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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### U.S. DEPARTMENT OF ENERGY **+ + + + + CENTRAL AIR CONDITIONER REGIONAL STANDARDS**  **ENFORCEMENT WORKING GROUP**

**+ + + + + PUBLIC MEETING** 

**+ + + + + Wednesday**  **October 1, 2014 + + + + +** **The Public Meeting met in Suite 8E 089, 1000 Independence Avenue, S.W.,**  **Washington, D.C., at 9:00 a.m., Neil Eisner, Meeting Facilitator, presiding.**  **PRESENT NEIL EISNER, Meeting Facilitator**  **ASHLEY ARMSTRONG, U.S. Department of Energy TIMOTHY BALLO, Earthjustice**  **LAURA BARHYDT, U.S. Department of Energy, General Counsel**  **JORDAN DORIA, Ingersoll Rand RAY ELLIS, Lincoln Electric Cooperative**  **GARY FERNSTROM, California Investment Owned Utilities**  **JOHN GIBBONS, Carrier Corporation JOHN HURST, Lennox International**  **MATTHEW LATTANZI, NORDYNE Inc. CHARLES McCRUDDEN, Air Conditioning**  **Contractors of America JON MELCHI, HARDI**  **KAREN MEYERS, Rheem Manufacturing Company**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### PRESENT: (cont'd) **ELIZABETH NOLL, Natural Resources Defense Council**  **DOUG RAWALD, U.S. Department of Energy, General Counsel**  **BRYAN ROCKY, Johnson Controls ANIRUDDH ROY, Goodman Manufacturing Company**  **HARVEY SACHS, American Council for an Energy-Efficient Economy**  **AMY SHEPHERD, Air-Conditioning, Heating and Refrigeration Institute**  **CHARLES WHITE, Plumbing-Heating-Cooling Contractors - National Association**  **DAVID WINNINGHAM, Allied Air Enterprises**

**ALSO PRESENT KARIM AMRANE, Air-Conditioning, Heating, and**  **Refrigeration Institute GARY CLARK, Goodman Global** * **LAURA DEGITZ, Navigant Consulting DAVID HUNGERFORD, California Energy**  **Commission*** **ERIC STAS, American Council for an Energy- Efficient Economy** 

***via teleconference**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 P-R-O-C-E-E-D-I-N-G-S**  **2 9:05 a.m.**  **3 MR. EISNER: All right, let's get**  **4 started so we can break. As Charlie**  **5 mentioned, we are going to caucus shortly and**  **6 then meet back in here. Then, we will hear**  **7 reports from the members about the variety of**  **8 things we were going to check on over the**  **9 weekend, last few days. So unless anybody has**  **10 an objection, we can do that now. I just**  **11 wanted to get a sense as to how long you**  **12 thought we might need.**  **13 COURT REPORTER: I'm sorry, could**  **14 you turn on your microphone?**  **15 MR. McCRUDDEN: I'm sorry. This is**  **16 Charlie with ACCA. Amy's not here. My guess**  **17 is would be less than an hour because there's**  **18 a couple of issues that sort of overlap for us**  **19 and the manufacturers and I wanted to talk to**  **20 the distributors. And I also don't see my**  **21 counterpart here yet from the contractors.**  **22 But I think we shouldn't be longer than it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 takes for Doug to arrive.**  **2 MR. EISNER: Are there sufficient**  **3 meeting rooms for people who want to meet?**  **4 People can stay here. There's a room in the**  **5 back, I believe. But if you think you're fine**  **6 with that, let's --**  **7 MR. SACHS: This is Harvey Sachs.**  **8 Advocates, do we want to act as though we have**  **9 to caucus?**  **10 MR. BALLO: Tim Ballo for the**  **11 manufacturers. We have nothing to talk about.**  **12 MR. FENSTROM: This is Gary. I have**  **13 my mind made up, Harvey. I don't need to**  **14 caucus.**  **15 MR. EISNER: I think, Charlie, you**  **16 said something about wanting to talk to other**  **17 groups also.**  **18 MR. McCRUDDEN: That's correct. I**  **19 think it was just a chance -- I think some of**  **20 us are sort of both been working on similar**  **21 things. We want to take a temperature of**  **22 where people are.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: So if people could stay**  **2 in the general area and could be found.**  **3 MR. SACHS: This is Harvey. And I**  **4 will make an offer that you're absolutely free**  **5 to decline which is the offer that we have a**  **6 caucus of the whole off the record if that**  **7 would help.**  **8 MR. McCRUDDEN: I think I would**  **9 prefer to sort of not to do that yet.**  **10 MR. SACHS: Very well.**  **11 MS. BARHYDT: So I think Doug**  **12 usually arrives about 10, so that would be an**  **13 hour. Do you want to resume before that?**  **14 Because he gave me some at least pointers on**  **15 things that people might talk about. If you**  **16 all are ready to go back before 10, we can do**  **17 that or we can wait until 10.**  **18 MR. SACHS: Laura, when you say**  **19 pointers from Doug --**  **20 MS. BARHYDT: He gave me things that**  **21 you all could talk about that I wouldn't be on**  **22 the spot.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 (Off-mic comment.)**  **2 MR. EISNER: That's one we don't**  **3 talk about.**  **4 (Laughter.)**  **5 MR. SACHS: The question that arises**  **6 is again not mine, but the caucusers like to**  **7 know what was on Doug's mind.**  **8 MS. BARHYDT: So he had said that**  **9 there were -- that he thought that you all**  **10 might want to talk some about the labels some**  **11 more. I don't know exactly in what respect,**  **12 but he thought that might be a topic to tee up**  **13 for first thing this morning before you all**  **14 had requested a caucus this morning. I'm**  **15 seeing puzzled looks though.**  **16 MR. EISNER: I mean the concept was**  **17 approved. It's just details and everybody**  **18 thought that was not going to be a problem.**  **19 MR. GIBBONS: It's all pending DOE**  **20 giving us guidance, final guidance or**  **21 assurance on the --**  **22 MS. BARHYDT: Okay, okay. I was** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 under the impression from him that the**  **2 advocates and the manufacturers still had some**  **3 details to work out on the labels, but if**  **4 that's not the case --**  **5 MR. SACHS: This is Harvey. I think**  **6 we're in violent agreement.**  **7 MS. BARHYDT: Okay.**  **8 MR. EISNER: Why don't we break? I**  **9 will stay in the room if people are ready to**  **10 get back together early we can find everybody**  **11 as long as you stay within a few minutes of**  **12 this area. And if you want to start earlier,**  **13 we can. Otherwise, let's assume we'll start**  **14 at 10 and everybody plan to be back by then.**  **15 (Whereupon, the above-entitled**  **16 matter went off the record at 9:09 a.m. and**  **17 resumed at 10:38 a.m.)**  **18 MR. EISNER: Okay, are we ready to**  **19 get started? Anybody have anything to say?**  **20 MR. ELLIS: I'd like to caucus.**  **21 MR. EISNER: Okay, everybody is**  **22 quiet. All right.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. McCRUDDEN: This is Charlie of**  **2 ACCA and I think what we did there was good.**  **3 It was a good chance for us to meet before we**  **4 start up today and I think there was some**  **5 overlapping issues that impact manufacturers,**  **6 but also impact distributors, impact**  **7 contractors. And we really hadn't had a**  **8 chance from last week to get together and see**  **9 if we're in alignment. And I think that was**  **10 important because that will streamline things**  **11 now.**  **12 The issues that I was concerned**  **13 about, and I don't think we've reached an**  **14 agreement on it yet, was the scope of the**  **15 record keeping, Southwest, Southeast versus**  **16 13s only or national. My concern -- what our,**  **17 ACCA's position is that it should be -- the**  **18 equipment installed in the Southeast and**  **19 Southwest. But that has potential problems**  **20 for the manufacturers, I think, because if**  **21 they're trying to mitigate a mis-rated labeled**  **22 product, they may want that information** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 tracked so that they can essentially prove**  **2 that a certain number didn't go there.**  **3 We had some discussion about that**  **4 looking at other alternatives to just**  **5 Southeast, Southwest or North. And I think**  **6 we're going to go back. One of them was that**  **7 what if you just do work -- if you do work in**  **8 both regions, then you should -- the record**  **9 keeping requirement should apply to you only.**  **10 That way the Minnesota contractor who's never**  **11 going to be working in the South and only**  **12 going to be touching 13 SEER units essentially**  **13 doesn't have the record-keeping requirement.**  **14 And then the contractor in Texas who is only**  **15 going to be -- who's not going to have access,**  **16 essentially, to 13 SEER units shouldn't be**  **17 required because essentially everything he's**  **18 selling is compliant.**  **19 The dilemma is minimizing the**  **20 record-keeping requirement to just really the**  **21 situations where it can help Doug and also --**  **22 help Doug in his investigation or DOE in its** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 investigations into an alleged violation and**  **2 again not burden those with the record keeping**  **3 that's out there. Have I summed that up?**  **4 Okay.**  **5 MR. HURST: Yes, we also talked**  **6 about the dilemma with cash. This is John**  **7 Hurst with Lennox. I'm sorry. The dilemma**  **8 with cash sales. Some distributors such as**  **9 Lennox, we do track our cash sales, not**  **10 because we are better. Our point of sales**  **11 systems were such that you have to enter a**  **12 customer with certain information in order to**  **13 accept their cash. That's a limitation of our**  **14 systems because we're not a retailer or have**  **15 not historically been a retailer. But if you**  **16 think about a lot of distributors that do take**  **17 cash sales or if you think of them as a**  **18 retailer like a Home Depot, Lowe's, Best Buy,**  **19 or your local grocery store, you have a**  **20 choice. You can pay with a credit card where**  **21 you can presumably track back to an individual**  **22 because you have their mailing address,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 probably contact information. You can also**  **2 walk into a Best Buy and you can swipe your**  **3 little key chain thing that gives you Best Buy**  **4 points and therefore we know that you have an**  **5 email address, an address, phone number.**  **6 But you can also go in and buy an**  **7 appliance with cash. And we struggled to find**  **8 a retailer today that tracks the purchaser**  **9 through a cash transaction, whether it's a**  **10 Best Buy and you're buying a serialized**  **11 dishwasher.**  **12 In order to do that for a distributor, it's a**  **13 significant change in business process that**  **14 most retailers today don't -- they just don't**  **15 do.**  **16 And we --- I'll speak on behalf of**  **17 the distributors, correct me, because I'm not**  **18 supposed to really, but correct me if I say**  **19 this incorrectly. The distributors would need**  **20 more time to be able to develop a process to**  **21 track cash. This is not an insignificant**  **22 change in their business practices to all of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 a sudden start tracking cash sales. So that**  **2 may be something we want to talk about in**  **3 terms of the amount of time. It's mitigated**  **4 a little bit by the fact that as we hit**  **5 January 1st, there's going to be a lot of**  **6 product manufactured in 2014 still available**  **7 for sale. But again, I don't want anybody to**  **8 underestimate the challenge in doing this and**  **9 being able to track those sales. Have I hit**  **10 that okay?**  **11 MR. EISNER: Do we have any**  **12 information on what percentages sales are**  **13 cash? We may have talked about this last**  **14 week.**  **15 MR. MELCHI: This is Jon with HARDI.**  **16 It varies by distributor, but industry wide,**  **17 20 percent is the number that I get. And that**  **18 could vary from one store which I have**  **19 described scenarios and say Detroit which is**  **20 almost exclusively cash over the counter**  **21 versus some stores which are very limited in**  **22 the scope of their sales.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: Any comments,**  **2 reactions?**  **3 MR. SACHS: This is a reaction.**  **4 This is Harvey. A couple of things I've heard**  **5 that I do want a response. One of them is, of**  **6 course, to note as a matter of fact. There**  **7 are some very inexpensive products for which**  **8 record keeping is required in particular**  **9 certain over-the-counter -- not only over-the**  **10 counter drugs that are too often have been**  **11 converted to meth. And I can't even remember**  **12 where that class is because I just don't**  **13 remember.**  **14 MR. RAWALD: I assume you're talking**  **15 about pseudoephedrine?**  **16 MR. SACHS: Pseudoephedrine.**  **17 MR. RAWALD: How when you buy**  **18 pseudoephedrine.**  **19 MR. SACHS: So their onerous record**  **20 keeping requirements have been implemented in**  **21 cases where public necessity was deemed to**  **22 require it. I'm not advocating that, but I'm** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 just making sure that it's on the record as**  **2 something that's been part of the tool box in**  **3 some cases.**  **4 The other thing that I'm much more**  **5 interested in is Jon and John's notes about**  **6 there may be time to think about the --**  **7 because of the sell through, to think about**  **8 the questions of record keeping for cash**  **9 sales. And that means there's also time to**  **10 think about what those mean. And in terms of**  **11 Doug's needs, to some extent that can mean**  **12 things like if you sell for cash, you have to**  **13 Xerox the driver's license of the guy who**  **14 picked it up or whatever it is. It does not**  **15 necessarily mean a full-blown alteration to**  **16 the ERP and it's not at all clear what the**  **17 trajectory looks like after the sell-through**  **18 period. So I'm very interested in hearing**  **19 much more about this discussion about what, if**  **20 anything, needs to be done to deal with the**  **21 issue of cash sales.**  **22 MS. SHEPHERD: This is Amy Shepherd** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 from AHRI. When we're thinking about this, we**  **2 do have to keep in mind that for personally**  **3 identifiable information there are all kinds**  **4 of requirements about that record-keeping.**  **5 And so to give -- those people, they don't**  **6 want that information because once you have**  **7 that personally-identifiable information about**  **8 an individual, there's a lot of requirements**  **9 about how you have to store that, protect it,**  **10 all those kinds of things, even destroy it.**  **11 MR. SACHS: This is Harvey. Thank**  **12 you and again this is all ingredients stirred**  **13 into the stew.**  **14 MR. MELCHI: Harvey, this is Jon**  **15 with HARDI.**  **16 Harvey, to address your point, as I**  **17 think about trying to make the records easily**  **18 accessible for Doug in the course of an**  **19 investigation, for those companies that do do**  **20 a large OTC cash business, I think it's going**  **21 to be very difficult if you have a big stack**  **22 of scanned driver's licenses to give to DOE,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 you would essentially have to create a filing**  **2 system for those which kind of defeats the**  **3 purpose of quick and easy.**  **4 MR. SACHS: Again, I'm not**  **5 advocating, but just trying to add ingredients**  **6 and I think it becomes a legitimate question,**  **7 a business question, of do I want to do that**  **8 filing system or modify my ERP. If we in fact**  **9 feel it's necessary to do the tracking of the**  **10 OTC sales. So please, I'm trying to**  **11 brainstorm.**  **12 MR. RAWALD: So this is Doug, and**  **13 John Hurst mentioned the fact that it could**  **14 take time to implement. So there's always the**  **15 ability for the Department in implementing**  **16 regulations to have them be not immediate, but**  **17 at a time in the future if that would be**  **18 palatable to the group and palatable to the**  **19 Department, which I don't know.**  **20 So how much time would it take to**  **21 implement a change of this type?**  **22 MR. HURST: This is John Hurst for** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Lennox. I don't know, Doug. I think that's**  **2 something we have to go back and I think it**  **3 depends on the distributor. Some already do**  **4 it. You know, where there's a distributor --**  **5 that 20 percent, I presume, is some have very**  **6 low cash sales. We have low cash sales**  **7 because we used to not even accept it. We**  **8 realized we were losing business as a result**  **9 of it.**  **10 I would imagine that there is some**  **11 out there in the extreme case that 75 to 80**  **12 percent of their sales are cash sales and**  **13 that's a big process change for that**  **14 particular distributor. I think we have to do**  **15 a little homework. I can go back and poll our**  **16 distributors. I'd suggest the other**  **17 manufacturers do the same thing. And Jon, you**  **18 can do the same.**  **19 MS. MEYERS: This is Karen with**  **20 Rheem. I just want to add one more point that**  **21 we use 20 percent as an aggregate. Is this**  **22 not on? Can you hear me now?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So we use 20 percent as an aggregate**  **2 so I think it an important point that Jon**  **3 Melchi made is that a distributor may have a**  **4 branch in inner-city Chicago, Detroit is**  **5 another great example where 80 to 90 percent**  **6 of those transactions may be cash. And we**  **7 have to recognize that that 20 percent is an**  **8 aggregate, but for many branches even of a**  **9 distributor of which there are maybe 10,000**  **10 plus -- that's kind of a guess on my part. I**  **11 think Jon gave that number earlier. He's much**  **12 more the expert than I am.**  **13 So if that's -- there's a lot of**  **14 branches that that is primarily how they sell**  **15 their units. I think what is very key here,**  **16 and what I want everyone on this committee to**  **17 recognize, is I think we brought into this**  **18 room a willingness to track cash sales, but we**  **19 need time to do it. And so hopefully that's**  **20 recognized around this room. There's a**  **21 willingness to at least take this back and**  **22 discuss it with our members. So please keep** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that in mind. I think this is a huge step**  **2 forward in what we're trying to achieve in**  **3 this negotiated rulemaking.**  **4 There's many other details that**  **5 still need to be worked out about what exactly**  **6 are we going to track and what are the details**  **7 of that record retention, etcetera. But I**  **8 just wanted to make sure everyone understands**  **9 that.**  **10 MR. RAWALD: So this is Doug. And**  **11 just from my point of view of what I can bring**  **12 back to the Department, I think it's a lot**  **13 easier to sell a solid record retention scheme**  **14 that would be phased in over time than a less**  **15 comprehensive scheme that can be phased in**  **16 now. So I guess if there's an ability to look**  **17 at that, that's probably more palatable to**  **18 those that I work with, just thinking out**  **19 loud. So if we can look towards that, that**  **20 would be very helpful.**  **21 MR. EISNER: Other comments? Other**  **22 issues that people want to talk about before** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we --**  **2 MR. ELLIS: Just real quick, Neil.**  **3 This is Ray from Lincoln Electric. I think we**  **4 want to make sure that whatever answer to the**  **5 record keeping is and whatever extent the**  **6 record keeping needs to be done, I think the**  **7 distributors need to play a really big part in**  **8 that because I would be uncomfortable coming**  **9 up with some plan to enforce on a distributor**  **10 that I don't know how onerous that might be.**  **11 So I think it would be -- I don't know how**  **12 long that would take to get from them some**  **13 idea on what would be a palatable form of**  **14 record keeping.**  **15 I know that for us, you do have to**  **16 be careful on what records you keep. We've**  **17 stayed away from some because if you have too**  **18 much information it gets really onerous trying**  **19 to keep that data and keep it secure and such.**  **20 It can be very expensive as well.**  **21 MR. EISNER: Are there technical**  **22 ways to address the problem? Has anybody** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 thought about the kinds of cards a lot of**  **2 stores hand out where your name and business**  **3 information is on it. You pay cash, they just**  **4 swipe that, whatever deal or distributor you**  **5 go to?**  **6 MS. MEYERS: So Neil, this is Karen.**  **7 I think we need to -- those details will**  **8 probably vary by what business practices a**  **9 distributor uses. But I do think because this**  **10 is going to be a significant change that I'd**  **11 like to have some conversation about what**  **12 we're tracking and for how long we're**  **13 tracking. If this is going to be successful,**  **14 it needs to be, in my opinion, and if we get**  **15 the guidance finally from DOE out shortly that**  **16 I think to get all my customers on board, it**  **17 needs to be products limited to regional**  **18 standards and that would be 13 and 14 SEER**  **19 condensing units and package A/C units that**  **20 are subject to regional standards.**  **21 The other thing is -- and that's**  **22 probably 80, 90 percent of the market. I'm** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 kind of guessing. Don't quote me on that.**  **2 And that's going to give you the most**  **3 information that you need.**  **4 And I think we need to -- I made**  **5 this point last week, I think this needs to be**  **6 limited to three years. This is a huge**  **7 record-keeping shift for people in the selling**  **8 chain. And I think if you're going to get a**  **9 warranty call or you're going to get some type**  **10 of information where a home owner or another**  **11 contractor is going to have knowledge of an**  **12 illegal installation, it's going to probably**  **13 happen within the first year of that**  **14 installation. I think those are key points**  **15 that need to be met for us to have our final**  **16 meeting tomorrow.**  **17 MR. RAWALD: And Karen, this is**  **18 Doug. So I've been thinking of this timeline**  **19 for a little bit, the length of time. So one**  **20 of the issues is the amount of time that the**  **21 product could sit in life before it's**  **22 manufactured to when it's installed is at** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 least of note to me, right?**  **2 So if an installer installs**  **3 something and he has a record requirement for**  **4 three years, and the thing that he installed**  **5 three years ago and he has records for, the**  **6 manufacturer, if they have a three-year**  **7 requirement, wouldn't have that record any**  **8 more, right? Because it would be manufactured**  **9 3, 6, 10, 12 months prior to that and left the**  **10 hands of the manufacturer.**  **11 And there's no way to put a**  **12 requirement upon the manufacturer to base**  **13 their record disposal scheme upon the install**  **14 date because you folks would never know when**  **15 that would be. So the only logical method is**  **16 the sales date for having the record**  **17 disposition date.**  **18 So how do I unravel that? How do I**  **19 make my best case that I try to keep -- that**  **20 I'm trying to make sure I connect all the**  **21 dots? How do I get there?**  **22 MR. HURST: This is John Hurst for** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Lennox. Doug, do you have to have a standard**  **2 time period for all three entities that handle**  **3 the equipment, or can it be different for**  **4 manufacturers, distributors, and contractors?**  **5 I'm thinking more of guys like Chuck, who have**  **6 to maintain five years' worth of paper versus**  **7 a manufacturer that has to maintain it on a**  **8 server somewhere.**  **9 MR. RAWALD: Right, this is Doug, so**  **10 we couldn't have different timelines for**  **11 different people in the chain.**  **12 MR. HURST: Could not?**  **13 MR. RAWALD: We could. We could.**  **14 That's open. And my thought would be that the**  **15 less years -- you want less years on the guys**  **16 that are installing it, right, because they're**  **17 the ones who are going to have the highest**  **18 burden. They're the ones who are going to**  **19 need it the least amount of time. So if Chuck**  **20 installed it three years and I have his**  **21 records, it's likely you manufactured it four**  **22 years ago. So I need you to have a longer** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 time than Chuck. That's the one kind of thing**  **2 as I think about this. And so there's some**  **3 compromises here to be had. But I guess it's**  **4 the kind of thing that's going on in the back**  **5 of my head as my wheels are turning on this.**  **6 MR. HURST: Speaking for my company,**  **7 we'd have to talk about this, but I think we'd**  **8 be amenable to that. There is a good chance**  **9 -- because of factory balancing, you may put**  **10 product into your own inventory for 6, 8, 12**  **11 months. A distributor runs on turns, so**  **12 they're trying to get it in and get it out as**  **13 fast, but they'd hold on to it longer than a**  **14 dealer and a dealer is typically not going to**  **15 be -- they can stock, but we have stocking**  **16 dealers, but they're not going to stock for**  **17 months at a time. So I think it's very**  **18 reasonable that the burden on the manufacturer**  **19 to maintain records would be obviously longer**  **20 than a contractor for the stated reasons.**  **21 MR. RAWALD: Okay. That's something**  **22 we can definitely consider and I'll bring** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 back. So I don't know if we want to keep**  **2 going down this path, but what I did in**  **3 response to Chuck's very salient point that I**  **4 probably see the tree and the ornaments a lot**  **5 better than everyone else, is I put together**  **6 the slide deck of everything we've kind of**  **7 discussed which would be kind of a**  **8 comprehensive plan. And there certainly are**  **9 some rough edges for us to work around.**  **10 I tried to fill in some gaps with**  **11 things that the Department would suggest. So**  **12 I have that prepared here to go over if folks**  **13 want to kind of walk through what we've talked**  **14 about and where we are. And that might help**  **15 us kind of say okay, what do we really need to**  **16 talk about still?**  **17 We have these two major issues, the**  **18 scope for the contractors and the over-the**  **19 counter sales as well as the timeline, so**  **20 three issues, for record retention. But maybe**  **21 there are other areas that we can dispense**  **22 with and feel comfortable about and kind of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 really focus our efforts on just narrowing**  **2 down those and feel comfortable that we've**  **3 accomplished a lot here.**  **4 So if people would like to do that,**  **5 unless you have more to talk about in the**  **6 other issues that we caucused about this**  **7 morning.**  **8 MR. MELCHI: This is Jon with HARDI.**  **9 I think Karen touched on a lot of the concern.**  **10 I think as we discussed last week over email,**  **11 Doug, as far as those cash transactions, it**  **12 would be much easier for us to track**  **13 condensing unit only. It's just -- you're**  **14 multiplying transactions at that point. And**  **15 oftentimes, somebody will come in for some of**  **16 the components that have been discussed for**  **17 warranty repair or something like that. I'm**  **18 just trying to get to something that I think**  **19 can be implemented effectively.**  **20 And it's just a much easier sell if**  **21 you say okay, you only have to track say 13 or**  **22 14 SEER sales as opposed to all of this entire** 

### Page 28

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 scope of transactions. Because my fear was**  **2 when we had discussed maybe the coils earlier**  **3 was a guy comes in and buys a lot of parts and**  **4 pieces and a coil. Those other transactions**  **5 don't need to be identified by the purchaser.**  **6 The coil maybe does. The question was brought**  **7 up though, you know, that a coil is not**  **8 necessarily a covered product, so how does**  **9 that fall into the scope of this given DOE's**  **10 guidance on rating the systems?**  **11 The simpler, the better is kind of**  **12 the way; with an estimated 10,000 distribution**  **13 branches across the United States, so it's a**  **14 huge undertaking. So the simpler, the better,**  **15 I think would be our preference.**  **16 MR. RAWALD: No, and I hear that,**  **17 Jon, I do. So I'm passing around the room the**  **18 slide deck that I also have on the screen**  **19 here. Unless folks have -- as long as**  **20 everyone is amenable, I'd like to jump into**  **21 this just so we can get that teed up for**  **22 people to think about over lunch and maybe** 

### Page 29

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 possibly caucus more after lunch if we need**  **2 to, to kind of figure out where else we are.**  **3 So I know we had these buckets we**  **4 initially looked at so as I thought about the**  **5 ideas that we had put together, I have**  **6 somewhat reorganized the buckets, but this**  **7 kind of covers the major area to think as we**  **8 look at them. So if we could turn first to**  **9 the basics. So all this stuff, as I mentioned**  **10 before, is premised upon the answer to Karen's**  **11 question which is the 14 SEER interpretation.**  **12 What I heard is everyone agrees with**  **13 this, everyone is comfortable with this**  **14 interpretation. So this is where we are with**  **15 the idea of 14 SEER. The least efficient**  **16 rating combination for a specialized model**  **17 condensing unit must be 14 in the Southeast**  **18 and Southwest regions. And then we have the**  **19 EER caveat as well for the Southwest. And any**  **20 condensing model that has a certified**  **21 combination that's below the regional standard**  **22 cannot be installed in the region. So that's** 

### Page 30

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 how we're approaching this. So this is the**  **2 baseline.**  **3 So I'm trying to give you this here,**  **4 so this at least fills the gap in your mind**  **5 that there's no guidance from the Department**  **6 at the moment. Here it is. If you guys want**  **7 to have a formal vote and say we all agree**  **8 with this, if that would make you feel -- I**  **9 want to do whatever I can to make you feel**  **10 comfortable that this is the position we're**  **11 taking in the rule and this is what we believe**  **12 in, but I don't have the guidance to give you**  **13 yet today.**  **14 So I don't what would make you feel**  **15 better. I mean do you want to have the room**  **16 say we all agree with this? What would make**  **17 you folks feel better?**  **18 Karen, I guess I'm looking at you.**  **19 MS. MEYERS: I think if the**  **20 Department buys lunch for everyone today, then**  **21 we'll sign off on this. So if we need a**  **22 formal vote, I think that's good. You know,** 

### Page 31

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we're all moving forward with a lot of**  **2 changes. So I think the whole premise of this**  **3 entire agreement depends on that.**  **4 MR. RAWALD: I agree.**  **5 MS. MEYERS: And I think that needs**  **6 to be stated in the record. We're going to go**  **7 through all these slides. We're going to see**  **8 areas that we've agreed on, but all of that**  **9 hinges upon this guidance. And I think you**  **10 heard from Amy, we don't want -- if this is**  **11 our formal notification from DOE, that's fine.**  **12 I think we would rather have some guidance**  **13 before it gets into the CFR. So I think we**  **14 would rather have some official response to**  **15 the guidance as well. But I can live with**  **16 this.**  **17 MR. RAWALD: And Karen, I can tell**  **18 you I have let people know that on multiple**  **19 occasions very loudly and clearly.**  **20 MS. MEYERS: Well, since there are**  **21 some people in the room, I'm restating this**  **22 one more time.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: And I think Karen is**  **2 thinking about Ashley Armstrong who said when**  **3 she was being asked to be a distraction, I**  **4 said certainly she won't be, but if she**  **5 becomes one, she may not be here any longer,**  **6 so keep that in mind.**  **7 MS. MEYERS: So Ashley, just know**  **8 this whole reg. neg. is now riding on your**  **9 shoulders to success or lack thereof.**  **10 MR. RAWALD: She likes to feel like**  **11 a super hero, so you're only helping her ego,**  **12 Karen.**  **13 So Neil, can we take a vote on this?**  **14 MR. EISNER: This is what I suggest**  **15 because everybody has said all along it**  **16 depends on the whole package. Let's vote on**  **17 each slide. When nobody has any more comments**  **18 they want to make on it, and if it's okay,**  **19 when we get through the -- she wants to ask a**  **20 question.**  **21 MS. ARMSTRONG: So I just have a**  **22 question. It's on some of the comments we got** 

### Page 33

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 in response to the other guidance and the**  **2 language that I think is coming from industry**  **3 parties or at least some of them that is being**  **4 suggested.**  **5 It has to do with the details of**  **6 this which potentially impacts the language of**  **7 the guidance that's coming out. It doesn't**  **8 change the premise of this. The only thing**  **9 not on this slide that was brought up by the**  **10 comments that we received is the idea of that**  **11 it must be tested as a coil-only unit. And so**  **12 I'm going to ask someone to elaborate on that.**  **13 What did you mean by that specifically?**  **14 MS. MEYERS: So what's your question**  **15 again? So what do you mean unless we test it**  **16 as a coil only.**  **17 MR. RAWALD: Right, so I think this**  **18 will go directly to AHRI submitted comments**  **19 where they submitted -- they requested we add**  **20 to the new guidance we put out, the line about**  **21 the 14 SEER to that to make sure we get a**  **22 final there. And the caveat was when tested** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 as a coil only, was the insertion. It's not**  **2 in this particular guidance or in this**  **3 particular caveat as drafted.**  **4 MS. ARMSTRONG: It's in the details.**  **5 It doesn't necessarily change the premise and**  **6 obviously a coil-only rating would be the**  **7 least efficient. It's consistent with the**  **8 language on the slide. But I want to be**  **9 clear, did you mean that every single**  **10 condensing unit the least efficient going to**  **11 that region has to be a coil-only rating?**  **12 That is my question. Yes or no?**  **13 MR. WINNINGHAM: This is Dave**  **14 Winningham with Allied. I think for single**  **15 stage equipment, the answer for that would be**  **16 yes.**  **17 MS. ARMSTRONG: That would have to**  **18 be, yes.**  **19 MR. WINNINGHAM: For other**  **20 equipment, I would say no.**  **21 MS. ARMSTRONG: I'm asking because**  **22 the language submitted by different people are** 

