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## U.S. DEPARTMENT OF ENERGY

**+ + + + + CENTRAL AIR CONDITIONER REGIONAL STANDARDS**  **ENFORCEMENT WORKING GROUP**

**+ + + + +**
**PUBLIC MEETING**

**+ + + + + Thursday**  **September 4, 2014**

**+ + + + +**
**The Public Meeting met in Suite 8E 089, 1000 Independence Avenue, S.W., Washington,**  **D.C., at 9:00 a.m., Neil Eisner, Meeting Facilitator, presiding.**  **PRESENT: NEIL EISNER, Meeting Facilitator**  **TIMOTHY BALLO, Earthjustice KEITH DENNIS, National Rural Electric**  **Cooperative Association JORDAN DORIA, Ingersoll Rand**  **GARY FERNSTROM, California Investor Owned Utilities**  **JOHN GIBBONS, Carrier Corporation MATTHEW LATTANZI, NORDYNE Inc.**  **CHARLES McCRUDDEN, Air Conditioning Contractors of America**  **KAREN MEYERS, Rheem Manufacturing Company ELIZABETH NOLL, Natural Resources Defense**  **Council STEVE PORTER, Johnstone Supply**  **DOUG RAWALD, U.S. Department of Energy, General Counsel**  **ANIRUDDH ROY, Goodman Manufacturing Company**

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## BRYAN ROCKY, Johnson Controls **HARVEY SACHS, American Council for an Energy-Efficient Economy**  **AMY SHEPHERD, Air-Conditioning, Heating and Refrigeration Institute**  **CHARLES WHITE, Plumbing-Heating-Cooling Contractors - National Association**  **DAVID WINNINGHAM, Allied Air Enterprises**

**ALSO PRESENT: KARIM AMRANE, Air-Conditioning, Heating, and**  **Refrigeration Institute ASHLEY ARMSTRONG, U.S. Department of Energy**  **LAURA DEGITZ, Navigant Consulting JOHANNA HARIHARA, U.S. Department of Energy,**  **General Counsel DAVID HUNGERFORD, California Energy**  **Commission*** **JOHN HURST, Lennox International JON MELCHI, HARDI** 

***via teleconference**

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## TABLE OF CONTENTS **Consequences 4. Adding Burdens to Contractors.. 4**  **5. DOE Consideration of Remedial Actions........................ 21**  **6. Assessing Civil Penalties...... 28 Labeling**  **1. Manufacturer's Proposal........ 44 2. Tear Off Labels................ 70**  **3. QR Code Labels................. 70 4. Label Packaging in Unit........ 72**  **Communication 1. Public Outreach................ 73**  **2. DOE Database: Contractors, Dealers, Distributors.......... 97**  **3. Training to Contractors/ Distributors in Compliance with**  **Regional Standards............. 107 4. Use of AHRI Database and**  **Certificates................... 133 DOE Collection of Information:**  **Suspected Violations and Date 1. Whistleblower.................. 134**  **2. Tear off label................. 142 3. Records Retention.............. 142** 

**Additional Topics**

**1. Upcoming October Meeting....... 159 2. Prohibited Acts................ 160** 

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## 1 P-R-O-C-E-E-D-I-N-G-S **2 (9:04 a.m.) 3 MR. EISNER: All right, let's get**  **4 started. We're under Consequences up to number 5 four, Adding Burdens to Contractors. I'm not**  **6 sure who suggested that or if somebody would like 7 to start it off.**  **8 Anybody want to say the pros for this 9 or the cons for this?**  **10 MR. WHITE: Well, this is Chuck White 11 and I guess I would just like to say for, again,**  **12 the bulk of the contractors, if we are aware, and 13 I know from my personal experience, if I am aware**  **14 that something we did was wrong, whether it was 15 undersized or wasn't what we said, we would make**  **16 it right. And I don't know what you would put in 17 to enforce that. If we are found to have done a**  **18 system that is not compliant, there are legal 19 ramifications and I have said before that the**  **20 building inspector has power over me but it is 21 not a huge concern because I can work with the**  **22 building inspector. He will tell me what is**

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## 1 wrong. We will work together to fix the problem. **2 But the homeowner has a greater power because if 3 I have done something in violation, I am going to**  **4 end up in court and litigation is expensive. It 5 is much less expensive for me, even if I put the**  **6 wrong unit in, to go take that unit out, put the 7 right unit it, than get involved in a protracted**  **8 legal battle. 9 But I guess I am interested in what**  **10 these quote unquote burdens or what these things 11 would be to fix noncompliant installations**  **12 because as far as I am aware, when we are made 13 aware of the situation, we work to try and fix**  **14 it. 15 MR. RAWALD: So this is Doug and I did**  **16 not pitch this idea so I am not speaking in 17 defense or for it. I am just trying to draw a**  **18 corollary. 19 We don't require this in the context**  **20 of if a manufacturer manufacturers and 21 distributes in U.S. commerce a noncompliant**  **22 product. We require the manufacturer to inform**

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## 1 the consumer that they have a noncompliant **2 product but we don't require them to replace the 3 product or to make it compliant. So, we don't**  **4 require that level of performance. 5 Manufacturers sometimes do things on**  **6 their own to fix the situation and, as I 7 mentioned in response to something Amy said**  **8 yesterday, we consider that in assessing the 9 scope of the penalty that we think would be**  **10 appropriate for the manufacturer, so the 11 manufacturer who goes out and spends a lot of**  **12 money to go out and replace all the refrigerators 13 that were wrongly distributed, we will consider**  **14 that in deciding in how much to charge the 15 company in a civil penalty.**  **16 So, I think what would be more 17 analogous to what DOE currently does would be to**  **18 require the contractor to notify the customer 19 that they received a product that is noncompliant**  **20 with the regional standard, without actually 21 requiring them to replace it. And that just**  **22 gives them information to the customer who then**

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## 1 could decide if they wanted to sue the **2 contractor. That would be their own choice, not 3 anything DOE would be involved in or taking other**  **4 action they feel appropriate, Yelp or whatever 5 thing they think is appropriate to lambaste the**  **6 guy who gave them the wrong thing. Which Charlie 7 McCrudden is shaking his head but those devices**  **8 are awfully powerful to the new generation for 9 some reason.**  **10 So my point being that I think what 11 the Department would probably be more willing to**  **12 do if we are trying to stick with things that we 13 kind of already do and be capable of enforcing**  **14 would be a notice to the customer that you have 15 received a product you should not have received.**  **16 MS. NOLL: So, this is Elizabeth, 17 NRDC. I am not sure if I was the one that added**  **18 this. A question, I guess, and I kind of wish 19 that Charlie Harak was here to speak on the**  **20 consumer advocate's behalf because I think on 21 some level notifying the consumer that they have**  **22 a noncompliant product seems like definitely**

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## 1 needs to be part of that. And I hear a lot of **2 well we would do everything we could to do the 3 right thing and make the consumer whole but don't**  **4 require us to do that, and us being whoever, 5 because there is situations we discussed**  **6 yesterday where it may have been the manufacturer 7 where the product was re-rated, and I guess on**  **8 what level do we want to ensure that if a 9 consumer gets sold the wrong product either from**  **10 a re-rating or from an improper installation that 11 they have means outside of just pursuing that on**  **12 their own to get the right product, if they were 13 unknowingly undercut or misinformed.**  **14 I guess, is there anything that we can 15 do to ensure that they are served properly? And**  **16 that is I guess where this, if the contractor is 17 required to go back and fix it, you know, that to**  **18 me seems like a strong requirement. On the other 19 hand, if the contractor goes out of business, is**  **20 it the Department's responsibility to fix that or 21 does it go up the chain?**  **22 MR. SACHS: This is Harvey. And from**

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## 1 the wording that was up there, adding burden, my **2 sick mind immediately jumped to thinking about 3 the famous old book, the Scarlet Letter, labeling**  **4 Hester Prynne as a violator of societal norms. 5 I think we are talking about but not**  **6 using the word the rogue contractor. And what I 7 don't have a sense of is sort of the flow chart,**  **8 in particular in conjunction with the term 9 habitual violator. So, presumably -- routine.**  **10 I'm sorry. Thank you very much. 11 Presumably, somehow or another**  **12 something triggers a single installation a 13 possibly being inappropriate. Perhaps it is the**  **14 label. Perhaps it is a subsequent contractor 15 coming in to fix the mess. That establishes that**  **16 we have -- presumptively it establishes that 17 there is a violation and somehow or other, we**  **18 need to have means to help the consumer get what 19 he thought he paid for. But how does that also**  **20 trigger the Department to be thinking about 21 whether this is a not habitual, a routine**  **22 violator. And how do we start putting the data**

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## 1 together to understand if this is a systematic **2 problem or a one-off mistake? 3 MR. RAWALD: Right, Harvey. I think**  **4 your question is going back to the thing that 5 have been punting on four different days defining**  **6 what routine is. So, and I am still just open 7 for different ideas about how we discern or**  **8 define the routineness of someone's violation. 9 So, that is kind of where I am.**  **10 I think it is a different question 11 than the requirement someone fix an installation**  **12 because the question here that we are asking here 13 is any installation, whether it is a one-off or a**  **14 routine problem, do we want to have the 15 contractor have the obligation to go out and**  **16 remediate it, primarily, it would seemingly be by 17 replacing the noncompliant unit with a compliant**  **18 unit, which I am sure it would be a great expense 19 both in time and in actual paying for the**  **20 returning of the unit and the new unit that you 21 would be putting in.**  **22 So, and I haven't heard a whole lot**

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## 1 from anybody except for Chuck and Elizabeth on **2 the point and then I issued the idea of hey 3 listen, we can at least think about a notice**  **4 provision, whether or not there is a requirement 5 of performance on the issue.**  **6 So, I guess are there any more 7 thoughts on that particular idea?**  **8 MR. SACHS: Then I do have some 9 follow-up. This is Harvey.**  **10 Given Chuck's assurance that a 11 reputable manufacturer -- I'm sorry -- reputable**  **12 contractor having made a mistake will remedy it, 13 then I certainly would want that requirement.**  **14 And if a contractor wants to dodge that, that is 15 circumstantial evidence that he is probably not**  **16 playing the game right. And that could lead to 17 sort of an operational trigger that someone who**  **18 starts playing funny when an irregular 19 installation is discovered is somebody's whose**  **20 pattern ought to be looked at by requesting his 21 records.**  **22 Again, we are trying to get an**

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## 1 efficient reactive process. And this is what I **2 am thinking is a way that gets you to very 3 targeted look sees, rather than throwing a**  **4 blanket over the whole contracting industry. 5 MR. EISNER: John.**  **6 MR. HURST: John Hurst with Lennox. 7 The idea that a contractor would have to make**  **8 good certainly has more teeth and it is a 9 financial incentive for the contractor to do the**  **10 right thing the first time. 11 The only caveat I would say to that is**  **12 we would have to be careful about the consumer. 13 You know we have used the example of the internet**  **14 retailer, where the unit is shipped to the 15 driveway. The homeowner or the consumer is in**  **16 collusion with whoever installs the rogue piece 17 of equipment.**  **18 I could envision a scenario where that 19 consumer gets amnesia and then wants some**  **20 recourse. Now, it is a very small percentage but 21 having worked in retail, there is an element of**  **22 the population. It is a very small element but**

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## 1 there are consumers that will game the system as **2 well. So, we would have to construct something 3 to avoid that situation.**  **4 But I am not necessarily opposed to 5 the idea. I would kind of like to hear from**  **6 Charlie and what he is thinking about that type 7 of circumstance.**  **8 MR. McCRUDDEN: So, this is Charlie 9 with ACCA. One of the things I sort of thought**  **10 about was the impact on the consumer in this 11 case. You know the consumer has to be home for**  **12 this remediation to occur. 13 And so there is, in some ways, a**  **14 burden on the consumer. You know they don't -- 15 it would be great if all the equipment was**  **16 outside and the contractor never had to enter the 17 home but, in this case, that has to occur. And**  **18 so does that require someone to stay home, 19 someone to miss work, or other obligations that**  **20 they may have. And this comes up in other, I 21 think there are utility programs that require**  **22 quality assurance checks. And when you add that**

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## 1 extra step in the whole process, we hear **2 grumblings sometimes from the consumers who say 3 something along the lines of wait, do you mean I**  **4 have got to stay home another day for this? 5 So, there is that impact. If that is**  **6 required, then we are adding that into this 7 program. I think the notification requirement**  **8 might satisfy that. And I think that would 9 trigger likely the contractor, anyway, to figure**  **10 out how to make this work, make this whole. Yes. 11 MR. RAWALD: So, this is Doug. I**  **12 guess I am not really buying into the concern 13 that a consumer's inconvenience is a reason why**  **14 we shouldn't require this. Because, frankly, 15 they have been inconvenienced by getting the**  **16 wrong product they didn't want in the first 17 place. I mean they are going to have to pay more**  **18 money in electrical bills because the SEER value 19 is going to be lower. So, that is not going to**  **20 have a whole lot of weight with who I work for. 21 But I do think there is at least a**  **22 question of how I can enforce somebody failing to**

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## 1 perform this. And so I have to go back and talk **2 to the lawyers about the extent of our authority 3 because we just don't do this right now. There**  **4 is no corollary to us doing this. And so I have 5 to go back and talk with folks about the comfort**  **6 level of our authority to require performance. 7 So, what I can say to you in all**  **8 clarity is I know that we do notifications. So, 9 notification at least is a baseline to consider**  **10 but I may not be able to get folks online with 11 the idea of requiring performance because of**  **12 issues that I haven't thought about yet. But I 13 want to mark that for them to talk about.**  **14 MR. SACHS: Charlie, this is Harvey 15 with a follow-up. My experience has been that --**  **16 we are really only regulating the condensing 17 unit. And I don't know if installations that**  **18 don't have a power shutoff outside at the 19 condensing unit and in which I can't do all of**  **20 the operations required to change out the 21 condensing unit, pump down an evacuation and**  **22 everything else, without having to go into the**

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## 1 house. I am not having to touch the coil. **2 So, I am not sure. I appreciate the 3 concern with the consumer and I know Charlie**  **4 Harak would if he were here, but I am not sure 5 how frequent that case is.**  **6 MR. WHITE: This is Chuck White. 7 MR. RAWALD: Well, let me just jump in**  **8 real quick because I want to make clear that our 9 regulations are of both the outdoor and indoor**  **10 unit. I mean it is a split system. While the 11 condensing unit is the large part of it, we do**  **12 have requirements for performance of the 13 combination, not just of the outdoor unit.**  **14 So, I get the point but I just want to 15 make that clear from the Department's point of**  **16 view. 17 MR. SACHS: I understand that. And**  **18 perhaps I am wrong, Doug, and need to be 19 corrected. But my sense is that operationally,**  **20 the only violation I could pick up in this case 21 was an incorrect condensing unit. That is one**  **22 which has a label on it saying it is --**

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## 1 MR. WHITE: This is Chuck White. So, **2 I am installing a system. The system is rated. 3 So, in Charlie's example, we have a third party**  **4 coming to verify the condition to get you a 5 rebate or verify compliance. They have to see**  **6 the inside coil because it is a matched system. 7 We are not just talking about an outdoor**  **8 condenser change out. If I am replacing a 9 system, they are going to have to have access to**  **10 the inside and possibly, the thermostat. There 11 will be an electrical disconnect, or at least**  **12 there should be, but people will need that access 13 to be able to verify some of that indoor stuff.**  **14 And kind of throwing back to my 15 original comments, the caveat I have is in the**  **16 case where it is our fault, and if I have a piece 17 of equipment that was mis-rated and that comes**  **18 down the pike, the contractor was operating in 19 good faith, I am still going to try to do what we**  **20 need to do to make it right but it is going to be 21 more of a discussion as to who is paying for**  **22 that.**

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## 1 MR. PORTER: This is Steve Porter, **2 Johnstone Supply. I mean currently right now the 3 process on a bad installation, which is whether**  **4 it is the wrong size unit, whether it goes DOA, 5 you know dead on arrival, or all those things**  **6 that exist today that a contractor has to deal 7 with all the time anyway and the homeowner has to**  **8 deal with. I mean, it is not like installations 9 are done perfectly every day. They happen not**  **10 that often but there is a percentage of them that 11 do and they are already remedied through Better**  **12 Business Bureau, working with the contractor. 13 You know it gets worked out every day. So, it**  **14 seems kind of redundant to me to put something 15 over this. Once they get notified that hey, you**  **16 put the wrong unit in is no different than hey, 17 this thing doesn't work.**  **18 MS. SHEPHERD: This is Amy Shepherd. 19 Actually, I think it is a little different but I**  **20 think that it is just important for us to keep 21 this in mind. I mean this is not necessarily a**  **22 situation where a consumer didn't get what they**

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## 1 paid for. This could be what they wanted. And **2 so there is not necessarily sort of a 3 misrepresentation of the consumer getting**  **4 defrauded in terms of I thought I was going to go 5 14 but I got a 13. They may have known that they**  **6 were getting the 13, they didn't know about the 7 requirement but they got exactly what they paid**  **8 for. 9 So, if you go back and you make the**  **10 contractor install the 14, I think you do have to 11 address the question of who is going to pay for**  **12 that because it could very well be that the 13 consumer doesn't want to pay for that. And then**  **14 I think you would have to ask whether 15 the Department has the authority to**  **16 force the contractor to pay for that, in terms of 17 whether they have that sort of penalty authority.**  **18 So, I just think it is important that 19 we keep in mind probably what I think is the most**  **20 likely nature of how this is going to happen. 21 And then in terms of the truly bad actor, the**  **22 person, the contractor who knew this was a**

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## 1 violation and did it anyway, I really question **2 whether or not they are still going to be around 3 or there is going to be a mechanism to get that**  **4 particular person to go back and install the 5 other unit. I think they are much more likely to**  **6 just disappear. 7 MR. RAWALD: Yes, this is Doug and I**  **8 heard obviously a good point. And I agree that 9 is a point that I think is well taken. So, that**  **10 is one thing we before did not include that. 11 Can we agree that as a baseline**  **12 premise that notification by the contractor to 13 the customer is a good idea? Is that something**  **14 that we could all agree to, that that is 15 something that we would sign up for? I see a lot**  **16 of nodding of heads. But is there anyone who is 17 dissenting from the idea of that, would be**  **18 opposed to saying hey, contractor, you should be 19 required to notify your customer that you**  **20 installed a noncompliant product, if we 21 discovered it?**  **22 Chuck, Charlie?**

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## 1 MR. WHITE: This is Chuck White. I **2 think the good guys are going to do that. But I 3 guess I would like to consult a little with some**  **4 of my people. But my own personal opinion, I 5 don't see it is an issue but we have got to think**  **6 about it a little bit. 7 MR. McCRUDDEN: And I will think about**  **8 it with Chuck. This is Charlie. 9 MR. RAWALD: This is Doug. So, I will**  **10 go back and talk to the people in the Department 11 about our sense of whether we could actually**  **12 require this level of specific performance to do 13 something that we don't do currently. But I will**  **14 also consider at least the open the possibility 15 pending further discussion from the contractors**  **16 of requiring a notification at least consistent 17 with how we do things with manufacturers now who**  **18 manufacturer noncompliant products. 19 MR. EISNER: All right, let's go on to**  **20 the next issue, DOE Consideration of Remedial 21 Actions.**  **22 MR. RAWALD: And this is Doug and so**

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## 1 I have mentioned this a couple of times, as a **2 matter of fact, probably in the last half an 3 hour, that we do, as a policy matter, consider**  **4 these. I don't think there is anything that 5 needs to be regulated regarding this. I mean we**  **6 have a policy statement that makes it pretty 7 clear that we consider remedial actions taken by**  **8 the person who we are enforcing against, for 9 purposes of deciding what the scope of the**  **10 penalty should be they face. So, it is a 11 standard course of business for us. I don't see**  **12 that ever changing. It is pretty standard across 13 all government agencies. And I think Neil could**  **14 speak to that as well in his administrative law 15 experience that that is what you do in looking at**  **16 civil penalties. 17 And so I don't think there is a need**  **18 for us to go much further than that. I could 19 just assure you that we do it and we will keep**  **20 doing it. 21 MR. EISNER: Is there anyone who would**  **22 want to argue that it should be required, rather**

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## 1 than just in a policy statement? **2 MR. DORIA: This is Jordan with 3 Ingersoll Rand. I wouldn't argue that. I just**  **4 wanted to maybe ask a question. And maybe this 5 is not the right place for this.**  **6 But I have been thinking about this 7 issue of remedial actions more in the context of**  **8 the line between a violator and routine violator 9 and whether or not remedial actions could play**  **10 into some sort of line of demarcation between 11 someone who is a violator and has violated but**  **12 maybe by taking remedial actions, they avoid 13 being labeled by the Department as a routine**  **14 violator. 15 Just as one example, if there were**  **16 maybe a slightly larger contractor or contracting 17 company really that had multiple employees and**  **18 one particular employee was continually doing 19 something, that employee was, upon discovery of**  **20 the data, installed maybe 20 units that were 21 noncompliant. That individual was let go by that**  **22 company. Would that company, then, still have to**

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## 1 endure routine violator status. **2 I understand we haven't gotten to the 3 point of what constitutes routine or not but in**  **4 my view the basic point is I think remedial 5 actions should be considered when we get to the**  **6 point of saying who is a violator and who is a 7 routine violator.**  **8 MR. RAWALD: And this is Doug. 9 Jordan, I am totally up to that idea. I think**  **10 that is a good point especially because we have 11 talked a lot about how someone gets off the list**  **12 once they get on the list, that kind of thing, 13 just as an idea. So, I think if we were taking a**  **14 factorized approach, which Neil has put out there 15 as a possible way to go for discussing the**  **16 routine subsequent remedial action would be a 17 factor to consider in deciding whether someone is**  **18 a routine violator or not or whether they should 19 remain a routine violator because of things they**  **20 did afterwards. So, I am open to that. 21 MR. WHITE: This is Chuck White. I**  **22 think that is a really good concept because I**

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## 1 think we all agree the biggest exposure at issue **2 here is going to be in these border locations and 3 I can see a big outfit, a busy morning, the wrong**  **4 thing gets put in the wrong truck. But if you 5 are made aware of it and you go take care of the**  **6 issue, I think that goes a long way to attesting 7 that you didn't really knowingly do this, that it**  **8 is just an accident that happened. 9 And really these border places where**  **10 people work on both sides, the example we had of 11 the line goes right through the middle of a city,**  **12 I think we have a much higher probability of 13 things happening there. And this allows a**  **14 contractor in that market to work its way out of 15 his mess.**  **16 MR. EISNER: Harvey? 17 MR. SACHS: Along those lines, Chuck,**  **18 the additional complication that I have run into 19 a couple of times in my own life is the**  **20 distributor doesn't have exactly the right unit 21 in stock. It is an emergency replacement. In**  **22 that border situation, the distributor might be**

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## 1 able to offer I can sell you a 13 condensing unit **2 or I can sell you an oversized 14, which do you 3 want.**  **4 So, there are additional complications 5 and you have made me a little bit more sensitive**  **6 to ambiguity that is inherent in the decision 7 process. But I still feel we need to have ways**  **8 to figure out who is that habitual guy, the guy 9 who has to -- I have experience with a guy who**  **10 has had to put in the wrong unit in an emergency, 11 replacing it later. But that is a big burden on**  **12 a contractor. 13 So, I am not quite sure what to do but**  **14 it certainly has helped me think through this. 15 MR. McCRUDDEN: This is Charlie with**  **16 ACCA. Is it possible to get a copy of the policy 17 statement that you have on this?**  **18 MR. RAWALD: Right. Coincidentally, 19 I emailed it to Amy yesterday and I could email**  **20 it to the group at large today. So, I will go 21 ahead and do that.**  **22 MR. EISNER: Okay, any other comments**

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## 1 on remedial actions? So, is the consensus right **2 now that we leave it as it is as part of a policy 3 or do you want to learn more after you look at**  **4 the policy? 5 MR. SACHS: This is Harvey again. And**  **6 I think we have got as far as we can. But I do 7 want to reiterate that this question of the**  **8 habitual -- differentiating the habitual violator 9 from the emergency replacement, the accident,**  **10 things like that. Particularly in the border 11 areas, it is going to be a task because raising**  **12 awareness of consequences is going to be an 13 important part of avoiding the need to do**  **14 enforcement. 15 MR. RAWALD: And this is Doug. I hear**  **16 that Harvey. I think what is the most likely 17 scenario that is going to take place with someone**  **18 that does a one-off is that we are going to ask 19 to look at their records to just take a quick**  **20 audit and make sure it is a one-off. That is 21 probably what is going to happen. I mean**  **22 thinking now having never done this particular**

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## 1 scenario but thinking about how we are going to **2 do it, that is what I would see the way it would 3 most likely play out. Is the guy would say I did**  **4 it. It was a one-time thing. I would say let me 5 look at your records. Okay, well, from your**  **6 records everything looks fine. Maybe we will 7 keep an eye on that person some other way over**  **8 time but I think that is probably what would 9 happen and we would not, of course, say they are**  **10 a routine violator because of a one-time mistake. 11 MR. EISNER: All right, let's go on to**  **12 the last item on the list, Assessing Civil 13 Penalties.**  **14 MR. RAWALD: So, the Department 15 already has in place a regulation based upon the**  **16 statute regarding civil penalties. There is a 17 $200 maximum. The way the regulation currently**  **18 is, there are violations that are a per unit 19 violation and there are some violations that are**  **20 a per day violation. So, I think it all depends 21 on what the prohibited acts are.**  **22 So, we only assess civil penalties for**

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## 1 defined prohibited acts. So, you folks yesterday **2 thought of some ideas for prohibited acts that we 3 are going to percolate on here. But so the**  **4 question would be that is what we will do for 5 that and then what the Department does is we look**  **6 at the maximum, which would be for the ones where 7 you are selling something it would be per unit,**  **8 and the ones where you are not giving information 9 would be per day. And then we would go ahead and**  **10 think about other factors as articulated in the 11 policy statement that I am going to mail around**  **12 to everyone to assess what the appropriate civil 13 penalty would be in the particular case we are**  **14 dealing with, because every day is different. 15 And then we would offer a settlement figure**  **16 typically as well. So, we would say okay, here 17 is what the maximum is. Here is what we think is**  **18 the appropriate amount for what you have done. 19 Here, if we are willing to have everyone settle**  **20 and not go to court over this, here is what we 21 are willing to charge you.**  **22 So, those could be three different**

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## 1 numbers. They could be all the same number, **2 depending on the case and the facts. That is how 3 we do business.**  **4 So, I don't think there is anything 5 unique to the regional enforcement context that**  **6 needs to be discussed here. I think those are 7 just going to be, from our point of view applied**  **8 equitably to the whatever prohibited acts we put 9 in place here, unless folks feel differently**  **10 about that process. 11 MR. EISNER: Does anyone think there**  **12 is a difference with regional standards that 13 would void their action?**  **14 MR. DENNIS: I just have a question 15 about the procedures for putting in place the**  **16 $200 fine. 17 Like in this case that Harvey was**  **18 talking about, somebody has done something that 19 might be wrong one-off and then you come and say**  **20 we would like data from you. And either we are 21 going to give you 30 days and start charging you**  **22 $200 a day or another option would be under**

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## 1 threat of subpoena, in which case I think a **2 subpoena then you get in the judicial process; 3 whereas, a $200 fine, kind of wondering what the**  **4 administrative process is. I mean is that just 5 DOE's discretion? If we give them the authority,**  **6 they can start fining people based on someone 7 calling them up and saying we think that they did**  **8 this? I mean is there any kind of process, 9 judicial check?**  **10 My concern -- and I would like to know 11 a little bit more about that before kind of**  **12 supporting or not, I guess opposing the $200 fee 13 on the records, just because I know that getting**  **14 information can be a priority of DOE and it 15 really, it is more comfortable when there is a**  **16 process with some checks in it. 17 MR. RAWALD: Right. And I get what**  **18 you are saying, Keith. So, here is the process 19 as it happens and this is created by EPCA and**  **20 this would not diverge in the regional 21 enforcement context. It would be treated the**  **22 exact same.**

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## 1 So, when we provide a notice to **2 someone that we are proposing a civil penalty, 3 they have three options. One, to pay a**  **4 settlement figure, which is typically lower 5 because they are going to avoid a lot of cost and**  **6 expense on everyone's part. Two, to demand that 7 we go before an administrative law judge, who is**  **8 an independent body not part of the Department of 9 Energy who would then look at the issue and**  **10 decide whether or not there should be some sort 11 of assessment of a fine. And if they don't like**  **12 the administrative law judge's decision, they 13 could always appeal that to the circuit court, a**  **14 federal circuit court that has jurisdiction. Or 15 three, to demand that we actually go to a federal**  **16 District Court to settle the issue. 17 So, there is a judicial process in**  **18 place. There are judicial checks and the 19 Department can't just steamroll over people. I**  **20 mean those options are given to the individual 21 before they decide what they are going to do.**  **22 So further, just to help assuage your**

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## 1 concerns, the Department does have discretion. **2 We don't just decide to put a ticker on, like you 3 are in a taxicab and the money is going to start**  **4 piling up. So, we look at each case. We look at 5 what is going on. We are very reasonable as far**  **6 as if the circumstances of the individual require 7 them to need more time, we give people more time.**  **8 So, I think that we will look at it from the 9 point of view that not every case is the same but**  **10 there is, as you were talking about, a judicial 11 process in place that would in some way get**  **12 people more options if they don't feel 13 comfortable dealing just with the Department of**  **14 Energy. 15 MR. EISNER: Does everyone agree that**  **16 DOE is reasonable? 17 (Laughter.)**  **18 MR. DENNIS: I mean the problem that 19 we have sometimes with that argument is that the**  **20 people that we are talking to now are reasonable 21 but we don't know who is going to be here in five**  **22 years. And having worked for the government, I**

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## 1 know how an IG report or if somebody comes down **2 and says we want data, someone is on the hook for 3 that and they start saying we have this thing**  **4 where we can start saying we are going to start 5 charging everyone $200 if they don't give us**  **6 data. 7 And I have been in situations where I**  **8 have seen, you know I tell people that is bad 9 idea, when I worked here. And some people just**  **10 don't listen to reason. And I think that that is 11 doesn't happen right now. I think that you are**  **12 not going to do that. I think the people around 13 here won't but there might be other regional**  **14 standards in the future. And as people start 15 sending in form letters saying we think people**  **16 are violating regional standards, there can be a 17 little bit of a harassment of $200 fines. So, I**  **18 say so will you take us to court? Starting off 19 with I have to go get a subpoena. That will at**  **20 least provide some level of accountability for 21 the people who are deciding to threaten $200**  **22 fines.**

