01-4102(L)

O1 .4103(CON), 02.41 60(CON), 02.4189(CON), 02.6139(CON)

NniuL States Qhnwt of Apttatu

for the

Otrnxth Orrutt

NATURAL RESOURCES DEFENSE COUNCIL, PUBLIC UTILITY LAW PROJECT, STATE

OF CONNECTICUT, STATE OF VERMONT, STATE OF MAINE, STATE OF NEW

JERSEY, STATE OF NEVADA, STATE OF CALIFORNIA, CONSUMER FEDERATION OF

AMERICA & STATE OF NEW YORK,

Petitioners,

(For Continuation of Caption See Inside Cover)

PETITIONS FOR REVIEW OF UNITED STATES

DEPARTMENT OF ENERGY RULES

BRIEF FOR PETITIONERS-INTERVENORS TEXAS RATEPAYERS'

ORGANIZATION TO SAVE ENERGY AND MASSACHUSETTS UNION

OF PUBLIC HOUSING TENANTS

CHARLES HARAK, ESQ.

Attorneys for Petitioners-Intervenors Texas

Ratepayers' Organization to Save Energy and

Massachusetts Union of Public Housing Tenants

National Consumer Law Center

77 Summer Street, 10th Floor

Boston, Massachusetts 02111

(617) 542-8010

EE-RM-STD-98-440 COMMENT 316

-. 

01-4103(CON), 02-4160(CON), 02-4189(CON), 02-6139(CON) 

Jtntttb &tatts Cltourt nf 1\pptals 

for the 

t'ttnnb mirrutt 

• 

NATURAL RESOURCES DEFENSE COUNCIL, PUBLIC UTILITY LAW PROJECT, STATE 

OF CONNECTICUT, STATE OF VERMONT, STATE OF MAINE, STATE OF NEW 

JERSEY, STATE OF NEVADA, STATE OF CALIFORNIA, CONSUMER FEDERATION OF 

AMERICA & STATE OF NEW YORK, 

(For Continuation of Caption See Inside Cover) 

PETITIONS FOR REVIEW OF UNITED STATES 

DEPARTMENT OF ENERGY RULES 

Petitioners, 

BRIEF FOR PETITIONERS-INTERVENORS TEXAS RATEPAYERS' 

ORGANIZATION TO SAVE ENERGY AND MASSACHUSETTS UNION 

OF PUBLIC HOUSING TENANTS 

CHARLES HARAK, ESQ. 

Attorneys for Petitioners-Intervenors Texas 

Ratepayers' Organization to Save Energy and 

Massachusetts Union of Public Housing Tenants 

National Consumer Law Center 

77 Summer Street, 10th Floor 

Boston, Massachusetts 02111 

(617) 542-8010 
- against -

SPENCER ABRAHAM, As Secretary of the United States Department of Energy & UNITED

STATES DEPARTMENT OF ENERGY,

Respondents,

- and -

AIR-CONDITIONING & REFRIGERATION INSTITUTE, STATE OF NEW HAMPSHIRE,

TEXAS RATEPAYERS' ORGANIZATION TO SAVE ENERGY, MASSACHUSETTS

UNION OF PUBLIC HOUSING TENANTS, COMMONWEALTH OF MASSACHUSETTS,

NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, & STATE

OF RHODE ISLAND,

Intervenors.

EE-RM-STD-98-440 COMMENT 316

- againstSPENCER ABRAHAM, As Secretary of the United States Department of Energy & UNITED 

STATES DEPARTMENT OF ENERGY, 

Respondents, 

-andAIR-CONDITIONING & REFRIGERATION INSTITUTE, STATE OF NEW HAMPSHIRE, 

TEXAS RATEPAYERS' ORGANIZATION TO SAVE ENERGY, MASSACHUSETTS 

UNION OF PUBLIC HOUSING TENANTS, COMMONWEALTH OF MASSACHUSETTS, 

NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, & STATE 

OF RHODE ISLAND, 

Intervenors. 

R 
CORPORATE DISCLOSURE STATEMENT, RULE 26.1

The intervenor Massachusetts Union of Public Housing Tenants

("MUPHT") is a non-profit corporation organized under the laws of the

Commonwealth of Massachusetts. MUPHT operates under § 501(c)(3) of the

Internal Revenue Code. It has no parent corporation and, as it has no stock, no

publicly held company owns 10% or more of its stock.

The intervenor Texas Ratepayers' Organization to Save Energy ("Texas

ROSE") is a non-profit corporation organized under the laws of the State of Texas.

Texas ROSE operates under § 501(c)(3) of the Internal Revenue Code. It has no

parent corporation and, as it has no stock, no publicly held company owns 10% or

more of its stock.

EE-RM-STD-98-440 COMMENT 316

CORPORATE DISCLOSURE STATEMENT, RULE 26.1 

The intervenor Massachusetts Union of Public Housing Tenants 

("MUPHT") is a non-profit corporation organized under the laws of the 

Commonwealth of Massachusetts. MUPHT operates under § 501(c)(3) of the 

Internal Revenue Code. It has no parent corporation and, as it has no stock, no 

publicly held company owns 10% or more of its stock. 

The intervenor Texas Ratepayers' Organization to Save Energy ("Texas 

ROSE") is a non-profit corporation organized under the laws of the State of Texas. 

Texas ROSE operates under § 501(c)(3) of the Internal Revenue Code. It has no 

parent corporation and, as it has no stock, no publicly held company owns 10% or 

more of its stock. 

Corp-l 
TABLE OF CONTENTS

CORPORATE DISCLOSURE STATEMENT (preceding this Table) Corp-1

TABLE OF AUTHORITIES 111

JURISDICTIONAL STATEMENT 1

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW 3

STATEMENT OF THE CASE 4

STATEMENT OF FACTS 4

1. EPCA AND OTHER ENERGY CONSERVATION

LAWS AND POLICIES 5

2. THE INTERESTS OF LOW INCOME CONSUMERS 7

3. DOE'S ROLLBACK OF THE SEER 13 STANDARD 12

SUMMARY OF ARGUMENT 17

ARGUMENT 19

DOE VIOLATED THE APA IN BASING THE MAY 23 FINAL

RULE ON A FINDING THAT LOW INCOME CONSUMERS

WOULD BE DISPROPORTIONATELY HARMED BY

ADOPTION OF SEER 13 9

A. Standard of Review 19

B. DOE Violated the APA by Making a Decision Contrary

to the Record Before It and By Relying on Inapposite,

Extra-Record Sources Which It Failed to Disclose to Parties 24

i

EE-RM-STD-98-440 COMMENT 316

TABLE OF CONTENTS 

CORPORATE DISCLOSURE STATEMENT (preceding this Table) 

TABLE OF AUTHORITIES 

JURlSDICTIONAL STATEMENT 

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW 

STATEMENT OF THE CASE 

STATEMENT OF FACTS 

1. EPCA AND OTHER ENERGY CONSERV A TION 

LA WS AND POLICIES 

2. THE INTERESTS OF LOW INCOME CONSUMERS 

3. DOE'S ROLLBACK OF THE SEER 13 STANDARD 

SUMMARY OF ARGUMENT 

ARGUMENT 

1. DOE VIOLATED THEAP A IN BASING THE MAY 23 FINAL 

RULE ON A FINDING THAT LOW INCOME CONSUMERS 

WOULD BE DISPROPORTIONATELY HARMED BY 

ADOPTION OF SEER 13 

Corp-l 

111 

1 

3 

4 

4 

5 

7 

12 

17 

19 

19 

A. Standard of Review 19 

B. DOE Violated the AP A by Making a Decision Contrary 

to the Record Before It and By Relying on Inapposite, 

Extra-Record Sources Which It Failed to Disclose to Parties 24 

1 
1. The Record Fully Supports the Adoption of SEER 13

As Benefitting Low Income Consumers

2. There is No Adequate Record Support for DOE's

Conclusion That SEER 13 Disproportionately

Harms Low Income Consumers,

and Its Conclusions Violate the APA

II. CONCLUSION

CERTIFICATE OF COMPLIANCE

27

36

49

50

ii

EE-RM-STD-98-440 COMMENT 316

II. 

1. 

2. 

The Record Fully Supports the Adoption of SEER 13 

As Benefitting Low Income Consumers 

There is No Adequate Record Support for DOE's 

Conclusion That SEER 13 Disproportionately 

Harms Low Income Consumers, 

and Its Conclusions Violate the AP A 

CONCLUSION 

CERTIFICATE OF COMPLIANCE 

11 

27 

36 

49 

50 
TABLE OF AUTHORITIES

CASES

Cal-Almond, Inc. v. United States Dep't ofAgriculture,

14 F.3d 429 (9th Cir. 1993) 13

Callaway v. Commissioner, 231 F.3d 106 (2nd Cir. 2000) 44

Diamond v. Charles, 476 U.S. 54, 64 ( 1986) 1

Motor Vehicle Manufacturers Ass'n of the U.S., Inc.

v. State Farm Mutual Ins. Co., 463 U.S. 29 (1983) 20,24148

Murphy Exploration and Production Co.

v. U.S. Dep't of the Interior, 252 F.3d 473 (D.C.Cir. 2001) 33, 38, 48

National Ass'n of Indep. Television Producers and Distributors

v. FCC, 502 F.2d 249 (2nd Cir. 1974) 13

National Black Media Coalition v. FCC, 791 F. 2d 1016 (2nd Cir. 1986) 23, 39,

40, 46, 48

New York State National Organization for Women

v. Patakai, 261 F.3d 156 (2nd Cir. 2001)

Reyblatt v. U. S. Nuclear Regulatory Commission, 105 F.3d 715 (D.C. Cir. 1997)

23, 38

Riverhead Farms, Inc. v. Madigan, 958 F. 2d 1479 (9" Cir.) 13

Sierra Club v. U.S. Army Corps of Engineers, 772 F.2d 1043 (2na Cir. 1975) 23

Texas Gray Panthers v. Thompson, 139 F. Supp. 66 (D.D.C. 2001) 2

United States v. Nova Scotia Food Products Corp.,

568 F.2d 240 (2"d Cir. 1977) 22, 23, 40, 41, 48

ill

EE-RM-STD-98-440 COMMENT 316

TABLE OF AUTHORITIES 

CASES 

Cal-Almond, Inc. v. United States Dep 't of Agriculture, 

14 F.3d 429 (9th Cir. 1993) 13 

Callaway v. Commissioner, 231 F.3d 106 (2nd Cir. 2000) 44 

Diamond v. Charles, 476 U.S. 54, 64 (1986) 1 

Motor Vehicle Manufacturers Ass 'n o/the Us., Inc. 

v. State Farm Mutual Ins. Co., 463 U.S. 29 (1983) 20, 24, 48 

Murphy Exploration and Production Co. 

v. us. Dep 't of the Interior, 252 F.3d 473 (D.C.Cir. 2001) 33,38,48 

National Ass 'n o/Indep. Television Producers and Distributors 

v. FCC, 502 F.2d 249 (2nd Cir. 1974) 13 

National Black Media Coalition v. FCC, 791 F. 2d 1016 (2nd Cir. 1986) 23,39, 

40,46,48 

New York State National Organization/or Women 

v. Patakai, 261 F.3d 156 (2nd Cir. 2001) 1 

Reyblatt v. U S. Nuclear Regulatory Commission, 105 F.3d 715 (D.C. Cir. 1997) 

23,38 

Riverhead Farms, Inc. v. Madigan, 958 F.2d 1479 (9th Cir.) 13 

Sierra Club v. US. Army Corps 0/ Engineers, 772 F.2d 1043 (2nd Cir. 1975) 23 

Texas Gray Panthers v. Thompson, 139 F. Supp. 66 (D.D.C. 2001) 2 

United States v. Nova Scotia Food Products Corp., 

568 F .2d 240 (2nd Cir. 1977) 

111 

22,23,40,41,48 
STATUTES

5 U.S.C.A. § 553

5 U.S.C.A. § 706

42 U.S.C.A. § 6201

42 U.S.C.A. § 6295(d)(3)(A)

42 U.S.-C.A. § 6295(o)

42 U.S.C.A. §§ 6851 - 6873

PUBLIC LAWS

Pub. L. 94-163, 89 Stat. 871 (1975)

Pub. L. 94-385, 90 Stat. 1150 (1976)

FEDERAL REGISTER

66 Fed. Reg. 7170 - 7200 (Jan. 22, 2001)

66 Fed. Reg. 7702 (Jan. 24, 2001)

66 Fed. Reg. 8745 (Feb. 2, 2001)

66 Fed. Reg. 38822 - 38844 (July 25, 2001)

67 Fed. Reg. 36368 - 36409 (May 23, 2002)

MISCELLANEOUS

H. Rep. No. 94-530

13, 22

23,27,37

6

14

11,13,21,24

11

5

10

Passim

14

15, 16

7, 16, 20, 24545

Passim

5

iv

EE-RM-STD-98-440 COMMENT 316

STATUTES 

5 V.S.C.A. § 553 

5 V.S.C.A. § 706 

42 V.S.C.A. § 6201 

42 U.S.C.A . § 6295( d)(3)(A) 

42 U.S.C.A. § 6295(0) 

42 V.S.C.A. §§ 6851 - 6873 

PUBLIC LAWS 

Pub. L. 94-163, 89 Stat. 871 (1975) 

Pub. L. 94-385, 90 Stat. 1150 (1976) 

FEDERAL REGISTER 

66 Fed. Reg. 7170 - 7200 (Jan. 22,2001) 

66 Fed. Reg. 7702 (Jan. 24, 2001) 

66 Fed. Reg. 8745 (Feb. 2, 2001) 

66 Fed. Reg. 38822 - 38844 (July 25, 2001) 

67 Fed. Reg. 36368 - 36409 (May 23, 2002) 

MISCELLANEOUS 

H. Rep. No. 94-530 

IV 

13,22 

23,27,37 

6 

14 

11, 13, 21, 24 

11 

5 

10 

Passim 

14 

15, 16 

7,16,20,24,45 

Passim 

5 
JURISDICTIONAL STATEMENT

As allowed by FRAP 28(i), the Massachusetts Union of Public Housing

Tenants ("MUPHT") and Texas Ratepayers' Organization to Save Energy ("Texas

ROSE") adopt the Statement of Jurisdiction included in the brief filed by the

Natural Resources Defense Council et al. ("Petitioners").'

Regarding their own standing, MUPHT and Texas ROSE note that this

Court has already granted their motion to intervene as petitioners in this case. July

25, 2002 Order. As parties granted intervenor status, they need not demonstrate

standing apart from the standing of the petitioners in these consolidated cases.

Diamond v. Charles, 476 U.S. 54, 64, 67 (1986)(intervenors may "ride

`piggyback"' on other parties who have standing). To the extent MUPHT and

Texas ROSE must independently demonstrate their organizational standing, they

have done so through the affidavits submitted with their June 20, 2002 Motion to

Intervene filed with this court. See New York State National Organization for

Women v. Patakai, 261 F.3d 156, 163 (2"d Cir. 2001)(NOW has organizational

The petitioners are the Natural Resources Defense Council; Public

Utility Law Project; Consumer Federation of America; and States of California,

Connecticut, Maine, New Jersey, Nevada, New York and Vermont. On brief, they

are joined by the intervenors State of New Hampshire, State of Rhode Island and

Commonwealth of Massachusetts (collectively, Petitioners).

1

EE-RM-STD-98-440 COMMENT 316

JURISDICTIONAL STATEMENT 

As allowed by FRAP 28(i), the Massachusetts Union of Public Housing 

Tenants ("MUPHT") and Texas Ratepayers' Organization to Save Energy ("Texas 

ROSE") adopt the Statement of Jurisdiction included in the brief filed by the 

Natural Resources Defense Council et al. ("Petitioners"). 1 

Regarding their own standing, MUPHT and Texas ROSE note that this 

Court has already granted their motion to intervene as petitioners in this case. July 

25, 2002 Order. As parties granted intervenor status, they need not demonstrate 

standing apart from the standing of the petitioners in these consolidated cases. 

Diamond v. Charles, 476 U.S. 54, 64, 67 (1 986)(intervenors may "ride 

'piggyback'" on other parties who have standing). To the extent MUPHT and 

Texas ROSE must independently demonstrate their organizational standing, they 

have done so through the affidavits submitted with their June 20, 2002 Motion to 

Intervene filed with this court. See New York State National Organization for 

Women v. Patakai, 261 F.3d 156, 163 (2nd Cir. 2001)(NOW has organizational 

The petitioners are the Natural Resources Defense Council; Public 

Utility Law Project; Consumer Federation of America; and States of California, 

Connecticut, Maine, New Jersey, Nevada, New York and Vennont. On brief, they 

are joined by the intervenors State of New Hampshire, State of Rhode Island and 

Commonwealth of Massachusetts ( collectively, Petitioners). 

1 
standing to bring suit challenging failure of state agency to timely resolve

discrimination complaints; organizational plaintiff has standing to sue on behalf of

its members); Texas Gray Panthers v. Thompson, 139 F. Supp. 66, 71 (D.D.C.

2001)(plaintiff association, which represents the interests of low income seniors,

has organizational standing to challenge agency failure to act, if it shows injury in

fact; that injury is "fairly traceable to the defendant's conduct"; and that "injury

will be redressed by a favorable decision").

The affidavits of John A. Cooper, for MUPHT, and of Carol Biedrzycki, for

Texas ROSE, filed on June 20, 2002 with this Court establish that the actions of

the Department of Energy ("DOE") to roll back the Seasonal Energy Efficiency

Rating ("SEER") for residential central air conditions from SEER 13 to SEER 122

harmed consumers in general, and particularly harmed the many low income

members of these two groups. Low income consumers, more than other

consumers, benefit from more widespread availability and use of energy efficient

air conditioners because they are less able to pay for the electric energy that runs

them.' The affidavits and record make it perfectly clear that the harm low income

2 See 67 Fed. Reg. 36368 - 36409 (May 23, 2002), SPA 205 - 246.

3 Because of their low incomes, poorer families spend a disproportionate

share of their income meeting basic energy needs. See National Consumer Law

2

EE-RM-STD-98-440 COMMENT 316

standing to bring suit challenging failure of state agency to timely resolve 

discrimination complaints; organizational plaintiff has standing to sue on behalf of 

its members); Texas Gray Panthers v. Thompson, 139 F. Supp. 66, 71 (D.D.C. 