### Page 35

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 slightly different and means different things.**  **2 So my ask is what exactly? Do you want to**  **3 think about it and get back to me?**  **4 MR. HURST: No, I think it's a great**  **5 question because it's be careful what you ask**  **6 for, you might get it. And so thank you for**  **7 the heads up. I think we need a five-minute**  **8 discussion to agree on what we're specifically**  **9 asking for to give you better guidance.**  **10 MS. ARMSTRONG: But you could do it**  **11 over lunch. The regional guidance hasn't come**  **12 out yet.**  **13 MR. HURST: Thank you.**  **14 MS. ARMSTRONG: Sorry.**  **15 MR. HURST: You're not being a**  **16 distraction, Ashley.**  **17 MR. RAWALD: For the record, I**  **18 always find Ashley very helpful, especially**  **19 given my technical limitations which are**  **20 obvious.**  **21 So do you think we want to take time**  **22 now or do you want to keep going through the** 

### Page 36

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 slide deck and think about it?**  **2 MR. HURST: Let's take five minutes**  **3 and just knock it out. Give us five minutes.**  **4 (Whereupon, the above-entitled**  **5 matter went off the record at 11:07 a.m. and**  **6 resumed at 11:33 a.m.)**  **7 MR. EISNER: Okay, is the problem**  **8 fixed? Karen, John, problem fixed?**  **9 MS. MEYERS: It's fixed.**  **10 MR. EISNER: That's apparent.**  **11 That's got to be a new ground rule.**  **12 MR. AMRANE: I think as far as**  **13 what's on this slide here, I think we will**  **14 agree that we are fine with what's being**  **15 stated here. I think that some maybe mission**  **16 distending from the comments, maybe we will be**  **17 fine with the DOE on the guidance. And for**  **18 us, we meant that all the combinations and**  **19 whether it's a single-speed unit or whether**  **20 it's a variable-speed unit, that all**  **21 combinations must meet the regional standard.**  **22 And that the rating for variable speed doesn't** 

### Page 37

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 have to be with the coil only. It can be with**  **2 a blower coil.**  **3 I think as far as the slide is**  **4 concerned we are okay. Now as far as the**  **5 comments we filed, maybe we need to refile**  **6 something. I don't know if it's better for us**  **7 to put this in writing with DOE.**  **8 MS. ARMSTRONG: I am not the lawyer**  **9 in the room, but this is fine for me.**  **10 MR. RAWALD: Right, what you're**  **11 telling us is sufficient as long as we**  **12 understand that's what you mean. I want to**  **13 make sure Ashley has got a full answer to her**  **14 question.**  **15 MS. ARMSTRONG: I'm going to**  **16 interpret what Karim says and I want everyone**  **17 to comment and/or agree or disagree with it.**  **18 In addition to this, that single**  **19 stage units can only be tested with a coil**  **20 only rating procedure. That is the addition.**  **21 MR. HURST: That's correct.**  **22 MS. MEYERS: So Ashley, that's fine.** 

### Page 38

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MS. ARMSTRONG: I don't think the**  **2 Department is ready to vote on that bullet yet**  **3 today. That's not to say we don't agree with**  **4 it. I just need to go back and compare it to**  **5 what's in our regs right now. But I think the**  **6 Department is ready to vote on the rest of the**  **7 bullets and I'm leaving that to Doug. But I**  **8 just want to make -- that is the ask, correct?**  **9 MS. MEYERS: So let me just ask the**  **10 engineers in the room. If I have a single**  **11 stage air conditioner, I can't test it with a**  **12 blower coil or that the least efficient -- I**  **13 mean don't we mean that the least efficient**  **14 rating of a single stage air conditioner must**  **15 be with the coil-only rating. If I have a**  **16 single stage A/C unit, I could have a rating**  **17 with a blower coil that might get it 14.5, but**  **18 -- right? Is that covered in that?**  **19 MR. LATTANZI: Karen, this is Matt.**  **20 You could use your arm to rate it with a**  **21 blower coil.**  **22 MS. ARMSTRONG: That is not --** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. LATTANZI: Well, it says tested.**  **2 So you would only test single stage with a**  **3 coil-only unit. That doesn't exclude using an**  **4 arm to create a rating with a blower coil.**  **5 MS. MEYERS: I think that confused**  **6 it more.**  **7 MR. RAWALD: I'm worried that we're**  **8 making it more difficult. So I'm not sure --**  **9 as I've heard from people up until this point**  **10 is that the folks do their test with the coil**  **11 only and they use the arm to then estimate**  **12 what the coolants would be when you add a**  **13 blower to the item. Am I hearing that**  **14 correctly, Dave?**  **15 MR. WINNINGHAM: For single-stage**  **16 equipment that is absolutely correct.**  **17 MR. RAWALD: And what the ask has**  **18 been and what I thought we had agreed to**  **19 ostensibly was the least efficient, whether by**  **20 testing -- you're testing the least efficient**  **21 thing or your arm, finds that it's less**  **22 efficient, but you still want to certify it as** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 useful. That has to be at least 14. Right?**  **2 That's what people are saying. That's what I**  **3 heard people say.**  **4 MS. MEYERS: Is that what the slide**  **5 says?**  **6 MR. LATTANZI: This is Matt**  **7 Lattanzi. I think you need to change rated**  **8 back to tested and then I feel like you have**  **9 it right.**  **10 MR. RAWALD: So Matt, you're**  **11 referring to the bullet we just added to the**  **12 slide just now. Is that what you're talking**  **13 about?**  **14 MR. LATTANZI: Yes, Doug, that's**  **15 correct.**  **16 MR. RAWALD: Okay. This is giving**  **17 Ashley some concerns, so I may have to talk to**  **18 her off the record here for a moment.**  **19 Okay, so I'm not clear why we need**  **20 this bullet to be added to the discussion**  **21 we've had, but Ashley is telling me it's**  **22 causing her a concern. So we're going to have** 

### Page 41

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to go to lunch and talk about it because I**  **2 can't ask the question. I'm not prepared to**  **3 --**  **4 MS. ARMSTRONG: So all I want to**  **5 know is the ask for the guidance. It has no**  **6 bearing on this slide whatsoever. I think**  **7 you can take the bullet out. Karen wants to**  **8 see the words though that we're agreeing to**  **9 necessarily. And so all I wanted to know is**  **10 to clarify your comments that you submitted to**  **11 the coil only blower coil guidance. And**  **12 specifically, you added a 14 SEER sentence.**  **13 And you've asked the Department to consider**  **14 guidance on 14 SEER. And Doug's pushing for**  **15 this guidance to be issued as soon as**  **16 possible. And for me to do that I need to**  **17 understand.**  **18 I think the ask is necessary. So**  **19 every -- I don't think you want the word**  **20 tested. Every condensing unit has to be**  **21 tested with the highest sales volume tested**  **22 combination in the report, period, in order to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 do it. Everything else can be rated with an**  **2 R after that. Right?**  **3 So if you add least efficient and**  **4 that's not your highest sales volume, you're**  **5 testing twice. Are we okay with that in a**  **6 coil-only rating? It gets more complicated.**  **7 MR. RAWALD: This is Doug. I really**  **8 want to keep this simple because as I**  **9 understand what we've been talking for the**  **10 past ten meetings has been that the least**  **11 efficient combination you would certify to DOE**  **12 would have to be 14. That's what we've agreed**  **13 to, right? Is that correct?**  **14 MS. MEYERS: That's correct, Doug.**  **15 But the issue comes in how the test procedure**  **16 works and what is meant by highest sales**  **17 volume combination and the number of units you**  **18 have to test. So we have a little disconnect**  **19 that we have to get worked out. You are**  **20 understanding our ask correctly, but now when**  **21 we look at how that operates within the test**  **22 procedure, there's an issue.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. WHITE: This is Chuck White.**  **2 I'm a manufacturer, so maybe I'm a sideline**  **3 viewer. If I'm going to buy this product, I'm**  **4 going to buy an XYZ 500. I'm going to go to**  **5 the DOE database or the AHRI database and I'm**  **6 going to look up the XYZ 500. And I'm going**  **7 to -- the least efficient thing in that --**  **8 everything that matches with the XYZ 500, has**  **9 to be 14. As a contractor, I don't care how**  **10 you got there. If you've listed it somewhere**  **11 or another, I'm assuming it's correct. So the**  **12 least efficient rating of these combinations,**  **13 whatever one of those I pick, as long as it's**  **14 a 14, it's an acceptable product. And whether**  **15 it's an arm or a blower coil or --**  **16 MS. ARMSTRONG: That's what that**  **17 says, right? That's what that --**  **18 MR. WHITE: Right, and that's what**  **19 that says and I think that's -- I think if we**  **20 get into the testing and the rating and all**  **21 the process, at the end of the day I don't**  **22 know if it makes much difference to the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 product I go pick off the shelf and install. **2 MR. AMRANE: This is Karim. And I 3 think for the purpose of the discussion we're**  **4 having here, I think what's on the slide is 5 probably okay. For the purpose of the**  **6 guidance that is being worked out, maybe we 7 need to clarify further and maybe that's**  **8 something we can come back to. 9 MS. MEYERS: Can you type this on**  **10 the screen as John reads? 11 MR. GIBBONS: This is John from**  **12 Carrier. I'll try to read slow. "Split 13 system central air conditioners with single**  **14 stage compressor system must be tested and 15 rated as a coil-only system for the HSVC;**  **16 however, other coil and blower coil ratings 17 can be obtained through the use of a DOE**  **18 approved arm or by testing." 19 MR. RAWALD: So here's -- this is**  **20 Doug. I need to talk to Ashley, obviously, 21 before we would ever commit to anything on**  **22 this. This last bullet is going towards, in**

### Page 45

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 part, to guidance that we've already issued**  **2 and is not squarely -- I want to make sure**  **3 we're all on the same page about it, how we**  **4 get to 14 from Chuck's point of view, is**  **5 something that we've issued some draft**  **6 guidance about. We've gotten some feedback on**  **7 it. Ashley is going to have to look at it**  **8 some more. We're going to have to talk about**  **9 it some more. But I don't think it's**  **10 necessary to deciding here that regardless of**  **11 how we get to 14, you can't have a certified**  **12 combination below 14, if you're going to sell**  **13 it in the region. It has to be -- so what I'd**  **14 like to do is not muddy the waters by adding**  **15 this language that seems to be causing at**  **16 least some problem from our end and just stick**  **17 with what we have. This is going to get us**  **18 right to where I think we're not comfortable**  **19 at the moment because we have to really talk**  **20 about this internally some more.**  **21 What we can all agree, I think, is**  **22 that we want to make sure that manufacturer** 

### Page 46

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 only sells certified combinations. All the**  **2 certified combinations you have for the region**  **3 are going to have to be 14. They can't be**  **4 13.6. Everything has to be at least 14. And**  **5 that's from the first three bullets. This**  **6 fourth bullet, I think, just may add another**  **7 layer of complexity that I can't commit to at**  **8 the moment.**  **9 So I get what you're asking, I do,**  **10 John, but I don't know if I'm comfortable --**  **11 I know I'm not comfortable. I need to talk to**  **12 Ashley some more and to other folks possibly**  **13 about this issue before we can commit to that.**  **14 MR. ROY: Doug, Aniruddh Roy with**  **15 Goodman. We agree with the first three**  **16 bullets.**  **17 MR. EISNER: Does anybody object to**  **18 taking that last bullet off now and voting on**  **19 this? So no one is objecting?**  **20 MR. LATTANZI: Do we need to caucus**  **21 again?**  **22 MR. WHITE: Is that call to lunch?** 

### Page 47

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MS. MEYERS: This is Karen with**  **2 Rheem. I'm okay with the first three bullets.**  **3 MR. EISNER: Okay, if we remove the**  **4 fourth bullet, does anybody object?**  **5 MR. RAWALD: And I want to save this**  **6 language. I don't want to throw it away. I**  **7 think it's important language for the**  **8 Department to have. So I want to make sure we**  **9 preserve it. I don't want just to delete it.**  **10 But just for the purposes of voting of hey,**  **11 this is where we are with this idea what 14**  **12 SEER means, the first three are what we**  **13 discussed to, what the Department is committed**  **14 to and what we all agreed on at this point.**  **15 I want to reconfirm that by having everyone**  **16 say, yeah, we do agree with that.**  **17 MR. EISNER: We'll create a separate**  **18 slide called Ashley Fixes and we'll move it to**  **19 that slide?**  **20 Now, with it removed and this is how**  **21 I'd like to proceed, tell me if anybody**  **22 objects. We'll look at each slide. We'll** 

### Page 48

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 discuss it until people are comfortable we've**  **2 discussed it enough. I will ask if anybody**  **3 objects. If nobody objects, we will indicate**  **4 on the slide that it was approved unanimously.**  **5 That does not preclude going back to it after**  **6 we've gone through the entire package. People**  **7 can say I'd like to go back to Slide 4 or 5.**  **8 And after we vote on this, she will indicate**  **9 the approval was unanimous or whatever the**  **10 vote was. We will then go on to the next**  **11 slide. Is that okay? We can try it and if**  **12 you're uncomfortable to that approach, we can**  **13 go back.**  **14 Harvey?**  **15 MR. SACHS: This is Harvey-spills**  **16 water. I'm certainly comfortable, but I do**  **17 want to have the record reflect that this**  **18 looks to be the best solution for**  **19 enforceability. It has some -- there**  **20 certainly will be cases where other technology**  **21 solutions might have been preferable for some**  **22 customers. And I think we all understand** 

### Page 49

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that. But I think this is the right one for**  **2 the enforceability that's the subject of this**  **3 series of talks.**  **4 MR. EISNER: Okay, any other**  **5 comments on this first slide? Does anyone**  **6 object to us approving this unanimously?**  **7 MR. LATTANZI: This is Matt Lattanzi**  **8 with NORDYNE. I don't object, but I would**  **9 like the record to indicate an abstention.**  **10 MR. EISNER: Okay, so we have one**  **11 abstention, a unanimous vote for this**  **12 approving it.**  **13 We're going to the next slide which**  **14 is 5. Definitions. Any comments or**  **15 questions?**  **16 MR. RAWALD: So this is Doug. I**  **17 took the definitions we had discussed and with**  **18 great length the information we had**  **19 additionally to the proposed definitions,**  **20 brought them back to the Department. We**  **21 wordsmithed them a slight bit and we also**  **22 broke out so the definition we had ultimately** 

### Page 50

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 proposed was a contractor or dealer is blank.**  **2 And so what I did was because of the way we do**  **3 definitions, we define terms individually, was**  **4 broke it out in this fashion.**  **5 So the major change from the word**  **6 contractor is -- I took out the word**  **7 residential before central air conditioner**  **8 because -- and the way -- in DOE regulatory**  **9 parlance, central air conditioner is a**  **10 residential product -- the commercial product**  **11 is commercial HVAC, so 438.32(c) is central**  **12 air conditioner and that is residential by**  **13 itself. So this a regulatory framework. The**  **14 word central air conditioner means**  **15 residential, so that was a redundant word to**  **16 my lawyers.**  **17 And then subject to regional**  **18 standards as opposed to covered by is a term**  **19 of art that we use. So I changed it to**  **20 subject to.**  **21 For dealer, what we have here is a**  **22 type of contractor because we agreed to and I** 

### Page 51

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 went back to what John Gibbons had mentioned**  **2 which was generally they have a relationship**  **3 with one or more specific manufacturers. We**  **4 can talk more about that.**  **5 And then installer is essentially**  **6 the same thing we said with the changes I made**  **7 to contractor as well, taking out the word**  **8 residential and changing the word covered to**  **9 subject to.**  **10 And then added late last night the**  **11 definition of the term installation which is**  **12 based in large part upon -- Bryan Rocky**  **13 recommended a while back, but I did want to**  **14 make sure we put it up there. It's not on the**  **15 slide so you may have to write it in which**  **16 would be installation with split system air**  **17 conditioner is a connection of the refrigerant**  **18 lines and electrical systems to make the air**  **19 conditioner operational. Obviously, we're**  **20 open to more discussion on that. That was**  **21 essentially taken from what you folks had**  **22 proposed before.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: Any comments,**  **2 questions?**  **3 MR. ROCKY: Yes, this is Bryan**  **4 Rocky, so Doug, the only thing with that**  **5 discussion, I'd say installation of a packaged**  **6 air conditioner, the connection of electrical**  **7 systems to just expand that slightly more.**  **8 MR. RAWALD: Okay.**  **9 MR. ROCKY: But I agree with the**  **10 discussion of the items as shown.**  **11 MS. DEGITZ: Could we just say**  **12 installation of a central air conditioner is**  **13 the connection to refrigerant lines electrical**  **14 systems? That would cover both.**  **15 MR. ROCKY: So this is Bryan. So**  **16 again, you're packaging it, you're not going**  **17 to have the connection of refrigerant lines**  **18 because there it's already done internally in**  **19 the package unit. So again, and/or is fine.**  **20 There you go. Thank you.**  **21 MR. McCRUDDEN: This is Charlie with**  **22 ACCA. So I think person in contractor is the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 company, correct. So the definition of**  **2 contractor, a person, but that included the**  **3 company.**  **4 MR. RAWALD: Right.**  **5 MR. McCRUDDEN: And then under**  **6 installer, a person that installs -- is that**  **7 still company or is that the individual?**  **8 MR. RAWALD: It could be any of**  **9 those things. And so installer is not a term**  **10 that we're going to use for any sort of**  **11 obligation. It's merely mentioned in the**  **12 statute, so we want to make sure the installer**  **13 could be the company. It could be the**  **14 technician, it could be anybody in that**  **15 market. But everything that we're going to do**  **16 is going to be based on contractor and dealer.**  **17 So those are the terms that are of importance**  **18 in the statute. Installer, it's a nebulous**  **19 term. We want to make sure it has a meaning**  **20 that people understand.**  **21 MR. SACHS: Doug, this is Harvey.**  **22 And I find installer a bit confusing because** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 in all of the other contexts, person is**  **2 referring to an entity, whether it's**  **3 incorporated or not. And with installer, the**  **4 ambiguity is that that could refer to that**  **5 type of organization or it could refer to an**  **6 employee who's tasked with going out and**  **7 stuffing the wires into the right places.**  **8 Is it intended to refer to the**  **9 employee or free agent, as opposed to the**  **10 business entity?**  **11 MR. RAWALD: Right. So when we**  **12 discussed this before, I thought we were**  **13 trying to get at the person. But once again,**  **14 we don't have to define this term if we don't**  **15 want to. It's not necessary because it**  **16 appears nowhere else in what we're doing later**  **17 on downstream. It's just mentioned at one**  **18 point in the statute and so my question to you**  **19 is well, what is an installer, so we can't put**  **20 a definition for it.**  **21 There's actually no obligation**  **22 placed upon the installer at all. It's placed** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 upon the contractor and dealer. So I'm not**  **2 overly concerned about defining it, but I felt**  **3 like it's a term that has otherwise been**  **4 undefined, so do we want to make sure we all**  **5 understand what we mean when we use the term**  **6 installer. I'm open to ideas to on that.**  **7 MR. SACHS: Doug, this is Harvey**  **8 again, not being a regulatory lawyer, what's**  **9 my downside risk if I eliminate that term**  **10 installer?**  **11 MR. RAWALD: I don't see much. I**  **12 don't see much at all. I mean, frankly, I'm**  **13 not convinced it's necessary. But we had**  **14 talked about it, so I wanted to have it up**  **15 here for folks to look at.**  **16 MS. SHEPHERD: This is Amy Shepherd.**  **17 I think it actually isn't any different than**  **18 a contractor, right? If you look at it, that**  **19 exact same language is within the contractor**  **20 definition in the and/or aspect of it.**  **21 MR. RAWALD: Right, so Amy you would**  **22 say it's basically redundant. There's no need** 