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## 1 So, I am not trying to say anything **2 about DOE or myself in this. I am saying that is 3 the concern that I hear. So, I put that out**  **4 there. 5 MR. RAWALD: Right. And this is Doug.**  **6 And I think I have made the point before that you 7 can't rely upon always dealing with me because I**  **8 may not always be here. I will at least, at some 9 point, leave this earth, if nothing else.**  **10 So, I get that point. And I don't 11 want to have people just to have faith. And hey,**  **12 DOE put the nicest person they have in their 13 office in the room to make everyone think they**  **14 are nice. So, it is really not true, actually. 15 There are a lot nicer people in my office than**  **16 me, first of all, but secondly, I get that point 17 very well and take it very well.**  **18 I just don't really know how to do 19 that. So one of the options on the table would**  **20 be, of course we discussed earlier incorporating 21 a look back provision into this. And so maybe if**  **22 we want to put that at a further time period out,**

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## 1 we could all come back and say boy, we don't like **2 the way DOE is doing this. Let's go ahead and 3 cancel that particular aspect. And so we could**  **4 always put that in there. If people are 5 uncomfortable, they could have a four-year or a**  **6 five-year that allows us to go back and reassess 7 whether we really want to have this prohibited**  **8 act and this penalty for the records. 9 So, that is something to keep in mind,**  **10 just as you are thinking about your options over 11 there, Keith, I want to make sure you have all**  **12 the options out there that are available. 13 I'm not wedded to anything we said**  **14 yesterday. I just want to make sure we have them 15 all on the table so everyone has what is before**  **16 you. And those would an option on that. And I 17 hear your concerns.**  **18 MR. PORTER: So are we going to have 19 a look back to add penalties?**  **20 MR. EISNER: That has what? 21 MR. RAWALD: Right, Steve's point was,**  **22 Steve Porter's point was we could have a look**

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## 1 back to add a penalty if we feel the subpoena **2 authority is not sufficient. I mean it is 3 consistent with the fact that they made pretty**  **4 clear that they don't think the penalty would be 5 needed from the distributor's point of view.**  **6 MR. EISNER: Any other comments on 7 this or do we want to leave this for now?**  **8 MR. RAWALD: I don't think there is 9 anything else on this issue. It is really just a**  **10 question of back to the prohibited act for 11 assessing money for the record. That is really**  **12 the question that seems to be on the table. 13 There is some difference of opinion. And there**  **14 is some people that haven't voiced an opinion at 15 all on it. So, I don't know even know if we had**  **16 a vote on how it would come out. So, I think it 17 is worth us discussing that when we go back and**  **18 discuss the issues. 19 But I want to take all of the**  **20 prohibited acts back to the lawyers to have them 21 look at them while they are in this interim. And**  **22 then we will come back next week or two weeks or**

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## 1 three weeks from now, actually, and I will let **2 you guys know what everyone else over here thinks 3 about those things and then we could decide, I**  **4 guess, how to go from there. 5 MR. EISNER: Okay, anything else on**  **6 this subject? We have finished the list. We did 7 have just come up one that we did not categorize**  **8 and it was whether there should be a requirement 9 or something else with respect to periodic**  **10 review. Would you like to discuss that now? 11 MR. RAWALD: I really liked Amy's**  **12 idea, which was to wait to see how everything 13 else goes and then kind of take it up at that**  **14 point and see are there any other things that are 15 making people feel like the look back would be**  **16 helpful. 17 So, I think knowing that it is out**  **18 there, is something to discuss but I still think 19 that is probably more timely to discuss kind of**  **20 at the very end of the process would be my 21 preference.**  **22 MR. EISNER: Okay, there was another**

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## 1 issue yesterday that Amy raised about the **2 interplay between DOE and state enforcement. Do 3 we want to discuss that further now or do we want**  **4 to go back over the list? 5 MS. SHEPHERD: I think that that is**  **6 something that I want to discuss eventually but I 7 don't know, I kind of feel like that we are still**  **8 -- this is still gelling. And I would like to 9 get the rule together first. I don't think that**  **10 it -- it is a separate issue. So, I don't want 11 to interfere with any progress that we are making**  **12 here on this and then have to come back to this 13 when it is not fresh.**  **14 MR. EISNER: Okay. 15 MR. RAWALD: This is Doug. Plus I**  **16 think there is some research that needs to be 17 done to really tee it up well. Then I think we**  **18 can discuss it. 19 I know Dave Hungerford could probably**  **20 give us some thoughts, which is helpful, but from 21 the Department's point of view, we haven't spent**  **22 any time and energy on this issue. So, I want to**

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## 1 be smart on it before I talk about it. **2 MR. EISNER: All right. We should 3 discuss how we would like to proceed. We have**  **4 got a clean version of a lot of this stuff that 5 has been added and we circulated last night. We**  **6 wouldn't have the last items we talked about 7 today but before we get to them, I am sure we**  **8 could get that list to everybody. 9 Do we want to go through these again**  **10 and discuss them in more detail or do we want to 11 go back down and rate them in terms of their**  **12 effectiveness and their efficiency, in terms of 13 whether they should be on the list for that**  **14 reason? Because we haven't really, and 15 especially in the more difficult categories,**  **16 clearly defined what we are thinking about. 17 In fact, there were a number of things**  **18 like whistleblowers and tear off labels that we 19 kind of delayed the discussion on those. How do**  **20 you want to proceed from here? Do you want to go 21 back to some of the ones that we need to discuss**  **22 further? Do you want to go through all those**

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## 1 again? **2 MR. RAWALD: Well, this is Doug. I 3 guess I feel somewhat different. I actually**  **4 feel like I have got a pretty clear sense of the 5 things that we are all, at least seemingly coming**  **6 together on, these are the things that we want to 7 do. So, I feel like we made a lot of progress**  **8 that way. 9 There were some do-outs from the last**  **10 meeting, specifically regarding the labeling 11 issue that Gary Fernstrom raised, which if folks,**  **12 you all talk about, I think would be a nice thing 13 to kind of talk about here.**  **14 I know Harvey had volunteered to talk 15 about what they want on a label for the condenser**  **16 and then the manufacturers volunteered that they 17 would go home and talk to their folks about**  **18 whether they could fit something on the actual 19 nameplate of their condensing unit. I don't know**  **20 if that is something that people are ready to 21 discuss at all, if you want to put that away in**  **22 time.**

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## 1 MR. EISNER: Other thoughts on how to **2 proceed? 3 MR. LATTANZI: This is Matt Lattanzi**  **4 with NORDYNE. The manufacturers haven't gotten 5 together and discussed labeling. If this is the**  **6 appropriate time, I think we can talk about that. 7 MR. EISNER: Well, it is the first one**  **8 the list. 9 MR. LATTANZI: There you go.**  **10 MR. GIBBONS: Why don't we take five 11 minutes to caucus and just make sure we have**  **12 everything lined up. I think that would be a -- 13 this is John from Carrier. Sorry.**  **14 MR. EISNER: Sounds good. 15 MR. GIBBONS: I think it would be wise**  **16 so that we are coherent. 17 MR. ELLIS: All right, let's take a**  **18 five-minute break. Come back about ten of. 19 (Whereupon, the above-entitled matter**  **20 went off the record at 9:42 a.m. and resumed at 21 10:06 a.m.)**  **22 MR. EISNER: Okay, John.**

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## 1 MR. HURST: John Hurst with Lennox. **2 The manufacturers want to talk about labeling. 3 And before I kind of jump into the idea, I want**  **4 to remind people that currently on a condensing 5 unit, there is not a lot of flat surface face to**  **6 affix labeling. We have a data plate or a name 7 plate, different manufacturers call it different**  **8 things. It is chock full of information. They 9 are oftentimes located in a fairly standard**  **10 location on the unit. And remember the unit is 11 louvered. So again, there is not a lot of flat**  **12 surface to affix a label. 13 What the manufacturers are willing to**  **14 do or committing to do is to come back to the 15 group with some concepts, and this is pending the**  **16 guidance being clarified. We have to first 17 understand what that is. But we would affix a**  **18 label which is as rugged as our current name 19 plate or our data plate and the information would**  **20 either be contained on that data plate or, in 21 some instances, manufacturers have difficulty**  **22 putting more information on that data plate. But**

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## 1 we would have a statement, an exclusionary **2 statement, and we will come back with concepts 3 what we think it ought to look like, which would**  **4 very clearly indicate whether or not a unit 5 subject to regional standards was compliant for a**  **6 specific region. So, for example, a 13 SEER unit 7 may say something like not for sale in the south**  **8 and the southwest. Very intuitive. it should 9 serve the purposes for any inspector or any**  **10 contractor and make it explicit what is not legal 11 in a specific region of the country.**  **12 Again, this would be for products 13 only, subject to the regional standards. We**  **14 wouldn't be labeling, obviously, 20 SEER product 15 that says for sale in all three regions. There**  **16 wouldn't be a need to do that because it is 17 compliant in all three regions.**  **18 With that, I think I would like to 19 open it up to any commentary or questions. But**  **20 again, it is incumbent upon the manufacturers to 21 come back with some concepts for the group to**  **22 evaluate.**

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## 1 Karen? **2 MS. MEYERS: Yes, and we have 3 committed to do that at the next meeting.**  **4 MR. AMRANE: This is Karim with AHRI. 5 And again, this is contingent upon DOE issuing**  **6 the guidance that you have explained the other 7 day, too.**  **8 MR. RAWALD: The 14 SEER guidance? 9 Okay, that is what I understood. So okay, that**  **10 makes sense. 11 And so I think we should all keep**  **12 operating under the assumption that it is what it 13 is going to be. But I understand the concern for**  **14 more finality on that. So, I will get back to 15 you folks on that.**  **16 I think that that is a really great 17 push forward from the manufacturers as far as**  **18 meeting what Dave Hungerford pitched as would be 19 more useful, based upon what was put forward at**  **20 first by Gary. But I would be interested to hear 21 from Elizabeth and Harvey because they are the**  **22 ones kind of looking at it from their point of**

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## 1 view over the break about what their thoughts are **2 on this kind of proffer. 3 Just so people understand, the**  **4 labeling has traditionally been an FTC issue. 5 And so from a legal authority point of view, I**  **6 have had people looking at whether or not the 7 Department could issue a rule regarding this or**  **8 whether FTC would be the one to issue a rule 9 regarding putting on the nameplate.**  **10 What my communication with the folks 11 at FTC is, if we can't do it but we think it is a**  **12 good idea, they will go ahead and do it. So, 13 they will always initiate a rule to follow-up on**  **14 this. So, they will be open to that. 15 So, we are going to nail down the**  **16 legal authority for issuing a rule regarding 17 labels of this type and then we will get back to**  **18 you on that. 19 MR. HURST: Doug, do we need a rule to**  **20 -- this is something that all manufacturers are 21 agreeing to do. We would come back with a**  **22 consistent --**

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## 1 MR. RAWALD: Right. You wouldn't need **2 a rule, as long as you guys felt like everyone 3 was in line with what you are doing.**  **4 MR. HURST: Okay. 5 MR. RAWALD: So, that is the question.**  **6 If six of you do it and the other doesn't and you 7 are like well, that's not fair, we want to --**  **8 that is the one thing. 9 So, you have decide among yourselves**  **10 about how you feel about that, I guess. 11 MR. HURST: Yes, the manufacturers**  **12 represented here today are all in agreement with 13 this approach.**  **14 MR. EISNER: And just for my 15 clarification, this is not in lieu of the FTC**  **16 label or it is? 17 MR. HURST: No, absolutely not. It is**  **18 in addition to. 19 MR. EISNER: In addition to.**  **20 MR. HURST: And again, the purpose is 21 you are looking at the name plate or somewhere**  **22 near the name plate, if you are a contractor or**

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## 1 an inspector, it would be very clear that the **2 product is either compliant or noncompliant. 3 MR. ROCKY: Yes, this is Bryan Rocky.**  **4 So again, just to restate it, the FTC label is 5 focused towards the consumer. And we will follow**  **6 the requirements of that rulemaking for 7 information for the consumer.**  **8 As discussed, this additional text or 9 whatever we are going to end up deciding as an**  **10 additional label is for the contractor, the 11 inspector, the utility person, whoever, that**  **12 helps provide a base that this product does or 13 does not comply with the regional standards for a**  **14 very narrow focus. 15 MR. FERNSTROM: This is Gary for the**  **16 California utilities. I only have one comment. 17 This is great. Thank you.**  **18 MR. EISNER: Others? 19 MR. SACHS: This is Harvey and, as you**  **20 might predict, I have several comments. The 21 first is to echo Gary and say thank you and I**  **22 like it.**

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## 1 I do have some questions. Let's **2 assume an OEM wants to use this information on 3 products that are not subject to regional**  **4 standards, a 20 SEER unit, and just wants to do 5 that. Will this be structured so it is**  **6 permissive that he can do that, if he chooses to 7 as part of his marketing strategy?**  **8 MR. HURST: Sure. I mean, yes, we 9 could affix all sorts of stuff to things that we**  **10 currently choose not to do. So, what if a 11 manufacturer chose to -- sure, there would be no**  **12 exclusion from doing that. 13 MR. SACHS: You know, best national**  **14 unit available or whatever. Good, that is 15 helpful.**  **16 The second thing that is on my mind is 17 really tied to the second and third things. One**  **18 of them is looking at the draft labels. We 19 happen to have some people who have a fair amount**  **20 of experience in consumer labeling in our shop as 21 well. And I would like to have a couple of days**  **22 to take drafts to these people to get their**

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## 1 reactions. And that particularly hinges around **2 questions like whether this is inclusive or 3 exclusive. Are we going to be labeling something**  **4 as legal for sale in all states versus or not 5 legal for sale in the following states? How are**  **6 we going to do this? Is it going to be labeling 7 region versus a list of states? So, there are a**  **8 lot of these detail questions that I think need 9 to be addressed.**  **10 MR. HURST: Yes, so first off, we 11 would like the input.**  **12 MR. SACHS: Thank you. 13 MR. HURST: I think we want it to be**  **14 intuitive. I think our original thinking we have 15 discussed a couple of different ideas but we want**  **16 to come back to you with some ideas before 17 committing to anything.**  **18 But I think what we envisioned was 19 something that would say it would be**  **20 exclusionary, not for sale in, and then maybe 21 have a box with an X in it. That way, you know**  **22 if it was inclusive, you could gain it by putting**

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## 1 a mark in the empty box and all of a sudden that **2 which is not legal becomes legal. So, we thought 3 an exclusionary type of label would be better**  **4 than an inclusive type of label. 5 I don't envision listing all the**  **6 states. Again, we have to look at the concepts. 7 The challenge there is there is a lot of states.**  **8 You could do something that has, you 9 know one of the ideas was to put a website under**  **10 it, you know, www.doe.gov/regionalstandards. 11 So, if I am in Texas, looking at the**  **12 rate and it says not for sale in the south, it 13 would be a reasonable assumption that I am in**  **14 Texas, I am in the south. I go to the website and 15 low and behold Texas is a southern state and I**  **16 have a noncompliant unit. 17 So, that is kind of the general**  **18 thinking but again, let us come back with some 19 ideas and we will certainly welcome yours.**  **20 MR. SACHS: That is very much 21 appreciated. Another question that just came up**  **22 is that I assume that whatever text comes to us**

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## 1 will say this lasts as long as the regional **2 standards last. This is not something we are 3 doing for two years or whatever.**  **4 MR. HURST: That is correct. 5 MR. SACHS: So, if we can work -- if**  **6 we can have time to look at these things and try 7 to vet them, I certainly would urge ACEEE and**  **8 others to support this, which means wherever 9 appropriate, but I don't want to take words away**  **10 from the rest of this caucus. Or did I? 11 MR. RAWALD: Well, Tim and Laura will**  **12 take a chance to think about what Harvey just 13 said.**  **14 So, from the Department's point of 15 view, something that might be valuable to**  **16 consider adding would be the 1-800 number that we 17 establish. So whether that would be something to**  **18 put below, so you know, below the not for sale 19 and call this number. So, something like that**  **20 may be helpful from the Department's point of 21 view.**  **22 The Department is generally receptive**

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## 1 to agreements among the industry, as you guys may **2 or may not be aware. So, we do like that. So, I 3 think that they will be receptive to that**  **4 concept, rather than doing rulemaking but I will 5 get back to you on that.**  **6 MR. HUNGERFORD: Hi, this is David 7 Hungerford. I haven't said anything for a while.**  **8 I am very encouraged by this. I appreciate the 9 effort you guys are putting into this and I am**  **10 looking forward to seeing what you end up 11 proposing.**  **12 MS. HARIHARAH: This is Johanna from 13 the Department of Energy. I just wanted to know,**  **14 are going to have a cutoff date for when this is 15 label is good until? Because if we change the**  **16 standards in the north, for example, then it 17 won't be able to be sold there or something like**  **18 that. Because I mean the 13 SEER is not going to 19 last forever, et cetera.**  **20 MR. DORIA: Yes, this is Jordan with 21 Ingersoll Rand. I mean we haven't talked through**  **22 all of that but I think our general view is**

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## 1 certainly that the label would evolve as regional **2 standards evolve and as long as they exist, we 3 would tie it in some manner to it. I guess**  **4 mechanically figuring out how we would do that, 5 whether it would actually be in the standards**  **6 rulemaking or the future enforcement rulemaking, 7 I don't know the answer to that but I think that**  **8 is very much our view. 9 The only other thing I just wanted to**  **10 say in response to Harvey, I am glad that you are 11 optimistic about this and definitely want the**  **12 feedback from others at ACEEE but you made the 13 comment about getting some of your people who**  **14 have expertise on sort of the consumer behavior 15 in the world of labeling. But the point we**  **16 really want to make here is that this is about 17 determination of compliance. The FTC guide is**  **18 the consumer label. It comes to the consumer in 19 many, many ways. Is that label that really**  **20 presents the potential to provide meaningful 21 information and potentially even educate people**  **22 moderately to the extent they choose to become**

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## 1 educated? We are talking about a very, very **2 small label here. 3 So, I just want to make that clear as**  **4 your people review it, that this is, in many 5 ways, not exactly a consumer facing label. That**  **6 is the EnergyGuide label. 7 MR. SACHS: Jordan, that is very**  **8 helpful. That is the good news. The bad news is 9 it stimulates another question. And that is that**  **10 we all, I think, are very encouraged by the idea 11 of a permanent label on the condensing unit. I**  **12 just assume it be something that can be read from 13 30 feet and actually covers one face of the**  **14 condensing unit but I am not going to get that. 15 (Laughter.)**  **16 MR. SACHS: But one firm here has or 17 does still offer condensing units labeled with**  **18 football teams but we are not naming names. 19 The question that I have is what of**  **20 this information will be carried on the box. 21 That is a question really of clarification but**  **22 also of one more piece of evidence in case of**

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## 1 people who turn out to be routine violators. Why **2 do I keep thinking habitual? 3 MR. DORIA: This is Jordan with**  **4 Ingersoll Rand. I think as we go back and look 5 at actual sort of drafts of a label, we can talk**  **6 about that. As I understand it, the EnergyGuide 7 label is on the box. Assuming we get the**  **8 guidance and all those other things, I think that 9 the issue is that the EnergyGuide label is not**  **10 permanently affixed to the outdoor unit. 11 MR. SACHS: Yes.**  **12 MR. DORIA: Right, so that this is 13 seeking to provide that additional source of**  **14 information. And I feel like on a box it would 15 be more duplicative than additional.**  **16 MR. SACHS: All right, so we are 17 putting all our eggs in this FTC basket -- all**  **18 our remaining eggs in this FTC basket and I very 19 much appreciate your providing the second basket.**  **20 MR. ROCKY: Harvey, that is the law. 21 MR. SACHS: I understand.**  **22 MR. ROCKY: So, we are adding**

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## 1 information as part of the discussion for this **2 enforcement. Everything else goes back to the 3 FTC label.**  **4 MR. BALLO: So this is Tim with 5 Earthjustice and I think this is a great move**  **6 forward. 7 The only issue I have and I don't want**  **8 the content of this to be specified to the level 9 of detail that is in the FTC regs with the**  **10 EnergyGuide label in the sense of Arial narrow 11 point, you know eight-point font, whatever. I do**  **12 think there needs to be some just bare bones 13 regulatory requirement that the nameplate must**  **14 indicate X. And that is just because the 15 manufacturers in this room don't necessarily**  **16 account for 100 percent of the industry and there 17 should be some teeth to it, so that if there is a**  **18 bad actor out there that is not putting this on 19 their nameplate, that there is the ability for**  **20 FTC to get them. 21 MR. HURST: So, I just want to**  **22 clarify. This is John Hurst with Lennox.**

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## 1 Tim, we would commit to -- some **2 manufacturers have no issue putting it on the 3 nameplate and have real estate. Because of the**  **4 space or the configuration of some manufacturers' 5 nameplates, it may have to be a separate equally**  **6 ruggedized not a sticky note, something that will 7 stay on the unit for some time but reasonably**  **8 close to the nameplate. It is easier for some 9 manufacturers to do it than others.**  **10 MR. BALLO: And that is exactly the 11 sort of level of detail I wouldn't want the regs**  **12 to have go into. 13 MR. HURST: Yes, but I do think we**  **14 can't say that it is going to be size four font 15 and in Cyrillic alphabet or Mandarin Chinese or**  **16 something. I think we do need to come back with 17 some base standard.**  **18 MR. EISNER: Other comments? Other 19 questions?**  **20 MS. NOLL: This is Elizabeth. I would 21 just offer that I think this is great and I think**  **22 we are moving in the right direction. And I**

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## 1 think this arms a lot more people and informs **2 them on if they were to choose to go and look at 3 their outdoor unit, they would be able to easily**  **4 identify. And I think that is helpful in what we 5 are trying to accomplish here. So, thank you.**  **6 I do have one question. Is the idea 7 that this would be, and again, obviously when you**  **8 guys would come back, but would go into effect on 9 January 1, 2015 that all labels would have that**  **10 applied to them? 11 MR. HURST: I don't know. I think we**  **12 have to wait for the rule to be published. We do 13 have, you know there is going to be a period of**  **14 time where you have the 18-month grace period. 15 It may not be perfection. It may not start**  **16 January first for all manufacturers but I think 17 we will all commit to getting it implemented as**  **18 quickly as possible but I think we have to wait 19 until the rule gets published.**  **20 MS. MEYERS: This is Karen with Rheem. 21 So, if we come back in three weeks with a concept**  **22 and we all agree on it and we take a vote on**

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## 1 that, on what September 23rd or 24th? There is a **2 much better opportunity of this going into effect 3 January first. But if we wait until this rule is**  **4 final, it will not go into effect January first. 5 So, I think all manufacturers would**  **6 like to do it. But you know we have to have an 7 agreement around this table and a vote on the**  **8 concept in three weeks, if you want that to 9 happen. And still, it is going to be**  **10 questionable for some companies. 11 I just want everyone to know that this**  **12 was not an easy consensus reached among the OEM. 13 So, we have been working on this for a long time.**  **14 A lot of emails have been going back and forth. 15 So, you know, thanks for your support**  **16 on this. There is some timing issues with some 17 people and I think we all would like it to go**  **18 into effect January first but we will need some - 19 - you know there is some people that think that**  **20 it can't. I don't know because I don't know what 21 it is going to look like yet and what the size**  **22 is. So, my people can't tell me.**

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## 1 So, the sooner I have an agreement on **2 that, then I can give you answer on when it would 3 go into effect.**  **4 MR. AMRANE: This is Karim with AHRI. 5 In addition to what just Karen said, I mean DOE**  **6 has to do rulemaking on whatever we could agree 7 here around the table. And how long it is going**  **8 to take, I mean probably until the end of the 9 year, I mean at the earliest. And then it is**  **10 going to be up for comment. So, I don't know 11 when the rule is going to be final.**  **12 So, obviously, January 1, 2015 is 13 probably not going to happen just because of**  **14 rulemaking. It is not going to complete by then, 15 right?**  **16 MR. RAWALD: Karim, I think you are 17 being very practical, given the fact that you**  **18 have been involved in a lot of rulemaking to 19 understand that there is going to be, no matter**  **20 when the notice is finally put out, there is 21 going to be a 30-day comment period. So, if we**  **22 are operating under an assumption that we**

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## 1 actually finish by the beginning of October and a **2 rule gets published sometime in October, which 3 would be very aggressive, that would be the most**  **4 aggressive time I would have the rule finalized 5 by the end of the year.**  **6 I think it is more likely that the 7 final rule probably would not happen before the**  **8 end of the year, just looking from a very 9 practical point of view. Though, I could say**  **10 that everyone is lining up and every way possible 11 to try to make this happen as quickly possible**  **12 until we hand them a list of items. 13 One of the things that I am going to**  **14 be working with the contractors on during the 15 two-week interim we have here is putting together**  **16 draft language in some way to address the things 17 that I think we are pretty agreed upon that we**  **18 can tweak as we get to the final point so that we 19 can start trying to lean forward on this as much**  **20 as possible. I think it is important for people. 21 MS. MEYERS: This is Karen with Rheem.**  **22 And I think just speaking for my company, if we**

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## 1 have a vote and an agreement, in three weeks I **2 think my company will proceed down the path of 3 making the changes to the bills and materials, et**  **4 cetera, assuming that this is going to go into 5 effect.**  **6 So, I don't know if all OEMs will do 7 that or if they will wait. But that is why I am**  **8 saying in three weeks, if we have 100 percent 9 agreement, then we will probably start doing the**  **10 drafting and engineering work required to make it 11 happen. I don't know if other OEMs will do that**  **12 or not. But just speaking for my company, that 13 would probably be our action.**  **14 MR. SACHS: This is Harvey and I very 15 much appreciate the urgency and the efforts you**  **16 all are making. At the same time, if we are 17 going to engage what expertise we have, we will**  **18 have to have a little bit of time to do that. We 19 are scheduled tentatively to have meetings the**  **20 first and second of October. If I have a week, 21 that is certainly helpful if you want to send**  **22 drafts earlier that we can look at and try to ask**

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## 1 people about, I am happy to do that. But I am **2 not at all sure that between the 24th and the 3 25th our folks would be in town.**  **4 MS. MEYERS: This is very time 5 sensitive.**  **6 MR. SACHS: It is very time sensitive 7 and I think we are all very respectful of that.**  **8 I think in practice, it is -- 30 days into 2015 9 are of less concern than getting it right. And I**  **10 really appreciate what you all have been doing. 11 I do have one question for John, I**  **12 guess, relative to the term ruggedized. I am 13 taking that to mean that this will be an**  **14 externally mounted nameplate or whatever. We 15 haven't made that explicit but that is certainly**  **16 a concern I have. 17 MR. HURST: Yes, so different pieces**  **18 of equipment have different things affixed to 19 them today. For example, I have a unit outside**  **20 my house that had a 410A sticker on it. That has 21 withered under the elements of the Texas sun.**  **22 The data plate or the nameplate is**

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## 1 typically of stronger material. It lasts **2 throughout the lifetime, hopefully, of the 3 equipment, where a servicing dealer or a**  **4 contractor, such as Chuck and his company, may be 5 able to get relevant data or information like the**  **6 serial number, the model number. But that has to 7 last or should last the lifetime of the**  **8 equipment. So, the idea of it being ruggedized 9 is of like material as what our data plates or**  **10 our name plates would be such that five years 11 from now it doesn't wrinkle, shred, and come off**  **12 the equipment. 13 MR. SACHS: This is Harvey again.**  **14 Much appreciated. I think my concern is more 15 explicit that it not be behind the access plate**  **16 to the controls, the wiring and the -- 17 MS. MEYERS: So, Harvey, this is**  **18 Karen. The conversations that we have had is 19 that it will either go on the nameplate or go**  **20 next to or as close to the nameplate as possible. 21 So, it would be right there with all the other**  **22 information about the unit.**

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## 1 MR. SACHS: Outside? **2 MS. MEYERS: Yes. 3 MR. HURST: On the bottom.**  **4 MS. MEYERS: I think Bryan may even 5 have a printed one that he can show you.**  **6 MR. HURST: Yes, and the idea, again, 7 is whoever is looking for information on the**  **8 nameplate or the data plate would also see this 9 information as well.**  **10 MR. SACHS: I love you all, sometimes. 11 MR. ROCKY: So this is Bryan. So, I**  **12 actually have a sample of our current print on 13 demand process rating plate used on our**  **14 condensing units. And it is an example of what 15 we do today. Every manufacturer has similar**  **16 products but not exactly the same. And so text 17 and font and available area differs by**  **18 manufacturer. In my case, we standardized 19 product on our labels a year and a half ago. So,**  **20 I am more fortunate than some of the other 21 manufacturers in what I can do immediately. It**  **22 is database manipulation.**

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## 1 But this is an example of a CSA UL**2 approved material for rating plates. And we all, 3 as manufacturers, have to meet those requirements**  **4 under the standard for durability and readability 5 and everything else of this material. So, when**  **6 John says material like a rating plate, there are 7 options but they are going to be considered**  **8 permanent labels. 9 MR. RAWALD: This is Doug and because**  **10 I am always on a quest to find things that are 11 corollary to the things we do now, so for items**  **12 that are built for export that are noncompliant 13 with standards there is a requirement that they**  **14 be marked for export only. Are those items 15 marked on the actual condensing unit or are they**  **16 marked on the packaging somewhere? The ones that 17 are built that are noncompliant with the standard**  **18 but are for export only, what are folks doing 19 with that? Does anyone know offhand?**  **20 MR. ROCKY: Yes, so this is Bryan, 21 Johnson Controls. For our products that are**  **22 export only, they have unique model numbers. So**

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## 1 that is what goes on the rating plate. And then **2 the cartons themselves are marked for export only 3 as far as the packaging.**  **4 So, we use the two different methods. 5 The model numbers are different. And those model**  **6 numbers are not available for sale to any of our 7 customers in the U.S. If there is an exception**  **8 of a distributor like Steve, who is exporting 9 units, they have certain levels of paperwork and**  **10 requirements to fill out and tracking is very 11 key. But model numbers is the main thing,**  **12 cartons marked for export only. 13 MR. GIBBONS: Yes, this is John at**  **14 Carrier. Very similar but one thing to add is 15 Canadian units. They are marked the same as the**  **16 U.S. So, at least for the north. 17 MS. MEYERS: This is Karen with Rheem.**  **18 I am not sure there is requirements for export 19 only, any federal requirements.**  **20 MR. RAWALD: So, the requirement under 21 EPCA is that if a product is a noncompliant**  **22 product -- so if it is compliant with the U.S.**

