From: Kennedy, Kit [mailto:kkennedy@nrdc.org]

Sent: Tuesday, May 04, 2010 3:22 PM

To: Cohen, Daniel; Miller, Bryan

Cc: Houren, Kate Subject: RE: Documents discussed during call today

Dan and Bryan, also, here’s the April 27 th letter from AHRI which also addresses some of the legal issues that we

discussed.

Thanks again for your time.

Best, Kit

Katherine Kennedy

Counsel, Air and Energy Program

NRDC

40 W. 20th St.

New York, NY 10011

ph: 212-727-4637

fax: 212-727-1773

email: kkennedy@nrdc.org

assistant: Lisa Copland, 212-727-4531, lcopland@nrdc.org

www.nrdc.org

PRIVILEGE AND CONFIDENTIALITY NOTICE

This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential, and exempt from disclosure under applicable law. If you are not the intended recipient of this message, you are hereby notified that disseminating, distributing, or copying it or any attachment to it is strictly prohibited. If you have received this message in error, please notify me immediately by email and delete the original message.From: Houren, Kate

Sent: Tuesday, May 04, 2010 3:18 PM

To: daniel.cohen@hq.doe.gov ; Miller, Bryan

Cc: Kennedy, Kit Subject: Documents discussed during call today

Dan and Bryan:

Thank you for taking the time to speak with us, today. We welcome and appreciate your questions, and we look forward to talking further about any issues that may come up during the rulemaking processes underway.

Best Regards,

Kate

Kate Houren

Natural Resources Defense Council

1200 New York Ave., NW Ste. 400

Washington, D.C. 20005

(202) 513-6267

khouren@nrdc.org

Attachments:

Letter from consensus agreement signatories affirming DOE’s ability to adopt the consensus agreement.

NRDC Comments of March 19, 2010 on DOE’s ability to adopt SEER and EER standards for central air conditioners

NRDC Comments of April 27, 2010 on the NOPM for Energy Conservation Standards for Residential Furnaces

NRDC Comments of April 27, 2010 on the SNOPR for Test Procedures for Residential Furnaces and BoilersMay 7, 2010

By e-mail: expartecommunications@hq.doe.gov

Daniel Cohen Assistant General Counsel for Legislation and Regulatory Law Office of the General Counsel Department of Energy
1000 Independence Avenue, SW Washington, DC 20585

– 0121

Re: Ex Parte Memorandum

Dear Mr. Cohen:

On Tuesday, May 4, 2010, Kit Kennedy and Kate Houren of the Natural Resources Defense Council (NRDC) initiated a telephone call with Daniel Cohen and Bryan Miller of the Department of Energy’s Office of the General Council.

During the call, NRDC advocated for the adoption of the consensus agreement, 1 and the parties discussed legal questions relating to the Department of Energy’s ability to adopt the consensus agreement’s recommended standards for central air conditioners.

Kit Kennedy and Kate Houren also referenced five documents during the cal l that were previously submitted to dockets concerning central air conditioners. Shortly after the call, KitKennedy and Kate Houren provided all five documents to Daniel Cohen and Bryan Miller via email. The documents include (i) a letter from the consensus agreement signatories that was
submitted to docket EERE

– 2009

– BT

– STD

– 0022 on April 27, 2010; (ii) comments of Earthjustice and NRDC that were submitted to dockets EERE- 2008

- BT -STD-0006 and EE

– 2009

– BT

– STD

– 0022 on March 19, 2010; (iii) comments of NRDC that were submitted to docket
EERE

– 2008

– BT

– TP

– 0020 on April 27, 2010; (iv) comments of NRDC that were submitted to
docket EE

– 2009

– BT

– STD

– 0022 on April 27, 2010; and (v) comments of the Air-Conditioning, Heating, and Refrigeration Institute that were submitted to docket EE-2009- BT -STD-0022 on April 27, 2010.

1 Agreement on Legislative and Regulatory Strategy for Amending Federal Energy Efficiency Standards, Test Procedures, Metrics and Building Code Provisions for Residential Air Conditioners, Heat Pumps, Weatherized and Non-Weatherized Furnaces and Related Matters, Oct. 13, 2009, at http://aceee.org/buildings/Furnace-ACAgreement.pdf

.Respectfully submitted,

Kate Houren Legal Fellow* Natural Resources Defense Council 1200 New York Ave., NW, Suite 400 Washington, DC 20005 (202) 513- 6267 khouren@nrdc.org

* Admitted to practice in New York, not yet admitted to practice in Washington, DC

cc: Kit Kennedy Daniel Cohen Bryan MillerJoint Comment on the Rulemaking Analysis Plan for Residential Furnaces, 75 Fed. Reg. 12,144 (issued Mar. 15, 2010)

submitted by:

American Council for an Energy-Efficient Economy Air-Conditioning, Heating and Refrigeration Institute Alliance to Save Energy Appliance Standards Awareness Project California Energy Commission
National Consumer Law Center
Natural Resources Defense Council Northeast Energy Efficiency Partnerships
Northwest Power and Conservation Council

April 27, 2010

Docket Number: EERE–2009–BT–STD–0022
RIN: 1904–AC06

We are writing to reiterate our strong suppor t for the furnace and central air conditioner
standards recommended to DOE by m anufacturers and various efficiency advocates, state agencies and other entities. In particular, we would like to address three specific issues related to the next standards for these products : 1) the particular be nefits of the joint agreement recommendations; 2) timing of a final rule; and 3) treatment of related
standards not addressed by the joint agreement.

Benefits of the joint proposal: The Joint Stak eholder agreement (“the agreement”) 1 includes several aspects which we believe will lead to the best possible overall outcome. As described in the complete agreement (attached), most elements can be adopted by DOE and are within the scope of DOE’s aut hority under EPCA, but so me features will require Congressional action. Key elements include the following:

• Accelerated effective dates : The new furnace standards would take effect just two years after the date on which a final rule is due (May 2011) and the new central
air conditioner standard woul d take effect three and one-h alf years after that final rule is due (June 2011). These effec tive dates are significantly accelerated

1 The following organizations and companies submitted the joint recommendation: Air-Conditioning, Heating and Refrigeration Institute; American Council for an Energy-Efficient Economy; Alliance to Save Energy; Natural Resources Defense Council; Nort hwest Power and Conservation Council; Appliance Standards Awareness Project; California Energy Commission; Northeast Energy Efficiency Partnerships; Bard Manufacturing, Inc; Carrier Residential and Light Commercial Systems; Goodman Global, Inc; Lennox Residential; Mitsubishi Electric and Elect ronics USA; National Comfort Products; Rheem Manufacturing Company; Trane Re sidential, and; Desert Aire.relative to the historic lead times for these products and w ill result in savings happening sooner than might otherwise be the case. 2

• Acceleration of the next review : Under the terms of the agreement, industry, state agencies and advocates support an expeditious DOE review of the agreed-upon standards, with the next furnace stan dard to be completed by 2014 (effective 2019) and the next central AC standards by 2017 (effective 2022). The initial and next-round effective dates represent a signi ficant facet of the larger agreement, and we expect that manufacturers would strongly resist DOE's imposition of this timetable absent adoption of the standard levels set out in the agreement. Moreover, because the subsequent reviews will build on the market progress initiated by the agreed-upon standards, th ey offer the potential for significant additional savings. We expect that the in itial standards will set in motion market pressures for innovation that will make even higher levels attainable in the nextround standards.

• Peak demand standards for the hot-dry climate : Representatives from California and other states dominated by hot-dry clim ate zones feel very strongly that air
conditioner standards must include an EER requirement to better capture actual performance in their region. Manufactur ers had previously strenuously opposed inclusion of EER, arguing that their de sign options would be more limited and their testing burden increased by having two efficiency requirements. Their support for EER and SEER requirements for the hot -dry region was a significant concession and will pave the way for equi pment that better meets the climate needs of that region. 3

• Encouraging better building codes : Existing federal law severely limits the options for incorporating appliances into state building codes. In general, state codes cannot require levels of appliance and equipment efficiency that exceed the efficiency levels in federal appliance standards, although existing law provides a limited opportunity for exemptions. These limits prevent states from reaping efficiency improvements in space conditioning equipment, which may be especially cost-effective in new constr uction, and hamper ef forts to customize building codes to suit varying climatic zones within a single state. As part of the agreement, manufacturers and efficiency advocates agreed to support legislative changes that will enable states to provid e packages of options for builders that maximize both energy efficiency and consumer choice.

We support the agreement as a balanced pack age that will achieve very large energy,

econom ic and environmental benefits and provide regulatory certainty. We strongly urge DOE to adopt the regulatory aspects of the ag reement in their entirety; partial adoption would jeopardize the overall agreement.

2 Earthjustice addresses DOE’s legal authority for the proposed effective dates in separate comments.

3 Earthjustice and NRDC addressed DOE’s legal authority for EER and SEER standards in a legal memo submitted dated March 19, 2010.

- 2 -Timing of the final rule. Out of fairness to all stakehol ders, we urge DOE to expedite completion of a final rule, either through a Direct Final Rule or through the normal rulemaking process. As noted above, manufactur ers have agreed to accelerated effective dates. The certainty of a final rule will let them proceed with design and production capacity changes with confidence. In addition, because thes e are the first ever regional standards, distributors and installers may have new re sponsibilities for compliance. The law requires that DOE complete a separate rulemaking on regional standards enforcement within fifteen months of publishing final standards. With the furnace implementation date just three years away, DOE needs to complete the standards so it can address the enforcement rule in a timely way.

Related standards outside the scope of the agreement. In DOE’s March 15th
Rulem aking Analysis Plan for furnaces, two issues surfaced that are not covered by the agreement: electrical standby requirements fo r furnaces and standards for furnace fans. We believe that both of these issues can be addressed by DOE without impeding accelerated adoption of final rule s implementing the agreement.

With respect to furnace standby electricity use, o ur strong preference is that DOE develop a separate metric that will discourage en ergy waste in standby mode. Standby electricity usage for furnaces is significant, but subsum ing it into an overall efficiency metric for furnaces will subvert the goal of energy savings since this electricity usage is very small relative to the appliance’s total energy use. 4 DOE should adopt the AFUE levels for furnaces as recommended in the joint agr eement and concurrently develop separate standards for standby electricity usage.