### Page 56

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 for it?**  **2 MS. SHEPHERD: I'm being redundant,**  **3 I guess, in the way I'm saying that. It's**  **4 redundant.**  **5 MR. RAWALD: I mean, I don't see the**  **6 need for it unless you guys need it is what**  **7 I'm saying.**  **8 MR. WHITE: This is Chuck White. I**  **9 guess I don't really see the need for it**  **10 either if it's not something that's going to**  **11 get penalized, but it is possible you have**  **12 someone who is doing installations, but didn't**  **13 do the selling. So it could be an individual.**  **14 It could be a business that is hired strictly**  **15 to install, but didn't actually sell the**  **16 product. So the person as defined that would**  **17 include companies would capture that, so if**  **18 you think you want to have that definition,**  **19 I'm fine with it the way it is. If you think**  **20 it's superfluous, that's fine, too.**  **21 MR. RAWALD: I don't need it. And**  **22 so I'm ready to drop it. We should just drop** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it.**  **2 MR. EISNER: Does anybody object?**  **3 MR. SACHS: I'm not yet clear on**  **4 this. This is Harvey. But what I'm hearing**  **5 from Chuck says gee, there's this guy who has**  **6 a business relationship with humongous big box**  **7 in which humongous big box sells the HVAC and**  **8 hires Chuck to put it in place. And Chuck**  **9 knowingly puts in place that SEER 13 where**  **10 it's not supposed to be.**  **11 Do we need this installer to cover**  **12 that or is the big -- the big humongous big**  **13 box the contractor in this?**  **14 MR. RAWALD: Right, so in that**  **15 scenario, by the definition that we have, both**  **16 big box and Chuck would be contractors because**  **17 we have the sales to and/or installs. So they**  **18 would both qualify as contractor with the**  **19 obligations that contractors have under that.**  **20 MR. SACHS: Thank you. I'm happy.**  **21 MR. EISNER: Does anybody object to**  **22 deleting the definition of installer? Okay,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we will delete it.**  **2 MR. ROCKY: I'm sorry. So this is**  **3 Bryan. So I know it's redundant, but in**  **4 dealing with some of our customers, it's**  **5 easier to have a term that is redundant than**  **6 not to have to keep explaining to them that**  **7 installer is a contractor. So even though**  **8 it's redundant, it doesn't hurt to have to**  **9 have it there. The interpretation I have no**  **10 issues with. I would just rather keep it**  **11 there so that we can explain to the guy who --**  **12 you're a contractor. No, I'm not. I'm an**  **13 installer. Okay, well, this is what this**  **14 means to you. And I'd just rather have it in**  **15 there.**  **16 MR. EISNER: Having heard many**  **17 people say they don't have an objection either**  **18 way, does anyone object to leaving the**  **19 definition of installer?**  **20 MR. RAWALD: This is Doug. So I**  **21 want to address Bryan's scenario. So the**  **22 concern I would have is so the definition of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 contractor as written that now they say, oh**  **2 yeah, you can see your contractor, you**  **3 install. If we have a definition of install**  **4 or an addition, will that then cause confusion**  **5 and they'll say well, I'm an installer. And**  **6 you can say you're a contractor and you're**  **7 going to say, no, you're both. So that's the**  **8 conversation you're really going to have with**  **9 them.**  **10 So if we eliminate the definition of**  **11 installer, now you can say, no, DOE defines a**  **12 person who installs the thing as a contractor.**  **13 So is that the more clear message possibly, to**  **14 your person you're talking about?**  **15 MS. MEYERS: This is Karen with**  **16 Rheem. I don't think we -- I would prefer**  **17 that it be deleted.**  **18 MR. ROCKY: This is Bryan. Having**  **19 you restated that, Doug, I'm fine with**  **20 deleting it.**  **21 MR. EISNER: Harvey, where are you?**  **22 MR. SACHS: This is Harvey. I can** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 accept it either way.**  **2 MR. EISNER: Again, does anyone**  **3 object to deleting the definition of**  **4 installer? All right, we will take it off.**  **5 I will now ask for a vote on contractor/dealer**  **6 and installation. Does anyone object to any**  **7 of these definitions?**  **8 MR. DORIA: This is Jordan with**  **9 Ingersoll Rand. I just want to ask a**  **10 question. I guess it's really related to the**  **11 contractor. Does it matter that -- the word**  **12 end user. Imagine in the case of just a**  **13 rental property. The person you would sell to**  **14 would likely be the owner. I don't know that**  **15 they would qualify as the end user if they're**  **16 not also the occupant. I don't know what that**  **17 matters.**  **18 MR. RAWALD: Right, so I think what**  **19 we would do is make clear in the preamble that**  **20 it wouldn't necessarily be the person who**  **21 lives in the place that's air conditioned, but**  **22 the person who owns it or manages it or all** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 sorts of permutations that would be possible.**  **2 The buyer could be the developer of tract**  **3 housing, right? So he would be the end user**  **4 that would be purchasing it and having it**  **5 installed for. So we're going to make all**  **6 that clear. I think that's what we have come**  **7 to as consensus as, that's what we're talking**  **8 about here.**  **9 MR. DORIA: That makes sense. Thank**  **10 you.**  **11 MR. EISNER: Okay, any other**  **12 problems? Does anybody object to us adopting**  **13 5 as you see it on the screen?**  **14 MR. FENSTROM: This is Gary for the**  **15 California IOUs. Before we agree on this,**  **16 would it be desirable to replace the term --**  **17 I need to wait for Doug's attention. Would it**  **18 be desirable to replace the term end user with**  **19 purchaser? Or does that add some additional**  **20 complication we don't want?**  **21 MR. RAWALD: So I think end user**  **22 might be more broad than purchaser from my** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 point of view. But I think what I can tell**  **2 the group is if we go back and the lawyers say**  **3 hey, we understand what the group wants and**  **4 that would be a better term to use, we might**  **5 insert a different term in the final rule.**  **6 We know what we want at this point.**  **7 We want to capture what's going on here. We**  **8 want it to be the person who gets the thing at**  **9 the end of the day, has to have the thing**  **10 that's 14. So I think end users is the best**  **11 term I can think of now. If we come up with**  **12 a different term in the course of writing the**  **13 rule, then we'll put out for comment and I**  **14 think everyone will be -- I think everyone**  **15 will be satisfied.**  **16 MR. FENSTROM: Okay, this is Gary,**  **17 again. With that clarification and your**  **18 suggestion that we define end user in the**  **19 preamble, that's fine with me.**  **20 MR. EISNER: Okay, so no one**  **21 objects? This one is unanimous. We'll go on**  **22 to slide 6, actually 7.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 This is the DOT website portion of**  **2 the rule. Any comments, concerns, questions?**  **3 MR. RAWALD: So we currently have a**  **4 website that's going to have information**  **5 included on it. We may -- we're going to have**  **6 regional standards information on it. And**  **7 it's going to have the tri-fold that you folks**  **8 have seen which will be available for**  **9 contractors to print when they go to see**  **10 consumers. And also we're going to put up**  **11 something for folks in John's world, the**  **12 distributors to put on the counter, they'll**  **13 have information for folks that's from DOE.**  **14 That's the current commitment from the**  **15 Department.**  **16 And we'll also have, as you'll see**  **17 later on, a link that will allow you to follow**  **18 the complaint if you know of one via email on**  **19 that website.**  **20 MR. EISNER: Any comments or**  **21 concerns?**  **22 MS. NOLL: This is Elizabeth. Will** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that also -- will that website also be what's**  **2 printed on the manufacturers' labels and do we**  **3 want to state that? Or is there labeling**  **4 later?**  **5 MR. RAWALD: So for the voluntary**  **6 label where the version Bryan Rocky provided**  **7 us has a website on it, will the website be**  **8 the one that we have for regional standards**  **9 that we're asking? I guess the question is**  **10 the manufacturers, could you guys do that?**  **11 You don't have to answer now. You can think**  **12 about it.**  **13 MR. ROCKY: This is Bryan. The**  **14 website that was referenced in my example, we**  **15 talked about was the Department's standard**  **16 site for energy rating information. If you're**  **17 looking at a different website than that, then**  **18 I think you can reference that internally from**  **19 a link from one to the other.**  **20 Productinfo.energy.gov is a site that we have**  **21 referenced in a lot of materials. And I think**  **22 that would be easier for us to reference, too.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: So what you're saying**  **2 is both sites could reference each other, so**  **3 no matter which one you put out, they would**  **4 indirectly get to the other?**  **5 MR. RAWALD: Yes. And I guess --**  **6 this is Doug, so I'm not prepared to give you**  **7 an URL. I know folks are trying to get this**  **8 thing done. We don't have a practical URL for**  **9 it. So whereas we know that the product that**  **10 .gov -- that's the one to use, then we'll make**  **11 sure there's a link obvious to that, to the**  **12 site they need to go to get information on**  **13 regional standards.**  **14 But this is a voluntary question for**  **15 you guys, obviously, so I don't think you need**  **16 to answer it right now. I think you can think**  **17 about it over lunch and come back to us. I'm**  **18 not going to pressure you for an answer right**  **19 now. I think it's just something for us to**  **20 talk about.**  **21 MR. EISNER: Do we want to hold off**  **22 from voting on this until after lunch.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 MR. RAWALD: I have a separate slide **2 on the voluntary label. I think it's more 3 relevant there. I think from this is a**  **4 different question. 5 MR. ROCKY: So this is Bryan. So**  **6 Doug, the discussion of an 800 number because 7 we do have customers that do not have --**  **8 MR. RAWALD: That's later. You'll 9 see a slide later with that.**  **10 MR. ROCKY: Thank you. 11 MR. EISNER: Any other comments on**  **12 this? No questions, no concerns? Does 13 anybody object to our adopting this? All**  **14 right, this one is passed as unanimous. And 15 we'll break for lunch. Come back at 1**  **16 o'clock. 17 (Whereupon, the above-entitled**  **18 matter went off the record at 12:04 pm. and 19 resumed at 1:07 p.m.)**  **20 MR. EISNER: All right, why don't we 21 get started. I think we are on slide number**  **22 nine. It may be simple. Anybody have any**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 objections to the slide as it is up there?**  **2 MR. SACHS: This is Harvey. The**  **3 third bullet there just says, "Will provide**  **4 webinar on standards and enforcement." That**  **5 could be taken as a one shot thing, or**  **6 resources accessible on demand. I think it'd**  **7 be preferable to have it as both.**  **8 MR. RAWALD: This is Doug. What**  **9 we've done in the past is we do the webinar**  **10 live, and then we make the slides available.**  **11 I don't know if we have that capability or the**  **12 recording the webinars being instructed. I**  **13 will ask the question.**  **14 MR. SACHS: Please don't ask.**  **15 You're close enough.**  **16 MS. MEYERS: This is Karen with**  **17 Rheem. Under the manufacturer's section, it**  **18 said, "Hosted at distributer sites." Is that**  **19 necessary? What if we want to do webinars or**  **20 host it at a hotel?**  **21 MR. RAWALD: This is not necessary**  **22 at all. I remember it was mentioned by a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 distributor at some point as they could do**  **2 this. So, it is not -- doesn't have to be**  **3 represented here at all. Or, we could**  **4 reference in the rule that, hey, the**  **5 distributers are going to pitch in by**  **6 providing a place to have these meetings.**  **7 So, it is up to you folks how you**  **8 want to phrase that, or if you want to have**  **9 them there at all.**  **10 MS. MEYERS: I would just as soon**  **11 have it deleted. I don't know how other OEM's**  **12 feel, but.**  **13 MR. ROY: I think the less**  **14 prescriptive the better.**  **15 MR. RAWALD: Just to be clear, I**  **16 don't view any of this to be a regulation.**  **17 This is going to be mentioned in the preamble,**  **18 where we say, "Manufacturers are volunteering**  **19 to do this." So, there will be no**  **20 prescription at all. You guys are**  **21 volunteering to do this as part of making sure**  **22 we enforce it correctly.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. MELCHI: This is John with**  **2 HARDI. In that context, our members are**  **3 willing to -- I have noted that we'll make**  **4 whatever efforts possible to provide training**  **5 on our end as well.**  **6 MR. RAWALD: So, perhaps instead of**  **7 making a sub-bullet, saying, "Distributors**  **8 offer to provide logistical or training**  **9 assistance as needed." Something like that?**  **10 MS. MEYERS: Well, could we just**  **11 say, "Distributors will also conduct**  **12 training?" Like we do for contractors as a**  **13 primary bullet? Is that what you meant?**  **14 MR. RAWALD: Okay, great.**  **15 MS. MEYERS: I thought that's what**  **16 we talked about.**  **17 MR. MCCRUDDEN: This is Charlie for**  **18 HARDI. I just -- when we do -- we're going to**  **19 do a webinar and training on this. Ours will**  **20 be on demand.**  **21 MR. WHITE: Chuck White, PHCC. Ours**  **22 will too, but will yours be open to the public** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 or just for members?**  **2 MR. MCCRUDDEN: You had to ask,**  **3 didn't you? Not sure yet just because we have**  **4 firewalls for members and non-members. But I**  **5 know we'll have some information available to**  **6 everybody. I haven't had a chance to talk**  **7 internally about what we -- whether the**  **8 webinars will be available to everybody now.**  **9 MR. WHITE: We need to talk offline**  **10 about mutual --**  **11 MR. MCCRUDDEN: Yes.**  **12 MR. EISNER: Anymore questions? As**  **13 changed, does anybody object to our adopting**  **14 this slide? All right, consider this one**  **15 adopted unanimously.**  **16 We're up to components, slide number**  **17 10. Actually, slide number 11. First one is**  **18 reporting. Any questions? Comments?**  **19 MR. DORIA: This is Jordan. Just a**  **20 question, and I don't -- I don't feel the need**  **21 to see it listed exhaustively here, but that**  **22 word, credible, got into some discussion we've** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 had about what sort of the triggers would be**  **2 for investigation to take place. Is that**  **3 addressed elsewhere, or is that just not going**  **4 to be addressed?**  **5 MR. RAWALD: Right. So, what we had**  **6 discussed last week was a threshold for**  **7 investigating. When I brought the idea back**  **8 to the department, what the department came**  **9 back to me with was, "Let's have a threshold**  **10 before we bother a contractor with records**  **11 requests. But we'll still follow up on**  **12 complaints and then flesh them out."**  **13 So, we won't say we won't**  **14 investigate, but before we actually ask for**  **15 records, we'll make sure there's kind of a**  **16 baseline met. Before we bother the contractor**  **17 and upset the apple cart and actually look**  **18 into something. But if somebody calls up with**  **19 at least some information, we're going to call**  **20 that person back. We're going to try to get**  **21 some more information.**  **22 Now, if we get a call that simply,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 "Acme is bad," and a hang up, I'm not going to**  **2 do anything about it. That's not a credible**  **3 complaint.**  **4 So, we didn't have any -- I didn't**  **5 have any language from the department as far**  **6 as that goes, and I'm not -- and I only put**  **7 the word credible there because we want there**  **8 to be some baseline. We're not going to**  **9 follow up on everything in the regional**  **10 standards world because there could be too**  **11 many. They're just incredible.**  **12 So, that's where I was there. If**  **13 you'd feel more comfortable fleshing that out,**  **14 we could. Understanding that we're really**  **15 talking about things we just can't follow up**  **16 on at all are the ones we're not going to**  **17 follow up on.**  **18 MR. FERNSTROM: This is Gary for the**  **19 California IOU. So, this slide is titled,**  **20 "Reporting." My question is is investigation**  **21 limited to reporting, or are there other**  **22 options that DOE is contemplating so far as** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 investigation is concerned?**  **2 MR. RAWALD: Right. So, the**  **3 department is going to have the right to**  **4 perform proactive investigations, as I talked**  **5 about before. And so, we don't see the need**  **6 to regulate what those actions could or could**  **7 not be, but we'll certainly -- we're not going**  **8 to be limited only to what's reported to us.**  **9 We can look at other things in**  **10 regard to investigation.**  **11 MR. FERNSTROM: Okay, so maybe I'm**  **12 asking about the next slide instead of this**  **13 one, but does DOE have an obligation with**  **14 respect to further investigation, or is that**  **15 solely at DOE's discretion?**  **16 MR. RAWALD: So, I'm having a hard**  **17 time with the word obligation. That's what**  **18 I'm struggling with. I'm not sure of the**  **19 obligation you're referring to. I believe**  **20 the department has an obligation to enforce**  **21 the rules, right?**  **22 So, we have a rule. So, we're going** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to enforce it. So, we're going to use**  **2 whatever tools we have at our disposal to**  **3 enforce that. So, one of the major tools we**  **4 talked about throughout this negotiation has**  **5 been responding to reported violations.**  **6 I think the department will look at**  **7 other methods over time to figure out if**  **8 people are being compliant, and we will take**  **9 action as noted. But if folks come to us with**  **10 an idea, we'll certainly consider them. The**  **11 idea that I floated to the department, which**  **12 is the next slide, is the survey that you've**  **13 asked for a couple times.**  **14 So, we can look at the next slide.**  **15 That's the major idea I floated to the**  **16 department already, and folks want to be able**  **17 to consider it without having it be a**  **18 requirement because there's some other**  **19 concerns we'll talk about when we get to that**  **20 slide.**  **21 MR. FERNSTROM: Thank you. I'm**  **22 waiting for the next slide.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: Okay.**  **2 MR. EISNER: Any other questions or**  **3 comments on 11?**  **4 MR. MCCRUDDEN: This is Charlie at**  **5 ACCIA. The -- looking ahead to slide 18,**  **6 which is threshold for record request. What's**  **7 the difference then between threshold for**  **8 record request and what you're looking for on**  **9 a credible complaint?**  **10 MR. RAWALD: So, there's more. I**  **11 want to have -- the term we use later in the**  **12 slide is reasonable belief, which is, to me**  **13 that we have to feel at least fairly certain**  **14 that something happened here before we're**  **15 going to bother you and ask you for records.**  **16 We currently use that as a standard**  **17 before we ask for manufacturers to provide us**  **18 models or units of models to test. So, we**  **19 require to have reasonable belief. Either we**  **20 have some sort of data, or I have tested**  **21 myself, and I see a unit of a model failed.**  **22 Then I have a reasonable belief that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the model itself is non-compliant. So, in**  **2 order for me to go to a contractor and say,**  **3 "You've got to cough up all your records. And**  **4 I know it's going to cost you a lot of time**  **5 and energy to do this." I've got to have a**  **6 reasonable belief that there's something**  **7 there.**  **8 So, I'm not going to waste your time**  **9 until I have a reason to believe something is**  **10 there. That's our assertion to you that we're**  **11 trying to make it so non-frivolous complaints**  **12 aren't used as a tool to disrupt your**  **13 business.**  **14 So, we're going to require that we**  **15 have at least some reason to believe that when**  **16 we ask you for something, we're going to find**  **17 something. So, in order to have that, we're**  **18 going to look for things.**  **19 On that slide, you can see various**  **20 things to indicate that, yes, there really was**  **21 something that Chuck's company did wrong**  **22 there. Whereas, a credible complaint is --** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it's really going to be if I have enough to**  **2 follow up on with the person, or at least look**  **3 into or do a little digging, and say, "Okay,**  **4 who is this company? What are they all**  **5 about?" Do a little internet surfing.**  **6 So, if I have a complaint through**  **7 that, I will follow up on it in that way**  **8 without actually starting an investigation or**  **9 requesting any records. I don't think it's**  **10 fair to you guys to be disruptive your**  **11 business that way.**  **12 The nebulousness of the term could**  **13 be -- can be concerning. I get that.**  **14 MR. MCCRUDDEN: This is Charlie**  **15 again. The reason I asked was I just wondered**  **16 if it makes sense for your purposes on the**  **17 outgoing message on the voice mailbox, or on**  **18 the website, to sort of say, "This is the**  **19 information we need." Then you're not getting**  **20 the, "Acme is bad," call. You're getting**  **21 someone who sort of knows what you need.**  **22 But in the way you answered, it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 almost makes me more concerned because it**  **2 seems like there's two thresholds: one for**  **3 requesting information, but the other one**  **4 which is sort of on this reporting threshold,**  **5 which is just sort of built up in your own**  **6 memory bank; complaints about folks. And does**  **7 that bias you moving forward?**  **8 MR. RAWALD: I think it's a fair**  **9 question. So, what I have been told is the**  **10 department doesn't want to feel constrained**  **11 from at least looking into a complaint. They**  **12 don't want to -- at least trying to gauge**  **13 other methods as opposed to disrupting the**  **14 contractor's business based on information**  **15 where we can't help the situation.**  **16 So, we want to at least have some**  **17 more flexibility there, but they're willing to**  **18 adopt some pretty rigid flexibility, to a**  **19 pretty inflexible situation actually, of a**  **20 standard for bothering a contractor in their**  **21 business by asking for records.**  **22 And so, this is still -- you have to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 come from the premise that right now any**  **2 complaint that we get, we're going to**  **3 investigate, which is -- there's a lot of them**  **4 we get that are really terrible. And so,**  **5 they're really worthless, but we'll still**  **6 follow up on it because we have an obligation**  **7 to follow up on every complaint.**  **8 So, what we're saying is there's**  **9 going to be a baseline here. You know, it's**  **10 something. And so, we'll advise you of all**  **11 that. But the complaints -- until we get a**  **12 certain critical mass of information, we're**  **13 not going to go ahead and disrupt the**  **14 contractor's business with a record request.**  **15 I think that could be time consuming**  **16 to accompany that's geared towards doing work**  **17 as opposed to filing records, record requests.**  **18 That's what we're coming from there. That's**  **19 what I think is a concern.**  **20 MR. MCCRUDDEN: That's helpful.**  **21 MR. ROY: Aniruddh, Goodman. Doug,**  **22 you mentioned reasonable belief. Could you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 elaborate on that? What would define that?**  **2 MR. RAWALD: When we get there,**  **3 we'll talk about that. That's on a future**  **4 slide. So, we can talk more about what will**  **5 constitute that.**  **6 MR. ELLIS: Doug, Ray Ellis. Is**  **7 this -- will they be investigated out of**  **8 Washington, D.C., or are there field offices**  **9 in different areas of the country?**  **10 MR. RAWALD: All the folks working**  **11 on this will be working from our offices here.**  **12 MR. ELLIS: Just here?**  **13 MR. RAWALD: Yes.**  **14 MR. EISNER: Other questions? Does**  **15 anyone object to our adopting what is on this**  **16 slide? Okay, then slide number 11 is**  **17 unanimous. Brings us up to slide 12,**  **18 proactive checks.**  **19 MR. RAWALD: So, this is the Gary**  **20 Fernstrom slide. So, Gary has asked on**  **21 multiple occasions if the department would**  **22 adopt a requirement that we would survey homes** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 on a regularized basis, similar to what**  **2 California has done with the pool pumps,**  **3 versus robo calling or regularized survey, to**  **4 determine that they have compliant units**  **5 installed.**  **6 I asked the department if they would**  **7 do this, and what I was told is, "We don't**  **8 want to commit to anything because we don't**  **9 know if the money is going to be there. If**  **10 it's available, then we'll consider it."**  **11 So, that's obviously very caveated**  **12 language. Not I'm sure what Gary would want,**  **13 but that's the most -- the biggest guarantee**  **14 that I can give from the department point of**  **15 view at the moment.**  **16 MR. FERNSTROM: Doug, this is Gary.**  **17 So, I probably used the wrong term earlier**  **18 when I suggested that DOE might have an**  **19 obligation. Commitment would've been a better**  **20 term. I was hoping for some sort of**  **21 commitment, not, "If funding is available we'd**  **22 consider it."** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 That's vague in two aspects. One,**  **2 funding may not be available, and even if it**  **3 is, DOE might consider it and reject it.**  **4 Maybe I'm a minority of one here, but I really**  **5 feel like some sort of field level survey is**  **6 necessary in order to -- a commitment to that**  **7 is necessary in order to assure compliance.**  **8 To use the traffic analogy, that**  **9 would be like trying to enforce the traffic**  **10 laws with no cops on the road. I mean, yes,**  **11 we can look at the auto dealerships and we can**  **12 look at the auto manufacturers, but unless**  **13 somebody to some small extent is on the ground**  **14 in the field looking, I don't believe we can**  **15 really be sure that it is working.**  **16 So, how about DOE -- if funding is**  **17 available, DOE will commit to it, and review**  **18 it. If it proves to be non-productive or**  **19 unnecessary, no problem in discontinuing it.**  **20 MR. RAWALD: Right, Gary. Just so**  **21 you understand, I've been an advocate for this**  **22 point for you, and I -- and the department has** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 told me this is the language they are most **2 willing to adopt. 3 I will bring back your language if**  **4 you want, and we can defer voting on this 5 slide if that is your preference. I can say**  **6 that with 95 percent likelihood that I'm not 7 going to get that response back from the**  **8 department. However, if the group wants to 9 adopt your language and the department could**  **10 concur, that at least could be put out there. 11 If the group wants the department to**  **12 do something that could be put out there. I 13 guess there's always that option.**  **14 MR. WHITE: Douglas, Chuck White. 15 This is -- bear with me a little afield, but**  **16 I'll pull it back. One of the things I've 17 thought of who we don't have sitting around**  **18 this table is building departments, 19 inspections authorities.**  **20 And if we cut back a couple slides 21 here and do some education to them as well,**  **22 and try to get some buy in from them to**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 understand this, and help them be an extension**  **2 of your enforcement that perhaps they could**  **3 give you some feedback on some of this field**  **4 kinds of surveys; they're going to see more**  **5 installations than you are easily.**  **6 So, that's kind of throwing**  **7 something out there, but it might help offset**  **8 this, "You don't have any money." They don't**  **9 have any money either, but they're looking at**  **10 the air conditioners anyway. Most of them.**  **11 At least ones that are permitted, and that**  **12 would perhaps help generate some leads for you**  **13 as well.**  **14 MR. RAWALD: So, the department's**  **15 training will be open to the public. So, I**  **16 certainly don't mind. And it would encourage**  **17 us to invite building inspectors and home**  **18 inspectors who experience this in this**  **19 southeast and the southwest to attend that**  **20 training.**  **21 So, I don't mind going back to the**  **22 department with that concept and including** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that. I don't know how the manufacturer**  **2 distributors would feel about providing**  **3 training to those folks, or if that's solely**  **4 on the department. I'm not sure if that's --**  **5 how broad your request is.**  **6 MR. WHITE: I guess I'm not sure**  **7 either, but I know when PHCC does training on**  **8 certain things, we very often invite the local**  **9 -- through our local chapters, the local**  **10 chapters invite the inspectors from the local**  **11 communities that we deal with to come and hear**  **12 the changes in the code. "Here's this.**  **13 Here's that."**  **14 They may come. They may not, but**  **15 it's -- it's kind of trying to get everybody**  **16 on the same page so we all hear the message at**  **17 the same time that -- that certainly DOE**  **18 sending information to them directly would**  **19 help and maybe trying to engage with them**  **20 directly or indirectly that if you guys can**  **21 help us out or if you see some issues -- and**  **22 probably not every community is going to buy** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 in, and say, "I don't have time for this. I**  **2 can't make one more phone call."**  **3 I do think you will get some that**  **4 will want to cooperate and help back up**  **5 training. I'm just kind of thinking out loud.**  **6 MR. FERNSTROM: So, this is Gary.**  **7 The California Utilities contribute to code**  **8 compliance related education, and we provide**  **9 classes for building energy consultants for**  **10 building code officials. You know, the lot.**  **11 Even so, we've discussed in these**  **12 meetings that compliance with this particular**  **13 measure with respect to the California**  **14 regulations is low. I've heard numbers around**  **15 20 percent discussed, and California is**  **16 probably more proactive with its building code**  **17 program than a lot of other states in this**  **18 country.**  **19 So, yes, there's no doubt that**  **20 building inspectors would be a source of**  **21 identifying non-compliant units, but I'd**  **22 suggest that we're probably going to see a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 very high level of compliance with those**  **2 installations that are inspected, and it is**  **3 those that are not inspected that I'm worried**  **4 about.**  **5 So, I'm empathetic with DOE's**  **6 concern about funding and making a commitment.**  **7 On the other hand, I don't believe any of us**  **8 can be confident that we're going to achieve**  **9 compliance without some field survey or audit**  **10 that addresses this known instance of**  **11 non-compliance that I just spoke about.**  **12 MS. SHEPHERD: This is Amy Shepherd**  **13 from AHRI. I'm fine with that as it is for**  **14 something for DOE to consider, but I don't**  **15 think that we should get hung up on this one**  **16 slide and an issue of how to mandate how DOE**  **17 is going to run its enforcement program to**  **18 this level.**  **19 They have an enforcement division.**  **20 This is their job. This is what they do.**  **21 They figure out the limited resources they**  **22 have and the best use of them to enforce the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 rules because that's what they're all about.**  **2 So, in my -- in my view? Fine. If**  **3 we want to put that there for something to**  **4 consider, but I don't think we should get hung**  **5 up on trying to mandate a specific enforcement**  **6 tool for them that they always have to use no**  **7 matter what.**  **8 MR. FERNSTROM: This is Gary. I**  **9 agree with Amy. I don't think it's our job to**  **10 tell DOE what to do. However, I do think it's**  **11 our job to extract some kind of commitment out**  **12 of DOE to do something along these lines to**  **13 assure us that compliance is going to be**  **14 achieved.**  **15 MS. NOLL: This is Elizabeth with**  **16 NRDC. So, while this reflects Gary's idea**  **17 accurately, I guess when I was thinking about**  **18 this more proactive opportunity for things for**  **19 the department to consider, I was actually**  **20 considering what is the potential for the**  **21 department to randomly audit.**  **22 We have records retention** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 requirements now. We are not requiring**  **2 records production, which seems reasonable,**  **3 but even just language in there that the DOE**  **4 would consider a random audit not necessarily**  **5 linked to a complaint, but just a check of the**  **6 -- a particular region, a particular**  **7 stakeholder; that that might actually be very**  **8 informative as well as a potential hook to**  **9 others to say, "At any given moment, I could**  **10 potentially be audited."**  **11 Even if that never happens, a hook**  **12 to stay in line. That was something I was**  **13 thinking of in this proactive nature.**  **14 MR. FERNSTROM: Elizabeth, this is**  **15 Gary. I'd be happy with that. I don't think**  **16 it necessarily has to be at the home level,**  **17 but I think a commitment towards some**  **18 proactive audit is needed.**  **19 MR. HURST: This is John Hurst with**  **20 Lennox. Regardless of whether I'm behaving or**  **21 not, I can be audited. Whether there's no**  **22 presumption of guilt, somebody can show up at** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 my doorstep and request my records, even**  **2 though I haven't done anything wrong. Is that**  **3 what we're suggesting?**  **4 MR. FERNSTROM: Yes.**  **5 MR. HURST: Don't like it.**  **6 MR. FERNSTROM: Well, it's kind of**  **7 like our income tax. We're all honest. We**  **8 all turn our --**  **9 MR. HURST: I'm audited when someone**  **10 finds an anomaly on my income tax form. Not**  **11 when I've filed an --**  **12 MR. FERNSTROM: Well, but you see,**  **13 you have to file the income tax, and there is**  **14 no filing here. So, if there isn't a**  **15 proactive outreach and review, there's**  **16 nothing.**  **17 MS. MEYERS: So, this is Karen with**  **18 Rheem. I'm going to throw further gas on the**  **19 fire. We have come up with several different**  **20 mechanisms for people to report improper**  **21 installations. This to me is absolutely**  **22 ridiculous, and I will not support it.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MS. NOLL: This is Elizabeth. I**  **2 think we're also coming up with several great**  **3 mechanisms for reporting under the assumption**  **4 that people will. I think that it is not**  **5 unreasonable that if the department sees in**  **6 the first year that they aren't getting any**  **7 reporting that they have a mechanism in place,**  **8 that says, "I'm going to go random sample."**  **9 It doesn't even have to be a large**  **10 number, but that they have the opportunity or**  **11 the capability of doing that.**  **12 MS. MEYERS: So, I think if**  **13 utilities want to spend their money doing**  **14 that, or other energy efficiency groups have**  **15 at it but they may not be getting any**  **16 complaints because low and behold people are**  **17 actually not cheating like some people think**  **18 there's going to be random cheating in this**  **19 room; I think the majority of the companies in**  **20 this industry are going to try and comply with**  **21 the law to go out there and do random audits**  **22 on whether a 13 or 14 SEER air conditioner was** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 illegally installed?**  **2 It's going to cost a lot of money to**  **3 do that. I think we said the difference in**  **4 saving -- utility savings -- I mean we're**  **5 putting in all of these ways for these checks**  **6 to occur anyway. But to go up and just**  **7 randomly request records from people, or to go**  **8 into neighborhoods and start robocalling is**  **9 beyond ridiculous.**  **10 MR. FERNSTROM: This is Gary. Well,**  **11 we have a difference of opinion on this one.**  **12 MR. EISNER: Do we want to talk more**  **13 or have a vote? Any language that could**  **14 clarify? Any adjectives that could be changed**  **15 that would satisfy you, Gary?**  **16 MR. BALLO: This is Tim. Leaving**  **17 our differences aside, which side of**  **18 ridiculous side this falls on, even though I**  **19 completely agree in a sense with Gary's point,**  **20 there needs to be a comprehensive look at the**  **21 effectiveness of this program on the ground.**  **22 I don't see us being able to secure** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 hard language that would commit DOE to this.**  **2 So, if we can maybe get something a little**  **3 stronger, like if funding is available DOE**  **4 will commit to conducting a survey, rather**  **5 than consider.**  **6 But that said, I don't see us**  **7 eliminating the play in the joints of this**  **8 one. So, I think it's incumbent on the group**  **9 more broadly to think about ways that we can**  **10 sort of have some sort of a check on the**  **11 system to make sure things are working, aside**  **12 from just the reporting of violations.**  **13 I don't see this one getting solved**  **14 because I sort of don't agree with the random**  **15 audits either.**  **16 MR. HURST: Well, that brings up a**  **17 point. Maybe I'm confused as to how this**  **18 would work, but who would be surveyed, and how**  **19 would you get the list of survey recipients?**  **20 I'm not sure how this program would actually**  **21 work.**  **22 MR. FERNSTROM: This is Gary.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Perhaps it is up to me to respond to that.**  **2 When I originally proposed it, I suggested**  **3 that DOE implement a program where targeted**  **4 areas of higher air conditioning saturation**  **5 and age commensurate with likely needing to**  **6 comply with the requirement be robocalled, and**  **7 surveyed to see if homeowners might allow**  **8 someone to come out and take a look at their**  **9 air conditioner.**  **10 Through that, compliance might be**  **11 determined or not. That was just one**  **12 suggestion. Whether this goes on at the**  **13 homeowner level or some other level kind of is**  **14 less important to me than something be done.**  **15 So, perhaps DOE could, on a very**  **16 limited extent, do an audit of distributors**  **17 inventory to see whether or not it is**  **18 generally indicative of compliance or not.**  **19 But somehow, I think there needs to be some**  **20 follow up other than relying solely on reports**  **21 from the field of violations.**  **22 MS. MELCHI: This is Jon with HARDI.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I appreciate Gary's intent here in trying to**  **2 make sure we're in compliance. I don't**  **3 necessarily agree that a survey of inventory**  **4 would be the best approach to that. As we've**  **5 discussed, maintaining and holding inventory**  **6 is not a violation and I don't know that that**  **7 would necessarily get you where you want to**  **8 go.**  **9 MR. DORIA: This is Jordan. One**  **10 thing I maybe want to turn around on is I**  **11 think one of the things Elizabeth talked about**  **12 -- first of all, let me say survey and audit**  **13 are two different things. That's at least my**  **14 understanding.**  **15 An audit is necessarily more**  **16 burdensome on at least a lot of industry**  **17 parties. The other point is something David**  **18 Hungerford brought up last week that I thought**  **19 was an important point; that compliance to**  **20 some extent is about an individual's sort of**  **21 internal assessment along two axis: likelihood**  **22 of getting caught and severity of punishment.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 It was his assertion that we've been**  **2 focusing a lot on the severity and punishment**  **3 of being the force which would dissuade people**  **4 from committing the bad act, and less so on**  **5 their being some belief that there's a greater**  **6 likelihood of being caught.**  **7 I think Elizabeth's point, to some**  **8 extent, was saying that if you have something**  **9 like this, you can help engender in the --**  **10 across the industry a feeling that this isn't**  **11 just some totally impossible situation that**  **12 they could in fact be caught if they violate;**  **13 that there are actually a number of different**  **14 mechanisms by which they could in fact be**  **15 found out if they violate.**  **16 I'd say from where I sit, that is**  **17 important. That goal is important to try to**  **18 create a culture of compliance. So, I'm not**  **19 necessarily suggesting that survey or audit is**  **20 the best. But I think as we think about all**  **21 of this in totality, trying to help convey**  **22 that there are a lot of different ways by** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 which one could be caught and also there are**  **2 severe punishments, I think both need to be**  **3 considered strongly for us to have something**  **4 that is in effective enforcement plans.**  **5 So, that's just a more general point**  **6 that I wanted to make.**  **7 MR. FERNSTROM: So, this is Gary.**  **8 Earlier in our caucus, David Hungerford**  **9 expressed an opinion on this. I'm not sure he**  **10 totally agreed with my position, but if he's**  **11 on the line, I wonder if we could hear from**  **12 him.**  **13 MR. RAWALD: He isn't able to speak**  **14 right now. He hasn't entered his audio PIN.**  **15 I'm not certain he's on.**  **16 MR. FERNSTROM: Okay. Anyway, I**  **17 would agree with Jordan that in principle I**  **18 think this is important, and I'm willing to be**  **19 very flexible about how we might collectively**  **20 address it.**  **21 MR. ELLIS: This is Ray from LAC. I**  **22 know there are numerous times that we survey** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 members and stuff all the time with postcards.**  **2 With the new stickers that everybody has**  **3 agreed to put on, it's fairly simple to be**  **4 able to tell on your device whether or not**  **5 it's a SEER 13 or SEER 14. So, that might be**  **6 a very inexpensive way to survey an area to**  **7 see if the installations have met certain**  **8 criteria.**  **9 MR. EISNER: One of the problems**  **10 with composing --**  **11 MR. HUNGERFORD: Hi guys. Can you**  **12 hear me?**  **13 MR. EISNER: Yes.**  **14 MR. HUNGERFORD: Gary, you were**  **15 asking me what I thought of the survey and**  **16 this general idea. I'm not sure that the way**  **17 you've described it in my opinion, and as**  **18 someone who has done a number of -- quite a**  **19 bit of survey work over the years; I'm not**  **20 sure that this is how we necessarily want to**  **21 say it.**  **22 I also agree with the point; I think** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it was Doug that said - it's sort of hard to**  **2 attach faces to voices sometimes - the idea of**  **3 the probability of getting caught versus the**  **4 amount of -- or the cost of getting caught.**  **5 There needs to be some method of**  **6 collecting data to sort of figure out whether**  **7 there are units going to the wrong place. But**  **8 I think that the more effective way to use**  **9 that research, or to do that research, would**  **10 be to use records from distribution and to**  **11 find out whether there are units that are**  **12 going to the wrong places. That's my major**  **13 concern.**  **14 I'm not sure that there is a**  **15 practical way to implement the kind of large**  **16 scale research project that you're talking**  **17 about. Sorry.**  **18 MR. FERNSTROM: Well, my reaction --**  **19 this is Gary. Siding with David a little bit**  **20 here is I agree it may not be practical at the**  **21 individual home level, but following Jordan's**  **22 suggestion, there ought to be some way in** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 principle we can get DOE to make a commitment**  **2 to be a little more proactive here than just**  **3 relying on reports of violation from the**  **4 field.**  **5 MR. HUNGERFORD: That I would agree**  **6 with.**  **7 MR. EISNER: Doug, if you had to**  **8 make more of a commitment would you be in a**  **9 position where you might have more of a**  **10 problem under the Paperwork Production Act?**  **11 MR. RAWALD: I can't answer that**  **12 question, but what I can say is for anything**  **13 I have to go back and talk to folks, and I**  **14 need some language that would actually meet**  **15 everyone's needs and reflect what we could**  **16 say.**  **17 There's an inability really for**  **18 people to realize that we can put a**  **19 requirement upon us to do anything, given the**  **20 fact that we have to rely on funding and other**  **21 considerations. But we all reserve the right**  **22 to go ahead and be proactive in our** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 investigations.**  **2 We're not going to -- like I said,**  **3 there will be no traction for the idea of**  **4 auditing of records of contractors who are**  **5 otherwise thought to be non-compliant because**  **6 the audit can be disruptive of their business**  **7 to the extent that it wouldn't be appropriate**  **8 given the threshold we're putting upon**  **9 ourselves for otherwise disrupting the**  **10 business.**  **11 So, I don't think there's going to**  **12 be traction to that idea. There could be some**  **13 traction for other ideas as far as trying to**  **14 survey or determine if there are a number of**  **15 non-compliant units where they shouldn't be.**  **16 The question is even if I get that**  **17 information; if I find out that in a**  **18 particular town in California there are a**  **19 number of SEER 13's that shouldn't be there,**  **20 what will I then do with that information, and**  **21 how will I be able to use it?**  **22 So, I have to look at what I can do** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 with that, and think about that some more as**  **2 to how will I be able to then link that to**  **3 investigating a particular contractor for**  **4 installing non-compliant units. So, there's**  **5 at least that part of it.**  **6 With the survey of the homes, at**  **7 least you are able to link a home to a**  **8 non-compliant unit and you're able to link a**  **9 home possibly to installer. So, there's a lot**  **10 more to go on for an investigation resulting**  **11 from that.**  **12 I can also see how, from a deterrent**  **13 standpoint, it would have an impact on the**  **14 contractor because he would say, "Oh, I might**  **15 be found out if this person ever gets a phone**  **16 call. So I want to make sure I do the right**  **17 thing."**  **18 So, that could be helpful. Once**  **19 again, I want to present the idea of the**  **20 survey. In particular, the information I**  **21 received back was a lukewarm consideration,**  **22 which is completely caveated in double terms** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 here. So, I get the concern from the**  **2 advocates.**  **3 So, I'm asking you to -- if you want**  **4 to suggest different language, which at this**  **5 point all I've heard is DOE will commit as**  **6 opposed to consider. That's been firm**  **7 language. Then I will bring that back to the**  **8 department and see if they -- what their**  **9 thoughts are on it.**  **10 At the moment, this is what I've**  **11 been given as far as what we want to do.**  **12 MR. FERNSTROM: So, this is Gary.**  **13 Let me sort of sum up where I think we are.**  **14 I don't think this is as strong a commitment**  **15 as I'd like to see, yet I've heard**  **16 representatives from industry saying this**  **17 whole idea of completely ridiculous.**  **18 So, I'm not sure even the way it's**  **19 worded now it would get approval by this**  **20 group. So, maybe we can generalize it in such**  **21 a way as to meet the needs of our friends from**  **22 industry, perhaps substituting "survey of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 homes" to a term such as "proactively review**  **2 installations," leaving it wide open as to at**  **3 what level and how that might be done.**  **4 But strengthening the term consider**  **5 to -- would conduct if funds are available.**  **6 Even with that change, I don't know that it**  **7 would meet with everyone's agreement here.**  **8 MR. HURST: This is John Hurst with**  **9 Lennox. I don't know if I used the word**  **10 ridiculous. If I did, I apologize. So, the**  **11 evil, mean and spiteful me says we should**  **12 approve this because I don't think it's**  **13 ridiculous. I don't think it's going to be as**  **14 effective as you may want it to be.**  **15 I think we need to leave latitude**  **16 with the department to pursue different**  **17 approaches if they find things to be**  **18 effective.**  **19 In a former life, I worked for a**  **20 big, orange big box retailer, and we targeted**  **21 neighborhoods specifically for HVAC**  **22 installations because we knew those were** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 target rich opportunities.**  **2 I can't say as a marketer that my**  **3 efforts were very effective. So, if you do a**  **4 survey and target those neighborhoods, yes;**  **5 you might trip across one or two, but I**  **6 believe there are more effective ways to go**  **7 after this.**  **8 If the department is going to have**  **9 limited funding, which last time you checked**  **10 you do, I think we need to leave it to the**  **11 department's discretion to figure out what the**  **12 most effective use of those dollars is.**  **13 This is one of many ideas I**  **14 personally didn't find to be very effective.**  **15 Not ridiculous.**  **16 MR. SACHS: This is Harvey. Brother**  **17 Hurst and I don't always agree, but I like the**  **18 focus he's offered on keeping DOE responsible**  **19 and not dictating whether they use a hoe or a**  **20 pick to do it.**  **21 They think they can do a better job**  **22 with a shovel than a hoe? That's okay with me** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 as long as they haven't lost the shovel. So,**  **2 that's agreement.**  **3 MR. RAWALD: Does anyone have any**  **4 particular language they could suggest, or do**  **5 you want to come back to this with some**  **6 language after thinking about it for a while?**  **7 MR. FERNSTROM: This is Gary. My**  **8 only suggestion is replace survey of homes to**  **9 some phrase, like, "Proactively reach out."**  **10 If you, Doug, feel like indeed the best**  **11 alternative from your point of view now, if**  **12 DOE is capable of doing it, would be surveying**  **13 homes, then I'm happy with leaving it there.**  **14 I guess I'm willing to give up my**  **15 request for a commitment from DOE in exchange**  **16 for even language as weak as this.**  **17 MR. RAWALD: I hear that Gary. So,**  **18 I'm pro the broadening of the language rather**  **19 than "survey of homes," because I think there**  **20 are smarter people that work enforcement for**  **21 much longer than I possibly.**  **22 So, I think it's good to have a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 breadth of ideas. So, let's do that.**  **2 MR. WHITE: Chuck White. I don't**  **3 know in terms of your language if it's okay.**  **4 I don't know if people agree to it. But**  **5 instead of consider, could you say, "Reserves**  **6 the right to?"**  **7 MR. RAWALD: We could do that. That**  **8 would be effectively the same thing because we**  **9 wouldn't say, "We would do it." We would say,**  **10 "We will consider doing it simply by reserving**  **11 the right to do it," of course.**  **12 MR. FERNSTROM: Well, I think DOE**  **13 already has the right. It doesn't have to**  **14 reserve it.**  **15 MR. RAWALD: I think what Gary is**  **16 trying to look for is something to put out**  **17 there to scare people and at least give some**  **18 sort of deterrent value. "There's another**  **19 thing going on here that DOE is going to do,**  **20 and they're going to really look at this.**  **21 They're going to really consider it."**  **22 I can't get us to the, "We are going** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to do it." I can get us to the, "We're going**  **2 to give a lot of thought to it." And**  **3 especially if in a year or two years I haven't**  **4 seen a single report come across my desk.**  **5 Then I'm going to feel like, "Okay, what do we**  **6 need to start thinking about how else we're**  **7 ensuring compliance?"**  **8 At least I could say with a straight**  **9 face, "Yes, everything is fine out there. Not**  **10 a single thing is going wrong." Which would**  **11 be extraordinary.**  **12 MR. FERNSTROM: This is Gary. After**  **13 discussing this, I'm okay with the way it**  **14 reads now. I hope others in the room, given**  **15 Jordan's perspective on this, would be okay**  **16 with it too.**  **17 MR. HURST: This is John Hurst with**  **18 Lennox. Would you limit it by funding, and**  **19 would you limit it by saying investigation?**  **20 Couldn't you just say, "Doe will consider**  **21 proactive measures to determine if**  **22 non-compliant units have been installed?"** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 That gives you broad flexibility.**  **2 MR. RAWALD: So limit the term, "If**  **3 funding is available," and say, "DOE will**  **4 consider proactive measures in each region?"**  **5 Or, "Proactive measures," period?**  **6 MR. HURST: I think leave it broad.**  **7 It gives you the flexibility. It gives the**  **8 department the ability to pursue proactive**  **9 versus reactive measures.**  **10 MR. RAWALD: We can agree to that.**  **11 MR. EISNER: This is a preamble**  **12 statement as opposed to a rules statement.**  **13 MR. RAWALD: Right.**  **14 MR. EISNER: Will this be a preamble**  **15 statement rather than something you put in the**  **16 rules?**  **17 MR. RAWALD: Right. So, I have to**  **18 confer with the lawyers about whether or not**  **19 we can put a requirement at least upon**  **20 ourselves in regulatory text. It seems to be**  **21 in the preamble but I don't know the answer to**  **22 that.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: My suggestion would be,**  **2 from what I'm hearing, is to come from the**  **3 other direction. "DOE may also take other**  **4 steps it deems appropriate," or something**  **5 along those lines. Not what they will**  **6 consider, but they will take whatever steps**  **7 they believe are necessary to address this**  **8 problem. They're not limited to what they've**  **9 stated in the rule making document.**  **10 MR. MCCRUDDEN: This is Charlie from**  **11 ACCA. I'm uncomfortable with the way it's**  **12 written now versus the way it was written**  **13 because proactive measures to me could be an**  **14 audit, whereas before we had, "Survey of**  **15 homes." To tell you the truth, I have no**  **16 problem surveying the homeowners because I**  **17 think that's the last check of eyes that could**  **18 be there.**  **19 MR. RAWALD: I think, Charlie, that**  **20 could be solved by saying, "DOE will only**  **21 request records if." So, we'll make the**  **22 records production slide later on. We can** 