2001 )(plaintiff association, which represents the interests of low income seniors, 

has organizational standing to challenge agency failure to act, if it shows injury in 

fact; that injury is "fairly traceable to the defendant's conduct"; and that "injury 

will be redressed by a favorable decision"). 

The affidavits of John A. Cooper, for MUPHT, and of Carol Biedrzycki, for 

Texas ROSE, filed on June 20, 2002 with this Court establish that the actions of 

the Department of Energy ("DOE") to roll back the Seasonal Energy Efficiency 

Rating ("SEER") for residential central air conditions from SEER 13 to SEER 122 

harmed consumers in general, and particularly harmed the many low income 

members of these two groups. Low income consumers, more than other 

consumers, benefit from more widespread availability and use of energy efficient 

air conditioners because they are less able to pay for the electric energy that runs 

them. 3 The affidavits and record make it perfectly clear that the harm low income 

2 See 67 Fed. Reg. 36368 - 36409 (May 23, 2002), SPA 205 - 246. 

3 Because of their low incomes, poorer families spend a disproportionate 

share of their income meeting basic energy needs. See National Consumer Law 

2 
consumers will suffer is "fairly traceable to the defendant's [respondent DOE's]

conduct," as DOE promulgated the rules in question. There is no question that a

favorable decision invalidating DOE's rollback of the SEER 13 standard would

remedy the injury identified in the MUPHT and Texas ROSE affidavits.

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW

MUPHT and Texas ROSE generally adopt the Issues Presented for Review

in the brief of the Petitioners, but add one additional issue:

1. Did DOE violate the Administrative Procedure Act by failing to disclose,

prior to final promulgation of the SEER 12 air conditioning efficiency

standard at issue here, the key economic sources and formulae it primarily

relied upon to conclude that previously-promulgated SEER 13 standard

would harm low income consumers and should be withdrawn?

Center, Access to Utility Service, § 7.1.1 (2°a Ed. 2001)(families receiving

governmental income assistance spend 25% or more of their income on energy;

average family spends three to five percent).

3

EE-RM-STD-98-440 COMMENT 316

consumers will suffer is "fairly traceable to the defendant's [respondent DOE's] 

conduct," as DOE promulgated the rules in question. There is no question that a 

favorable decision invalidating DOE's rollback of the SEER 13 standard would 

remedy the injury identified in the MUPHT and Texas ROSE affidavits. 

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW 

MUPHT and Texas ROSE generally adopt the Issues Presented for Review 

in the brief of the Petitioners, but add one additional issue: 

1. Did DOE violate the Administrative Procedure Act by failing to disclose, 

prior to final promulgation of the SEER 12 air conditioning efficiency 

standard at issue here, the key economic sources and formulae it primarily 

relied upon to conclude that previously-promulgated SEER 13 standard 

would harm low income consumers and should be withdrawn? 

Center, Access to Utility Service, § 7.l.1 (2nd Ed. 2001)(families receiving 

governmental income assistance spend 25% or more of their income on energy; 

average family spends three to five percent). 

3 
STATEMENT OF THE CASE

MUPHT and Texas ROSE adopt the Statement of the Case in the brief of

the Petitioners, adding that MUPHT and Texas ROSE filed their Motion to

Intervene on June 20, 2002, and that the Court granted the Motion on July 25,

2002.

STATEMENT OF FACTS

MUPHT and Texas ROSE generally adopt the Petitioners' Statement of

Facts. However, they make some additional points below regarding: the context

and purposes of the Energy and Policy Conservation Act; the interests of low

income consumers in higher air conditioning efficiency standards, as those issues

are particularly relevant to the intervenors MUPHT and Texas ROSE;4 and the

context of DOE's decision to roll back the SEER 13 standard it formally

4 "MUPHT is the oldest statewide association of public housing tenants in

the United States" and represents the interests of low income consumers in

Massachusetts. Declaration of John A. Cooper in Support of Motion to Intervene

(filed June 20, 2002). "Texas ROSE is a statewide non-profit membership

organization dedicated to affordable electricity and a healthy environment for

residential and low-income consumers." Declaration of Carol Biedrzycki in

Support of Motion to Intervene (filed June 20, 2002).

4

EE-RM-STD-98-440 COMMENT 316

STATEMENT OF THE CASE 

MUPHT and Texas ROSE adopt the Statement of the Case in the brief of 

the Petitioners, adding that MUPHT and Texas ROSE filed their Motion to 

Intervene on June 20,2002, and that the Court granted the Motion on July 25, 

2002. 

STATEMENT OF FACTS 

MUPHT and Texas ROSE generally adopt the Petitioners' Statement of 

Facts. However, they make some additional points below regarding: the context 

and purposes of the Energy and Policy Conservation Act; the interests of low 

income consumers in higher air conditioning efficiency standards, as those issues 

are particularly relevant to the intervenors MUPHT and Texas ROSE;4 and the 

context of DOE's decision to roll back the SEER 13 standard it formally 

4 "MUPHT is the oldest statewide association of public housing tenants in 

the United States" and represents the interests of low income consumers in 

Massachusetts. Declaration of John A. Cooper in Support of Motion to Intervene 

(filed June 20, 2002). "Texas ROSE is a statewide non-profit membership 

organization dedicated to affordable electricity and a healthy environment for 

residential and low-income consumers." Declaration of Carol Biedrzycki in 

Support of Motion to Intervene (filed June 20, 2002). 

4 
promulgated as a Final Rule on January 22, 2001.5 ("January 22 Final Rule").

1. EPCA AND OTHER ENERGY CONSERVATION LAWS AND POLICIES

Energy conservation has consistently been an important component of

America's domestic and foreign policy since shortly after the Arab Oil Embargo

of 1973.6 In 1975 , Congress, shocked by the oil embargo and its effect on the

economy, adopted the Energy Policy and Conservation Act ("EPCA"), Pub. L. 94-

163, 89 Stat. 871 (1975). Congress noted that "the nation has entered a new era in

which energy resources previously abundant, will remain in short supply." H.

Rep. No. 94-530, at 1, reprinted in 1994 U.S.C.C.A.N. 1763 . For the first time,

Congress established:

regulatory programs to bring about measured savings in consumption of

energy by improving the efficiency of the products we use ....

Id. Congress was alarmed that over the prior two decades the country had

slipped from being a significant "net exporter of energy supplies" to a significant

importer, threatening the American economy and well-being of its citizens. H.

5 See 66 Fed. Reg. 7170 - 7200 (Jan. 22, 2001), SPA 144 - 174.

6 For an overview of the impact of the embargo on America's energy

policy, see Energy Information Administration, 25`h Anniversary of the 1973 Oil

Embargo, at http://www.eia.doe.gov/emeu/25opec (last modified Mar. 7, 2000).

5

EE-RM-STD-98-440 COMMENT 316

promulgated as a Final Rule on January 22, 200l. 5 ("January 22 Final Rule"). 

1. EPCA AND OTHER ENERGY CONSERVATION LAWS AND POLICIES 

Energy conservation has consistently been an important component of 

. America's domestic and foreign policy since shortly after the Arab Oil Embargo 

of 1973.6 In 1975, Congress, shocked by the oil embargo and its effect on the 

economy, adopted the Energy Policy and Conservation Act ("EPCA"), Pub. L. 94-

163, 89 Stat. 871 (1975). Congress noted that "the nation has entered a new era in 

which energy resources previously abundant, will remain in short supply." H. 

Rep. No. 94-530, at 1, reprinted in 1994 U.S.C.C.A.N. 1763. For the first time, 

Congress established: 

regulatory programs to bring about measured savings in consumption of 

energy by improving the efficiency of the products we use .... 

Id. Congress was alarmed that over the prior two decades the country had 

slipped from being a significant "net exporter of energy supplies" to a significant 

importer, threatening the American economy and well-being of its citizens. H. 

5 See 66 Fed. Reg. 7170 - 7200 (Jan. 22, 2001), SPA 144 - 174. 

6 For an overview of the impact of the embargo on America's energy 

policy, see Energy Information Administration, 25th Anniversary of the 1973 Oil 

Embargo, at http://www.eia.doe.gov/emeul250pec (last modified Mar. 7, 2000). 

5 . 
Rep. No. 94-350, at 2-3, 1994 U.S.C.C.A.N., at 1764-1765.

In passing EPCA, Congress intended "to conserve energy supplies through

energy conservation programs, and ... to provide for improved energy efficiency

of ... major appliances ...." 42 U.S.C.A. § 6201(4), (5)(West 1995). While

these policies were first adopted more than twenty-five years ago in response to

the Arab oil embargo and threat of future embargos, energy conservation remains

at least as important today as the country draws closer to another war in the

Middle East. The need to conserve energy, including through aggressive

implementation of appliance efficiency standards, remains paramount.

The current Administration has publicly emphasized that conservation

remains a high priority. Last year, the White House released its National Energy

Policy, in a report from the National Energy Policy Group chaired by VicePresident Cheney. The White House, Reliable, Affordable and Environmentally

Sound Energy for America 's Future (May 2001),

http://www.whitehouse.gov/energy ("America's Future"). As America's Future

highlights at the outset, "America faces the most serious energy shortage since the

oil embargoes of the 1970s." Id. at viii ("Overview"). America 's Future was

written well before the events of September 11 and the country's heightened

concerns over the security and reliability of energy supply from the Middle East,

6

EE-RM-STD-98-440 COMMENT 316

Rep. No. 94-350, at 2-3, 1994 U.S.C.C.A.N., at 1764-1765. 

In passing EPCA, Congress intended "to conserve energy supplies through 

energy conservation programs, and ... to provide for improved energy efficiency 

of ... major appliances .... " 42 U.S.C.A. § 6201(4), (5)(West 1995). While 

these policies were first adopted more than twenty-five years ago in response to 

the Arab oil embargo and threat of future embargos, energy conservation remains 

at least as important today as the country draws closer to another war in the 

Middle East. The need to conserve energy, including through aggressive 

implementation of appliance efficiency standards, remains paramount. 

The current Administration has publicly emphasized that conservation 

remains a high priority. Last year, the White House released its National Energy 

Policy, in a report from the National Energy Policy Group chaired by VicePresident Cheney. The White House, Reliable, Affordable and Environmentally 

Sound Energy for America's Future (May 2001), 

http://www.whitehouse.gov/energy ("America's Future"). As America's Future 

highlights at the outset, "America faces the most serious energy shortage since the 

oil embargoes of the 1970s." Id. at viii ("Overview"). America's Future was 

written well before the events of September 11 and the country's heightened 

concerns over the security and reliability of energy supply from the Middle East, 

6 
but it still notes that America's domestic energy consumption is increasing as

supply is falling, and that this is "leaving us ever more reliant on foreign

suppliers." Id. at x.' This is no time to retreat from energy conservation efforts,

yet that is exactly what DOE has done, by rolling back the SEER 13 standard to

SEER 12.

2. THE INTERESTS OF LOW INCOME CONSUMERS

In promulgating the January 22, 2001 Final Rule that included the SEER 13

standard, DOE concluded that it "will have a net benefit to the nation's consumers

of $1 billion" over the period 2006, when manufacturers would first have to

comply, through 2030. 66 Fed. Reg. 7171, SPA 145. In the January 22 Final

Rule, DOE further noted, in response to comments that low income people could

not afford to purchase more efficient air conditioners, that it had "examined the

impact on low income consumers, and found them to benefit overall." 66 Fed..

Reg. 7175, SPA 149.

' America's Future, issued May 2001, includes a recommendation that "the

President direct the Secretary of Energy to improve the energy efficiency of

appliances." Id. at 4-11. Two months later, DOE formally withdraw the January

22 Final Rule, with its SEER 13 standard, and proposed a SEER 12 standard that

will result in reducing the energy efficiency of central air conditioners. 66 Fed.

Reg. 38822, 38830 (July 25, 2001), SPA 179, 187.

7

EE-RM-STD-98-440 COMMENT 316

but it still notes that America's domestic energy consumption is increasing as 

supply is falling, and that this is "leaving us ever more reliant on foreign 

suppliers." Id. at X.7 This is no time to retreat from energy conservation efforts, 

yet that is exactly what DOE has done, by rolling back the SEER 13 standard to 

SEER 12. 

2. THE INTERESTS OF LOW INCOME CONSUMERS 

In promulgating the January 22, 2001 Final Rule that included the SEER 13 

standard, DOE concluded that it "will have a net benefit to the nation's consumers 

of $1 billion" over the period 2006, when manufacturers would first have to 

comply, through 2030. 66 Fed. Reg. 7171, SPA 145. In the January 22 Final 

Rule, DOE further noted, in response to comments that low income people could 

not afford to purchase more efficient air conditioners, that it had "examined the 

impact on low income consumers, and found them to benefit overall." 66 Fed. 

Reg. 7175, SPA 149. 

7 America's Future, issued May 2001, includes a recommendation that "the 

President direct the Secretary of Energy to improve the energy efficiency of 

appliances." Id. at 4-11. Two months later, DOE formally withdraw the January 

22 Final Rule, with its SEER 13 standard, and proposed a SEER 12 standard that 

will result in reducing the energy efficiency of central air conditioners. 66 Fed. 

Reg. 38822, 38830 (July 25,2001), SPA 179,187. 

7 
Throughout the DOE rulemaking proceedings, numerous parties submitted

written comments and oral testimony on whether a SEER 13 standard would help

or harm low income customers. Those that maintained SEER 13 was beneficial

for low income consumers included federal and government agencies, consumer

groups and environmental organizations.' See, for example, JA 6990 - 6997,

B0006598 - B0006605 (Oct. 19, 2001 Letter and appended Comments of the

Environmental Protection Agency: air conditioning use occurs during summer

peak loads and therefore drives up costs for all consumers; low income consumers

will benefit from lower electricity costs if air conditioners are more efficient; most

low income households are renters and will not pay the capital costs of more

efficient air conditioning); JA 7005 - 7024, B0006613 - 6632 (Oct. 19, 2001

Comments of New York and Massachusetts Attorneys General: SEER 13 will

reduce electricity prices for all consumers because inefficient air conditioners

increase usage on peak summer days; low income households are renters, do not

purchase central air conditioners but will bear higher energy bills if SEER 13 is

not adopted); JA 7035 - 70394, B0006643 - 6648 (Oct. 19, 2001 Comments of the

Alliance to Save Energy: a SEER standard lower than 13 will increase electricity

8 Notably, not a single low'income or consumer group supported SEER12;

all strongly supported SEER 13.

8

EE-RM-STD-98-440 COMMENT 316

Throughout the DOE rulemaking proceedings, numerous parties submitted 

written comments and oral testimony on whether a SEER 13 standard would help 

or harm low income customers. Those that maintained SEER 13 was beneficial 

for low income consumers included federal and government agencies, consumer 

groups and environmental organizations. 8 See, for example, JA 6990 - 6997, 

B0006598 - B0006605 (Oct. 19,2001 Letter and appended Comments of the 

Environmental Protection Agency: air conditioning use occurs during summer 

peak loads and therefore drives up costs for all consumers; low income consumers 

will benefit from lower electricity costs if air conditioners are more efficient; most 

low income households are renters and will not pay the capital costs of more 

efficient air conditioning); JA 7005 - 7024, B0006613 - 6632 (Oct. 19,2001 

Comments of New York and Massachusetts Attorneys General: SEER 13 will 

reduce electricity prices for all consumers because inefficient air conditioners 

increase usage on peak summer days; low income households are renters, do not 

purchase central air conditioners but will bear higher energy bills if SEER 13 is 

not adopted); JA 7035 - 70394, B0006643 - 6648 (Oct. 19, 2001 Comments of the 

Alliance to Save Energy: a SEER standard lower than 13 will increase electricity 

8 Notably, not a single low income or consumer group supported SEER12; 

all strongly supported SEER 13. 

8 
prices for all consumers, including low income households that do not have air

conditioning); JA 6432 - 6435, B0006078 - 6081 (Sept. 13, 2001 Comments of

Northeast Energy Efficiency Partnerships: DOE's analysis ignores the fact that

reducing air conditioning usage on peak summer days will lower overall electric

rates, benefitting the millions of low income households who do not have air

conditioning; low income renters who have central air conditioning do not pay the

capital costs of central air conditioners yet reap the energy savings); JA 6438 -

6455, B0006084 - 6101 (Sept. 10, 2001 Comments of Texas ROSE: "low-income

Texans have much to gain from raising the standard [to SEER 13] as quickly as

possible"); JA 6772 - 6778, B0006380 -6386 (Oct. 2, 2001 Comments of four

dozen consumer, health and environmental organizations and others: DOE's own

estimates show that SEER 13 equipment will cost only $122 more than SEER 12;

low income households will be harmed by roll back to SEER 12; SEER 12 units

consume more energy); JA 6395 - 6396, B0006041 - 6042 (Sept. 13, 2001

Comments of Consumer Federation of America: the energy savings from SEER 13

unit will quickly pay back any increase in initial purchase cost); JA 6315 - 6318,

B0005969 - 5972 (Comments of Environmental Ministries of California: low

income households are disproportionately renters; if DOE does not move to SEER

13, landlords will purchase the less efficient units because capital costs are lower,

9

EE-RM-STD-98-440 COMMENT 316

prices for all consumers, including low income households that do not have air 

conditioning); JA 6432 - 6435, B0006078 - 6081 (Sept. 13,2001 Comments of 

Northeast Energy Efficiency Partnerships: DOE's analysis ignores the fact that 

reducing air conditioning usage on peak summer days will lower overall electric 

rates, benefitting the millions of low income households who do not have air 

conditioning; low income renters who have central air conditioning do not pay the 

capital costs of central air conditioners yet reap the energy savings); JA 6438 -

6455, B0006084 - 6101 (Sept. 10,2001 Comments of Texas ROSE: "low-income 

Texans have much to gain from raising the standard [to SEER 13] as quickly as 

possible"); JA 6772 - 6778, B0006380 -6386 (Oct. 2, 2001 Comments of four 

dozen consumer, health and environmental organizations and others: DOE's own 

estimates show that SEER 13 equipment will cost only $122 more than SEER 12; 

low income households will be harmed by roll back to SEER 12; SEER 12 units 

consume more energy); JA 6395 - 6396, B0006041 - 6042 (Sept. 13,2001 

Comments of Consumer Federation of America: the energy savings from SEER 13 

unit will quickly pay back any increase in initial purchase cost); JA 6315 - 6318, 

B0005969 - 5972 (Comments of Environmental Ministries of California: low 

income households are disproportionately renters; if DOE does not move to SEER 

13, landlords will purchase the less efficient units because capital costs are lower, 

9 
yet tenants will bear the higher operating costs through their electric bills).

