs arose out of that type of
rulemaking proceeding. A number of commenters stressed that in contrast
to the restriction in the February 2020 Final Rule, negotiated
rulemakings should once again be permitted to result in a term sheet
with a consensus recommendation that leads to a DFR. (NPCC, No. 12 at
p. 5; Carrier, No. 26 at p. 4; MHI, No. 32 at p. 3; Nortek, No. 19 at
p. 4; Joint Environmentalist Commenters, No. 31 at pp. 6-7; Joint
Advocacy Commenters, No. 38 at p. 7; Joint Advocacy Commenters
(appendix I), No. 38 at pp. 1, 2, 15; NEEA, No. 43 at p. 4; NAFEM, No.
30 at p. 7; Joint Industry Commenters, No. 40 at p. 15) On this point,
A.O. Smith argued that the

[[Page 70918]]

approach contained in the February 2020 Final Rule undermines DOE's own
authority under EPCA. In A.O. Smith's view, DOE's past application of
the DFR provision to permit a DFR to result from a negotiated
rulemaking has ensured that the DFR's ``fairly representative''
requirement has been met, and the commenter asserted that the
negotiated rulemaking process has been an important advancement and
addition to the Appliance Standards Program, and for these reasons, its
use should continue. A.O. Smith also asserted that applying the DFR
provision in this manner meets the goal of Congress to promote
consensus agreements that reflect broad input from interested parties
who can fashion agreements that best promote the aims of the statute.
It added that when DOE receives a consensus agreement consistent with
the DFR process, that act alone is sufficient to satisfy the statute so
long as 42 U.S.C. 6295(o) (or 42 U.S.C. 6313(a)(6)(B) as applicable)
are met. (A.O. Smith, No. 27 at p. 5)
Commenters also addressed the individual proposed changes regarding
negotiated rulemakings that DOE presented in the April 2021 NOPR. On
the to

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