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### 1 make clear that we'll only request those **2 records if we have that reasonable belief. 3 So, I can't supersede that by**  **4 saying, "Well, it's a proactive measure." I 5 can only request records if I have this**  **6 reasonable belief. 7 MR. MCCRUDDEN: I understand that,**  **8 but I just want to make sure that "consider 9 proactive measures" doesn't mean random**  **10 audits. 11 MR. RAWALD: Right. It would not in**  **12 my opinion. 13 MR. MCCRUDDEN: Okay, well --**  **14 MR. RAWALD: Because if I put that 15 limitation on the language regarding records**  **16 production, then I wouldn't be able to get 17 around that because I would already have**  **18 committed more specifically to that 19 implementation.**  **20 MR. MCCRUDDEN: Right, okay. 21 MS. SHEPHERD: This is Amy Shepherd.**  **22 I don't have an objection to that. I really**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 feel like we're just trying to rephrase this**  **2 statement that DOE will do its job. So, I**  **3 really think we should not get too hung up on**  **4 this if -- maybe table it and move on.**  **5 MR. FERNSTROM: This is Gary. Let's**  **6 call for a vote and see where we go. If it**  **7 stalls, maybe we can table it and find better**  **8 language.**  **9 MR. EISNER: All right, so with the**  **10 language that we have up there, "DOE will**  **11 consider proactive measures." Does anybody**  **12 object to this language?**  **13 PARTICIPANT: Well, does this mean**  **14 that DOE can show up at a contractor's door,**  **15 and say, "I want to see your records." Or,**  **16 does this mean --**  **17 MR. RAWALD: That was the question**  **18 Charlie and I were just speaking about, which**  **19 is I would not view that that way because**  **20 we're going to constrain the record production**  **21 requirement to a requirement that the**  **22 department has a reasonable belief that that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 particular entity has committed a violation.**  **2 So, that specific requirement will therefore**  **3 trump any general idea that I can go out there**  **4 and proactively investigate things.**  **5 So, this language will not say that**  **6 I can do that. That will not be a proactive**  **7 measure that we will undertake.**  **8 MR. DORIA: This is Jordan. If I**  **9 could ask a question? As I read this, I'm**  **10 interpreting it to mean that one of the**  **11 proactive measures among the many the DOE**  **12 would consider would be something like a**  **13 sting.**  **14 MR. RAWALD: Sure.**  **15 MR. DORIA: That the language would**  **16 open the possibility for that.**  **17 MR. RAWALD: Sure. But again,**  **18 that's not something I feel like we could do**  **19 today. So, it's something that -- but I think**  **20 Gary's point once again is to put out there**  **21 that there's something going on, so people**  **22 will realize, "I can be caught. So, I really** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 need to be doing the right thing because DOE**  **2 is doing more than just waiting for people to**  **3 call me. They're out there doing their job**  **4 too."**  **5 Then he also wants DOE doing that,**  **6 of course. But that deterrent value is**  **7 important as well if I understand it. So, I**  **8 appreciate that. I don't mind saying, "We're**  **9 going to do our job in this way."**  **10 MR. EISNER: So, is there concern**  **11 about this language or do we want to come up**  **12 with something different? Doug is simply**  **13 saying he's going to add in the preamble,**  **14 "Don't think we have just reporting authority.**  **15 We have other authority to do things like**  **16 stings, like surveys, and we will use them as**  **17 necessary or appropriate."**  **18 MR. FERNSTROM: This is Gary. I**  **19 thought Doug said he didn't know whether it**  **20 would go in the preamble or not, you know,**  **21 based on advice of attorneys. But I'm happy**  **22 with this, and I think we should call the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 question.**  **2 MR. EISNER: Okay, does anybody**  **3 object to this language? I see some informal**  **4 caucusing going on. Do we want to take a**  **5 break and talk among ourselves, or do we want**  **6 to take a vote?**  **7 MR. MELCHI: This is Jon from HARDI.**  **8 This is something that if people end up having**  **9 objections to, we have no qualms about being**  **10 able to go back to it if people do end up**  **11 having objections. I'm okay with voting on it**  **12 now, but there's no reason we couldn't revisit**  **13 it if need be.**  **14 MR. HURST: Let's just take two**  **15 minutes. We can come back and agree on**  **16 something, but can we take a couple minutes?**  **17 MR. FERNSTROM: Just a clarification**  **18 as a matter of process. I was of the**  **19 understanding that everything we were agreeing**  **20 to and not as we move through this process**  **21 could be subject to some reconsideration if**  **22 our constituents gave alternative direction.** 

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### 1 So, what -- **2 MR. EISNER: Let's stop there now. 3 This is scheduled to be our last meeting**  **4 unless we decide to go to the next meeting. 5 So, if we want to end tomorrow, it's going to**  **6 be hard to come back after you go and talk to 7 your constituents.**  **8 I think if you need that, we do have 9 another meeting scheduled. But keep that in**  **10 mind. 11 MR. FERNSTROM: Good observation.**  **12 Thank you. 13 MR. EISNER: I'm not saying between**  **14 now and tomorrow night at 5:00 we can't come 15 back to this if we have to. We've got some**  **16 more contentious issues to get through also. 17 MR. FERNSTROM: Well, before we take**  **18 our break to caucus, let me just reiterate 19 that I think this is really, really important**  **20 to me, and I believe the advocate group. And 21 I hope we can find some language that allows**  **22 us to be okay with this.**

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### 1 MR. EISNER: Okay, let's take five **2 minutes, and if you need more let me know. 3 (Whereupon, the above-entitled**  **4 matter went off the record at 1:59 p.m. and 5 resumed at 2:09 p.m.)**  **6 MR. EISNER: Alright, can everybody 7 take their seats?**  **8 MR. MCCRUDDEN: And so this is 9 Charlie with ACCA, and we would like to go**  **10 back to the original language. I don't know 11 if you have it, if you don't, I have it right**  **12 here. We'll consider conducting a survey of 13 homes in each regions to determine if a**  **14 noncompliant unit has been installed. 15 MS. MYERS: This is Karen with**  **16 Rheem, I find that absolutely reasonable. 17 Thank you, Gary.**  **18 (Laughter.) 19 MR. FERNSTROM: This is Gary. Thank**  **20 you so much, Karen, because when you started 21 with the R word, I was hoping it was going to**  **22 be reasonable.**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 (Laughter.)**  **2 MR. MCCRUDDEN: And this is Charlie**  **3 with ACCA, speaking on behalf of ACCA, not of**  **4 everyone in the group. What I like about this**  **5 is I have always believed that the homeowner**  **6 is a last set of eye to the check. And we**  **7 can't guarantee the homeowner will be that**  **8 last set of eyes.**  **9 But this does encourage them, in a**  **10 survey, to look out and see is this -- and**  **11 this is, this protects, I think, the**  **12 contractor because he knows that the guy who's**  **13 going to undercut him has to be wary of that**  **14 homeowner getting that call.**  **15 MR. EISNER: Other comments? Anybody**  **16 have any objections to this language?**  **17 MR. BALLO: This is Tim with**  **18 Earthjustice. The one thing this leaves out**  **19 is the possibility of this staying, which I**  **20 don't know that we absolutely need that,**  **21 because at some point DOE is going to have to**  **22 buy SEER-13 units to test them for some** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 reason. And, of course, it would make sense**  **2 to sort of kill two birds with one stone and**  **3 try to buy them from somebody in the south.**  **4 But --**  **5 (Off-microphone comments.)**  **6 So I don't know we need a language**  **7 to cover that but, just want to raise it, it**  **8 does leave out that --**  **9 MR. RAWALD: Right.**  **10 MR. BALLO: -- the traditional**  **11 measure.**  **12 MR. RAWALD: So this is Doug. And**  **13 my perspective all along has been that we have**  **14 the authority to do that. We will consider**  **15 doing those things. And so I don't think it**  **16 needs to come from this group to say that we**  **17 want to say that. So that's my thought on it.**  **18 MR. EISNER: Others? Are you afraid**  **19 that this is going this is going to be too**  **20 limiting, because that's all they're going to**  **21 do?**  **22 MR. SACHS: This is Harvey and, just** 

