FRO CM t e ( A ot -l d J (MON) 12. 04'00 1: 46/ST.. 16:45/NO. 3561242221 P I

' rlntteb *tate!tg epartment o tr 7)

Antitrust Division

950 Pennsylvania Avenue, NW EE-RM/STD-98-440

Room 3109

Wasbhigtou, DC 20530

Fax Number: 202-616-2645

Voice Number: 202-514-2401

EE -fh/S TO -q 9 -qy o

The infbrmation contained in this facsimile is government privileged and confidential information intendcd only for the use of the

addressees) listed on tbi covejrheet If the reader of this message is not the intended recipient(s), you are hereby notfied that any

dissemination, dislribution or copying of the telecopy is strictly prohibited. If you have received this facsimile in error, please

immediately notify the sender at the telephone number Listed on this coversheet and the original facsimile must be returned via the

United States Postal Service to the address above. Thank you.

FAX COVER SHEET

DATE: December 4, 2000

TO: Ed Levy

of: Department of Energy

Fax Number: 586-4116

FROM: Doug Melamed

Pages Sent (including this sheet): 4

Remarks: Please deliver immediately.

, ~ ,,-.c, EE-RM-STD-98-440 COMMENT 112 0' 

FROM C<,,, •. J"t ... ., l fhr ~Nd;+-iON (MON) 12, 0:' 00 16: 4,6/S1. 1.~: 45/N~:,,~56I 24222 I,,~: .,l, 

Ilnittb ~tatt!j i19tpartmtn~ ,orjM~:t/i2. Antitrust Division 

950 Pennsylvania Avenue, NW 

Room 3109 ',. 

WasbingtoD .. DC 20530 

fax Number: 202-616-2645 

Voice Number: 202-514-2401 

, EE-RM/STD-98-440 

The informaLion contained in this facsimile is government privileged and confidential infonnation inlended only for me use of rhe 

adchetIsee(s) listed on truscoversbeet If ~he rca4er orchis message unollhc intended recipicnt(s), you are hereby notIfied that any 

dissemination, distribution or copying of the telecopy is litrictly prohibited. If you bave received rhis fac.'iimile in error, pJeiU~ 

immediately notify the ~r at the telephone number Listed On this covcrsheel and the original facsimile muSt ~ returned via the 

United States Postal. Service: to tbe address above. Thank you. 

FAX COVER SHEET 

DATE: 

TO: 

of: 

Fax Number: 

FROM: 

December 4, 2000 

Ed Levy 

Department of Energy 

586-4116 

Doug Melamed 

Pages Sent (including this sheet): 

Remarks: Please deliver immediately. 

4 
FROM (MON)12.04'00 16:46/ST. 16:45/NO. 3561242221 P 2

DEPAR ENT OF JUSTICE

Antitrust Division EE-M/STD-l98-44a0//c EE-RM/STD-98-440-i^-o(

A. DOUGLAS MELAMED

Acting Assistant Attorney General

Main Justice Building

EE-RM/STD-98-440 _>/ Of Washington, D.C. 20530-0001

(202) 514-2401 /(202) 616-2645 (f) ~---- Bnjantitrust@justice.usdoj.gov (i_)

http://ww.usdoj.gov (World Wide Web)

December 4, 2000

Mary Anne Sullivan, General Counsel

Department of Energy

Washington, D.C. 20585

Dear General Counsel Sullivan:

I am responding to your October 16, 2000 letter seeking the

views of the Attorney General about the potential impact on

competition of two proposed energy efficiency standards: one for

clothes washers and the other for residential central air

conditioners and heat pumps. Your request was submitted pursuant

to Section 325(o)(2) (B)(i) of the Energy Policy and Conservation

Act, 42 U.S.C. §6291, 6295 ("EPCA"), which requires the Attorney

General to make a determination of the impact of any lessening of

competition that is likely to result from the imposition of

proposed energy efficiency standards. The Attorney General's

responsibility for responding to requests from other departments

about the effect of a program on competition has been delegated

to the Assistant Attorney General for the Antitrust Division in

28 CFR § 0.40(g).

We have reviewed the proposed standards and the

supplementary information published in the Federal Recister

notices and submitted to the Attorney General, which include

information provided to the Department of Energy by

manufacturers. We have additionally conducted interviews with

members of the industries.