With respect to furnace fan standards, we very much appreciate DOE’s commitment to
address this im portant energy use. Howeve r, the furnace fan rulemaking and analyses will be more complicated than typical DOE proceedings. 5 We are skeptical that it can be completed within a year, as DOE proposes. We encourage DOE to combine analysis for the furnace, central air conditio ner and furnace fan rulemakings to the extent possible to conserve agency resources, but believe that the final rules for furnaces and air conditioners can be completed much earlier than a final rule for furnace fans – especially
if the furnace and air conditioner rule s are based on the joint agreement.

Finally, we would like to emphasi ze the his toric role of joint agreements such as this one in advancing national appliance standards. DOE has explicitly encouraged these sorts of joint agreements over the course of three ad ministrations. Previous joint agreements formed the basis for the 1997 refrigerator, the 2000 ballast, and th e 2001 clothes washer
rules. DOE advanced a final rule for comme rcial air conditioners based on a 2004 joint agreement, but Congress enacted the standard before DOE could complete its process. By bringing all or nearly all of the most active stakeholders together, they smooth adoption through the administra tive process, thereby conser ving agency resources for

4 ACEEE and PG&E address this issue in their respective comments to the furnace docket.

5 Several factors contribute to this complexity: this is the first time DOE will address this end-use; a federal test method has not yet been completed; inter actions with central a/c and furnace standards must be accounted for; field variations in duct syst em performance complicate savings modeling.

- 3 -other, potentially more contentious, proceedi ngs. DOE’s receptiveness to this sort of agreement also serves to build stakeholder confidence in and support for the DOE

program.

In summary, we again urge adoption of the recomm ended furnace and central air conditioner standards on as accelerated a schedule as possible. The joint agreement includes a combination of efficiency metric s and levels, effective dates, subsequent rulemakings and legislative reforms that, we strongly believe, will lead to larger energy savings than would otherwise be likely to result from DOE rulemaking absent an agreement. We urge you to issue final rules based on our recommendation as soon as possible.

Thank you very much for your consideration.

Sincerely,

Steven Nadel
Executive Director American Council for an Energy-Efficient Economy

David B. Calabrese Senior Vice President, Public Policy Air-Conditioning, Heating and Refrigeration Institute

Jeffrey Harris Vice President for Programs Alliance to Save Energy

Andrew L. deLaski
Executive Director Appliance Standards Awareness Project

- 4 -Karen Douglas
Chairman California Energy Commission

David Goldstein Energy Program Co-Director
Natural Resources Defense Council

Susan Coakley
Executive Director Northeast Energy Efficiency Partnerships

Stephen L. Crow
Executive Director
Northwest Power and Conservation Council

Attachments (Jan. 15 th Joint Stakeholder letter to DOE)

- 5 -Natural Resources Defense Council

March 19, 2010

Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program Mailstop EE-2J NOPM for Energy Conservation Standards for Residential Furnaces
Docket EE

– 2009

– BT

– STD

– 0022 1000 Independence Avenue, SW Washington, DC 20585-0121

Dear Ms. Edwards,

The Natural Resources Defense Council and Earthjustice respectfully submit the attached memorandum regarding the Department of Energy‘s authority to establish multiple efficiency
standards for central air conditioners to Docket EE

– 2009

– BT

– STD

– 0022. Thank you for your assistance. Should you have any questions or concerns, please do not hesitate to contact me.

Sincerely,

Katherine E. Houren Pro Bono Fellowship Attorney
New York Bar # 4765079

Not Yet Admitted to Practice in Washington, D.C.1

Table 1: Efficiency Levels Jointly Recommended for Central Air Conditioners by Efficiency Advocates and Manufacturers Date: March 19, 2010

To: Cathy Zoi, Assistant Secretary for Energy Efficiency and Renewable Energy and Scott Blake Harris, General Counsel

CC: Roland Risser, Michael McCabe, Wes Anderson, Mohammed Khan, Bryan Miller, Michael Kido, Docket EERE-2008- BT -STD-0006, and Docket EE

– 2009

– BT

– STD

– 0022

From: Timothy Ballo, Earthjustice and Kate Houren, Natural Resources Defense Council

Re: DOE ‘ s Authority to Establish Multiple Efficiency Standards for Central Air Conditioners

I. Introduction

This memorandum explains why the Department of Energy (DOE) has the authority to adopt the energy efficiency standards jointly recommended by manufacturers and efficiency
advocates for residential central air conditioners installed in the southwestern U.S. 1 The jointly recommended standards would impose multiple performance requirements on central air conditioners in the states of California, Arizona, New Mexico, and Nevada (the Southwest), by requiring central air conditioners installed in this region to meet separate Seasonal Energy Efficiency Ratio (SEER) and Energy Efficiency Ratio (EER) standards, as depicted in Table 1.

System Type Capacity Base
National
Standard Standard

for
Southeast Standard for

Southwest
SEER EER Split < 45,000 Btu/h 13.0
SEER 14.0

SEER 14.0 12.2

Split ≥ 45,000 Btu/h; < 65,000

Btu/h 13.0

SEER 14.0

SEER 14.0 11.7

Package < 65,000 Btu/h 14.0
SEER 14.0

SEER 14.0 11.0

The Department should adopt both SEER and EER standards for central air conditioners in the Southwest for several reasons. First, DOE‘s o wn scientific analysis supports the conclusion that the use of both a SEER and an EER standard for this region meets the Department‘s mandate to achieve the maximum energy savings that is technologically feasible and economically justified. Second, the Department has the authority to set separate regional energy efficiency standards. Third, prior rulemakings conducted under both the Clinton and Bush administrations clearly affirm the DOE‘s authority under the Energy Policy and

1 These standards for central air conditioners in the Southwest are a key part of a larger agreement betweenmanufacturers and efficiency advocates, the full text of which is available at http://aceee.org/buildings/FurnaceACAgreement.pdf.2

Conservation Act (EPCA), 42 U.S.C. §§ 6201-6422 to require that central air conditioners comply with both SEER and EER standards. 2 Finally, basic principles of statutory construction support DOE‘s 2001 and 2002 interpretation s of the EPCA, which allowed for the promulgation
of multi ple performance requirements when such standards would achieve the DOE‘s statutory
mandate.

Under prior presidential administrations, DOE‘s position on this issue has shifted. In 2001 and 2002 air conditioner standard rules issued by DOE under the Clinton and Bush administrations, respectively, DOE took the position that it had the authority under the EPCA to adopt both EER and SEER standards (although it chose not to adopt EER standards at that time). However, during a later period of the Bush administration, in the context of furnace standard rules issued in 2004 and 2007, DOE changed its position and concluded that the EPCA limited the Department to issuing only a single metric standard.

DOE under the current Secretary and administration has not yet taken a position on this significant statutory question. For the reasons described in this memo, NRDC and Earthjustice urge the Department to apply sound principles of statutory interpretation and conclude that the EPCA gives DOE the authority to adopt both EER and SEER standards in air conditioning rulemakings specifically, and overall, gives DOE authority to adopt multi-metric efficiency standards in all efficiency standard rules.

II. The Need for Multiple Performance Standards for Central Air Conditioners in the
Southwest

To achieve the greatest energy savings that are technically feasible and economically justified, DOE must apply both the SEER and EER standard to central air conditioners installed in the Southwest. The SEER standard, on its own, does not come close to addressing the standard climactic conditions in which central air conditioners operate in the Southwest. The disparity in conditions between the Southwest and other regions of the United States necessitates
the use of both the SEER and EER standard.

To briefly explain the distinction between the two metrics, EER reflects the efficiency of an air conditioner at steady-state operation, while SEER reflects the unit‘s overall cooling season performance. 3 EER measures the cooling efficiency of an air conditioner when operating at a constant outdoor temperature. However, under typical summertime ambient conditions, most central air conditioners cycle on and off repeatedly to maintain a desired indoor temperature. This constant cycling degrades the cooling efficiency delivered to the end-user. Pacific Gas & Electric, R ESIDENTIAL A IR C ONDITIONING R ULEMAKING : C RITICAL I SSUES FOR R EGIONAL

2 See 67 Fed. Reg. 36368, 36393 (May 23, 2002) (stating that ―DOE believes that EPCA permits adoption of an EER standard‖ in addition to the SEER standard); 66 Fed. Reg. 7170, 7183 (Jan. 22, 2001) (stating ―[t]he Department believes that EPCA permits the adoption of an EER standard‖ in addition to the SEER standard).

3 This section is intended to provide only a brief overview of the issue. A comprehensive discussion of the need for an additional performance metric for air conditioners in the Southwest can be found in the comments of Energy Solutions et al., submitted to the central air conditioner rulemaking docket on behalf Pacific Gas and Electric. Pacific Gas & Electric, R ESIDENTIAL A IR C ONDITIONING R ULEMAKING : C RITICAL I SSUES FOR R EGIONAL S TANDARDS D EVELOPMENT (July 31, 2008).3

S TANDARDS D EVELOPMENT (July 31, 2008) at 4. The benefit of SEER is that it more accuratel y depicts the energy efficiency realized by users of air conditioners in regions of the country that experience ―normal‖ summer conditions. Instead of a snapshot of the unit‘s performance, SEER represents the average efficiency over a typical cooling season, reflecting the impact of varying ambient temperatures on air conditioner efficiency. See 65 Fed. Reg. 59,607 (Oct. 5, 2000) (comparing SEER and EER).

However, because summers in the Southwest feature ambient temperatures that far exceed those experienced in other parts of the country, SEER is particularly ill-suited to depicting

— as a stand-alone metric

— the efficiency of air conditioners installed in that region. 4
To provide sufficient cooling at these extreme outdoor temperatures, air conditioners installed in the Southwest must often operate uninterrupted for long stretches. This steady-state operation more closely resembles the EER performance measurement. Therefore, because central air conditioners with identical SEER ratings can have significantly different EER values, 5 it is essential to supplement the SEER rating with an EER rating to ensure that central air conditioners supplied to the Southwest are suited to the unique weather conditions of that region. 6

To comply with its statutory mandate to achieve the greatest energy savings that are technically feasible and economically justified, it is essential that DOE use its authority to adopt regional standards for central air conditioners that take into account the steady-state operating mode in which these products most commonly operate in the Southwest.

II I. The EPCA Authorizes DOE to Adopt Regional Energy Efficiency Standards

Congress unambiguously provided DOE with the authority to promulgate separate, regional energy efficiency standards for central air conditioners in 2007 though section 306(a) of the Energy Independence and Security Act, Pub. L. 11-140, 121 Stat. 1492, 1556 (2007). The statute provides that for ―furnaces, central air conditioners, and heat pumps‖ :

In any rulemaking to establish a new or amended standard, the Secretary may consider the establishment of separate standards by geographic region for furnaces (except boilers), central air conditioners, and heat pumps.