By contrast, those who asserted that SEER 13 would be harmful to low

income households included air conditioning manufacturers, their trade

association (the Air-Conditioning and Refrigerating Institute), and elected officials

from states in which air conditioners are manufactured. The corporate and

organizational parties who argued that SEER 13 would harm low income

consumers simply do not represent the interests of low income people. Their true

interest is in rolling back the SEER 13 standard that would have imposed higher

costs on manufacturers and potentially cut into manufacturer profits.'

Congress has long recognized that low income families have unique

burdens in meeting their energy needs and that energy conservation is especially

valuable to those who struggle to pay their bills. The homes and apartments in

which low income families reside are less energy-efficient than the average

dwelling, and, thus, there are programs apart from EPCA's appliance efficiency

standards that focus on the energy conservation needs of low income families. In

1976, Congress adopted the Energy Conservation in Existing Buildings Act, Pub.

' In withdrawing the SEER 13 Final Rule and replacing it with a SEER 12

standard, DOE paid close heed to manufacturers' arguments regarding higher

costs and profit impacts. 67 Fed. Reg. 36387 - 36389 (May 23, 2002), SPA 224 -

226.

10

EE-RM-STD-98-440 COMMENT 316

yet tenants will bear the higher operating costs through their electric bills). 

By contrast, those who asserted that SEER 13 would be harmful to low 

income households included air conditioning manufacturers, their trade 

association (the Air-Conditioning and Refrigerating Institute), and elected officials 

from states in which air conditioners are manufactured. The corporate and 

organizational parties who argued that SEER 13 would harm low income 

consumers simply do not represent the interests of low income people. Their true 

interest is in rolling back the SEER 13 standard that would have imposed higher 

costs on manufacturers and potentially cut into manufacturer profits. 9 

Congress has long recognized that low income families have unique 

burdens in meeting their energy needs and that energy conservation is especially 

valuable to those who struggle to pay their bills. The homes and apartments in 

which low income families reside are less energy-efficient than the average 

dwelling, and, thus, there are programs apart from EPCA's appliance efficiency 

standards that focus on the energy conservation needs of low income families. In 

1976, Congress adopted the Energy Conservation in Existing Buildings Act, Pub. 

9 In withdrawing the SEER 13 Final Rule and replacing it with a SEER 12 

standard, DOE paid close heed to manufacturers' arguments regarding higher 

costs and profit impacts. 67 Fed. Reg. 36387 - 36389 (May 23,2002), SPA 224 -

226. 

10 
L. 94-385, Title IV, 90 Stat. 1150 - 1158, codified at 42 U.S.C.A. §§ 6851 - 6873

(West 1995 & Supp. 2002) and created the federal weatherization program for low

income families. 10 The law notes the connection between the "energy inefficient"

homes in which low income people reside and "the Nation's [continued]

dependence on imported energy supplies," 42 U.S.C.A. § 6861(a). Millions of

low income families still live in poorly insulated and inefficient homes, making it

harder and more expensive to keep these homes cool in warm weather." Thus,

low income people have more to gain than others from higher equipment

efficiency standards. JA 6783 - 6785, B0006391 - 6393 (Oct. 18, 2001 Comments

of Consumer Federation of America). Raising air conditioning efficiency

standards is not only required by EPCA, 42 U.S.C.A. § 6295(o), but consistent

with the federal weatherization program's goal of helping low income families

meet their energy needs.

10 DOE operates the low income weatherization program. 42 U.S.C.A. §§

6862( 1), 6863(a).

11 See October 18, 2001 Letter of Emily Achtenberg , JA 6848 - 6849,

B0006456 - 6457 (low income people tend to live in older , poorly insulated homes

and will therefore reap larger than average savings from use of more efficient air

conditioners).

11

EE-RM-STD-98-440 COMMENT 316

L. 94-385, Title IV, 90 Stat. 1150 - 1158, codified at 42 U.S.C.A. §§ 6851 - 6873 

(West 1995 & Supp. 2002) and created the federal weatherization program for low 

income families. 10 The law notes the connection between the "energy inefficient" 

homes in which low income people reside and "the Nation's [continued] 

dependence on imported energy supplies," 42 U.S.C.A. § 6861(a). Millions of 

low income families still live in poorly insulated and inefficient homes, making it 

harder and more expensive to keep these homes cool in warm weather. I I Thus, 

low income people have more to gain than others from higher equipment 

efficiency standards. JA 6783 - 6785, B0006391 - 6393 (Oct. 18,2001 Comments 

of Consumer Federation of America). Raising air conditioning efficiency 

standards is not only required by EPCA , 42 U.S.C.A. § 6295(0), but consistent 

with the federal weatherization program's goal of helping low income families 

meet their energy needs. 

10 DOE operates the low income weatherization program. 42 U.S.C.A. §§ 

6862(1),6863(a). 

11 See October 18, 2001 Letter of Emily Achtenberg, JA 6848 - 6849, 

B0006456 - 6457 (low income people tend to live in older, poorly insulated homes 

and will therefore reap larger than average savings from use of more efficient air 

conditioners). 

11 
3. DOE'S ROLLBACK OF THE SEER 13 STANDARD

As noted above, on January 22, 2001, DOE formally promulgated and

published in the federal register a "Final Rule" that included "revised energy

conservation standards for central air conditions and heat pumps." 66 Fed. Reg.

7170, SPA 146. The Final Rule "essentially raise[d] the energy efficiency

standards to SEER 13 for new central air conditioners." Id. The air conditioning

efficiency standard had not been revised since nine years earlier, in 1992, and

DOE had been looking at making revisions for more than seven years, starting

with the release of an Advance Notice of Proposed Rulemaking on September 8,

1993. 66 Fed. Reg. 7172 (Jan. 22, 2002), SPA 148. The January 22 Final Rule

was the result of careful and lengthy deliberation, and relied upon extensive

comments, submissions and analysis from a broad range of interested parties. All

parties, including air conditioning manufacturers and their trade association, had

an ample opportunity to present their views to DOE. 66 Fed. Reg. 7172, 7174 -

7184 (Jan. 22, 2001), SPA 146, 148 - 158. ("Background" of proceeding and

"Discussion of Comments").

The stated effective date for the Final Rule was February 21, 2001.

Nowhere in the thirty pages of the Federal Register in which DOE discussed this

Final Rule did it suggest or imply that the new SEER 13 standard was subject to

12

EE-RM-STD-98-440 COMMENT 316

3. DOE'S ROLLBACK OF THE SEER 13 STANDARD 

As noted above, on January 22,2001, DOE formally promulgated and 

published in the federal register a "Final Rule" that included "revised energy 

conservation standards for central air conditions and heat pumps." 66 Fed. Reg. 

7170, SPA 146. The Final Rule "essentially raise[d] the energy efficiency 

standards to SEER 13 for new central air conditioners." Id. The air conditioning 

efficiency standard had not been revised since nine years earlier, in 1992, and 

DOE had been looking at making revisions for more than seven years, starting 

with the release of an Advance Notice of Proposed Ru1emaking on September 8, 

1993. 66 Fed. Reg. 7172 (Jan. 22, 2002), SPA 148. The January 22 Final Rule 

was the result of careful and lengthy deliberation, and relied upon extensive 

comments, submissions and analysis from a broad range of interested parties. All 

parties, including air conditioning manufacturers and their trade association, had 

an ample opportunity to present their views to DOE. 66 Fed. Reg. 7172, 7174 -

7184 (Jan. 22,2001), SPA 146; 148 - 158. ("Background" of proceeding and 

"Discussion of Comments"). 

The stated effective date for the Final Rule was February 21, 200l. 

Nowhere in the thirty pages of the Federal Register in which DOE discussed this 

Final Rule did it suggest or imply that the new SEER 13 standard was subject to 

12 
delay, revision or withdrawal in the time between when it was published in the

Federal Register and when it would become effective . DOE did not intend that the

one-month delay in the Final Rule taking effect would allow it to reconsider any

of the legal or factual issues relating to promulgation of the SEER 13 standard, but

rather the delay was intended to comply with the requirements of 5 U.S.C.A. §

553(d)(West 1996)(the "required publication or service of a substantive rule shall

be made not less than 30 days before its effective date ....")12

Thus, there is little doubt that the SEER 13 "energy efficiency

standards"(66 Fed. Reg. 7170, SPA 146) were meant by DOE to be the type of

"standard" referred to in 42 U.S.C.A. 6295 (o), that is, a standard that cannot be

amended "to increase the maximum allowable energy use ... of a covered

12 While MUPHT and Texas ROSE rely on and adopt the legal arguments

of the Petitioners that DOE's repeated delay of the effective date of the January

22, 2001 Final Rule violated various provisions of the Administrative Procedure

Act, 5 U.S.C.A. §§ 551- 559, 701 -706, and do not make any separate legal

argument on this point, they note that this and other circuits have found that the

minimum 30-day period under § 553(d) is not meant to allow agencies to revisit

formally promulgated rules and delay or withdraw them, but only intended to

"give affected parties time to adjust their behavior before the final rule takes

effect." Cal-Almond, Inc. v. United States Dep't ofAgriculture, 14 F.3d 429, 442

(9t' Cir. 1993), citing Riverhead Farms, Inc. v. Madigan, 958 F.2d 1479 (91 Cir.),

cert. denied 506 U.S. 999 (1992); see also National Ass'n ofIndep. Television

Producers and Distributors v. FCC, 502 F.2d 249 (2nd Cir. 1974)(30-day period

meant to provide parties with reasonable time to comply).

13

EE-RM-STD-98-440 COMMENT 316

delay, revision or withdrawal in the time between when it was published in the 

Federal Register and when it would become effective. DOE did not intend that the 

one-month delay in the Final Rule taking effect would allow it to reconsider any 

of the legal or factual issues relating to promulgation of the SEER 13 standard, but 

rather the delay was intended to comply with the requirements of 5 U.S.C.A. § 

553( d)(West 1996)(the "required publication or service of a substantive rule shall 

be made not less than 30 days before its effective date .... ")12 

Thus, there is little doubt that the SEER 13 "energy efficiency 

standards"(66 Fed. Reg. 7170, SPA 146) were meant by DOE to be the type of 

"standard" referred to in 42 U.S.C.A. 6295(0), that is, a standard that cannot be 

amended "to increase the maximum allowable energy use ... of a covered 

12 While MUPHT and Texas ROSE rely on and adopt the legal arguments 

of the Petitioners that DOE's repeated delay of the effective date of the January 

22, 2001 Final Rule violated various provisions of the Administrative Procedure 

Act, 5 U.S.C.A. §§ 551- 559, 701 -706, and do not make any separate legal 

argument on this point, they note that this and other circuits have found that the 

minimum 30-day period under § 553(d) is not n1eant to allow agencies to revisit 

formally promulgated rules and delay or withdraw them, but only intended to 

"give affected parties time to adjust their behavior before the final rule takes 

effect." Cal-Almond, Inc. v. United States Dep 't of Agriculture, 14 F.3d 429,442 

(9th Cir. 1993), citing Riverhead Farms, Inc. v. Madigan, 958 F.2d 1479 (9th Cir.), 

cert. denied 506 U.S. 999 (1992); see also National Ass 'n of Indep. Television 

Producers and Distributors v. FCC, 502 F.2d 249 (2nd Cir. 1974)(30-day period 

meant to provide parties with reasonable time to comply). 

13 
product." Id. As of January 22, 2001 , it appeared that DOE had finally brought

closure to a seven-year process to adopt a new air conditioning standard and

belatedly complied with the mandate of 42 U.S.C.A. § 6295(d)(3)(A)(West

1995)(DOE to adopt new standard "no later than January 1, 1994").

But in January 2001 a new Administration took office . On January 24,

2001 , two days after DOE published the SEER 13 Final Rule , the newlydesignated Assistant to the President and Chief of Staff Andrew H. Card, Jr. issued

a "Memorandum for the Heads and Acting Heads of Executive Departments and

Agencies" which, inter alia, instructed those agencies as follows:

With respect to regulations that have been published in the OFR [sic -

"Federal Register"] but have not taken effect, temporarily postpone the

effective date of the regulations for 60 days ....

66 Fed. Reg. 7702 (Jan. 24, 2001), SPA 175. On its face, the Chief of Staff s

Memorandum excluded "any regulations promulgated pursuant to statutory ...

deadlines." Id. Nothing in the Memorandum suggests that the Chief of Staff

intended it to apply to the January 22, 2002 Final Rule regarding SEER 13. To the

contrary, the just-quoted exclusion clearly applies to the January 22 Final Rule

because it was promulgated pursuant to the statutory deadline imposed by 42

U.S.C.A. § 6295(d)(3)(A)("The Secretary shall publish a final rule no later than

January 1, 1994 to determine whether the standards [previously set under §

14

EE-RM-STD-98-440 COMMENT 316

product." Id. As of January 22,2001, it appeared that DOE had finally brought 

closure to a seven-year process to adopt a new air conditioning standard and 

belatedly complied with the mandate of 42 U.S.C.A . § 6295(d)(3)(A)(West 

1995)(DOE to adopt new standard "no later than January 1, 1994"). 

But in January 2001 a new Administration took office. On January 24, 

2001, two days after DOE published the SEER 13 Final Rule, the newlydesignated Assistant to the President and Chief of Staff Andrew H. Card, Jr. issued 

a "Memorandum for the Heads and Acting Heads of Executive Departments and 

Agencies" which, inter alia, instructed those agencies as follows: 

With respect to regulations that have been published in the OFR [sic -

"Federal Register"] but have not taken effect, temporarily postpone the 

effective date of the regulations for 60 days .... 

66 Fed. Reg. 7702 (Jan. 24, 2001), SPA 175. On its face, the Chief of Staffs 

Memorandum excluded "any regulations promulgated pursuant to statutory ... 

deadlines." Id. Nothing in the Memorandum suggests that the Chief of Staff 

intended it to apply to the January 22, 2002 Final Rule regarding SEER 13. To the 

contrary, the just-quoted exclusion clearly applies to the January 22 Final Rule 

because it was pron1ulgated pursuant to the statutory deadline imposed by 42 

U.S.C.A. § 6295(d)(3)(A)("The Secretary shall publish a final rule no later than 

January 1, 1994 to determine whether the standards [previously set under § 

14 
6295(d)(1)] ... should be amended.")."

DOE, however, interpreted the Chief of Staff's Memorandum as a mandate

to delay the effective date of the January 22 Final Rule. 66 Fed. Reg. 8745 (Feb.

2, 2001), SPA 176, B0005554 ("Final Rule; postponement of effective date and

reconsideration"). Before promulgating the January 22 Final Rule, DOE was

under political pressure from elected officials in states where air conditioners are

manufactured not to promulgate a SEER 13 standard; afterwards, it was under

similar pressure to roll the standard back to SEER 12. JA 5524 - 5525, B0004844

- 4845 (December 22, 2000 Letter of Tom Harkin, noting impact on "our

manufacturers" in Iowa); JA 5720 - 5721, B0005552 - 5553 (Jan. 29, 2001 Letter

of Senators Cochrane, Grassley, and Lott, noting impact on manufacturers and

urging DOE to "discuss this rule with the Air Conditioning and Refrigeration

Institute," the industry's trade association and lobbying arm); JA 5535 - 5536,

B0004855 - 4856 (January 4, 2001 Letter of Sen. Thad Cochrane, noting the

impact on "our manufacturers" in Mississippi); JA 5537, B0004857 (January 4,

2001 Letter of Rep. Bennie Thompson, noting "negative impact" on a

13 While DOE was seven years late in complying with this statutory

mandate, that does not vitiate the fact that DOE's rule was promulgated pursuant

to a statutory deadline.

15

EE-RM-STD-98-440 COMMENT 316

6295(d)(1)] ... should be amended.")Y 

DOE, however, interpreted the Chief of Staff's Memorandum as a mandate 

to delay the effective date of the January 22 Final Rule. 66 Fed. Reg. 8745 (Feb. 

2, 2001), SPA 176, B0005554 ("Final Rule; postponement of effective date and 

reconsideration"). Before promulgating the January 22 Final Rule, DOE was 

under political pressure from elected officials in states where air conditioners are 

manufactured not to promulgate a SEER 13 standard; afterwards, it was under 

similar pressure to roll the standard back to SEER 12. JA 5524 - 5525, B0004844 

- 4845 (December 22, 2000 Letter of Tom Harkin, noting impact on "our 

manufacturers" in Iowa); JA 5720 - 5721, B0005552 - 5553 (Jan. 29, 2001 Letter 

of Senators Cochrane, Grassley, and Lott, noting impact on manufacturers and 

urging DOE to "discuss this rule with the Air Conditioning and Refrigeration 

Institute," the industry's trade association and lobbying arm); JA 5535 - 5536, 

B0004855 - 4856 (January 4, 2001 Letter of Sen. Thad Cochrane, noting the 

impact on "our manufacturers" in Mississippi); JA 5537, B0004857 (January 4, 

2001 Letter of Rep. Bennie Thompson, noting "negative impact" on a 

13 While DOE was seven years late in complying with this statutory 

mandate, that does not vitiate the fact that DOE's rule was promulgated pursuant 

to a statutory deadline. 

15 
manufacturer located in Grenada, Mississippi). These highly similar and

obviously orchestrated letters had their impact once a new Secretary of Energy

was appointed. Shortly after the Chief of Staff's Memorandum was issued, DOE

delayed the effective date of the January 22 Final Rule (66 Fed. Reg. 8745 (Feb. 2,

200.1), SPA 176, B0005554). Ultimately, DOE proposed withdrawing the SEER

13 Final Rule, 66 Fed. Reg. 38822 (July 25, 2001), SPA 179 and adopted a SEER

12 standard. 67 Fed. Reg. 36368 (May 23, 2002), SPA 205. Clearly, DOE

responded to the Chief of Staff's Memorandum and the influence of elected

officials. As argued below, however, DOE's decision to roll back the SEER 13

standard violated the Administrative Procedure Act, especially to the extent that

DOE relied on the purported finding that SEER 13 would harm low income

consumers.