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## 1 standards, nobody cares, right? But if you are **2 making, say a 12 SEER condensing unit because you 3 are going to ship it to South America, it needs**  **4 to be marked that it is for export only. So that 5 way, we don't confuse it and think that it is for**  **6 use in the U.S. 7 So, if you are not making those, it**  **8 doesn't matter. But I guess I was curious if 9 there was any corollary here to draw from. It**  **10 seems that there is not. It is more on the 11 packaging, not on the actual unit. So, there is**  **12 not much to be learned from that example for this 13 case. But I was just curious as we were thinking**  **14 about this. 15 So, I appreciate your guys' input.**  **16 That was really helpful. 17 MR. GIBBONS: This is John again. And**  **18 in most cases, I think the voltage is different, 19 too.**  **20 MR. RAWALD: That is a give-away. 21 MR. GIBBONS: Yes.**  **22 MR. EISNER: Okay, anything else on**

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## 1 this part? All right, we also had a second idea **2 on tear off labels. Is that something we still 3 want to talk about?**  **4 MR. RAWALD: So, Gary and I pushed 5 this aside to hear how people felt about record**  **6 retention and records production. So, I guess 7 now that we know we are kind of circling around a**  **8 pretty decent record retention scheme, I guess 9 the question is to Gary whether he feels that**  **10 this other approach is still necessary or if you 11 want to keep it on the table to see how the**  **12 language comes together for record retention for 13 a while? I mean so how do you feel about that?**  **14 MR. FERNSTROM: This is Gary for the 15 California IOUs. I am happy with the record**  **16 retention approach. 17 MR. EISNER: Does anybody else have**  **18 any thoughts on this or are we okay to go to the 19 next item?**  **20 Okay, the next item is QR Code labels. 21 Any discussion on that?**  **22 MS. MEYERS: So this is Karen with**

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## 1 Rheem. I would not support that idea. **2 MR. RAWALD: And this is Doug. With 3 the much more visible and informative label you**  **4 guys are offering, I think this is really not 5 going to be useful. This would be a fall back if**  **6 we weren't going to get this other thing which, 7 seemingly, is much more approachable to the**  **8 average person. 9 MR. ROCKY: Yes, Bryan Rocky. So, as**  **10 you may have noticed on my rating plates, we have 11 it on there. So, as a voluntary item, I think**  **12 that is acceptable if manufacturers want to do 13 that and tie it in to whatever the use the QR**  **14 code labels. But as a requirement, I would 15 support, as Karen said, I don't think it is**  **16 necessary at this point. 17 MR. EISNER: Okay, anybody want to**  **18 make a contrary argument? All right. 19 MR. SACHS: This is Harvey. I**  **20 reluctantly have to acquiesce. I think it is 21 something that adds value and I accept that Rocky**  **22 wants to do it and nobody wants to be required to**

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## 1 do it. Let's go on. **2 MR. RAWALD: Harvey, you just really 3 prefer his last name to his first name, don't**  **4 you? 5 MR. SACHS: I'm sorry?**  **6 MR. RAWALD: You really prefer Bryan's 7 first name to his last name. It is an obsession**  **8 with Rocky. I understand. 9 MR. ROCKY: Actually, Doug, I**  **10 appreciate the fact every time you point out the 11 mistake, Harvey hits himself.**  **12 (Laughter.) 13 MR. SACHS: You know, some of us start**  **14 senility earlier than others. I began at 40. 15 MR. EISNER: Okay, I assume the next**  **16 one, manufacturing labeling is what we have taken 17 care of. Nobody had any other thought here, did**  **18 they? 19 Okay, that brings us to six, label**  **20 packaging in unit. I'm not sure what we meant. 21 MR. RAWALD: Right. And that, I**  **22 think, goes back to the question Harvey asked**

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## 1 earlier about whether we have put it on the **2 outside or not or was it Tim, I'm not sure. One 3 of the two of you asked that question. And I**  **4 think that we have dealt with that as well as 5 part of this whole discussion we had about the**  **6 manufacturers. We wanted to put it on the actual 7 unit.**  **8 MR. EISNER: Anybody disagree? Okay, 9 that brings us up to communication. The first**  **10 item is public outreach or a list of things here 11 under A for DOE to do.**  **12 MR. RAWALD: Right. So as I mentioned 13 yesterday, I think we are ready to commit to**  **14 developing at least a trifold for folks to 15 distribute possibly some posters, et cetera, to**  **16 put out there for people to post it over the 17 counter distribution for folks to have in their**  **18 office space to remind their contractors who work 19 for them. And that is why it was trifold,**  **20 hopefully for the contractors to slide across the 21 table to the consumer so that they know what they**  **22 are getting into, if they are going to say they**

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## 1 are going to buy it from somebody else who has a **2 cheaper product that isn't compliant. 3 So, I think we are -- I am pretty much**  **4 happy to at least do that. So, I will more on 5 that over the interim but I think that we are**  **6 there on that. 7 The more robust kind of questions for**  **8 grant money or for money for public outreach or 9 commercials, those kind of things, as I mentioned**  **10 yesterday, I don't think the money is going to be 11 there for that but I will ask the question. But**  **12 it seems like people from yesterday were at least 13 happy with the proffer that I was able to give,**  **14 which hopefully will give us somewhere to start 15 here.**  **16 Also, the webinars are definitely 17 doable, as I talked about before. From an**  **18 affordable point of view, I and my office will be 19 able to conduct webinars with folks, educate them**  **20 as we do now in terms of the industry. So, we 21 would open that up to anyone as far as that goes,**  **22 webinar education on what is going on but that**

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## 1 would be more for the industry than for **2 consumers, I would think. 3 MR. MELCHI: This is Jon Melchi with**  **4 HARDI. Doug, if I could make a recommendation it 5 would be for the Department to also make those**  **6 collaterals available in a PDF format on whatever 7 website, in case a contractor runs out or a**  **8 distributor runs out of the trifolds, that they 9 could easily print some up at their locations.**  **10 That would be hopeful. 11 MR. RAWALD: Yes, that makes sense.**  **12 And I think that we would want to set up a whole 13 website regarding information regarding regional**  **14 standards, too. So, that is a game idea that we 15 could work on.**  **16 MR. EISNER: Does anybody want to 17 argue for this to be implemented via regulation**  **18 or just a discussion in the preamble? 19 MR. GIBBONS: Well, this is John from**  **20 Carrier. I was going to ask about timing because 21 the sooner we get in front of this, the better,**  **22 get professional contractors out showing folks**

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## 1 what regional standards are and maybe already **2 starting to sell compliant product ahead of the 3 game. I think we are better off.**  **4 MR. RAWALD: Yes, I'm going to ask if 5 we can start working on this now.**  **6 MR. DORIA: This is Jordan with 7 Ingersoll Rand. I feel like it could be handled**  **8 in the preamble is my feeling. Just one sort of 9 thought for the group on the content. Obviously,**  **10 I think we are going to leave it largely to the 11 Department to decide but I think there is a sort**  **12 of thematically a couple of approaches. 13 One would simply be informative and it**  **14 is something from the Department simply saying 15 what the requirements are and what the regional**  **16 standards are. 17 Another approach would be something**  **18 that would, I would say, attempt to elicit some 19 degree of fear, for lack of a better term, that**  **20 if you don't comply you will in fact be caught. 21 Right? And that could be some commentary on**  **22 possible approaches that the Department either**

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## 1 will employ or could employee in an attempt to **2 catch bad actors. And it could also simply be to 3 focus on what are the penalties for**  **4 noncompliance. And I think this sort of ties in 5 with the idea that ultimately our goal is to**  **6 dissuade people from not complying in the first 7 place.**  **8 So, I would sort of ask the 9 contractors, as well as the distributors, whether**  **10 or not you think that approach may be in addition 11 to something that is purely informative would**  **12 have value. 13 MR. WHITE: This is Chuck White. I**  **14 think you bring up a good point and I hadn't 15 really thought about it in this respect but**  **16 perhaps we are only talking about a couple of 17 items, one for consumers that could explain the**  **18 benefits, the energy savings, the basis of the 19 rule, explain the geographic zones, similar**  **20 information to the contractors but also include 21 more information about enforcement actions and**  **22 methods they need to comply with, records**

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## 1 retention, a lot of the business operation end. **2 And so perhaps we have a couple of 3 pieces of collateral here and not just a one**  **4 size-fits-all. But the consumer, I think, needs 5 less information -- that is not really the right**  **6 thing to say. They need it a little more easy to 7 grasp and in shorter bites, so you get their**  **8 attention, you get the information to them. They 9 don't need as much detail as a contractor needs**  **10 to be sure the contractor is in compliance. The 11 consumer just needs to know the product they are**  **12 getting is right and this is why. 13 MR. EISNER: And should the consumer**  **14 information cite anything about purchases via the 15 internet and the implications of that?**  **16 MR. WHITE: This is Chuck White. I 17 would love to discourage internet sales but they**  **18 need to be aware no matter where they get the 19 product that especially in a competitive**  **20 situation, if they have three quotes in front of 21 them and two of them are SEER 14 and one of them**  **22 is SEER 13 or one doesn't have a specified SEER**

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## 1 rating, that that is a question that they **2 probably need to ask. And here is the reasons 3 why: the compliance, it is going to save you**  **4 money in the long-run and it is a way that a 5 consumer can kind of have their attention up, be**  **6 paying attention to the things that are being put 7 before them. Because most of them see air**  **8 conditioner, X dollars and you are going to fix 9 it and I am going to be cool again. That is what**  **10 they see. And directing them that there is this 11 efficiency rating, there is a benefit to paying**  **12 attention to it. And it is possible, there are 13 people in the marketplace that may try to slip**  **14 one by you. 15 MR. PORTER: This is Steve Porter with**  **16 Johnstone Supply. Yes, I agree. I think there 17 should be something that informs the homeowner**  **18 that since anybody that installs will then become 19 a contractor and they will be subject to the same**  **20 level of fines. And a lot of those online sales 21 are going to be purchased by homeowners that are**  **22 going to get their brother-in-law, or they are**

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## 1 going to do it themselves, or somebody is going **2 to install that unit. 3 So, I think that needs to be made**  **4 clear to them that they will be subject to the 5 same laws and the conditions as the contractor,**  **6 once they do the installation. 7 MR. RAWALD: So, this is Doug. And I**  **8 hear that. I am curious what would be our method 9 of delivering that message to people that are not**  **10 meeting with a contractor otherwise? So, what is 11 the best method by which I can get a message to**  **12 someone who is just going to go on the internet 13 and shop and never call a contractor into his**  **14 house who is going to give him the pamphlet? How 15 else? I mean, do you folks envision mailers?**  **16 What do you think is the most effective means of 17 reaching those people that otherwise wouldn't be**  **18 touched by someone who is in the normal chain of 19 events that we have been describing over the**  **20 course of this discussion? 21 MS. MEYERS: So, this is Karen with**  **22 Rheem. I think one of the things that we would**

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## 1 like is be able to link on our Rheem website to **2 the DOE website that has the webinar information 3 or whatever. I think that is something we are**  **4 looking for. 5 A lot of consumers do go to our**  **6 websites. Our websites are consumer facing. So, 7 we have other websites that are for our**  **8 distributors. But our primary Rheem.com website 9 is a consumer website and that is where we would**  **10 like to be able to link back. 11 MR. RAWALD: Okay. Amy, would AHRI**  **12 want to do that as well, do you think? 13 MS. SHEPHERD: Yes, we can put that**  **14 information on our consumer page. 15 MR. RAWALD: So, I will have the**  **16 lawyers look at the implication of that. I don't 17 think it is an issue but I want to make sure that**  **18 it is not before I commit. 19 MR. PORTER: Steve Porter from**  **20 Johnstone. HARDI would. 21 MR. WHITE: This is Chuck White. I**  **22 know PHCC would and I will volunteer Charlie**

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## 1 McCrudden too. I'm sure they would be glad to do **2 it as well. 3 The contractor associations, we will**  **4 be undertaking messaging out to contractors and 5 try to get information out. We have consumers**  **6 that check our websites for contractors and 7 changes in the industry and things like that. We**  **8 certainly would feature this in a prominent home 9 page position, at least early on, and try to**  **10 direct that information. 11 But one of the things, as an**  **12 association we try to do is make sure our members 13 are educated to what is going on in the industry**  **14 so we are all moving in the right direction. 15 So I know at least our association**  **16 will certainly step up on that. 17 MR. HURST: John Hurst from Lennox.**  **18 I agree with what everyone said. I wanted to 19 provide a little more context on why it is**  **20 important that we don't do it individually. 21 There is already a lot of confusion in the**  **22 marketplace. It would be great to be able to**

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## 1 direct people to one message. **2 So, regardless of whose website you 3 are going to, the contractor, the distributor,**  **4 that they are all getting the exact same message 5 from the same source. So, if there is anything**  **6 that can be done to support the notion that has 7 already been floated, that would be extremely**  **8 helpful. 9 MR. RAWALD: No, I get that. So, my**  **10 next question is how much oversight of the 11 content does this group want to have or are you**  **12 going to trust the Department to effectively 13 deliver the message in a way that is going to be**  **14 understood by the people that we want to receive 15 it?**  **16 MR. HURST: John Hurst from Lennox. 17 I will speak for myself and I think my compadres**  **18 would be agree that we would want some oversight, 19 not from the standpoint of a lack of trust but**  **20 more to ensure that the message is delivered in a 21 manner that we break it down where it is very**  **22 easy to understand.**

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## 1 And so if there is any confusion with **2 the language, we can help. 3 MR. RAWALD: No, I understand that**  **4 exactly, John because regulations are the 5 government's best example of how confusing we can**  **6 be. Right? 7 MR. HURST: Right.**  **8 (Laughter.) 9 MR. RAWALD: So, I understand that**  **10 that would be helpful for people are more in tune 11 with the obvious readers to be able to receive**  **12 it. 13 So, while the question I will ask of**  **14 the people I work with then is the willingness to 15 draft something up and then circulate it to this**  **16 group to kind of look at and see are our 17 comments. Here is where you can do better.**  **18 I don't think they would be adverse to 19 that but I want to make sure that everyone is in**  **20 line with that before I commit to that. 21 MR. HURST: Yes, Doug, I think the**  **22 other thing that would be very helpful is**

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## 1 oftentimes we will read the regulation and we **2 will interpret it. It would be extremely helpful 3 if, and we would be willing to help, to come up**  **4 with examples of okay, so I think there was one 5 part that you read out a couple of meetings ago,**  **6 Part 1 with Part A and then 1 plus B. It was a 7 little confusing but it was an example that was a**  **8 real life example that you could actually take 9 and run with. Those are extremely helpful,**  **10 versus here is the reg. I hope you can figure it 11 out. Examples work great.**  **12 MR. RAWALD: I appreciate that, John. 13 I will let the people know who wrote the guidance**  **14 how you feel about the examples they provided. I 15 get that and we will definitely work with you**  **16 guys with that. 17 I just wanted to make sure everyone**  **18 else was onboard before I commit to that but I 19 think that is very reasonable.**  **20 MR. SACHS: Doug, this is Harvey. I 21 want to strongly endorse giving this group some**  **22 days to mark up the drafts. I think there is**

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## 1 wisdom in this crowd that you all are obligated **2 to use so it doesn't come back to us. 3 MR. RAWALD: Harvey, I would say**  **4 nothing different about this group. 5 MS. NOLL: Doug, this is Elizabeth.**  **6 Would it be helpful if this group develops an 7 outline or at least a list of what needs to be**  **8 included? 9 MR. RAWALD: That would always be**  **10 helpful, yes, of must have items. 11 MS. NOLL: There are a lot of people**  **12 shaking their head no on that comment, though. 13 MR. PORTER: Steve Porter, Johnstone**  **14 Supply. I think it is easier for one person to 15 write it and then we pass it around it and kind**  **16 of footnote to it and then beat it up. 17 MS. NOLL: Maybe I misspoke, then. In**  **18 terms of what we are doing here like at a minimum 19 material will include and a list of it has to**  **20 explain, it has to address the sell through. It 21 has to address, as opposed to leaving it all to**  **22 the Department. And I guess we are saying now**

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## 1 that we will have time to review any materials. **2 But in terms of what we are developing 3 here, that is more of what I was focusing on.**  **4 MR. PORTER: Yes, I don't know. I 5 guess I will wait for other comment. For me, I**  **6 know in my role it is easier to take a document 7 that, I mean you are better at taking all the**  **8 other rules and regs that I may not even be 9 thinking about and have it in there.**  **10 I know pieces I will want when I see 11 the document. So, I wouldn't know all of what**  **12 Doug needs to have in there, I guess. I guess I 13 would rather start with the Department of Energy**  **14 starting it and then adding to it or recommending 15 some change in language that is less confusing.**  **16 I have already offered to write and I 17 want to just remind about the 18-month sell**  **18 through and the confusion that is likely to be 19 around on that when we start right out with the**  **20 regional standards, particularly the homeowner, 21 the contractor, that there is going to be --**  **22 since it is not very clean right now going**

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## 1 forward and it won't really become clean until **2 '16. 3 MR. EISNER: Elizabeth, I think Doug**  **4 was talking about that between meetings he is 5 going to develop an outline of some sort of what**  **6 it would look like, which will probably be 7 something that might be inserted in the preamble.**  **8 And it sounds like that is what you want. You 9 will have an opportunity to hear about that.**  **10 MR. RAWALD: Yes, and I think what 11 might be helpful would be, and this is Doug, so**  **12 in the interim here, if people have a burning 13 notion, hey, I really want this thing in there,**  **14 email me, because we are allowed to do that. We 15 can communicate over email together and say Doug,**  **16 I think you should actually, this is in there, or 17 this might be a nice way to say that, just as you**  **18 are thinking about it. And I will certainly take 19 such feedback and incorporate it into what we are**  **20 doing. 21 And I will try to work with folks to**  **22 see what kind of thing we can put together in two**

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## 1 weeks to bring it back to the table for people to **2 look at and say this is kind of where we are. 3 My hope would be that this would not**  **4 be something that we would put in the regulation 5 but that it is going to be in a preamble**  **6 discussion that DOE has agreed to and take a part 7 in this campaign, which is going to involve this**  **8 and the group has seen it and they have comfort 9 in what DOE is going to go ahead and say to**  **10 people about what we are doing. I think that is 11 probably the approach I would recommend from a**  **12 rulemaking point of view. 13 But I will get folks working on this,**  **14 understanding they have jobs to do, too, but we 15 will focus on this and try to get something to**  **16 you guys next time we meet. 17 MR. EISNER: Okay, anything else on**  **18 the label? 19 MR. BALLO: This is Tim with**  **20 Earthjustice. I have another issue to raise 21 here. There is the issue of the online sales.**  **22 Currently, under FTC regs, anyone offering a**

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## 1 central air conditioning unit online for purchase **2 must show the EnergyGuide label on that web page. 3 I don't know if we want to maybe think**  **4 about adding an additional requirement to maybe 5 link to the DOE website or some additional**  **6 statement about what the consequences are of 7 purchasing and installing this unit outside of**  **8 the region for which it is legal for 9 installation.**  **10 MR. RAWALD: Right. So, Tim this is 11 Doug. So, that goes with the information**  **12 disclosure, I think, which has traditionally been 13 part of the FTC world.**  **14 So, let me talk to Hampton about that 15 and see what he thinks and then get back to you**  **16 guys. I think it is a valid notion, I just want 17 to make sure that is something that they are**  **18 supportive of. 19 MR. McCRUDDEN: This is Charlie with**  **20 ACCA. Doug, you said something earlier that kind 21 of intrigued me. And that was, you know, how do**  **22 we go after these internet sales and sort of**

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## 1 insert yourselves or sort of get in-between or **2 somehow in that decision change for the 3 homeowner. And I was, on my iPad, I tried to go**  **4 onto eBay but the DOE server blocked me. 5 But and I don't know the technology**  **6 here very well. I know certain buzz words. But 7 is there a way that DOE could put banner ads, and**  **8 this may be way out there, so that if someone 9 does go to eBay and types in certain key words,**  **10 something pops up. And maybe it is a warning. 11 Maybe it is an alert. Maybe it is just a --**  **12 MR. RAWALD: Right. So, you are 13 asking the question of if we could, if a consumer**  **14 went to a commercial site not controlled by the 15 government, could the government insert a banner**  **16 that would appear. 17 MR. McCRUDDEN: We do it.**  **18 MR. RAWALD: Right. So, I will look 19 at the legality of that question. I would guess**  **20 that that is going to be a big no. 21 MR. McCRUDDEN: Okay.**  **22 MR. RAWALD: But I will ask the**

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## 1 question at your request. **2 MR. McCRUDDEN: And I try not to put 3 out crazy ideas that just pop in my head but that**  **4 did. 5 MR. RAWALD: We support crazy ideas**  **6 here. Didn't you hear John Hurst mention a 7 bioluminescence on the condensing unit earlier?**  **8 MR. HURST: That is an idea ahead of 9 its time.**  **10 (Laughter.) 11 MR. EISNER: Anything else on labels?**  **12 MR. RAWALD: That was public outreach. 13 MR. EISNER: Well, I was going to ask**  **14 if anybody wanted to take a break. We did break 15 earlier in the meeting but it has been an hour**  **16 and a half or so. Do you want to break? 17 Take ten minutes.**  **18 (Whereupon, the above-entitled matter 19 went off the record at 10:55 a.m. and resumed at**  **20 11:06 a.m.) 21 MR. EISNER: All right, Harvey you**  **22 wanted to raise an issue about progress and where**

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## 1 we are going? **2 MR. SACHS: Yes. I just wanted to get 3 a better sense, a refresher on what we are doing**  **4 the rest of the day. 5 MR. EISNER: Unless we want to do it**  **6 differently, I just thought we would continue 7 going through the list. The next thing we have**  **8 is the second part of communications, the D part 9 -- excuse me, the second part of number one under**  **10 communications and just keep going through it the 11 rest of the day. We seem to be making good**  **12 progress in not letting people go at the end of 13 the day.**  **14 That was supposed to be a joke, guys. 15 (Laughter.)**  **16 MR. EISNER: So, everybody happy with 17 continuing like that? We do have to talk at the**  **18 end of the day about whether we need that meeting 19 in October. We decided to put it off until this**  **20 week. 21 MR. BALLO: This is Tim. The only**  **22 think I would suggest is there anything that we**

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## 1 could think of where we have a long way off **2 coming up where folks, issues that people will 3 need to go back to their constituencies and talk**  **4 more in-depth about, those should be teed up 5 before the end of today.**  **6 MR. EISNER: That is a good point. 7 MR. RAWALD: So, this is Doug. And I**  **8 think I made it clear earlier today that we are 9 going to take back the prohibited acts. So, if**  **10 there is any sharpening or thought after last 11 night's discussion, people want to do that, we**  **12 should definitely have that before we leave today 13 so that I can have that as a complete package to**  **14 bring to the folks that I work for to look at. 15 MR. AMRANE: Along those lines, this**  **16 is Karim with AHRI, it would be good to have a 17 list of action items at the end of the day or, I**  **18 don't know, tomorrow or whatever. I mean so a 19 list of what we have to do by when we get back in**  **20 three weeks. 21 MR. RAWALD: No, that is a fair**  **22 request, Karim.**

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## 1 MR. HURST: Neil, this is John Hurst **2 from Lennox. I would also suggest maybe making 3 the determination on that October meeting either**  **4 right after lunch or after the first break. I 5 know some of us have flights, myself included.**  **6 And I think we will be fresher right after lunch, 7 versus at the very end of the day when some of us**  **8 are either tired or not here. 9 MR. EISNER: Is everybody agreeable to**  **10 that? All right. 11 MR. SACHS: I sure would like to have**  **12 our consensus list of prohibited acts in hand, as 13 I am sharing information with the people behind**  **14 us. 15 MR. RAWALD: So, do you want to tee**  **16 that up for after lunch, just go straight into 17 that, and then try to bang out some of the other**  **18 things before then, between now and lunch? 19 MR. SACHS: Your discretion on the**  **20 sequence. I just want to make sure I have it. 21 MR. RAWALD: Okay. That way, it will**  **22 give lunchtime for everyone to kind of think**

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## 1 about the prohibited acts a little more so they **2 can come back and be really thoughtful about it. 3 MR. SACHS: Then you had better**  **4 distribute them before. 5 MR. RAWALD: So, oh, you mean in**  **6 writing?**
**7 MR. SACHS: Yes. 8 MR. RAWALD: Okay, so we did get an**  **9 email out to everyone last night. 10 MR. EISNER: I think it was in this**  **11 document. 12 MR. SACHS: Oh, I'm sorry. In reading**  **13 materials? 14 MR. RAWALD: Yes, so everyone has**  **15 them. 16 MR. SACHS: Thank you.**  **17 MR. EISNER: All right. Go ahead. 18 MR. RAWALD: I was going to say I**  **19 think that for 1B, there is not really a whole 20 lot more to say. The manufacturers and everyone**  **21 said they are committed to this and that we can 22 develop some preamble language or not, just** 

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## 1 basically saying hey, we are going to go ahead **2 and make sure we tell people things and they want 3 to link to our sight. I don't think there is a**  **4 whole lot more to be said on that particular 5 point there at 1B.**  **6 MR. EISNER: You are talking about B?**
**7 MR. RAWALD: Yes. 8 MR. EISNER: Okay, everybody agree we**  **9 are done with that? 10 Okay, DOE database, contractors,**  **11 dealers, distributors. 12 MR. RAWALD: Okay, so there was at**  **13 least some people that are still interested in 14 this topic when we last met, although the**  **15 contractors themselves were least interested in 16 it. I asked the question at DOE, we have the**  **17 resources and abilities to do this. It wouldn't 18 be overly complex in that we would use our system**  **19 we already have in place for tracking 20 certification of compliance of products to have**  **21 some sort of data place to put certification of 22 compliance by those who are installing or** 

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## 1 contractors who are going to do this. **2 So, what it would be, though, just so 3 everyone understands, it would be based upon the**  **4 entity, the contractor self-certifying they are 5 going to comply. I mean this is not going to be**  **6 a robust program where I am going to be auditing 7 their certifications. That is not the way we do** **8 business. So, it is based upon self 9 certification, though I would be following up on**  **10 them on occasion. It is just not going to be 11 based upon some sort of entry program, where you**  **12 have to give me a thing and I look at every 13 single entry.**  **14 So, when we are talking about possibly 15 over 100,000 people on the list, we are going to**  **16 be auditing on a more targeted basis, rather than 17 reviewing every applicant and saying yes, they**  **18 are someone that we agree with are compliant. 19 So, the list will, of course, not**  **20 always have a current reflection of who is in 21 operation because somebody may not notify me and**  **22 they may go out of business, so I will have to**

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## 1 find that out over time. So, there are kind of **2 layers to how real-time the information will be. 3 It will always be no realer than two weeks**  **4 because we don't offer a real-time database like 5 AHRI does. There will always be some update on a**  **6 biweekly basis at most. 7 So, those are the kind of technical**  **8 limitations we will have to it. But we have the 9 capacity and the ability to do it if folks are**  **10 interested in doing it. 11 MR. ROCKY: Bryan Rocky, JCI. So, I**  **12 have been thinking about this not from my 13 standpoint as a manufacturer but more from Steve**  **14 as a distributor, the HARDI guys, leaning towards 15 the contractor. And I have not fleshed this idea**  **16 out but the idea to potentially have a document 17 drafted by the Department that would be a point**  **18 of sale notification that a distributor or a 19 manufacturer that sells to contractors could**  **20 provide to the contractor when they buy a piece 21 of equipment, at least the first time.**  **22 Here is the law, explain it to them;**

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## 1 here is your responsibility as a contractor; here **2 is what we are doing. That is given to the 3 contractor when the pick up equipment at least**  **4 once, gives them some sort of document that could 5 be maintained by distribution points or by**  **6 manufacturer branches as part of this document 7 trail.**  **8 So, we talked about a consumer piece, 9 a contractor piece and other things. So, I am**  **10 wondering if a point of sale, one page or one 11 page front and back, Mr. Contractor, here is the**  **12 law. Here is your responsibilities. You 13 acknowledge that you are going to abide by these**  **14 and it is something that could be signed, given 15 back to our distribution partners or our branches**  **16 and just kept on file. Having a contractor sign 17 it, and again, Chuck and Charlie will have to**  **18 weigh in on this as well. You don't want to 19 create a lot of burden. You don't want to do**  **20 this every time you sell a piece of equipment to 21 a given contractor, but is that an option for**  **22 consideration?**

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## 1 MR. PORTER: This is Steve Porter, **2 Johnstone Supply. I would not be interested in 3 that process whatsoever. Primarily, that is no**  **4 different than us starting to keep warranty on 5 every piece of equipment or another process or**  **6 record keeping. What am I supposed to do with 7 those records? Are they supposed to be checked**  **8 very time that person shows up, so, I got to go 9 over and find that piece of paper? I'm not**  **10 interested in anything that creates another piece 11 of paper to handle or process, especially if when**  **12 we are going to do trifolds and we will have 13 those available and all the other education**  **14 issues and record keeping we are going to get. 15 We also have contractors that the**  **16 person that shows up to get the equipment is not 17 the service person, not the person installing it.**  **18 That person may never come in the store. I think 19 there is confusion that that owner entity or the**  **20 contractor always comes in the store. In many 21 cases, in larger companies, we never see those**  **22 entities. It is the technician that rolls in or**

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## 1 a purchasing person or a parts runner or just **2 somebody delivering equipment. 3 So, I think this just adds a lot of**  **4 confusion to what we are going to do. I think 5 the communication pieces and the trifolds that**  **6 are there will be available and on the counter, 7 they will be able to hand out, which would be**  **8 just as good a communication vehicle as any and 9 all the other communication pieces. I am not**  **10 looking to processing paper or handling that kind 11 of paper. It is expensive.**  **12 MR. McCRUDDEN: This is Charlie with 13 ACCA. I think this is one of those issues where**  **14 we are so limited because we don't know how many 15 contractors are out there. And so it is what**  **16 won't be on that, this self-certification 17 registry.**  **18 And I think we have heard this 19 argument several times which is, well, the**  **20 noncompliant contractor is always going to be 21 noncompliant and here is just one more way they**  **22 will be noncompliant. Meanwhile, the compliant**