4 Although the Air-Conditioning, Heating, and Refrigeration Institute certifies EER testing results taken at an outdoor temperature of 95°F, DOE‘s calculation for SEER is based on a measurement of EER taken at an outdoor temperature of 82°F. See 10 C.F.R. § 430 subpt. B, app. M. This relatively moderate 82°F outdoor temperature is an unrealistic depiction of summertime ambient conditions in the Southwest, where much of the space cooling demand occurs at temperatures at or above 95°F. See Noah Horowitz, R ESIDENTIAL HVAC FOR H OT

, D RY C LIMATES (2004) (estimating that 30% of the energy used for space cooling in some California cities is expended at outdoor temperatures above 95°F).

5 See

, e.g. , 66 Fed. Reg. 7183 (Jan. 22, 2001) (noting discrepancies between SEER and EER ratings for some central air conditioners, such as those equipped with variable speed compressors).

6 Moreover, the higher ambient temperatures in the Southwest impact the accuracy of DOE‘s SEER measurement in other ways. For example, refrigerant performance can degrade significantly at high outdoor temperatures, further reducing the accuracy of the existing SEER metric. Pacific Gas & Electric, R ESIDENTIAL A IR C ONDITIONING R ULEMAKING : C RITICAL I SSUES FOR R EGIONAL S TANDARDS D EVELOPMENT (July 31, 2008) at 7- 8.4

42 U.S.C. § 6295(o)(6).

The statute even goes on to expressly contemplate multiple efficiency standards in particular regions. The applicable language states that, in addition to the base national standard, DOE ―may establish 1 or 2 additional standards that are applicable in 1 or 2 geographic regi ons as may be defined by [DOE].‖ 42 U.S.C. § 6295(o)(6)(B)(ii)(II). The jointly recommended SEER and EER standards described above fit squarely within this command. For the smallest capacity split system central air conditioners, the joint recommendation calls for a base national standard of 13.0 SEER, supplemented with one additional regional standard of 14.0 SEER applicable in both the Southeast and Southwest and a second additional regional standard of 12.2 EER applicable in the Southwest. In sum, ―2 additional standards‖ will apply to these products in ―2 geographic regions.‖ The result for the larger capacity split system units is the same, but with a slightly lower EER requirement (11.7) in the Southwest. Meanwhile, for single package central air conditioners, the joint recommendation calls for a base national standard of 14.0 SEER, supplemented with only a single additional regional standard

— 11.0 EER in the Southwest. Thus, there is no conflict between the recommended levels and DOE‘s authority to adopt regional standards.

Because the EPCA expressly allows DOE to adopt multiple standards for air conditioners in a particular region, adopting the recommended SEER and EER standards is not only sound policy but supported by the EPCA.

IV. Prior DOE Rulemakings Under Both the Clinton and Bush Administrations Clearly State that the Department Has the Authority to Adopt Both EER and SEER Standards.

DOE‘s general authority to impose multiple requirements on an individual product is
found in th e definition of the term ―energy conservation standard‖ in the EPCA.

(6) The term ―energy conservation standard‖ means— (A) a performance standard which prescribes a minimum level of energy efficiency or a maximum quantity of energy use, or, in the case of showerheads, faucets, water closets, and urinals, water use, for a covered product, determined in accordance with test procedures prescribed under section 6293 of this title; or (B) a design requirement for [dishwashers, clothes washers, clothes dryers, kitchen ranges, ovens, certain showerheads, faucets, water closets, and metal halide lamp fixtures]; and includes any other requirements which the Secretary may prescribe under section 6295(r) of this title.5

42 U.S.C. § 6291(6). 7

, 8 The final part of the definition sweeps in requirements prescribed under 42 U.S.C. § 6295(r), which provides as follows:

(r) I NCLUSION IN S TANDARDS OF T EST P ROCEDURES AND O THER R EQUIREMENTS

. — Any new or amended energy conservation standard prescribed under this section shall include, where applicable, test procedures prescribed in accordance with section 6293 of this title and may include any requirement which the Secretary determines is necessary to assure that each covered product to which such standard applies meets the required minimum level of energy efficiency or maximum quantity of energy use specified in such standard.

42 U.S.C. § 6295(r).

In a 2001 final rule issued under the Clinton administration, DOE, affirmed its authority to adopt both SEER and EER standards for central air conditioners. 66 Fed. Reg. 7170 (Jan. 22, 2001). DOE explained that ―[t]he Department believes that EPCA permits the adoption of an EER standard‖ in addition to the SEER standard but ultimately declined to impose the EER standard for technical reasons. Because this rulemaking set a national, not regional, standard, DOE concluded that ―[m]ost benefits accruing from an EER standard will likely accrue from the SEER standards alone, without the associated burdens on manufacturers and the disincentives to apply energy- saving modulating technologies.‖ Id. at 7183. 9

Later, in a 2002 final rule issued under the Bush administration, DOE again affirmed its authority to adopt both SEER and EER standards for central air conditioners. 67 Fed. Reg. 36368 (May 23, 2002). This final rule concluded an ultimately unsuccessful attempt by the
Bush DOE to roll back the 13 SEER standard articulated in the 2001 Clinton final rule to a SEER
12 standard. See NRDC v. Abraham, 355 F.3d 179 (2d Cir. 2004) (declaring DOE ‘ s 2002 final

7 The reference to metal halide lamp fixtures in subparagraph (B) may be the result of a drafting error. Prior to the enactment of the Energy Independence and Security Act (EISA), Pub. L. 110-140, 121 Stat. 1492 (2007), the text in subparagraph (B) cross-referenced 42 U.S.C. § 6292(a)(19), which at that time referred to any type of consumer product not among the 18 categories specifically listed in section 322 which DOE designated as a covered product. 42 U.S.C. § 6292(a)(19) (2006). Though EISA added metal halide lamp fixtures as the 19 th covered product, the internal cross reference in 42 U.S.C. § 6291(6)(B) was not updated.

8 The quoted definition applies to household appliances covered under Part A of EPCA. Part A-1 of EPCA provides a similar definition applicable to commercial equipment:

(18) The term ―energy conservation standard‖ means— (A) a performance standard that prescribes a minimum level of energy efficiency or a maximum quantity of energy use for a product; or (B) a design requirement for a product.

See 42 U.S.C. § 6311(18). Though focused on Part A, much of the analysis presented below is also directly applicable to Part A- 1.

9 The concerns that the Department cited in electing not to adopt a nationwide EER standard do not argue against the adoption of a regional EER standard for the Southwest. See 66 Fed. Reg. at 7183 (noting that a nationwide EER standard could discourage the adoption of energy saving variable speed and modulating technologies). Because of the higher ambient summer temperatures in the Southwest, variable speed and capacity modulating equipment have much less of an impact on the energy consumption of air conditioners installed in the
Southwest.6

rule invalid because the EPCA‘s anti -backsliding provision prevented DOE from reducing the SEER standard from 13 to 12). Even though DOE disagreed with the SEER 13 standard, it
nevertheless affirmed in its 2002 final rule that ―DOE believes that EPCA permits adoption of an
EER standard‖ in addition to the SEER standard

. Id. at 36393. For technical reasons identical to those it cited in the 2001 final rule, DOE concluded that the EER standard was permitted but not
desirable at a national scale. Id.

Because both the 2001 and 2002 rules were issued prior to Congress‘s 2007 amendments to the EPCA, which provided DOE with the specific authority to issue regional standards, the conclusions reached by the 2001 and 2002 rules speak directly to whether DOE, as a general matter, may apply multiple performance standards to individual covered products. As shown below, not only may DOE apply the EER and SEER standards to central air conditioners installed in the Southwest, but it may also appl y multiple performance standards at a national
level.

V. Basic Principles of Statutory Construction Support DOE’s 2001 and 2002 Interpretations of the EPCA, Which Affirmed DOE’s Authority to Apply Multiple Performance Standards to a Single Covered Produ ct

Some controversy over whether the EPCA permits DOE to adopt multiple performance standards for single covered products came about after DOE, in the later years of the Bush administration, reinterpreted the EPCA in 2004 and 2007 to preclude multiple standards. 10 The 2004 DOE interpretation is based upon a simple mistake

— a failure to employ the basic principles of statutory construction set forth in the Dictionary Act and affirmed in subsequent case law. NRDC and Earthjustice urge the Department to realign its interpretation of the EPCA with correct interpretations set forth by prior administrations and sound principles of statutory interpretation.

A. 2004 DOE Rulemaking Reinterprets the EPCA

In a 2004 rulemaking to amend the efficiency standards for residential furnaces and boilers, the Bush administration DOE reversed its view that the EPCA permits the Department to adopt multiple performance standards for single covered products. Although the framework document for that rulemaking suggested that DOE might adopt separate standards to limit the maximum electricity consumption of oil and natural gas-fired heating equipment, in addition to the standards governing the equipment‘s fossil fuel energy efficiency, 11 the Department ultimately reversed course in its advance notice of proposed rulemaking, stating that it now viewed such an approach as contrary to the statutory definition of ―energy conservation standard.‖ 69 Fed. Reg. 45,420, 45,427 (July 29, 2004). The Department asserted that ―a singl e  ̳energy conservation standard‘ cannot have measures or descriptions for both energy efficiency and energy use.‖ 69 Fed. Reg. 45,420, 45,427 (July 29, 2004). DOE also pointed to the statutory definition of energy conservation standard in rejecting regionally differentiated

10 69 Fed. Reg. 45,420, 45,427 (July 29, 2004); 72 Fed. Reg. 65,136, 65,151 (Nov. 19, 2007).

11 DOE, F RA MEWORK D OCUMENT FOR R ESIDENTIAL F URNACES AND B OILERS E NERGY C ONSERVATION S TANDARDS R ULEMAKING at 19 (July 17, 2001).7

standards and separate standards for heating equipment destined for use in newly constructed housing. 69 Fed. Reg. at 45,425. In the final rule, DOE reiterated its conclusion that the use of the singular tense in the definition of energy conservation standard prohibits multiple standards
for furnaces.

In defining an energy conservation standard, EPCA employs ―a performance standard‖ or ―a design requirement‖ in the singular. (42 U.S.C. 6291(6)) This use of the singular indicates that the Secretary generally may only set one energy conservation standard for a product.