16

EE-RM-STD-98-440 COMMENT 316

manufacturer located in Grenada, Mississippi). These highly similar and 

obviously orchestrated letters had their impact once a new Secretary of Energy 

was appointed. Shortly after the Chief of Staffs Memorandum was issued, DOE 

delayed the effective date of the January 22 Final Rule (66 Fed. Reg. 8745 (Feb. 2, 

200.1 ), SPA 176, B0005554). Ultimately, DOE proposed withdrawing the SEER 

13 Final Rule, 66 Fed. Reg. 38822 (July 25,2001), SPA 179 and adopted a SEER 

12 standard. 67 Fed. Reg. 36368 (May 23, 2002), SPA 205. Clearly, DOE 

responded to the Chief of Staffs Memorandum and the influence of elected 

officials. As argued below, however, DOE's decision to roll back the SEER 13 

standard violated the Administrative Procedure Act, especially to the extent that 

DOE relied on the purported finding that SEER 13 would harm low income 

consumers. 

16 
SUMMARY OF ARGUMENT

On January 22, 2001, DOE formally promulgated a Final Rule adopting a

SEER 13 efficiency standard for central air conditioners, updating and revising the

pre-existing SEER 10 standard originally adopted almost a decade earlier. By

promulgating the SEER 13 standard, DOE mandated that central air conditioners

become more energy efficient by 30%. As part of the comment on the January 22

Final Rule, DOE specifically found that low income households would "benefit

overall" from a SEER 13 standard.

On July 25, 2001, DOE proposed withdrawing the formally promulgated

and final SEER 13 standard. It also proposed adopting a lower, less energyefficient SEER 12 standard. After extensive proceedings that allowed for oral

comments and written submissions, DOE on May 23, 2002 formally withdrew

SEER 13 and finally adopted SEER 12. Both in its comments on the July 25

proposed rule and the May 23 final rule, DOE substantially relied on alleged

harmful impacts on low income people for completely reversing its prior position.

Such a reversal of agency position, occurring concomitantly with a change in

Administration, renders the agency's action suspect under the Administrative

Procedure Act ("APA"). DOE's new-found position that SEER 13 would hurt low

income families was little more than a pretext.

17

EE-RM-STD-98-440 COMMENT 316

SUMMARY OF ARGUMENT 

On January 22, 2001, DOE fonnally promulgated a Final Rule adopting a 

SEER 13 efficiency standard for central air conditioners, updating and revising the 

pre-existing SEER 10 standard originally adopted almost a decade earlier. By 

promulgating the SEER 13 standard, DOE mandated that central air conditioners 

become more energy efficient by 30%. As part of the comment on the January 22 

Final Rule, DOE specifically found that low income households would "benefit 

overall" from a SEER 13 standard. 

On July 25,2001, DOE proposed withdrawing the fonnally promulgated 

and final SEER 13 standard. It also proposed adopting a lower, less energyefficient SEER 12 standard. After extensive proceedings that allowed for oral 

comments and written submissions, DOE on May 23, 2002 fonnally withdrew 

SEER 13 and finally adopted SEER 12. Both in its comments on the July 25 

proposed rule and the May 23 final rule, DOE substantially relied on alleged 

hannful impacts on low income people for completely reversing its prior position. 

Such a reversal of agency position, occurring concomitantly with a change in 

Administration, renders the agency's action suspect under the Administrative 

Procedure Act C"APA"). DOE's new-found position that SEER 13 would hurt low 

income families was little more than a pretext. 

17 
In response DOE's July 25, 2001 notice that it proposed to withdraw SEER

13 and adopt SEER 12, consumer and low income groups, government agencies, a

major air conditioning manufacturer and others submitted extensive and consistent

comments and analyses demonstrating that SEER 13 would benefit low income

households. However, in the comments to the May 23, 2002 Final Rule, DOE reaffirmed its position that SEER 13 would harm low income households. DOE

illegally relied upon, mis-cited and misapplied certain economic literature that it

disclosed for the first time in its discussion of the May 23 Final Rule. By failing

to reference or disclose these economic source materials prior to publication of the

May 23 Final Rule, DOE greatly prejudiced the rights of the public and the

commenting parties who supported SEER 13. While the scope of review of

agency rulemaking is generally narrow, in this case DOE's rulemaking

proceedings violated the APA.

The administrative record developed prior to May 23, 2002 fully and

overwhelmingly supported DOE's original promulgation of the SEER 13 standard.

In order to rebut this record and justify its withdrawal of the SEER 13 standard,

DOE relied on extra-record material which it did not disclose at any point during

the process of reviewing and revising the pre-existing SEER 10 standard. Only

with publication of the May 23, 2002 Final Rule did DOE let the public and

18

EE-RM-STD-98-440 COMMENT 316

In response DOE's July 25,2001 notice that it proposed to withdraw SEER 

13 and adopt SEER 12, consumer and low income groups, government agencies, a 

major air conditioning manufacturer and others submitted extensive and consistent 

comments and analyses demonstrating that SEER 13 would benefit low income 

households. However, in the comments to the May 23, 2002 Final Rule, DOE reaffirmed its position that SEER 13 would harm low income households. DOE 

illegally relied upon, mis-cited and misapplied certain economic literature that it 

disclosed for the first time in its discussion of the May 23 Final Rule. By failing 

to reference or disclose these economic source materials prior to publication of the 

May 23 Final Rule, DOE greatly prejudiced the rights of the public and the 

commenting parties who supported SEER 13. While the scope of review of 

agency rulemaking is generally narrow, in this case DOE's rulemaking 

proceedings violated the AP A. 

The administrative record developed prior to May 23, 2002 fully and 

overwhelmingly supported DOE's original promulgation of the SEER 13 standard. 

In order to rebut this record and justify its withdrawal of the SEER 13 standard, 

DOE relied on extra-record material which it did not disclose at any point during 

the process of reviewing and revising the pre-existing SEER 10 standard. Only 

with publication of the May 23, 2002 Final Rule did DOE let the public and 

18 
commenting parties know that it was relying on economic literature from which it

concluded, erroneously, that SEER 13 would allegedly impact the cost of low

income rental housing and, thus, allegedly not benefit low income households.

DOE has no agency expertise in issues regarding the cost of low income rental

housing and its belatedly-adopted views on this issue should be given no

deference as a matter of law. DOE's last-minute efforts to find justification for its

reversal of position on SEER 13 violate fundamental rules of agency openness and

fairness, substantially prejudiced the rights of parties supporting SEER 13, and

must be struck down as violating the APA.

ARGUMENT

1. DOE VIOLATED THE APA IN BASING THE MAY 23 FINAL RULE

ON A FINDING THAT LOW INCOME CONSUMERS WOULD BE

DISPROPORTIONATELY HARMED BY ADOPTION OF SEER 13

A. Standard of Review14

On July 25, 2001, when DOE announced that it was proposing to withdraw

the January 22 Final Rule adopting SEER 13, it noted for the first time its concern

14 MUPHT and Texas ROSE generally adopt the Petitioners' discussion of

the standard of review applicable to claims under the Administrative Procedure

Act, but add some additional points herein.

19

EE-RM-STD-98-440 COMMENT 316

commenting parties know that it was relying on economic literature from which it 

concluded, erroneously, that SEER 13 would allegedly impact the cost of low 

income rental housing and, thus, allegedly not benefit low income households. 

DOE has no agency expertise in issues regarding the cost of low income rental 

housing and its belatedly-adopted views on this issue should be given no 

deference as a matter of law. DOE's last-minute efforts to find justification for its 

reversal of position on SEER 13 violate fundamental rules of agency openness and 

fairness, substantially prejudiced the rights of parties supporting SEER 13, and 

must be struck down as violating the AP A. 

ARGUMENT 

I. DOE VIOLATED THE APA IN BASING THE MAY 23 FINAL RULE 

ON A FINDING THAT LOW INCOME CONSUMERS WOULD BE 

DISPROPORTIONATELY HARMED BY ADOPTION OF SEER 13 

A. Standard of Review 14 

On July 25,2001, wllen DOE announced that it was proposing to withdraw 

the January 22 Final Rule adopting SEER 13, it noted for the first time its concern 

14 MUPHT and Texas ROSE generally adopt the Petitioners' discussion of 

the standard of review applicable to claims under the Administrative Procedure 

Act, but add some additional points herein. 

19 
about "the disparity in impacts [of SEER 13] between low-income and typical

consumers." DOE believed that "increases in first cost" that arise from "more

stringent efficiency standards" are "felt more sharply by lower income

consumers." "Supplemental proposed rule; proposed withdrawal of final rule," 66

Fed. Reg.38828, SPA 185 (July 25, 2001)("July 25 Proposed Rule"). DOE

completely reversed its earlier finding that "low income consumers [will] ...

benefit overall" from adoption of SEER 13. Such a reversal should cause this

Court to more carefully scrutinize the overall validity of the SEER 12 standard

than would otherwise be the case. See, e.g., Motor Vehicle Manufacturers Ass'n

of the U.S., Inc. v. State Farm Mutual Ins. Co., 463 U.S. 29, 42 (1983)("[A]n

agency changing its course by rescinding a rule is obligated to supply a reasoned

analysis beyond that which may be required when an agency does not act in the

first instance.")

On May 23, 2002, when DOE formally withdrew the January 22 (SEER 13)

Final Rule and adopted the SEER 12 standard, DOE again voiced its concern

about low income consumers, offering this concern as one of the primary reasons

for withdrawing SEER 13:

As explained in the July 25 SNOPR (66 FR 38828) DOE believed that in

issuing the January 22 Final Rule, the previous Administration had given

inadequate consideration to the fraction of consumers, and especially low

20

EE-RM-STD-98-440 COMMENT 316

about "the disparity in impacts [of SEER 13] between low-income and typical 

consumers." DOE believed that "increases in first cost" that arise from "more 

stringent efficiency standards" are "felt more sharply by lower income 

consumers." "Supplemental proposed rule; proposed withdrawal of final rule," 66 

Fed. Reg.38828, SPA 185 (July 25, 2001)("July 25 Proposed Rule"). DOE 

completely reversed its earlier finding that "low income consumers [will] ... 

benefit overall" from adoption of SEER 13. Such a reversal should cause this 

Court to more carefully scrutinize the overall validity of the SEER 12 standard 

than would otherwise be the case. See, e.g., Motor Vehicle Manufacturers Ass 'n 

of the U.S., Inc. v. State Farm Mutual Ins. Co., 463 U.S. 29,42 (l983)("[A]n 

agency changing its course by rescinding a rule is obligated to supply a reasoned 

analysis beyond that which may be required when an agency does not act in the 

first instance.") 

On May 23, 2002, when DOE formally withdrew the January 22 (SEER 13) 

Final Rule and adopted the SEER 12 standard, DOE again voiced its concern 

about low income consumers, offering this concern as one of the primary reasons 

for withdrawing SEER 13: 

As explained in the July 25 SNOPR (66 FR 38828) DOE believed that in 

issuing the January 22 Final Rule, the previous Administration had given 

inadequate consideration to the fraction of consumers, and especially low 

20 
income consumers, who would incur significant increases in life cycle cost

as a result of the SEER 13 standard.

May 23 Final Rule, 67 Fed. Reg. 36376, SPA 213 ("Basis for DOE's Decision to

Withdraw the January 22, 2001 Final Rule" - "Policy Issues").

MUPHT and Texas ROSE argue below that DOE's belatedly-voiced

concern about low income consumers is nothing more than a pretext for the fact

that a new Administration was much more receptive to the arguments of the air

conditioning industry but constrained by 42 U.S.C.A. § 6295(o)(1)(the "antibacksliding" provision) in its ability to withdraw the SEER 13 standard. The

current DOE was grasping for arguments it could use for rolling back SEER 13,

without violating § 6295(o)(1). From the current DOE's perspective, appearing to

champion the interests of low income consumers was an attractive basis for rolling

back the SEER 13 standard. However, as argued below, DOE's belated reversal

regarding low income impacts runs contrary to the overwhelming evidence before

the agency. Rather, DOE's newly-adopted position on low income impacts is

based on technical data that was outside the record, not disclosed to the public or

commenting parties, generally not accessible to the

21

EE-RM-STD-98-440 COMMENT 316

income consumers, who would incur significant increases in life cycle cost 

as a result of the SEER 13 standard. 

May 23 Final Rule, 67 Fed. Reg. 36376, SPA 213 ("Basis for DOE's Decision to 

Withdraw the January 22,2001 Final Rule" - "Policy Issues"). 

MUPHT and Texas ROSE argue below that DOE's belatedly-voiced 

concern about low income consumers is nothing more than a pretext for the fact 

that a new Administration was much more receptive to the arguments of the air 

conditioning industry but constrained by 42 U.S.C.A. § 6295(0)(1 )(the "antibacksliding" provision) in its ability to withdraw the SEER 13 standard. The 

current DOE was grasping for arguments it could use for rolling back SEER 13, 

without violating § 6295(0)(1). From the current DOE's perspective, appearing to 

champion the interests of low income consumers was an attractive basis for rolling 

back the SEER 13 standard. However, as argued below, DOE's belated reversal 

regarding low income impacts runs contrary to the overwhelming evidence before 

the agency. Rather, DOE's newly-adopted position on low income impacts is 

based on technical data that was outside the record, not disclosed to the public or 

commenting parties, generally not accessible to the 

21 
public, and not in fact supportive of its conclusions." Thus, DOE's actions were

highly prejudicial to the proponents of SEER 13 and to the integrity of the

administrative process. DOE's conclusions about the impacts of SEER 12 and

SEER 13 on low income people violated the APA.

. The Administrative Procedure Act ("APA"), requires agencies, inter alia:

to give interested persons an opportunity to participate in the rule making

through submission of written data, views, or arguments, with or without

opportunity for oral presentation.

5 U.S.C.A. § 553(c)(West 1996). The APA then provides:

After consideration of the relevant matter presented, the agency shall

incorporate in the rules adopted a concise general statement of their basis

and purpose.

Id. These two provisions require agencies to disclose key data and assumptions

relied upon in proposing and adopting a rule, so that parties may have a fair

opportunity to "participate in the rule making," see, e.g., United States v. Nova

Scotia Food Products Corp., 568 F.2d 240, 249 (2nd Cir. 1977)("the failure to

disclose to interested persons the factual material upon which the agency was

15 DOE's reversal of its conclusions about low income impacts and its

penchant to ignore extensive record evidence contrary to its pre-ordained decision

to roll back the SEER 13 standard are part of a larger pattern of APA violations

addressed more fully in Petitioners' brief. MUPHT/Texas ROSE adopt those

arguments here.

22

EE-RM-STD-98-440 COMMENT 316

public, and not in fact supportive of its conclusions. 1s Thus, DOE's actions were 

highly prejudicial to the proponents of SEER 13 and to the integrity of the 

administrative process. DOE's conclusions about the impacts of SEER 12 and 

SEER 13 on low income people violated the AP A. 

The Administrative Procedure Act ("AP A"), requires agencies, inter alia: 

to give interested persons an opportunity to participate in the rule making 

through submission of written data, views, or arguments, with or without 

opportunity for oral presentation. 

5 U.S.C.A. § 553(c)(West 1996). The APA then provides: 

After consideration of the relevant matter presented, the agency shall 

incorporate in the rules adopted a concise general statement of their basis 

and purpose. 

Id. These two provisions require agencies to disclose key data and assumptions 

relied upon in proposing and adopting a rule, so that parties may have a fair 

opportunity to "participate in the rule making," see, e.g., United States v. Nova 

Scotia Food Products Corp., 568 F.2d 240,249 (2nd Cir. 1977)("the failure to 

disclose to interested persons the factual material upon which the agency was 

15 DOE's reversal of its conclusions about low income impacts and its 

penchant to ignore extensive record evidence contrary to its pre-ordained decision 

to roll back the SEER 13 standard are part of a larger pattern of AP A violations 

addressed more fully in Petitioners' brief. MUPHT/Texas ROSE adopt those 

arguments here. 

22 
relying vitiates the element of fairness which is essential to any kind of

administrative action"), and to offer a basis for a final rule that is not contrary to

the record, Sierra Club v. US. Army Corps of Engineers, 772 F.2d 1043, 1051 (2nd

Cir. 1975)("an agency's action is held to be arbitrary and capricious when it ...

offers an explanation contrary to the evidence before it")("Sierra Club").

As is so often noted in connection with court challenges of agency

rulemaking , "the scope of judicial review is narrow." Reyblatt v. U S. Nuclear

Regulatory Commission, 105 F.3d 715, 722 (D.C. Cir. 1997). However, agency

action will be held to be "arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law," 5 U.S.C.A. § 706(2)(A)(West. 1996), where it can be

shown, as it will be below, that the agency relied on studies and data that "were

not disclosed throughout the proceeding," thus preventing parties "from making

relevant comment" and interfering with the statutory mandate for the agency "to

take into account all relevant factors in making its determination." National Black

Media Coalition v. FCC, 791 F. 2d 1016, 1023 - 1024 (2nd Cir. 1986); accord,

United States v. Nova Scotia Food Products Corp., 568 F.2d 1977 (2nd Cir. 1977).

Agency rulemaking action will also be held to violate the APA when it is contrary

to the record, Sierra Club, supra, and based on pretext. The fact that a new

Administration has taken office is not sufficient grounds for reversing prior

23

EE-RM-STD-98-440 COMMENT 316

relying vitiates the element of fairness which is essential to any kind of 

administrative action"), and to offer a basis for a final rule that is not contrary to 

the record, Sierra Club v. us. Army Corps o/Engineers, 772 F.2d 1043,1051 (2nd 

Cir. 1975)("an agency's action is held to be arbitrary and capricious when it ... 

offers an explanation contrary to the evidence before it")("Sierra Club"). 

As is so often noted in connection with court challenges of agency 

rulemaking, "the scope of judicial review is narrow." Reyblatt v. U S. Nuclear 

Regulatory Commission, 105 F.3d 715,722 (D.C. Cir. 1997). However, agency 

action will be held to be "arbitrary, capricious, an abuse of discretion, or otherwise 

not in accordance with law," 5 U.S.C.A. § 706(2)(A)(West. 1996), where it can be 

shown, as it will be below, that the agency relied on studies and data that "were 

not disclosed throughout the proceeding," thus preventing parties "from making 

relevant comment" and interfering with the statutory mandate for the agency "to 

take into account all relevant factors in making its determination." National Black 

Media Coalition v. FCC, 791 F. 2d 1016,1023 - 1024 (2nd Cir. 1986); accord, 

United States v. Nova Scotia Food Products Corp., 568 F.2d 1977 (2nd Cir. 1977). 