EE-RM-STD-98-440 COMMENT 112

FROM 

EE.RM/STD-98~O_tt-/ Ic:A 

(MON) 12. 04' 00 16: 46/ST. 16: 45/NO. 3561242221 P 2 

DEPARTMENT OF JUSTICE 

Antitrust Division EE-RM/STD-98-4404F//c:( 

A.DOUGLASMELAMED 

Acting Assistant Attorney Geneml 

Main JU9tice BuiJdin, 

950 Pennsylvania Avenue, N.W. 

Washington, D.C. 20530-0001 

(202) 514-2401 1(202) 616-2645 (0 

antitrust@justice.usdoj.gov (k*Jna) 

http://www.usdoj.gov (WorJd Wide Web) 

December 4, 2000 

Mary Anne Sullivan, General Counsel 

Department of Energy 

Washington, D.C. 20585 

Dear General Counsel Sullivan: 

I am responding to your October 16, 2000 letter $eeking the 

views of the Attorney General about the potential impact on 

competition of two proposed energy efficiency standards: one for 

clothes washers and the other for residential central air 

conditioners and heat pumps. Your request was submitted pursuant 

to Section 325(0) (2) (B) (i) of the Energy Policy and Conservation 

Act, 42 U.S.C. §6291, 6295 ("EPCAW), which requires the Attorney 

General to make a determination of the impact of any lessening of 

competition that is likely to result from the imposition of 

proposed energy efficiency standards. The Attorney General's 

responsibilicy for responding to requests from other departments 

about the effect of a program on competition has been delegated 

to the Assistant Attorney General for the Antitrust Division in 

28 CFR § 0.40(g). 

WQ have reviewed the proposed standards and the 

supplementary information published in the Federal Register 

notices and submicted to the Attorney General, which include 

information provided to the Department of Energy by 

manufacturers. We have additionally conducted interviews with 

members of the industries. 
FROM (MON)12. 04' 00 16:47/ST. 16:45NO. 3561242221 P 3

EE-RM/STD-98-440 - /

Page 2

We have concluded that the proposed clothes washer standard

would not adversely affect competition. In reaching this

conclusion, we note that the proposed standard is based on a

joint recommendation submitted to the Department of Energy by

manufacturers and energy conservation advocates. That

recommendation states that virtually all manufacturers of clothes

washers who sell in the United States participated in arriving at

the recommendation through their trade association, that the

recommendation was developed in consultation with small

manufacturers, and that the manufacturers believe the new

standard would not likely reduce competition. We note further

that, as the industry recommended, the proposed standard will be

phased in over six years, which will allow companies that do not

already have products that meet the proposed standard sufficient

time to redesign their product lines.

With respect to the proposed residential central air

conditioner and heat pump standard, we have concluded that there

could be an adverse impact on competition. The proposed

standard, Trial Standard Level 3, is expressed in terms of two

industry measurements: SEER (Seasonal Energy Efficiency Ratio)

and HSPF (Heating Seasonal Performance Factor).1 These standards

would change from the current central air conditioner and heat

pump efficiency standards of 10 SEER/6.8 HSPF for split system

air conditioners and beat pumps and 9.7 SEER/6.6 HPSF for single

package air conditioners and heat pumps to 12 SEER for air

conditioners and 13 SEER/7.7 HPSP for heat pumps.

We have identified three possible competitive problems

presented by the proposed standards. First, the proposed 13 SEER

The Federal Register notice also requested comments on a

proposal to adopt a standard for steady-state cooling efficiency

(EER)and discussed several options the Department of Energy is

considering. The proposed rule set forth in the notice does not,

however, include a provision regarding an EER standard, and the

views of the Department of Justice expressed in this letter are

limited to "the impact of any lessening of competition ... that

is likely to result from the imposition of the [proposed]

standard," as required by EPCA. If the Department of Energy

proposes a rule in the future incorporating an EER standard, the

Department will then evaluate that proposed rule and express its

views about the competitive impact of that standard.

EE-RM-STD-98-440 COMMENT 112

FROM 

. . .,.:.-, . ~ , -. 

---- - - - - - -- -

(MON) 12. 04' 00 16:47/ST. 16:45/NO. 3561242221 P 3 

EE-RM/STO-9B-440 - if I) t5{ I 

Fage 2 

We have concluded that the proposed clothes washer standard 

would not adversely affect competition. In reaching this 

conclusion, we note that the proposed standard is based on a 

joint recommendation submitted to the Department of Energy by 

UIaIlufacturers and energy conservation advocates. That 

recommendation states that virtually all manufacturers of clothes 

washers who sell in the United' States participated in arriving at 

the recommendation through their trade association, that the 

recommendation was developed in consultation with small 

manufacturers, and that the manufacturers believe the new 

standard would not tikely reduce competition. We note further 

that, as the industry recommended, the proposed standard will be 

phased in over six years, which will allow companies that do not 

already have products that meet the proposed standard sufficient 

time to redesign their product lines. 