72 Fed. Reg. 65,136, 65,151 (Nov. 19, 2007).

B. 2004 and 2007 DOE Statements Misinterpreted the EPCA

The Department‘s 2004 and 2007 statements are based on mistaken interpretations of the EPCA. First, rather than constraining DOE‘s authority by implication, the use of the singular tense merely reflects that statutory definitions are by their own nature illustrative. The Dictionary Act, 1 U.S.C. § 1, supports this view and states

In determining the meaning of any Act of Congress, unless the context indicates
otherwise

— words importing the singular include and apply to several persons, parties or things.

1 U.S.C. § 1. Here, the definition of ―energy conservation standard‖ indicates that each time the
EPCA refers to the term ― energy conservation standard ‖ it is referring to some regulatory imposition that will either take the form of a performance standard or a design requirement. In a similar vein, the EPCA‘s definition of the term ―central air conditioner‖ indicates that each time
the EPCA refers to the term ― central air conditioner ‖ it is referring to the universe of products that possess the attributes listed in the definition. See 42 U.S.C. § 6291(21). 12

Additionally, the operative provisions of the EPCA similarly apply in plural form the definition of energy conservation standard. Section 325 repeatedly refers to ―standards‖ that DOE must prescribe for covered products. See

, e.g. , 42 U.S.C. § 6295(d) (―Standards for central air conditioners and heat pumps‖). Although the EPCA does in some instances refer specifically to the prescription of ―an energy conservation standard‖ for a given product, see 42 U.S.C. § 6295(l)(1), this exception only proves the rule. When Congress provides language limiting agency discretion in one provision, a more expansive grant of discretion in adjacent provisions may not be ignored. See Vonage Holdings Corp. v. FCC , 489 F.3d 1232 (D.C. Cir. 2007) (―we have repeatedly held that  ̳[w]here different terms are used in a single piece of legislation, the court must presume that Congress intended the terms to have different meanings.‘‖ (quoting Transbrasil S.A. Linhas Aereas v. DOT, 791 F.2d 202, 205 (D.C. Cir. 1986)) (alteration in original). Thus, absent language elsewhere in the EPCA that indicates that a particular covered

12 Supreme Court precedent also supports the illustrative role of definitions in a statutory scheme. See U.S. v. Fior D‘Italia, Inc. , 536 U.S. 238 (2002) (holding that the use of the singular tense in a definitional section could not override the statute‘s operational sections, which would have been frustrated by the singular tense).8

product may be subject only to a single energy conservation standard, there is no rational basis for DOE‘s conclusion that the use of the singular in the de finition must be given controlling weight. 13

Likewise, the single standard conclusion articulated by the Bush administration DOE in 2004 and 2007 would undermine the goals of the EPCA. While not disputing the applicability of the Dictionary Act, in the furnaces rulemaking discussed above, DOE erroneously concluded that the context of the EPCA indicates that Congress did not intend the use of the singular in the definition of energy conservation standard to include the plural form. The Department asserted that construing that definition as permitting the Department to adopt multiple performance standards for a single product would render meaningless the authority granted by 42 U.S.C. § 6295(o)(5) to set multiple standards for products that have more than one major function. 72 Fed. Reg. at 65,151.

To the contrary, this conclusion not only misreads the statutory context, it undermines the very purposes behind the EPCA. Congress enacted the EPCA to accomplish several purposes, including the following:

(4) to conserve energy supplies through energy conservation programs, and, where necessary, the regulation of certain energy uses; (5) to provide for improved energy efficiency of motor vehicles, major appliances, and certain other consumer products;
. . . and (8) to conserve water by improving the water efficiency of certain plumbing products and appliances.

42 U.S.C. § 6201. DOE‘s narrow interpretation of its authority serves none of these purposes.

The criteria set out in the EPCA to guide DOE ‘s selection of standard levels also compels the conclusion that multiple requirements may be imposed. Section 325(o)(2)(A) provides that DOE must set standards at the maximum technologically feasible level that is economically justified. 42 U.S.C. § 629 5(o)(2)(A). It would be perverse for Congress to tie DOE‘s hands by limiting the Department‘s discretion to adopt regulations that achieve this goal. It is no objection that Congress may have intended to ensure that DOE did not burden manufacturers with multiple requirements, because the interests of manufacturers are well protected under the statute. DOE may only adopt standards that are economically justified, and in determining economic justification DOE must consider the impacts on manufacturers, as well as the impacts on competition. Standards that prescribe multiple requirements undoubtedly face greater scrutiny in weighing these impacts, but DOE‘s ability to take such factors into account argues against the likelihood that Congress would think it necessary to bar DOE from even considering whether to adopt a standard that imposes multiple requirements.

13 Moreover, even in instances where EPCA calls for the pr omulgation of ―an energy conservation standard,‖ the Dictionary Act, 1 U.S.C. § 1, and the overall statutory scheme indicate that multiple metric standards are
authorized.9

Specific language in other provisions of the EPCA also refutes the contention that Congress intended to bar multiple requirements. For example, the provision establishing the purposes of section 325 is not the only EPCA provision that refers to a single product being subject to multiple standards. In fact, the EPCA frequently refers to single, specific products as being potentially subject to multiple standards. For example, the EPCA does this with lamps:

(E) The terms ―fluorescent lamp‖ and ―incandescent lamp‖ do not include any lamp excluded by the Secretary, by rule, as a result of a determination that standards for such lamp would not result in significant energy savings because such lamp is designed for special applications or has special characteristics not available in reasonably substitutable lamp types.

42 U.S.C. § 6291(30)(D) (emphasis added). The EPCA repeats this approach with respect to
distribution transformers:

(B) The term ―distribution transformer‖ does not include

--

. . . (iii) any transformer . . . that is excluded by the Secretary by rule because

-- (I) the transformer is designed for a special application; (II) the transformer is unlikely to be used in general purpose applications;
and (III) the application of standards to the transformer would not result in significant energy savings.

42 U.S.C. § 6291(35)(B) (emphasis added).

As noted above, DOE asserted in the furnaces rulemaking that reading the EPCA to allow the imposition of multiple standards for a single product would render meaningless the authority granted by 42 U.S.C. § 6295(o)(5) to set multiple standards for a product if that product has more than one major function. 72 Fed. Reg. at 65,151. However, this assertion ignores that there is still a unique role for section 325(o)(5) even if DOE views multiple standards as generally permissible. That section clarifies the Department‘s authority to cover all aspects of the operation of appliances designed to perform more than one major function. Absent this provision, even given the authority to set multiple standards for a single function, it could be subject to debate whether DOE had the authority to issue standards covering each function of a product that combines multiple functions. 14

14 Though section 325(o)(5) was ultimately enacted as part of the Energy Policy Act of 2005, Pub. L. 109- 58 § 135(c)(3), 2005 U.S.C.C.A.N. (119 Stat.) 594, 629, Congress had previously felt it necessary to clarify in report language DOE‘s authority to regulate each function of combination appliances.

The energy conservation standards specified in the Act apply to the principal function of an appliance . . . . The reason for this is that DOE test procedures are based on the average use cycle for the principal function of the appliance and do not specify a use cycle that would occur if that appliance were also performing another function.

If DOE establishes test procedures for both functions of combination appliances, energy conservation standards for both functions of such appliances may be established.10

The fact that section 325(o)(5) indicates that DOE may deal with combination appliances ―by setting 1 energy conservation standard for each major function,‖ does not mean that DOE may set only one standard for each major function. As noted above, 1 U.S.C. § 1 provides that, unless context indicates otherwise, the use of the singular tense includes consideration of the plural tense. Here there is no context to indicate that Congress intended to block DOE from setting multiple performance standards for individual combination products. Had Congress sought to accomplish this goal, it could easily have provided that DOE may regulate combination products ―by setting no more than 1 energy c onservation standard for each major function.‖

C. The Definition of the Term “ Efficiency Descriptor ” Does Not Restrict Standards for
Central Air Conditioners to SEER

DOE‘s authority to adopt an EER standard for central air conditioners installed in the Southwest is not impacted by the EPCA‘s definition of ―efficiency descriptor‖ as being expressed for central air conditioners in terms of SEER. See 42 U.S.C. § 6291(22)(C) (definition of ―efficiency descriptor‖). 15 Though the EPCA lists such ―efficiency descriptors‖ for several products in section 321(22), ―efficiency descriptor‖ is a term that appears nowhere else in the statute‘s appliance and commercial equipment provisions, 16 and nothing in the language of section 321 indicates that this definition was intended to impose an obligation on the Department. Nor does the same definition‘s reference to EER as the efficiency descriptor for
room air conditioners alter this conclusion. See id. § 6291(22)(B). For example, there are no words of limitation to indicate that SEER is the only efficiency descriptor that may be applied to central air conditioners, or that EER is the efficiency descriptor for room air conditioners exclusively.

To the extent that the EPCA‘s definition of ―efficiency descriptor‖ has any relevance at all, the only reasonable way to read this provision is as a reinforcement of the command in section 323(a) that the test procedures in effect on the date of enactment of the National Appliance Energy Conservation Act of 1987 (NAECA), Pub. L. 100-12, 101 Stat. 103 (1987),

House Report No. 100-11 at 20 (1987).

15 Section 321(22) provides as follows:

(22) The term ―efficiency descriptor‖ means the ratio of the useful output to the total energy input, determined using the test procedures prescribed under section 6293 of this title and expressed for the following products in the following terms: (A) For furnaces and direct heating equipment, annual fuel utilization efficiency. (B) For room air conditioners, energy efficiency ratio. (C) For central air conditioning and central air conditioning heat pumps, seasonal energy efficiency ratio. (D) For water heaters, energy factor. (E) For pool heaters, thermal efficiency.

42 U.S.C. § 6291(22).

16 The only other reference to ―efficiency descriptor‖ outside of the definition of the term is in the definition of ―annual fuel utilization efficiency‖ (AFUE), which provides that AFUE is ―the efficiency descriptor for furnaces and boilers.‖ 42 U.S.C. § 6291(20).11

remain in effect until amended by DOE. 42 U.S.C. § 6293(a). At the time Congress enacted NAECA, which added the ―efficiency descriptor‖ definition, see NAECA § 2, 101 Stat. at 104, SEER was the method used for determining the efficiency of central air conditioners. See

, e.g. , NAECA § 5, 101 Stat. at 109-110 (codified at 42 U.S.C. § 6295(d)(1)) (establishing minimum SEER ratings for central air conditioners). Therefore, by indicating that SEER, ―as determined using th e test procedures prescribed under [42 U.S.C. § 6293],‖ expressed the efficiency descriptor for central air conditioners, Congress emphasized its intent to adopt minimum SEER standards that were tied to the existing DOE test procedure for SEER. It is no response to argue that such a reading renders the reference to SEER in section 321(22) superfluous, as the courts have observed that Congress does sometimes build redundancy into statutory schemes. See Sabre, Inc. v. DOT, 429 F.3d 1113, 1122 (D.C. Cir. 2005) ("Legislative drafters often use apparently redundant language‖ to avoid evasions that ―frustrate a statute‘s purpose‖).