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### 1 wordsmithing, in any region it's not clear to **2 me why DOE might, has to be instructed to go 3 into every region.**  **4 MR. EISNER: Any objections to that? 5 Anybody object to this language? Unanimously**  **6 adopted? Okay. 7 MR. FENSTROM: This is Gary. Thank**  **8 you. 9 MR. EISNER: Okay, that takes us up**  **10 to slide number 14, Contractors and Dealers. 11 Any comments? This is --**  **12 MR. RAWALD: This would be the 13 appropriate place for Charlie to discuss the**  **14 regional aspect of record-keeping. 15 MR. MCCRUDDEN: Okay. So this is**  **16 Charlie. This was the appropriate place for 17 me to discuss the regional aspect of -- I**  **18 think that's the scope. Wait, correct? 19 MR. RAWALD: If you want to confine**  **20 it only to the contractors and dealers in the 21 southwest, southeast or, as you posed,**  **22 seemingly, this morning, to those operating**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 only on the border.**  **2 MR. MCCRUDDEN: No, no. I was not**  **3 proposing only those on the border. And I say**  **4 that because, to me, that implies those north**  **5 of the border. And so I believe that it**  **6 should be only those installations that occur**  **7 in the region, not the base. So that would be**  **8 in the southeast or the southwest. And then**  **9 I'd leave it open to others.**  **10 MR. RAWALD: And the Department is**  **11 supportive of that limitation for**  **12 installations in the region -- in the regions.**  **13 MR. EISNER: Any comments?**  **14 MR. RAWALD: And so, Laura, if you**  **15 could make that only to installations in the**  **16 region. So it's not where the contractors and**  **17 dealers exist but where the installation**  **18 itself exists. Because we could have a**  **19 contractor that crosses the border either way.**  **20 But they only need to keep records of things**  **21 that they install in the region for that**  **22 matter.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. BALLO: So I wonder how you**  **2 could -- if you could play that out a little**  **3 bit. Say you get a report of a non-compliant**  **4 installation. You find out it was installed**  **5 by someone who doesn't -- the contractor**  **6 doesn't have this information.**  **7 The distributor who sold it to the**  **8 contractor, who installed it out of region, is**  **9 that then the person you're going to be**  **10 looking to as far as maybe a violation**  **11 occurred there? Because you're not going to**  **12 find the contractor potentially.**  **13 MR. RAWALD: I'm trying to**  **14 understand the hypotheticals, Tim.**  **15 MR. BALLO: Well, I mean, I'm -- if**  **16 the contractor who installed it doesn't keep**  **17 a record -- never mind. Actually, I think I'm**  **18 tired.**  **19 (Laughter.)**  **20 MR. LATTANZI: Okay, this is Matt**  **21 Lattanzi of Nordyne. I have a question, a**  **22 little bit, on the scope. Under split system** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 air conditioner we indicate the outdoor**  **2 condensing unit, manufacturer, model and**  **3 serial number. But then underneath that we**  **4 say complete indoor unit, manufacturer and**  **5 model number. Like to explore the -- why**  **6 we're indicating the indoor unit, and for two**  **7 reasons.**  **8 One, the indoor product, if it's an**  **9 air handler, coils is not a covered product**  **10 under EPCA. And, two, if we're tracking the**  **11 outdoor units and we rely on our discussions**  **12 earlier this morning regarding the least**  **13 efficient unit -- I'm sorry, the least**  **14 efficient rating, having to be the minimum in**  **15 the given region, why would we need records on**  **16 the indoor unit?**  **17 MR. RAWALD: So this is Doug. So I**  **18 guess I'll push back against the notion that**  **19 indoor units themselves are not regulated. So**  **20 we regulate, essentially, air conditioners as**  **21 a system. And we view -- this is going to**  **22 have two major parts to it -- the outdoor unit** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and the indoor unit, both of which are defined**  **2 in 430.2 CFR. And so we talk a lot about the**  **3 indoor unit.**  **4 And I've been using, appropriately,**  **5 I think, upon reflection now, for ten**  **6 meetings, the term coil interchangeably with**  **7 that when I should be speaking, I think, more**  **8 broadly of the term indoor unit to be more**  **9 accurate. But we do require the indoor unit,**  **10 when combined with the outdoor unit, to have**  **11 a certain performance level. And if we didn't**  **12 then you could have any indoor unit you want**  **13 to match with the condensing unit.**  **14 So we do require, if you are not the**  **15 manufacturer of the condensing unit -- so we**  **16 require, if you build an indoor unit and**  **17 you're going to, say, pair it with the**  **18 condensing unit, they have to perform at a**  **19 certain level.**  **20 And so because it's a system we want**  **21 to track both parts of the system. Now I**  **22 understand, from talking to the distributors,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that a lot of folks don't serialize indoor**  **2 units. And so we're not requiring the**  **3 serialization of that.**  **4 The only item we want the serial**  **5 number for is the condensing unit, what I**  **6 think is, makes it a little bit easier. But**  **7 we do believe that probably it's a function of**  **8 the system and that there are some folks who**  **9 decide to buy an outdoor unit from a major**  **10 manufacturer, but an indoor unit with somebody**  **11 else, a different manufacturer, or from an**  **12 independent coil manufacturer. And we want to**  **13 make sure that, as a system, will meet the**  **14 requirements. So we want to make sure we're**  **15 tracking it in the system.**  **16 MR. WHITE: So this is Chuck White.**  **17 And that language is slightly different than**  **18 what we discussed last week and in your**  **19 clarification of indoor unit versus the other.**  **20 But the thing that initially threw me, and I**  **21 know what we're talking about, but it**  **22 initially threw me -- you say complete indoor** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 unit.**  **2 And I have some concern that some**  **3 people might think, well, I'm putting a**  **4 furnace and an A-coil in, so that's my**  **5 complete unit, when that's not what you mean.**  **6 And what we talked about before was the coil**  **7 and-or the air handler or air mover, however**  **8 we talked about it. And I understand what**  **9 you're saying but I'm just -- my concern**  **10 there.**  **11 MR. RAWALD: Right. This is Doug.**  **12 And, once again, because I'm not as**  **13 technically adept as everyone else here, and**  **14 so I make mistakes. So I think we could drop**  **15 the word complete.**  **16 I just put it in there because I**  **17 want people to understand that we weren't**  **18 saying uncased coils. So we were making that**  **19 very clear, because there was a lot of**  **20 confusion based upon that, and I think brought**  **21 upon by my me, and I want to make sure we**  **22 clarify that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So an indoor unit is defined as a**  **2 component of a split system air conditioner,**  **3 central air conditioner or a heat pump -- but**  **4 that's not apply, applicable here -- designed**  **5 to transfer heat between the afferent and the**  **6 indoor air and which consists of an indoor**  **7 coil, a cooling mode expansion device and may**  **8 include an air moving device. So that's the**  **9 definition we want to apply. And so if**  **10 dropping the word complete alleviates your**  **11 concern, I'm game for that, Chuck.**  **12 MR. WHITE: All right. I think that**  **13 would help some people.**  **14 MR. RAWALD: Great, let's do it.**  **15 Let's dump, let's leave that word.**  **16 MR. WINNINGHAM: Doug, this is Dave**  **17 with Allied Air. I mean, previously we talked**  **18 about replacement situations where it's a**  **19 condenser-only replacement and that, you know,**  **20 if that unit had a valid rating for the area,**  **21 knowing that the indoor system may or may not**  **22 be changed, is that part of this requirement** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 or --**  **2 MR. RAWALD: So would you be**  **3 required to keep the record of replacing a**  **4 condensing unit in the region is the question,**  **5 if you want to replace the condensing unit.**  **6 And my answer would be yes, because that's**  **7 still what -- that's what we want to show that**  **8 if you -- because that has to be, the**  **9 condensing unit itself has to be a 14-SEER**  **10 condensing unit, still, in that situation.**  **11 MR. WINNINGHAM: But other that, are**  **12 you only requiring the documentation for the**  **13 outdoor section?**  **14 MR. RAWALD: Because that's all**  **15 you're installing. Right. If you're not**  **16 installing any other piece you don't have to**  **17 keep records of it.**  **18 MS. MYERS: So this is Karen with**  **19 Rheem. I don't really have a problem with**  **20 this. I think this significantly increases**  **21 the record keeping burden to not -- and I**  **22 don't really think it gets you that much** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 benefit. So that's just the only comment I**  **2 would make.**  **3 I mean, keeping the record on**  **4 outdoor unit is going to be 95 percent of the**  **5 information you need. And so this is a lot of**  **6 extra burden and I'm just not sure why it's in**  **7 there. That's just, you know.**  **8 MR. RAWALD: Right. So, Karen, my**  **9 hope is that when the contractor receipts the**  **10 sale or when they're done with the sale they**  **11 put it on the same receipt, you know, the**  **12 model number and the serial number for the**  **13 condensing unit and then the model number and**  **14 the manufacturer or the brand of the indoor**  **15 unit.**  **16 And that's it. And as long as**  **17 they're doing that's, that's going to meet the**  **18 need. Or, when they have their bidding that**  **19 they say this is what we're going to give you.**  **20 A 3-ton upload is going to be the Carrier**  **21 outdoor for these specs and also this**  **22 particular indoor unit from Aspen or Allstyle,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 some independent coil manufacturer.**  **2 MR. ROCKY: Yes, this is Bryan**  **3 Rocky. So I think, Doug, that when all the**  **4 components are being replaced that's**  **5 acceptable. I think the confusion comes from**  **6 the discussion of you have a replacement**  **7 condenser you're now going to require them to**  **8 tell you what furnace, air handler or coil was**  **9 installed as part of that system. And that's**  **10 not the intent.**  **11 MR. RAWALD: Right.**  **12 MR. ROCKY: I don't think.**  **13 MR. RAWALD: Right. This is Doug.**  **14 And so if you're not adding the thing to the**  **15 house, if it's already there, you don't have**  **16 to have receipt for it. It's just what you're**  **17 putting in the house you have to receipt for**  **18 and explain.**  **19 MR. AMRANE: Doug, this is Karim.**  **20 But are you requiring this only for when you**  **21 are just replacing the indoor coil as well?**  **22 You will have to report that?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: So if you were in a**  **2 situation where you came to a house and you**  **3 were to replace the indoor unit, a condenser**  **4 -- and not to replace the coil but replace the**  **5 indoor unit which, I think, is on the more**  **6 rare side. It sounds like we're replacing**  **7 more often the coil or the thing within the**  **8 indoor unit, not the entire indoor unit.**  **9 But if you were to replace the**  **10 entire indoor unit we would ask for you, on**  **11 the receipt you give your customer, to put the**  **12 manufacturer and the model number and to keep**  **13 that receipt for five years. That's what we**  **14 would ask.**  **15 MR. AMRANE: This is Karim again.**  **16 What will be the purpose? I mean, is this for**  **17 DOE? I don't understand. If you're replacing**  **18 just the indoor coil what will be the intent**  **19 for you?**  **20 MR. RAWALD: So I want to be**  **21 careful. I'm not saying the coil. I'm saying**  **22 the indoor unit. Because if you're replacing** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 the coil that's a service part, so. But if **2 you're replacing the indoor unit, in our 3 perception the indoor unit still has to be**  **4 certified as being able to perform at a 5 certain level with a pair of something,**  **6 somewhere out there. 7 You can't just replace an indoor**  **8 unit with something that's not out there as 9 being capable of performing at a certain**  **10 level. 11 MS. MEYERS: So if your indoor unit**  **12 is a gas furnace you have to keep the model 13 number? If you're just going out and**  **14 replacing a gas furnace, which, that's your 15 indoor unit, so.**  **16 MR. RAWALD: I thought the indoor 17 unit, as I defined it under 430.2, right, so**  **18 -- as I understand it. So if I'm looking at 19 the indoor unit as defined in 430.2, the**  **20 component of a split system air conditioner 21 that is designed to transfer heat between a**  **22 refrigerant and the indoor air and which**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 consists of an indoor coil, a cooling mode**  **2 expansion device and a main cooling air moving**  **3 device.**  **4 I understand that furnaces interact**  **5 with these things but I'm not asking you to**  **6 keep track of the furnace. The furnace is not**  **7 what we're regulating here.**  **8 MS. MEYERS: It's --**  **9 MR. SACHS: Doug?**  **10 MR. RAWALD: Yes?**  **11 MR. SACHS: This is Harvey. When**  **12 you use those words, which may be as defined**  **13 in 430.2, it evokes a strong reaction for even**  **14 those of us who've had minimal contact.**  **15 And let me try to give you one**  **16 perspective on it. You said it may include**  **17 the air moving. If I change out the motor I**  **18 can get about or a point less of SEER**  **19 equivalent by moving to a better or lesser**  **20 motor. If I change out the coil and go to a**  **21 slightly smaller one because it then, had it**  **22 been rated with instead of a bigger one, we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 get the same sort of change.**  **2 So that, given that we are focused**  **3 for enforcement of the Regional Rule on the**  **4 outdoor unit and that had some compromises**  **5 that concern some people, to now circle back**  **6 on this peculiar regulatory definition of**  **7 indoor unit which, to most of us, connotes two**  **8 things -- the furnace or other air handler**  **9 plus the evaporator unit -- it just sort of**  **10 boggled the eyes and reverberated around the**  **11 gears inside, I think, for pretty much**  **12 everybody in the room.**  **13 I don't understand why, if my**  **14 enforcement of Regional is more than 99**  **15 percent focused on the condensing unit by what**  **16 we've already adopted, why we would be**  **17 recording any information on anything inside**  **18 the house except the diameter of the**  **19 refrigerant line. No, you don't need that.**  **20 MR. RAWALD: Right. So this is**  **21 Doug. And so what I have been reminded by the**  **22 people that I work for is that central air** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 conditioner is the system. We regulate the**  **2 system. The system has a performance value,**  **3 which is dictated both by the pairing of the**  **4 outdoor and the indoor unit.**  **5 Now it's clear to me, from an**  **6 enforcement point of view, it's going to be**  **7 easier to focus on the outdoor unit. But a**  **8 contractor could not install a properly tested**  **9 and compliant SEER-14 condensing unit with a**  **10 coil that's not certified to work with it and**  **11 that's not going to actually help it perform**  **12 at SEER-14.**  **13 So we have to know that the coil**  **14 that's installed with it, that's installed in**  **15 the system, is the appropriate coil to help it**  **16 achieve the value that the manufacturer has**  **17 certified it as. Or else what's the point of**  **18 the manufacturer doing all this work to make**  **19 sure their product performs? If somebody's**  **20 going to be able to put an indoor unit in with**  **21 the condensing unit it's going to degrade its**  **22 performance.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. SACHS: I, Harvey Sachs, might**  **2 do that to get better humidity control in the**  **3 swamps in Biloxi. And I don't want you to**  **4 know about it, but that's a different issue,**  **5 I think. But we're confounding the questions**  **6 of what the manufacturer is certifying with**  **7 the enforcement of the Regional standard. But**  **8 Karim is much better than I am --**  **9 MR. AMRANE: Yes, I mean, I guess,**  **10 Doug, I think from your system, when you're**  **11 replacing the indoor and outdoor, I think you**  **12 are absolutely right. I mean, you want to do**  **13 that, obviously.**  **14 But let's say I have a 10 year old**  **15 unit, okay. It's a 10-SEER, okay. It still**  **16 has maybe five more years to go. And now you**  **17 are basically requiring, if my coil goes bad,**  **18 I need to change my indoor coil, and now I**  **19 have to basically replace it with a coil that**  **20 is not matched with my 10-SEER but it's**  **21 matched with a 14-SEER or 13-SEER.**  **22 It doesn't -- you know, so in this** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 case you might even have issues with how the**  **2 system would work, its reliability, its**  **3 performance. So I -- that's why I think if**  **4 you're replacing the coil only I'm not sure**  **5 why you want to go that way.**  **6 MR. RAWALD: And I want to be very,**  **7 very careful because -- and I hear -- we had**  **8 this conversation a couple weeks ago with the**  **9 folks from Mortex who, Terry Small who**  **10 presented the scenario of the larger coil**  **11 versus the smaller coil.**  **12 We're not talking about replacing**  **13 only the coil. So, and I guess I want to hear**  **14 from the contractors how often do you go to a**  **15 job and you replace the entire indoor unit, as**  **16 opposed to the innards of the indoor unit, the**  **17 coil itself? I mean, is it a very common**  **18 scenario where you will show up at a home and**  **19 you will replace the entire indoor unit?**  **20 MR. SACHS: Again, Doug, this is**  **21 Harvey, I don't think you can ask them to**  **22 answer that until you've articulated clearly,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and I think it's going to require some**  **2 language change, that says in this context**  **3 indoor unit means the following because of**  **4 that ambiguity about whether that includes the**  **5 most common air handling unit which is a**  **6 furnace, or excludes that.**  **7 MR. RAWALD: I guess I'm confused,**  **8 Harvey, because 430.2 defines indoor unit. So**  **9 indoor units a defined term that we have in**  **10 our regulations. And I'm not saying the parts**  **11 of the indoor unit. I'm saying the indoor**  **12 unit.**  **13 MR. SACHS: Okay.**  **14 MR. RAWALD: If you --**  **15 MR. SACHS: And I'm just saying that**  **16 we, people might be able to live with that, if**  **17 that language is redundantly repeated and**  **18 redundantly right here. So it's -- because I**  **19 think that I'm not the only person in the room**  **20 who grabbed an entirely different meaning,**  **21 particularly when it had that prefatory word,**  **22 what was it, completed. That just, complete** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 indoor unit just totally blew me away.**  **2 MS. MEYERS: And correct me if I'm**  **3 wrong, but 430 dot whatever it is -- talks**  **4 about how you test and certify your units.**  **5 MR. RAWALD: No, 430.2 is**  **6 definition. So it's -- defines everything**  **7 that we have in 430.**  **8 MS. MEYERS: So, read that back to**  **9 me one more time.**  **10 MR. RAWALD: Sure.**  **11 MS. MEYERS: Because your gas**  **12 furnace is your air mover, in most of your**  **13 installations. So know that when you're**  **14 reading that back to me.**  **15 MR. RAWALD: Right. Okay. Indoor**  **16 unit means a component of a split system**  **17 central air conditioner or a heat pump that is**  **18 designed to transfer heat between the**  **19 refrigerant and the indoor air.**  **20 MS. MEYERS: Okay, so stop right**  **21 there. The transfer of heat is your -- it's**  **22 going to be your air-moving device. Your** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 air-moving device, in several installations,**  **2 is going to be your gas furnace. Because it's**  **3 got the motor in it, it's got -- it's going to**  **4 blow it through the duct system. I mean,**  **5 maybe somebody can -- I mean, that's the way**  **6 I --**  **7 MR. RAWALD: Do you want me to read**  **8 the rest of that definition?**  **9 MS. MEYERS: Yes, sorry, Doug.**  **10 MR. RAWALD: And which consists of**  **11 an indoor coil, a coiling mode expansion**  **12 device and may include an air-moving device.**  **13 MR. WHITE: Okay, this is Chuck**  **14 White. And I can envision a lot of scenarios**  **15 here, so I'm being careful to limit myself to**  **16 things that are kind of germane. Two weeks**  **17 ago or three weeks ago, four weeks ago,**  **18 whenever, Bryan talked about finished goods**  **19 which were a case, a coil,**  **20 refrigerant-metering device. That was the**  **21 product. And the coil was the replacement**  **22 part.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 That's not your definition. And**  **2 that's not your fault that we didn't have that**  **3 at our thumb at the moment. Tim couldn't look**  **4 that standard up quick enough for us, I guess.**  **5 But, as you read, the heat exchange**  **6 device is the coil, the thing with the**  **7 aluminum fins on it that transfers. It's got**  **8 a metering device. Okay, that's fine. We**  **9 haven't said anything about the cased coil,**  **10 the casing, so that's out of the picture in**  **11 your definition.**  **12 So now I have a real hard time --**  **13 may include the fan, may not. I guess whether**  **14 the context of the top of the page that**  **15 describes the definition, the category of**  **16 definitions, your aim, whether that helps us**  **17 take the furnace off the hook or not.**  **18 What I envision we're talking about**  **19 is your basic electric furnace, where the**  **20 motor, and the coil and everything, is one**  **21 cabinet put together. I see how you could**  **22 think, because it may or may not include the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 fan, it might be the fan in the furnace. I**  **2 don't know that we can fix that in there.**  **3 But the problem we've got here is,**  **4 how do I know that coil is a component or --**  **5 because now we've taken away the coils within**  **6 that slides in my casing. Now your definition**  **7 of our indoor unit is that coil. And it's the**  **8 same thing whether I'm going to be a component**  **9 or whether I'm going to be the system.**  **10 I understand. If we're putting in a**  **11 matched system, brand new, straight out of the**  **12 box, those numbers all have to match. I also**  **13 see -- and this where I'm stepping on my wrong**  **14 side of my own self-interest -- gee, your coil**  **15 is bad, so I'm going to put in a SEER-13 coil**  **16 or whatever happens to fit.**  **17 And, guess what, two days from now**  **18 your condensing unit is bad. Gee, now I got**  **19 to change that too. So I think, from your**  **20 perspective, if we are upgrading components in**  **21 the south, you want them to be upgraded to the**  **22 current standard because you have this other** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 half that's sitting out in the garden that we**  **2 may change later.**  **3 And then, at that point that will**  **4 have to be 14 and, lo and behold, we end up**  **5 with a 14 system. Everything works out.**  **6 Karim is right that sometimes that SEER-14**  **7 coil that I put in is not going to work with**  **8 that SEER-8, 9 or 10 that's sitting out in the**  **9 garden.**  **10 Or it's not going to work very well.**  **11 Or some of these folks around the table are**  **12 going to get a call from some of my folks**  **13 saying, your piece of equipment isn't any**  **14 good, what did you do to me? Kind of an**  **15 unintended consequence. So I don't know if**  **16 I've helped here or not, but the way you have**  **17 read the definition, I think we're talking**  **18 about the day coil and metering device,**  **19 whether it's a piston or expansion valve,**  **20 whatever it might be.**  **21 And if it's in -- whether you want**  **22 to put that in this here to kind of define it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 better, or put an exclusion in there, not**  **2 talking about gas furnaces, oil furnaces,**  **3 separate appliances that provide the air**  **4 moving. I don't know how we'd clarify that.**  **5 But probably I've just confused things more.**  **6 If I did, I apologize.**  **7 MR. RAWALD: Well, my impression is**  **8 that we are talking about finished product.**  **9 I mean, you have a finished product as**  **10 assembled. So not the individual parts of**  **11 this finished product, not the coil itself,**  **12 not the expansion valve itself, not the**  **13 furnace.**  **14 But if you installed a, as I called**  **15 it improperly, complete indoor unit, so an**  **16 indoor unit that consists of all these parts,**  **17 then you have to have a receipt saying here's**  **18 the model of the indoor unit.**  **19 But if you're just replacing the**  **20 coil or you're replacing the TXV or any of**  **21 those other then you just -- that doesn't have**  **22 to be retained. But if you're replacing the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 indoor unit into a system in the south, the**  **2 southwest, you should have a receipt which has**  **3 the manufacturer and the model number of the**  **4 indoor unit that you've installed.**  **5 That's what my understanding of my**  **6 marching orders coming in here on this says.**  **7 Now we can discuss it further about that. And**  **8 if folks are saying, hey, that's not possible,**  **9 in a replacement situation we can't do that,**  **10 then I will go back and let's folks know**  **11 you're saying it's impossible. That's how I**  **12 understood it, what I was told I had to ask**  **13 for here.**  **14 MS. MEYERS: So, okay, closer to**  **15 what you're wanting, but what if you just**  **16 replace the outdoor unit? That's just a part**  **17 of a system. You're saying they don't have to**  **18 keep the record there?**  **19 MR. RAWALD: I'm saying they do. I**  **20 mean, so we're saying if you replace the**  **21 condensing unit you have to keep, once again,**  **22 the manufacturer, the model number, serial** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 number of the outdoor unit. And the outdoor**  **2 unit has to be certified as being able to**  **3 perform at 14 --**  **4 MS. MEYERS: Correct.**  **5 MR. RAWALD: -- even though it won't**  **6 with that particular indoor unit that's**  **7 already in there. But it has to be a 14-SEER**  **8 indoor-outdoor unit.**  **9 MR. WHITE: So here's Chuck White,**  **10 and I've got a question for, I guess, the**  **11 manufacturer, perhaps Karim, that we have this**  **12 condensing unit-evaporator relationship.**  **13 And I highly suspect that it's a**  **14 one-way street. So the condensing unit rules**  **15 and we match up evaporators to that to get our**  **16 -- so is it possible that we will have a**  **17 condensing unit that will be a SEER-14 only**  **18 and it will have, for the sake of argument,**  **19 six evaporator numbers. And that makes your**  **20 match 14.**  **21 But one of those evaporator numbers**  **22 could also show up somewhere else on the chart** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 with a unit that has a SEER-13 rating. So as**  **2 long as that evaporator has a SEER-14 rating**  **3 it matches to a condensing unit somewhere at**  **4 SEER-14, it would be appropriate to use? Is**  **5 that a fair question? Is that a fair**  **6 solution?**  **7 MR. WINNINGHAM: Chuck, this is**  **8 David at Allied. And, looking around the room**  **9 here, yes, there are evaporator coils that are**  **10 used at multiple levels of efficiency. You**  **11 can have the same evaporator coil be matched**  **12 with 13, 14, 16 and above.**  **13 MR. WHITE: So does -- Chuck White**  **14 -- so does that solve our issue? I mean, we,**  **15 on the condensing unit we've said it has to be**  **16 SEER-14 and no lower. But are we opening a**  **17 new can of worms on the evaporator side?**  **18 Because I don't think you're going to find**  **19 evaporators that are going to be SEER-14 and**  **20 no lower.**  **21 MR. RAWALD: Right. And I haven't**  **22 said that. All I said was that if it's, if** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 you were replacing the whole indoor unit --**  **2 and this is not the coil, so, once again, if**  **3 you were replacing the whole indoor unit what**  **4 I understood was our intent was to require,**  **5 just like that it has to be able to perform --**  **6 MR. WHITE: But it --**  **7 MR. RAWALD: -- at 14. But it could**  **8 perform below that because --**  **9 MR. WHITE: But that could be a**  **10 complete finished product, what we're calling**  **11 a unit. It could be an A-coil -- inside a**  **12 cabinet, the whole package. It's a unit, and**  **13 it could show up in this condensing unit where**  **14 it's used as a 14. It could show up over here**  **15 as a 13.**  **16 But given its capacity, its BTU**  **17 ability and its size constraints, because its**  **18 SEER is a 14, it meets as a 14. But I can**  **19 install it over here because it fits even**  **20 though, technically, it's probably not going**  **21 to be a 14 application at that point.**  **22 MR. RAWALD: Because of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 condensing unit that's already existing in**  **2 that situation it's not going to be -- I mean,**  **3 it's not going to be replaced, so --**  **4 MR. WHITE: Right.**  **5 MR. RAWALD: Absolutely. Yes,**  **6 absolutely. That's the same thing we're**  **7 saying, in reverse, right? I mean, that**  **8 condensing unit is going into a situation**  **9 where it's not actually going to be a 14,**  **10 because it's going to be constrained by the**  **11 indoor unit that's already in there.**  **12 MR. ROCKY: So this is Bryan, GSES.**  **13 My question is actually to Charlie and Chuck**  **14 for a second. And I'm thinking -- we're**  **15 talking record retention. So you replace an**  **16 indoor unit next month. Do we want the**  **17 contractor to keep that record? So they put**  **18 it in, as Chuck talked about earlier, and,**  **19 because you have an issue, a field issue with**  **20 the indoor unit, that coil.**  **21 Six months later the homeowner's**  **22 going to replace the outdoor unit when the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 compressor goes bad. If the indoor unit has**  **2 been tracked as a current product, now they**  **3 have validation that that product matches part**  **4 of a new system with a new outdoor unit.**  **5 So do we -- this is just keeping the**  **6 record. Does it make that much difference or**  **7 does it help validate that the unit, the**  **8 replacement condenser is now part of a valid**  **9 system?**  **10 MR. WHITE: This is Chuck White.**  **11 And so, speaking personally, and probably for**  **12 many of my members and probably for a number**  **13 of Charlie's, probably most of them, I will**  **14 have that record.**  **15 If I changed an evaporator three**  **16 months ago, I'll have it. The wild card here**  **17 is I may not be the guy changing the**  **18 condensing unit in six months. So they may**  **19 not know that and, unless Doug wants to**  **20 establish a statute of limitations, once**  **21 something's installed it's an existing system.**  **22 So changing the components in a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 different time frame, I mean, it would be nice**  **2 to have the 14 so that it does match. But I**  **3 don't think, by this scenario of we're**  **4 changing components, that that's going to be**  **5 a necessary requirement.**  **6 But, and kind of circling back,**  **7 Doug, your question earlier, I would say coil**  **8 change-outs are significantly less, as a**  **9 service call, significantly less than changing**  **10 a condensing unit, probably, easily, 4 to 1,**  **11 maybe 5 to 1, could be more. Changing indoor**  **12 coils happens, but it's not the most common**  **13 occurrence.**  **14 MR. RAWALD: I guess my question was**  **15 also how often do you just pull the coil out**  **16 of the indoor unit, as opposed to pulling out**  **17 the whole entire indoor unit and replacing**  **18 that? It seems to me, what I've been hearing,**  **19 folks, is what you're more likely to do is**  **20 say, hey, your coil's leaking. Let me take**  **21 out the coil portion here and put it in the**  **22 box that's already in there in the attic, and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 not change the whole box, because what we're**  **2 talking about is the whole box.**  **3 MR. WHITE: Right. And if I have a**  **4 cased coil that has a bad coil in it I'm going**  **5 to try and find the exact thing to fit in it**  **6 because it's the least amount of time to do**  **7 something. And time rules the roost.**  **8 And the minimum amount of time is**  **9 what you're looking for. It reduces cost and**  **10 it gives your people more things to do, more**  **11 jobs to do per day, per week, per month.**  **12 That's the goal. So if it's possible to fit**  **13 it in the box, that's what we're going to do.**  **14 MS. MEYERS: So this is Karen with**  **15 Rheem. The majority of split system air**  **16 conditioners are installed with coils that sit**  **17 on top of a gas furnace. The only time you're**  **18 really pulling a coil out of a unit and**  **19 replacing that whole indoor unit because you**  **20 have a bad coil it's probably in south Florida**  **21 where the majority of condensing units are**  **22 installed with air handlers or electric** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 furnaces, because they have such a low heat**  **2 load.**  **3 So the way this reads today, I think**  **4 we need to either delete and may include an**  **5 air handler -- because I think what you're**  **6 wanting -- I think you do want the coil model**  **7 number and the condensing unit model number,**  **8 if you're replacing the entire system.**  **9 But a coil will sit inside an air**  **10 handler which is either installed with a heat**  **11 pump -- that's the way heat pumps are**  **12 installed, it's with an air handler.**  **13 Condensing units are primarily installed with**  **14 gas furnaces.**  **15 And in that case you usually have a**  **16 case coil sitting on top of that gas furnace.**  **17 And if you're just going to replace the coil**  **18 you're just going to take that coil off and**  **19 put another coin on. You're not going to**  **20 touch the gas furnace.**  **21 So I think it's -- I think there's a**  **22 disconnect between how units are installed and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the definition and the reason for records**  **2 retention. So if this, is we were talking**  **3 about heat pumps I would totally get this**  **4 definition, but we're not.**  **5 And so that's why I'm just, I'm**  **6 struggling with it, because most contract --**  **7 when you're talking about keeping records**  **8 retention on condensing units and you say the**  **9 indoor unit, the first question that they're**  **10 going to say, ask, is does that mean a gas**  **11 furnace? Because they consider that the**  **12 indoor unit. And they consider the coil the**  **13 coil.**  **14 So, you know, unless you said the**  **15 indoor coil, I mean, that makes sense. But --**  **16 or you tell them they've got to keep the**  **17 record on a gas furnace too. But usually a**  **18 whole new system, I mean, at least in my many**  **19 years of experience. It's usually the outdoor**  **20 unit and the coil that are getting replaced,**  **21 not always with a gas furnace. And I think**  **22 that's --** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 MR. RAWALD: Right. And we're not **2 trying to regulate the furnace. So I don't 3 want to make people record the furnace**  **4 information. I mean, so if you think it's 5 better to say indoor coil, that's fine. I**  **6 want to do what makes sense, what people will 7 understand, that we would keep.**  **8 MS. MEYERS: I think that makes 9 sense. I mean, I look to other people around**  **10 the room. But I think indoor coil would make 11 sense. And you could also include, I mean,**  **12 I don't know how many people actually put an 13 expansion valve on in the field. I mean, I**  **14 think most of them are shipped with a coil, 15 installed with a coil.**  **16 But, I mean, that's the cooling 17 mode, expansion device. I mean, you can just**  **18 go and change out a TXV, which is your 19 expansion device, because it could have gone**  **20 bad. 21 MR. RAWALD: Right, but we would --**  **22 MS. MEYERS: I don't think that's**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 what you're looking for here.**  **2 MR. RAWALD: We don't care about**  **3 that.**  **4 MS. MEYERS: That's just a**  **5 component.**  **6 MR. RAWALD: Right.**  **7 MS. MEYERS: So I think maybe you**  **8 could just say coil, and that would --**  **9 MR. WHITE: Could you say indoor**  **10 coil-indoor unit? I guess I -- indoor coil**  **11 will make it much more usable and**  **12 understandable to probably 80 or 90 percent of**  **13 the people doing this.**  **14 MR. RAWALD: Then let's do that.**  **15 That's what we want to do. We want it to be**  **16 understandable. We want people to understand**  **17 what the rules look like. And if indoor coil**  **18 is the way to go, that's what I want to hear**  **19 from you guys.**  **20 MR. WHITE: Right, but --**  **21 MR. AMRANE: This is Karim. But**  **22 because then we don't want to a record** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 retention for the indoor coil, right? This is**  **2 not what we want.**  **3 MS. MEYERS: Well, I agree that it's**  **4 really significantly increases the**  **5 record-keeping burden. But I think if you**  **6 have the records retention on the outdoor unit**  **7 it's primarily the piece of information that**  **8 you need. But, you know, the -- I do, I agree**  **9 with you, Karim. I'm still questioning why**  **10 we're doing records retention on the indoor**  **11 coil. But, you know, if --**  **12 MR. AMRANE: I think this is just a**  **13 question of semantics here, because indoor**  **14 unit, I guess, unless you read the definition,**  **15 as you read it, Doug, people will not**  **16 understand really what are we talking about.**  **17 Are we talking about the coil? Are we talking**  **18 about the whole indoor unit? And that's maybe**  **19 where the confusion is.**  **20 MR. RAWALD: Well, let's say --**  **21 MR. AMRANE: If I listened correctly**  **22 you were not asking for record retention on** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the coil itself, right? I'm asking Doug. I**  **2 don't know. I mean --**  **3 MR. RAWALD: Right. So let's say,**  **4 let's attack it from a different angle. In**  **5 the AHRI certification database -- and, Karim,**  **6 stand up still, because I'm really directing**  **7 it toward you, you'll be the best answer to**  **8 this. When you report a combination that's,**  **9 your member has certified, you have model**  **10 numbers for the condensing unit and what?**  **11 What is the second model number for?**  **12 MR. AMRANE: The coil.**  **13 MR. RAWALD: Right, so it seems to**  **14 me that's what we want then, right? Because**  **15 what we want to do is we want to do is we want**  **16 to be able to look at the database that has**  **17 been certified by AHRI or by us, and to be**  **18 able to ascertain that, yes, in a complete**  **19 system, this is the one that has a 14, so it's**  **20 okay.**  **21 Or, in the case of a replacement,**  **22 this is the one that makes sense. But what** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the concern I'm hearing from the room is we**  **2 don't really want to track replacements of**  **3 coils only. That's the concern.**  **4 MR. AMRANE: That's correct. That's**  **5 correct. Yes.**  **6 MR. RAWALD: So, but if it's**  **7 complete, if it's in a complete system being**  **8 installed, would everyone agree what should be**  **9 retained is both the outdoor and the indoor**  **10 number?**  **11 MR. AMRANE: Yes.**  **12 MS. MEYERS: Yes.**  **13 MR. AMRANE: That's correct. Yes.**  **14 MR. RAWALD: Okay. So what people**  **15 are worried about is if we're replacing only**  **16 the indoor coil do we really need to keep**  **17 track of the indoor coil, okay?**  **18 MR. AMRANE: Yes.**  **19 MR. RAWALD: So how about this. Let**  **20 me go back and ask that question, if in the**  **21 replacement of the indoor coil only, if we can**  **22 not keep track of that and only keep the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 indoor coil for the purposes of a complete**  **2 system install, okay? So that's what I'll ask**  **3 the Department tonight.**  **4 MR. SACHS: Doug, I think the --**  **5 this is Harvey, and I think the secondary**  **6 issue that a number of people have brought out**  **7 is that ambiguity in the definition. When it**  **8 says indoor unit, somehow, I think it has to**  **9 be clarified as referring to the coil assembly**  **10 and exclusive of the air handler, unless you**  **11 mean to include air handler. I had the**  **12 complete furnace, indoor coil, outdoor**  **13 condenser, and everything else done when**  **14 everything was near the end of its service**  **15 life.**  **16 MR. RAWALD: Okay.**  **17 MR. SACHS: So I think we need that**  **18 clarification.**  **19 MR. RAWALD: Well, if we change it**  **20 to indoor coil then it's clarified, right?**  **21 And if we use the word indoor coil we're**  **22 presuming that that's clear.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. SACHS: I think so.**  **2 MR. RAWALD: Okay. So that's what**  **3 I'll go back tonight and ask on this slide.**  **4 So give me a chance to work on this tonight**  **5 and we can come back to it. Any other**  **6 concerns on this particular slide?**  **7 MS. MEYERS: I do have one more**  **8 question, sorry. Is this just 13 and 14-SEER**  **9 units?**  **10 MR. RAWALD: Right. And so what we**  **11 had discussed earlier was that it was going to**  **12 be limited to people who install in the**  **13 southeast and southwest. But that was the**  **14 only constraint that I was prepared to put on**  **15 it. So now what is the ask here? So I guess**  **16 I need to see the scope of the ask so I can**  **17 bring that back. What I'm prepared to agree**  **18 to is installations only in the southeast and**  **19 the southwest. I am not prepared to agree to**  **20 anything else, but I can ask the question.**  **21 MR. EISNER: Anything else on this**  **22 slide?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. LATTANZI: So, yes, this is Matt**  **2 Lattanzi with Nordyne. And I got sort of a**  **3 question for the manufacturers. But this**  **4 might be helpful for you, Doug, when you go**  **5 back tonight. With respect to the wording,**  **6 indoor unit, relative to it being and air**  **7 handler, Doug, I believe you commented that**  **8 the thought was you want to make sure that air**  **9 handler was capable of achieving the rating**  **10 within region with some matched outdoor.**  **11 When I think about our product line,**  **12 and this is where I'm looking for help from**  **13 the other manufacturers, I struggle to think**  **14 about an air handler that we would make that**  **15 wouldn't be capable of making 14-Seer. I**  **16 believe all of them would. So if -- I'll**  **17 throw that out there for the other**  **18 manufacturers -- if I got that wrong, please**  **19 jump in.**  **20 (Off-microphone comments.)**  **21 MR. LATTANZI: Yes, which is a good**  **22 reason, again, to switch to indoor. And,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 hearing nobody respond negatively, I think I'm**  **2 correct on this, that we're not going to make**  **3 an air handler that isn't capable of making**  **4 14-SEER with an outdoor unit. And I was just**  **5 hoping that might be helpful in your**  **6 discussions later.**  **7 MR. MCCRUDDEN: So this is Charlie**  **8 with the ACCA, and, Doug, I think I heard you**  **9 say that, looking at scope, looking at**  **10 southeast, southwest only. But were you, are**  **11 you not prepared to eliminate from the**  **12 record-keeping in the requirement of the**  **13 scope, 15 and above?**  **14 MR. RAWALD: So I don't have**  **15 authorization to agree to that at the moment,**  **16 so I'd have to go back and talk it. Here's**  **17 the concern, is I don't want to walk into a**  **18 contractor's house and then for him to say,**  **19 oh, I don't have records for that. They're**  **20 all above 15.**  **21 So I need to be able to see the**  **22 scope of his records so I can really see that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 he's -- what is business is. And so if I give**  **2 some sort of ability to carve out records,**  **3 that's a concern. And also, if it's not a**  **4 regularized practice where you're doing it**  **5 always, people are more likely to kind of**  **6 forget to do it. Because, oh, this is a**  **7 15-SEER one and I don't have to do it.**  **8 So I think, from a department point**  **9 of view, I like the fact that they would have**  **10 to do it for all the installation they do in**  **11 the south, because then they're more likely to**  **12 do it properly, from my vantage point of**  **13 having done this kind of stuff. So, but I**  **14 will, if you want to -- for me to ask a**  **15 question, to put a constraint on there, I will**  **16 bring it back to the folks I work for.**  **17 MR. MCCRUDDEN: This is Charlie. I**  **18 would appreciate that because I think that for**  **19 -- what I'd like to hear most is reasons not**  **20 to limit the scope. And I think that I**  **21 understand what you're saying about sort of**  **22 routineness of keeping records.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And I think I understand the idea**  **2 about carving out, I guess, an exemption here**  **3 -- or, not carving out an exemption, but it**  **4 just seems to me that the same reason we're**  **5 limiting the scope to regions, there doesn't**  **6 seem to be any particular reason of purpose to**  **7 keep records on, say, 17, 18, 19, 21 and**  **8 23-SEER units.**  **9 MR. RAWALD: Okay, so you don't want**  **10 to draw the line at 15? Is that the ask?**  **11 MR. MCCRUDDEN: I guess I'd say 14**  **12 and below.**  **13 MR. RAWALD: So 14.2 -- I don't know**  **14 how this -- I don't know how the numbering**  **15 works, really. I guess I'm going to look at**  **16 the manufacturer. Are 14.2s that are 14.5s,**  **17 are there 14.8s? I mean --**  **18 MR. MCCRUDDEN: Okay.**  **19 MR. RAWALD: Are those -- where do**  **20 those factor in? Are those kept or are they**  **21 not kept in your mind?**  **22 MR. WINNINGHAM: This is Dave with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Allied. I think we need to think about that**  **2 a little bit because the labeling rules are**  **3 changing. And we're also changing what we're**  **4 proposing here, as far as the minimum**  **5 efficiency being the base.**  **6 So I don't think you're going to**  **7 find a lot of products that are, you know,**  **8 you're going to have 13 that are the base.**  **9 But they're going to have rating up to**  **10 whatever level. You're going to have 14-SEER**  **11 products that have rating up to 16 and**  **12 whatever.**  **13 So I don't know. I think we need to**  **14 think about how, where there threshold might**  **15 fall, because I think you're going to have**  **16 products at 14 and then anything above 14.0**  **17 you probably shouldn't have to keep records**  **18 for. But I don't know that a lot of**  **19 manufacturers are going to have designs that**  **20 are above that. But there are also, you know,**  **21 what people do as far as rating practices**  **22 needs to be considered also.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. WHITE: This is Chuck White and**  **2 on this slide you have some homework. And I**  **3 think I'd like to talk with Charlie a little**  **4 bit about this ourselves too. So maybe we can**  **5 talk about this first thing in the morning?**  **6 MR. SACHS: This is Harvey, and I'm**  **7 hearing two things. One of them I'm hearing**  **8 from Dave is if I have a condensing unit**  **9 that's most commonly sold in a way that's at**  **10 14.5, 14.4, whatever, there still may be some**  **11 combinations that may be attractive for a**  **12 particular application to a contractor that**  **13 might be above 15.**  **14 Does he, with the 14 Rule, when**  **15 we're focused on the condensing unit, does he**  **16 have to just keep a record on that one, or not**  **17 have to keep a record on that one, where his**  **18 rated performance for that installation is**  **19 15.2 or something like that?**  **20 So there's that complication. And**  **21 if I try to think about being a contractor,**  **22 premium contractor, I'm going to be selling a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 lot more 15s and above, or 14s and above**  **2 including a mix going a way on up, than 13s,**  **3 regardless of where I am.**  **4 And I might want to be able to**  **5 present my whole file cabinet to show that,**  **6 yes, there were two 13s in there but that was**  **7 half of one percent of my sales. And so, to**  **8 me, there is an argument for simplifying a**  **9 Doug investigation and having it focus on the**  **10 condensing unit labeled as 14 or anything**  **11 above 14.**  **12 MR. RAWALD: Yes, I mean, I guess,**  **13 Harvey, I'll do you one better which is if I'm**  **14 looking later on at a routine violator and you**  **15 come back and say, well, look, Doug, I have**  **16 records of 95 percent of my installs are these**  **17 16-SEER ones, I'm not a guy who typically**  **18 violates. I made a mistake here.**  **19 I'm going to be more compelled to**  **20 find that, oh, yeah, that really was a mistake**  **21 than the other option. So I think it's --**  **22 that's helpful for me to see the complete** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 picture. And so that's why I would ask.**  **2 I'm not saying this is incredibly**  **3 burdensome. I, as an enforcement guy, it's**  **4 better for me just keep all the records and**  **5 then let's like we can talk about them.**  **6 That's my thought.**  **7 So, just to kind of where we are,**  **8 so, Charlie and Chuck are going to talk about**  **9 it a little more. I'm going to go back**  **10 tonight and ask if there is any ability in the**  **11 Department to kind of desire a cutoff at a**  **12 threshold above 14, as well as the other**  **13 issues we had. Now there's a comment over**  **14 here?**  **15 MR. BALLO: Doug, let me give you**  **16 another scenario. You've gotten a report that**  **17 there's a non-compliant unit installed in the**  **18 south. You trace it down to a contractor who**  **19 got it from a distributor. The contractor**  **20 says, well, I installed that unit in the**  **21 north. I don't know how it got there on the**  **22 other side of the border. You don't have any** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 records at that point. You can't really prove**  **2 that that contractor installed it. Contractor**  **3 can't prove he didn't install it. What do you**  **4 do?**  **5 MR. RAWALD: So am I presuming that**  **6 I found it in a house that's on the southern**  **7 side of that water?**  **8 MR. BALLO: Yes.**  **9 MR. RAWALD: Okay, so it's, the**  **10 question is how do I prove that that guy**  **11 actually installed that particular unit in**  **12 that place. So -- and I don't have any**  **13 records from the homeowner about who actually**  **14 installed that for them?**  **15 MR. BALLO: Yes, I mean, I guess**  **16 you could treat the contractor as a**  **17 distributor at that point, although if there's**  **18 no prohibited act for a distributor then I**  **19 don't know what you get out of it.**  **20 MR. RAWALD: Yes, I mean, I don't**  **21 believe that's an actual scenario so I think**  **22 there's other things I can look at to kind of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 track it down. But I get what you're saying,**  **2 is that there could be a gap. I think that**  **3 there is, there's more investigation that**  **4 could be done. I mean, I have a non-compliant**  **5 unit in a house, so I can at least move from**  **6 that to something.**  **7 MR. MELCHI: This I Jon with HARDI.**  **8 Doug, if, to Tim's scenario, DOE would still**  **9 have the ability to subpoena a contractor's**  **10 records in the north. It may not exactly line**  **11 up with what you're specifying here, correct,**  **12 if maybe you assume that's what's going on?**  **13 MR. RAWALD: If we have information**  **14 that leads us to believe that a contractor who**  **15 resides in the north did an installation in**  **16 the south, then we'd have reason to subpoena**  **17 his records, right. Correct.**  **18 MR. EISNER: Any more on this? No**  **19 more assignments? All right, then we're going**  **20 to take a 15-minute break, come back at 3:15?**  **21 Tim will be revived and join us again.**  **22 (Whereupon, the foregoing matter** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 went off the record at 3:01 p.m. and went back**  **2 on the record at 3:18 p.m.)**  **3 MR. EISNER: All right. We're ready**  **4 to talk about slide number 15.**  **5 MR. MCCRUDDEN: Actually, this is**  **6 Charlie with ACCA. Before we move on, Chuck**  **7 and I, Chuck from PHCC, had a conversation**  **8 during the break, and we had asked or I had**  **9 asked about looking at the scope of just 13,**  **10 14, or 15 units versus all. And I think it**  **11 probably makes sense that the scope include**  **12 all installed units, and I think part of it is**  **13 the benefit to the contractor in terms of**  **14 mitigation if there is a violation found so**  **15 that they can compare all installations versus**  **16 the non-compliant ones. So there's no need**  **17 for Doug to research that.**  **18 MR. EISNER: Is everybody else okay**  **19 with that? Okay. All right. That brings us**  **20 up to slide 15.**  **21 MR. RAWALD: And I'll caveat that**  **22 both 15 and 16 have the same indoor unit issue** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that I'll bring back to the Department to**  **2 discuss further.**  **3 MR. EISNER: So I think we should be**  **4 doing the same thing here then, seeing if**  **5 there's anything else in any of these that are**  **6 going to have to go back.**  **7 MR. RAWALD: And this is the point**  **8 where Jon Melchi can talk about**  **9 over-the-counter cash sales.**  **10 MR. MELCHI: Doug, though, just to**  **11 clarify, I'm operating under the assumption**  **12 that kind of the records you'll be asking**  **13 distributors to keep will mimic what the**  **14 contractors will be required to keep. So when**  **15 you get that answer, it will impact -- okay.**  **16 MR. EISNER: Okay. On distributors,**  **17 anything else?**  **18 MR. MELCHI: This is Jon Melchi with**  **19 HARDI. We talked a little bit about this**  **20 morning in regards to over-the-counter cash**  **21 sales. These requests are going to be very**  **22 difficult for our members to comply with,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 knowing that the standard kicks in January 1,**  **2 2015.**  **3 Typically, the way it works would be**  **4 -- I'll use Chuck because I'm looking at him**  **5 -- Chuck would come in. Chuck maybe is Brand**  **6 X, deals typically with Brand X, but he's got**  **7 a customer, his mother-in-law wants Brand Y,**  **8 and he comes and comes to my store and buys**  **9 that. Chuck is not going to come back to my**  **10 store because he doesn't typically deal with**  **11 us, so no need to open an account for Chuck.**  **12 He'll make the purchase, give him a packing**  **13 slip. He'll roll his truck around back where**  **14 we'll load what's on the slip to him.**  **15 What we're talking about doing is a**  **16 pretty big deviation from that process.**  **17 Talking with my members yesterday, to create**  **18 an account is typically 15 to 30 minutes time,**  **19 depending on your system and how that works.**  **20 One of my members said, typically, that's**  **21 going to happen at the least opportune time:**  **22 the phone is ringing off the hook, you've got** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 customers who need assistance in the store.**  **2 So it's going to be a big burden.**  **3 That said, you know, we recognize**  **4 that we need to try to capture these, but**  **5 we're going to need some assistance, I guess,**  **6 and the first thing would be getting some**  **7 implementation time to make this happen.**  **8 There's approximately, an approximation,**  **9 10,000 branches in the United States that sell**  **10 equipment. And to get all of those branches**  **11 informed and to have them up to speed is going**  **12 to take a lot of time.**  **13 I don't know that -- you know, we'll**  **14 certainly have our members, but there are a**  **15 lot of people who sell equipment who are not**  **16 HARDI members or affiliated loosely with other**  **17 groups. So it's going to take a very, very**  **18 big chunk of time to make sure that this**  **19 happens.**  **20 Now, we want to try to comply**  **21 because we understand that this is a gap here.**  **22 But to John's point earlier, to our knowledge,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 no other retail outlet or store in the United**  **2 States has tracked any of this information on**  **3 a cash sale. I understand Harvey's point. I**  **4 wish we had the revenues of the pharmaceutical**  **5 industry. It would be a heck of a lot easier**  **6 if we were CVS to implement something like**  **7 this. But we don't, but they were also, but**  **8 they were also given a substantial amount of**  **9 time to comply with this; and, to my**  **10 knowledge, from the time that I think that**  **11 legislation was passed in '06 regarding**  **12 pharmaceuticals.**  **13 So I think that this is something**  **14 that, you know, I want to say that we're**  **15 certainly willing to try. But we need to work**  **16 on some sort of, I don't want to say grace**  **17 period, but that's the term we're using for**  **18 this sale of stranded inventory. And the**  **19 question of serial numbers is problematic on**  **20 a lot of sales simply because nobody is**  **21 tracking that on those over-the-counter sales.**  **22 It would almost require you to go back into** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the store and then provide a serial number,**  **2 which we're not going to have.**  **3 You know, I think on a lot of the**  **4 transactions we're going to have that**  **5 information, what I like to call invoiced**  **6 transactions. But on the cash sales, it just**  **7 simply doesn't apply. And I don't want to**  **8 necessarily commit to something when I don't**  **9 think that our members are going to be able to**  **10 comply easily. You know, it will already be**  **11 a change of practice on those that utilize**  **12 cash sales to get this account information to**  **13 them have to have somebody come back into the**  **14 store and get a serial number. It's going to**  **15 be really problematic, I think.**  **16 MR. RAWALD: So, Jon, this is Doug,**  **17 if I could just kind of parse out a couple of**  **18 things. So do you, would you need a separate**  **19 amount of phase-in time for the serial number**  **20 tracking versus just the tracking of**  **21 over-the-counter sales period or one phase-in**  **22 time for both?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. MELCHI: I'll borrow a phrase**  **2 from Chuck. I think it depends. I don't**  **3 believe that all distributors track via serial**  **4 number now. I think most do on their invoice**  **5 sales. That certainly is going to take time**  **6 to implement for those who don't. On the cash**  **7 sales, yes, that's a whole process change.**  **8 MR. RAWALD: And can you give a**  **9 number on how long you need for the phase-in,**  **10 or do you have to think about that overnight**  **11 --**  **12 MR. MELCHI: If I could think about**  **13 it overnight, that would be great.**  **14 MR. RAWALD: Okay. I did have a**  **15 chance at lunch to talk about this issue, at**  **16 least with my immediate supervisor I work**  **17 with. And we're both of the mind that we'd**  **18 rather have a phased-in time than have an**  **19 insufficient record retention scheme. So**  **20 that's our preference, though I think we have**  **21 to talk to more people in the Department about**  **22 that. But that makes more sense to have a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 good scheme that works, even if takes a little**  **2 bit longer to get there, than have a bad**  **3 scheme because they want to get there now, or**  **4 one that we view insufficient I guess would be**  **5 the right term.**  **6 So that's kind of my druthers. But**  **7 I want to hear kind of what the time frame**  **8 would be. I mean, if it's going to be five**  **9 years, that's not going to work. So we need**  **10 to have some sort of thought on what would**  **11 work from you guys.**  **12 MR. MELCHI: You know, a question I**  **13 had was, from a member was, you know, party to**  **14 whom the unit was sold, including company**  **15 number, individual's name, full address, and**  **16 phone number, there were some folks who**  **17 thought that that might be either difficult to**  **18 obtain all that information or that, by the**  **19 time you got around to an investigation, that**  **20 might not be helpful. But, you know, folks**  **21 seem to think that, they seemed agreeable to**  **22 try to make every effort to collect all of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 that, you know. But, again, not knowing, you **2 know. Some of our customers aren't 3 necessarily willing to turn over their home**  **4 address information to us on a regular basis. 5 MR. RAWALD: Right. This is Doug.**  **6 Just to be clear, I don't want, I wouldn't 7 want individuals' home addresses as much as**  **8 company -- 9 MR. MELCHI: No, no, but I think for**  **10 a lot of the folks who are buying over the 11 counter that it's one in the same.**  **12 MR. RAWALD: They operate out of 13 their homes?**  **14 MR. MELCHI: Yes, absolutely. 15 MR. RAWALD: Okay.**  **16 MR. MELCHI: And I don't know, if 17 that is the case, if that raises any flags or**  **18 anything that we have to do with personal 19 identification and that sort of thing. I'm**  **20 not clear on that. 21 MR. ROCKY: Doug, this is Bryan. So**  **22 one of the questions that I had from a number**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of my distribution partners was consistency in**  **2 this, especially if we have a phase-in, and**  **3 particularly for the guys working in multiple**  **4 regional areas. A concern was expressed that**  **5 if distributor A, with their 12 sites,**  **6 immediately implements a change in policy that**  **7 makes it more difficult, from the perception**  **8 of the contractor, that they're going to lose**  **9 business to distributor B who has not**  **10 implemented those same restraints at this**  **11 point. And so there was a lot of questions I**  **12 don't have answers to as far as how this would**  **13 be implemented, so a consistent approach**  **14 across the chain is definitely worthwhile.**  **15 But one of the things that people were worried**  **16 about, especially the guys that are doing over**  **17 the counter.**  **18 And just to reiterate, in the five**  **19 major customers I talked to, I had all five**  **20 that had locations that they said, at peak**  **21 season in the summer, had more than, 75**  **22 percent of their transactions were cash-based.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 This is not a one and two, it's not ten a day.**  **2 In some locations, and I'm talking Phoenix,**  **3 Houston, Sacramento, Seattle, other places,**  **4 people use cash, especially at the peak**  **5 season. And a lot of it goes back to not that**  **6 the preference of the distribution partner or**  **7 even the contractor. I was reminded it was**  **8 based on credit lines that distribution**  **9 partners give to contractors was the**  **10 predominant reason people paid in cash. They**  **11 used up their credit line, and they weren't**  **12 being extended anymore, so they paid in cash.**  **13 Number one thing that was reported back to me,**  **14 and I don't usually think about that sort of**  **15 stuff.**  **16 MR. RAWALD: Bryan, this is Doug. So**  **17 I guess what I heard in the past, though, was**  **18 a differentiation between a cash sale with**  **19 someone that has an account and just clearly**  **20 don't have anymore credits, but you at least**  **21 know who they are. So they can say, "Yes, I'm**  **22 McCrudden Heating and Cooling. My credit is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 up, but here's $1500," as opposed to a guy who**  **2 walks in and says, "I've never been here**  **3 before. I'm paying cash, and I don't want to**  **4 be a recorded partner with you folks."**  **5 So do you have a sense of that 75**  **6 percent how many were people without accounts**  **7 that are walking off the street and were not**  **8 established parties with that distributor?**  **9 Because I think that's a difference.**  **10 MR. ROCKY: Yes, I understand and I**  **11 agree. And I don't have a sense for that. I**  **12 can go back and ask some questions, but some**  **13 of the discussion is related to if you use up**  **14 your credit with distributor A, you go try to**  **15 get credit with distributor B until you use up**  **16 the credit line there, you know, and you**  **17 change your company name or whatever you have**  **18 to do because you're running a cash business.**  **19 A lot of these guys, as Chuck and Charlie have**  **20 talked about, they're on a shoestring.**  **21 They're not successful because they know how**  **22 to run a business. They're unsuccessful** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 because they don't know their costs, and**  **2 they're just talking cash flow in and out, day**  **3 and day.**  **4 It's a percentage. I'll try to get**  **5 some more information for you.**  **6 MR. EISNER: Other comments?**  **7 MR. HUNGERFORD: This is David**  **8 Hungerford. Can you guys hear me?**  **9 MR. EISNER: Yes.**  **10 MR. HUNGERFORD: You know, I was**  **11 struggling with this latest conversation**  **12 because I was thinking about the idea of, I**  **13 know it's difficult for -- I understand the**  **14 difficulties of tracking the cash sales and**  **15 the reasons that people might do the cash**  **16 sales. I'm just having trouble comprehending**  **17 the idea of a contractor in Phoenix or**  **18 Sacramento dealing with signing somebody up or**  **19 collecting all this information with the**  **20 contractor so that he can buy a SEER 13 in a**  **21 city where those units aren't supposed to be**  **22 sold.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And so I find it a little bit**  **2 theatrical in some way or absurd because are**  **3 you maintaining that the distributors and**  **4 retailers are going to be selling SEER 13**  **5 units?**  **6 MR. RAWALD: And, Dave, this is**  **7 Doug. So just to be clear, we haven't said**  **8 that we were maintaining records only as sales**  **9 of 13 SEER, so that's --**  **10 MR. HUNGERFORD: I understand.**  **11 MR. RAWALD: Okay.**  **12 MR. HUNGERFORD: I understand. And,**  **13 you know, I do appreciate the difficulty of**  **14 tracking all these sales as a way of finding**  **15 out whether an installer is putting in the**  **16 wrong unit. But I don't know. I just have an**  **17 issue with the idea that the retailer is going**  **18 to be, there's going to be 13 units on the**  **19 dock and they're going to be putting them in**  **20 a pickup truck so other people can put them in**  **21 in Phoenix and Sacramento. I'm trying to**  **22 figure out a way to prove that that's** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 happening.**  **2 MR. ROCKY: So this is Bryan. So,**  **3 David, I apologize if I used an example that**  **4 was causing you confusion. The fact is that**  **5 we have distribution partners in every part of**  **6 the country that have a large segment of their**  **7 customers that come in and pay cash for a**  **8 number of reasons. And our customers are**  **9 concerned, our distribution partners are**  **10 concerned on significant changes in their**  **11 policies and procedures that appear to be**  **12 needed immediately in an area that nobody else**  **13 in this country does at a retail level for**  **14 tracking cash transactions.**  **15 And so, yes, I'm not expecting, my**  **16 customers in Phoenix are not expecting to have**  **17 a lot of people come in over the counter and**  **18 pay cash and try to buy a 13 SEER condenser**  **19 after July 1, 2016 when the sell-through**  **20 period is done. Between now and then, if we**  **21 have it in inventory, it is legal for us to**  **22 sell it, and we will continue to sell that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 product to them. Manufactured product before**  **2 January 1, 2015.**  **3 So that is going to be an issue that**  **4 our customers, our distribution partners, and**  **5 contractors are going to be dealing with for**  **6 18 months. Do I get a unit that was built in**  **7 '14 or a unit that was built in '15? Do I**  **8 have to pay cash? Do I have to pay credit?**  **9 Do I have to be a customer? Do I have to be**  **10 registered? What kind of data do I have to**  **11 turn in? It all is the same issue.**  **12 Whether or not a 13 SEER unit is**  **13 sold in Phoenix is a question or not, those**  **14 are going to be sold in Phoenix for up to 18**  **15 months from the time this law goes into**  **16 effect. That's the sell-through period. So**  **17 the processes have to be able to deal with the**  **18 distinction of units built in 2014 and those**  **19 built in 2015.**  **20 MR. FENSTROM: So this is Gary. I**  **21 have a question about records kept by**  **22 distributors specifically with respect to cash** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 sales. So I imagine that if I were to go in**  **2 to a distributorship as a qualified contractor**  **3 that they routinely sell for, I'd have the**  **4 option of charging something to my account or**  **5 doing a cash sale. And my question is are**  **6 there any products that distributor sales that**  **7 they don't sell through a cash sale? If it's**  **8 some small inconsequential part, I can**  **9 envision that being a cash sale. But I were**  **10 to buy a complete air conditioning system**  **11 consisting of maybe the furnace but, at a**  **12 minimum, the coil and the condensing unit,**  **13 could I buy anything out of the**  **14 distributorship on a cash basis?**  **15 MR. MELCHI: This is Jon Melchi with**  **16 HARDI. Yes.**  **17 MR. FENSTROM: All right. Well --**  **18 MR. MELCHI: It's legal tender of**  **19 the United States.**  **20 MR. WHITE: With one caveat there.**  **21 You can't buy certain refrigerants without a**  **22 608 certification, but you could pay cash for** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it, provided you had the certification.**  **2 MR. FENSTROM: Okay. Well, where I**  **3 was going with this question -- unfortunately,**  **4 I didn't get the one I was hoping for, the**  **5 answer I was hoping for that is. But where I**  **6 was going with the question is why couldn't**  **7 some small fraction of the products that are**  **8 carried that could normally be purchased**  **9 through a cash sale be invoiced? That is to**  **10 say, you know, it's not going to be a credit**  **11 sale going to my account, but an invoice would**  **12 be issued by the counter person for the sale**  **13 of that product and the invoice would contain**  **14 this information. The method of payment would**  **15 be cash, but there would be an invoice and a**  **16 record kept.**  **17 I've had the experience of going to**  **18 many distributors to buy stuff where I've paid**  **19 cash, and they've always asked me my name and**  **20 given me an invoice. And there is a system,**  **21 usually, at distributors for creating and**  **22 keeping copies of invoices.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: Anybody else?**  **2 MR. RAWALD: This is Doug, and I**  **3 have a question I've been wondering about, as**  **4 I sit here, for Jon Melchi. So is it fair to**  **5 say that over-the-counter sales that are not**  **6 invoiced to people that pay cash and have no**  **7 account are typically ones that are going to**  **8 be used locally? I mean, those are people**  **9 that are not taking them and going some place**  **10 else, is it? Is that a fair assumption, or**  **11 that's not a fair assumption, or you just**  **12 don't know?**  **13 MR. MELCHI: I wouldn't be able to**  **14 answer one way or the other.**  **15 MR. HUNGERFORD: This is David. I**  **16 can follow-up a little bit on Gary's comment**  **17 just now. The last time I ran into Standard**  **18 Appliance Parts in downtown Sacramento to pick**  **19 up two capacitors for my unit, they fully**  **20 tested the old ones for me and found they were**  **21 bad and that's why my unit wasn't turning on**  **22 properly. They invoiced me, name, address,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 phone number, and, I assume for internal**  **2 tracking purposes, recorded the model numbers**  **3 for those two pieces, and it was like 50 bucks**  **4 worth of stuff. But I don't know. It seems**  **5 like they could do that for a condenser unit,**  **6 but that's just an observation.**  **7 MR. SACHS: This is Harvey, and what**  **8 I'm hearing from this conversation is that it**  **9 can be moved toward, it can be done. It's a**  **10 pain in the butt, and there are some folks**  **11 who'd rather not, but it can be done but that**  **12 getting the systems in place, because David**  **13 and Gary happened to walk into distributors**  **14 who had the systems in place and there are**  **15 others who don't, and that it's important to**  **16 have a simultaneous date for such systems to**  **17 be required so we don't disadvantage**  **18 distributor X relative to distributor Y. But**  **19 I'm not hearing anyone say we can't do what**  **20 amounts to invoicing and record-keeping on**  **21 cash sales if we're given at least until year**  **22 2020 to do it. So we're just arguing now** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 about what the implementation date is.**  **2 MR. MELCHI: This is Jon with HARDI.**  **3 And I think the question our members had was**  **4 on that question of is a serial number**  **5 necessary? Because while we're capturing that**  **6 information at the counter, the contact**  **7 information of the purchaser or the**  **8 contractor, we don't have that serial number,**  **9 and that, again, takes another added step that**  **10 we don't necessarily have.**  **11 Now, on those invoiced orders of our**  **12 tried and true customers, most distributors**  **13 would have that information. So a good**  **14 percentage of those guys, we would have that**  **15 serial number information. Our preference**  **16 would be that it not be mandatory, that the**  **17 model number, manufacturer be sufficient**  **18 because we think that's going to assure an**  **19 easier compliance than what exists today. For**  **20 those that don't track by serial number, you**  **21 know, in addition to the internal processes,**  **22 you know, you may have to make a change to the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 RP system, which we don't know how long that**  **2 could take.**  **3 MR. SACHS: I understand. I**  **4 personally feel that, given everything else**  **5 we've discussed over the last weeks,**  **6 particularly with respect to prohibited acts,**  **7 that that serial number information just might**  **8 be the ability to do the job versus not being**  **9 able to do the job for Doug now. I have no**  **10 problems envisioning Doug as a junkyard dog,**  **11 but he's still got to find the bone.**  **12 So my instinct is, I guess,**  **13 following on Doug's in this case, that**  **14 implementation date is a lot more**  **15 instinctively, has a lot more flexibility than**  **16 what information is required. And if we're**  **17 already getting serial numbers from both**  **18 distributors for most products and somebody**  **19 has got to tell Joe which box to pull to make**  **20 sure he's got the right capacity, as well as**  **21 the right SEER and the right motor and**  **22 everything else, it's just hard for me to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 believe without other knowledge that that unit**  **2 is likely to have a unique serial number, too.**  **3 MR. WHITE: This is Chuck White.**  **4 Let me help you out here. I've been to a lot**  **5 of supply houses. I've loaded lots of**  **6 equipment in trucks, and here's how it works.**  **7 I go in the front door, and I say hi and they**  **8 all say hi. I eat one of their doughnuts. I**  **9 sign the paper for the equipment I have, and**  **10 I drive to the backdoor where there's a stack**  **11 of air conditioners, a tall stack. And the**  **12 guy up at the counter doesn't know which one**  **13 out of that stack I'm going to pull. Now, he**  **14 might have access to the serial numbers that**  **15 he has sitting there in his data bank, but he**  **16 doesn't know which one is the one on top**  **17 they're going to take off. So he can't assign**  **18 me a serial number at the desk because I don't**  **19 know which one out of the pile of jack straws**  **20 I'm going to get.**  **21 So not everybody does this, so I'm**  **22 not -- the wholesalers that I work with,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 because I have an account, they say, okay,**  **2 here's the top one, and many of them have a**  **3 little sticker. They pull the sticker off,**  **4 and they put it on my receipt. And then they**  **5 put a sticker on their receipt, and it gets**  **6 entered in their system. But I have an**  **7 account, so it's there.**  **8 But I also have a wholesaler related**  **9 to a major manufacturer to be unnamed.**  **10 They're on the far side of town from me. They**  **11 don't sell their equipment particularly a lot.**  **12 They do occasionally. And I do need parts,**  **13 but I don't have an account there. So when I**  **14 go there, I take a check to get something, and**  **15 they say, okay, well, you know, okay, I get a**  **16 receipt that says cash. Well, I'd like a**  **17 receipt that has my company name on it. You**  **18 know what I have to do to do that? I get a**  **19 credit app, please fill out this credit**  **20 application. I don't want to fill out a**  **21 credit application, but the only way they will**  **22 open an account for me is to fill out a credit** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 application, and I'm sure not sending one of**  **2 my drivers out there and expecting him to fill**  **3 out a credit application.**  **4 So I just want to clarify for you**  **5 that the day-to-day goings on are not as**  **6 automated as you think; and, certainly, they**  **7 could be. I've, more than once, been a little**  **8 annoyed at the supply house that you can't**  **9 seem to get my company name, Repairs,**  **10 Incorporated, on the top of my invoice. But**  **11 it's a fact of life, and I can't help it.**  **12 So there's, there are some obstacles**  **13 that probably can be gotten around, but I**  **14 think it's not easy.**  **15 MR. SACHS: I appreciate that,**  **16 Chuck, every much, and I think I am setting up**  **17 a chance to go visit one of the distributors.**  **18 I'm trying hard to arrange that. But as I**  **19 said before, being too clever by half, I'm not**  **20 terribly interested in the no account**  **21 contractors. I'm not real sure that a no**  **22 account guy in the other sense is the one** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 who's paying attention to installation quality**  **2 and other business practices and can't get**  **3 credit. I'm hearing the distributors say we**  **4 can do this if it has value and if it's**  **5 needed, but we need time to do it. And along**  **6 the way, it looks like they will have a way to**  **7 bill those parts cash sale to Repairs,**  **8 Incorporated, and that's all to the benefit of**  **9 everybody. It's just a hard way to get there.**  **10 MR. RAWALD: Okay. So my homework**  **11 here is to take back the question, the**  **12 phase-in, to my people, to more people. Jon**  **13 is going to go back and find out a time line**  **14 that would work for folks, and we'll come back**  **15 with that. And then I'll re-ask the question**  **16 on serial number, though. I have asked it a**  **17 couple of times and have been told it's of**  **18 some value to people, but I will ask it again,**  **19 though, with the information that we've gotten**  **20 here again today.**  **21 MR. MELCHI: Thank you.**  **22 MR. EISNER: That brings us to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufacturers.**  **2 MR. RAWALD: Once again, same caveat**  **3 as the first two slides. You know, whatever**  **4 we decide as far as the indoor portion, the**  **5 same thing will be here.**  **6 MR. EISNER: Anything people want to**  **7 raise in addition to that?**  **8 MR. ROCKY: So this is Bryan. I'm**  **9 not going to speak for every manufacturer, but**  **10 this record retention request, we have no**  **11 problem with meeting these requirements, as**  **12 stated, as a company.**  **13 MR. EISNER: Others? Everybody else**  **14 is okay with it? Assuming on these three**  **15 slides, essentially, that when we come back**  **16 tomorrow we hit the new information --**  **17 MR. MELCHI: Neil, this is Jon with**  **18 HARDI. Can I circle back? There was a**  **19 question that I forgot to ask and I wanted to**  **20 ask regarding the records retention for**  **21 distributors. We had talked about, with many**  **22 distributors operating at regional capacities,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 possibly the need to maintain records for**  **2 distributors nationally. Having heard the**  **3 contractors' point of view about installations**  **4 potentially in those regions, would DOE be**  **5 open to considering that only distributors who**  **6 sell or do business within multiple regions be**  **7 required to keep all of those records?**  **8 The reason I ask is, you know, upon**  **9 calling a member in upstate New York small,**  **10 three branches, never going to have any issue.**  **11 But these are the type of record-keeping**  **12 changes that is really going to change their,**  **13 would really change their processes. And the**  **14 questions they ask me are why, you know, we**  **15 don't do business with anybody -- it would**  **16 make no sense for anybody to go from Rochester**  **17 all the way down to the south.**  **18 Would DOE be open to considering**  **19 that, if a distributor does business with**  **20 entities that operate in multiple region, that**  **21 they would be required to, or is this**  **22 something that DOE is locked into on a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 nationwide scale?**  **2 MR. RAWALD: Right. So this is**  **3 Doug. We're not locked in. The complexity**  **4 with the distributors is that we've heard**  **5 numerous times that you just don't know where**  **6 things end up, so there's that constraint.**  **7 That's why I asked the over-the-counter**  **8 question because I thought there could be at**  **9 least some legs for me to go back to the**  **10 Department and say, hey, at least for those**  **11 guys doing over-the-counter sales in Portland,**  **12 Maine, those aren't going to end up in the**  **13 south. There's no delta there for a guy to**  **14 drive up from South Carolina to get a unit**  **15 from Portland, Maine and bring it back, so why**  **16 would he do that?**  **17 So I could see that. I just need**  **18 some language that makes sense because what**  **19 we've heard, unfortunately, you don't really**  **20 know, and so how could I have to be able to**  **21 know he's saying, yes, definitely, I'm sure my**  **22 product went to the south. I mean, I'm not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 going to come to the distributor first, so I'm**  **2 going to go, more likely than not, to the**  **3 contractor first. And if there's no chain**  **4 going to the distributor, I'm never going to**  **5 knock on that distributor's door. So it's**  **6 almost, it's almost like they could play at**  **7 their own risk and say, well, I'm never going**  **8 to get questioned about it, so why should I**  **9 keep these records? But I don't want to**  **10 create regulations that do that.**  **11 So I guess how would I be able to**  **12 say something to make sense so they would know**  **13 I'm in the area where I don't have to keep**  **14 records? So I guess I need you to come up**  **15 with some language that would make sense,**  **16 knowing that you don't control where the**  **17 product goes.**  **18 MR. MELCHI: Okay. I'll bring that**  **19 back tomorrow. Thank you.**  **20 MR. EISNER: Anything else from the**  **21 manufacturers? As I said, these -- oh, I'm**  **22 sorry.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. ROY: Aniruddh with Goodman. We**  **2 agree with what Bryan said. And I guess, you**  **3 know, I saw a few nodding of the heads, as**  **4 well, so should we take a vote on the**  **5 manufacturer aspect?**  **6 MR. RAWALD: I want to come back**  **7 with the indoor unit part and what we're going**  **8 to do there because I want it to be consistent**  **9 across the board. But I appreciate the fact**  **10 that there should be no bump in the road here**  **11 for that tomorrow, so we'll come back to the**  **12 other thing.**  **13 MR. ROCKY: So, Doug, from that**  **14 standpoint of the manufacturer, we keep track**  **15 of every unit we sell. It's all in the same**  **16 database. It gets invoiced. We don't do cash**  **17 sales to our distribution partners, you know.**  **18 So this is straightforward.**  **19 MR. RAWALD: Right. I just want to**  **20 make sure we adopt the same language across**  **21 the board, so I appreciate it. Okay. Could**  **22 we jump to the next slide?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: Sure can. Next slide**  **2 is other issues, five-year record retention.**  **3 Questions, concerns?**  **4 MR. RAWALD: So over lunch I did**  **5 raise with my supervisor the idea of a**  **6 different time line for differing actors in**  **7 the chain, so we're going to talk more about**  **8 that. So I think there are some reasons for**  **9 that. But it would be the version, as we talk**  **10 with John Hurst, which would be the increasing**  **11 time would be as you go further back in time**  **12 in the chain. So five years being what would**  **13 be a manufacturer time and then I could see**  **14 possibly maybe I could bring back four years**  **15 for contractors and four and a half years for**  **16 distributors. I don't know if I could do**  **17 three, four, and five. I don't know if that**  **18 would be too far. But I'll go back with the**  **19 idea in mind again and talk more about --**  **20 MR. HURST: Doug, I think the other**  **21 consideration is the manufacturers have**  **22 systems capable of tracking these things,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 whereas small contractors will probably be**  **2 filing them in a file cabinets and paper. So**  **3 five years is a lot of paper versus three.**  **4 MR. RAWALD: No, I do get that. So,**  **5 you know, it's just the concern on the flip**  **6 side of, well, after three years, is everybody**  **7 able to get away? Because the first stop is**  **8 going to be the contractor's records, and so**  **9 I want to be able to look back on it, when I**  **10 have a five-year statute of limitation, to the**  **11 most efficacious period of time I can.**  **12 MR. HURST: Yes. And just for the**  **13 record, I'd also submit that the chance of a**  **14 contractor being caught, whether it be through**  **15 warranty, you know, a follow-up call on that**  **16 system is going to happen most likely within**  **17 the first 12 months of the installation. I**  **18 don't know if that's a consideration, but**  **19 that's usually when you find it.**  **20 MR. WHITE: Doug, this is Chuck**  **21 White. I think three, four, five has a real**  **22 nice ring. It just rolls off the tongue.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. SACHS: This is Harvey, and**  **2 sometimes I'm contrarian but --**  **3 MR. RAWALD: Well, you want eight to**  **4 ten so . . .**  **5 MR. SACHS: I've given up on eight**  **6 to ten, convinced that the tail of the**  **7 distribution is not going to happen. But I do**  **8 feel, again, from the thrust of what I've**  **9 heard today, that five, five, five is**  **10 feasible, except for the no account guy. And**  **11 we're not going to catch all of them because**  **12 they will have moved out of town to Arkansas.**  **13 Oh, I'm sorry, Karen. But I still think that**  **14 storage lockers are a pain in the butt, but if**  **15 the fourth year and fifth year files are in a**  **16 storage locker in your basement, they get a**  **17 little moldy, they're still available. And I**  **18 don't think that for a legitimate contractor,**  **19 given the stakes here, that a five, five, five**  **20 is unreasonable. And I may not be helping**  **21 you, Charlie and Chuck, but I'm trying.**  **22 MR. MCCRUDDEN: This is Charlie with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 ACCA. I mean, Harvey, I think that anything**  **2 is possible. You can install a condensing**  **3 furnace where a non-condensing was in a**  **4 townhouse with no walls that you can reach for**  **5 a price.**  **6 So I think what we have to look at**  **7 is what's practical and what's reasonable and**  **8 is it reasonable to ask a contractor to stuff,**  **9 keep a lot of records and stuff them in**  **10 lockers? And is it effective, and is it going**  **11 to get what we want?**  **12 I think there's a balance we have to**  **13 find, and I think we've struck on that which**  **14 is the sophistication level. The manufactures**  **15 I think have admitted that they have a level**  **16 of sophistication that a lot of contractors**  **17 don't. And then we get to the point where**  **18 what are we doing, what are we requiring of**  **19 what is, essentially, we assume to be the vast**  **20 majority of upstanding contractors just to get**  **21 at those who are going to be out there trying**  **22 to skirt the system. And I don't think that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 requiring these records for five years meets**  **2 that test, which is let's not burden the good**  **3 guys, let's not give them too much. It may be**  **4 possible, but I don't think it's practical.**  **5 MR. SACHS: Thanks, Charlie. I hear**  **6 you. I haven't locked my sword into the stone**  **7 yet.**  **8 MR. RAWALD: Okay. So as I said,**  **9 I'll bring that back and see what the**  **10 Department is feeling. Obviously, if the**  **11 group comes to a consensus and we don't agree,**  **12 that's always an option, you know, and we'll**  **13 go forward from there.**  **14 MR. SACHS: Forty-eight, fifty-four,**  **15 and sixty months.**  **16 MR. RAWALD: And I think that's why**  **17 it was four, four and a half, and five was an**  **18 option. The second bullet was so I took back**  **19 Chuck's thoughts about how people really don't**  **20 understand being readily available. So I**  **21 thought, okay, let's see if we can just make**  **22 this very clear in what we decide. And so** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 when you have a record request, you have 30**  **2 days to respond.**  **3 And then let's go even further and**  **4 not rely upon Doug being a good guy here. I**  **5 mean, let's write into the rules that DOE can**  **6 grant extra time for making good faith**  **7 production and explain the need for additional**  **8 time. So you give them what you got in 30**  **9 days, and then you say, "I need more time, and**  **10 here's why." And it's in writing, and so we**  **11 say, "Yes, we'll give you more time, Chuck.**  **12 We know you've given us a lot here. Here's**  **13 another 45 days or 15 days, or whatever seems**  **14 reasonable. You tell us how much time you**  **15 need, and we'll come to an agreement."**  **16 So that's what I thought was the**  **17 best way to kind of reach that concern that**  **18 Chuck, I think, was articulating. I think it**  **19 was a very valid concern. So what do folks**  **20 feel about that, those two bullets?**  **21 MR. WHITE: Well, I'll start. This**  **22 is Chuck White. I like the language. I like** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that you've put in there about the good faith.**  **2 I think that's very helpful. The no new forms**  **3 and it doesn't have to be searchable, I think**  **4 that makes it a lot more doable for people.**  **5 Again, on a personal note, I can**  **6 find the first invoice from 1976 for our**  **7 business, and I probably can do it less than**  **8 30 days because it's within the walls of the**  **9 building. But not everybody is like that.**  **10 And, again, if you want to know just**  **11 air conditioners, I have the files of what I**  **12 bought. But it's going to be, it's going to**  **13 take me some time to go through, paw through**  **14 all those and pull out the ones that are**  **15 particular air conditioners. But, again,**  **16 within 30 days, I can get you quite a bit of**  **17 them. And if we do need a lot longer time**  **18 frame for me personally, I can do it and then**  **19 explain it to you, I think that's fair.**  **20 MR. MCCRUDDEN: This is Charlie with**  **21 ACCA. On these, and I guess on record**  **22 retention requirements, what do you imagine** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the compliance date to be? I mean, is it**  **2 going to be January 1 because that's what's in**  **3 the statute, or, based on the fact that we**  **4 know we're not going to have a final rule --**  **5 MR. RAWALD: Right. So the rule**  **6 will go out, and there will be a 30-day**  **7 compliance date for the rule in general. So**  **8 it all depends on when the rule goes final,**  **9 that will have a 30-day compliance date**  **10 associated with it, so I imagine that it won't**  **11 be final before January 1st. So I imagine**  **12 that would be, whatever date the final rule**  **13 is, which is something else to consider as Jon**  **14 Melchi is thinking about, the fact that we're**  **15 going to have this built-in time line anyway.**  **16 MR. EISNER: Other questions,**  **17 concerns?**  **18 MR. RAWALD: So absent the years, is**  **19 there otherwise general agreement to what's on**  **20 this slide? Just the time line is what needs**  **21 to be looked at for . . .**  **22 MR. SACHS: This is Harvey. On the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 last line of slide 18, complainant has history**  **2 of substantiated complaints, and I think**  **3 there's some ambiguity in the wording you**  **4 might want to think about.**  **5 MR. RAWALD: So we're on slide 17.**  **6 MR. SACHS: I'm sorry, I'm sorry.**  **7 MR. RAWALD: But we can jump into**  **8 slide 18, and that can be the first comment we**  **9 discuss.**  **10 MR. MELCHI: Doug, this is Jon with**  **11 HARDI. On slide 17, no requirement to create**  **12 new forms, in a way, though, if a distributor**  **13 does have to alter their OEM or their ERP**  **14 system, that would, in effect, be creating a**  **15 new form for them. You know, modifications to**  **16 the database are, essentially, doing just**  **17 that.**  **18 MR. RAWALD: Okay.**  **19 MR. MCCRUDDEN: So this is Charlie**  **20 with ACCA. I think I have a similar question,**  **21 but I think maybe you're trying to say no**  **22 requirement to create standardized form.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: What I'm saying is that**  **2 you can use the things you're already doing**  **3 when your invoice sales and when you receive**  **4 invoices from things you purchased to keep the**  **5 records. So we're not requiring that there be**  **6 anything else created for the Department**  **7 alone.**  **8 MR. EISNER: That doesn't prohibit**  **9 you from creating a form if you want. So,**  **10 again, it's okay then. I hear no objections,**  **11 that it's okay except for the number of years.**  **12 All right. Go on to the next one, 18,**  **13 threshold for records requests.**  **14 MR. RAWALD: Right. And we hit on**  **15 this a few slides back now. So DOE must have**  **16 a reasonable belief to request records, and**  **17 what that means is we have to have a**  **18 reasonable belief that the person we're going**  **19 to ask records from actually has a violation.**  **20 So a reasonable belief is more than just**  **21 merely suspicion, but it's not anywhere near**  **22 proof beyond a reasonable doubt. It will be,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 hey, listen, I have good reason I think this**  **2 guy is doing something bad, and I want to look**  **3 at these following factors that we have listed**  **4 here, and these are going to be the things**  **5 that I'm going to consider when trying to**  **6 decide, okay, do I really have a reason to**  **7 believe this person is doing bad?**  **8 Now, the last one is the one that**  **9 Harvey jumped in on, "complainant has a**  **10 history of substantiated complaints." That's**  **11 an analogy to criminal law where if you have**  **12 an informant and they're a good informant**  **13 because they're always finding out bad guys,**  **14 then you're more likely to believe that**  **15 informant. So if Chuck has told me that five**  **16 other contractors in this area were installing**  **17 non-compliant units, and on the sixth time I'm**  **18 going to say, "Chuck has a really good track**  **19 record," that's going to contribute to the**  **20 belief that I have that what Chuck is telling**  **21 me now is probably right because Chuck has**  **22 been really good, Chuck has been very good at** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 giving good complaints to the Department. So**  **2 we'll consider that.**  **3 But if Chuck has been the type of**  **4 guy who, every time he tells me about someone**  **5 they're always good, and Chuck is just really**  **6 rabble-rouser, he just wants to do whatever he**  **7 can to cause trouble, I'm going to be very**  **8 unlikely to believe Chuck's complaint. So**  **9 that's what that means, Harvey.**  **10 MR. SACHS: This is Harvey. When I**  **11 read it the first time, I read it as the**  **12 complainant is one of these revenge guys who**  **13 has a record of complaints against him having**  **14 been found. I'm just suggesting that this**  **15 ambiguation, as the term Wikipedia would use,**  **16 that it can be misread.**  **17 MR. RAWALD: Right. And so we can**  **18 change the wording to -- right, yes. So I**  **19 don't mind changing that wording. That's the**  **20 intent of that bullet.**  **21 MR. EISNER: Okay. Any other**  **22 questions or concerns about 18?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MS. SHEPHERD: I had a question.**  **2 This is Amy Shepherd from AHRI. In addition**  **3 to the reasonable belief, I think that one**  **4 thing you're going to have to have is a**  **5 prohibited installation. So I think**  **6 particularly before there's a records request**  **7 for distributors or manufacturers, can we**  **8 include in there that DOE has to have proof of**  **9 a prohibited installation? Because that's**  **10 not, the actual physical installation is not**  **11 something you're going to get from either of**  **12 those parties. And I think that, since that's**  **13 the fundamental thing you're going to have to**  **14 prove before the rest of anything else can be**  **15 proved, I think it would be good if that had**  **16 to be met as a threshold.**  **17 MR. RAWALD: Amy, this is Doug. I'm**  **18 envisioning a scenario possibly where multiple**  **19 people have come to us with bids from a**  **20 contractor showing that he's willing to**  **21 install something, a 13 SEER in their house,**  **22 but nothing has actually been installed. So** 