Agency rulemaking action will also be held to violate the AP A when it is contrary 

to the record, Sierra Club, supra, and based on pretext. The fact that a new 

Administration has taken office is not sufficient grounds for reversing prior 

23 
agency positions or making findings contrary to the agency record. See, e.g.,

Motor Vehicle Manufacturers Ass'n of the U.S., Inc. v. State Farm Mutual Ins.

Co., 463 U.S. 29, 59, n. * (1983)(Rehnquist, J., concurring)("new administration

may not choose not to enforce laws of which it does not approve")( "State Farm ").

B. DOE Violated the APA by Making a Decision Contrary to the Record

Before It and By Relying on Inapposite, Extra-Record Sources Which

It Failed to Disclose to Parties.

In promulgating the SEER 12 standard on May 23, 2002 (67 Fed. Reg.

36368, SPA 205 ("May 23 Final Rule")), DOE focused its discussion of the

"Impact of Consumers" primarily on the impact on low income consumers. 67

Fed. Reg. 36379 - 81, SPA 216 - 218. The current DOE apparently does not

question that the majority of consumers would derive substantial benefits from the

SEER 13 standard previously promulgated in the January 22 Final Rule. See July

25 Proposed Rule, 66 Fed. Reg. 38828, SPA 185 (61 percent of consumers would

benefit from a SEER 13 standard). DOE instead relies on the canard that low

income people will be disproportionately harmed by the adoption of SEER 13, as

a pretext to roll the standard back to SEER 12.16 MUPHT, whose members

16 MUPHT and Texas ROSE adopt the arguments of the Petitioners that this

rollback violates the so-called "anti-backsliding" provisions of EPCA, 42

24

EE-RM-STD-98-440 COMMENT 316

agency positions or making findings contrary to the agency record. See, e.g., 

Motor Vehicle Manufacturers Ass 'n of the U.S., Inc. v. State Farm Mutual Ins. 

Co., 463 U.S. 29, 59, n. * (1 983)(Rehnquist, J., concurring)("new administration 

may not choose not to enforce laws of which it does not approve")( "State Farm "). 

B. DOE Violated the APA by Making a Decision Contrary to the Record 

Before It and By Relying on Inapposite, Extra-Record Sources Which 

It Failed to Disclose to Parties. 

In promulgating the SEER 12 standard on May 23, 2002 (67 Fed. Reg. 

36368, SPA 205 ("May 23 Final Rule"), DOE focused its discussion of the 

"Impact of Consumers" primarily on the impact on low income consumers. 67 

Fed. Reg. 36379 - 81, SPA 216 - 218. The current DOE apparently does not 

question that the majority of consumers would derive substantial benefits from the 

SEER 13 standard previously promulgated in the January 22 Final Rule. See July 

25 Proposed Rule, 66 Fed. Reg. 38828, SPA 185 (61 percent of consumers would 

benefit from a SEER 13 standard). DOE instead relies on the canard that low 

income people will be disproportionately hanned by the adoption of SEER 13, as 

a pretext to roll the standard back to SEER 12.16 MUPHT, whose members 

16 MUPHT and Texas ROSE adopt the arguments of the Petitioners that this 

rollback violates the so-called "anti-backsliding" provisions of EPCA, 42 

24 
solely consist of low income persons; Texas ROSE, an organization consisting of

a broad income range of members that represents low income interests;" and

numerous other parties submitted written and oral comments to DOE

demonstrating that low income people would benefit from the adoption of SEER

13. Several commenters further testified that low income consumers could benefit

more than the typical consumer, due to the fact that low income households rarely

incur the initial capital cost of central air conditioning but reap the energy savings

if they live in dwellings where central air conditioning has been previously

installed. Additional commenters, including the Environmental Protection

Agency (JA 6995 - 6996, B0006603 - 66044) further pointed out that wider use of

more efficient air conditioners will reduce usage on peak summer days and thus

reduce electricity prices for all customers, even those, like many low income

households, who do not have central air conditioners in their homes. MUPHT and

Texas ROSE summarize the record evidence demonstrating that low income

consumers would benefit from SEER 13 in heading B. 1, infra.

To rebut this evidence, DOE did not rely on anything in the record. Rather,

U.S.C.A. § 6295(o)(1).

" See Declarations of John A. Cooper and Carol Biedrzycki filed June 20,

2002 with this Court.

25

EE-RM-STD-98-440 COMMENT 316

solely consist of low income persons; Texas ROSE, an organization consisting of 

a broad income range of members that represents low income interests; 17 and 

numerous other parties submitted written and oral comments to DOE 

demonstrating that low income people would benefit from the adoption of SEER 

13. Several commenters further testified that low income consumers could benefit 

more than the typical consumer, due to the fact that low income households rarely 

incur the initial capital cost of central air conditioning but reap the energy savings 

if they live in dwellings where central air conditioning has been previously 

installed. Additional commenters, including the Environmental Protection 

Agency (JA 6995 - 6996, B0006603 - 66044) further pointed out that wider use of 

more efficient air conditioners will reduce usage on peak summer days and thus 

reduce electricity prices for all customers, even those, like many low income 

households, who do not have central air conditioners in their homes. MUPHT and 

Texas ROSE summarize the record evidence demonstrating that low income 

consumers would benefit from SEER 13 in heading B.1, infra. 

To rebut this evidence, DOE did not rely on anything in the record. Rather, 

U.S.C.A. § 6295(0)(1). 

17 See Declarations of John A. Cooper and Carol Biedrzycki filed June 20, 

2002 with this Court. 

25 
in the May 23 Final Rule, after the record had closed, DOE relied upon (and, in

one case, mis-cited) four economics sources which had not been mentioned by any

party during the many years of proceedings before the agency. One of the sources

is either seriously mis-cited or does not exist.18 A second source has nothing to do

with the impacts on low income housing costs of more efficient air conditioners,

despite DOE's references to it.19 Two other source are, respectively, thirty and

twenty years old; highly inaccessible to the public; and, in large part, inapposite.20

In light of the record demonstrating that SEER 13 would not harm low

income households, and the extra-record nature and questionable relevance of the

18 See 67 Fed. Reg. 36380, SPA 217, n. 11 ("Footnote I1"). DOE refers to

"Pindykck, R. and D. Rubinfeld, Microeconomic Theory, 2001." "Pindykck" is

misspelled; Robert S. "Pindyck" of the Massachusetts Institute of Technology is

the author of many economics treatises, but there is no publication authored by

him with the title "Microeconomic Theory" listed in the 2001/2002 edition of

Books in Print. Nor is there a book with this author and title that can be located at

any of the thousands of major university and other libraries whose electronic

catalogs are accessible via most research libaries. There are many treatises

entitled "Microeconomic Theory," but none by Pindyck.

19 See SPA 217, Footnote 11. DOE correctly cited "Microeconomics" as a

treatise authored by "Pindykck" [sic - "Pindyck"], but the treatise does not address

issues germane to DOE's rulemaking. See discussion, B.1, infra.

20 See SPA 217, Footnote 11, the references to "The Supply of Rental

Housing" (1971) and "The Determinants of Housing Demand" (1982).

26

EE-RM-STD-98-440 COMMENT 316

in the May 23 Final Rule, after the record had closed, DOE relied upon (and, in 

one case, mis-cited) four economics sources which had not been mentioned by any 

party during the many years of proceedings before the agency. One of the sources 

is either seriously mis-cited or does not exist. ls A second source has nothing to do 

with the impacts on low income housing costs of more efficient air conditioners, 

despite DOE's references to it. 19 Two other source are, respectively, thirty and 

twenty years old; highly inaccessible to the public; and, in large part, inapposite?O 

In light of the record demonstrating that SEER 13 would not harm low 

income households, and the extra-record nature and questionable relevance of the 

18 See 67 Fed. Reg. 36380, SPA 217, n. 11 ("Footnote 11 "). DOE refers to 

"Pindykck, R. and D. Rubinfeld, Microeconomic Theory, 2001." "Pindykck" is 

misspelled; Robert S. "Pindyck" of the Massachusetts Institute of Technology is 

the author of many economics treatises, but there is no publication authored by 

him with the title "Micro economic Theory" listed in the 200112002 edition of 

Books in print. Nor is there a book with this author and title that can be located at 

any of the thousands of major university and other libraries whose electronic 

catalogs are accessible via most research libaries. There are many treatises 

entitled "Microeconomic Theory," but none by Pindyck. 

19 See SPA 217, Footnote 11. DOE correctly cited "Microeconomics" as a 

treatise authored by "Pindykck" [sic - "Pindyck"], but the treatise does not address 

issues germane to DOE's rulemaking. See discussion, B.1, infra. 

20 See SPA 217, Footnote 11, the references to "The Supply of Rental 

Housing" (1971) and "The Determinants of Housing Demand" (1982). 

26 
sources DOE relied on to rebut this record, DOE's decision to base its roll back of

the SEER 13 standard on adverse low income impacts was "arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with law," within the

meaning of 5 U.S.C.A. § 706(2), as detailed below. This Court should set aside

the SEER 12 standard in the May 23 Final Rule and declare that the SEER 13

standard in the January 22 Final Rule is valid.

1. The Record Fully Supports the Adoption of SEER 13 As

Benefitting Low Income Consumers

DOE properly noted in its discussion of the May 23 Final Rule that

numerous parties, including the intervenors MUPHT and Texas ROSE, various

states and state agencies, recognized energy efficiency experts, a major utility

company, and a major manufacturer of air conditioners, all testified that SEER 13

would not harm low income consumers. May 23 Final Rule, 67 Fed. Reg. 36380,

SPA 217.21

21 The comments referenced by DOE came from the American Council for

an Energy Efficient Economy ("ACEEE"), JA 7059 - 7073, B0006667 - 6681; the

Appliance Awareness Standards Project ("ASAP"), JA 6772 - 6780 , B006380 -

6388 ; Austin Energy, a municipal utility, JA 6769 - 6771, B0006377 - 6379;

Consumer Federation of America ("CFA"), JA 6395 - 6396 , B0006041 - 6042; JA

6783 - 6785, B0006391 - 6393; Northeast Energy Efficiency Partnerships, JA

6432 - 6435, B0006078 - 6081; State of Vermont, JA 6944 - 6948, B0006552 -

6556; Goodman Global Holdings, the nation's second largest air conditioning

27

EE-RM-STD-98-440 COMMENT 316

sources DOE relied on to rebut this record, DOE's decision to base its roll back of 

the SEER 13 standard on adverse low income impacts was "arbitrary, capricious, 

an abuse of discretion, or otherwise not in accordance with law," within the 

meaning of 5 V.S.C.A. § 706(2), as detailed below. This Court should set aside 

the SEER 12 standard in the May 23 Final Rule and declare that the SEER 13 

standard in the January 22 Final Rule is valid. 

1. The Record Fully Supports the Adoption of SEER 13 As 

Benefitting Low Income Consumers 

DOE properly noted in its discussion of the May 23 Final Rule that 

numerous parties, including the intervenors MUPHT and Texas ROSE, various 

states and state agencies, recognized energy efficiency experts, a major utility 

company, and a major manufacturer of air conditioners, all testified that SEER 13 

would not harm low income consumers. May 23 Final Rule, 67 Fed. Reg. 36380, 

SPA 217.21 

21 The comments referenced by DOE came from the American Council for 

an Energy Efficient Economy ("ACEEE"), JA 7059 - 7073, B0006667 - 6681; the 

Appliance Awareness Standards Project ("ASAP"), JA 6772 - 6780, B006380 -

6388; Austin Energy, a municipal utility, JA 6769 - 6771, B0006377 - 6379; 

Consumer Federation of America ("CFA"), JA 6395 - 6396, B0006041 - 6042; JA 

6783 - 6785, B0006391 - 6393; Northeast Energy Efficiency Partnerships, JA 

6432 - 6435, B0006078 - 6081; State of Vermont, JA 6944 - 6948, B0006552-

6556; Goodman Global Holdings, the nation's second largest air conditioning 

27 
This broad range of parties consistently made five key points in support of

SEER 13 and its beneficial impact on low income consumers. DOE itself agreed

with some of these points, but not others, as discussed below. Its disagreements,

however, are founded on extra-record documents that result in substantive

violations of the APA, as argued in B. 2., infra.

First, low income households are disproportionately renters, not owners,

and thus do not incur the capital costs of installing central air conditioning. Only

landlords pay for the costs of installing central air conditioning in rental units.

Thus, low income households actually bear less of the "first cost" (July 25

Proposed Rule, 66 Fed. Reg. 38828, col. 2, SPA 185) burden of moving to SEER

13 than non-low income consumers. Parties variously made this point as follows:

The majority of low-income households rent their homes, far more

frequently than non-low-income households. Nationally,. 67% of all

manufacturer, JA 6414 - 6416, B0006060 - 6062; JA 6959 - 6963, B0006567 -

6958; the Alliance to Save Energy ("ASE"), JA 7035 - 7040, B0006643 - 6648;

California Energy Commission, JA 6940 - 6941, B0006548 - 6549; Natural

Resources Defense Council ("NRDC"), JA 6425 - 6431, B0006071 - 6077, JA

6798 - 6830, B0006406 - 6438; Environmental Ministries of Southern California,

JA 6315 - 6318, B0005969 - 5972; Texas ROSE, JA 6438 - 6455, B0006084 -

6101, JA 6858 - 6859, B0006466 - 6467; National Consumer Law

Center/MUPHT, JA 6417 - 6421, B0006063 - 6067, JA 6844 - 6855, B0006452 -

6463; National Grid, JA 6422 - 6424, B0006068 - 6070; Texas Natural Resource

Commission, JA 6462 - 6474, B0006108 - 6120; the Environmental Protection

Agency ("EPA"), JA 6990 - 6997, B0006598 - 6605, and two other parties.

28

EE-RM-STD-98-440 COMMENT 316

This broad range of parties consistently made five key points in support of 

SEER 13 and its beneficial impact on low income consumers. DOE itself agreed 

with some of these points, but not others, as discussed below. Its disagreements, 

however, are founded on extra-record documents that result in substantive 

violations of the APA, as argued in B. 2., infra. 

First, low income households are disproportionately renters, not owners, 

and thus do not incur the capital costs of installing central air conditioning. Only 

landlords pay for the costs of installing central air conditioning in rental units. 

Thus, low income households actually bear less of the "first cost" (July 25 

Proposed Rule, 66 Fed. Reg. 38828, col. 2, SPA 185) burden of moving to SEER 

13 than non-low income consumers. Parties variously made this point as follows: 

The majority of low-income households rent their homes, far more 

frequently than non-low-income households. Nationally,. 67% of all 

manufacturer, JA 6414 - 6416, B0006060 - 6062; JA 6959 - 6963, B0006567-

6958; the Alliance to Save Energy ("ASE"), JA 7035 - 7040, B0006643 - 6648; 

California Energy Commission, JA 6940 - 6941, B0006548 - 6549; Natural 

Resources Defense Council ("NRDC"), JA 6425 - 6431, B0006071 - 6077, JA 

6798 - 6830, B0006406 - 6438; Environmental Ministries of Southern California, 

JA 6315 - 6318, B0005969 - 5972; Texas ROSE, JA 6438 - 6455, B0006084 -

6101, JA 6858 - 6859, B0006466 - 6467; National Consumer Law 

Center/MUPHT, JA 6417 - 6421, B0006063 - 6067, JA 6844 - 6855, B0006452 -

6463; National Grid, JA 6422 - 6424, B0006068 - 6070; Texas Natural Resource 

Commission, JA 6462 - 6474, B0006l08 - 6120; the Environmental Protection 

Agency ("EPA"), JA 6990 - 6997, B0006598 - 6605, and two other parties. 

28 
households in America own their homes. Yet homeownership rates among

non-white households, which have much lower incomes, are around 45%,

20 points below the overall rate of ownership.

To choose Massachusetts as one example where income-stratified

ownership characteristics are readily available, only 59% of all households

own their own homes, somewhat less than the national rate. But among

households earning less than 30% of median income, the home ownership

rate plummets to 28%.

National Consumer Law Center Comments on behalf of MUPHT (Oct. 2, 2001),

JA 6417 - 6418, B0006063 - 6064.

The federal Environmental Protection Agency in its October 10, 2001

comments (JA 6996, B0006604)("EPA Comments") similarly noted:

Also related to, distributional equities and according to the RECS

[Residential Energy Consumption Survey] data, among households below

the poverty level, about 60% rent their housing units. This is in contrast to

27% of above poverty level households that rent (See Exhibit 2). Therefore,

low-income consumers, or those defined as "poor" in TSD [Technical

Support Document] Table 10.1, are not the ones to buy a central A/C or heat

pump product, but they would be the one [sic] to pay the electric bill (or

likely face increased rents if utilities were included in the rent) for the use of

that product. Instituting a higher minimum efficiency standard will actually

ensure that low-income consumers have lower utility bills, providing a

benefit to this population.

Related to this point that low income households rarely buy central air

conditioning, National Grid, the largest utility in New England, noted:

[I]t is rare for low-income consumers [in New England] to have either

central air conditioning or heat pump systems ....Since low-income

consumers typically do not have the equipment in question, additional

29

EE-RM-STD-98-440 COMMENT 316

households in America own their homes. Yet homeownership rates among 

non-white households, which have much lower incomes, are around 45%, 

20 points below the overall rate of ownership. 

To choose Massachusetts as one example where income-stratified 

ownership characteristics are readily available, only 59%) of all households 

own their own homes, somewhat less than the national rate. But among 

households earning less than 30% of median income, the home ownership 

rate plummets to 28%. 

National Consumer Law Center Comments on behalf of MUPHT (Oct. 2, 2001), 

JA 6417 - 6418, B0006063 - 6064. 