A contrary reading that views the definition of efficiency descriptor as mandating that SEER is the only performance metric DOE may apply to central air conditioners would lead to absurd results. For instance, while DOE has always had the authority to amend the test procedures that define SEER, see NAECA § 4, 101 Stat. at 106, subsequent amendments to the EPCA now require the Department to review and, if necessary, amend the existing test procedures for central air conditioners and all other covered products on a set schedule. 42 U.S.C. § 6293(b)(1)(A). The determination of whether to amend is based on DOE‘s conclusion
that am ended test procedures ―would more accurately or fully comply‖ with the EPCA‘s fundamental requirement that test procedures ―produce test results which measure [performance] . . . during a representative average use cycle or period of use.‖ Id. § 6293(b)(1)(A)(i), (b)(3). Reading section 321(22) as mandating that DOE gauge central air conditioner performance through the application of SEER ignores that more accurate test procedures may be developed. Such a reading would either force the Department to maintain a less accurate test method, or undertake the nonsensical exercise of renaming the output of any such more accurate test method
as ―SEER.‖

VI. Conclusion

For the reasons stated above, the Department has clear authority to adopt efficiency standards consisting of both SEER and EER performance re quirements for central air conditioners installed in the Southwest. The EPCA permit s the imposition of multiple requirements in energy conservation standards for covered products, and none of the provisions in the EPCA that are specific to central air conditioners contradict this conclusion. We urge DOE to recognize this authority and to adopt the EER and SEER standards for residential central air conditioners jointly recommended by manufacturers and efficiency advocates. More broadly, we urge DOE to reaffirm its authority under the EPCA to issue multiple efficiency standards, where appropriate, for all products covered under the EPCA.April 27, 2010

Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program Mailstop EE- 2J
SNOPR on Test Procedures for Residential Furnaces and Boilers
Docket Number EERE

– 2008

– BT

– TP

– 0020
RIN 1904

–

AB89 1000 Independence Avenue, SW Washington, DC 20585-0121

Dear Ms. Edwards:

The Natural Resources Defense Council respectfully submits the
attached comments on the SNOPR on Test Procedures for Residential
Furnaces and Boilers to Docket Number EERE

– 2008

– BT

– TP

– 0020

, RIN

1904

– AB89. Thank you for your assistance. Should you have any questions or concerns, please do not hesitate to contact me.

Sincerely,

Katherine E. Houren Pro Bono Fellowship Attorney
New York Bar # 4765079 Not Yet Admitted to Practice in Washington, D.C.1

Comments of the Natural Resource s Defense Council on the Supplemental Notice of Proposed Rulemaking ―SNOPR‖ on Test Procedures for Residential

Furnaces and Boi lers

, 75 Fed. Reg. 17,075 (Apr. 5, 2010)

April 27, 2010

Docket Number: EERE

– 2008

– BT

– STD

– 002 0
RIN: 1904

– A B89

I. Introduction

The Natural Resources Defense Council (NRDC) is a national environmental advocacy organization with over 1.3 million members and online activists. NRDC has spent decades working to build and improve DOE’s federal appliance standards programs because of the important energy, environmental, and consumer benefits of appliance efficiency standards. NRDC participated in the enactment of the first federal legislation establishing efficiency standards and has been active in all significant rulemakings since then.

NRDC submits these comments as a signatory of the consensus agreement negotiated and agreed to by NRDC; other efficiency and environmental groups; and the trade association for the manufacturers of residential furnaces, central air conditioners, and heat pumps. 1 NRDC fully supports

1 Agreement on Legislative and Regulatory Strategy for Amending Federal Energy Efficiency Standards, Test Procedures, Metrics and Building Code Provisions for Residential Air Conditioners, Heat Pumps, Weatherized and Non-Weatherized Furnaces and Related Matters, Oct . 1 3, 2009 (hereinafter ―consensus agreement‖)

, at http://aceee.org/buildings/FurnaceACAgreement.pdf

. The following organizations and companies are signatories to the consensus agreement: Air-Conditioning, Heating and Refrigeration Institute; American Council for an Energy-Efficient Economy; Alliance to Save Energy; Natural Resources Defense Council; Northwest Power and Conservation Council; Appliance Standards Awareness Project; California Energy Commission; Northeast Energy Efficiency Partnerships; Bard Manufacturing, Inc; Carrier Residential and Light Commercial Systems; Goodman Global, Inc; Lennox Residential; Mitsubishi Electric and2

the consensus agreement and requests that the Department of Energy (DOE or Department) move expeditiously to adopt the levels and dates presented by the agreement. 2

NRDC provides additional comments on the infeasibility of the Department’s proposal for an integrated efficiency descriptor

, AFUE I , that incorporates standby and off mode energy consumption into the statutorily identified efficiency descriptor, Annual Fuel Utilization Efficiency (AFUE). Because
AFUE I is infeasible, NRDC urges the Department to adopt separate metrics to measure the standby and off mode energy consumption of residential
furnaces and boilers.

II. The Consensus Agreement

As explained above, NRDC is a signatory to the consensus agreement on residential furnaces, central air conditioners, and heat pumps submitted to DOE on January 15, 2010. The consensus agreement recommends regional standards and multiple metrics for furnaces . W e strongly urge the Department to move forward expeditiously to implement the standards contained in the agreement.

III. The AFUE I Test Procedure D o es N ot Comply W ith the 2007 Amendments to the E nergy Policy and Conservation Act

Section 310 of the Energy Independence and Security Act of 2007 (EISA),

Public Law 110

– 140, amended the Energy Policy and Conservation Act (EPCA)

, 42 U.S.C. §§ 6201-6422, to require that the

[t]est procedures for all covered products shall be amended pursuant to section 323 to include standby mode and off mode energy consumption . . . with such energy consumption integrated into the overall energy efficiency, energy consumption, or other energy descriptor for each covered product, unless the Secretary determines that

—

Electronics USA; National Comfort Products; Rheem Manufacturing Company; Trane Residential; and Desert Aire.

2 The Department has the authority to adopt all provisions of the consensus agreement except the building codes provisions, which the signatories are pursuing through legislation.3 (i) the current test procedures for a covered product already fully account for and incorporate the standby mode and off mode energy consumption of the covered product; or (ii) such an integrated test procedure is technically
infeasible

for a particular covered product, in which case the Secretary shall prescribe a separate standby mode and off mode energy use test procedure for the covered product, if technically feasible

.
42 U.S.C. § 6295(gg)(2)(A) (emphasis added). Elsewhere in the same section, however, the EISA provides slightly different guidance about when DOE must incorporate standby and off mode energy use into a single standard:

(A) IN GENERAL.

— Subject to subparagraph (B), based on the test procedures required under paragraph (2), any final rule establishing or revising a standard for a covered product, adopted after July 1, 2010, shall incorporate standby mode and off mode energy use into a single amended or new standard, pursuant to subsection (o), if feasible

.

(B) SEPARATE STANDARDS.

— If not feasible , the Secretary shall prescribe within the final rule a separate standard for standby mode and off mode energy consumption, if justified under subsection (o).

42 U.S.C. § 6295(gg)(3)(A)

– (B) (emphasis added). Regardless of whether
DOE determines that ― technically feasible ‖ or simply ― feasible ‖ is the relevant test to apply when promulgated amended standards, the Department cannot to meet the requirements of the EPCA with the proposed
AFUE I test procedure.

Technical research by respected labs proves that the proposed AFUE I test procedure does not meet the statutory requirements of the EPCA. The Energy Center of Wisconsin and Proctor Engineering have shown that the average combined standby and off mode electrical energy use for a residential natural gas furnace is between 7 watts and 13 watts. The 2005 California Residential Energy Consumption Survey (RECS) data suggests that for a household using a natural gas furnace, average annual space heating gas use is 50.3 million Btu. If a furnace has a standby and off mode electrical energy use of 13 watts and spends 80 percent of the heating season in standby or off mode, total electrical energy use in these modes is still less than 0.62 percent of total annual energy use.4

It is not feasible to regulate standby and off mode electrical energy when it may be less than the rounding error of the regulated metric. For example, consider two natural gas furnaces with an 80 percent AFUE and an average annual gas energy use of 50.3 million Btu. If one furnace uses 6 watts in standby mode and the other furnace uses 13 watts in standby mode, then the
AFUE I measurement for these furnaces would be 79.5 percent and 79.7 percent, respectively. Current DOE requirements for reporting AFUE allow rounding to two significant figures. If DOE continues to allow this level of rounding for AFUE I , then these two furnaces would both receive an AFUE I of 80 percent, and standby and off mode energy consumption would be relegated to a rounding error. In other words, the proposed AFUE I metric would not be able to distinguish between these two pieces of equipment, even though one has more than double the standby electrical energy use. DOE cannot meet its statutory requirement to measure standby and off mode energy use if the test procedure that the Department uses cannot distinguish between products with vastly different levels of standby and off mode energy use.

To meet its statutory requirement with the AFUE I test procedure, DOE would need to recognize differences in measurements to a hundredth of a percent in order to capture accurately the difference in standby and off mode energy use between most products

. DOE has not proposed any such change in policy in any of its materials for this docket. Even if DOE had proposed requiring measurements to a hundredth of a percent under the AFUE I test procedure, it is questionable whether the test procedure would then pass the benefits and burdens analysis required under section 6295(o) of the EPCA.

From a testing and enforcement perspective, the AFUE I test procedure simply will not measure standby and off mode energy use in furnaces. As a result, reliance on the proposed AFUE I metric will not meet the DOE’s statutory duty ―to include standby mode and off mode energy consumption.‖ 42 U.S.C. § 6295(gg)(2)(A). We strongly urge the DOE to use the existing AFUE metric to regulate the gas use and active mode electrical energy use of residential furnaces, and to establish a separate metric to regulate standby and off mode energy use.

IV. Conclusion

NRDC opposes the Department’s proposal to integrate standby power into the AFUE metric. The proposed AFUE I test procedure will not meet the DOE’s statutory requirement to measure standby and off mode en ergy use because the test procedure would relegate differences among furnaces to a rounding error

. NRDC urges the Department to adopt separate test5

procedures for standby and off mode energy use consistent with the terms of the consensus agreement

.