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### 1 I want to go look at that guy's record now to **2 see if actually has installed any 13 SEERs 3 anywhere else because I have four or five of**  **4 these folks who have these bids from this guy 5 saying they're going to install a 13 SEER in**  **6 their house. So I wouldn't have a prohibited 7 installation at that point, but I think I'd**  **8 have reasonable belief that that guy did 9 install something because he's bid a lot of**  **10 jobs willing to do that. So I would have 11 reason to believe that and want to go ahead**  **12 and ask him for this records at that point. 13 MS. SHEPHERD: So that's talking**  **14 about the contractor, though, right? 15 MR. RAWALD: Right, the contractor.**  **16 MS. SHEPHERD: So what about 17 distributors and manufacturers? What if that**  **18 was the trigger before records requests 19 happened for those other entities? Because**  **20 you wouldn't have to have that, right? 21 MR. RAWALD: So I'm not sure I'm**  **22 following your question. So I guess what**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 you're asking is do we want to have a**  **2 threshold to ask for records from the**  **3 distributor and the manufacturer, and I would**  **4 say, yes, we'd want to meet the threshold.**  **5 Would it be the same threshold? I would think**  **6 a reasonable belief that they -- once I had a**  **7 reasonable belief that something has happened,**  **8 then would I want to go ahead and follow the**  **9 contractor, the manufacturer?**  **10 I'm not necessarily thinking the**  **11 manufacturer did anything wrong or the**  **12 distributor. I'm just asking for records to**  **13 verify what I'm hearing from the contractor.**  **14 So do I want to establish a separate threshold**  **15 for that? I mean, is that what you're asking**  **16 for? What exactly would you --**  **17 MS. SHEPHERD: Yes, I think the**  **18 concern is that, since manufacturers are used**  **19 to keeping these records and since**  **20 manufacturers have the automated records and**  **21 since manufacturers have, looks like may have**  **22 the longest period of collecting these** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 records, that they're the ones that are going**  **2 to be kind of hit up all the time for these,**  **3 as opposed to starting where the, starting**  **4 where the activity actually occurred. And so**  **5 it's just that, to make sure before the**  **6 manufacturers have to go back and pull**  **7 everything out of archives, that you know, not**  **8 that this particular person necessarily did it**  **9 but that you know that the prohibited**  **10 installation actually happened.**  **11 MR. RAWALD: I guess part of the**  **12 scenario that I see, though, is I'd want to go**  **13 to the distributor or to the manufacturer on**  **14 occasion where the contractor gave me all his**  **15 records and everything seems right, and I'm**  **16 like, wait, but this doesn't seem to line up,**  **17 can I disprove that? Is there something in**  **18 the manufacturer's or distributor's records**  **19 that show that that contractor gave me records**  **20 that were doctored in some way?**  **21 And I haven't thought through the**  **22 scenario entirely, but I don't want to** 