The federal Environmental Protection Agency in its October 10, 2001 

comments (JA 6996, B0006604)("EPA Comments") similarly noted: 

Also related to . distributional equities and according to the RECS 

[Residential Energy Consumption Survey] data, among households below 

the poverty level, about 60% rent their housing units. This is in contrast to 

270/0 of above poverty level households that rent (See Exhibit 2). Therefore, 

low-income consumers, or those defined as "poor" in TSD [Technical 

Support Document] Table 10.1, are not the ones to buy a central AIC or heat 

pump product, but they would be the one [sic] to pay the electric bill (or 

likely face increased rents ifutilities were included in the rent) for the use of 

that product. Instituting a higher minimum efficiency standard will actually 

ensure that low-income consumers have lower utility bills, providing a 

benefit to this population. 

Related to this point that low income households rarely buy central air 

conditioning, National Grid, the largest utility in New England, noted: 

[IJt is rare for low-income consumers [in New England] to have either 

central air conditioning or heat pump systems .... Since low-income 

consumers typically do not have the equipment in question, additional 

29 
burdens will not be created .... We therefore disagree with the DOE [about

the negative impact on low income consumers] .... We feel those effects

will be negligible.

JA 6422 - 6423, B0006068 - 6069; see also EPA Comments, JA 7000, B0006608

(46% of all households, but only 25% of low income households, have central air

conditioning, based on DOE's RECS data).

Texas ROSE's Executive Director Carol Biedrzycki, who has three decades

of experience in energy conservation and working with low income families,

testified that 60% of low income Texans rent their homes, and that even those who

are "[l]ow-income homeowners have little or no disposable income to purchase

new, central air conditioning units." JA 6450, B0006096 (Sept. 10, 2001

Comments).

DOE essentially agrees with this first point, acknowledging that "roughly

half of low income households are renters."22 67 Fed. Reg. 36380, SPA 217. It no

longer asserts, as it did in the July 25 Proposed Rule, that low income families will

be unduly burdened by bearing the "first cost" of air conditioning units produced

22 DOE drew this conclusion from the fact that "49.8 percent of low-income

households with central air conditioning or heat pumps are renters." 67 Fed. Reg.

36380, SPA 217. However, this is a skewed sample since central air conditioning

is far more prevalent among owners than renters. The percentage of low-income

people who rent, rather than own, is higher, closer to the 60% figure attested to by

EPA, Texas ROSE, and MUPHT.

30

EE-RM-STD-98-440 COMMENT 316

burdens will not be created .... We therefore disagree with the DOE [about 

the negative impact on low income consumers] .... We feel those effects 

will be negligible. 

JA 6422 - 6423, B0006068 - 6069; see also EPA Comments, JA 7000, B0006608 

(46% of all households, but only 25% of low income households, have central air 

conditioning, based on DOE's RECS data). 

Texas ROSE's Executive Director Carol Biedrzycki, who has three decades 

of experience in energy conservation and working with low income families, 

testified that 60% of low income Texans rent their homes, and that even those who 

are "[lJow-income homeowners have little or no disposable income to purchase 

new, central air conditioning units." JA 6450, B0006096 (Sept. 10, 2001 

Comments). 

DOE essentially agrees with this first point, acknowledging that "roughly 

half of low income households are renters."22 67 Fed. Reg. 36380, SPA 217. It no 

longer asserts, as it did in the July 25 Proposed Rule, that low income families will 

be unduly burdened by bearing the "first cost" of air conditioning units produced 

22 DOE drew this conclusion from the fact that "49.8 percent of low-income 

households with central air conditioning or heat pumps are renters." 67 Fed. Reg. 

36380, SPA 217. However, this is a skewed sample since central air conditioning 

is far more prevalent among owners than renters. The percentage of low-income 

people who rent, rather than own, is higher, closer to the 60% figure attested to by 

EPA, Texas ROSE, and MUPHT. 

30 
under a SEER 13 standard. DOE implicitly concedes that low income consumers

are less likely to bear "first cost" (SPA 185) of central air conditioning than other

consumers. Instead, DOE prejudicially and illegally relies on extra-record sources

to conclude that landlords will fully pass on to their tenants the incremental cost of

more efficient air conditioners, as discussed more fully in B.2, infra.

The second point the SEER 13 proponents made was that landlords will not

or cannot pass through to their tenants the slightly higher initial purchase costs of

SEER 13 units. The cost difference of moving from the current SEER 10 standard

to SEER 13 is $335, spread over the 18 year useful life of the units. 66 Fed. Reg.

7171, SPA 145, "Estimated Price Increase" of $335 for "Split system air

conditioner."23 The cost of moving to SEER 12 from the current SEER 10

standard is $213, again spread out over the 18 year useful life of the units. 67

Fed. Reg. 36377, SPA 214, "Estimated Price Increase" of $213 for "Split system

air conditioner." Thus, the cost difference per household of DOE's initial

position of adopting SEER 13 (January 22 Final Rule) and its rollback position of

adopting SEER 12 (May 23 Final Rule) is only $122 ($335 - $213). Considering

that the typical unit lasts 18.4 years (SPA 145, 214), this incremental cost is

23 All parties agree that this is the most common system installed.

31

EE-RM-STD-98-440 COMMENT 316

under a SEER 13 standard. DOE implicitly concedes that low income consumers 

are less likely to bear "first cost" (SPA 185) of central air conditioning than other 

consumers. Instead, DOE prejudicially and illegally relies on extra-record sources 

to conclude that landlords will fully pass on to their tenants the incremental cost of 

more efficient air conditioners, as discussed more fully in B.2, infra. 

The second point the SEER 13 proponents made was that landlords will not 

or cannot pass through to their tenants the slightly higher initial purchase costs of 

SEER 13 units. The cost difference of moving from the current SEER 10 standard 

to SEER 13 is $335, spread over the 18 year useful life of the units. 66 Fed. Reg. 

7171, SPA 145, "Estimated Price Increase" of$335 for "Split system air 

conditioner. ,,23 The cost of moving to SEER 12 from the current SEER 10 

standard is $213, again spread out over the 18 year useful life of the units. 67 

Fed. Reg. 36377, SPA 214, "Estimated Price Increase" of$213 for "Split system 

air conditioner." Thus, the cost difference per household of DOE's initial 

position of adopting SEER 13 (January 22 Final Rule) and its rollback position of 

adopting SEER 12 (May 23 Final Rule) is only $122 ($335 - $213). Considering 

that the typical unit lasts 18.4 years (SPA 145, 214), this incremental cost is 

23 All parties agree that this is the most common system installed. 

31 
almost trivial.

To address the question of whether landlords will choose to or be able to

pass this cost through to tenants, MUPHT submitted the expert opinion of Emily

P. Achtenberg, a "housing consultant with more than 30 years' experience in

affordable housing preservation and development." As Ms. Achtenberg noted, she

has:

assisted non-profit, resident, and government organizations in acquiring and

preserving more than 3,000 affordable units threatened with expiring use

restrictions and/or subsidy contracts. In this capacity I am extremely

familiar with the costs of developing and operating housing for low income

families and individuals.

Achtenberg letter, JA 6848, B0006456. In offering her opinion on "whether an

increase in the SEER central air conditioning standard from SEER 10 to SEER 13

would have an impact on housing costs for low income people," Ms. Achtenberg

accepted without question that the SEER 13 units would cost approximately $340

more than SEER 10 units. Id.14 Ms. Achtenberg concluded that:

moving from SEER 10 to SEER 13 will have no measurable, detrimental

impact on housing costs for low income people and could benefit low

24 There was extensive evidence in the DOE record that DOE had

previously over-estimated the cost of increasing the SEER standard, and that its

current estimate was similarly overstated. MUPHT and Texas ROSE adopt the

Petitioners' arguments on this issue of capital costs. However, to be conservative

in her opinion, Ms. Achtenberg simply accepted DOE's estimate.

32

EE-RM-STD-98-440 COMMENT 316

almost trivial. 

To address the question of whether landlords will choose to or be able to 

pass this cost through to tenants, MUPHT submitted the expert opinion of Emily 

P. Achtenberg, a "housing consultant with more than 30 years' experience in 

affordable housing preservation and development." As Ms. Achtenberg noted, she 

has: 

assisted non-profit, resident, and government organizations in acquiring and 

preserving more than 3,000 affordable units threatened with expiring use 

restrictions and/or subsidy contracts. In this capacity I am extremely 

familiar with the costs of developing and operating housing for low income 

families and individuals. 

Achtenberg letter, JA 6848, B0006456. In offering her opinion on "whether an 

increase in the SEER central air conditioning standard from SEER 10 to SEER 13 

would have an impact on housing costs for low income people," Ms. Achtenberg 

accepted without question that the SEER 13 units would cost approximately $340 

more than SEER 10 units. Jd. 24 Ms. Achtenberg concluded that: 

moving from SEER 10 to SEER 13 will have no measurable, detrimental 

impact on housing costs for low income people and could benefit low 

24 There was extensive evidence in the DOE record that DOE had 

previously over-estimated the cost of increasing the SEER standard, and that its 

current estimate was similarly overstated. MUPHT and Texas ROSE adopt the 

Petitioners' arguments on this issue of capital costs. However, to be conservative 

in her opinion, Ms. Achtenberg simply accepted DOE's estimate. 

32 
income households if savings in operating costs are considered .... Such a

small cost [e. g.; the higher cost of SEER 13 units] is unlikely to affect rents

in any market.

JA 6849, B0006457. No other party, on either side of the SEER 12/SEER 13

debate, offered expert opinion on the ability of landlords to pass through

incremental air conditioning capital costs to tenants.25 Only after the record had

long closed in this case and only when it actually published the May 23 Final Rule

did DOE attempt to rebut this point by relying on various economic sources that

were are inapposite and, in part, mis-cited. 67 Fed. Reg. 36380, n. 11, SPA 217.

As DOE has no expertise in housing policy or the factors that impact housing

costs, its late-voiced opinions should be given no weight. See, e.g. Murphy

Exploration and Production Co. v. US. Dep't of the Interior, 252 F.3d 473, 480

(D.C.Cir. 2001) (See argument B.2, infra.)

Third, the record demonstrates that low income households, whether renters

or owners, reap direct, economic benefits of increasing the SEER standard. Those

who actually own or use air conditioners will consume less energy and have lower

utility bills. DOE does not question this, and in fact itself assumes significant

25 However, other parties agreed with Ms. Achtenberg's conclusion. See,

for example, September 13, 2001 Comments of NRDC, JA 6434, B0006080

("many low income consumers are renters in areas where rental rates have little if

anything to do with the cost of providing housing").

33

EE-RM-STD-98-440 COMMENT 316

income households if savings in operating costs are considered .... Such a 

small cost [e.g.; the higher cost of SEER 13 units] is unlikely to affect rents 

in any market. 

JA 6849, B0006457. No other party, on either side of the SEER l2/SEER 13 

debate, offered expert opinion on the ability of landlords to pass through 

incremental air conditioning capital costs to tenants?5 Only after the record had 

long closed in this case and only when it actually published the May 23 Final Rule 

did DOE attempt to rebut this point by relying on various economic sources that 

were are inapposite and, in part, mis-cited. 67 Fed. Reg. 36380, n. 11, SPA 217. 

As DOE has no expertise in housing policy or the factors that impact housing 

costs, its late-voiced opinions should be given no weight. See, e.g. Murphy 

Exploration and Production Co. v. u.s. Dep 't of the Interior, 252 F.3d 473, 480 

(D.C.Cir. 2001) (See argument B.2, infra.) 

Third, the record demonstrates that low income households, whether renters 

or owners, reap direct, economic benefits of increasing the SEER standard. Those 

who actually own or use air conditioners will consume less energy and have lower 

utility bills. DOE does not question this, and in fact itself assumes significant 

25 However, other parties agreed with Ms. Achtenberg's conclusion. See, 

for example, September 13, 2001 Comments ofNRDC, JA 6434, B0006080 

("many low income consumers are renters in areas where rental rates have little if 

anything to do with the cost of providing housing"). 

33 
"Annual Utility Bill Savings" that more than pay back any higher costs of

purchasing more efficient equipment. 67 Fed. Reg. 36377, SPA 214 , Table 2,

"Implications of the New Standards for the Average Consumer" (a SEER 12 "Split

system air conditioner" has "Annual Utility Bill Savings" of $31 per year, thus

paying back the higher "Estimated [purchase cost] Price Increase" of $213 in 7

years, well before the unit's 18.4 year useful life expires); 66 Fed. Reg. 7171, SPA

145, Table 1.2, "Implications of the New Standards for the Average Consumer" (a

SEER 13 "Split system air conditioner" has "Annual Utility Bill Savings" of $42

per year, thus paying back the higher "Estimated [purchase cost] Price Increase"

of $335 in 8 years, well before the unit's 18.4 year useful life expires). Overall,

the energy savings of both SEER 12 and SEER 13 units make economic sense, as

the long-term savings outweigh the costs.

Fourth, the record shows that to the extent that low income households

purchase or use central air conditioning, this occurs almost exclusively in warm

states where DOE's own analysis shows SEER 13 makes sense, due to much

higher use of air conditioning and, therefore, much higher annual utility bill

savings. National Grid, the New England based utility, made the point that low

income people in colder states very rarely have central air conditioning, due to

their limited incomes, the high cost of purchasing such units, and the limited usage

34

I

EE-RM-STD-98-440 COMMENT 316

"Annual Utility Bill Savings" that more than pay back any higher costs of 

purchasing more efficient equipment. 67 Fed. Reg. 36377, SPA 214, Table 2, 

"Implications of the New Standards for the Average Consumer" (a SEER 12 "Split 

system air conditioner" has "Annual Utility Bill Savings" of $31 per year, thus 

paying back the higher "Estimated [purchase cost] Price Increase" of $ 213 in 7 

years, well before the unit's 18.4 year useful life expires); 66 Fed. Reg. 7171, SPA 

145, Table 1.2, "Implications of the New Standards for the Average Consumer" (a 

SEER 13 "Split system air conditioner" has "Annual Utility Bill Savings" of$42 

per year, thus paying back the higher "Estimated [purchase cost] Price Increase" 

of$335 in 8 years, well before the unit's 18.4 year useful life expires). Overall, 

the energy savings of both SEER 12 and SEER 13 units make economic sense, as 

the long-term savings outweigh the costs. 

Fourth, the record shows that to the extent that low income households 

purchase or use central air conditioning, this occurs almost exclusively in warm 

states where DOE's own analysis shows SEER 13 makes sense, due to much 

higher use of air conditioning and, therefore, much higher annual utility bill 

savings. National Grid, the New England based utility, made the point that low 

income people in colder states very rarely have central air conditioning, due to 

their limited incomes, the high cost of purchasing such units, and the limited usage 

34 
of air conditioning in cool climates. September 13, 2001 Comments, JA 6422 -

6423, B0006068 - 6069. See also September 13, 2001 Comments of Consumer

Federation of America, JA 6396, B0006042 ("those [low income families] that

have central air are more likely to live in very warm summer climates where air

conditioning is virtually a necessity"); September 10, 2001 Comments of Texas

ROSE, JA 6450, B0006096 (even in Texas, low income households "comprise a

very small share of the market for central air conditioning units.. . [m]any low

income Texans have no air conditioning"). Again, DOE does not fundamentally

disagree with this point.

Fifth, commenters emphasized that rolling back the SEER 13 standard to

SEER 12 actually hurts low income renters, who comprise approximately 60% of

all low income households (JA 6996, B0006604).26 Renters face the problem that

their landlords have every incentive to purchase less expensive, less efficient

units, saddling the tenants with higher annual electric bills, year and year out for

the 15 to 20 year useful life of the units. Only government regulatory action can

address the disincentives landlords have to investing in energy-efficient units.

October 19, 2001 Comments of the New York and Massachusetts Attorneys

26 See also JA 6962, B0006570 ("The Census Bureau has determined that

most low income families with central air conditioning rent their homes.")

35

EE-RM-STD-98-440 COMMENT 316

of air conditioning in cool climates. September 13, 2001 Comments, JA 6422-

6423, B0006068 - 6069. See also September 13,2001 Comments of Consumer 

Federation of America, JA 6396, B0006042 ("those [low income families] that 

have central air are more likely to live in very warm summer climates where air 

conditioning is virtually a necessity"); September 10, 2001 Comments of Texas 

ROSE, JA 6450, B0006096 (even in Texas, low income households "comprise a 

very small share of the market for central air conditioning units ... [m]any low 

income Texans have no air conditioning"). Again, DOE does not fundamentally 

disagree with this point. 

Fifth, commenters emphasized that rolling back the SEER 13 standard to 

SEER 12 actually hurts low income renters, who comprise approximately 60% of 

all low income households (JA 6996, B0006604).26 Renters face the problem that 

their landlords have every incentive to purchase less expensive, less efficient 

units, saddling the tenants with higher annual electric bills, year and year out for 

the 15 to 20 year useful life of the units. Only government regulatory action can 

address the disincentives landlords have to investing in energy-efficient units. 

October 19,2001 Comments of the New York and Massachusetts Attorneys 

26 See also JA 6962, B0006570 ("The Census Bureau has determined that 

most low income families with central air conditioning rent their homes.") 

35 
General, JA 7021, B0006629 ("This is a particularly acute problem in large urban

areas ... where many residents live in multi-family housing"); October 18, 2001

Comments of Consumer Federation of America, JA 6784, B0006392 ("In the case

of rental housing, it is likely that landlords will underinvest when it comes to

installing a new air conditioner and choose the least expensive and less efficient

model.") Again, DOE did not rebut or disagree with this point.

Given these several arguments, the extensive record supporting these

arguments, and DOE's limited disagreement, the current DOE should have found,

as the prior DOE had found, that low income consumers would "benefit overall"

from SEER 13. January 22 Final Rule (66 Fed. Reg. 7175, col. 1), SPA 150.

However, it instead largely based its decision to withdraw the SEER 13 standard

and adopt the SEER 12 standard on the negative impacts on low income

households. 67 Fed. Reg. 36376, 36380 (May 23, 2002), SPA 213, 217. DOE's

decisions violated the APA.

2. There is No Adequate Record Support for DOE's Conclusion

That SEER 13 Disproportionately Harms Low Income

Consumers, and Its Conclusions Violate the APA

In the May 23 Final Rule, DOE references virtually all of the comments

MUPHT and Texas ROSE cite above in support of the SEER 13 standard. 67 Fed.