NRDC appreciates the opportunity to comment on this rule-making.

Sincerely,

Lane Burt Manager, Building Energy Policy

Katherine E. Houren Pro Bono Fellowship Attorney
New York State Bar # 788246 Not Yet Admitted to Practice in Washington, D.C.0 April 27, 2010

Ms. Brenda Edwards U.S. Department of Energy Building Technologies Program Mailstop EE- 2J NOPM for Energy Conservation Standards for Residential Furnaces
Docket Number EE

– 2009

– BT

– STD

– 0022
RIN 1904

–

AC06 1000 Independence Avenue, SW Washington, DC 20585-0121

Dear Ms. Edwards:

The Natural Resources Defense Council respectfully submits the attached comments on the NOPM for Energy Conservation Standards for
Residential Furnaces to Docket Number EE

– 2009

– BT

– STD

– 0022. Thank you for your assistance. Should you have any questions or concerns, please
do not hesitate to contact me.

Sincerely,

Katherine E. Houren Pro Bono Fellowship Attorney
New York Bar # 4765079 Not Yet Admitted to Practice in Washington, D.C.1

Comments of the Natural Resource s Defense Council on the NOPM for Energy Conservation Standards for Residential Furnaces

, 75 Fed. Reg. 12,144 (Mar. 15, 2010)

April 27 , 2010

Docket Number: EE

– 2009

– BT

– STD

– 0022

RIN: 1904

– AC06

I. Introduction

The Natural Resources Defense Council is a national environmental advocacy organization with over 1.3 million members and online activists. NRDC has spent decades working to build and improve the Department of Energy’s (DOE or Department) federal appliance standards programs because of the important energy, environmental, and consumer benefits of appliance efficiency standards. NRDC participated in the enactment of the first federal legislation establishing efficiency standards, and has been active in all significant rulemakings since then.

NRDC submits these comments as a signatory of the consensus agreement negotiated and agreed to by NRDC, other efficiency and environmental groups and the trade association for the manufacturers of residential furnaces, central air conditioners, and heat pumps. 1 NRDC fully supports

1 Agreement on Legislative and Regulatory Strategy for Amending Federal Energy Efficiency Standards, Test Procedures, Metrics and Building Code Provisions for Residential Air Conditioners, Heat Pumps, Weatherized and Non- We atherized Furnaces and Related Matters, Oct. 13, 2009 (hereinafter “consensus agreement”) , at http://aceee.org/buildings/Furnace-ACAgreement.pdf . The following organizations and companies are signatories to the consensus agreement: Air-Conditioning, Heating and Refrigeration Institute; American Council for an Energy-Efficient Economy; Alliance to Save Energy; Natural Resources Defense Council; Northwest Power and Conservation Council; Appliance Standards Awareness Project; California Energy Commission; Northeast Energy Efficiency Partnerships; Bard Manufacturing, Inc; Carrier Residential and Light Commercial Systems; Goodman Global, Inc; Lennox Residential; Mitsubishi Electric and Electronics USA; National Comfort Products; Rheem Manufacturing Company; Trane Residential; and Desert Aire.2

the consensus agreement and requests that DOE move expeditiously to adopt the levels and dates presented by the agreement.

NRDC provides additional comments on the following issues:

 The Department should Adopt the Consensus Agreement.

 The Department has the Authority to Adopt Expedited Effective Dates.

 The Department has the Authority to Utilize both SEER and EER for the Southwest, as Proposed by the Consensus Agreement.

 Regulating Standby Consumption in Furnaces With a Single Metric i s Not Feasible.

 NRDC Supports t he Department’ s Consideration of Regional
Enforcement Schemes.

 The Department should Regulate Electric Furnaces.

 The Department should not use Impacts on Subclasses to Determine
Standard Levels

.

 The Department should Combine the Furnace, Central Air
Conditioner , a nd Furnace Fan Rulemakings.

 Ma rket Penetration will Resemble t he ―Shift‖ Scenario.

II. The Department s hould Adopt t he Consensus Agreement

.

NRDC is a signatory to the consensus agreement on residential furnaces and central air conditioners and heat pumps submitted to DOE on January 15

, 2010. We strongly urge the Department to move forward expeditiously to implement the standards contained in the agreement. 2

III. The Departm ent has the Authority t o Adopt Expedited Effective
Dates

.

In the November 2007 final rule for residential furnaces, DOE set an eightyear implementation period. 72 Fed Reg. 65136, 65152 (Nov. 19, 2007). NRDC respectfully submits that an eight-year lead time is not required for residential furnaces. The Department has already affirmed its ability to adopt expedited effective dates under consensus agreements, 3 and nothing in

2 Id. Note that the Department has the authority to adopt all provisions of the consensus agreement except the building codes provisions, which the signatories are pursuing through legislation.

3 Energy Conservation Program for Consumer Products; Central Air Conditioners and Heat Pumps Energy Conservation Standards, 69 Fed. Reg. 50,997, 50,998 (Aug. 17,3

the Energy Policy and Conservation Act (EPCA), 42 U.S.C. §§ 6201-6422

, requires an eight-year lead time. The Department, therefore, should adopt the effective compliance dates set forth in the consensus agreement of May 1, 2013 for non-weatherized furnaces and January 1, 2015 for weatherized furnaces to achieve the mandates and objectives of the EPCA and preserve the value of consensus decision-making.

In 2004, DOE clearly affirmed its authority under the EPCA to adopt a shortened implementation period when all the stakeholders, including manufacturers, agree

. See 69 Fed. Reg. 50, 997 (Aug. 17, 2004) (setting a seventeen month implementation period for central air conditioners under a
consensus agreement ). 4 The final rule for central air conditioners explained that when DOE fails to issue a rule by the deadline provided in the EPCA, i t will generally ― adjust the date such rule becomes enforceable to allow for the same amount of lead time as [originally] provided in the statute. ‖ Id. at
50998. However, DOE stated that in ―special circumstances‖ it will abandon that practice and adopt an expedited implementation period. Id

. The special circumstance present in the central air conditioner rulemaking was a consensus agreement between ―a ll of the participants in the rulemaking, including representatives of the manufacturers who would have to comply
with the standards and who had ex pressed a view about the matter,‖ which stated that a five year lead time was not needed. Id. Later, in the November 2007 final rule for residential furnaces, DOE insisted on an eight-year lead
time because ― no similar consensus among furnace and boiler manufacturers‖
existed. 72 Fed. Reg. 65,152.

I n the instant rulemaking, DOE may no longer rely on the absence of ―special circumstances‖ to justify an eight -year lead time. The parties to this rulemaking, including the manufacturers who would have to comply with the standards, have agreed to effective dates of May 1, 2013 for non-weatherized furnaces and January 1, 2015 for weatherized furnaces

. DOE recognized the importance of consensus agreemen ts in the central air conditioner rulemaking and the 2007 final rule for furnaces. It should do the same here.

Additionally, the EPCA does not require or support an eight-year lead time.
U nder Congress’ mandated schedule, DOE had a legal responsibility to complete this rulemaking by 1994 and implement the rule by 2002. 42 U.S.C. § 6295(f)(4)(B). This provision does not require or provide for an automatic

2004) (providing in the publication of a final rule for an effective date of January 23, 2006).

4 DOE has adopted recommendations from consensus agreements in other contexts. See 66 Fed. Reg. 3,314, 3,315 (Jan. 12, 2001) (adopting a two-phase standard with a significant increase in required efficiency as a result of a consensus agreement reached
between stakeholders ).4

eight-year gap between the issuance of the final rule and the compliance date if DOE in fact issues the final rule sixteen years late. As explained above

, DOE itself has acknowledged in the central air conditioner rulemaking that when a rule is issued later than the statutory deadline, it is not legally required to establish a compliance date that reflects the lead time provided in the statute between the original deadline for issuing the rule and the statutory compliance date. See 69 Fed. Reg. 50,997, 50,9978 (Aug. 17, 2004); 67 Fed. Reg. 36,368, 36,394 (May 23, 2002).

Moreover, an eight-year lead time cannot be implied for furnaces. In contrast with other covered products, the EPCA does not require or even provide a
lead time for furnaces

. The EPCA mandates lead times for several covered products. See, e.g.

, 42 U.S.C. § 6295(i)(3)

– (5) (making amended standards for lamps effective 36 months after rule publication); id. § 6295(v)(3) (making standards for vending machines effective 3 years after final rule publication);

id. § 6295(c)(2)(C)(i) (applying amended standards for room air conditioners five years after the effective date of the previous amendment); id. § 6295(m)(4) (tying subsequent amended standards for all products to rule publication date). For furnaces, the EPCA, instead, directs DOE to implement amended furnace standards by a specific date

— January 1, 2002. 42 U.S.C. § 6295(f)(4)(B ).

DOE has far-exceeded the 1994 deadline to determine whether to amend the statutory standards for furnaces and the January 1, 2002 implementation date. Further delay, in the absence of a statutory directive or stakeholder requests to provide lead time would place the internal policies of the Department over clear statutory deadlines. The Department must recognize Congress’ decision to emphasize a specific compliance date and endeavor to meet that deadline or comply thereafter at the earliest possible time.

Finally, DOE’s representations to the court in New York v. DOE indicated that the Department understood the urgency with which it should complete and implement new furnace standards. The instant proceedings on remand to revise the standards issued in 2007 are governed by the January 1, 2002 compliance date. 42 U.S.C. § 629 5(f)(4)(B). In New York v. DOE , DOE moved on April 15, 2009 for a voluntary ― order remanding this proceeding for the Department of Energy to undertake further notice and comment rulemaking proceedings, leading to a revised final rule.‖ Mem. in Supp. of Mot. for Voluntary Remand at 1, New York v. DOE, No. 08-0311-ag (2d Cir. Apr. 15, 2009). DOE stated that ―[a] voluntary remand allowing DOE to

reopen its proceedings for additional comments and the development of a revised final rule would provide an opportunity for the agency to analyze the effect of standards on natural gas pricing, and to consider that analysis in the
formulation of a revised f inal rule.‖ Id.

at 4 (emphasis added). DOE5

explained that it ―has recently decided to revisit the substance of the final
rule under review in these cases. In order to undertake the notice and comment rulemaking that will be required for the agency’s rec onsideration of the rule, we are requesting that this Court grant the motion for voluntary
remand.‖ Id.

at 5 –6 (emphasis added). Further, DOE’s remand motion specifically indicated that the Department would re-evaluate its view, expressed in the November 2007 final rule, that the EPCA mandates an eight-year lead time:

In the course of the notice-and-comment proceedings on remand, DOE will interpret and apply its EPCA authority (as amended by EISA) to the record as a whole. The agency will not be bound by the earlier final rule, and may re-evaluate and seek comment on other issues, including the proper application of the governing statutory provisions and the appropriate compliance date for any revised final rule.