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### 1 handicap that without having thought through **2 it entirely. So let me think about it some 3 more.**  **4 MR. FENSTROM: This is Gary for the 5 California Utilities. We've already**  **6 established that trying to find violations in 7 the field is probably going to be difficult.**  **8 And to require before we could look at 9 distributors' or manufacturers' records, that**  **10 we actually have a violation in the field 11 would pretty much restrict access to**  **12 proactively looking at those records with the 13 possibility of finding a violation at that**  **14 level. 15 And if I recall, Dave Hungerford's**  **16 point earlier, again, calling for him to come 17 back on the line if he's there, I believe he**  **18 seems to feel that the effectiveness of 19 enforcement is probably going to be much**  **20 greater at the distributor and manufacturer 21 level then it will be at the installation**  **22 level because of the difficulty of finding**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 violations at the installation level. So,**  **2 David, are you still on the phone, and would**  **3 you like to speak to your interest in focusing**  **4 on distributors, rather than individual**  **5 customers, and, consequently, the difficulty**  **6 of using individual customer violation as a**  **7 trigger for authority to look at the**  **8 distributor level? If he gave up and he's not**  **9 on the line, I think I expressed, well, I**  **10 think I expressed the view for both of us.**  **11 You know, certainly, I recognize the**  **12 reasonableness of the request. On the other**  **13 hand, I think it would unnecessarily restrict**  **14 DOE's or complicate DOE's ability to**  **15 investigate.**  **16 MR. DORIA: This is Jordan. I**  **17 understand that point, but I guess, looking at**  **18 it another way, at what point do you need to**  **19 actually determine a violation happened before**  **20 you just run off and get records from**  **21 absolutely all possible actors? I mean, I**  **22 feel like, at some point, we need to have an** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 indicator that something actually happened,**  **2 right, or, I think to Doug's point, that there**  **3 was significant evidence to suggest that there**  **4 was intent to commit a violation. I think,**  **5 otherwise, you know, you run the risk of**  **6 investigating a lot of things and adding a lot**  **7 of burden without any proof. That's like**  **8 saying, you know, you see blood so you're**  **9 convinced there's a body somewhere, right?**  **10 And you're running around looking, but there**  **11 isn't one, you know.**  **12 MR. FENSTROM: Well, this is Gary.**  **13 We talked earlier about trusting DOE's**  **14 reasonableness. And given the fact that they**  **15 have budget constraints and limitations on**  **16 their compliance ability, I don't think**  **17 they're going to unnecessarily run around and**  **18 request records that aren't needed.**  **19 On the other hand, making it, again,**  **20 more difficult for them to get at them when**  **21 they do need them or have reason to suspect.**  **22 I think that's an unnecessary burden.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: Yes, this is Doug. And**  **2 I've talked a lot about people coming into**  **3 this meeting to try to establish a threshold**  **4 because I really was worried about the**  **5 concerns that I heard from Chuck and Charlie**  **6 about the frivolous claims that would mess up**  **7 their business practice. And so this is the**  **8 area that people felt comfortable with and the**  **9 reasonable belief standard, and I think trying**  **10 to say that there needs to be something more**  **11 before we go to the distributors and the**  **12 manufacturers would be really difficult for**  **13 other people to palate because they don't want**  **14 to constrain themselves.**  **15 I'm having a problem because I don't**  **16 want to deal with unintended consequences**  **17 because I haven't seen these cases firsthand**  **18 yet to say what could be causing me to want to**  **19 go further. And so I don't want to be pinned**  **20 in if I don't have to be. So this reasonable**  **21 belief, to me at least, is I'm not going to**  **22 bother people until I really think something** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 happened. And, frankly, we and my office,**  **2 we're not trying to get extra records to deal**  **3 with because we have to review them all, and**  **4 it's a lot of time and effort to look at these**  **5 things.**  **6 So we're not trying to subpoena**  **7 industry-wide. We're trying to be very**  **8 targeted in what we ask for. We're not**  **9 usually asking for things from the entire**  **10 period that we can. We're usually looking for**  **11 things from a very targeted time period, too,**  **12 because we want to look at things very**  **13 specifically.**  **14 So I think we're going to be very**  **15 judicious in what we ask for, but I understand**  **16 the concern. I will bring back the question,**  **17 as Amy has raised it, but I think there's not**  **18 going to be a whole lot of traction for me to**  **19 go from. I think that it's really going to**  **20 come back to we've come forward with this kind**  **21 of already constrained on our ability, which**  **22 is we're going to have a reasonable belief** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 before we do anything and we're going to look**  **2 at all these factors. But I don't think**  **3 there's going to be one determinative factor**  **4 that we'll want to say, well, unless we have**  **5 this thing, we can't ask for any records from**  **6 manufacturers or distributors.**  **7 MR. EISNER: Are we talking about,**  **8 if I understand this, one instance where you**  **9 then want to get information about other**  **10 possible instances? So, for example, you find**  **11 out that contractor A installed a 13 in the**  **12 south and that he bought that 13 from Y**  **13 distributor, but that's the only one he bought**  **14 he says. Do you have the right to go to Y**  **15 distributor and say did you sell any other 13s**  **16 to this contractor? You don't have any**  **17 indication he installed any others illegally,**  **18 but you know he installed one. He said he**  **19 only got that one from that distributor. You**  **20 want to find out if he got 13 more or 14 more.**  **21 MR. RAWALD: Well, if I understand**  **22 the question correctly, that would be okay** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 because he already had one instance to go on.**  **2 So what she's saying is that we want to be**  **3 able to have that one installation that's been**  **4 found before we go to these folks who are**  **5 upper in the chain, if I understand her**  **6 question correctly.**  **7 MS. SHEPHERD: Yes. I mean, we'd**  **8 like a signed confession, but we realize that**  **9 might not be unreasonable. But I think so, in**  **10 thinking about this issue, I mean, yes. But**  **11 at the same time, too, this list, as it's sort**  **12 of drafted right now, is one of these things,**  **13 right? So a picture of a unit with a name**  **14 plate. So is that reasonable? Well, if**  **15 you're literally looking at this list, that's**  **16 a factor up there, and so yes. But it's not**  **17 connected to an address or anything like that.**  **18 So anything I think that gets to the**  **19 just a little bit more of the scope because,**  **20 Gary, as to your point, you're going to have**  **21 to do this, you're going to have to be able to**  **22 show this eventually, right? Because you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 can't hold a manufacturer reliable unless**  **2 there was a violation. So you have to get**  **3 here.**  **4 And so I'm not necessarily saying**  **5 you can't go anywhere until you're already**  **6 there, but I do think that because of sort of**  **7 the fact that, you know, there is going to be**  **8 a desire to look upstream and to collect these**  **9 records in order to find other information.**  **10 I just think that if either we have this as a**  **11 predicate or if we can work with this list a**  **12 little bit to just give more comfort that**  **13 there will be enough of this or it will be**  **14 sufficient that you're very certain that a**  **15 violation has occurred before you go asking**  **16 for the specific questions.**  **17 MR. EISNER: But one violation,**  **18 you're saying, would be enough to get records**  **19 about other possible violations elsewhere by**  **20 the same, for example, the same contractor?**  **21 MS. SHEPHERD: I don't know. That's**  **22 actually not the issue that I was raising. I** 

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### 1 have to think about that because I think **2 that's getting more into investigating 3 routine. What I'm talking about is just this**  **4 reasonable belief to request records. 5 MR. RAWALD: Right. So I'm open to**  **6 working on this list. This is just what we 7 put together based upon the things we talked**  **8 about last week for the threshold for 9 investigating at all. So I'm open for ideas**  **10 on this. 11 MR. FENSTROM: This is Gary again.**  **12 Rather than, primarily, a proactive approach, 13 we've agreed on, primarily, a reactive**  **14 approach with the notion that, where we find 15 a violation, that it can be investigated.**  **16 However, we left the door open to DOE doing 17 some stuff proactively.**  **18 So the records don't need to be 19 reported because that would be too much of a**  **20 burden, and we'd like to have them reside at 21 the manufacturer's place of business, the**  **22 distributor's place of business. If DOE**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 doesn't have the authority without having**  **2 found an installation violation to go look at**  **3 the distributor's records, there's no**  **4 possibility of any kind of audit that might**  **5 discover something at the distributor level**  **6 that could then, in turn, reflect back on the**  **7 installation or inform us about the**  **8 installations.**  **9 So I don't want to agree to**  **10 something that is going to preclude a direct**  **11 inspection at the distributor or manufacturer**  **12 level of those records we all agreed could**  **13 reside there.**  **14 MR. MCCRUDDEN: So this is Charlie**  **15 with ACCA. There's no reason to go to a**  **16 distributor or a manufacturer to ask for**  **17 records unless you've got some type of**  **18 violation, unless there's a box in the wrong**  **19 place, because the only violation that the**  **20 distributor or the manufacturer can commit is**  **21 a couple of slides away but, essentially,**  **22 knowing when you sell a product with knowledge** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to sell or install. So something has to**  **2 happen first.**  **3 MR. FENSTROM: I follow your**  **4 reasoning, but I'm also thinking about the**  **5 point that David Hungerford made, and that is,**  **6 rather than search for a needle in a haystack**  **7 among a gazillion California homes for a**  **8 violation, I think he wants to be able to go**  **9 to the distributor and see whether or not**  **10 there's a whole lot of equipment there that**  **11 maybe shouldn't be there.**  **12 MR. MCCRUDDEN: There's no --**  **13 MR. FENSTROM: Let me finish. And**  **14 if there is, then there might be a suspicion**  **15 that some of that was sold to contractors in**  **16 the wrong places.**  **17 MR. MCCRUDDEN: And, again, to**  **18 repeat, it's not illegal to have the product**  **19 in a warehouse.**  **20 MR. FENSTROM: That is absolutely**  **21 correct, but, illegal or not, it might be an**  **22 indication, if there's an excessive amount of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 product in the warehouse, that maybe some of**  **2 it is being sold. It's not illegal, but it**  **3 depends upon where it's being sold. And if**  **4 there's a whole bunch of it, that might be**  **5 cause to ask where is it being sold. And you**  **6 all are proposing an approach here that will**  **7 not allow that question to be asked.**  **8 MR. RAWALD: Right. This is Doug,**  **9 to interject. So from an investigative point**  **10 of view, what I see Gary looking at is I find**  **11 a report or I hear that a distributor who's**  **12 located in Southern Texas has a lot of 13,**  **13 which could be fine because it could be going**  **14 to Mexico, it could be fine because it's a hub**  **15 and they're going to be going out in the**  **16 spokes and all be in the north somehow. But**  **17 it just seems unusual because that's not the**  **18 regular thing.**  **19 Gary, and I agree, thinks that I**  **20 should be able to go to that distributor and**  **21 say can you give me the records for where**  **22 you're selling those 13s, who you're selling** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 them to you, and that way I can look at the**  **2 contractors and say, oh, are these contractors**  **3 who are operating in Texas? Are they**  **4 contractors who are operating in Arkansas?**  **5 Are they contractors who are operating in**  **6 Nebraska? And that may help me then build a**  **7 case.**  **8 And so I think I don't want to have**  **9 a constraint stop me from being able to do**  **10 that if I have a reasonable belief that, hey,**  **11 there's a lot of these things here**  **12 corresponding with some other information that**  **13 makes me think that this could be the bad**  **14 thing. So he wants to be able to have that**  **15 ability as long as I feel it meets a**  **16 sufficient threshold to do that, and I would**  **17 want that, as well.**  **18 MR. ROCKY: And, Doug, this is**  **19 Bryan. I absolutely agree that you should**  **20 have the ability to do that January 1, 2017**  **21 because if you go on June 30th, 2016, that**  **22 pile of units could be totally legal, could be** 