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## 1 contractor has to go through and register. And **2 that is likely to be, the registry is probably 3 going to be a simple process but is it creating**  **4 one thing without resolving what the real problem 5 here is, which is the bad actors who will be out**  **6 there and continuing to be bad actors. 7 And I think in terms of what Steve**  **8 just mentioned, he is right, there is a lot of 9 contractors who don't -- there is a lot of**  **10 installers, the individual who installs who never 11 goes into the shop, sometimes it is pickup**  **12 person, it is a delivery person. 13 So, I don't think this is going to**  **14 capture the people we want to capture. 15 MR. EISNER: Others?**  **16 MR. WHITE: This is Chuck White. I 17 don't think I have to tell you what I think of**  **18 it. 19 (Laughter.)**  **20 MR. WHITE: I think I have expressed 21 my opinion before. But it is naive to think that**  **22 this is going to stop sales. It is not. People**

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## 1 are going to come. Somebody is going to forget. **2 In short order, it is going to go by the way 3 side. It is going to be a lot of work for DOE to**  **4 track. It is going to be a lot of for Steve and 5 his folks to track. We are just going to fill**  **6 out a piece of paper and keep it on file. How 7 many file cabinets have you got, Steve? You have**  **8 got a lot. 9 It is work. And I don't see that the**  **10 bad actor is going to do this. And even if he 11 does do it, we still don't know what jobs he**  **12 does. You are making a list of us in the 13 industry. I guess from a personal liability or**  **14 liberties perspective, I sort of resent that. 15 But the proof is what is the work that I do. And**  **16 you want to make a list of me just in case. 17 MR. PORTER: This is Steve Porter,**  **18 Johnstone Supply. You know you look at it from a 19 contractor's side. Is he supposed to have that**  **20 paper on file every time he needs a piece of 21 equipment anywhere in town at 16 different**  **22 wholesalers? I mean even that they are going to**

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## 1 check and verify or look or go through this **2 process, it just doesn't make any sense to me. 3 MR. WHITE: This is Chuck White again.**  **4 I am EPA 608 certified. I haven't had anybody 5 ask me to see that card probably since the day I**  **6 got it. And nobody goes and looks in their data 7 base to see if I am on the list. They know who I**  **8 am. I've been coming in there forever. It is 9 not going to happen. End of my rant.**  **10 MR. SACHS: I agree but I do want to 11 point out that I am agreeing from the standpoint**  **12 of being an International Ground Source Heat Pump 13 Association certified ground loop installer.**  **14 MS. SHEPHERD: This is Amy Shepherd 15 from AHRI and I think that I guess my concern**  **16 would be how effective this database would be, 17 unless it was really robust. Because if it is**  **18 something that the Department just doesn't have 19 the priority for or resources for, which is**  **20 totally understandable, on a real-time basis for 21 this many people, where there is no other way of**  **22 tracking them, you are just going to have a data**

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## 1 base that is full of garbage and not useful **2 information. And then relying -- sorry. I take 3 back garbage.**  **4 You are going to have a database full 5 of not useful information and then I think you**  **6 get into the situation where it might even be 7 worse to start trying to rely on that, as part of**  **8 an effective enforcement process when you are 9 relying on data that you can't really trust.**  **10 MR. MELCHI: Jon Melchi with HARDI. 11 I brought this up to some of my members and one**  **12 of the scenarios that was sent to me was that 13 scenario where somebody who works for Chuck's**  **14 company decides he is ready to strike out on his 15 own and tells Chuck, you know, hey, I am going to**  **16 be starting my own thing, registers with the DOE, 17 goes to the distributor, but the website hasn't**  **18 been uploaded. Therefore, my members aren't able 19 to sell this new contractor, this new small**  **20 business entity product. And maybe it is not 21 updated for a couple of weeks, a couple people go**  **22 on vacation. That guy is kind of in no man's**

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## 1 land. I don't know how frequently that would **2 happen. That was just a scenario that was 3 brought to me by some distributors.**  **4 MR. EISNER: So, is anybody advocating 5 for this thing? Is there agreement on that?**  **6 Okay, that brings us up to training to 7 contractors/distributors in compliance with**  **8 regional standards. 9 MR. DORIA: This is Jordan, Ingersoll**  **10 Rand. And one thing I have been thinking about 11 here, I think this is when we had some of the**  **12 discussion about the different things that we, as 13 OEMs could do with our distributors, whether they**  **14 are truly ours or just those that we work with, 15 sort of in conjunction with things that we**  **16 already do. 17 I think that there is a lot that we**  **18 could ultimately offer there. Again, because it 19 is in conjunction with the kinds of training that**  **20 we would already be providing. 21 My view, in terms of whether or not it**  **22 should be incorporated into the regulation with**

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## 1 any level of specificity, I am inclined to find **2 some kind of other mechanism which we, as 3 manufacturers, at least, could commit to this. I**  **4 am thinking some kind of MOU or something like 5 that where we all say that we are going to do the**  **6 following. And then I think that gets to the 7 idea of an enforcement plan but it would be**  **8 outside of the regulation, perhaps with the 9 exception of the regulation ultimately saying**  **10 that the OEMs potentially have agreed to jointly 11 or have agreed to -- something that will be**  **12 specified in another document, essentially. 13 MS. MEYERS: This is Karen with Rheem.**  **14 How is this different from the public outreach 15 webinars, website, information that we talked**  **16 about earlier? 17 MR. RAWALD: This is Doug. It is my**  **18 opinion that it is not really. This is all 19 wrapped into the same thing and I think that is**  **20 going to basically be preambulatory discussion as 21 far as it sounds like of people's willingness to**  **22 engage in this but without any actual regulatory**

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## 1 language requiring it or any sort of sanction for **2 not doing it. 3 MR. EISNER: So, do you envision this**  **4 as something that could just be in the preamble 5 when you discuss the outreach?**  **6 MR. RAWALD: From listening to folks 7 around the table, that seems to be the way to go,**  **8 is that people are saying hey, we are going to 9 commit to it and we will say that the working**  **10 group has come together and manufacturers have 11 agreed they are going to go and provide this**  **12 training to people as needed over time but 13 without further detail or any actual regulation**  **14 requiring it. 15 MS. NOLL: This is Elizabeth. I would**  **16 only offer the point that was made about 17 consistency of message. Do we divert from that**  **18 or would there still be a consistent message in 19 that process?**  **20 MR. ROCKY: This is Bryan. I think, 21 Elizabeth, that gets covered by the basis of this**  **22 will be the guidance documents and then the final**

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## 1 enforcement rule as published. So, that will lay **2 out for manufacturers some of the key things that 3 we are going to have to discuss through the**  **4 chain. 5 MR. SACHS: This is Harvey with a**  **6 question that I hope Doug can answer. 7 Let's assume that I am a distributor**  **8 or a manufacturer and I don't offer training to 9 my customers. Is that information that you would**  **10 use in trying to help establish that someone is a 11 habitual violator?**  **12 I mean does it have use to you to know 13 that somebody is not offering the training?**  **14 MR. RAWALD: Right, I hear what you 15 are saying because I think this relates back to a**  **16 point you made before that somebody who is not 17 willing to participate may be someone who is more**  **18 likely to be plodding along, or at least maybe as 19 an indication.**  **20 So, I haven't thought about it in that 21 concept of this particular training. I don't**  **22 know off hand. I would really like to think**

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## 1 about it a little bit more because I think it **2 could be indicative but it could be also 3 someone's say of saying hey, I didn't know. So,**  **4 they want to build in some sort of way of saying 5 I don't know the rules. I didn't have the**  **6 training. So, I want to think about that a 7 little more.**  **8 MR. SACHS: Because if it is 9 indicative, that again becomes part of this self**  **10 enforcing fabric. That is why it matters. 11 MR. EISNER: Any other thoughts on**  **12 this particular point? 13 MR. McCRUDDEN: This is Charlie with**  **14 ACCA. I think that sort of a standardized 15 training that is going to be part of the public**  **16 outreach campaign on sort of just in general what 17 are the rules, looking at the rules as they apply**  **18 nationally, will then get changed in terms of 19 message to the audience at the contractor level**  **20 or the distributor level, which is going to be 21 the training for a contractor in Michigan is**  **22 going to be pretty easy because nothing is**

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## 1 changing for that person. **2 But the training for a contractor in 3 New Mexico versus the training for a contractor**  **4 in Texas is going to be very different because it 5 is going to be about the EER value and the size**  **6 variation, versus simply just a SEER value. 7 So, I don't know. And I think if you**  **8 are going to hang your shingle out as a 9 contractor, you are going to train your**  **10 employees. Now, whether or not you should prove 11 you did that, I don't know if that is necessary.**  **12 And if you are looking at distributors, well, did 13 the distributors train their potential customers?**  **14 I mean, I think you will. I think our 15 contractors will. And I think is sort of -- this**  **16 falls, I think, also under the good ones are 17 going to do it. The bad ones may just ignore it.**  **18 But because it becomes so specialized, 19 I don't know if we can put a requirement on it**  **20 because you look at what does the training look 21 like? Does it meet a standard and do you want to**  **22 go down that road?**

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## 1 MR. EISNER: It sounded like what **2 Harvey was saying was it wouldn't be a standard 3 for the training. It would be a factor for the**  **4 agency to consider they could balance the kinds 5 of concerns are you are talking about.**  **6 MR. McCRUDDEN: This is Charlie again. 7 And then you go back to though, so if Doug is**  **8 evaluating factors, how does the contractor 9 prove? He could say yes, we scheduled a toolbox**  **10 talk one Monday morning before the crews all went 11 out and I had this PowerPoint. Or I walked**  **12 through, I had them all review the DOE webinar 13 but I mean if he did that but then didn't record**  **14 that he did that, how does he prove that? 15 MR. PORTER: This is Steve Porter,**  **16 Johnstone Supply. 17 Yes, I think that industry/contractor**  **18 piece is the easy piece. I mean the hard part is 19 the homeowner piece which you have got, Doug, it**  **20 really is the hard part to do on this. 21 You can look at distributors and**  **22 contractors and the training that went on over**

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## 1 the phase out of R-22 to see what the industry **2 does. I mean I can't tell you how many thousands 3 of those that we held as a single entity to make**  **4 sure that everybody was aware. And I can promise 5 you right now, probably in that first year, is**  **6 our company alone would probably put out over a 7 million pieces on the subject. So, that is north**  **8 and south because we are going to put out mailers 9 and we are not going to discriminate who they go**  **10 to. So, they are going to be very aware. 11 Even though the north may not need it**  **12 in Michigan but we also have contractors we 13 talked about the other day that leave Michigan**  **14 and go south. We also talked we are going to 15 have all those border states that will need to be**  **16 educated just as if they were in the south. 17 So I mean we are really not going to**  **18 discriminate on the message. We will, probably, 19 tend to go over the top on regions. And**  **20 contractors are not, most of them, even though 21 they are not in that part of the country, they**  **22 are interested to hear what is going on and then**

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## 1 they are going to be interested in the **2 regulations. 3 So, I think it is not a totally**  **4 complicated thing to explain. I don't think it 5 will be hard to deliver. I think the industry**  **6 has proven with all the regulations coming from 7 both the EPA or the DOE or over the years that**  **8 they get the message out. 9 MR. EISNER: Any more comments? Does**  **10 everybody agree this should just be informal or 11 do people still want to have something a little**  **12 more firm for the agency to rely on? 13 MR. WHITE: Well, this is Chuck White.**  **14 I just wanted to throw this out that I think the 15 industry that is around here has committed to**  **16 really stepping up and trying to do the best we 17 can at informing every piece of the pie that we**  **18 can to help Doug out. And I am not trying to -- 19 I am just saying that this has happened in the**  **20 past. 21 I went to a training session of 410A,**  **22 way back when 410 was kind of coming out, by a**

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## 1 manufacturer in the room. And I still have their **2 certificate of completion of the training hanging 3 on the wall in a frame because we never take**  **4 anything off the wall. 5 (Laughter.)**  **6 MR. WHITE: But certainly that is a 7 possibility that people will hand out**  **8 documentation. There is also the possibility 9 there is a lot of NATE training technicians out**  **10 there and they all need CEUs and this would all 11 kind of mesh with that. So, there is**  **12 possibilities that there will just -- not saying 13 we will be required but possibilities that these**  **14 kinds of documents will just kind of naturally 15 evolve with it.**  **16 That doesn't help you if you come ask 17 somebody were you trained and they don't want to**  **18 admit they were trained, so they take the 19 certificate off the wall and you see a nice clean**  **20 spot where it used to be. But I think there is 21 probably some voluntary documentation that will**  **22 be available for some of the stuff that will help**

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## 1 people demonstrate their knowledge. **2 MR. EISNER: Other comments? Is there 3 any disagreement with the idea that it would be**  **4 essentially a voluntary requirement, so to speak? 5 You don't have to do it.**  **6 MR. SACHS: This is Harvey. Again, 7 Neil, it is not a question of disagreement. It**  **8 is a question of seeking better, more 9 clarification on the extent to which the**  **10 Department can use training offerings and 11 training uptake as a factor in its consideration.**  **12 MR. EISNER: Yes, that is what I 13 meant, I'm sorry, by a requirement on this. DOE**  **14 can consider it. Do people want some provision 15 like that in there? We don't seem to have**  **16 consensus but I'm not sure. 17 MR. LATTANZI: This is Matt Lattanzi**  **18 with NORDYNE. I would agree it doesn't need to 19 be in the regulation for a couple of reasons.**  **20 One, as manufacturers, I think we have 21 been sending this message, literally, since the**  **22 consensus agreement was agreed upon and we are**

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## 1 going to continue to do that if we have to. **2 And in my mind, it has sort of become, 3 this is a bad analogy but it is the only one I**  **4 can think of, it is almost like a de facto 5 requirement. The market expects it. Our**  **6 customers expect it, distributors, contractors, 7 they expect this education and we provide it.**  **8 Analogous to almost like the ENERGY 9 STAR program, I mean that is an optional program.**  **10 We are not mandated by the EPA to participate in 11 it but we all do because it is a market**  **12 expectation. Not a good analogy, I realize that. 13 But you get my point.**  **14 So, this is going to march on and 15 continue on just like it has since the beginning**  **16 of the consensus agreement. 17 MR. EISNER: I understand that. I**  **18 think the point that Harvey was making was they 19 don't want to necessarily require that the**  **20 training be done but when there is a question as 21 to whether you used someone who was a routine**  **22 violator, whether the agency can consider whether**

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## 1 you had done the training that could have avoided **2 that problem. 3 Is that a fair way to express that,**  **4 Harvey? It is just the fine print that would be 5 listed in the things that the Agency would**  **6 consider in determining routine violation. 7 MR. PORTER: Steve Porter, Johnstone**  **8 Supply. So, would you be able to see which 9 contractor, all sales, maybe use the link,**  **10 recommend the link, log in, look at your site? I 11 don't know. I mean how are you going to go out**  **12 and enforce? How would you enforce this? Is 13 this going to start another enforcement hearing**  **14 on training? Just a question. 15 MR. SACHS: This is Harvey. And it**  **16 may be that my thinking is a little fuzzy but I 17 really wasn't trying to constrain it or enumerate**  **18 provisions but simply trying to look at this as a 19 factor the department could consider as it is**  **20 looking to differentiate good buys from bad guys. 21 Steve offers training. He has had a**  **22 large fraction of his customers take that**

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## 1 training. He carried it out to his customer **2 sites for tool box talks. Whatever it is, helps 3 demonstrate that Steve is not a rogue.**  **4 And I certainly don't feel, at this 5 point, any need to get into specifics of what**  **6 information you would want to show or even be 7 asked for. I don't think that would be helpful,**  **8 if it is part of this sort of factors type thing. 9 And again, I can't answer the question of what**  **10 happens in five years, a different administration 11 has different people pulling the strings or**  **12 cracking the whips but that is where I am. 13 MR. McCRUDDEN: So this is Charlie**  **14 with ACCA and I guess I will turn to you, Doug. 15 I mean does your policy statements or do you have**  **16 a list of factors or do you line up the factors 17 or outline them right now?**  **18 MR. RAWALD: So, this is Doug. So, I 19 assume you are talking about our policy guidance**  **20 or policy regarding civil penalty and the scope 21 of that.**  **22 So, we do outline factors, though, of**

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## 1 course as any good lawyer will tell you, we also **2 had it for any other factors they feel relevant. 3 And I think that this could be a relevant fact in**  **4 assessing a civil penalty possibly. But I think 5 that we are really trying to go out and talk**  **6 about as far as is it additional evidence of 7 somebody who is noncompliant with the standard,**  **8 you know the fact that they didn't do any 9 training and they are not taking part in any**  **10 training. So, that is a question. 11 And I think that if I were to make a**  **12 case before a judge, because that is how I look 13 at these kind of things, on saying hey, here is**  **14 why I think this person is someone who violated 15 this and should, therefore, pay a penalty or**  **16 something like that, it is conceivable it could 17 be some sort of evidence but I don't think it**  **18 needs to be in any way regulated. It just needs 19 to be something I would once again bring up and**  **20 say here we have it, Your Honor, we know that he 21 never did any training. So, could that be a**  **22 factor to think about?**

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## 1 I haven't really thought about how **2 that would play out or how important that would 3 be to me in doing that. And I am just trying to**  **4 think about that because Harvey put it forward. 5 But I think I would use it the same**  **6 way, regardless of whether there was a regulatory 7 requirement of some sort that manufacturers do**  **8 this or not. And we don't have any other 9 analogous provision in our regulations right now**  **10 requiring people to provide training. And I 11 would be hard-pressed to say that we would be**  **12 able to do anything to someone who failed to 13 provide such training or attend such training on**  **14 itself. 15 And so I don't want to create**  **16 provisions that we couldn't follow up on if they 17 weren't fallout. And so that is kind of my**  **18 concern. 19 So, I like the idea of us putting out**  **20 there that as a group we have agreed to do it but 21 I don't necessarily see the need for it to be a**  **22 regulatory text that would be in the CFR. That**

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## 1 is kind of where I am thinking right now about **2 it. 3 MR. GIBBONS: Yes, this is John from**  **4 Carrier Corporation. I think as Bryan and Matt 5 have both stipulated, I think manufacturers, we**  **6 all have an obligation to do it, whether it is in 7 writing or not because we want to eliminate**  **8 confusion. 9 You know I speak for our company. We**  **10 are going to require our distributors to sign off 11 on a webinar that they attended and they paid**  **12 attention and blah, blah, blah, just because we 13 got a thousand lawyers who need something to do.**  **14 But we also have to train our customer 15 service people so when they answer a call from**  **16 our distributors that they know, wait a minute, 17 Steve is in Texas and he is asking for all these**  **18 13 SEER units. They need to raise the flag and 19 say should we be shipping these in there?**  **20 In addition, we have got a consumer 21 relations department. It is a 20-some person**  **22 department that is busy all the time and answers**

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## 1 all kinds of questions from not only consumers **2 but from distributors -- well sometimes 3 distributors but mostly a lot of times**  **4 contractors. So, it behooves us to be out in 5 front of it and educate internally as well as**  **6 externally. 7 So, I think it needs to be informal.**  **8 We want to eliminate confusion because I 9 certainly don't want to have to answer calls all**  **10 day and night either. 11 MS. NOLL: This is Elizabeth. I think**  **12 listening to the conversation I would generally 13 agree that maybe take it back and think about it**  **14 a little bit more but that the training be 15 informal. But I would think that the uniformity**  **16 might be important so that its manufacturers can, 17 at their discretion to deliver training and offer**  **18 training but that maybe the Department take on 19 putting together the training module and adding**  **20 that to the website. And the manufacturers can 21 add to it as they see fit but that there maybe be**  **22 a baseline kind of going back to that consistent**

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## 1 message. **2 But I think in terms of the informal 3 nature of what a manufacturer or a distributor**  **4 offers, it seems reasonable. 5 MR. EISNER: Why don't we put the**  **6 decisionmaking on this off until Doug thinks 7 about it a little bit more and lets us know what**  **8 his thoughts are? 9 MR. WHITE: This is Chuck White. I**  **10 guess I would like to not be a contractor for a 11 moment, sort of a contractor.**  **12 We are professionals in the industry. 13 And in our discussion of knowing, you either know**  **14 it or you should have known it. And one of the 15 concepts in licensing, and I can't speak for**  **16 every state and every license that exists, but my 17 license requires me to stay abreast of current**  **18 trends in the industry, changes in the industry. 19 So, someone who is acting as a**  **20 contractor, as a professional industry, should 21 have known. And you should make effort to keep**  **22 up with this.**

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## 1 Now, if you are a guy working out the **2 trunk of your car, and you are putting air 3 conditioners in or classing them for the**  **4 contractor, but are they truly a professional**
**5 contractor? 6 I think it is -- I don't know how you**  **7 make this a formal requirement but I think the 8 professionals in the industry are essentially**  **9 honor bound to do this. And as we make all the 10 information available at the wholesalers where**  **11 they are going to go pick up 95 percent of the 12 product, 98 percent of the product they are**  **13 dealing with, they are going to be bombarded with 14 it.**  **15 So, I think we have a lot of 16 opportunity and really people have to do it.**  **17 MR. RAWALD: So this is Doug. So, my 18 position on this is that it should not be a**  **19 regulatory requirement, that it should be in the 20 preamble, unless there is somebody else who**  **21 really wants it to be a regulatory requirement 22 and then I'll go back and to talk to folks about** 

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## 1 the issue Harvey raised. **2 So, there is nothing for me to think 3 about unless there are people here who want it to**  **4 be a regulatory requirement of some sort. And 5 so, I think there is some unclarity whether,**  **6 Harvey, you want it to be a regulatory 7 requirement. You are shaking your head no. So,**  **8 it sounds like nobody really wants it to be a 9 regulatory requirement as I am hearing. So, I**  **10 think we have consensus on this. 11 MR. EISNER: Well, what I am hearing** 
**12 -- 13 MR. SACHS: My question --**  **14 MR. EISNER: Go ahead, Harvey. 15 MR. SACHS: This is Harvey. My**  **16 question to you was whether the existence of 17 training programs was something that you could or**  **18 were likely to consider as a factor as you are 19 trying to trace out whether somebody was a**  **20 routine violator. I hope that I was clear that I 21 was not asking for that as a regulatory action.**  **22 MR. RAWALD: Okay.**

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## 1 MR. EISNER: And you had said you **2 needed to think about whether or not this would 3 help you in terms of making a case --**  **4 MR. RAWALD: Right but I also further 5 said it wouldn't affect my analysis of whether it**  **6 should be in the regulation or in the preamble. 7 I mean I could use it regardless. So, I don't**  **8 think I need to make a decision on that for the 9 purposes of this process because I think that**  **10 what I am saying is if we have in the preamble 11 language saying hey, everyone is going to go**  **12 ahead and do this, whether it happens or not, is 13 going to have the same impact to me, as well as**  **14 if it is regulatory language. 15 So, I don't think it affects my**  **16 opinion on adding it to the regulation. I think 17 that the best way to go is going to be having**  **18 this in some way be a preamble kind of discussion 19 of the fact that we all agree that this should be**  **20 done and it is going to be done. 21 MR. EISNER: And you are saying that**  **22 you would just like to resolve it now with a vote**

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## 1 on what Harvey is suggesting? Or would you like **2 to think a little bit more about it? 3 Because I think Harvey was thinking**  **4 this is the way I understand it, is just another 5 one of the preamble discussions on the kinds of**  **6 factors you would consider when you were making a 7 decision about routine violation.**  **8 So, I thought that is what you were 9 saying, just something -- wherever all the other**  **10 language was going to go about routine violation 11 factors.**  **12 MR. SACHS: This is Harvey. Thanks, 13 Neil. I really did, I hope, posed it as a**  **14 question. I was not thinking of whether it 15 should be in the preamble or not because I have**  **16 thought much about the preamble. 17 It really was purely trying to get a**  **18 better understanding. 19 MR. EISNER: So, should we resolve**  **20 this now with a vote? Does anybody want anything 21 in the preamble or in the reg text about training**  **22 and whether it can be factored into the**

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## 1 decisionmaking on routine violations? Is anybody **2 in favor of that? 3 Okay, I assume that means everybody is**  **4 opposed. 5 MR. ROCKY: So, Neil, you put two**  **6 contradictory statements there. So, if we are 7 going to say are we in favor or opposed to**  **8 requiring it as part of the regulation that 9 training be considered mandatory, that is one**  **10 motion. And I would say we could vote on that. 11 The addition of text in the preamble**  **12 is up to the Department. And I think we have 13 already stated that we are in favor of something**  **14 there that we are already going to do. Two 15 different items.**  **16 MR. EISNER: I was not suggesting that 17 what I heard was that the rulemaking language**  **18 would say training is mandatory. The rulemaking 19 language, I thought some were suggesting should**  **20 say the factors that will be considered in 21 determining routine violation could include**  **22 whether you provided training, not that it is**

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## 1 required but whether you did that is generally **2 considered good practice in the industry, for 3 example.**  **4 MR. DENNIS: Just to clarify, I think 5 that what Doug was saying is it can be, whether**  **6 or not you say it or not. 7 MR. EISNER: I understand that. He**  **8 can consider what he wants to consider. I am 9 asking whether there is any vote for it being**  **10 either in the real text that he can consider it 11 or that it be in the preamble that he consider**  **12 it. 13 If you don't want it in either, then**  **14 we will finish with this. Does anyone want it in 15 either one of those places?**  **16 MR. SACHS: I'm withdrawing if it is 17 two separate questions.**  **18 MR. EISNER: All right, what would you 19 propose then in terms of what you have been**  **20 asking about? 21 MR. SACHS: I do not favor its being**  **22 in regulation. I am open to it being in the**

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## 1 preamble, if others think it is useful. **2 MR. EISNER: All right. Assuming no 3 one wants it in reg text, does anybody else think**  **4 it should be in the preamble or want to at least 5 talk about it more?**  **6 MR. RAWALD: I do. I think I have 7 voiced the opinion several times. I think it is**  **8 should be in the preamble that the group came 9 together, as part of the working group's**  **10 discussion we felt that there should be some sort 11 of provisional training and that should be what**  **12 we said about it. 13 As far as whether it is a factor in**  **14 considering what I would ultimately do, I think 15 that is not worthy of being in there. But I**  **16 think the question of provisional training should 17 be in there and that is my position on the issue.**  **18 MS. MEYERS: This is Karen with Rheem. 19 I agree with that.**  **20 MR. EISNER: Others? Comments? 21 MR. LATTANZI: Yes, NORDYNE supports**  **22 putting it in the preamble.**

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## 1 MR. EISNER: Does anybody oppose **2 putting in the preamble a discussion of the need 3 for training?**  **4 Okay, so I assume that is where we end 5 up on this one.**  **6 Okay, the next one is use of AHRI 7 database and certificates. And you said DOE/CCMS**  **8 database. 9 MR. RAWALD: Right. And the way we**  **10 left the last time was we felt there was 11 generally no need to require a provision of a**  **12 printout from the database or from the directory 13 to the consumer, based upon what we know with the**  **14 label and the requirement that 14(c) or (b), the 15 minimum efficiency of the pair that we have.**  **16 So, we left it as those would be tools 17 that I could use in my enforcement, of course,**  **18 but they don't need to be involved in the 19 regulations or the preamble at all. It is just**  **20 tools my disposal we are all aware of but there 21 is no reason to provide regulatory language**  **22 regarding the use of them or the provision of**

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## 1 stuff from them. **2 MS. NOLL: This is Elizabeth. I would 3 also add that with the strides that we made on**  **4 the label and the commitment the manufacturers 5 are making, that I think that takes us a long way**  **6 from not needing these certificates anymore or 7 requiring them. So, thank you.**  **8 MR. EISNER: Others? Okay, so nobody 9 feels we have any need to require anything under**  **10 number four. 11 Okay, that takes us up to DOE**  **12 collection of information, suspected violations 13 and data. The first item was whistleblower.**  **14 MR. RAWALD: This is Doug. So, I have 15 a general sense from the folks that I have talked**  **16 with that we would be supportive of a 1-800 17 number, a web-based submission process, and also**  **18 the current email process that we have now for 19 that.**  **20 So, I think that it is a resource 21 issue that I will make sure that we can nail down**  **22 so I can guarantee that but I think we are**

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## 1 committed to doing that, providing those options **2 for complaints to made to the Department about 3 violations of regional standards.**  **4 MR. EISNER: And this would be 5 something you would do via the preamble?**  **6 MR. RAWALD: Well, so the question of 7 whether we want to provide some sort of**  **8 information in the regulatory text about this 9 resource or not, I don't necessarily the need for**  **10 it but other folks may think it would be helpful 11 to be able to flip open the CFR and see the**  **12 information possibly. So, I haven't thought 13 through. So, I guess I want to hear from folks**  **14 if they felt that it would be helpful to have 15 that in the regulation as opposed to not.**  **16 MR. PORTER: This is Steve Porter, 17 Johnstone Supply. I just would include it in the**  **18 training that you did. 19 MR. RAWALD: Yes, absolutely. I think**  **20 that is a must have. Any training we would do 21 would incorporate this. And the web page that we**  **22 would have as a resource on this information**

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## 1 would have links to the site to submit your **2 complaint. It would have the link to the email 3 address to submit your complaints, as well as the**  **4 phone number with the mailbox. And I could, of 5 course, guarantee if people left information on**  **6 the mailbox, we would follow up on those 7 complaints. Because we do, as long as they**  **8 provide contact information back. 9 MR. MELCHI: Jon Melchi with HARDI.**  **10 Doug, just a quick question. How long are 11 whistleblower records kept by the Department**  **12 typically? 13 MR. RAWALD: And so we are using the**  **14 word whistleblower but there is some government 15 context to that term that this is really people**  **16 complaining about something. And so we keep 17 complaints about investigations we have ongoing**  **18 for a particular period of time but I don't know 19 how long.**  **20 So, once an investigation is closed, 21 we do keep our records. So at this point, I**  **22 can't tell you what the time period but we do**

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## 1 maintain the record of the complaint with that. **2 Now, we encrypt it. We do all sorts 3 of things to make it protected so it is not**  **4 available. And if it was a FOIA request, we 5 would treat it properly. We don't want to -- we**  **6 want to make sure people who complain feel that 7 they have protections as a complainant, so they**  **8 don't have that. 9 I would view the protections that a**  **10 person in a regional standards context would have 11 would be the identical to those we provide people**  **12 who complain now in the course of our regular 13 enforcement efforts, which are we would not**  **14 reveal your name or information unless you wanted 15 us to do so. So, that is how we would handle it.**  **16 MR. GIBBONS: Doug, this is John with 17 Carrier. The 800 number that you referenced**  **18 earlier, that you asked us to consider putting on 19 the label, would that be the same number as this**  **20 hotline number or would it be just press 1 for 21 whistleblowing; press 2 for --**  **22 MR. RAWALD: No, it would be this**