Id. at 6. The Department’s representati ons to the court and to petitioners in
New York v. DOE

, confirm that this rulemaking is a continuation of the rulemaking required under section 6295(f)(4)(B), which provided an implementation date of January 1, 2002

. That date has well passed

. Because th e consensus agreement presents ― special circumstances ‖ , and because the EPCA does not provide an implementation period for residential furnaces, DOE may not rely on section 6295(f)(4)(B) to support an eight-year implementation period. Doing so, here, would not only undermine the effectiveness of consensus decision-making, but it would also inappropriately favor DOE policy over the statutory mandates contained in the EPCA.

IV. The Department has t he A uthority t o U tilize both SEER a nd EE R for the Southwe st, a s P roposed by t he C onsensus A greement

.

NRDC incorporates by reference our March 19, 2010 comments to Docket No.
EE

- 2009

- BT -STD-0022.

The definition of ― efficiency descriptor ‖ does not limi t or preclude the adoption of an EER performance standard, in addition to a SEER performance standard, for central air conditioners installed in the
southwestern United States.

The Energy Policy and Conservation Act defines ―efficiency descriptor‖ as

the ratio of the useful output to the total energy input, determined using the test procedures prescribed under section 323 and expressed for the following products in the following6 terms: . . . For central air conditioning and central air conditioning heat pumps, seasonal energy efficiency ratio.

42 U.S.C. 6291(22)(C). 5 As NRDC explained in our March 19, 2010

comme nts, the term ― efficiency descriptor ‖ is not employed in an operative capacity to central air conditioners anywhere in the EPCA, and as a result, it appears to be nothing more than an empty definition. But additional factors point to the conclusion that the term does not limit or pr eclude DOE’s ability to adopt SEER and EER performance standards for central air conditioners
in the Southwest.

As an initial matter, section 6291(22)(C) was added to the EPCA by Public Law 95-91 in 1987, almost two decades before the Department of Energy took the position in 2001 and 2002 that it had the authority under the EPCA to adopt both SEER and EER standards for central air conditioners. 66 Fed. Reg. 7,170 (Jan. 22, 2001); 67 Fed. Reg. 36,368 (May 23, 2002). Additionally

, an efficiency descriptor is, by definition, merely descriptive. Section 6291(22)(C) simply states that if an efficiency descriptor is required under test procedures outlined in section 6295 that it should be ―expressed‖ for
central air conditioners as a ― seasonal energy efficiency ratio .‖ This is not a limiting provision, and under the consensus agreement, standards for central air conditioners installed in the Southwest would still be expressed in terms of SEER. An EER standard would simply be added to the test procedure to capture the peculiar conditions in that region which necessitate an additional
standard.

Finally, other operative sections of the EPCA provide an expansive view o f DOE’s power to promulgate new procedures. Under section 6293(b), the Secretary must promulgate test procedures that are

reasonably designed to produce test results which measure energy efficiency, energy use . . . , or estimated annual operating cost of a covered product during a representative average use cycle or period of use, as determined by the Secretary . . . .

42 U.S.C. § 6293(b)(3). As explained in our March 19, 2010 comments, an EER efficiency standard is necessary because the SEER standard, on its own, does not come close to addressing the standard climactic conditions in which central air conditioners operate in the Southwest. It would be torturous and contrary to the
EPCA’s statutory directive to employ an inoperative definitional section to

5 The only other reference to “efficiency descriptor” outside of the definition of the term is in the definition of “annual fuel utilization efficiency” (AFUE), which only applies to
“the efficiency descriptor for furnaces and boilers. ” 42 U.S.C. § 6291(20).7

limit the agency’s ability to design test procedures that accurately measure the energy efficiency and energy use of covered products.

V. Regulating S tandby C onsumpti on i n F urnaces with a S ingle M etric i s N ot F easible

.
Section 310 of the Energy Independence and Security Act of 2007 (EISA)

, Public L aw 110

– 140, amended the EPCA to require the Department to begin considering standby mode and off mode energy use as part of a single metric, if feasible, or if infeasible through a separate metric. See 42 U.S.C. §6295(gg)(2)(A) ; 42 U.S.C. § 6295(gg)(3)

. 6

NRDC has initially determined that regulating standby power and active mode power with a single metric would be infeasible. The technically feasible and economically justified reduction in energy consumption from standby power would be lost in the measurement of active mode power and would be unlikely to be attained, while uncertainty for the manufacturers would be introduced as to the compliance of current products. We will be submitting further comments in the SNOPR proceeding, docket number EERE- 200 8- BT

STD-0020, but urge DOE here to adopt separate metrics for standby and offmode.

VI. NRDC Supports t he Department’ s Consideration o f Regional Enforcement Schemes.

We support the Department’s decision to begin consideration of enforcement schemes at this point in the rulemaking process. We also concur with AHRI, ACCA, and HARDI that proper consideration of the enforcement scheme and effectiveness are of the utmost importance. We will be submitting further comments on the enforcement question upon further consideration.

We agree with the eight components of an enforcement plan initially proposed by the Department in the RAP. DOE, Energy Conservation Standards for Residential Furnaces Rulemaking Analysis Plan, Mar. 11, 2010, at 13

– 14

. All factors deserve consideration, and in particular labels should be proposed that will simply and effectively communicate to interested, non-technical stakeholders where the equipment should be

6 NRDC perceives some confusion over whether DOE is required to incorporate standby mode and off mode energy use into a single metric “if technically feasible” or simply “if
feasible ,” based on conflicting lang uage in section 310 of the EISA. NRDC addresses this issue in comments submitted to the SNOPR proceeding, Docket EERE

– 2008

– BT

– STD

– 0020.8

installed. Specifically , we think including strong language such as ―Illegal to install in‖ followed by the states on the border of the regional zones will communicate the most important point to consumers. These labels could be applied only to those units shipped to border regions or border distributers so as to not confuse consumers unaffected by the regional differences. Regardless, further discussion is warranted in the follow-on rulemaking and at the Federal Trade Commission, but we encourage the Department to continue to further the discussion on appropriate enforcement mechanisms.

We would also note that consumer call back programs that could be applied at time of sale or resale would allow potential homebuyers who find a furnace that was installed illegally to have so me recourse, as long as the contractor’s
information is maintained. Home inspectors could also be made aware of the standards so that they can inform the consumer if the improper unit is
installed.

VII. The Department s hould Regulate Electric Furnaces.

At the public hearing, the Department requested comment on its stance that electric resistance furnaces are not within the scope of this rulemaking. We are concerned that continuing to ignore these units due to assumed insignificant energy saving potential is problematic and will result in an increase in market share of these units. These units represent a low cost option that could grow in market penetration as the efficiency of competing units that provide the exact same consumer amenity (heat pumps, which in most cases have electric furnaces as back up and would use the same duct system) may potentially increase with upcoming standards.

We would also note that the Department has the authority to adopt standards whenever energy savings would be non-trivial. NRDC v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985) (explaining that Congress expects DOE to prescribe mandatory efficiency standards unless such standards would yield ― such negligible benefits that they were not worth the
trouble of further examination ‖ ). Indeed, DOE has previously set standards when significant energy savings on the order of 0.032 quads have been found, as in the final rule for packaged terminal air conditioning equipment. 73 Fed. Reg. 58 ,772, 58 ,819 (Oct. 7, 2008) (― DOE projects that TSLA for standard size PTACs and PTHPs would save 0.032 quads of energy through 2042, an amount DOE considers significant. ‖) . Should electric furnaces present larger energy savings potential tha n 0.032 quads, they should be added to the scope of the rule.9

We initially recommend that electric furnaces be added to the heat pump class and be required to attain the same performance. The Department should explore rating electric resistance heaters using HSPF if technically feasible or specify the procedure for utilizing HSPF for electric furnaces if not currently possible. Alternatively, a heat pump AFUE could be explored for comparative purposes, to set an electric furnace standard at a similar level of efficiency as attained by the heat pump products that provide the same consumer amenity

.

VII. The Department s hould not use Impacts on Subclasses to
Determine Standard Levels.

During the public hearing, a stakeholder suggested that the Department give strong consideration to disadvantaged subclasses before adopting the efficiency levels for furnaces specified in the consensus agreement. We object
to the use of subclasses to drive decisions about minimum standards with large corresponding national benefits as a matter of policy. In practical reality, many subgroups of consumers, especially consumers who rent their homes, are disadvantaged by less stringent standards. They are not able to decide how efficient their furnace will be, yet they will pay for the continued operation and the additional expense caused by the inefficiency.

Low and fixed income consumers should not be considered to be negatively impacted by more efficient standards as a result of first cost increase only. The commitment to the additional energy expenditures required by a less stringent standard would be more detrimental than the increase in first cost, as energy payments claim a larger share of disposable income than for buyers from other income levels. These consumers often purchase used appliances or rent them with their housing, making it unlikely that they had the option of anything except minimum standard level equipment. As such, these consumers could be considered to be adversely affected by less stringent
standards.

Many furnace purchasers may be similarly limited in choice of replacement units, when replacement occurs upon failure in the winter months, and speed of replacement is the primary consideration. The units that are on hand and can be quickly installed represent the real range of choices. As such, there are a large number of consumers that could be analyzed as a subgroup who would be disadvantaged by lower standards.

VIII. The Department s hould Combine t he Fur nace, Central Air Conditioner, a nd Furnace Fan Rulemakings.10

We support the Department’s proposal to accelerate the furnace fan rulemaking to coincide with the rulemakings for furnaces and central air conditioners. This provides analysis simplification potential and is consistent with the President’s request to DOE to meet all statutory deadlines and accelerate those with large potential energy savings. In his Memorandum for the Secretary of Energy released on Fe bruary 5, 2009, the President requested

,

. . . with respect to standards subject to judicial and statutory deadlines later than August 8, 2009, the DOE work to complete prior to the applicable deadline those standards that will result in the greatest energy savings. To undertake this task, the DOE should quantify, to the extent feasible and consistent with statutory requirements, the expected annual energy savings from the relevant standards. The DOE must, however, ensure that it meets applicable deadlines for all standards.