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### 1 sold, could be installed, as long as it's not **2 installed July 1. And if you go to that same 3 distributor on January 1 of 2016, you might**  **4 see an amazing pile. You can go to 5 distributors right now, some of our customers**  **6 in different locations have an amazing stock 7 of inventory that's two and three years old.**  **8 And I wish they didn't, but they do. 9 So we're talking about taking**  **10 something that's still a legal act at this 11 point, Gary, and making it an assumed illegal**  **12 act just because the process of having it. 13 MR. RAWALD: No, I don't think we're**  **14 going to that far because it's simply an 15 indication, right? So I could go back and**  **16 call up the distributor and say we heard a 17 note that you have a large stock of 13, and**  **18 the distributor can come back and say here's 19 the records showing those were all prior to**  **20 2015. Okay, thanks, that's it, the 21 investigation is over. I now have the**  **22 question answered. But I want to be able to**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 ask that question of the distributor.**  **2 MR. EISNER: I'm a little confused**  **3 as to why this is -- I'm not even sure you**  **4 have to focus on the distributor. Suppose a**  **5 very reliable source, somebody who works for**  **6 the distributor, says that contractor X who**  **7 advertises that he only installs them in**  **8 Alabama so he can pay attention to his**  **9 customers just bought a SEER 13 when it was**  **10 illegal to install it anywhere in that area.**  **11 You go and see the contractor. The contractor**  **12 says, no, I don't have any 13s, I don't intend**  **13 to install any 13s down here.**  **14 So Doug says, okay, let me go ask**  **15 the distributor for the records and see if he**  **16 did, in fact, get one or ten or fifteen even.**  **17 What is wrong with that? I'm not following**  **18 why you shouldn't be able to ask the**  **19 distributor. You don't think the distributor**  **20 did anything wrong. You just want to find out**  **21 if the contractor did, indeed, get a 13 that**  **22 he denies he ever got when you've got a very** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 good source, no idea where it would have been**  **2 installed, but a very good source that said we**  **3 sold it to that distributor and I know he only**  **4 does business in Alabama. I mean that**  **5 contractor.**  **6 What is wrong with giving Doug the**  **7 authority to ask the distributor did you sell**  **8 to this company, and did you sell them 13s?**  **9 MS. MEYERS: So this is Karen with**  **10 Rheem. Is it wrong for a contractor in**  **11 Alabama to be in possession of a 13 SEER unit?**  **12 MR. EISNER: Again, my question**  **13 would be if I'm in business and I'm buying a**  **14 13, it can't be legally installed in the only**  **15 state in which I work, and I asked you if you**  **16 bought a 13 and you said no --**  **17 MS. MEYERS: I thought on day one we**  **18 defined a violation as an illegal**  **19 installation.**  **20 MR. BALLO: But a violation for a**  **21 distributor is to knowingly sell a product to**  **22 a contractor either with knowledge that the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 entity will sell or install the product in**  **2 violation. So --**  **3 MS. MEYERS: I see what you're**  **4 saying.**  **5 MR. RAWALD: And I guess, Karen, the**  **6 investigation would be over, right? Because**  **7 after I found out from the distributor that**  **8 the contractor is lying to me, then I would go**  **9 back to where the guy works and try to figure**  **10 out, well, where the heck are these being**  **11 installed, you know? So it's not -- right.**  **12 MR. FENSTROM: So this is Gary.**  **13 Just to kind of reiterate the point, I think**  **14 it's prudent for us to be able to go from the**  **15 bottom-up or the top-down and not just one**  **16 direction.**  **17 MR. SACHS: This is Harvey. I'd**  **18 like to sort of draw this together, if I can,**  **19 with a question to Bryan and, by extension, to**  **20 the other manufacturers. January 1st of next**  **21 year and, for that matter, July 1st of 2016,**  **22 you all will continue to make the same models** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 as you're making today in some cases. But the**  **2 point is you don't -- the question from Dave**  **3 Hungerford is you're not changing all the**  **4 model numbers to indicate that we have gotten**  **5 into a new enforcement regime.**  **6 MR. ROCKY: This is Bryan. Since**  **7 the question was specifically directed to me,**  **8 Johnson Controls will continue to manufacture**  **9 units today that are 13 SEER rated in 2016**  **10 that will be 13 SEER rated for sale in**  **11 northern states.**  **12 MR. SACHS: I appreciate it, and I'm**  **13 sorry I'm not being clear. I've got a SEER 14**  **14 model, let's say. And when the calendar rolls**  **15 over, we enter a new -- let's say with a 13**  **16 that will remain completely legal. You're not**  **17 changing model numbers for any distributors to**  **18 indicate that this is a change in the**  **19 regulatory regime. You're continuing to make**  **20 them under the same model number.**  **21 MR. ROCKY: So I think, in general,**  **22 there will be model families that every** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufacturer does that are the same models.**  **2 MR. SACHS: Okay.**  **3 MR. ROCKY: I think there will be**  **4 model numbers from us and other manufacturers**  **5 that will be new and unique for different**  **6 regions, and we're going to try to keep any of**  **7 those changes to the minimum because it**  **8 disrupts our entire distribution chain to**  **9 constantly change model numbers.**  **10 MR. SACHS: Okay. That's very**  **11 helpful.**  **12 MS. MEYERS: And plus because the**  **13 DOE testing and compliance --**  **14 MR. SACHS: Right. That's what I**  **15 thought, Karen. And thank you. Now, the**  **16 reason David was concerned about that is that**  **17 it would seem to indicate that, in terms of**  **18 the kinds of records that Doug will see, the**  **19 only thing indicating date of manufacture that**  **20 Doug would see is the serial number on the**  **21 unit, which would seem to support strongly the**  **22 need for the distributor to be able to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 maintain the record of that serial number. I**  **2 swiped one of those, Bryan.**  **3 MR. ROCKY: Another one?**  **4 MR. SACHS: No, no, no, one is**  **5 enough. I have trouble with paper records.**  **6 MR. ROCKY: I'm sorry. This is**  **7 Bryan. I just showed Harvey a copy of the**  **8 rating plate that we agreed to add text saying**  **9 "install prohibited in southwest and**  **10 southeast," so there's more than just a serial**  **11 number that identifies a product.**  **12 MR. SACHS: This is Harvey. You're**  **13 absolutely right. But I'm trying to think**  **14 like Doug, and he's got some sort of report**  **15 from the field that might have a photograph of**  **16 your plate, and that's cool. But if he**  **17 doesn't, he's relying on being able to bird**  **18 dog through various forms of records, and the**  **19 serial number could be an important aspect of**  **20 that compliance check.**  **21 MS. MEYERS: I think, at least**  **22 speaking from OEMs, we don't want to get** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 inundated with requests for records just**  **2 because something appears on the DOE website,**  **3 you know, if DOE has not determined that**  **4 there's been a violation. So we don't want to**  **5 get hundreds of requests, hey, who did you**  **6 sell this model number and serial number to;**  **7 hey, who'd you do this?**  **8 So I think we want some type of**  **9 understanding. I like, actually, the way you**  **10 have this worded that you must have a**  **11 reasonable belief to request records. I just**  **12 want to understand, I think, what you mean by**  **13 reasonable belief. If it's just somebody is**  **14 keying something in on a model number, I'm**  **15 going to go in and key in Jon's model numbers**  **16 and serial numbers all day long so that you're**  **17 bugging him to death.**  **18 You know, that's, I think, you know,**  **19 at least from an OEM standpoint or at least**  **20 from Rheem's standpoint, I just want to**  **21 understand what that is, so I'm not like, oh,**  **22 somebody just put this in on the website, tell** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 me who you sold it to you, you know. So I**  **2 think that's kind of where we're coming from.**  **3 MR. RAWALD: Right. And so for the**  **4 manufacturer point of view, you at least have**  **5 some sort of frame of reference because of the**  **6 fact that we use a standard for when we make**  **7 you give us product now that we're testing**  **8 something. And so the analogy for right now**  **9 is if we test one unit and it comes back to be**  **10 less than the standard, that doesn't mean the**  **11 entire model line meets the standard. That**  **12 could be a one-off for a lot of reasons.**  **13 But we have a reasonable belief that**  **14 that could be a problem with that product**  **15 line, so then we go back to the manufacturer**  **16 and say, okay, now you got to give us three**  **17 more units at your expense. So that's**  **18 probably more expensive than any record**  **19 request you're going to do, but that's kind of**  **20 the baseline. You know, we have a pretty**  **21 strong indication that something happened**  **22 here, so what we're going to be looking for is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we have these kind of -- I'm giving you ideas**  **2 to kind of help you understand what I'll be**  **3 looking for, but, you know, a soup of things**  **4 together would make me think there's a pretty**  **5 good likelihood something bad happened here,**  **6 and that's what I'm trying to get at.**  **7 MR. EISNER: So it's more than just**  **8 the complaint.**  **9 MR. RAWALD: Right. It's not just**  **10 the complaint.**  **11 MS. MEYERS: I actually am okay with**  **12 this because I think you're trying to define**  **13 what you believe is reasonable belief and how**  **14 you would determine if reasonable belief, that**  **15 you have reasonable belief, which is a copy of**  **16 the Energy Guide label, a copy of the work**  **17 order, bill of sale for the equipment, a copy**  **18 of the bid for installation, before you would,**  **19 that's your threshold to request records,**  **20 correct?**  **21 MR. RAWALD: Correct. Right. So**  **22 I'm not saying one of those is enough. I'm** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 not saying all those are required. What I'm**  **2 saying is I will look at these factors and say**  **3 what do we have here. And if we don't have**  **4 enough for me to get there, then I'm going to**  **5 ask for more. These are the kind of things**  **6 that could help me get there, but I'm not**  **7 going to require all of these but I'm not**  **8 going to require -- one is probably not**  **9 enough. I'm going to want to have a certain**  **10 amount of things that make me feel confident**  **11 that there's a reason to bother the person**  **12 with a record request because we're not in the**  **13 business of trying to request records**  **14 frivolously, and we're not trying to interrupt**  **15 business practices. We want to make sure we**  **16 have reason to believe something happened, and**  **17 then, when we do, we're going to act upon it.**  **18 But I can't say what combination of**  **19 things are going to be sufficient because**  **20 every case is different. And so these are**  **21 things that we'll look at in general to kind**  **22 of decide, okay, is there enough here to go** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 ahead and bother the company with a records**  **2 request now?**  **3 MR. MELCHI: Doug, this is Jon with**  **4 HARDI. Doug, so just to be clear so when I**  **5 run this back to my members, if you get a**  **6 report on Karen's contracting company,**  **7 because, Karen, we haven't picked on you as a**  **8 contractor yet, and you say, "Karen, you're**  **9 installing 13 SEER in Alabama, and you**  **10 shouldn't be doing that," kind of Neil's**  **11 scenario. And she says, "No, I didn't," and**  **12 she gives you records that indicates that she**  **13 hasn't. But your source says I know she did**  **14 for a fact, but she has no records that**  **15 indicate that.**  **16 Is that one time, is the records**  **17 that she provides you enough to -- do you need**  **18 to go steps further after that? She's**  **19 provided you the records. There's nothing in**  **20 the records that says she's done anything.**  **21 Whoever the source was, her competitor, Dave,**  **22 says, "Yes, she did, I know she did," is that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 enough that he is adamant that she did, even**  **2 though she provides her records for you to**  **3 come to me as her distributor and request**  **4 Karen's records?**  **5 MR. RAWALD: I'd probably want more.**  **6 I mean, I don't think that's enough. Like, if**  **7 it's just Dave talking, it's not enough. But**  **8 if Dave comes back and says, "Here's Mrs.**  **9 Smith who she remembers Karen coming to her**  **10 house and putting this unit it," then I would**  **11 say, okay, we now have a house, at least I**  **12 have a homeowner. I have something a little**  **13 bit more, and that gives you that thing that**  **14 Amy wants, which is unlawful installation.**  **15 But that's an easy example, but I want a**  **16 little bit more. That's not enough. Just**  **17 Dave's word versus Karen's records, Karen's**  **18 records are probably going to win because**  **19 Karen's records seem, at least, more credible**  **20 than Dave's statement.**  **21 Now, if Dave already gave me seven**  **22 other people that have been right, and so Dave** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 has got a really good track record. He's not**  **2 just somebody who I don't know. Then maybe**  **3 Dave's word means more. So I have to think**  **4 about it in the context because there's a lot**  **5 of factors that you think about in trying to**  **6 arrive at this. It's not just an easy**  **7 blueprint where you say, okay, let's look at**  **8 the checklist and do we have these five items?**  **9 But I think I'm going to want more probably to**  **10 get there.**  **11 MR. EISNER: So where do we stand?**  **12 Do people still object to reasonable belief?**  **13 Anybody still object to it? Doug has**  **14 convinced you it's reasonable?**  **15 MR. FENSTROM: This is Gary. Just**  **16 thinking about the discussion, it seems like**  **17 everyone in the industry, reasonably, is**  **18 saying I want to have some confidence that DOE**  **19 is not going to unnecessarily come out here**  **20 and disrupt the applecart. That makes sense.**  **21 And the efficiency advocates are saying, by**  **22 golly, we want to make sure that DOE** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 preemptively goes out and does some**  **2 inspection. So I think, in the end, we just**  **3 have to trust that DOE is going to do what's**  **4 reasonable and not try and implement**  **5 restrictions that would limit DOE and its**  **6 ability to exercise its reasonableness.**  **7 MS. SHEPHERD: I think we can move**  **8 on. I think that I would like Doug to think**  **9 about what we had discussed thinking about.**  **10 And I think that we'll do that, as well. And**  **11 I think that, you know, it's not that we think**  **12 DOE is going to just be bugging us all the**  **13 time. It's that, especially when you're going**  **14 five years back, it's a significant burden to**  **15 do it, to archive those, to respond to all**  **16 these requests.**  **17 So we just want, I mean, honestly,**  **18 something solid. And so it's the one thing**  **19 that DOE can rely on is reasonable belief is**  **20 that the person telling us has been successful**  **21 before, I don't know how much comfort that**  **22 gives us. I think that's something that we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 need to talk about.**  **2 So I would just say I think we can**  **3 move on. We'll discuss it, and, if we decide**  **4 that we're not completely comfortable, we'll**  **5 raise this issue.**  **6 MR. RAWALD: Okay. I just want to**  **7 be clear that, in my assessment, a history of**  **8 past positive complaints would not be**  **9 sufficient alone without additional evidence.**  **10 I want more. But that's a factor I'm going to**  **11 consider. And also a history of bad**  **12 complaints is going to require a lot more, so**  **13 it's kind of a sliding scale to come to this**  **14 idea of what's reasonable.**  **15 MS. SHEPHERD: I agree, and I think**  **16 everybody on this table will be comfortable if**  **17 you, like, were indentured to the Department**  **18 of Energy to work on these issues. But,**  **19 unfortunately, you're not so . . .**  **20 MR. EISNER: Okay. We will come**  **21 back to 18 tomorrow. Let's go on to 20,**  **22 violation.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: And these are all the**  **2 things that we've hashed over before.**  **3 Hopefully, everyone is familiar with them at**  **4 this point.**  **5 MR. MCCRUDDEN: This is Charlie with**  **6 ACCA. On the contractor dealer part, do you**  **7 want to take out residential, the word**  **8 "residential?"**  **9 MR. RAWALD: Right. Just to be**  **10 consistent, that would make sense to take out**  **11 the word "residential" there. And also save**  **12 topic two, as opposed to covered by, just to**  **13 be consistent with the other things.**  **14 MR. EISNER: Okay. Anybody have any**  **15 other questions or concerns about violations**  **16 or distributors and contract dealers?**  **17 MR. MELCHI: This is Jon with HARDI.**  **18 The only concern that my members brought to my**  **19 attention was in the first bullet, knowingly**  **20 sell a product to a contractor or a dealer**  **21 with knowledge that that entity will sell**  **22 and/or install the product in violation. Just** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the will sell part kind of raised a few**  **2 eyebrows. I guess some clarity on that from**  **3 DOE what you're specifically envisioning**  **4 there.**  **5 MR. RAWALD: So it goes back to the**  **6 definition of contractor, right? So it's the**  **7 folks who sell it to an individual user, and**  **8 I think who we're really trying to capture are**  **9 the people who, like an internet sales person**  **10 who will sell it to an individual, and we want**  **11 there to be a violation. So if a distributor**  **12 knows they're selling it to an internet guy**  **13 who is then going to be selling it immediately**  **14 to a homeowner in Florida to install in their**  **15 house themselves, that would be a bad thing.**  **16 So that's what that means.**  **17 MR. MELCHI: But for clarity's sake,**  **18 if I'm -- for the record, our members hate**  **19 internet sales so --**  **20 MR. RAWALD: Right. I know.**  **21 MR. MELCHI: Detest them. But if**  **22 I'm selling to a contractor in upstate New** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 York who then decides he's going to be this**  **2 big internet broker, but I know he's done some**  **3 stuff online but, you know, just in the New**  **4 York metro region or something like that, I**  **5 wouldn't be on the hook for his forays into**  **6 Southern Florida.**  **7 MR. RAWALD: If you don't know, you**  **8 don't know.**  **9 MR. MELCHI: Okay, that's fine.**  **10 Thank you.**  **11 MR. SACHS: This is Harvey, and if**  **12 that distributor has agreed to do drop**  **13 shipment directly to Florida from that**  **14 distributor in the upper Hudson Valley, we**  **15 might look askance.**  **16 MR. EISNER: Any other problems or**  **17 issues with violation? Is this one we're**  **18 going to be able to vote on? Does anybody**  **19 have an objection to the language in slide 20?**  **20 Okay. So we can show this one as unanimous?**  **21 End the night on a good note, at least. All**  **22 right.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 All right. Slide 21, product**  **2 installed in violation.**  **3 MR. RAWALD: So this is where I**  **4 wanted to make clear the system issue that we**  **5 discussed before. So this last bullet is the**  **6 one we talked about a lot, which is the**  **7 outdoor unit had a certified combination less**  **8 than 14. So that's the 14 SEER guidance, that**  **9 last bullet.**  **10 The first bullet is saying, hey,**  **11 contractor, if you're going to install a**  **12 system, it has to be a certified system. You**  **13 can't mix and match. You can't decide, well,**  **14 I've got a Lennox model out there on my truck,**  **15 but I only have my Train in inventory, and I'm**  **16 just going to match them up, even though I**  **17 don't have actually a certified pair because**  **18 the system needs to be a 14. So we need to**  **19 make sure that when you're installing a system**  **20 that it's actually one that's certified to be**  **21 a system.**  **22 So this applies to system. This** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 doesn't apply to placement of individual**  **2 parts, outdoor/indoor. But when you're**  **3 installing a system, it has to be one that's**  **4 certified to the Department as being a**  **5 compliant system, so the indoor and the**  **6 outdoor have to be certified together.**  **7 So the top of the slide is what's**  **8 confusing, right? So we're saying what would**  **9 be a violation? So it's written in the**  **10 negative, which makes it complicated, so we**  **11 could change it back to being a compliant**  **12 installation would be, and then it would be**  **13 less confusing. No, that's okay. It tripped**  **14 me up when I first drafted it.**  **15 So a product installed in violation**  **16 would be one that's not a complete system.**  **17 That's certified as meeting the standard.**  **18 Now, I also wanted to make clear**  **19 because what could happen downstream is a**  **20 manufacturer may discontinue their system and**  **21 it's still out there in Jon's warehouse and he**  **22 could still sell it, and so Chuck could pick** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it up and install it. So as long as it was**  **2 previously certified, that's okay, unless it**  **3 was discontinued because Dave tested it and**  **4 realized, oh, my gosh, this actually isn't a**  **5 14. Then it shouldn't be installed in the**  **6 south, so Dave should be making sure that Jon**  **7 knows not to sell it to Chuck anymore. So**  **8 that's the one caveat.**  **9 MR. MCCRUDDEN: So this is Charlie**  **10 with ACCA. On that situation you just**  **11 described, is the manufacturer supposed to**  **12 pull that or take action to get that property**  **13 out of the marketplace or out of the stream?**  **14 How does that work?**  **15 MR. RAWALD: So this is an issue of**  **16 first impression because we've never had this**  **17 problem before. So what we now require is**  **18 ceasing of distribution but not pulling back**  **19 because that's not a requirement. But it**  **20 seems like where it's stopping is the**  **21 installation, so somebody has got to make sure**  **22 those things aren't installed or they're** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 redirected towards the north. So I don't know**  **2 how folks want to handle that.**  **3 MR. MCCRUDDEN: This is Charlie with**  **4 ACCA. So it seems as though the contractor is**  **5 going to have to know that this system is no**  **6 longer compliant, and that seems difficult**  **7 unless there's some -- I don't know how**  **8 they're supposed to figure this out.**  **9 MR. RAWALD: Right. And so, once**  **10 again, the contractor is only held responsible**  **11 for knowingly installing what they knew**  **12 shouldn't be there, right? So the**  **13 manufacturers have to, I think, figure out how**  **14 they want to handle this situation because I**  **15 think it's really on the manufacturer at this**  **16 point.**  **17 MR. SACHS: The no longer compliant**  **18 or re-rated systems are certainly on the AHRI**  **19 website. I would not now expect them to be on**  **20 your website as prohibited in the southeast**  **21 and southwest. So then the question is trade**  **22 press would, ACHR news published that somebody** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 who is not here's unit had been delisted and**  **2 would not be allowed in the south anymore,**  **3 would that publication be considered as an**  **4 indicator by you that people should have**  **5 known? That's the trade rag that hits**  **6 everybody.**  **7 MR. RAWALD: I haven't thought**  **8 through the problem, so I don't know. I mean,**  **9 it seems like a logical outcome, but I don't**  **10 know how difficult that would be on folks.**  **11 MR. MELCHI: This is Jon Melchi with**  **12 HARDI. A question for my manufacturer friends**  **13 here. So from my distributor that can only**  **14 buy 14 SEER products and they have a warehouse**  **15 full of that, how will that process work if a**  **16 product is rated as not achieving 14? Because**  **17 this is going to be a question that's going to**  **18 come back as far as how do they, what do they**  **19 do with their warehouse full of inventory that**  **20 they can't sell in their market?**  **21 MR. WHITE: Chuck White. Well, what**  **22 do you do now? If something comes up as 12.8** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 instead of 13, what do you do now?**  **2 MR. LATTANZI: You're talking about**  **3 our current verification program with AHRI,**  **4 and there's processes and procedures available**  **5 today. If a unit is pulled and it doesn't**  **6 make a rating, there's certain steps that we**  **7 have to take as manufacturers.**  **8 MR. MELCHI: I guess, given all of**  **9 this that we're discussing, it may have to**  **10 re-double or make sure that those are, I want**  **11 to make sure that our members are well aware**  **12 of everything.**  **13 MR. ROCKY: So the issue -- and this**  **14 is Bryan. So the issue is going to get to be**  **15 a 14 SEER that's no longer 14 SEER, what are**  **16 we going to do as manufacturers? DOE is going**  **17 to require us to pull that inventory back from**  **18 the areas that can no longer be sold as 14**  **19 SEER. Those same units can now be still sold**  **20 as 13 something in the north, so we're looking**  **21 at the possibility having to remark them,**  **22 maybe changing, well, obviously change a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 rating plate or something that we've already**  **2 talked about as far as what's installed.**  **3 There will be processes we'll have to work**  **4 through, but it just adds the complexity of,**  **5 you know, instead of recalling units and**  **6 having to dispose of them because they're not**  **7 13, now we just go from they're not 14, okay,**  **8 you can't sell them in the southwest and the**  **9 southeast, so manufacturers have decided how**  **10 they're going to handle it, take the inventory**  **11 back, can we resell those units in the north**  **12 or Canada or export or something else.**  **13 MR. WINNINGHAM: Doug, this is Dave**  **14 with Allied. This is somewhat in play today**  **15 already with minimum efficiency products.**  **16 There's kind of a process in place. It's**  **17 just, as we apply it through regional**  **18 requirements, we have to kind of expand that.**  **19 MR. MCCRUDDEN: And this is Charlie**  **20 with ACCA. The issue there is the only**  **21 enforcement that comes down or the only actor**  **22 who has to take action in the situation you're** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 describing is the manufacturer. But in this**  **2 case, because of regional standards, suddenly**  **3 the contractor makes a violation because they**  **4 don't know that yesterday the manufacturer**  **5 found out that this product isn't compliant**  **6 anymore and that contractor has -- I don't**  **7 know if there was resolution with the**  **8 contractor here is a knowing standard, but I**  **9 don't know how you prove that because that**  **10 could be easily abused.**  **11 MR. LATTANZI: It seems like that**  **12 would come out in the DOE investigation, would**  **13 it not?**  **14 MR. RAWALD: We would learn that.**  **15 MR. LATTANZI: Yes, you would learn**  **16 that there was a re-rate and act**  **17 appropriately.**  **18 MR. EISNER: So where are we in**  **19 this? Other than -- we're getting close.**  **20 MR. MCCRUDDEN: This is Charlie with**  **21 the ACCA. I don't know how the contractors**  **22 can find out quickly enough to satisfy the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 situation here. This is a real conundrum, and**  **2 I was just laughing because Doug keeps finding**  **3 these little things in this rule that are big,**  **4 big deals.**  **5 MR. AMRANE: This is Karim. We**  **6 intend, as AHRI, to amend the directory, to**  **7 modify the directory in the future, so that**  **8 you would be able to search by ZIP code and**  **9 you would know which products are, you know,**  **10 acceptable in this region. And the directory**  **11 is updated everyday, so, eventually, the**  **12 information will be there. So now the**  **13 question would be will the contractor work**  **14 with the director.**  **15 MR. RAWALD: So I think this is a**  **16 problem that can be solved internally by the**  **17 manufacturers and not be regulated. I just**  **18 wanted to put people on notice that what we're**  **19 saying here is a discontinued product can be**  **20 installed, as long as it wasn't discontinued**  **21 because it was non-compliant. Discontinued**  **22 because it's non-compliant, it can't be** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 installed because it's not compliant with the**  **2 region. So manufacturers have to decide how**  **3 they want to handle that with their**  **4 distribution chain as far as dealing with**  **5 what's out there.**  **6 MR. LATTANZI: We're approaching the**  **7 end of the day, and just a couple of things**  **8 just occurred to me. It seems like this might**  **9 be something we want to caucus on. Does that**  **10 make sense?**  **11 MR. RAWALD: Can we jump to the**  **12 second bullet before we jump out of here for**  **13 the day? So this, I think, goes back to what**  **14 we talked about earlier with the record**  **15 retention. So this is replacement**  **16 indoor/outdoor not certified as part of a**  **17 combination that meets the applicable**  **18 standard. So am I right in guessing folks who**  **19 just wanted to replace the outdoor unit and**  **20 not the indoor unit? Is that fair that people**  **21 only wanted the outdoor unit? So that's the**  **22 question that I'll bring back to the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Department tonight, so I wanted to make sure**  **2 we got that. Otherwise, manufacturers think**  **3 about how they want to handle the**  **4 distribution. Premises in the first bullet,**  **5 does everyone agree that's a general premise**  **6 that makes sense? It's just a question of how**  **7 you're going to handle dealing with these guys**  **8 that are out there.**  **9 MR. WHITE: Doug, this is Chuck**  **10 White. Can I ask a question about your number**  **11 two bullet?**  **12 MR. RAWALD: Yes.**  **13 MR. WHITE: Are we talking component**  **14 there, as opposed to system?**  **15 MR. RAWALD: Right. So what we're**  **16 talking about here, once again, is you come to**  **17 a house just to replace the condensing unit,**  **18 and the condensing unit has to be a 14 SEER**  **19 condensing unit on the site but you know it's**  **20 not going to function at 14 SEER.**  **21 MR. WHITE: Right. I think it would**  **22 be beneficial to put the word component in** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 there so we know we're talking components and**  **2 not system. I'm assuming, probably in the**  **3 preamble, we'll discuss that component versus**  **4 system thing, but that would probably clarify**  **5 that.**  **6 MR. RAWALD: Okay.**  **7 MR. FENSTROM: This is Gary. I**  **8 thought we had a big discussion about what was**  **9 a component and what was a system, and DOE had**  **10 determined that condensing unit was not a**  **11 component but maybe the compressor in it would**  **12 be a component. So I'm just worried about the**  **13 terminology here.**  **14 MR. RAWALD: Right. Gary, that's**  **15 exactly how I look at it. I have a hard time**  **16 with the word "component" because it's**  **17 misleading. So I think of a component as**  **18 being the thing within the thing, you know,**  **19 the coil or the condensing of the coil or the**  **20 compressor. Those are the things that are the**  **21 components of the condensing unit.**  **22 So what we're talking about is if** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 you replace the condensing unit itself, the**  **2 outdoor unit, condensing unit, that it has to**  **3 be certified as compliant with the applicable**  **4 standard at the current rate, even though it**  **5 won't function at that level with the system**  **6 because the system itself is going to have a**  **7 lower-functioning indoor unit.**  **8 So I want to use words that work, so**  **9 we may not use "component," but I get what**  **10 Chuck is saying and I'm trying to make sure**  **11 we're consistent with what we said before.**  **12 MR. FENSTROM: Yes, I think we all**  **13 understand and agree with the intent. I was**  **14 just a little worried about the terminology.**  **15 MS. MEYERS: So, essentially, what**  **16 you're saying is if that outdoor unit has a**  **17 sticker on it that says prohibited for sale in**  **18 the southwest, it cannot be installed in the**  **19 southwest?**  **20 MR. RAWALD: That's right. And that**  **21 applies to charged or uncharged, by the way,**  **22 just to make sure we're clear about . . .** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 MR. EISNER: Anything else in slide **2 21? Anybody want to work for a couple more 3 hours, or do you want to quit now?**  **4 MR. RAWALD: It seemed like Matt was 5 asking for a break.**  **6 MR. EISNER: All right. 7 MR. HUNGERFORD: Hello, this is**  **8 David. Can you guys hear me? 9 MR. EISNER: Yes, David.**  **10 MR. HUNGERFORD: I just want to let 11 you know that I have been listening this**  **12 entire time. I just had some sort of problem 13 with my mute capability. And that's a good**  **14 thing because there are things I would have 15 said that I probably would regret as having**  **16 said. 17 MR. EISNER: Well, I assume you did**  **18 hear the part where Gary started to speak for 19 you?**  **20 MR. HUNGERFORD: Yes. And he 21 actually did channel me pretty well there. I**  **22 did want to comment on that. But I was here**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 for that. I just couldn't get in. So just to**  **2 verify I am listening.**  **3 MR. EISNER: Good. All right.**  **4 We'll see everybody tomorrow morning at 8:00,**  **5 9:00 rather.**  **6 (Whereupon, the above-referred to**  **7 matter went off the record at 4:55**  **8 p.m.)**  **9 10**  **11 12**  **13 14**  **15 16**  **17 18**  **19 20**  **21 22** 202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **Page 266** A $1500 183:1 A-coil 126:4 148:11 a.m 1:11 3:2 7:16

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29:11,15,17 33:21 40:1 41:12,14 42:12 43:9,14 45:4,11,12 46:3,4 47:11 62:10 91:22 98:5 120:10 143:4 143:5 146:3,20 147:12 148:7,14 148:18,18,21 149:9 151:2 158:19 165:11 166:16 167:14 168:10,11 169:12 172:10 187:7 224:20 236:13 251:8,8,18 253:5 255:14,16 256:15 256:15,18 257:7 261:18,20 14-Seer 128:9

136:21 146:7 161:8 162:15 163:4 166:10 14.0 166:16 14.2 165:13 14.2s 165:16 14.4 167:10 14.5 38:17 167:10 14.5s 165:16 14.8s 165:17 14s 168:1 15 163:13,20

165:10 167:13 172:4,10,20,22 174:18 187:7 208:13 15-minute 171:20 15-SEER 164:7 15.2 167:19 15s 168:1 16 147:12 166:11

172:22 16-SEER 168:17 17 165:7 211:5,11 1875:5 165:7 187:6 187:14 211:1,8 212:12 214:22 247:21 19 165:7 1976 209:6 1st 12:5 210:11

235:20,21 2 2:09 117:5 20 12:17 17:5,21 18:1,7 86:15 247:21 250:19 2014 1:8 12:6 187:18 2015 174:2 187:2 187:19 232:20 2016 186:19 231:21

232:3 235:21 236:9 2017231:20 2020 191:22 21 165:7 251:1

264:2 23-SEER 165:8 3 3 23:9 3-ton 129:20 3:01 172:1 3:15 171:20 3:18 172:2 30 174:18 208:1,8

209:8,16 30-day210:6,9 30th231:21 4 448:7 151:10 4:55 265:7 430 139:3,7 430.2 124:2 132:17 132:19 133:13 138:8 139:5 438.32(c) 50:11 45 208:13 5 548:7 49:14 61:13 151:11 5:00 116:14 50 191:3 50043:4,6,8 6 623:9 25:10 62:22 608 188:22 7 7 62:22 75 17:11 181:21 183:5 8 8 25:10 8:00 265:4 80 17:11 18:5 21:22

156:12 800 66:6 8E 1:10 9NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com C E R T I F I C A T E

This is to certify that the foregoing transcript

In the matter of:

Before:

Date:

Place:

was duly recorded and accurately transcribed under my direction; further, that said transcript is a true and accurate record of the proceedings.

----------------------- Court Reporter 299

Central A/C Regional Standards Enforcement Working Group

US DOE

10-01-14

Washington, DC