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## 1 exact same number. So, I think that if we **2 established a number that was the number to 3 complain about the regional standards issues, it**  **4 would be that number that we would say oh, 5 consider putting that on the label.**  **6 So, just because that would be the one 7 stop shop. The guy could see that the label is**  **8 there and says oh, call this number if it is 9 here.**  **10 MR. GIBBONS: That information or the 11 two-way conduit.**  **12 MR. RAWALD: Right. So what I am 13 envisioning, based upon your label is the guy**  **14 walks into the backyard to service the unit. He 15 looks at it and says oh, not for sale within the**  **16 southwest. Call this number if it is there. And 17 he picks up the phone and he calls that number**  **18 and says hi, I am standing in the backyard of Mr. 19 and Mrs. Smith's house. I see I have model**  **20 number XYZ, serial number XY43, and it shouldn't 21 be here. And then we get the information and we**  **22 respond. That is how I would see that taking**

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## 1 place. **2 MR. LATTANZI: This is Matt with 3 NORDYNE. 1-800-BAD-SEER.**  **4 (Laughter.) 5 MR. WHITE: This is Chuck White. So,**  **6 the question of is this in the preamble or in the 7 regulation, I think depends largely on your item**  **8 A there. Is this something that is going to be 9 required of industry members? And if it is**  **10 required, then I think it is going to have to be 11 in the regulation. So, maybe we can talk about**  **12 that. 13 MR. RAWALD: Yes, Chuck, I absolutely**  **14 agree. If we are going to place a requirement on 15 people, it has to be in the regulation.**  **16 So, the sense I got from the last 17 meeting when we discussed this was that folks**  **18 didn't want this step to be a requirement. And I 19 would have to spend an awful lot of time then**  **20 trying to enforce failure to do that and that 21 would be another burden on us that I don't**  **22 necessarily want to absorb enforcing its failure**

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## 1 to make complaints. **2 So, I think my preference would be not 3 to create such a requirement but I would like to**  **4 hear if anyone has a thought to the contrary. 5 MR. WHITE: This is Chuck White. I**  **6 support that. 7 MR. EISNER: And if it is not**  **8 required, would there still be an issue about 9 conflict of interest? Somebody raised the last**  **10 question that is up there. 11 MR. RAWALD: So, the conflict of**  **12 interest issue is, as I understood it, was 13 somebody who is dealing with someone, a**  **14 manufacturer who is dealing with -- this is 15 manufacturer specific, by the way, because of the**  **16 act as we had designed or the statute gives us. 17 A manufacturer who is dealing with a distributor**  **18 or a dealer they know is to be in violation, are 19 they going to be restrained from reporting**  **20 because they are going to feel that they are 21 going to get in trouble, too? And so is there**  **22 some sort of way of creating some sort of safe**

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## 1 harbor around that one, was the request of the **2 group before, some sort of consideration. 3 And I don't have a resolution to that** **4 because I think that that is going to be fact 5 specific. So, if the person acted upon**  **6 knowledge, if you knew and at that point you 7 stop dealing with them and tell us about them,**  **8 that is a different scenario than if you knew but 9 you kept dealing with them for a while and then**  **10 told us later. 11 So, I think those are two different**  **12 factual scenarios that might be treated 13 differently. And so, I can't give a one-size**  **14 fits-all answer to that. 15 MR. DORIA: This is Jordan with**  **16 Ingersoll Rand. I don't think we can really 17 effectively address this until we get a little**  **18 bit more clarity on both the prohibited acts and 19 more importantly who makes the determination on**  **20 violation and routine violations. 21 MR. RAWALD: Right. I'm with Jordan.**  **22 I guess we have to roll that up with that other**

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## 1 thing. **2 MR. EISNER: Any more comments? Does 3 everybody agree we need to hear more about how we**  **4 are going to define these other terms? 5 All right, let's go on. The next**  **6 issue is the tear off label mailed in by 7 manufacturers. Do we want to talk about this?**  **8 Is that resolved? 9 MR. RAWALD: Right. And Gary**  **10 volunteered earlier when it came up that he is 11 willing to let that go now that we are at where**  **12 we are with the records retention. 13 MR. EISNER: Okay. Records retention**  **14 is the next issue for specified times, specified 15 manner.**  **16 MR. RAWALD: Right. And what I 17 suggested yesterday was that I would want to**  **18 draft something and pass it around to the 19 distributors and the contractors, since it is**  **20 going to affect them as a new direction and have 21 them look at it.**  **22 So, what I am committing to do is, in**

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## 1 the interim, to put together something and have **2 Charlie, Chuck, and Steve take a look at it and 3 give their thoughts on it before we come back.**  **4 And also come back with a firm kind of Department 5 perspective on how long it would be that we would**  **6 want records to be retained. 7 So, understanding that our position**  **8 will be a number of years but I can't say how 9 many, what I am proposing to the Department will**  **10 be somewhere between three and five. So, that 11 seems to be the reasonable number to me. If**  **12 anybody has any other numbers that they want me 13 to present to the Department, I will listen to**  **14 that. That seems to be the area that I am 15 looking at.**  **16 MR. EISNER: Okay. 17 MR. SACHS: This is Harvey and I do**  **18 have an opinion on that. It will probably cause 19 me to be thrown out of the room but half the**  **20 expected life of an air conditioner would be more 21 than five years. So, more than five years would**  **22 be easily the repair versus replace. And I think**

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## 1 that something in the range of eight to ten years **2 is actually worth thinking about because that 3 increases the likelihood that the thing is going**  **4 to have broken and going to have been repaired by 5 somebody who was not the original installer.**  **6 It is not an issue analogous to paying 7 your taxes. So, it is perspective and I will**  **8 turn around so you can throw your slings and 9 arrows and stones at me.**  **10 MR. RAWALD: Well, I am not going to 11 say anything negative because that is a very**  **12 valid point. So, if we are trying to opine that 13 the first time that thing is actually going to be**  **14 determined to be in the wrong place is by a 15 servicing person and it is not going to happen**  **16 within the first three to five years of the 17 unit, then that makes a lot of sense. And so, I**  **18 want to think about that some more and keep in 19 that mind when I advise people on what I think**  **20 about this matter. 21 MR. WHITE: This is Chuck White. Most**  **22 units get service sooner than eight years.**

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## 1 Condensers need cleaning. There is routine **2 maintenance that is done. It should be done 3 annually. Some do it every two years. But there**  **4 is opportunity for service, probably not on every 5 unit ever installed but contractors sell service**  **6 agreements to make sure people's equipment is in 7 tip top shape.**  **8 So, it is not just when the thing dies 9 that it gets looked at.**  **10 MR. SACHS: This is Harvey. Your 11 point is very well taken. I am not only an**  **12 installer but I have a service contract on my own 13 unit. I have long had the feeling that I was in**  **14 a small minority in having that service contract 15 and the benefits of those reminders.**  **16 MR. WHITE: This is Chuck White. And 17 you are not in the minority. And many times**  **18 those service agreements are not the company that 19 installed it. There is lots of opportunity for**  **20 cross-marketing and people will try and move in 21 on other people's territory, if you will.**  **22 MR. SACHS: Again, point well taken.**

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## 1 The one development I would like to add. This is **2 Harvey that the other time of discovery is a real 3 estate transaction. That is, again, pushing**  **4 things out. Can I offer a hard number as my 5 insistence that record retention be required for**  **6 X years? No. 7 Am I comforted somewhat by the offer**  **8 the manufacturers made today, which may 9 facilitate doing some look back? Yes.**  **10 But I do want to say emphatically that 11 I don't look at this as being dictated by -- the**  **12 considerations that form the IRS opinion being 13 determinative for this.**  **14 MR. WHITE: This is Chuck White again. 15 And I understand what you are saying but you have**  **16 got to realize that the bulk of the record 17 keeping is for tax purposes and we can't afford**  **18 to do tax bookkeeping and other bookkeeping. 19 My view of the tax thing is that is**  **20 the convenient thing that we, most of us are 21 going to be doing anyway. And most likely, most**  **22 contractors have records older than that because**

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## 1 we don't -- you know, I said earlier we don't **2 take things off the wall until the file cabinet 3 is overflowing. Probably there is records older**  **4 than that. 5 But as a rule to write for what the**  **6 common practice of folks is, the tax look back 7 window is the 800 pound gorilla in the room.**  **8 That is what people have to comply with. And 9 SEER 14 equipment is probably could be the**  **10 majority of someone's business but in most 11 businesses, it is only a percentage.**  **12 So, to create a record keeping 13 procedure for 20, 40, 50 percent of your business**  **14 when you have a tax accounting rule for 100 15 percent of your business, seems a little over the**  **16 top. 17 MR. BALLO: This is Tim with**  **18 Earthjustice and I don't have a very strong 19 opinion of a particular year but it strikes me**  **20 that what we are sort of doing is creating a 21 statute of limitations by this record keeping**  **22 requirement, in that if we are past that record**

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## 1 keeping date, someone finds the unit out in the **2 field, there is not really going to be much 3 anyone can do about it.**  **4 So, I am wondering, Doug, what does 5 the Department generally look at in terms of**  **6 product that violates the standards but just was 7 produced like ten years' ago? Do you have sort**  **8 of a cutoff date that the Department generally 9 looks at as we are not going to bother going**  **10 after someone for something they made ten years' 11 ago?**  **12 MR. RAWALD: Right. Generally, we 13 stick within five years of looking at violations.**  **14 But the point that I made before is 15 that our record retention requirement for**  **16 manufacturers is two years' past the life of the 17 item because oftentimes it is tested for the**  **18 first time well at the beginning of the item's 19 time. And so if the item is in circulation for**  **20 ten years, the record retention requirement is 12 21 years.**  **22 And then after it has been out of**

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## 1 circulation for two years, then there is no more **2 ability to get to it. So, that is kind of the 3 practice.**  **4 So, I get that, though I think there 5 is at least some sort of reason for us to**  **6 consider that the manufacturer's capacity to keep 7 those records and testing of an information is**  **8 certainly a lot easier than the contractor's 9 ability to keep records of many more**  **10 installations over a longer course of period of 11 time. So, I want to weigh those burdens as we**  **12 look at this. 13 You have to understand that we have to**  **14 do sort of cost benefit analysis from a PRA point 15 of view on this. So, that is going to be part of**  **16 what is going to drive the math on this. 17 But I really take Harvey's point with**  **18 a lot of information. I think it is a very 19 important data point for me to consider what**  **20 these folks have talked about this. 21 MR. EISNER: Okay, is there anything**  **22 else we want to discuss on this?**

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## 1 MR. PORTER: This is Steve Porter, **2 Johnstone Supply. I support Chuck's position on 3 this and that we keep it within normal record**  **4 keeping process that exist today and so I don't 5 have to do a training effort throughout the whole**  **6 organization. 7 And quite frankly for us, and I am**  **8 sure for some, this is a space issue on 9 inventory. All this paper adds up, believe it or**  **10 not. They are not all -- so, we do clean ours 11 out and change our pictures on the wall.**  **12 (Laughter.) 13 MR. PORTER: But it is quite a bit of**  **14 records that we keep now. So, we are on it 15 because it is actually an inventory space issue**  **16 and a storage issue, not that that should drive 17 this but it is just I would rather keep it in**  **18 line with record keeping. I think it would be 19 more successful, you will have more success over**  **20 the issue and get better record keeping, if it is 21 in alignment with that.**  **22 And also, as far as what Chuck was**

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## 1 saying, I mean, every homeowner knowing when or **2 even caring eight years later remembering when 3 the unit was in, it is not likely. Movement out**  **4 of the house and transition of sale and all of 5 those things that go on as well. And plus there**  **6 is, and most of the time it may not be the 7 installer, but service contracts are prominent in**  **8 the industry. 9 So, the likelihood that that unit is**  **10 not going to be seen in eight years is small. 11 MR. MELCHI: Jon Melchi with HARDI.**  **12 Doug, one of the question I got from 13 one of our members was does the Department**  **14 envision this record keeping requirement to kind 15 of encompass all distributors in all 50 states?**  **16 The gentleman I am talking about is from the New 17 England area and his question was so do I have to**  **18 maintain my records in the same manner that a 19 distributor in the south or on a border state**  **20 would be. 21 MR. RAWALD: Right and so I think we**  **22 have talked about that a little bit before about**

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## 1 -- and it was more from the contractor point of **2 view than the distributor point of view that 3 contractors are more limited in their geographic**  **4 scope, whether there was a need to make a uniform 5 requirement across the industry versus only those**  **6 that will be touching appliances going into the 7 regions.**  **8 And I will say at this point I am open 9 to ideas. I am probably not going to send a**  **10 records production request to that New England 11 distribution house unless I have heard that**  **12 somebody got a 13 SEER unit from him in Virginia 13 and they delivered it to him.**  **14 So, unless he is operating in that 15 manner, I am probably not going to ask him for**  **16 records. And so if I never ask him for records, 17 he is going to have very little incentive to**  **18 retain them. So, that is kind of how I think 19 about this from a practical point of view. But I**  **20 would like to hear people's thoughts on it. 21 MR. DENNIS: Just from a utility**  **22 perspective, I mean I don't know how this is**

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## 1 going to play out because a minimum standard we **2 don't really incentivize. But we do keep records 3 of when we help people with air conditioners or**  **4 other products. 5 And I think that when we are involved**  **6 in these rulemakings and in similar rulemakings, 7 we kind of come up with these bad actors and**  **8 think of these bad actors and get kind of 9 paranoid about them and then put additional**  **10 burdens on normal people who aren't bad actors. 11 I don't think that is a good way to**  **12 kind of live your life. Like what about this 13 guy? I have got to keep all my paperwork so I**  **14 can prove I am not him. I think we don't need to 15 spend a lot of time, as much time putting new**  **16 burdens on people who are acting good just to 17 kind of deal with this rogue contractor. And I**  **18 think that is probably the position that we face. 19 We are keeping the paperwork anyway.**  **20 There is no reason to keep it for an extra couple 21 of years because there might be somebody out**  **22 there who four years ago did something they**

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## 1 weren't supposed to do and now I have got to keep **2 paperwork. It doesn't make a lot of sense. 3 MR. FERNSTROM: Excuse me. This is**  **4 Gary for the California IOUs. So, I certainly 5 agree with that point of view. However, some of**  **6 us investor owned utilities that are regulated by 7 state utility commissions are obliged to follow**  **8 certain rules. And if we were to give an 9 incentive for a product, I think we need to be**  **10 assured for some significant time that it 11 complied with our eligibility requirements.**  **12 And for that reason, I think the 13 longer record keeping is probably appropriate.**  **14 Once you do the record, it is just a matter of 15 having it sit there in a box.**  **16 MR. DORIA: This is Jordan with 17 Ingersoll Rand. I understand that point but, as**  **18 I understand it, obviously there is a higher 19 level of variability in utility programs but I am**  **20 not aware of really any program that does not 21 require submission of what the efficiency of the**  **22 product was, typically in the form of an AHRI**

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## 1 certificate though not limited to that. **2 And in the case of the California 3 IOUs, almost all the split system rebates today**  **4 are predicated on a quality install. So, you 5 also need that additional documentation.**  **6 So, I think there is, in the case of 7 utilities, their record keeping is kind of**  **8 already there, independent of what would be 9 required here. At least that is my perspective.**  **10 MR. DENNIS: And to my point, 11 certainly when there is financials involved, we**  **12 would probably be required to keep it or we would 13 keep it longer. My point is we don't need to put**  **14 more on because of this, because there might be a 15 bad actor. There is instances where we do. I**  **16 don't think this is one of them. 17 MR. FERNSTROM: So this is Gary.**  **18 Jordan, you are right about the California 19 Utility Rebate Programs. I agree. However, we**  **20 also operate this codes and standards program for 21 which we get energy saving credit. And we need**  **22 to assure ourselves that the credit, energy**

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## 1 saving credit we claim for codes and standards is **2 legitimate and there might be a requirement to 3 assure, at some point in the future that**  **4 compliance with the codes that we advocated for 5 is actually being achieved.**  **6 MS. SHEPHERD: This is Amy Shepherd 7 from AHRI. I understand that but this record**  **8 keeping requirement has to be based off of this 9 enforcement plan. So, I think we have to look at**  **10 what is effective, what is the requirement for 11 this enforcement plan to be effective, even**  **12 though it may be used for other purposes. We 13 can't justify the length of time by what**  **14 California needs for other incentive programs. 15 And going back to the question of**  **16 whether it is sort of national or regional, I 17 think one thing we would consider would be to**  **18 have this requirement apply to distributors and 19 contractors located within the region or maybe**  **20 that make sales to the region. And I would just 21 tee that up for discussion purposes as a way to**  **22 sort of not make it national but to try and maybe**

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## 1 capture those individuals who are making the **2 sales. That is food for thought. 3 MR. SACHS: This is Harvey and I am**  **4 intrigued by Amy's suggestion and would certainly 5 love to see further discussion of the pluses and**  **6 minuses in the general sense of all of us trying 7 to minimize the regulatory burdens where they are**  **8 not useful. 9 But at the same time, I editorially**  **10 want to differ with my friend Keith in that as 11 far as I am concerned, all manufacturers and all**  **12 businesses have, for many decades, paid the 13 burden, paid some burden of showing that they are**  **14 not bad actors, whether it is OSHA or wage and 15 hour regulations because there are a few people**  **16 who have been bad boys. We have chosen as a 17 society to impose that burden.**  **18 So, we are trying to minimize it but 19 I don't think that you can make the philosophical**  **20 argument that we can't impose some requirements 21 on everyone to avoid much worse damage for those**  **22 who would willfully violate.**

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## 1 End of rant. **2 MR. EISNER: Anything further? Have 3 we covered some of the issues that were up there**  **4 the last time? I think one of them is about 5 internet operators.**  **6 MR. RAWALD: So, I would recommend 7 this might be a good time for lunch. I know I am**  **8 beginning to lose a little momentum myself. And 9 if possible, if we could then tee up for the**  **10 discussion after lunch the prohibited acts, that 11 seems to be the most important thing to make sure**  **12 we get before people start flying out of here, if 13 that is okay with the rest of the room.**  **14 MR. EISNER: Why don't we come back at 15 a quarter after one.**  **16 (Whereupon, the above-entitled matter 17 went off the record at 12:13 p.m. and resumed at**  **18 1:22 p.m.) 19 MR. EISNER: I think the agenda for**  **20 after lunch was, first of all, to talk about the 21 October meeting and whether we are going to need**  **22 it. And then to start off with prohibited acts**

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## 1 so we could get that done before we took two **2 weeks off. 3 So first of all, October. Any**  **4 thoughts on that? This is really to make sure 5 that people who want to come, have to come to the**  **6 meeting can get airline ticket reservations. 7 MS. MEYERS: So, this is Karen with**  **8 Rheem. I guess to start the discussion, I think 9 October 1 and 2 are probably going to be**  **10 required. I don't see us wrapping this up next 11 time we meet. I'm not sure about the next one.**  **12 MR. EISNER: Does anybody disagree 13 with that?**  **14 (Laughter.) 15 MR. EISNER: All right, it sounds like**  **16 we have consensus. So, plan on the October 17 meeting. We have rooms for that, so we are all**  **18 set. Okay. 19 MR. LATTANZI: Yes, this is Matt. It**  **20 looks like it is at the L'Enfant. Is that 21 correct?**  **22 MR. RAWALD: That is correct.**

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## 1 MR. LATTANZI: My sheet here shows it **2 is still in here, but it has moved. 3 MR. RAWALD: The October 1 and 2**  **4 meeting was tentatively scheduled to be at the 5 offices where we had the second meeting at the**  **6 L'Enfant office space. Now that we are closer in 7 time we could, of course, see if any rooms are**  **8 changed around. So, that tends to happen as 9 things come closer.**  **10 So, I will have my people look at 11 that. So, the meeting we have at the end of**  **12 September is going to be here in Forrestal, just 13 in the basement or the ground floor. There will**  **14 still be no windows. 15 MR. EISNER: Okay. The next thing is**  **16 to start with prohibited acts. And in the event 17 that we get through that quickly, you should be**  **18 thinking about whether there is anything else on 19 the list that we want to complete before we go**  **20 back to the schedule. We were -- the next step 21 and some of these didn't look like they were**  **22 going to take very long but the next step was use**

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## 1 of warranty information. Is there anything else **2 on the list we should discuss first or any other 3 issues, start thinking about it.**  **4 Prohibited acts, I think last night's 5 handout gives you the current version, the**  **6 language we worked on yesterday. I don't know if 7 that is where you wanted to start. You had**  **8 mentioned the subject. We had the four or five 9 bullets we had created yesterday.**  **10 MR. RAWALD: Sure. And Amy approached 11 me during the break and I just want to make clear**  **12 how DOE views the term prohibited act. 13 So the prohibited acts are the things**  **14 that DOE has the authority to charge a civil 15 penalty for someone doing. So, we have**  **16 enumerated prohibited acts in our regulations, 17 which are mostly directly derived from the**  **18 statute, which lists prohibited acts as well and 19 then we have a couple that are interpretations of**  **20 the statutory authority for things that we also 21 take action on.**  **22 So, the consequences of a prohibited**

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## 1 act is this would be something that I could turn **2 to the party named and say you committed an 3 unlawful act and you would face a penalty of up**  **4 to $200 per violation for doing. So, I want to 5 make sure that is clear to the group. That is**  **6 what we were discussing when we discussed 7 prohibited acts.**  **8 MR. EISNER: One which is upon the 9 board is what we suggested I think in the middle**  **10 of yesterday afternoon. There seemed to be 11 general consensus behind it.**  **12 MS. SHEPHERD: This is Amy Shepherd 13 from AHRI. And I just sort of want to clarify**  **14 sort of where this all started from which is in 15 the prohibited act that is in the statute right**  **16 now, it talks about what a manufacturer can do 17 and what they are prohibited from doing. And**  **18 because they are prohibited from knowingly 19 selling a product to a distributor, contractor or**  **20 dealer, who would acknowledge that that entity 21 routinely violates the regional standard.**  **22 So, for the prohibited act that is**

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## 1 listed for manufacturers, manufacturers have to **2 know what a violation is, so that they know when 3 they have that knowledge.**  **4 And so that is that piece of it. And 5 so I think manufacturers are going to need**  **6 clarity on what a violation means, so that they 7 know when they can sell and when they can't. And**  **8 those violations could be similar to, they could 9 be the same as, they could be separate from any**  **10 additional prohibited acts. It really doesn't 11 make sense that they would be separate from but I**  **12 think they are two very related things but they 13 are kind of in different buckets, I think.**  **14 MR. RAWALD: This is Doug. I agree 15 with that entirely. That was the point I was**  **16 making yesterday when I was pushing against 17 people trying to conflate the two terms but then**  **18 acquiesced in the fact that it seemed like people 19 really wanted a defined prohibited act. So, I**  **20 said let's go ahead and do that, if that seems to 21 be the consensus of the room.**  **22 So, the caveat that I have, Neil said**

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## 1 there is general consensus, is I don't have an **2 opinion on these at the moment. So, DOE has a 3 statute and we can interpret it based upon our**  **4 authority. 5 So, what I want to do is once we fine**  **6 tune what we want the prohibited acts to be, I 7 want to bring it back to our lawyers and have**  **8 them make sure that those words are words they 9 feel are a fair interpretation of the statutory**  **10 authority we have. 11 So, I mean I have said to the group**  **12 that we have broad authority but I want to make 13 sure that we are not going beyond that authority.**  **14 So, that is why I am reserving any comment from 15 the Department. I am trying to do my best to let**  **16 you folks craft what you think are the ones that 17 would be acceptable to you, so that I could bring**  **18 them back to the Department for them to look at 19 further.**  **20 MR. DORIA: Doug, this is Jordan with 21 Ingersoll Rand. So, to that end, it would be**  **22 good, at least in my view, it would be good for**

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## 1 us to try and get to our own consensus, so that **2 you could do that review between now and our next 3 meeting.**  **4 MR. RAWALD: I absolutely 100 percent 5 agree.**  **6 MR. DORIA: Okay. 7 MS. NOLL: This is Elizabeth. Amy, I**  **8 apologize but can you explain one more time? 9 Because I think I might be getting things**  **10 confused as well. I'm just not clear on it. 11 MS. SHEPHERD: Sure. Sure. Okay, so**  **12 EPCA sets out prohibited acts. That is the 13 things that DOE can take action on. DOE also is**  **14 of the view that, through their interpretation 15 authority and the sort of general authority they**  **16 have to do things that are necessary to enforce 17 these prohibited acts, I am paraphrasing, but**  **18 that they have in the past, in other cases, 19 identified in regulations other enumerated**  **20 prohibited acts. So, they are enumerated. It is 21 like one, two, three, four, five. We will ignore**  **22 that there is two sixes, but six and seven in the**

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## 1 statute. **2 So, that is the prohibited act. That 3 is what they can bring an action against and**  **4 charge civil penalties for. 5 So, in the section that deals with**  **6 regional standards, there is a prohibited act for 7 manufacturers and that talks about it is a**  **8 prohibited act for manufacturers, I am going to 9 paraphrase again, to basically sell a product to**  **10 a contractor, dealer, or distributor, if they 11 know that that entity is routinely violating the**  **12 law. But there aren't separate prohibited acts 13 listed out in the statute for contractors,**  **14 retailers, and dealers and distributors. 15 So, in order for manufacturers to know**  **16 what their prohibited act is, they have to know 17 what we think or DOE thinks a violation of that**  **18 act is. 19 Now, the separate question is, do we**  **20 want to add additional prohibited acts that DOE 21 could enforce with civil penalties, in addition**  **22 to this obligation of the manufacturer. But our**

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## 1 point and the reason this was sort of brought up **2 is, at least for us, a first step is a 3 manufacturer has to know what a violation of the**  **4 Act is because that is what they are prohibited 5 from doing is selling to people who have done**  **6 that thing. So, that is kind of where at least 7 that piece of it starts.**  **8 And so I think then we get into the 9 question of okay so, we are going to define what**  **10 a violation is, so manufacturers know. Is that 11 violation also going to be a prohibited act? Are**  **12 we going to have separate prohibited acts or are 13 we just going to have violations? What do we**  **14 need for this to be an effective enforcement 15 plan?**  **16 MR. PORTER: And this is Steve Porter 17 for Johnstone Supply.**  **18 So, I see the prohibited act you have 19 right now with the manufacturers. What I would**  **20 view as a violation is your are going to have, 21 somebody is going to have to show up and confirm**  **22 a violation. That is going to have to be the**

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## 1 Department of Energy. So, they are going to have **2 to request records, do fact checking, confirm 3 that the contractor or homeowner or installer,**  **4 whoever did the job is in violation. That has 5 got to be communicated up to a manufacturer.**  **6 This is what we found. It was your 7 equipment that was at the job site. We found out**  **8 the contractor bought from X distributor. That 9 distributor is your distributor. We are going to**  **10 fine you, if you don't stop selling or restrict 11 the equipment to that, get your manufacturer or**  **12 your distributor to restrict, or maybe it is 13 yourself, restrict the sale of that type of**  **14 equipment to that contractor. 15 So, the manufacturer has a huge hammer**  **16 over the distributor because, typically, that 17 could be as much as 50 or 60 percent of their**  **18 business and they are under contractual 19 agreements with that particular entity, usually**  **20 the manufacturer. The manufacturer and 21 distributor will have a contract giving them**  **22 territory, giving them certain rights to sell**

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## 1 that equipment. **2 So to me, it is once you get them all 3 in line and communicating but we would have to be**  **4 notified. I don't think a distributor or a 5 contractor or a manufacturer is going to know the**  **6 violation until it is confirmed by you, DOE. 7 MR. EISNER: Do you agree?**  **8 MR. RAWALD: I think there is a lot 9 more nuance. I think Steve is doing a good job**  **10 trying to give a layman's -- because there is a 11 lot more nuance to what is going to happen.**  **12 But essentially, the running discourse 13 between Jordan and I is the question of whether a**  **14 DOE determination is absolutely necessary before 15 somebody could be found to having knowing**  **16 interaction with somebody who they have knowledge 17 is a routine violator. And I think that there is**  **18 some middle ground there where if DOE puts you on 19 notice, certainly you have knowledge that that**  **20 person shouldn't be someone you are dealing with. 21 But if you have knowledge yourself because they**  **22 told you, hey I am going to go ahead and install**

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## 1 this in Tupelo, Mississippi and you sold it to **2 them anyway, then I would argue that that is also 3 knowledge sufficient to be found hey, you were on**  **4 notice that this guy was doing the wrong thing. 5 So, there is some gray area there that**  **6 I don't think necessarily requires the Department 7 to have a determination for then you to be found**  **8 to have been playing with the wrong actor from a 9 manufacturer point of view.**  **10 So, just to get to where we are. So, 11 I was trying to approach it yesterday from the**  **12 point of view that I think Amy and I share, which 13 is I wanted to define the violations so the**  **14 manufacturers can understand them but we kind of 15 shifted focus from that and we put that aside to**  **16 look at what acts would people want in an ideal 17 world to add as prohibited acts, for which DOE**  **18 could take independent action for, which may then 19 inform what we decide to make -- define the**  **20 violations as. I mean, we could as easily say a 21 violation is a commission of one of the**  **22 prohibited acts that have been enumerated. And**

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## 1 that is as simple as it could get at the most **2 basic level. 3 So, that is kind of, I think, how we**  **4 got to where we are. And so I think what we 5 really need to decide is does everyone understand**  **6 that when we were putting these on the board that 7 we were talking about things that for which the**  **8 person is named, they would face a penalty for 9 doing that thing? And is everyone okay with how**  **10 it is drafted or would you want to redraft with 11 an understanding or dismiss it all entirely?**  **12 MR. MELCHI: This is Jon Melchi from 13 HARDI. I thought I said yesterday and maybe I**  **14 will clarify today that this is something that we 15 would need to get that we specifically need to**  **16 take back to our members. And one night is not 17 sufficient to do that.**  **18 My question for you, Doug, is -- I 19 certainly understand the Department's ability to**  **20 add prohibited acts. My question is, is there 21 precedent for the Department adding regulated**  **22 entities to those prohibited acts?**