Reg. 36380, SPA 217. DOE also references contrary comments that urged DOE

36

EE-RM-STD-98-440 COMMENT 316

General, JA 7021, B0006629 ("This is a particularly acute problem in large urban 

areas ... where many residents live in multi-family housing"); October 18,2001 

Comments of Consumer Federation of America, JA 6784, B0006392 ("In the case 

of rental housing, it is likely that landlords will underinvest when it comes to 

installing a new air conditioner and choose the least expensive and less efficient 

model.") Again, DOE did not rebut or disagree with this point. 

Given these several arguments, the extensive record supporting these 

arguments, and DOE's limited disagreement, the current DOE should have found, 

as the prior DOE had found, that low income consumers would "benefit overall" 

from SEER 13. January 22 Final Rule (66 Fed. Reg. 7175, col. 1), SPA 150. 

However, it instead largely based its decision to withdraw the SEER 13 standard 

and adopt the SEER 12 standard on the negative impacts on low income 

households. 67 Fed. Reg. 36376,36380 (May 23,2002), SPA 213,217. DOE's 

decisions violated the APA. 

2. There is No Adequate Record Support for DOE's Conclusion 

That SEER 13 Disproportionately Harms Low Income 

Consumers, and Its Conclusions Violate the AP A 

In the May 23 Final Rule, DOE references virtually all of the comments 

MUPHT and Texas ROSE cite above in support of the SEER 13 standard. 67 Fed. 

Reg. 36380, SPA 217. DOE also references contrary comments that urged DOE 

36 
to consider the adverse impacts on low income consumers. Id., citing comments

of York International, Trane Company, Rheem Manufacturing, Carrier

Corporation, ARI, Southern Company, Edison Electric Institute, and the Mercatus

Center. The first four of these commenters are major air conditioning

manufacturers, while the fifth (ARI) is the industry's trade association and

lobbying arm. It would be "arbitrary" and "capricious" (5 U.S.C.A. § 706(2)(a))

for DOE to give much weight to these comments, as they come from parties who

are not concerned about the interests of low income consumers, but with the

regulatory burdens and cost impacts that a SEER 13 standard would impose. See

67 Fed. Reg. 36386 (May 23, 2002), SPA 223 (discussion of "Impact on

Manufacturers," including "Cumulative Regulatory Burden" and "Financial

Burden"). In fact, DOE appears to have given these comments little weight in

determining the impact on "Low Income Consumers," 67 Fed. Reg. 36380, SPA

217. Similarly, the comments of Southern Company, a major electric utility,

Edison Electric Institute, a utility industry trade association, and Mercatus Center,

a promoter of free markets, should be and apparently were given little weight.

In the May 23 Final Rule, DOE for the first time in its nine-year effort to

revise the air conditioning efficiency standard:

examined existing literature on the economics of rental markets to

37

EE-RM-STD-98-440 COMMENT 316

to consider the adverse impacts on low income consumers. Id., citing comments 

of York International, Trane Company, Rheem Manufacturing, Carrier 

Corporation, ARl, Southern Company, Edison Electric Institute, and the Mercatus 

Center. The first four of these commenters are major air conditioning 

manufacturers, while the fifth (ARl) is the industry's trade association and 

lobbying ann. It would be "arbitrary" and "capricious" (5 U.S.C.A. § 706(2)(a)) 

for DOE to give much weight to these comments, as they Come from parties who 

are not concerned about the interests of low income consumers, but with the 

regulatory burdens and cost impacts that a SEER 13 standard would impose. See 

67 Fed. Reg. 36386 (May 23,2002), SPA 223 (discussion of "Impact on 

Manufacturers," including "Cumulative Regulatory Burden" and "Financial 

Burden"). In fact, DOE appears to have given these comments little weight in 

determining the impact on "Low Income Consumers," 67 Fed. Reg. 36380, SPA 

217. Similarly, the comments of Southern Company, a major electric utility, 

Edison Electric Institute, a utility industry trade association, and Mercatus Center, 

a promoter of free markets, should be and apparently were given little weight. 

In the May 23 Final Rule, DOE for the first time in its nine-year effort to 

revise the air conditioning efficiency standard: 

examined existing literature on the eoonomics of rental markets to 

37 
determine whether any previous analyses might help resolve the

disagreements on this issue [of low income burdens and benefits].

67 Fed. Reg. 36380, SPA 217. This statement is notable for several reasons.

First, it clearly acknowledges that the advocates of SEER 13 had raised serious

issues that the DOE had to "resolve." Agencies are required "to respond in a

reasoned manner to those [comments] that raise significant problems." Reyblatt v.

U. S. Nuclear Regulatory Commission, 105 F.3d 715, 722 (D.C. Cir. 1997).

Second, the statement acknowledges that DOE was for the first time considering

economics literature that it had not mentioned in the proceeding before and that

other parties had not brought forward. Third, the statement demonstrates that

DOE "resolved" the disagreements by resort to the literature of housing

economics, an area far afield from DOE's expertise. As such, its conclusions

should be given little deference by this Court. See, e.g., Murphy Exploration and

Production Co. v. United States Dep't of the Interior, 252 F.3d 473, 480 (D.C.Cir.

2001)("if an agency has promulgated a regulation outside the scope of its

specialized knowledge, courts will not defer to it"; noting the "general principle

that an agency's regulations deserve no deference where they proceed neither from

a congressional delegation nor from agency expertise")( "Murphy ").

DOE then cites four economics sources:

38

EE-RM-STD-98-440 COMMENT 316

detennine whether any previous analyses might help resolve the 

disagreements on this issue [of low income burdens and benefits]. 

67 Fed. Reg. 36380, SPA 217. This statement is notable for several reasons. 

First, it clearly acknowledges that the advocates of SEER 13 had raised serious 

issues that the DOE had to "resolve." Agencies are required "to respond in a 

reasoned manner to those [comments] that raise significant problems." Reyblatt v. 

u. S. Nuclear Regulatory Commission, 105 F.3d 715,722 (D.C. Cir. 1997). 

Second, the statement acknowledges that DOE was for the first time considering 

economics literature that it had not mentioned in the proceeding before and that 

other parties had not brought forward. Third, the statement demonstrates that 

DOE "resolved" the disagreements by resort to the literature of housing 

economics, an area far afield from DOE's expertise. As such, its conclusions 

should be given little deference by this Court. See, e.g., Murphy Exploration and 

Production Co. v. United States Dep 't of the Interior, 252 F.3d 473,480 (D.C.Cir. 

2001 )("if an agency has promulgated a regulation outside the scope of its 

specialized knowledge, courts will not defer to it"; noting the "general principle 

that an agency's regulations deserve no deference where they proceed neither from 

a congressional delegation nor from agency expertise")( "Murphy"). 

DOE then cites four economics sources: 

38 
Pindykck, R. and D. Rubinfeld, Microeconomic Theory, 2001 ... Pindykck,

R. and D. Rubinfeld, Microeconomics, 2001 Prentice Hall (citing de Leeuw,

F. and N. Ekanen, "The Supply of Rental Housing," AER Vol. 61, 1971, pp.

806 - 817).. . [and] Hanushek, E.A. and J.M. Quigley, "The Determinants

of Housing Demand", Research in Urban Economics, Vol. 2, 1982, pp.

221-242.

67 Fed. Reg. 36380, SPA 217, n. 11 ("Footnote 11"). There are several legal and

factual flaws with DOE's critical reliance on these sources for reaching the

conclusions that landlords will pass the higher costs of SEER 13 through to their

tenants and that SEER 13 should therefore be withdrawn and replaced with

SEER 12.

Legally, the APA does not allow an agency free license, ex post facto, to

draw on any realm of social science literature, especially literature outside the

realm of the agency's expertise, in order to justify the agency's rulemaking

decisions. Courts have voided agency decisions that rely on previously

undisclosed information, as the Court should do here.

In National Black Media Coalition v. FCC, 791 F.2d 1016, 1018 (2nd Cir.

1986)("National Black Media") 7

studies and maps relied upon by the FCC in its report and order were not

exposed to public comment, so that the Commission cannot be said to have

considered all the relevant factors in making its decision.

The court held that the FCC's "order must therefore be overturned as arbitrary and

39

EE-RM-STD-98-440 COMMENT 316

Pindykck, R. and D. Rubinfeld, Microeconomic Theory, 2001 ... Pindykck, 

R. and D. Rubinfeld, Microeconomics, 2001 Prentice Hall (citing de Leeuw, 

F. and N. Ekanen, "The Supply of Rental Housing," AER Vol. 61, 1971, pp. 

806 - 817) ... [and] Hanushek, E.A. and 1M. Quigley, "The Determinants 

of Housing Demand" ,Research in Urban Economics, Vol. 2,1982, pp. 

221-242. 

67 Fed. Reg. 36380, SPA 217, n. 11 ("Footnote 11 "). There are severallegal and 

factual flaws with DOE's critical reliance on these sources for reaching the 

conclusions that landlords will pass the higher costs of SEER 13 through to their 

tenants and that SEER 13 should therefore be withdrawn and replaced with 

SEERI2. 

Legally, the AP A does not allow an agency free license, ex post jacto, to 

draw on any realm of social science literature, especially literature outside the 

realm of the agency's expertise, in order to justify the agency's rulemaking 

decisions. Courts have voided agency decisions that rely on previously 

undisclosed information, as the Court should do here. 

In National Black Media Coalition v. FCC, 791 F.2d 1016,1018 (2nd Cir. 

1986)("National Black Media"), 

studies and maps relied upon by the FCC in its report and order were not 

exposed to public comment, so that the Commission cannot be said to have 

considered all the relevant factors in making its decision. 

The court held that the FCC's "order must therefore be overturned as arbitrary and 

39 
capricious." Id. The court noted that these maps and studies "were not disclosed

throughout the proceeding and thus parties had no opportunity to comment on

their methodology or conclusions." Id. at 1023. This latter point is particularly

germane here, where the conclusions DOE drew were especially prejudicial to the

Petitioners and intervenors MUPHT and Texas ROSE, and the previously

undisclosed sources either do not exist or do not clearly support DOE's

conclusions. MUPHT and Texas ROSE, having relied on the expert opinion of

Emily Achtenberg regarding the lack of any negative impact on low income

housing tenants (JA 6848, B0006456), would have welcomed the "opportunity to

comment on [the] methodology or conclusions" of DOE's cited sources, id. As in

National Black Media Coalition, it is the case here that the agency's:

non-disclosure thus prevented petitioners and perhaps others from making

relevant comments .... The FCC did not comply with the notice provision

of the Administrative Procedure Act .... [T]he Commission's action must

be set aside.

Id. at 1023 -1024.

Similarly, in United States v. Nova Scotia Food Products Corp., 568 F.2d

240 (2"d Cir. 1977), this Court was presented with a challenge to agency action

that was premised in large part on factual material not disclosed to the

commenting parties and the public. The Court:

40

EE-RM-STD-98-440 COMMENT 316

capricious." ld. The court noted that these maps and studies "were not disclosed 

throughout the proceeding and thus parties had no opportunity to comment on 

their methodology or conclusions." ld. at 1023. This latter point is particularly 

germane here, where the conclusions DOE drew were especially prejudicial to the 

Petitioners and intervenors MUPHT and Texas ROSE, and the previously 

undisclosed sources either do not exist or do not clearly support DOE's 

conclusions. MUPHT and Texas ROSE, having relied on the expert opinion of 

Emily Achtenberg regarding the lack of any negative impact on low income 

housing tenants (JA 6848, B0006456), would have welcomed the "opportunity to 

comment on [the] methodology or conclusions" of DOE's cited sources, id. As in 

National Black Media Coalition, it is the case here that the agency's: 

non-disclosure thus prevented petitioners and perhaps others from making 

relevant comments .... The FCC did not comply with the notice provision 

of the Administrative Procedure Act .... [T]he Commission's action must 

be set aside. 

ld. at 1023 -1024. 

Similarly, in United States v. Nova Scotia Food Products Corp., 568 F.2d 

240 (2nd Cir. 1977), this Court was presented with a challenge to agency action 

that was premised in large part on factual material not disclosed to the 

commenting parties and the public. The Court: 

40 
recognize[d] that an agency may resort to it own expertise outside the

record in an informal rulemaking proceeding ... [but] when the pertinent

research material is readily available and the agency has no special expertise

on the precise parameters involved, there is [no] reason to conceal the

scientific data relied upon from the interested parties.

Id. at 241. While the precise facts of Nova Scotia differ from the present facts, it

is notable that in both cases the agencies in question were relying on highly

technical data that commenters had not had a chance to review and respond to.

What the Court there said about scientific research and debate is as true of the

economic research and debate at issue here:

Scientific research is sometimes rejected for diverse inadequacies of

methodology; and statistical results are sometimes rebutted because of a

lack of adequate gathering technique or of supportable extrapolation. Such

is the stuff of scientific debate.

Id. at 252 (emphasis added).

DOE's citations to the economic literature suffer from "diverse

inadequacies" and were extrapolated to apply to circumstances (decisions about

potential housing cost impacts of improved air conditioning efficiency) far beyond

the literature's intended scope. DOE's reliance on the economic literature were

extremely prejudicial because the agency used this literature as the basis for reaffirming its erroneous conclusion that SEER 13 would harm low income

consumers.

41

EE-RM-STD-98-440 COMMENT 316

recognizer d] that an agency may resort to it own expertise outside the 

record in an informal rulemaking proceeding ... [but] when the pertinent 

research material is readily available and the agency has no special expertise 

on the precise parameters involved, there is [no] reason to conceal the 

scientific data relied upon from the interested parties. 

Id. at 241. While the precise facts of Nova Scotia differ from the present facts, it 

is notable that in both cases the agencies in question were relying on highly 

technical data that commenters had not had a chance to review and respond to. 

What the Court there said about scientific research and debate is as true of the 

economic research and debate at issue here: 

Scientific research is sometimes rejected for diverse inadequacies of 

methodology; and statistical results are sometimes rebutted because of a 

lack of adequate gathering technique or of supportable extrapolation. Such 

is the stuff of scientific debate. 

Id. at 252 (emphasis added). 

DOE's citations to the economic literature suffer from "diverse 

inadequacies" and were extrapolated to apply to circumstances (decisions about 

potential housing cost impacts of improved air conditioning efficiency) far beyond 

. the literature's intended scope. DOE's reliance on the economic literature were 

extremely prejudicial because the agency used this literature as the basis for reaffirming its erroneous conclusion that SEER 13 would harm low income 

consumers. 

41 
To begin with, the first citation to "Pindykck [sic], R. and D. Rubinfeld,

Microeconomic Theory, 2001," misspells the first author's name27 and references

a title he did not author. While many treatises bear the title "Microeconomic

Theory," including one authored by Professor Samuelson, the treatise cited by

DOE is not in Books in Print or at major urban research and university libraries.28

The second treatise cited by DOE, "Pindykck [sic], R. and D. Rubinfeld,

Microeconomics, 2001" is in print and available at large libraries and bookstores.

DOE's citation of this Pindyck treatise makes it clear that DOE is referring to and

relying upon the portion that cites "de Leeuw, F. and N. Ekanen, `The Supply of

Rental Housing' , AER, Vol. 61, 1971, pp. 806-807." Footnote 11. The de Leeuw

article is cited in a section of Pindyck's Microeconomics treatise entitled

"Example 8.5 The Long Run Supply of Housing."29 Not surprisingly, a review of

this section demonstrates that it has nothing to say in particular about landlords

27 Robert S. Pindyck is a professor of economics and finance at the

Massachusetts Institute of Technology.

28 See n. 18, supra. It is of course possible DOE intended to refer to

"Microeconomic Theory" by another author, or to another title authored by

Pindyck.

29 MUPHT and Texas ROSE will provide a copy of "Example 8.5 The

Long Run Supply of Housing" to the Court, if so requested, as the cited treatise is

not available at many libraries.

42

EE-RM-STD-98-440 COMMENT 316

To begin with, the first citation to "Pindykck [sic], R. and D. Rubinfeld, 

Microeconomic Theory, 2001," misspells the first author's name27 and references 

a title he did not author. While many treatises bear the title "Microeconomic 

Theory," including one authored by Professor Samuelson, the treatise cited by 

DOE is not in Books in Print or at major urban research and university libraries.28 

The second treatise cited by DOE, "Pindykck [sic], R. and D. Rubinfeld, 

Microeconomics, 2001 t1 is in print and available at large libraries and bookstores. 

DOE's citation of this Pindyck treatise makes it clear that DOE is referring to and 

relying upon the portion that cites "de Leeuw, F. and N. Ekanen, 'The Supply of 

Rental Housing' ,AER, Vol. 61,1971, pp. 806-807." Footnote 11. The de Leeuw 

article is cited in a section ofPindyck's Microeconomics treatise entitled 

"Example 8.5 The Long Run Supply of Housing."29 Not surprisingly, a review of 

this section demonstrates that it has nothing to say in particular about landlords 

27 Robert S. Pindyck is a professor of economics and finance at the 

Massachusetts Institute of Technology. 

28 See n. 18, supra. It is of course possible DOE intended to refer to 

"Microeconomic Theory" by another author, or to another title authored by 

Pindyck. 

29 MUPHT and Texas ROSE will provide a copy of "Example 8.5 The 

Long Run Supply of Housing" to the Court, if so requested, as the cited treatise is 

not available at many libraries. 

42 
passing through higher air conditioning equipment costs to tenants. Quite

surprisingly, however, the section has little to do with landlord's generally passing

along cost increases to tenants. Rather, "The Long-Run Supply of Housing"

section addresses the extent to which increases in housing prices will result in

increases in the "supply" (amount of) housing produced.30 Thus, Pindyck notes

the obvious: that if "the price of housing services were to rise in one area of the

country, the quantity of services could increase substantially," particularly in rural

areas where "land is not scarce" and new housing could profitably be built as

prices rose. Robert S. Pindyck & Daniel L. Rubinfeld, Microeconomics 282

(Prentice Hall 5`h ed. 2001). Citing the de Leeuw article referenced by DOE in

Footnote 11, Pindyck also notes that the same might not be true in dense urban

areas. As prices in urban areas rise, housing developers face strict "local zoning

laws" and the extreme scarcity of "urban land on which rental housing" can be

built. Thus, in urban areas, supply is not as "elastic," meaning that a I% increase

in price will generate less than a 1% increase in supply. Id. at 283.

30 Economists refer to this as the "elasticity of supply," a term quoted in

Footnote 11 ("supply elasticity"). Pindyck defines elasticity as the "[p]ercentage

change in one variable resulting from a 1-percent change in another." Robert S.