Id. Accelerating furnace fans is consistent with this request and DOE should be commended for taking this step.

IX. Ma rket Penetration will Resemble t he ―Shift‖ Scenario.

For furnaces in particular, we think the existence of successful federal
tax incentives for furnaces that reach 95 AFUE indicates that it is likely for sales of these units to continue to increase, resulting in a market penetration of efficient technologies that resembles the ―shift‖
scenario more than the ―roll

- up‖ scenario.

X. Conclusion

We appreciate the Department’s thorough consideration of the consensus agreement and urge the Department to adopt those standards as expediently as possible. In addition, we conclude that,

 The Department can adopt the accelerated effective dates found in the
consensus agreement.

 The Department can utilize both SEER and EER for the Southwest region, in accordance with the consensus agreement.

 Regulating standby consumption in furnaces with a single metric is
not feasible.

 Regional enforcement can be done effectively and the Department’s approach is sound.11

 Electric furnaces should be included within the scope of the

ru lemaking with an eye on future market share.

 The use of impacts on subclasses to determine standard levels is not
sound.

 The furnace fan rulemaking should be accelerated and combined with the furnace and central air conditioner rulemaking.

 The market penetration scenarios will more closely resemble the
―shift‖ than the ―roll

- up‖.

Thank you for the opportunity to comment,

Lane Burt Manager, Building Energy Policy

Kate Houren Pro Bono Fellowship Attorney
New York State Bar # 788246 Not Yet Admitted to Practice in Washington, D.C.27 April 2010

Ms. Brenda Edwards

- Jones U.S. Department of Energy Building Technologies Program Mailstop EE

- 2J 1000 Independence Avenue, SW Washington, DC 20585

Re: Energy Conservation Program for Co nsumer Products: Energy Conservation Standards fo r Residential Furnaces (Docket No. EE

- 2009

- BT

- STD

- 0022/RIN 1904

- AC06 )

Dear Ms. Edwards -Jones:

These comments are submitted by the Air

- Conditioning , Heating and Refrigeration Institute (A H RI) in response to the U.S. Departm ent of Energy’s (DOE) notice a ppearing in the Federal Register on 15 March 2010 announcing the availability of a rulemaking analysis plan for residential furnaces.

AHRI is the trade association representing manufacturers of heating, cooling, and commercial refrigeration equipment. More than 350 members strong, AHRI is an internationally recognized advocate for the industry, and develops standards for and certifies the performance of many of the products manufactured by our members. In North America, the HVACR industry produces more than $20 billion worth of product, and in the United States alone, our members employ approximately 130,000 people, and support some 800,000 dealers and contractors.

AHRI has reviewed the rulemaking analysis plan and would to make the following

comments:

Consensus Agreement

As a signatory to the consensus agreement on minimum federal energy efficiency standards for residential furnaces, air conditioners and heat pumps, reached between AHRI and leading energy efficiency advocacy organizations last October, we strongly support the agreement and urge the Department of Energy to adopt it in a direct final
rule and without delay. We believe that the agreement has several benefits including:AHR I Comments – RAP Gas Furnaces
27 April 2010 Page | 2

• Accelerated effective date . The proposed standards would take effect in 2013 for

non

- weatherized furnaces, two and a half years ahead of the 80% AFUE standard published by DOE in 2007 and several years ahead of any new standard that DOE would promulgate under the current rulemaking. Accelerating the effective date will help the nation save energy several years ahead of any

standards established under the current schedule.

• Acceleration of the next rulemaking iteration

. According to the conse nsus agreement, the effective date for the next DOE rulemaking iteration is schedu led for January 1, 2019 for non

- weatherized furnaces and January 1, 2022 for air conditioners/heat pumps and weatherized furnaces. This schedule is a substantial acceleration of the next effective date relative to the dates by which DOE would be statutorily required to complete and implement the next final rules. These accelerated effective dates will save a considerable amount of energy.

• Significant amount of energy savings . The agreement, if adopted, would save 3.0 quads of primary energy by 2030. This is a significant amount of energy. These energy savings will result in annual greenhouse gas emission reductions of approximately 18 million metric tons of CO2 in year 2030.

• Economic savings to consumers

. According to our analysis , the agreement wil l

result in net economic savings to consumers of $13 billion with a 4.5% real discount rate. The average affected household will save about $260 on a discounted life cycle cost basis.

• Free

- up resources at DOE . The agreement is the result of two years of intense negotiations. Adopting the agreement in a direct final rule will free

- up resources at DOE, allowing the Department to speed up other rulemakings and focus on other products.

The Department of Energy has encouraged stakeholders in the past to con sider informal discussions which could result in a consensus agreement. Furthermore, in 2007, Congress amended the Energy Policy and Conservation Act (EPCA) to expedite the rulemaking process by authorizing DOE to issue direct final rules establishing new energy conservation standards upon receipt of joint stakeholders’ proposals. The consensus agreement satisfies the criteria of the law and the Process Improvement Rule. Consequently, we urge the Department to issue a direct final rule adopting the

agree ment as soon as possible. In the event that DOE cannot conduct a direct final rule, we would recommend that DOE adopt the agreement in an expedited rulemaking

process.AHR I Comments – RAP Gas Furnaces
27 April 2010 Page | 3

Combined Rulemaking Approach

DOE indicates that it is considering combining the central air conditioners and heat pumps, gas furnaces and furnace fans rulemakings if the analyses show that a combined approach result s in additional energy savings. AHRI does not support such approach. We would agree to a combined central air conditioners / heat pumps and gas furnaces rulemaking only in the context of the consensus agreement and its adoption by DOE in a direct final rule or through an expedited normal rulemaking

. In the event that DOE decides not to adopt the agreement, we would then recomme nd separate rulemakings. However, we feel that under no circumstances should DOE try to combine the furnace fans rulemaking with any of the two other rulemakings. As DOE noted, combining the furnace fans rulemaking with the gas furnaces and central air

c onditioners rulemakings will require DOE to publish a final rule no later than May 2011, two years ahead of the schedule laid out by the Energy Independence and Security Act (EISA) of 2007 1

. Shortening the time necessary to conduct the rulemaking analysis by two years is, in our opinion, not reasonable in particular since DOE has no pr ior experience in this area. We strongly believe that more time is needed to fully analyze
the electrical energy consumed by furnace fans and establish appropriate energy

co nservation standards. As such the rulemaking on furnace fans should be part of a separate process and not combined with the other rulemakings.

Standards Effective Dates

AHRI believes that, except for the building code provisions, DOE has express statut ory authority to publish a direct final rule adopting the standards descriptors, standard levels and standards effective dates contained in the consensus agreement. DOE has queried whether the agency has the legal authority to accelerate standards effect ive dates as proposed by the consensus agreement. AHRI believes DOE does have such authority in the context of adopting consensus standards. Section 325(p)(4) was added to EPCA in 2007 to encourage DOE to embrace and expedite adoption of consensus

stan dards that have the support of manufacturers, States and efficiency advocates, which is the case with the consensus agreement. Section 325(p)(4)(A) of EPCA, 42 U.S.C. § 6295(p)(4)(A), trumps section 325(m), 42 U.S.C. § 6295(m), and other sections of EPCA having to do with standards effective dates and compliance lead times. Under section 325(p)(4)(A), DOE is authorized to accept and adopt consensus standards, the only caveat being that the proposed standards must be in accordance with subsection 325(o), 42 U.S.C. § 6295(o), i.e. the standards must be technically feasible and economically justified. That is the only limitation on DOE’s discretion to adopt consensus standards. There is nothing in subsection 325(o) that prescribes minimum lead times for standards compliance or binds DOE to any schedule.

1 The Energy Independence and Security Act (EISA) of 2007 requires DOE to publish a final rule establishing energy conservation standards for furnace fans by January 1, 2013AHR I Comments – RAP Gas Furnaces
27 April 2010 Page | 4

AHRI believes that, in the spirit of section 325(p)(4)(A), DOE has authority to adopt the accelerated standards effective dates in the consensus agreement even if DOE elects to proceed via a conventional rulemaking process instead of via direct final rule. DOE has itself previously recognized that in special circumstances where the manufacturers who must comply with the standard support acceleration of the effective date of the standard DOE has flexibility to adopt the earlier effective date. See 67 Fed. Reg. 36394
and 69 Fed. Reg. 50998.

Enforcement

We recognize that the implementation of regional standards presents enforcement challenges. However, these challenges can be overcome and shouldn’t stop D OE from adopting the consensus agreement. We agree with DOE that effective energy saving through the implementation of regional standards is reliant upon the development and implementation of a strong enforcement policy. AHRI is committed to work with DO E, contractors, distributors and other stakeholders is developing an enforcement
framework that is practical and has minimal financial impact on the industry, the federal and state agencies as well as consumers

.

Condensing Furnaces in Replacement Applicat ions
Although not specifically identified as an issue by DOE, there were comments during
the 31 March 2010 meeting raising concerns about the consensus agreement. In particular questions were raised about replacement installations that might require
modi fication of the existing vent system to accommodate the “orphaned” gas water
heater. We want to remind DOE that this circumstance was considered during the rulemaking process for the final rule that has since been remanded. In the Technical Support Docum ents for that analysis DOE noted that 50% of existing furnace installations were common vented with a gas water heater. DOE further determined
that in about 30 % of those cases there would be an added cost in the range of $355 to $375 to correct the vent for the orphaned water heater. It should be recognized that the consensus agreement only requires condensing gas furnaces in the Northern half of the U.S. while the TSD analysis looked at this on a national basis. So, the consensus agreement actually reduces the number of installations that may incur added water heating venting costs since it will be only common vented installations in the north that may have this situation. Recognizing that North half has the colder winter, the payback of a 90% AFUE furnace will more easily cover the additional $375 or so associated with
this installation.

In summary, AHRI and the signatories to the consensus agreement worked very hard during the past two years in developing a comprehensive proposal. The consensus

ag reement has several notable benefits and features including stringent regional efficiency standards and accelerated effective dates that will result in significant energy savings. We urge the Department to adopt the agreement as soon as practically possib le.AHR I Comments – RAP Gas Furnaces
27 April 2010 Page | 5

AHRI appreciates the opportunity to provide these comments. If you have any

qu estions regarding this submission, please do not hesitate to contact me.

Sincerely,

Karim Amrane Vice President, Regulatory & Research Tel: 703/524

- 8800 ext.307
Email: kamrane@ahrinet.org