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## 1 So, I get that there could be **2 additional prohibited acts added to 3 manufacturers, falling, I guess, under this EPCA**  **4 umbrella. But is there a history for adding, 5 say, contractors as violators of a prohibited**  **6 act? 7 MR. RAWALD: Right. So, this is Doug.**  **8 I gave you guys, during my short spiel back on 9 the second day of this, I wish we had the**  **10 PowerPoint, hopefully you guys can go back and 11 look at that, which listed the ten prohibited**  **12 acts we have in our regulations. 13 So, none of them list contractors as**  **14 a current body. There are two prohibited acts in 15 the statute that name distributors and retailers.**  **16 So, it is not unprecedented that they would be 17 considered part of a prohibited act.**  **18 Only one of those is a DOE prohibited 19 act, so only one of those ended up in our**  **20 regulations. The other one is an FTC one. So, 21 those are the two occasions where those folks are**  **22 named. And there is no place where the term**

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## 1 dealer appears at all in any prohibited act **2 either. So that would be new terms. The term 3 reseller doesn't appear in regulations anywhere,**  **4 so that would be new as well. 5 MR. PORTER: Steve Porter, Johnstone**  **6 Supply. So, I will try and give the 7 understanding of the difficulty as easy as it**  **8 sounds as someone telling someone at the counter 9 that I am going to do this. And whether -- not**  **10 distributor is going to then drive out to a 11 homeowner to check to see if what they were told**  **12 and get on a homeowner's property to investigate 13 an issue like that. That would be just something**  **14 that would be way outside of our scope or an 15 invasion of dealing with our contractor customer.**  **16 So, I am going to put somebody in a van and have 17 them follow that contractor to a job site to**  **18 watch an installation, to do that process. 19 Now, I think the whistleblower number**  **20 takes care of that issue, as long as it is 21 anonymous and we have that ability. And I think**  **22 it is easier for a distributor to turn in a**

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## 1 violation in that fashion than it is to get what **2 may or may not have happened but we are not set 3 up to be an investigative group.**  **4 MR. RAWALD: And this is Doug. So, I 5 don't want to imply that that would be a**  **6 requirement at all. What I am saying is, and 7 this is not about -- and for the manufacturer**  **8 prohibited act, which is the one from the 9 statute, which is the first one there, because it**  **10 requires knowledge that they are a routine 11 violator, it is not that you have the guy come in**  **12 and say yes, I am going to go ahead and install 13 this one time in Tupelo but the guy routinely**  **14 comes into you and buys and he is always saying 15 yes, I am going to Tupelo to install this today.**  **16 So, you know that -- you have knowledge that this 17 guy has told you on multiple occasions that is**  **18 where he is going with this thing. You don't 19 have to investigate it but you are pretty much**  **20 put on notice that he is going to do this in the 21 place he shouldn't be doing it in.**  **22 And if you keep on selling to him**

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## 1 knowing that that is where he is saying he is **2 going every time he has come into your office, 3 then we are going to say okay you were put on**  **4 sufficient notice to have knowledge here under 5 the statute that he was routinely violating the**  **6 statute. That is how I would approach it from a 7 pure fact applied to the law from that example, I**  **8 think. 9 MR. PORTER: And just, since you are**  **10 not at the counter and understand that process, 11 you know, that contractor could be going to**  **12 different locations, stores, talking to numerous 13 people. Whether they line that information up**  **14 and actually go, oh, yes, and they all get in 15 the break room and yes, he said that to me, they**  **16 are going to sit around on their break and talk 17 about regional standards is probably not very**  **18 likely. 19 So, I mean that is why I would prefer**  **20 that I get notice that this person is a bad 21 actor, that obviously we are going to cease and**  **22 desist on selling that type of equipment. If my**

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## 1 manufacturer or manufacturers come to me with **2 that information that they obtained from you and 3 then it is confirmed and it is not a maybe or a**  **4 guess that I am cutting off customers on either 5 rumor, or innuendo, or my guy doesn't like that**  **6 guy, and I heard he was doing this, and I think 7 he is a violator, I need something a little more**  **8 hard before we go down that road. 9 MR. RAWALD: This is Doug and I get**  **10 that. I mean a lack of knowledge is the perfect 11 defense to knowledge. So, you would then be**  **12 explaining why you have no knowledge of that 13 thing.**  **14 And I think the easiest case for us to 15 bring is a case would be one where we have a**  **16 finding that a guy is a routine violator and then 17 we have sales to that person after we told you**  **18 that person is a routine violator. That is the 19 easy case.**  **20 What I am saying is I can't sell to 21 the Department that is the only case. They have**  **22 got to leave room for the massive email chain**

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## 1 between the manufacturer and the distributor and **2 the dealer. And this scenario is very unlikely 3 to happen. I am giving you the worst case**  **4 scenario here. But of the guy saying yes, we had 5 this 100 house home project in Tupelo,**  **6 Mississippi, as soon as I get all these 13 SEER 7 units in, I am going to go ahead and bring them**  **8 down there and everybody is saying that sounds 9 great. Good job, you are going to save us all a**  **10 lot of money, which nobody wants. Everybody 11 wants to make money. I understand. But because**  **12 there are people who think in these kind of 13 terms, I have to reserve the ability for us to**  **14 not only bring cases where I have found someone 15 to be a routine violator, but where there is the**  **16 possibility that everybody knew the guy was 17 routinely violating and didn't tell us about it**  **18 and we found out later. 19 MR. PORTER: Steve Porter, Johnstone.**  **20 I mean that is why I think the whistleblower 21 works for us. It works fine, I think, as long as**  **22 they are aware of it. And I think direct**

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## 1 knowledge, like you just described in the email **2 trail, I don't think anybody is going to have any 3 trouble with that.**  **4 MR. RAWALD: Okay. 5 MR. PORTER: Right? I mean they have**  **6 stated it. I have documentation. I am not 7 listening to someone in the organization three or**  **8 four levels down or a warehouse guy coming and 9 telling me, or conversation at the counter or**  **10 whatever that we will actually have physical 11 proof, absolutely.**  **12 MR. EISNER: So, this is going to be 13 in this language that is up here. Are you**  **14 comfortable with this explanation or are you 15 still troubled by having that in the list of**  **16 prohibited acts? 17 MR. PORTER: I guess I am -- as I**  **18 understand it, once we find a violator and the 19 violator is known and DOE has communicated that**  **20 to the manufacturer, then it is the manufacturer 21 to the distributor, to the distributor to the**  **22 contractor. So, whether you call that a**

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## 1 violation or prohibitive act, it seems more like **2 a violation to me than it does than to put it in 3 a prohibitive act.**  **4 But you know I think the mechanism is 5 in place, I guess, how I view it already because**  **6 DOE is going to be talking directly with their 7 manufacturers about that issue and fine. And if**  **8 we are routinely violating the manufacturer is 9 going to be canceling that contract that is with**  **10 the distributor. 11 MR. RAWALD: So, and I want to address**  **12 Jon Melchi's point and then I will address yours 13 as well.**  **14 So, I don't expect anyone to say that 15 this is where their group is willing to go. I**  **16 understand fully if you want to take these back 17 to that group as well. I think we want to iron**  **18 out what we hear, feel comfortable presenting to 19 our group in unison, so we can all go back to our**  **20 respective people and get their views so when we 21 come back in three weeks we can say I have talked**  **22 to my folks and they hate it. I have talked to**

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## 1 my folks, they are okay with it. So, we can kind **2 of gauge that we are all listening to a piece of 3 information to them.**  **4 So, the question of whether it is a 5 violation versus a prohibited act is important**  **6 only because DOE assesses civil penalties for 7 commission of prohibited acts. That is what a**  **8 prohibited act means to us. So, if we define a 9 prohibited act as something that we are saying**  **10 DOE has the authority to charge a civil penalty, 11 a monetary amount of penalty for somebody**  **12 committing. 13 So, the violation is important but**  **14 separate because the violation is the thing that 15 if the person is doing it routinely, the**  **16 manufacturer who deals with that person, once it 17 is known, will have to pay a penalty for. And**  **18 that is a baseline. So, that is going to exist 19 no matter what. The manufacturer will -- if that**  **20 happens, that prohibited act exists. 21 So the question on the board really is**  **22 are folks comfortable with recommending that the**

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## 1 Department of Energy add prohibited acts to **2 address different people in the chain, so that 3 they could face financial liability for actions?**  **4 Whereas, right now the only person that actually 5 faces a financial consequence from the**  **6 Department, because I understand there is market 7 consequences that are financial in nature, are**  **8 the manufacturers from the statute. 9 I am trying to make this as -- it is**  **10 so complicated and I really want to make sure I 11 am making it very clear because I don't want**  **12 anyone to be confused on this. I think it is 13 really important that everyone has clarity on**  **14 what we are doing. 15 MR. GIBBONS: This is John from**  **16 Carrier. Can we take the easy one first and that 17 would be the resellers and the retailers? We all**  **18 like that one. 19 MR. RAWALD: That is the easy one from**  **20 you guys. 21 MR. GIBBONS: Yes.**  **22 MR. RAWALD: So, it is probably the**

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## 1 hardest one for me because they are the people **2 who are not named by name in anything before 3 here. So, I will put that out there. But**  **4 everyone does want these guys to be responsible. 5 Now what is interesting to me, and**  **6 this goes back to John Hurst -- is he still here 7 or not? So, what he mentioned was the definition**  **8 of retailer that we have, which everyone has 9 before them in the statute describes someone who**  **10 takes delivery of a product. And so it may not 11 actually imply in the context of the air**  **12 conditioning retailer market. And so I want to 13 talk to him more about that to make sure that we**  **14 are careful. Otherwise, if it doesn't apply to 15 them, then in effect, they are distributors.**  **16 So, that is one thing that I want to 17 get his opinion on because he was going to work**  **18 on a definition he thought or some tailoring of 19 this to meet the regional standards context. And**  **20 he is not here, so he can't now.**
**21 22 So, there is that caveat but I am** 

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## 1 going to have people really looking at this hard **2 over the next two weeks because I think this is 3 really important.**  **4 But it sounds like around the room, 5 everyone, because there are no retailers here and**  **6 there is no resellers here, they should face some 7 monetary penalty if they are selling things.**  **8 MR. PORTER: I will disagree. 9 MR. RAWALD: Okay, Steve.**  **10 MR. PORTER: This is Steve Porter with 11 Johnstone Supply. I will disagree a little bit**  **12 with that and put them in as what is a violation. 13 And I will do it in this context that I mean what**  **14 I want on that kind of violation is there doesn't 15 seem to be a lot of motivation right now to get**  **16 that equipment offline and out of those hands. 17 And I know that sometimes I get the**  **18 excuse of I am just playing whack-a-mole with 19 contractors but there has been no motivation to**  **20 seek out those contractors that put that online 21 and sell to an end user directly out of their**  **22 territory or in other regions or to unqualified**

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## 1 people or people that don't have a 608 or all of **2 those things that seems to go on unchecked. And 3 so, I would rather see it as a violation because**  **4 I want some motivation up the stream. 5 MR. ROCKY: So, this is Bryan. I**  **6 think you just said your agreement with this as a 7 prohibited act is the motivation is if it is a**  **8 prohibited act, the violation can be defined and 9 that leads to civil penalties to these people**  **10 that are doing the potentially bad behaviors. 11 So, I think you agree that that is**  **12 necessary, not that it is not necessary. 13 MR. PORTER: I understand if it is a**  **14 violation, then it is going to be on the 15 manufacturer, who is under the prohibited act, if**  **16 we call this out as a violation, unless I 17 misunderstood Doug.**  **18 MR. ROCKY: No, adding prohibited 19 acts, as shown up there, leads to the opportunity**  **20 for the Department to have civil penalties in any 21 of those categories for violations, which we**  **22 still have to define violations for a couple of**

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## 1 those categories. **2 MR. PORTER: I'm sorry, Bryan, maybe 3 I wasn't clear. I see the retailers and**  **4 resellers as a violation, not as a prohibited**
**5 act. 6 MR. RAWALD: Yes, what I hear Steve**  **7 saying, this is Doug, is that he doesn't see the 8 need to give the Department authority to charge**  **9 civil penalties to the retailer or reseller. He 10 wants to put the emphasis on the manufacturer to**  **11 stop dealing with them, based upon the statutory 12 prohibited act we already have, by finding to be**  **13 a violation on their part and to deal with the 14 retailer who is routinely violating that, that**  **15 would then be a prohibited act committed by the 16 manufacturer. Is that right Steve?**  **17 MR. PORTER: Yes. 18 MR. RAWALD: Okay.**  **19 MS. MEYERS: So, this is Karen with 20 Rheem. In the instance where the manufacturer is**  **21 not dealing with the retailer or the resaler and 22 it is another entity, maybe a distributor, then I** 

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## 1 have a problem with it going back to the **2 manufacturer. Because I probably am not selling 3 to the retailer or the resaler.**  **4 MR. PORTER: This is Steve Porter, 5 Johnstone Supply. But you would be selling to**  **6 the distributor. So, you would have, once you 7 find that violation or you seek it down, why is**  **8 my equipment online, you would have motivation to 9 police.**  **10 MS. MEYERS: There is a lot of my 11 equipment online that I have no idea how it is**  **12 getting there. 13 MR. PORTER: That is my hope, that you**  **14 will find out why it is there. 15 MR. SACHS: This is Harvey. And we**  **16 have tried real hard to be supportive of a system 17 that is purely reactive but that is built on the**  **18 assumption that there are the incentives for 19 information to flow from wherever it is found for**  **20 appropriate action. 21 There are two pieces that weren't**  **22 mentioned. One of them is what I was picking up**

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## 1 between the lines and Steve may have not meant at **2 all that it is not so much the question of a guy 3 walking in and saying I want 100 of these units**  **4 for Tupelo, unless it is a sting. And I am 5 hearing react. I am trying to interpret reactive**  **6 as meaning the Department doesn't routinely do 7 stings.**  **8 The other piece of that is that I 9 really do want to see prohibited acts or**  **10 violations recourse for any party who can cause 11 or facilitate knowingly the installation of a**  **12 product that is out of compliance with the 13 regional standards.**  **14 MR. RAWALD: Right. So Harvey, if I 15 hear you correctly, what you are saying is you**  **16 want anyone in the chain that could be the source 17 of it being installed, a noncompliant unit, to**  **18 face the possibility of having to pay civil 19 penalties.**  **20 MR. SACHS: If they are the source of 21 the problem, they ought to be held accountable.**  **22 MR. RAWALD: Okay. No, I get that.**

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## 1 I do want to be clear, the Department **2 has not committed to a reactive only process. 3 And I know it has been -- what I am telling you**  **4 that based upon the resources and the 5 practicality, I would say most things are going**  **6 to be reactive but we are at least proactive in 7 that we will be testing things. We will be**  **8 looking at trends on occasion but we have to be 9 honest with ourselves that for the most part, the**  **10 best tool that we are going to have here are 11 going to be complaints, it seems like, just**  **12 because of what we are dealing with. 13 And so reactive is going to be the**  **14 more likely course of action but I don't want to 15 say it is going to be the only action. I don't**  **16 want to say the Department won't be taking things 17 proactively. I mean I would love to run some**  **18 stings. That sounds both fun and also 19 interesting. Right?**  **20 (Laughter.) 21 MR. RAWALD: I mean, who doesn't like**  **22 the movie? It is just a question of resources**

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## 1 and time and energy and what I know about how the **2 Department works right now. 3 MR. DORIA: This is Jordan with**  **4 Ingersoll Rand. I guess I just wanted to maybe 5 circle back. I think where we might be getting**  **6 hung up to Steve's point is the way we eventually 7 sort of got to these prohibited acts that we have**  **8 is because we initially got clarity that we 9 weren't actually talking about actors but acts.**  **10 And then the definitions flowed from that. 11 So, I guess my question would be for**  **12 retailers, resellers, is that act the act of 13 doing that actually different than distribution,**  **14 as defined? 15 So, the question becomes do we**  **16 actually need a prohibited act for them, or does 17 based no how we defined distribution in a**  **18 distributor, is it actually different? And I 19 don't know but I just want to us to make sure**  **20 that we are staying focused on the act itself, 21 not some sort of actor.**  **22 MR. RAWALD: Well, and Jordan, what I**

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## 1 hear Steve saying is he doesn't feel there is a **2 need to have a fine assessed for those actors in 3 the chain, contrary to what Harvey is saying,**  **4 which he is saying he would like to have the 5 ability to assess a fine to every actor in the**  **6 chain who is responsible for the action. 7 MR. DORIA: This is Jordan again. And**  **8 I would agree with that as well. So, I think I 9 am aligned with Harvey.**  **10 I guess my question is when we go back 11 to these prohibited acts tailored to specific,**  **12 again, I would say that these are actors, I think 13 you could get at all the acts for which you would**  **14 want to levy a civil penalty, potentially without 15 having all four of those definitions up there for**  **16 the actors. 17 MR. BALLO: This is Tim. I guess the**  **18 concern is that distributors are defined in the 19 statute and it is not clear that all retailers or**  **20 all resellers would be distributors and that 21 retailers is also defined in the statute and**  **22 would all the people that we are trying to get at**

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## 1 here qualify as retailers if they don't actually **2 take delivery of the product. 3 I guess to Steve's point, that this**  **4 group of actors should be sort of left to have 5 the manufacturers, or if we have a prohibited act**  **6 for distributors, to have the distributors be the 7 ones that bear the responsibility for providing**  **8 it to them. I think we need to keep in mind that 9 as it is currently worded, manufacturers are**  **10 distributors, assuming these are the prohibited 11 acts that we would have for them, would only be**  **12 responsible for knowing violations. 13 So, if a retailer/reseller gets a**  **14 product through some other dishonest 15 representation to that party further up the**  **16 chain, this would essentially allow that to 17 occur, if there is no separate responsibility for**  **18 the retailer/reseller. 19 MR. RAWALD: And further to add to**  **20 Tim's point, so the assessment of civil penalty 21 would rely upon routine behaviors. So, there**  **22 would be nothing at all for a guy that was**

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## 1 engaged in behavior that was less than routine. **2 And so the question is, does that give someone a 3 threshold of feeling I can break the law a couple**  **4 of times because they are not going to be a 5 routine violator. Or do they need that**  **6 individual concern from a contractor level, a DOE 7 level, or from a distributor level that hey, if I**  **8 do it one time and get caught, I am still 9 possibly facing a $200 fine, which may not be**  **10 much, but could be the difference between the 11 margins for a month for a particular operation,**  **12 depending on how close they have got to run to 13 the wire.**  **14 MR. DENNIS: I think it is important 15 what Tim said about the knowledge of what you are**  **16 doing and I think that is key. If you know you 17 are breaking the law, you should be in trouble.**  **18 My question is what is the actual -- 19 is there a line, like a limit to what we can**  **20 decide is lawful? Like how is our ability to 21 make the law right here limited in any way?**  **22 Like could we say, for instance,**

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## 1 contractors who don't have any knowledge are **2 violating the law? Are we making law at that 3 point and is that within the authority? I mean**  **4 are there any lines or we can just kind of make 5 up the law right now?**  **6 MR. RAWALD: Okay, so we are not 7 making up any law. Congress has given us a law**  **8 but within the ambit of the playing field they 9 have given us, we can interpret what they have to**  **10 apply to our situation here. 11 So, we have the authority to take what**  **12 Congress has given us and interpret it in trying 13 to create an effective enforcement plan to**  **14 require these particular additional prohibited 15 acts.**  **16 So, what I would suggest to you is 17 that not only is there going to basically be a**  **18 baseline kind of issue that is going to be 19 necessary but if you want to put forward a**  **20 prohibited act that does not have knowledge as an 21 element or has some sort of other caveat, we can**  **22 certainly consider it.**

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## 1 What I really want to do is have the **2 room come to a consensus kind of what they think 3 are the things that I should then have the**  **4 lawyers really look at. And say, okay, we think 5 this is a fair interpretation of DOE's statutory**  **6 authority so that we can come back and say yes, 7 DOE would be okay with us adopting it instead of**  **8 no, DOE doesn't think this is a starter. And for 9 this reason, let's go ahead and see what else we**  **10 have to do to change this. 11 And meanwhile, folks can bring it back**  **12 to their particular constituencies and say how 13 would you feel about this or would you be against**  **14 this. And so, they could also come back with an 15 informed opinion to our next meeting about**  **16 whether they would be okay with it or not. 17 MR. DENNIS: Well, I mean deference to**  **18 agencies is well established administrative law 19 but I just am questioning whether we are not the**  **20 agency. It doesn't seem like we are really 21 giving deference to the law. We are kind of**  **22 maybe even going a little bit outside that by**

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## 1 having so much room to determine what is lawful **2 and lawful. 3 But you know, I think we are on the**  **4 right path anyway. I think that knowingly, just 5 I don't see the clear line with limitations of**  **6 what we can and can't do or what we should be 7 doing, other than to kind of give the agency**  **8 advice on what their deference should be. 9 But it is not kind of just what we**  **10 feel like. Right? 11 MR. RAWALD: This is Doug. So, I**  **12 think what it is supposed to be is from your 13 vantage point in the industry, what do you think**  **14 would be an essential prohibited act, if 15 necessary at all, to make this an effective**  **16 enforcement plan. And so some folks have come to 17 the table and said I don't think it is going to**  **18 be effective if we don't add prohibited acts. 19 And other folks are going to be saying we don't**  **20 need to add prohibited acts; it will be effective 21 based upon the other things we have put into**  **22 this.**

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## 1 And so that is kind of what I am **2 asking folks to consider and then we will look at 3 it from there.**  **4 MR. WHITE: This is Chuck White. 5 Yesterday when I left, I thought we made great**  **6 progress and I was feeling really good about all 7 this. And today, I am a little more confused**  **8 than I was. 9 The difference between prohibited act**  **10 and violation, we are looking for people who are 11 routine violators. So, perhaps you could touch**  **12 on that, the difference between prohibited act 13 and the violation.**  **14 But first, I am wondering is it 15 important that we attach who does what because it**  **16 is unlawful to install a product. It doesn't 17 matter who installed it. It is unlawful to do**  **18 it. It is unlawful to provide the product with 19 knowledge that that is what is going to happen.**  **20 Is it important that you say that only 21 applies to retailers and resellers? Because if a**  **22 distributor does it, I guess we have got that**

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## 1 covered in the above. But is it important to you **2 that each of these things has a person attached 3 to it that does that? And lastly, what I heard**  **4 you say was you have ten things you regulate and 5 in those ten things, contractors aren't in that**  **6 list. 7 So, it is probably a big concern for**  **8 me that we are kind of expanding and setting some 9 precedent and I am uneasy about that concept.**  **10 MR. RAWALD: Right, so this is Doug. 11 So, taking your middle question. So, we have to**  **12 identify who the party is. That is required. I 13 can't use a passive voice, prohibited act. I**  **14 have to identify who the party is that doing the 15 thing would be held liable for doing that thing.**  **16 That is just going to be a legal requirement and 17 it is consistent with how the other prohibited**  **18 acts are drafted. 19 What I said was, under the current**  **20 scheme, which is geared entirely around 21 manufacturing of compliant products, all the**  **22 prohibited acts center around manufacturer except**

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## 1 for one under DOE that also talks about **2 distributors and retailers not having the ability 3 to sell certain things.**  **4 So, there is no other DOE regulation 5 that relates to installation of anything. And so**  **6 that is why there is no prohibited act regarding 7 that because it is not an issue that is before**  **8 the Department in any other context. 9 So, you are correct that it would be**  **10 precedent-setting, though we could, of course, 11 limit that precedent in however way we want to in**  **12 what we do here but it is at least a fair 13 interpretation of the breadth of the statute.**  **14 And if the statute talks about installation being 15 the act and it talks about the effect on**  **16 contractors and dealers and the fact that 17 contractors and dealers can in some way be**  **18 violating. 19 Now, taking your very first question**  **20 because I have answered your second two now, I 21 think, so the difference between a violation and**  **22 a prohibited act, and I think Amy and I have kind**

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## 1 of sort of made this clear but I think I may -- I **2 don't know, I really want to try and make this as 3 clear as possible and I am sorry if I am being**  **4 confusing because I really want to be clear. 5 So, the prohibited acts that are**  **6 enumerated are the ones for which the Department 7 of Energy can assess a monetary fine against the**  **8 person that does the thing for doing that thing. 9 So up here, I could charge a contractor up to**  **10 $200 for installing one unit. The violation 11 relates only in fact to the first prohibited act**  **12 that we have from the statute and, as drafted, 13 the second we have discussed, in that the**  **14 manufacturer will be charged money if they 15 knowingly sell products -- which we haven't**  **16 defined what product means yet. That is still a 17 marker. Don't worry, we are going to get back to**  **18 that hopefully within the next two weeks -- to an 19 entity that routinely violates the standards.**  **20 So, the question is, what does it mean 21 to routinely violate? And we discussed the term**  **22 routinely and we discussed the term violate. But**

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## 1 the violation could be the commission of a **2 prohibited act. You know we could simply say the 3 contractor was a routine violator because he had**  **4 four times he installed a product that shouldn't 5 have been installed. We could do that but we**  **6 don't have to. 7 So, we have to come to an accord at**  **8 some point about what the violations are. And I 9 feel like we really have in terms of the dealer**  **10 of the contractor, though with the distributor we 11 are still a little bit more in a gray area. So,**  **12 they are different in that way, because of the 13 consequences about what we are talking about,**  **14 Chuck. 15 MR. DENNIS: This is Keith Dennis. In**  **16 my experience with these rules, it has been very 17 helpful that the point of regulation is on the**  **18 manufacturer. I think that if we were a 19 homeowner, we had homeowners within our**  **20 territory, members within our territory who say 21 we all decide to take out the knowingly part.**  **22 Since the knowingly is in there, I don't have as**

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## 1 much problem with it. They put in something and **2 now DOE is assessing a fine. And we look back to 3 the law and we see that it says it is always**  **4 applied to manufacturers. It applies to 5 manufacturers for that type of thing that we**  **6 would be in court saying they went well beyond 7 their deference to say this applies to a**  **8 homeowner now who is putting in something 9 compared to all the precedent in this law in**  **10 other areas. 11 So, I think a violation makes sense.**  **12 I mean a violation is talked about, manufacturer. 13 I don't know that expanding the authority to**  **14 whole new areas of different types of people that 15 aren't normally regulated under the law is really**  **16 something that we should be doing with this 17 workgroup.**  **18 MR. BALLO: This is Tim with 19 Earthjustice. And I would respond to that by**  **20 saying that Congress has instructed DOE to 21 consider, at least, the possibility of expanding**  **22 that authority by virtue of the fact that it**

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## 1 ordered the Department to come up with an **2 effective enforcement regime. 3 And the fact that Congress merely**  **4 supplied one additional prohibited act 5 specifically tailored to manufacturers, doesn't**  **6 necessarily reflect that Congress only intended 7 for manufacturers to bear the responsibility. It**  **8 just reflects the fact that Congress believed 9 that that one was so important that it codified**  **10 it. 11 So, I don't think it is a question of**  **12 DOE or this organization, this working group 13 going out and rewriting the rule, rewriting the**  **14 laws, and going beyond what DOE would ordinarily 15 just have to do to implement this law as it is**  **16 written. 17 MR. DORIA: This is Jordan with**  **18 Ingersoll Rand. I would agree with that and also 19 say Congress also said you cannot install these**  **20 products. Right? So, installation is not a 21 manufacturer act.**  **22 So, the moment they did that, that to**

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## 1 me, as much as the prohibited act itself, if not **2 more, is the reason why we have to talk about 3 other actors in the chain. There is just no way**  **4 around that. 5 So, that is just sort of a response I**  **6 think we have to deal with that. 7 But the other comment I wanted to make**  **8 in response to this, and I understand where HARDI 9 is coming from that they need to talk about this**  **10 more and I certainly think that is fair, I am 11 going to offer an opinion. And I am sure Doug**  **12 will correct me if I go awry here but I would say 13 that if we do not define a prohibited act for a**  **14 manufacturer -- excuse me -- for a distributor, 15 it would be next to impossible for DOE to ever**  **16 really assess a civil penalty against a 17 manufacturer because we would not have knowledge**  **18 of that party that we would be actually 19 interacting with, which is the distributor not**  **20 the contractor, has in fact done something wrong. 21 Whether that is DOE making an**  **22 affirmative determination or not, we still need**

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## 1 to have some sense of what the distributor's **2 wrongdoing in this would be. Because otherwise, 3 as I understand it, they have no ability to**  **4 actually affect their statutory language here. 5 And furthermore, as I understood it, the**  **6 Department has said that is basically an option 7 here. And that if we do not give that to them,**  **8 they will do that on their own. 9**  **10 So, I think -- I certainly understand 11 the need for HARDI and others to come up with**  **12 this but I think at the end of the day, the 13 answer to that distributor piece is going to**  **14 come, whether it comes from us or somebody else. 15 So, I think we really can't lose sight of that.**  **16 MR. RAWALD: Right, this is Doug. So, 17 the question it really turns on whether you want**  **18 to give the Department authority to charge money 19 to the other actors in the chain. Because the**  **20 statute already gives me enough room to make a 21 finding that the person is a routine violator,**  **22 though I have to define what routine and**

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## 1 violation is. They already give me that room to **2 do that. The question is whether that person 3 should also bear some financial penalty to the**  **4 government for their violation or for their 5 actions, if they are not the same thing. So,**  **6 that is the concern. So, that is where I am 7 coming down on.**  **8 So, if the folks in the room feel like 9 they want other people in the chain of commerce**  **10 or they feel it is appropriate in order to make 11 sure the enforcement program is effective, that**  **12 they face the penalty of monetary -- the 13 possibility of monetary penalties, then we need**  **14 to describe additional prohibited acts. 15 If people don't feel that it is an**  **16 additional stick that the Department needs to 17 wield, then we don't need to define additional**  **18 prohibited acts. That is all the question we 19 would ask comes down to. There is a question of**  **20 whether or not you want the Department to have 21 the ability to assess monetary fines for the**  **22 behavior of people in the chain besides the**

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## 1 manufacturers as enumerated already in the **2 statute. 3 MR. FERNSTROM: This is Gary for the**  **4 California IOU. So, it seems to me that to have 5 effective enforcement of compliance, DOE needs to**  **6 have the authority to easily subject violators to 7 monetary fines.**  **8 MR. PORTER: This is Steve Porter, 9 Johnstone Supply. I understand that Congress has**  **10 asked to enforce and has given them the ability 11 to go out and do that. They also gave them the**  **12 ability to do regional standards and that is 13 probably something they shouldn't have pursued**  **14 either. 15 (Laughter.)**  **16 17 MR. PORTER: So, I would put caution**  **18 to the wind here. Be careful what you ask for 19 the day you deliver a fine to a homeowner because**  **20 he installed equipment. That would be my 21 cautionary tale that if you think that is going**  **22 to go over easily with other groups out there or**