Pindyck & Daniel L. Rubinfeld, Microeconomics 666 (Prentice Hall 5`' ed. 2001).

In Example 8.5, Pindyck is discussing the change in housing supply (e.g., housing

production) that would result if housing prices increase, or the "supply elasticity."

43

EE-RM-STD-98-440 COMMENT 316

passing through higher air conditioning equipment costs to tenants. Quite 

surprisingly, however, the section has little to do with landlord's generally passing 

along cost increases to tenants. Rather, "The Long-Run Supply of Housing" 

section addresses the extent to which increases in housing prices will result in 

increases in the "supply" (amount of) housing produced. 3D Thus, Pindyck notes 

the obvious: that if "the price of housing services were to rise in one area of the 

country, the quantity of services could increase substantially," particularly in rural 

areas where "land is not scarce" and new housing could profitably be built as 

prices rose. Robert S. Pindyck & Daniel L. Rubinfeld, Microeconomics 282 

(Prentice Hall 5th ed. 2001). Citing the de Leeuw article referenced by DOE in 

Footnote 11, Pindyck also notes that the same might not be true in dense urban 

areas. As prices in urban areas rise, housing developers face strict "local zoning 

laws" and the extreme scarcity of "urban land on which rental housing" can be 

built. Thus, in urban areas, supply is not as "elastic," meaning that a 1 % increase 

in price will generate less than a 1 % increase in supply. Id. at 283. 

3D Economists refer to this as the "elasticity of supply," a term quoted in 

Footnote 11 ("supply elasticity"). Pindyck defines elasticity as the "[p]ercentage 

change in one variable resulting from a I-percent change in another." Robert S. 

Pindyck & Daniel L. Rubinfeld, Microeconomics 666 (Prentice Hall 5th ed. 2001). 

In Example 8.5, Pindyck is discussing the change in housing supply (e.g., housing 

production) that would result if housing prices increase, or the "supply elasticity." 

43 
MUPHT and Texas ROSE summarize Pindyck's discussion of supply

elasticity not because it is germane to DOE's conclusion that landlords will pass

along higher air conditioning purchase costs to their tenants, but to show the

opposite: that this source in fact does not address the impact of rising landlord

costs on tenant rents. DOE's reliance on Pindyck is completely inapposite and

misplaced, and unfairly prejudiced the right of parties who supported SEER 13 to

participate in a fair and open rulemaking proceeding. DOE, with the advent of a

change in Administration and under political pressure from states that manufacture

air conditioners, decided to roll back the SEER 13 standard to SEER 12. Perhaps

DOE thought that basing the rollback on purported protection of low income

consumers would buttress its legal position. But the inconsistencies between

DOE's initial and current position on low income impacts (as well as so many

other issues regarding the SEER 12/SEER 13 debate) should cause this Court to

give DOE little, if any, deference. See Callaway v. Commissioner, 231 F.3d 106,

132(2 nd Cir. 2000)("the consistency of an agency's interpretations" will affect the

amount of deference due). Here, DOE's findings and conclusions regarding the

benefits of SEER 13 were highly inconsistent and the circumstances surrounding

44

EE-RM-STD-98-440 COMMENT 316

MUPHT and Texas ROSE summarize Pindyck's discussion of supply 

elasticity not because it is germane to DOE's conclusion that landlords will pass 

along higher air conditioning purchase costs to their tenants, but to show the 

opposite: that this source in fact does not address the impact of rising landlord 

costs on tenant rents. DOE's reliance on Pindyck is completely inapposite and 

misplaced, and unfairly prejudiced the right of parties who supported SEER 13 to 

participate in a fair and open rulemaking proceeding. DOE, with the advent of a 

change in Administration and under political pressure from states that manufacture 

air conditioners, decided to roll back the SEER 13 standard to SEER 12. Perhaps 

DOE thought that basing the rollback on purported protection of low income 

consumers would buttress its legal position. But the inconsistencies between 

DOE's initial and current position on low income impacts (as well as so many 

other issues regarding the SEER 12/SEER 13 debate) should cause this Court to 

give DOE little, if any, deference. See Callaway v. Commissioner, 231 F .3d 106, 

132 (2nd Cir. 2000)("the consistency of an agency's interpretations" will affect the 

amount of deference due). Here, DOE's findings and conclusions regarding the 

benefits of SEER 13 were highly inconsistent and the circumstances surrounding 

I . 

i 

44 
its change of position highly suspect.31 This is a clear case for finding that the

agency's views were tainted by considerations far outside the ambit that the APA

allows an agency.

MUPHT and Texas ROSE will briefly address the other two sources that

DOE cites and that purportedly support DOE's conclusion that landlords will pass

on the costs of more efficient air conditioners to their tenants. 67 Fed. Reg.

36380, n. 11 & col. 3, SPA 217. The de Leeuw and Ekanem article was published

more than thirty years ago, in the 1971 American Economic Review.32 The focus

of the article was to determine whether "housing allowances" and "housing

subsidy programs" would "drive up rents" by placing more purchasing power into

the hands of low income households Frank de Leeuw & Nkanta F. Ekanem, The

Supply of Rental Housing, 61 American Economic Review 806 (1971)("The

31 It bear noting again that in the January 22 Final Rule, DOE found that

low income consumers would "benefit overall" from adoption of SEER 13 (66

Fed. Reg. 7175, col. 1, SPA 150) but that with a change of Administration and no

change in the record before it, DOE then found that SEER 13 would

disproportionately harm low income consumers "because increases in first cost are

felt more sharply by lower income consumers" (July 25 Proposed Rule, 66 Fed.

Reg. 38828, col. 2).

32 DOE cites this as "AER." Footnote 11. MUPHT and Texas ROSE will

provide a copy of this article to the Court, if so requested, as it is available only at

major university and research libraries due to its vintage and obscurity.

45

EE-RM-STD-98-440 COMMENT 316

its change of position highly suspect. 3! This is a clear case for finding that the 

agency's views were tainted by considerations far outside the ambit that the AP A 

allows an agency. 

MUPHT and Texas ROSE will briefly address the other two sources that 

DOE cites and that purportedly support DOE's conclusion that landlords will pass 

on the costs of more efficient air conditioners to their tenants. 67 Fed. Reg. 

36380, n. 11 & col. 3, SPA 217. The de Leeuw and Ekanem article was published 

more than thirty years ago, in the 1971 American Economic Review. 32 The focus 

of the article was to determine whether "housing allowances" and "housing 

subsidy programs" would "drive up rents" by placing more purchasing power into 

the hands of low income households Frank de Leeuw & Nkanta F. Ekanem, The 

Supply afRental Housing, 61 American Economic Review 806 (l 97 l)("The 

3! It bear noting again that in the January 22 Final Rule, DOE found that 

low income consumers would "benefit overall" from adoption of SEER 13 (66 

Fed. Reg. 7175, col. 1, SPA 150) but that with a change of Administration and no 

change in the record before it, DOE then found that SEER 13 would 

disproportionately harm low income consumers "because increases in first cost are 

felt more sharply by lower income consumers" (July 25 Proposed Rule, 66 Fed. 

Reg. 38828, col. 2). 

32 DOE cites this as "AER." Footnote 11. MUPHT and Texas ROSE will 

provide a copy of this article to the Court, if so requested, as it is available only at 

major university and research libraries due to its vintage and obscurity. 

45 
Supply of Housing"). The authors' primary focus was not whether rising costs (for

air conditioning or any other building-related cost) would cause landlords to raise

their tenant's rents, but whether greater demand in the form of greater purchasing

power among poor households would drive up rental prices. The authors make

this clear not only in the introductory paragraph just cited, but in their conclusion

as well:

[T]he implication of this study would seem to be that programs to increase

the demand for housing [e.g., housing assistance and housing voucher

programs] would in part serve to drive up rents.

Id. at 815.33

All of the parties that supported SEER 13 are prejudiced by DOE's reliance

on these newly-found extra-record sources. See National Black Media, supra, 791

F.2d at 1023 - 1024. DOE simply copied numerical values for supply and demand

elasticities from these articles and, apparently, then inserted these values into the

"Pass-Thru [sic]-Fraction" formulae contained in its discussion of low income

33 The Supply ofHousing, however is the source of DOE's statement that

the supply elasticity for "long-run housing supply [is] 0.3 to 0.7 ," SPA 217.

Similarly, the Hanushek and Quigley article is the source of DOE's statement that

housing demand elasticities range from -0.1 to -1.0 (SPA 217). Like The Supply

of Housing, however, this article primarily addresses "government subsidies" of

various kinds that have been developed to help poor people obtain housing. Eric

A. Hanushek and John M . Quigley, The Determinant of Housing Demand, 2

Research in Urban Economics 221 (1982).

46

EE-RM-STD-98-440 COMMENT 316

Supply 0/ Housing"). The authors' primary focus was not whether rising costs (for 

air conditioning or any other building-related cost) would cause landlords to raise 

their tenant's rents, but whether greater demand in the form of greater purchasing 

power among poor households would drive up rental prices. The authors make 

this clear not only in the introductory paragraph just cited, but in their conclusion 

as well: 

[T]he implication of this study would seem to be that programs to increase 

the demand for housing [e.g., housing assistance and housing voucher 

programs] would in part serve to drive up rents. 

Id. at 815.33 

All of the parties that supported SEER 13 are prejudiced by DOE's reliance 

on these newly-found extra-record sources. See National Black Media, supra, 791 

F.2d at 1023 - 1024. DOE simply copied numerical values for supply and demand 

elasticities from these articles and, apparently, then inserted these values into the 

"Pass-Thru [sic]-Fraction" formulae contained in its discussion of low income 

33 The Supply o/Housing, however is the source of DOE's statement that 

the supply elasticity for "long-run housing supply [is] 0.3 to 0.7," SPA 217. 

Similarly, the Hanushek and Quigley article is the source of DOE's statement that 

housing demand elasticities range from -0.1 to -1.0 (SPA 217). Like The Supply 

of Housing, however, this article primarily addresses "government subsidies" of 

various kinds that have been developed to help poor people obtain housing. Eric 

A. Hanushek and John M. Quigley, The Determinant of Housing Demand, 2 

Research in Urban Economics 221 (1982). 

46 
impacts. 67 Fed. Reg. 36380, col. 3, SPA 217.34 DOE nowhere explains where it

derived the demand or supply version of the "Pass-Thru-Formula" and none of the

cited articles contains any similar formula. Using these formulae, DOE concludes

that some "landlords may actually pass on more than 100 percent of these

[increased air conditioning purchase] costs" to their tenants, although others will

pass on as little as "23 percent" of these costs. Id. (emphasis added). The

formulae have no basis whatsoever in the record or in the sources DOE cites. As

already noted, a court should give DOE no deference on this point because it

possesses no expertise in the areas of low income housing supply and demand.35

DOE notes that if landlords pass on less than 100 percent of the higher costs

"renters are much more likely to benefit." Id. Possessing no expertise in this area

and unable to draw any conclusions from the inapposite studies it referred to after

34 That is, DOE used the "supply elasticities" it "found in Pindykck [sic]"

and the "demand elasticities found in Hanushek" and used those values to

calculate pass through fractions ranging from "23 percent to 121 percent." 66 Fed.

Reg. 36380, col. 3 & n. 11, SPA 217.

35 The de Leeuw article notes that the Department of Housing and Urban

Development funded "the research and studies forming the basis for this

publication," and, arguably, HUD is an agency that possesses the type of expertise

in low income housing supply and demand to which a court would defer. The

Supply of Housing, supra, 61 American Economic Review 806 . DOE possesses

no such expertise and is due no deference.

47

EE-RM-STD-98-440 COMMENT 316

impacts. 67 Fed. Reg. 36380, col. 3, SPA 217.34 DOE nowhere explains where it 

derived the demand or supply version of the "Pass-Thru-Formula" and none of the 

cited articles contains any similar formula. Using these formulae, DOE concludes 

that some "landlords may actually pass on more than 100 percent of these 

[increased air conditioning purchase] costs" to their tenants, although others will 

pass on as little as "23 percent" of these costs. Id. (emphasis added). The 

formulae have no basis whatsoever in the record or in the sources DOE cites. As 

already noted, a court should give DOE no deference on this point because it 

possesses no expertise in the areas of low income housing supply and demand. 35 

DOE notes that if landlords pass on less than 100 percent of the higher costs 

"renters are much more likely to benefit." Id. Possessing no expertise in this area 

and unable to draw any conclusions from the inapposite studies it referred to after 

34 That is, DOE used the "supply elasticities" it "found in Pindykck [sic]" 

and the "demand elasticities found in Hanushek" and used those values to 

calculate pass through fractions ranging from "23 percent to 121 percent." 66 Fed. 

Reg. 36380, col. 3 & n. 11, SPA 217. 

35 The de Leeuw article notes that the Department of Housing and Urban 

Development funded "the research and studies forming the basis for this 

publication," and, arguably, HUD is an agency that possesses the type of expertise 

in low income housing supply and demand to which a court would defer. The 

Supply of Housing, supra, 61 American Economic Review 806. DOE possesses 

no such expertise and is due no deference. 

47 
the rulemaking closed, DOE reaffirmed its pre-ordained conclusion regarding the

"likely effects of central air conditioning and heat-pump standards on low-income

renters." 66 Fed. Reg. 36382, SPA 219. While it had before it the very current

opinion of an expert who had worked in the field of low income housing for thirty

years (October 18, 2001 Comments of Emily Achtenberg, JA 6843, B0006456), it

instead muddied the record with last-minute references to twenty- and thirty-year

old articles and mis-citation of and mis-reliance upon other economic treatises.

DOE's actions in basing its withdrawal of the SEER 13 standard and

adoption of the SEER 12 standard on allegedly adverse impacts of SEER 13 on

low income households are "arbitrary, capricious [and] an abuse of discretion." 5

U.S.C.A. § 706(2)(A). DOE is not free to rely on extra-record sources that it

failed to disclose during the comment period and that it misused to draw

conclusions nowhere contained in those sources. United States v. Nova Scotia,

supra, 568 F.2d 240, at 249; National Black Media Coalition, supra, 791 F.2d

1016, at 1022-1024. Such conduct is particularly suspect where the agency has

changed course not in connection with any newly discovered information or

studies but with a change in Administration. State Farm, supra, 463 U.S. 29, at

59 n.*. DOE's low income findings are entitled to little deference and should be

rejected by this Court. Murphy, supra, 252 F.3d 473, at 480.

48

EE-RM-STD-98-440 COMMENT 316

the rulemaking closed, DOE reaffirmed its pre-ordained conclusion regarding the 

"likely effects of central air conditioning and heat-pump standards on low-income 

renters." 66 Fed. Reg. 36382, SPA 219. While it had before it the very current 

opinion of an expert who had worked in the field of low income housing for thirty 

years (October 18,2001 Comments of Emily Achtenberg, JA 6843, B0006456), it 

instead muddied the record with last-minute references to twenty- and thirty-year 

old articles and mis-citation of and mis-reliance upon other economic treatises. 

DOE's actions in basing its withdrawal of the SEER 13 standard and 

adoption of the SEER 12 standard on allegedly adverse impacts of SEER 13 on 

low income households are "arbitrary, capricious [and] an abuse of discretion." 5 

U.S.C.A. § 706(2)(A). DOE is not free to rely on extra-record sources that it 

failed to disclose during the comment period and that it misused to draw 

conclusions nowhere contained in those sources. United States v. Nova Scotia, 

supra, 568 F.2d 240, at 249; National Black Media Coalition, supra, 791 F.2d 

1016, at 1022-1024. Such conduct is particularly suspect where the agency has 

changed course not in connection with any newly discovered information or 

studies but with a change in Administration. State Farm, supra, 463 U.S. 29, at 

59 n. *. DOE's low income findings are entitled to little deference and should be 

rejected by this Court. Murphy, supra, 252 F.3d 473, at 480. 

48 
II. CONCLUSION

Petitioners - Intervenors MUPHT and Texas ROSE respectfully ask this

Court to declare that the SEER 13 Final Rule promulgated January 22, 2001 was

lawfully promulgated and shall take effect; further declare that the SEER 12 Final

Rule•promulgated May 23, 2002 is null and void and may not take effect; and

order such other relief as the Court deems proper and in the interest of justice in

this matter.

Respectfully submitted,

MASSACHUSETTS UNION OF PUBLIC HOUSING TENANTS

TEXAS RATEPAYERS' ORGANIZATION TO SAVE ENERGY

By their counsel:

cthO L/ P / /o 2

Charles Harak, Esq.

National Consumer Law Center, Inc.

77 Summer Street, 10`h floor

Boston, MA 02110-1006

617 542-8010

617 542-8028 (facsimile)

charaknnclc.org

49

EE-RM-STD-98-440 COMMENT 316

II. CONCLUSION 

Petitioners - Intervenors MUPHT and Texas ROSE respectfully ask this 

Court to declare that the SEER 13 Final Rule promulgated January 22,2001 was 

lawfully promulgated and shall take effect; further declare that the SEER 12 Final 

Rule promulgated May 23,2002 is null and void and may not take effect; and 

order such other relief as the Court deems proper and in the interest of justice in 

this matter. 

Respectfully submitted, 

MASSACHUSETTS UNION OF PUBLIC HOUSING TENANTS 

TEXAS RA TEPA YERS' ORGANIZATION TO SAVE ENERGY 

By their counsel: 

CWJ!'kJJJfJMU Ylk /02-

Charles Barak, Esq. 

National Consumer Law Center, Inc. 

77 Summer Street, lOth floor 

Boston, MA 02110-1006 

617542-8010 

617 542-8028 (facsimile) 

charak@nclc.org 

49 
CERTIFICATE OF COMPLIANCE

In accordance with Rule 32(a)(7)(c) of the Federal Rules of Appellate

Procedure, the undersigned counsel hereby certifies that this brief complies with

the type-volume limitation of Rule 32(a)(7)(B). As measured by the wordprocessing system used to prepare this brief, there are 11,892 words in the brief.

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EE-RM-STD-98-440 COMMENT 316

CERTIFICATE OF COMPLIANCE 

In accordance with Rule 32(a)(7)(c) of the Federal Rules of Appellate 

Procedure, the undersigned counsel hereby certifies that this brief complies with 

the type-volume limitation of Rule 32(a)(7)(B). As measured by the wordprocessing system used to prepare this brief, there are 11,892 words in the brief. 

50