With re~pect to the proposed residential centra~ air 

conditioner and heat pump standard, we have concluded that there 

could be an adverse impact on competition. The proposed 

standard, Trial Standard Level 3, is expressed in terms of two 

industry measurements: SEER (Seasonal Energy Efficiency Ratio) 

and HSPF (Heating Seasonal Performance Factor).l These standards 

would change from the current central air conditioner and heat 

pump efficiency standards of 10 SEER/6.B HSPF for split system 

air conditioners and beat pumps and 9.7 SEER/6.6 HPSF for single 

package air conditioners and heat pumps to 12 SEER for air 

conditioners and 13 SEER/7.7 HPSF for heat pumps. 

We have identified three possible competitive problems 

presented by the proposed standards. First, the proposed 13 SEER 

The Federal Register notice also requested comments on a 

proposal to adopt a standard for steady-state cooling efficiency 

(BER)and discussed several options the Department of Energy is 

considering. The proposed rule set forth in the notice does not, 

however, include a provision regarding an EER standard, and the 

views of the Department of Justice expressed in this letter are 

limited to Wthe impact of any lessening of competition .'. that 

is likely to result from the imposition of the (proposed1 

standard," as required by EPCA. If the Department of Energy 

proposes a rule in the future incorporating an EER standard, the 

Department will then evaluate that proposed rule and express its 

views about the eompetitive impact of that standard. 
FROM (MON) 12. 04' 00 16:47/ST. 16:45/NO. 3561242221 P 4

EE-RM/STD-98-440- // .

Page 3

heat pump Standard would have a disproportionate impact on

smaller manufacturers. Currently less than 20% of the total

current product lines meet the proposed standards, but for some

small manufacturers, 100% of their product lines fail to satisfy

the proposed standard.

Second, the proposed standard for heat pumps, and in some

instances for air conditioners, would have an adverse impact on

some manufacturers of these products (including those products

referred to in the Federal Register notice as "niche products")

used to retrofit existing housing and used in manufactured

housing. These manufacturers could not make units that comply

with the rule and fit into the available space.

Third, the proposed heat pump standard of 13 SEER could make

heat pumps less competitive with alternative heating and cooling

systems. Because the standard will result in increased in the

size and cost of heat pumps, it is possible that purchasers will

shift away from heat pumps to other systems that include electric

resistance heat, reducing the competition that presently exists

between heat pumps and those other systems.

The Department of Justice urges the Department of Energy to

take into account these possible impacts on competition in

determining its final energy efficiency standard for air

conditioners and heat pumps. The Department of Energy should

consider setting a lower SEER standard for heat pumps, such as

the standard included in Trial Standard Level 2, and a lower SEER

standard for air conditioners for retrofit markets where there

are space constraints (such as markets served by niche

products)and for manufactured housing.

Sincerely,

A. Douglas Melamed

A. Douglas Melamed

EE-RM-STD-98-440 COMMENT 112

page 3 

(MON) 12. 04' 00 16:47/8T. 16: 45/NO. 3561242221 P 4 

EE·RM/STD·98-440 - if:::- / leA . 

heat pump standard would have a disproportionate impact on 

smaller manufa~turers. Currently less than 20% of the total 

current product lines meet ~he proposed standards, bu~ for some 

small manufacturers, 100% of their product lines fail to satisfy 

the proposed standard. 

second, the proposed standard for heat pumps, and in some 

instances for air conditioners, would have an ad~erse impact on 

some manufacturers of these products (including those products 

referred to· in the Federal Register notice as uniche products") 

used to retrofit existing housing and used in manufactured 

housing.· These manufacturers could not make units that comply 

with the rule and fit into the available space. 

Third, the proposed heat pump standard of 13 SEER could make 

heat pumps less competitive with alternative heating and cooling 

systems. Because the standard will result in increases in the 

size and cost of heat pumps, it is possible that purchasers will 

shift away from heat pumps to other systems that include electric 

resistance heat, reducing the competition that presently exists 

between heat pumps and those other systems. 

TbeDepartment of Justice urges the Department of Energy to 

take into account these possible impacts on competition in 

determining its tinal energy efficiency standard for air 

conditioners and heat pumps. The Department of Energy should 

consider setting a lower SEER standard for heat pumps, such as 

the standard included.1n Trial Standard Level 2, and a lower SEER 

standard for air conditioners for retrofit markets where there 

are space constraints (such as markets served by niche 

products}and for manUfactured housing. 

<' 

Sincerely, 

. C' 

l. ' 

., 

A. Douglas Melamed 

. --...... _-.. _ ...