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## 1 whatever, I think we are heading down another **2 delay process. 3 I think we need to put caution here**  **4 and do we really -- they can still tell the 5 manufacturer we found the units. This was the**  **6 contractor. He bought from this person, which 7 the manufacturer sold to.**  **8 What more information you need beyond 9 that, I don't know. The fine isn't the issue at**  **10 all. It is who has the better ability to 11 control. And for me, it is my relationship with**  **12 my manufacturer. There is a lot of dollars at 13 stake and they wield a much bigger hammer than a**  **14 $200 fine. That is my point. Let's make this 15 thing clean. Let's not go down areas that you**  **16 haven't regulated fine before. I mean I can't 17 imagine what is going to happen when the**  **18 installer is the homeowner. 19 MR. ROCKY: So at this point, Steve,**  **20 this is Bryan, the installer as the homeowner is 21 not going to be a routine violator. A routine**  **22 violator --**

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## 1 MR. PORTER: We have got to define **2 routine. 3 MR. RAWALD: Right. Bryan, let me cut**  **4 you off. Because it is not a question of the 5 routine violation for the purposes of the**  **6 assessment of civil penalty. So, it is that as 7 drafted we have a prohibited act against the**  **8 installer for a one-time violation. 9 Now, as a practical matter, I could**  **10 say with almost 100 percent certainty, I cannot 11 imagine bringing an action against a homeowner in**  **12 that consequence. But I won't always be here and 13 so we have got to think of the unintended**  **14 consequences. I think that is absolutely a fair 15 point. What we are really talking about from a**  **16 practical matter is DOE going to wield authority 17 over somebody who does something? And frankly,**  **18 is the government going to bring a $200 action? 19 Probably not very regularly. We are looking at a**  **20 guy who is going to be doing this on a more bulk 21 nature. That is the more likely action against**  **22 someone who has 10 or 15 homes and you go ahead**

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## 1 and bring an action against them. That is a **2 little bit more effective and a little bit more 3 judicious use of taxpayer dollars. But I can't**  **4 guarantee that will be the only thing. 5 So, I think Steve's point is fair. We**  **6 have to think about all the consequences that we 7 are looking at here before we describe prohibited**  **8 acts by which the Department can assess monetary 9 fines against people for committing.**  **10 MR. DENNIS: Yes, and I would suggest 11 that if it is not practical that you don't add it**  **12 in. Because what is going to happen is somebody 13 is going to ask oh, so does that mean that**  **14 somebody puts in -- a homeowner puts in an air 15 conditioner across the border, they can now get a**  **16 fine under this rule. And I really don't think 17 that that is what -- first of all, I don't think**  **18 that that is what Congress intended. I don't 19 think that that is a news story that you would**  **20 want to see about this. I don't think that is 21 what we are intending to do.**  **22 So, I don't think that it is worth**

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## 1 even going there, especially if you say there is **2 no chance that we would ever do something like 3 that. It just doesn't make sense to even go**  **4 there, especially when it is not routinely. If 5 it was routinely, I can't see a homeowner**  **6 routinely putting air conditioners in their own 7 house or something like that. But that is**  **8 especially troublesome that that -- if you were 9 asked that question directly, the answer is kind**  **10 of silly, considering what we are trying to do, I 11 think.**  **12 MS. SHEPHERD: This is Amy Shepherd 13 from AHRI. I guess I have a very practical**  **14 question for Doug, which I don't know if he can 15 answer. But our job here is to recommend**  **16 something to ASRAC and then ASRAC would recommend 17 to DOE that it adopt such a rule.**  **18 Do you think that the Department would 19 feel that they would have an effective**  **20 enforcement plan if there were not separate 21 identified prohibited acts but that maybe these**  **22 things were defined as violations, such that that**

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## 1 is how a manufacturer alone would be responsible. **2 So, I guess I am just saying because 3 if the answer to that is the Department is not**  **4 going to find that viable, then it kind of -- I 5 mean we have to factor that in.**  **6 MR. RAWALD: Right. I did not come 7 here with any marching orders to achieve**  **8 prohibited acts being added, nor was I told that 9 we don't want them added. So, the slate is**  **10 clean, really. Because we really want to know 11 from the folks who are dealing with this from**  **12 both ends of the industry, what do you think is 13 going to be the most way to make this work.**  **14 And so if having the prohibited act as 15 a stick or whether there are various people in**  **16 the chain is what is going to be required to make 17 it effective, then that is what I need to bring**  **18 back to folks. 19 But I would say there is no druthers**  **20 one way or the other. I don't have many marching 21 orders either way.**  **22 MR. WHITE: Doug, this is Chuck White.**

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## 1 I would like to ask for five or ten minutes to **2 make a phone call, if that is okay. 3 MR. RAWALD: That seems fine with me.**  **4 MR. EISNER: It is quarter after. 5 Let's take a ten-minute break.**  **6 (Whereupon, the above-entitled matter 7 went off the record at 2:13 p.m. and resumed at**  **8 2:49 p.m.) 9 MR. EISNER: Does anyone want to speak**  **10 on behalf of the group? Or you are not reaching 11 any agreement or anything like that?**  **12 MR. RAWALD: Well, Chuck is the one 13 that called the break, said he was going to make**  **14 an important phone call to a friend. So, I don't 15 know if we want to start with him or if the**  **16 manufacturers have had a lengthy caucus. 17 MR. WHITE: This is Chuck White. I**  **18 used a lifeline. 19 (Laughter.)**  **20 MR. WHITE: I still have a couple 21 concerns that I really need to -- I have a**  **22 committee that I deal with routinely. I can't**

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## 1 probably pull them together tomorrow but I know I **2 can get a meeting with them next week to talk 3 about a little bit of this.**  **4 I don't know that I have any big 5 problem talking through it but I do need to talk**  **6 with my people before I say yes or no. I hope 7 that doesn't shipwreck us too badly but I need a**  **8 little bit of time. 9 MR. RAWALD: I guess, Chuck, I don't**  **10 think it derails us. As I said to folks earlier, 11 I know everyone needs to go back and talk to you**  **12 before they commit to these things. 13 What I really want to get on the table**  **14 is are there anything else prohibited act wise or 15 any other refinements to the prohibited acts**  **16 added, or shall I reflect back that folks are 17 less interested in the idea of even adding**  **18 prohibited act while we are looking at these 19 issues at large?**  **20 Because yesterday I left it and I was 21 like oh, it seems like everybody seems to at**  **22 least believe there should be some prohibited**

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## 1 acts. And now I am not so certain that everyone **2 believes that. 3 MR. WHITE: This is Chuck White. That**  **4 is kind of how I left yesterday, too. 5 MR. EISNER: So, anymore comments or**  **6 thoughts? Should we go to another issue then, 7 go back to the chart?**  **8 MR. RAWALD: Well, I guess I would 9 like to hear as a baseline just the question**  **10 really to me from the prohibited acts is right 11 now the manufacturers are the only ones in the**  **12 statute who face financial liability for failure 13 to comply with the regional standards, whether it**  **14 is theirs or someone else's. 15 So, how do people feel, as a general**  **16 manner, about there being financial liability for 17 other actors in the chain? So, I have heard from**  **18 Harvey who thinks there should be some financial 19 liability. I have heard from Steve that he**  **20 thinks there shouldn't. So, where is everyone 21 else kind of shaking out so I can help with the**  **22 Department about kind of where the room is on**

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## 1 this issue? **2 MR. DENNIS: This is Keith Dennis. I 3 think that as a baseline, it says violation and**  **4 you need to have these things be violations. I 5 think that as a matter of implementation, I think**  **6 it makes sense to have people have a penalty for 7 knowingly breaking the rule and putting things in**  **8 appropriately. My main concern is adding 9 prohibited acts to classes of people who aren't**  **10 usually regulated by DOE and the implications 11 that that has in general -- broader implications**  **12 it has as we look at utilities as potential 13 distributors of end-use products.**  **14 I think that writing back in my notes 15 that Congress said it is unlawful, what it says**  **16 up there, for a manufacturer to knowingly to 17 provide this to anyone who violates law. In**  **18 order to do that, DOE then had to make it a new 19 thing that it is illegal to do. And a fine on**  **20 that for distributors, retailers, and then all 21 the way down to homeowners, a new unlawful law**  **22 that can be penalized. I think that I would run**

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## 1 into a lot of problems with supporting that, if **2 that is the way it came out. 3 So, that is where we are. I think**  **4 violations, I mean I think -- these things -- 5 when I read that, those are violations. Like, I**  **6 think as a baseline, I think they have to be. I 7 am just a little bit not confident that making**  **8 them prohibited acts when it wasn't made a 9 prohibited act in the statute would be a tough**  **10 sell. 11 MR. EISNER: Let me ask a question to**  **12 see if maybe I am misunderstanding some of this. 13 If we did not agree to call them**  **14 prohibited acts but the statute calls them 15 violations, would you have the same problem if a**  **16 structure were created that penalized the parties 17 for their violations in some way?**  **18 MR. DENNIS: I would have to ask the 19 lawyers what they thought of that, if that was**  **20 the same thing, if there was a distinction. I 21 think expanding the EPCA to non-manufacturers**  **22 would be a big issue for progress.**

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## 1 MR. EISNER: Say that again, expanding **2 it to? 3 MR. DENNIS: To a non-point of**  **4 manufacturer for prohibited acts would be an 5 issue with our lawyers.**  **6 MR. RAWALD: Yes, this is Doug. I 7 don't think that Keith's issue comes down to**  **8 nomenclature so much as the fact that it would be 9 the financial penalty that hasn't been otherwise**  **10 been something that was assessed to these parties 11 before. That is the concern to him.**  **12 So, I guess that is my baseline 13 question is I am hearing from -- so, I have heard**  **14 from two people that are saying we have some 15 concerns with assessing a civil penalty, though**  **16 for slightly different reasons against people for 17 committing certain actions. And at least from**  **18 Harvey, that not only do I think that is 19 necessary in order to make this an effective.**  **20 And Gary seemed to indicate that 21 earlier, I think.**  **22 MR. FERNSTROM: Well, this is Gary.**

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## 1 Let me respond by asking a question. I think it **2 is pretty clear that DOE has determined that 3 actors down the market channel from the**  **4 manufacturer, wholesalers, distributors, 5 contractors for the purpose of determining**  **6 compliance can be considered as if they were 7 manufacturers and be responsible parties in this**  **8 regard. 9 So, the question is can a penalty be**  **10 assessed on down the chain just as these entities 11 have been determined to be responsible parties?**  **12 And it would seem to me that if they are going to 13 be judged responsible, they similarly ought to be**  **14 responsible for accepting penalties. I don't 15 think you can have one and not the other and have**  **16 an effective enforcement scheme. 17 MR. DORIA: This is Jordan with**  **18 Ingersoll Rand. I mean I would stress that 19 again, that prohibited act is not the only thing**  **20 that was changed. 21 You said in 2007 Congress said it is**  **22 illegal to install. Right? So, the moment that**

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## 1 happened, as far as I am concerned, Congress made **2 it very clear that installation becomes an issue. 3 And that necessarily moved us away from what has**  **4 been a long-standing paradigm of the appliance 5 standards program, which is a manufacturer only**  **6 approach to this. 7 So, in my view, there is really no**  **8 question that, at least for this specific 9 category or product, which is all we are talking**  **10 about because it is the only product category, 11 with the exception of furnaces, for which**  **12 regional standards exist, I really don't think 13 this is precedent-setting because, again, we are**  **14 talking about a very limited class of product. 15 MR. MELCHI: This is Jon from HARDI.**  **16 Jordan, you continue to cite with the EISA 17 changing to installation. Did EISA also talk**  **18 about prohibited acts? And I believe it does. 19 And it says that it is the responsibility of the**  **20 manufacturer. Correct? 21 MR. DORIA: I don't know that it was**  **22 changed. I think it was.**

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## 1 MR. MELCHI: Yes, it was. So, **2 Congress did, indeed, make a determination on 3 enforcement and they said it is a purview of the**  **4 manufacturer. Within the same law that you are 5 citing, that is indeed what they said in regards**  **6 to enforcement. 7 MR. RAWALD: Right. This is Doug. I**  **8 want intercede because these are both, they are 9 both, I think, valid interpretations that at**  **10 least I have, whether they are the right ones, or 11 the most reasonable ones is a different question.**  **12 But I hear both sides of this. People can read 13 the statute differently.**  **14 The question is from developing an 15 effective enforcement plan, some people have**  **16 voiced that it can't be effective without having 17 everybody in the chain have a financial**  **18 liability. And that is from the advocates I have 19 heard that. And then from the distributors and**  **20 possibly from Keith, they think that no, it can 21 be effective without having that financial**  **22 liability.**

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## 1 So, what I am really curious about is **2 where the contractors are, and it seems like 3 Chuck is saying I need to think about it some**  **4 more but Charlie hasn't voiced anything. And 5 where are the manufacturers in this? Do they**  **6 think there needs to be a spreading of the 7 wealth? Because at this point, only the**  **8 manufacturers are the ones under the statute 9 facing a financial risk or a penalty because**  **10 there are market risks as well, but a penalty 11 from the government.**  **12 MR. FERNSTROM: This is Gary again. 13 I don't think you can have an effective**  **14 regulation and have it effectively enforced if 15 there is no penalty for noncompliance. Now, so**  **16 far as how the law reads on this with respect to 17 evidence and so on, I don't know. But it seems**  **18 like a simple fact to me that we can't have 19 effective enforcement without penalties.**  **20 MR. HURST: John Hurst from Lennox. 21 I am going to wade into the cesspool here.**  **22 (Laughter.)**

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## 1 MR. HURST: The only financial -- the **2 financial penalty doesn't have to be the one we 3 are talking about. I think to Steve's earlier**  **4 point, there are contractual obligations between 5 manufacturers and distributors and with**  **6 distributors and dealers. 7 Now, the challenge is, they are all**  **8 different. Some are very complex and involve 9 agreements between very large entities. Some are**  **10 probably more on a handshake. And I am not 11 committing in any way, shape, or form, to get to**  **12 a standard agreement between manufacturers, 13 distributors, distributors and contractors.**  **14 But I would like to do, and I think 15 what we are kind of hung up on, is are there**  **16 other carrots and sticks that we can use between 17 manufacturers and distributors, distributors and**  **18 contractors. And I am too tired to maybe 19 articulate what those are. But instead of**  **20 getting hung up on, I think we are hung up on 21 this, there was a settlement agreement that we**  **22 have to consider as well. But I would like to**

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## 1 take some time between maybe the manufacturers **2 and the distributors, the distributors and the 3 contractors, to figure out what those other**  **4 potentially financial penalties or incentives 5 could be outside of this. I don't know if I said**  **6 that well but we need to explore that. 7 MR. FERNSTROM: Well, this is Gary**  **8 again. You said yourself that these other 9 approaches would have financial consequences,**  **10 although they may not be deemed directly 11 penalties. And if it turns out that the law**  **12 doesn't allow for penalties, I would suggest that 13 the law wouldn't allow for other approaches that**  **14 are de facto financial penalties either. 15 MR. DENNIS: One thing that I think a**  **16 little bit distinguishes what has been said is 17 that there are other penalties and other things**  **18 in the market that kind of punish people for 19 doing the wrong thing. Whereas, when you are**  **20 talking especially about the consumer level 21 installing a product that it wasn't supposed to**  **22 install and DOE saying they would never even**

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## 1 enforce a penalty on them anyway, that is a big **2 difference. I mean to set up a penalty that is 3 never going to be enforced or implemented is**  **4 different than something that actually already 5 exists in the market as a real penalty.**  **6 MR. RAWALD: So Keith, I want to be 7 careful because what I said was from a practical**  **8 matter, I don't imagine that the Department is 9 going to assess a fine against the homeowner.**  **10 Nowhere up on here does there seem to be a 11 homeowner as a listed party. The question is**  **12 could they possibly be considered a contractor if 13 they do a self-install.**  **14 But the prohibited acts as drafted 15 would be ones that if the Department agreed with**  **16 them and promulgated, we would use against 17 somebody in some way. So, I want to make that**  **18 clear. If we agree with these and put this 19 forward, we would use them.**  **20 So, the question really comes down to, 21 the very basic question that I have articulated a**  **22 couple of times is do you people want to have,**

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## 1 give the Department the authority to charge **2 monetary penalties for failing to do -- for doing 3 these certain things.**  **4 I am hearing kind of a little 5 difference of opinion between John and Jordan,**  **6 possibly. Like Jordan is open to the idea while 7 John is saying, I would rather look at other**  **8 things. So, I am not sure if the manufacturers 9 are all on the same page here and I don't think**  **10 there is a need for that. But I just want to 11 make sure I am hearing -- I'm not hearing a**  **12 direct answer. So, before I run all these up the 13 Department's flagpole and do a lot of things I am**  **14 going to have to do, I kind of need to get a 15 sense from everybody where we are, so I could say**  **16 here is where people are, everyone. This is kind 17 of why it is important or not.**  **18 And if they come back and say well, 19 they are all putting it off to the next meeting,**  **20 guess what they are going to do for me for the 21 next two weeks, guys, while we are thinking about**  **22 this? I am not going to get an answer.**

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## 1 So, if we want to have an answer from **2 the Department about where the Department is on 3 this, I need to need to know from you folks where**  **4 at least you think you are leaning on the issue, 5 if you thought about it. And if you don't have**  **6 an idea, then you need to tell me we don't know 7 and then I will have to reflect that back to**  **8 folks. 9 MR. DORIA: So, this is Jordan with**  **10 Ingersoll Rand. 11 Can we maybe take a step back from**  **12 this and just talk about these in the context of 13 being violations? I mean I don't think we have**  **14 actually said these are all in fact violations by 15 the parties. Question. Violation, understanding**  **16 that it is a separate term does not necessarily 17 mean it is a prohibited act which carries civil**  **18 penalties. Right? 19 So, I mean at least from my**  **20 perspective, just looking at -- well I was about 21 to point out those terms but looking at those**  **22 terms, to me those strike me as reasonable things**

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## 1 to effectively prohibit, to say are unlawful, **2 regardless of whether or not every single one of 3 them ultimately carries a civil penalty. That is**  **4 my opinion in reading them, that that seems like 5 it should be a baseline. And we can talk about**  **6 the other pieces but we haven't actually, at 7 least my understanding, have not actually agreed**  **8 to that. So, I feel like it would be progress if 9 we at least agreed to those concepts being**  **10 violations. 11 MR. RAWALD: Okay and I am okay with**  **12 that approach. That is kind of where I was 13 trying to head, I think yesterday a little bit.**  **14 So, the concern would be from the ones 15 we have listed, the statutory text as described**  **16 right now list the three parties that the 17 manufacturer would be at risk for dealing with as**  **18 distributor, dealer and contractor. So, there is 19 no wedge in there for a violation for a**  **20 manufacturer selling to a retailer or a reseller. 21 So, that could not be one of those violations**  **22 under the description of the statutory text**

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## 1 because the statutory text doesn't mean those **2 parties in that way. 3 So, really, we are looking at the**  **4 distributor, with that would be a violation with 5 regard to the distributor and would that be a**  **6 violation with regard to the contractor and 7 dealer. If we are trying to keep it within what**  **8 is the violation, that the manufacturer would 9 need to be on notice that if they routinely see**  **10 it, they shouldn't be dealing with the guy for 11 doing.**  **12 MR. DORIA: Doug, maybe I am just 13 confused but we had yesterday, and on one of the**  **14 previous slides, there is discussion of violation 15 being a violation would be installing a product**  **16 that doesn't comply. I don't know that we 17 actually got to a point where we all agree**  **18 definitively that was in fact a violation. But I 19 mean, at least from my perspective, that is an**  **20 important thing to get clear on and get agreement 21 on.**  **22 MR. RAWALD: No, I am with you on**

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## 1 that. I am with you. **2 What I am saying is so if Laura would 3 go back to that slide that lists these, so the**  **4 prohibited act we have, which is where the 5 violation is important, says it will be unlawful**  **6 to sell a product to a distributor, contractor, 7 or dealer, with knowledge that that entity or the**  **8 entity routinely violates any regional standard. 9 So, if we were to define what would be**  **10 a thing that a retailer or a reseller can't do, 11 that wouldn't come into play in that particular**  **12 text. That is all I am pointing out. But I 13 agree with you.**  **14 I mean it seems like there is general 15 consensus that the installation of a bad thing is**  **16 a violation. Everyone seems to at least agree to 17 that. That seems to be a place where we all have**  **18 held up our hands that we agree on that. 19 So, now there is a question of what**  **20 installation is. But that is one area where we 21 have at least consensus. So, I feel good about**  **22 that.**

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## 1 So, I am not sure we have complete **2 consensus on what the violation would be by the 3 distributor and there needs to be at least some**  **4 sort of progress on that because, otherwise, we 5 are going to fill the gap, as Amy intimated**  **6 yesterday, with what that violation would be. 7 So, here is the idea that Amy put**  **8 forward and Bryan did as well with regard to the 9 violation. And then the question is, are there**  **10 other violations that a distributor, dealer, or 11 contractor could be committing such that if they**  **12 routinely did that thing, a manufacturer would be 13 charged money for dealing with them. That is**  **14 what it comes down to from the defined prohibited 15 act we have within the statute.**  **16 MR. FERNSTROM: This is Gary. So, a 17 related issue is that we seem to talk again and**  **18 again about the situation where a homeowner might 19 install a unit. And I would suggest that if I**  **20 went down to Steve's place and tried to buy a 21 condensing unit, since I am not a contractor,**  **22 they probably wouldn't sell it to me because it**

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## 1 is a wholesale only business. **2 I don't think the likelihood of a 3 homeowner installing their own equipment is very**  **4 great. Sure, we all have connections. We may 5 have friends that are contractors that would**  **6 facilitate our buying a unit. But just because 7 they have a vacuum pump in the garage, doesn't**  **8 mean that I would be able to go down and buy a 9 condensing unit and install it myself in my**  **10 house. 11 MR. PORTER: This is Steve Porter,**  **12 Johnstone Supply. So, I am glad this 13 conversation has gotten more lively.**  **14 We have different issues on the HARDI 15 side obviously that we have to take back to the**  **16 membership, so we do have to have those 17 discussions.**  **18 But my direction really on the fine 19 where there is a violation is not about the $200**  **20 and I don't think it is about $200 to a 21 contractor. They can put that on the invoice, if**  **22 they want. I think the reality for me, as I look**

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## 1 at it is really I want the onus back. I want it **2 on the manufacturer because they are the source. 3 And it is better to start it at the source and**  **4 have that managed from the source than I think in 5 any other way. Because the first thing I am**  **6 going to do when we are done here is probably 7 call you with every online retailer, so you will**  **8 be busy for the next couple years chasing down 9 violations because those are all likely going to**  **10 homeowners that are being bought on the internet. 11 And I, as a distributor, who have made numerous**  **12 phone calls to manufacturers and said stop this, 13 can't get it stopped.**  **14 So, our interest is and I want it done 15 at the source because they are the ones in**  **16 control of who gets what, even though it may go 17 to a contractor and then show up online, which**  **18 can come from a distributor as well but we need 19 some help running that stuff down.**  **20 So, once it is run down, we put a stop 21 to it but the penalty needs to be at the source**  **22 of the product.**

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## 1 MR. DORIA: Steve, this is Jordan. **2 Just a clarifying question. I mean that sounded 3 to me like a comment more focused on the**  **4 retailer/reseller piece than an overall comment, 5 right?**  **6 MR. PORTER: Yes, which is I believe 7 we are a large, most of the violations are going**  **8 to come from because they are going direct to 9 homeowners and they are less likely to be aware**  **10 of the law and they are more likely to see the 11 violations there than in any other spot. But do**  **12 I want to put penalties on them for getting their 13 product -- I mean I guess they are not at the**  **14 table. 15 I have a little bit of trouble**  **16 throwing somebody under the bus that is not 17 sitting at the table. Because there are online**  **18 sites that may eventually marry contractors and 19 homeowners, right, and that is the only way they**  **20 sell. So, not knowing how that evolves as a 21 market, I don't know if I want to -- how we would**  **22 want to -- I would have to think about that one**

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## 1 more. **2 But I do know that if you deal with it 3 at the source and they have the ability to sell**  **4 you or not sell you, you know and we have those 5 discussions and they have been made aware by DOE,**  **6 when somebody has violated because I don't know 7 how they get that information any other way as a**  **8 manufacturer until an investigation is done and a 9 determination is made.**  **10 We can make assumptions and I can pass 11 you, which we will pass those assumptions onto**  **12 you, based off we have somebody come in and tell 13 us directly and we suspect, we need to give that**  **14 to somebody to go act on. 15 I am not going to go act on it. I am**  **16 not going to go to a homeowner. I am not going 17 to go do those things but I will pass that**  **18 information on to the DOE and I think everybody 19 would.**  **20 But then we need a determination made. 21 It is like we can't -- somebody I think mentioned**  **22 earlier, you can't throw somebody in jail if you**

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## 1 haven't had a trial. Right? **2 MR. RAWALD: This is Doug. I hear 3 what you are saying, Steve, and I definitely,**  **4 once again, I don't want you guys to be 5 investigators. I prefer people give us**  **6 information they have. And I think you and I 7 were clear before on what the extent of knowledge**  **8 that I think would be necessary and all that. 9 So, I think we are on the same page there.**  **10 MR. PORTER: Okay. 11 MR. SACHS: This is Harvey. And what**  **12 surprises me a little bit but pleases me a little 13 bit is how much of what you said, Steve,**  **14 resonates very positively with me but leads me to 15 a little bit different conclusion.**  **16 And like you, I have got to report 17 back to a constituency that has some hardliners.**  **18 I got beat up pretty bad last year for not 19 emphasizing enforcement enough in the commercial**  **20 equipment thing. So, I have still got a couple 21 of open sores there. That is to say that I am**  **22 the good cop and I have got some bad cops.**

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## 1 And as I think about this package, I **2 am hoping I can convince them that it is 3 sufficient. I am sure they will consider the**  **4 minimum that is necessary, that to put it 5 slightly crudely, regardless of where the**  **6 information comes from, everybody from homeowner 7 to manufacturer has got to have a bit of risk, a**  **8 bit of skin in the game if, unlike you, they 9 don't do the right thing.**  **10 I think the position the manufacturer 11 is in of fearing, threatening the relationship**  **12 with his distributors, he doesn't have really 13 firm evidence with fear that that distributor**  **14 will defect to another manufacturer that all of 15 these things, to me, seem to require to make this**  **16 workable. We probably need to have everybody 17 involved, as painful as that is, to keep this at**  **18 the minimum total burden. 19 So, I could be wrong that is what I**  **20 see from this picture that is on the board now. 21 MR. BALLO: This is Tim and I have got**  **22 a question. If the concern is the people that**

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## 1 sell product over the internet and buy that **2 product and install it out of region, the people 3 that are selling that product over the internet,**  **4 I had thought got it from dealers and from 5 distributors. But if only the manufacturer can**  **6 be held, if it is only a prohibited act for the 7 manufacturer to knowingly sell a product to a**  **8 distributor, contractor or dealer with knowledge 9 that entity routinely violates a standard, it**  **10 seems to me we are sort of delaying the ability 11 to effectively enforce this, because there would**  **12 have to be a finding not only that we are getting 13 these products sold online and they are being**  **14 installed out of region, but that someone is 15 supplying them, having been supplied, having**  **16 gotten the product from the manufacturer, a 17 distributor or dealer is then violating the**  **18 regional standard by providing that product to an 19 internet retailer.**  **20 So, it seems to me that if there is no 21 ability to hold the distributors -- if the buck**  **22 only stops when it gets to the manufacturer, it**

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## 1 is sort of injecting this extra level of findings **2 the DOE would have to make to ever start actually 3 levying fines to bringing the situation under**  **4 control. 5 MR. PORTER: This is Steve Porter,**  **6 Johnstone Supply. I don't think the buck stops. 7 We are talking about violations and ultimately**  **8 that conversation and the proof of a violation 9 has to happen with the Department of Energy.**  **10 Right? So, I mean they have -- somebody has to 11 tell somebody this is a violator. We have gone**  **12 to that job site. We have absolute proof. And 13 now if you continue to sell to that person, you**  **14 are going to be in violation. That is all the 15 way down the chain.**  **16 But in the end, it all rolls back up 17 to the manufacturer. It doesn't matter who or**  **18 where or what or why, it will all end up back 19 there.**  **20 MR. BALLO: I think what I was saying 21 is that it doesn't have to end up back there. If**  **22 you can isolate that bad distributor who is**

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## 1 providing the product to the online seller, we **2 can actually stop that process sooner, if you can 3 find the prohibited act there and fine the**  **4 distributor. 5 MR. PORTER: But if you fine the**  **6 distributor, you are going to notify the 7 manufacturer, no matter what. You are going to**  **8 have to say because you are going to tell that 9 manufacturer -- I didn't make the product. You**  **10 are going to tell the manufacturer your 11 distributor is selling to somebody that is in**  **12 violation. If you continue to sell them, you are 13 in violation. It all ends up back at the**  **14 manufacturing. Everybody in the chain is going 15 to have to be notified in this process.**  **16 MR. BALLO: But there has to be a 17 finding that there is a routine violation before**  **18 you can do that, before you can move it up the 19 chain.**  **20 If a routine violation is one 21 instance, then I agree, it collapses and it goes**  **22 to the manufacturer.**

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## 1 MR. PORTER: Right, which would be on **2 that when we talked about contractors, dealers, 3 homeowners and see who installed it is a**  **4 violation I thought. Didn't we say that 5 yesterday? That is what it says. So, that**  **6 pretty much takes. And if it happens on 7 installation, that is the violation.**  **8 MR. BALLO: It happens on installation 9 but the manufacturer isn't dealing with the**  **10 installer. They are only dealing in this case 11 with the dealer or distributor.**  **12 MR. PORTER: Well, that is not all 13 manufacturers, number one. And even if they**  **14 aren't the chain still has to be notified about 15 that violation. I mean I would imagine that**  **16 everybody is going to get some notification of 17 that violator sent out to them if it is that**  **18 equipment, if it is their equipment, if it is 19 everybody's equipment because you are not going**  **20 to want that person to move around. So, he may 21 move.**  **22 He is buying from a distributor and**

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## 1 only the distributor and the contractor or end **2 user in the chain and then he goes over to a 3 manufacturer that is also a distributor that**  **4 hasn't been notified because he a manufacturer. 5 That doesn't make any sense to me. He could now**  **6 move his business. Correct? 7 If you are saying that if it is just**  **8 going to happen to the manufacturer or the 9 contractor and we are not going to haul everybody**  **10 in because he was just the distributor and we 11 don't need to involve the manufacturer so we can**  **12 stop it there. But sometimes manufacturers are 13 distributors as well.**  **14 MR. BALLO: I think I am getting 15 confused because if the manufacturer is the only**  **16 one who is going to have pay a fine and the 17 manufacturer, this particular manufacturer only**  **18 deals with distributors or dealers, and it is 19 those parties who are providing product for sale**  **20 over the internet, to someone else for sale over 21 the internet, it just seems to me like it would**  **22 take more time to declare, to trace it back up to**

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## 1 the manufacturer that there is a routine **2 violation for a party that you are dealing with. 3 MR. PORTER: I don't understand more**  **4 time. I mean I see that as a notification that 5 would be sent out instantly to everybody in the**  **6 chain. So, I don't understand more time. 7 MR. RAWALD: Right, I think the time**  **8 isn't the notification process that Tim is 9 talking about. You have to observe a routine**  **10 violation in order for it to arrive at the 11 manufacturer level. But if it is a prohibited**  **12 act, the one-time sale, I could then pick up the 13 phone and say hey, internet dealer, you violated**  **14 the law. You face a $200 penalty or get yourself 15 in line. So, then I have that kind of option.**  **16 So, that is seemingly what I am 17 hearing Tim saying that pulls their way into**  **18 observe them selling five or six times and then 19 say okay, now I percolate it up to the**  **20 manufacturer and say oh, internet DRX is a 21 routine violator and you need to go ahead and**  **22 move against them. That is what I think the time**

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## 1 is. Am I right, Tim? **2 MR. BALLO: It is not only that they 3 are acting as a routine violator but the**  **4 distributor supplying it to them is now a routine 5 violator. And now you, the manufacturer cannot -**  **6 - 7 MR. RAWALD: But it is the routineness**  **8 that is the time you are talking about, the fact 9 that we have to observe a course of conduct over**  **10 time, as opposed to addressing the one incident 11 and nipping it in the bud with an action by DOE**  **12 against that individual who is, at the end, 13 taking the act.**  **14 MR. PORTER: So, if you don't give 15 them visibility along the way, you just drop the**  **16 bomb on them when it is routine? I mean, I am 17 confused here that there wouldn't be a matter of**  **18 course and process so he can start to see 19 routine. How do I know routine? You are telling**  **20 me I don't get routine until it is routine. 21 MR. BALLO: So, for the DOE**  **22 enforcement process, I think we heard it can take**

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## 1 three months or so to go from first learning **2 about a violation to having some sort of finding 3 or penalty or whatever. If someone is selling**  **4 one or two products on the internet at a time, 5 are they going to trigger the level of a routine**  **6 violation within a fast span of time? 7 I don't know what the seller's**  **8 practices are for people who sell things over -- 9 air conditioners on eBay. So, I have to assume**  **10 that, like a lot of sellers, they are doing one 11 or two products.**  **12 MR. PORTER: Yes, I mean I hear what 13 you are saying, Tim. And I don't think that eBay**  **14 sales are something that is going to call -- it 15 is out there. I'm not denying that that isn't**  **16 going to be out there or happen but there is much 17 bigger online sites that sell millions and**  **18 millions of dollars' worth of equipment to 19 homeowners directly. And those are the ones. We**  **20 are more concerned about the bigger actor on that 21 type of sale.**  **22 But I still want to know how, if we**

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## 1 just, if you are just going to contact them and **2 deal with them on a one direct basis that how do 3 I know or get visibility to end up to routine.**  **4 MR. RAWALD: Right. So, this is Doug. 5 So, there are a couple of different ways to**  **6 approach this. So, if it is a prohibited act by 7 the individual to any time they do it they sell**  **8 this thing or they install this thing, then if I 9 take an action against the individual, then of**  **10 course there is a public action. Right? So, the 11 contractor does it one time. I bring a penalty**  **12 against them. They pay the $200. It is over. 13 They do it again. I bring another**  **14 action, $200. Every time, it is a public action 15 so that then that kind of builds up a routine.**  **16 If I don't have a prohibited act against the 17 individual then I kind of have an open**  **18 investigation. I say oh, okay, I see one thing. 19 I will add it to the list but I can't do anything**  **20 to that person. And so, I have an open 21 investigation until such time as they have**  **22 reached a routine level of activity and then it**

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## 1 is okay, now they are a routine actor. I am **2 going to go ahead and do that. So, the level of 3 visibility to the person above in the chain is**  **4 actually heightened if it is a prohibited act 5 because I am able to announce publicly that I**  **6 took an action against the individual that can 7 inform the decisionmaking of those people higher**  **8 up in the chain. So, that is, I think, what 9 level of visibility comes I response to your**  **10 thought process. 11 MR. PORTER: So, Doug, you are saying**  **12 if it is a violation it wouldn't get that 13 visibility?**  **14 MR. RAWALD: I am saying if the 15 prohibited act is the only prohibited act that we**  **16 have under the statute and I have to find a 17 routine violation, I don't really have a recourse**  **18 by which I am going to come out there and say 19 every time I find someone committed a violation,**  **20 I am going to put it out there. There is no 21 mechanism by which I am advertising a one-time**  **22 violations of things until they get to the point**

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## 1 where they are enough where they are routine, **2 unless we establish one here. 3 The one method that we have of kind of**  **4 establishing a pattern of conduct is a pattern of 5 action against somebody. They have been assessed**  **6 a penalty against them multiple times. Now we 7 know they are a routine violator. That is one**  **8 way of looking at it. 9 So, we could develop a process by**  **10 which every time we find a one-time violation, we 11 make it public without charging any fine, we**  **12 could do that if it is effective and necessary to 13 the process.**  **14 So, I guess it is open for 15 consideration. But if it is a matter of**  **16 prohibited act as drafted right now, what I would 17 -- if I only took this as drafted right now, if I**  **18 just took the one prohibited act as drafted right 19 now, what I would have to do is find a routine**  **20 course of conduct by a person, find that person 21 to be routinely violating it, I would then make**  **22 that announcement and then also deal with the**

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## 1 fact that who is dealing with them. **2 And so I wouldn't be observing someone 3 over time and be giving the hey, dealer X is**  **4 doing this. He has done this again. He has done 5 it again. I wouldn't be doing that because that**  **6 is not the way the case would be structured. 7 Because this is what that says.**  **8 MR. PORTER: And I guess I understand 9 that. The part where I was at was when you have**  **10 the way the contractor/dealer is written, because 11 it is a one-time event, and that is a violation.**  **12 So, you are not waiting for routinely. That is 13 what I was talking about.**  **14 MR. DENNIS: As a hypothetical, say 15 somebody comes in and they install this**  **16 inappropriately, that is a violation. You send 17 them a note. You say you have been in violation.**  **18 They do it again. Now they are a routine 19 violator. Now, who can they buy anything from?**  **20 Because anyone else who would sell it to them is 21 then going to be also violating.**  **22 MR. RAWALD: No, your point is**

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## 1 correct, that is the whole purpose of this I was **2 thinking the other day is to stop sales of 3 someone that has been a routine violator.**  **4 But the question is whether there is 5 a mechanism for me to say we have seen your one**  **6 time violation and the mechanism proposed by 7 people yesterday seemed to be the mechanism would**  **8 be assessment of a sole penalty or lesser, but at 9 least having that option. So, if I had the**  **10 ability to assess a civil penalty against 11 someone, I am not going to always assess a civil**  **12 penalty. You know I may send them a warning 13 saying this is your first time out there, buddy,**  **14 you may have made a mistake. Don't do it again. 15 If you do it again, you are going to**  **16 face a $200 penalty. 17 MR. DENNIS: Or you can't buy them**  **18 from anyone. Nobody will sell them to you 19 because we will put you on the list.**  **20 MR. McCRUDDEN: This is Charlie with 21 ACCA. Did we determine whether or not the cutoff**  **22 would be for all equipment or just the covered**

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## 1 equipment? **2 MR. RAWALD: Right, so this is Doug. 3 That is an open question that the DOE has promise**  **4 to give an answer to. 5 MR. McCRUDDEN: Okay, because**  **6 potentially you could be an ENERGY STAR only 7 contractor at that point, only selling 14 SEER**  **8 and above. 9 MR. PORTER: This is Steve Porter from**  **10 Johnstone Supply, just to give an opinion on 11 this, I mean I am not interested in cutting**  **12 people off and putting them totally out of 13 business. I mean if they violate it, they are**  **14 not going to get that equipment again is how I 15 viewed it. I mean Doug is going to go back and**  **16 look at it but I mean it is -- I mean I think 17 that goes above and beyond what we are trying to**  **18 accomplish, which what we are trying to 19 accomplish is not to have the illegal units -- or**  **20 the units in the wrong spot and protect 21 homeowners from making sure they get the correct**  **22 information about their energy and all of those**

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## 1 things. **2 MR. RAWALD: This is Doug. And what 3 I heard yesterday is there is a wide area of a**  **4 way of interpreting this. And I think it is on 5 us to really give you guys some guidance on where**  **6 we are on this. Because it could be as simple as 7 you can no longer sell product that is below the**  **8 minimum standard of the region to that person to 9 as severe as you can no longer sell product**  **10 period to that individual, which would be parts. 11 And to that nth degree, as I think John Hurst**  **12 recommended or not recommended but mentioned, hey 13 listen, that is as extreme as it could possibly**  **14 be. 15 So, my thought would be it would not**  **16 be the extreme approach but I can't say what the 17 Department's approach is because I never asked**  **18 the question. And so we need to go back and 19 think about that.**  **20 MR. EISNER: Doug, in terms of your 21 enforcement program, if it is not a prohibited**  **22 act, there is no penalty for what they have done**

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## 1 if they have done it one time. **2 So, one typical case would be you get 3 a phone call that the person has installed a 13**  **4 SEER in the south. You do whatever you do. You 5 find out in fact they did it. If it was a**  **6 prohibited act, you would then follow up to find 7 out if they could explain how it happened, if you**  **8 want to do anything about it, if you want to 9 penalize them.**  **10 But if you can't penalize them, would 11 you simply keep that information and not proceed**  **12 any further after you found out it was a 13 SEER? 13 Because there is nothing to penalize.**  **14 MR. RAWALD: Right. So, we haven't 15 thought through how we would deal with it if**  **16 there was no prohibited act because it is 17 unchartered territory. So, I think part of this**  **18 group could come up with other things that we 19 could do.**  **20 So, in building a case of a routine 21 violator, it would seem to me that you would want**  **22 to -- I would want to follow up on that and see**

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## 1 if it has been routine or not and then observe **2 that person's conduct over time and if it is not 3 routine based upon their records or other things**  **4 I find, to see if they do it again, and then 5 establish the case as routine.**  **6 But if it is a one-time violation and 7 it is not prohibited, then the question is, what**  **8 is the impact if I make a public pronouncement, 9 hey, this is a one-time act? If people aren't**  **10 prohibited for that act, if we don't have anybody 11 that prohibited act, that could have a very**  **12 negative effect on that person's business and it 13 may not be actually what folks intended. So, I**  **14 think we need to just think about that. So, by 15 making it a prohibited act, we are saying no, no,**  **16 no, we are saying that that one-time act is going 17 to need to be a public kind of act to be dealt**  **18 with. 19 MR. EISNER: In fact if I understand**  **20 you, if you go in and you look and you find out 21 that was the only time they did it, so it can't**  **22 be called routine, do you even have the authority**

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## 1 to make a decision without first having a hearing **2 for which you can't impose the penalty anyway. 3 Don't they have the right to come in and defend**  **4 themselves and say here is what happened? 5 MR. RAWALD: Right, so it depends. So**  **6 if it is a prohibited act and I said okay, it is 7 a one-time act and we decide that we are going to**  **8 go ahead and assess a civil penalty against that 9 person, we could then bring the action and they**  **10 could choose to have a hearing before an 11 administrative law judge or go to the federal**  **12 courts for it. 13 If it is not a prohibited act, then**  **14 there would be no process at all because there 15 would be no penalty they would be facing from the**  **16 Department. 17 MR. EISNER: And there would probably**  **18 be no public record without the adjudicatory 19 hearing, unless you did start a different**  **20 process. 21 MR. RAWALD: Unless we develop a**  **22 different process here. And that is the option.**

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## 1 So, people here could say well we want to develop **2 a different process by which if a one-time 3 violation well, it doesn't rise to the level of**  **4 being assessed a civil penalty, we think it 5 should be documented and made public in some**  **6 fashion. So, that is the alternative, as I see 7 it.**  **8 MR. EISNER: Any other comments or 9 thoughts on this?**  **10 MR. HUNGERFORD: Yes, this is David 11 Hungerford. Can you guys hear me?**  **12 MR. EISNER: Yes. 13 MR. HUNGERFORD: I think it is**  **14 important that we spend some time discussing how 15 enforcement would happen if a violation occurred**  **16 or communicated and discovered. But I think a 17 part of this question about whether the**  **18 responsibility for violations falls to these 19 different parties comes in setting up a set of**  **20 incentives that, I guess may align people's 21 incentives and disincentives so that their**  **22 natural action is to avoid violating this law.**

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## 1 And to that extent, it seems like the **2 people in the middle of the supply chain who have 3 the most incentive, it seems, to violate the**  **4 rules by buying a group of 13 SEER, a shipment of 5 13 SEER boxes and having them delivered to**  **6 Chicago and then shipping them to California or 7 to Texas, that they ought to have some skin in**  **8 the game. 9 The prosecution of a violation or an**  **10 enforcement action is going to be a very, very 11 rare event, honestly. And it seems that just**  **12 structuring the incentives is the first step, so 13 that if there is an incentive to make a better**  **14 profit by moving this device into a place where 15 it is not supposed to be, then there is also a**  **16 disincentive to do that. And if you get caught, 17 you will get a fine.**  **18 It is not unlike enforcement of speed 19 limit laws. On the interstate in certain areas,**  **20 they are not very much enforced and people drive 21 at 85 to 90. In areas where it is not as safe or**  **22 the local government wants to make a little**

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## 1 money, it is more heavily enforced and people **2 know that and they slow down. 3 A good rule will structure incentives**  **4 so that it encourages proper behavior and 5 discourages the other behavior. And that is my**  **6 general sense of this. 7 MR. EISNER: Other comments on this?**  **8 So, we leave this to the next meeting 9 or do we want to talk about alternatives if this**  **10 is not acceptable to a significant number of 11 members of the group?**  **12 Do we want to develop an alternative 13 approach that would be satisfactory?**  **14 MR. DORIA: This is Jordan with 15 Ingersoll Rand. I just want to maybe reiterate**  **16 the way I read the statute on prohibited act, 17 Doug correct me if you don't agree with this, I**  **18 would contend that if we stopped our work today 19 and had no definition of the word violate, that**  **20 statutory requirement would be unenforceable. 21 That is my understanding.**  **22 MR. RAWALD: Well, I think what would**

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## 1 be more likely to happen would be that DOE would **2 fill in the gap and you would have to settle with 3 what we do.**  **4 MR. DORIA: Correct, yes. But absent 5 any definitions by us, by you, by somebody, it**  **6 would be unenforceable. 7 So, forgetting for a second the**  **8 prohibited act piece, I also think getting to the 9 different parties that have a lack of comfort**  **10 with extending the prohibited acts, which I fully 11 understand, I think it is very hard to get behind**  **12 a prohibited act, unless you actually know what 13 the violations are.**  **14 So, perhaps if we move in a step-wise 15 manner, get comfort with what amounts to a**  **16 violation and then determine whether or not that 17 violation should also be a prohibited act seems**  **18 like a reasonable path forward. 19 That is not abandoning saying there**  **20 could be other prohibited acts but to me it seems 21 like we could move in a stepwise manner here. It**  **22 is just a thought.**

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## 1 MR. DENNIS: I think that that makes **2 a lot of sense because I think the violation is 3 the easier threshold and I think that all three**  **4 of those things -- I still don't understand why 5 retailers/resellers can't be a violation just**  **6 because it is written that way but it could be a 7 prohibited act. I think a prohibited act is even**  **8 a further jump away from that language than 9 making it a violation.**  **10 But I don't know that the concern 11 would be as much with having, at least with my**  **12 organization, with having these things be 13 violations because I think that the language**  **14 indicates that they are. 15 So, I think that the stepwise approach**  **16 probably gets us at least somewhere instead of 17 nowhere.**  **18 MR. EISNER: Other thoughts or 19 reactions?**  **20 MR. RAWALD: I am content and, once 21 again, that is the course of action I was trying**  **22 to take yesterday until we kind of reversed to**

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## 1 try and define prohibited acts. **2 So, if we want to start off and say 3 are these things violations in the context of**  **4 that manufacturer prohibited act that we have, I 5 think that is a fruitful discussion. What I want**  **6 to make clear, Keith, is that the statutory text 7 for that prohibited act that we have is limited**  **8 to three parties, distributor, contractor or 9 dealer. That is what we are talking about with**  **10 that. That statutory prohibited act are those 11 three parties. That is very clear.**  **12 Now, DOE believes we can interpret the 13 statutory text in a way to create prohibited**  **14 acts, if necessary, to make an effective 15 enforcement plan. But when we are talking about**  **16 this one statutory prohibited act we have, the 17 three parties in our numerator are the ones we**  **18 are talking about. That is the point I am trying 19 to deliver here. Retailers and resellers are not**  **20 in that. 21 So, we are talking about what the**  **22 violation would be vis-a-vis those three named**

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## 1 parties that the statutory prohibited act exists **2 already for. And if we don't define them here, I 3 will then fill in the gap and the rule will be**  **4 promulgated. 5 MR. DENNIS: I guess a solution to**  **6 that might be if you think that you can add 7 prohibited acts, add a prohibited act it is the**  **8 exact same for retailers and resellers in it to 9 the manufacturers and just add that one thing,**  **10 and then make that a violation. 11 Or, I mean if you can add prohibited**  **12 acts, I don't see why you can't add 13 retailers/resellers to the prohibited act list**  **14 but you could add all these other things to 15 prohibited act. There is a solution there.**  **16 MR. RAWALD: Right. Keith, the group 17 can do that. Unfortunately, you are the first**  **18 guy who said to me I don't think DOE can do that. 19 So, if DOE, if the group wants to**  **20 suggest prohibited acts, we can suggest adding a 21 more fulsome prohibited act that would be dealing**  **22 with retailers and resellers. But if we want to**

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## 1 focus in first on the statutory text we have and **2 defining that, then we should focus on the 3 statutory text we have, which doesn't have**  **4 additional parties in it. And then if we want to 5 add to it, then we can. So, I am trying to go**  **6 down the path that Jordan described, which is 7 take what we have and let's define the violations**  **8 as we have. 9 And then if we decide that it is**  **10 necessary to add parties to that, then we can do 11 that.**  **12 MR. MELCHI: Jon Melchi with HARDI. 13 One of the things that we have been working on is**  **14 to find a -- there is no definition for 15 contractor/dealers/installers and that is what**  **16 part of this group is working towards. Correct? 17 And I wonder within that context because if maybe**  **18 one of those, I think John from Lennox tried to 19 do this yesterday, which was maybe lump the**  **20 reseller of that or retailer in with those 21 definitions. I don't know, and I am probably**  **22 saying this inartfully. We have been at this for**

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## 1 a little while. But I think from hearing, at **2 least from my members, there is a thought that a 3 lot of the resellers are oftentimes contractors**  **4 or dealers. So, in that sort of line of 5 thinking, if it is indeed a contractor that buys**  **6 from a Lennox and then turns around and said 7 doesn't install the product but puts it online, I**  **8 am just trying to think we would be classifying 9 them as a contractor because that is where they**  **10 purchased the product or a retailer or reseller. 11 And in the context of us maybe defining these, is**  **12 there a place for that? 13 MR. RAWALD: Right. This is Doug. I**  **14 think that we do have the ability to define those 15 terms because they are undefined terms broadly**  **16 enough to include those people that Steve has 17 referred to as the internet resellers. We just**  **18 need to come to an accord of how to do that. 19 We had the proposed definitions that**  **20 we handed around this morning and that we emailed 21 out last week, which gives us a starting point.**  **22 I, just sitting outside the industry,**

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## 1 I don't know if the definition, as defined, cover **2 those folks. And so we need the advice of the 3 folks in the chain to say no, no, no, the way you**  **4 have the definitions laid out would incorporate 5 the guy who is selling on the internet. And that**  **6 is why I need your advice on this point. 7 MR. DORIA: So, this is Jordan. I am**  **8 looking at this document I think we all have in 9 front of us. Under dealer, second bullet, the**  **10 entity that that purchases the equipment for the 11 purpose of selling to the consumer. That sounds**  **12 like what we are saying with an internet reseller 13 and a retailer. No?**  **14 Doug, this is Jordan Doria. This is 15 a question. Because there is a definition though**  **16 of retailer, could -- to the extent that a 17 retailer for the purposes of what we are talking**  **18 about here meet our created definition of a 19 dealer, how does that intersect with the existing**  **20 definition of retailer that exists, I think, in 21 statute?**  **22 MR. RAWALD: Right. Well, I would**

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## 1 have to confer that with the lawyer but there is **2 nothing on the EPCA definition of retailer that 3 stops that person from being something else, if**  **4 we were to define it. So, there is nothing 5 preventing that.**  **6 The only thing that is preventative is 7 the distributor definition explicitly calls out**  **8 that manufacturers and retailers cannot be 9 distributors. But nothing about the retailer**  **10 definition would stop them from wearing another 11 hat as well. That is my understanding but the**  **12 lawyers can contradict me after some research but 13 I think we can proceed under that assumption. I**  **14 think that is a pretty safe one. 15 MR. EISNER: Do we want to try that**  **16 now? Do we want to try to merge these into the 17 statutory terms?**  **18 MR. RAWALD: Is everyone looking at 19 me? Because I am game for that. I mean, listen,**  **20 I am up for that. We have a proposed definition. 21 We have a chart with some characteristics of**  **22 these folks. I want to make sure the proposed**

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## 1 definition includes who you think it needs to **2 include so those people could have a 3 responsibility under the statutory prohibited act**  **4 we have before us. 5 So, if you want to make sure that the**  **6 term distributor, dealer or contractor includes 7 the internet reseller and the retailer, let's**  **8 make sure the definition does that. Let's do 9 that. I think it is the easiest way to get to**  **10 Keith's solution. He is raising his thumbs up 11 there. He is supportive of this.**  **12 MR. EISNER: She's ready to go. Does 13 anyone want to suggest something?**  **14 You have got the term distributor on 15 this sheet that was handed out.**  **16 MR. RAWALD: Right. So, the terms we 17 are trying to define are dealer, contractor.**  **18 Those are the terms we are trying to define and 19 possibly installer. So, the distributor and**  **20 retailer are defined by EPCA. So, we already 21 gave you those.**  **22 MR. EISNER: Okay, so all the rest has**

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## 1 to be under contractor. **2 MR. RAWALD: Or dealer. 3 MR. EISNER: Or dealer. So, put the**  **4 definitions -- 5 MR. DENNIS: The one under dealer**  **6 after the second bullet put a comma, which 7 includes --**  **8 COURT REPORTER: I'm sorry, sir, I 9 can't hear you.**  **10 MR. DENNIS: Why not under dealer, 11 under the second bullet, just put comma, which**  **12 includes retailers and resellers, just to be 13 explicit?**  **14 I mean I think that there is wiggle 15 room in there to say that that definition as**  **16 written probably does include them. 17 MR. DORIA: So, this is Jordan with**  **18 Ingersoll Rand. The question, unfortunately, I 19 think John is now gone, but I believe he has said**  **20 that in many instances a retailer does not 21 actually purchase the product.**  **22 MR. RAWALD: What he said was they**

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## 1 don't take delivery of it in the case of air **2 conditioning, unlike other big box products. So, 3 whereas, the refrigerator would arrive at the**  **4 hand of the retailer, the big box store range is 5 just simply a drop shipment of some sort, where**  **6 they are not involved in actually receiving 7 delivery of the product.**  **8 So, I am not sure that is actually 9 something that gets them out of the retailer but**  **10 it is really irrelevant. So, if we can describe 11 what the retailer function is in the air**  **12 conditioning world, such that it would fit within 13 the ambit of the dealer definition, then we would**  **14 be covered. So, that is what we really need to 15 do. But once again, I am relying entirely upon**  **16 you guys as the market members to tell me how to 17 do that.**  **18 MR. EISNER: What we worked on in 19 terms of the conduct was provide a product to end**  **20 users. Is that an adequate description of the 21 retailer and the reseller? You add that to one**  **22 of the three.**

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## 1 MR. DORIA: This is Jordan with **2 Ingersoll Rand. Is there a difference between 3 consumer and end user?**  **4 MR. RAWALD: So, I guess the concern 5 is when you are talking about these large tract**  **6 housings and so the product is delivered into a 7 home that is unoccupied, is there really a**  **8 consumer there or as an end user? So, how do you 9 really define that term?**  **10 I think that is possibly one of the 11 areas that are of concern. If there is no actual**  **12 consumer there when that product is delivered, so 13 if it is just being installed into an empty home** 
**14 -- 15 MR. PORTER: This is Steve Porter with**  **16 Johnstone Supply. The reason why we put end user 17 in was also to capture daycare, capture all types**  **18 of other entities. So, it is whether a homeowner 19 is not in that home, the contractor or somebody**  **20 owns that property. Somebody owns that entity in 21 the units there.**  **22 So, it is not the end user. I mean**

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## 1 end user encapsulates, it brings in everybody **2 that you need to bring in is why I think end user 3 is appropriate.**  **4 MR. EISNER: So, is everybody happy 5 with adding that and which one do we add it to,**  **6 dealer? 7 MR. DORIA: Jordan with Ingersoll**  **8 Rand. I think it is the second bullet under 9 dealer and, instead of saying selling to the**  **10 consumer, I think it is selling to the end user. 11 I think that would cover the two, essentially the**  **12 two broad forms of the term dealer that we care 13 about here.**  **14 MR. EISNER: Okay. So, if that takes 15 care of retailers and resellers, and if we got**  **16 everything covered, we have got contractor. We 17 have got dealer. Distributor is already defined.**  **18 Retailer is already defined. So, have we covered 19 everything?**  **20 MR. RAWALD: So, this is Doug. So, 21 everyone understands what is going on with the**  **22 document, so we have proposed definitions, which**

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## 1 are those are the simplified definitions that we **2 came up with as a group after listing out in the 3 area below the different characteristics we felt**  **4 that were endemic to each one of these groups. 5 So, what we need to decide is do we**  **6 need a more robust definition than the ones that 7 we initially proposed that incorporates more of**  **8 the characteristics we have in these charts 9 below.**  **10 I am not going to pull out a table as 11 a definition. So, I need to have -- we need to**  **12 make sure the definition we are proposing 13 incorporates all those characteristics we want it**  **14 to incorporate. That is where we should start 15 here with this.**  **16 MR. WHITE: This is Chuck White, in 17 the proposed definition of a dealer or**  **18 contractor, it is a person who sells to and/or 19 installs. So, if a retailer could sell it but**  **20 not install it they would be captured by that. A 21 reseller would be similar. They don't**  **22 necessarily have to install it but they sold it.**

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## 1 And whether they took delivery or not is **2 irrelevant. They sold it. 3 MR. ROCKY: So, this is Bryan Rocky.**  **4 I believe the proposed definition text matches 5 the descriptions in the intent of the discussion**  **6 notes in the boxed area and that we should 7 proceed with acceptance of the proposed**  **8 definition as shown. 9 MR. EISNER: Repeat again what you are**  **10 suggesting we adopt. We have got the definition 11 ideas.**  **12 MR. ROCKY: So, this is the discussion 13 of we take a vote to accept the proposed**  **14 definition, as shown on the screen, that states 15 that a dealer or a contractor is a person other**  **16 than the manufacturer/distributor who sells to 17 and/or installs for an end user a residential**  **18 central air conditioner covered by regional 19 standards. An installer is a person that**  **20 installs a residential central air conditioner 21 covered by regional standards. A contractor,**  **22 dealer, or installer may perform any of the**

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## 1 functions defined above. **2 MR. EISNER: All right, anybody want 3 to comment on that or should we just see if there**  **4 is support for it? 5 MR. RAWALD: So, what I can commit to**  **6 is bringing the definitions back to the 7 Department to the lawyers and how to make sure**  **8 they are comfortable with them. I mean I think 9 that as long as the industry is saying this**  **10 covers the groups that we want to cover, I am 11 comfortable saying that sounds good to us. But I**  **12 want to make sure that they are agreed before I 13 vote formally on that.**  **14 MR. GIBBONS: This is John from 15 Carrier. And I have amnesia when it comes to why**  **16 did we change -- I thought we had residential 17 product covered by regional standards. Then why**  **18 did we change to central air conditioner? Are we 19 just limiting it to central air?**  **20 MR. RAWALD: So, people -- this is 21 Doug. What I recall is --**  **22 MR. GIBBONS: You have got heat pumps**

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## 1 and you have got small package products. **2 MR. RAWALD: Right. So people really 3 want to keep this cabined to the residential air**  **4 conditioner split systems and single package that 5 we are talking about here. They didn't want to**  **6 do anything that would have unintended 7 consequences, in case the Department develops**  **8 regional standards for something else. They 9 really wanted it to keep it cabined to that**  **10 particular instance. 11 MR. GIBBONS: Okay. And again, I**  **12 mentioned I had amnesia. 13 MR. RAWALD: No, I think it is an**  **14 appropriate question to ask because people are 15 listening online that may not have been there for**  **16 that past conversation as well. 17 MS. SHEPHERD: This is Amy Shepherd.**  **18 I actually had a question. So, what are the 19 functions defined above? Is that installing or**  **20 selling? So, that second sentence of installer. 21 MR. RAWALD: Right. So,**  **22 unfortunately, Karen has left but she is the one**

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## 1 that proposed this language to kind of save us. **2 And you can wear multiple hats. 3 If you are an installer, you can also**  **4 be a contractor. So, there may be a more artful 5 way of saying that, especially because I didn't**  **6 really know where we would put that. So, I mean 7 we would have a defined term for dealer or**  **8 contractor. We have a defined term for 9 installer. And then it had this other language**  **10 kind of wandering on the CFR, so I want to be 11 able to put it in somewhere artfully.**  **12 And if we could come up with an idea 13 for that, that would fulfill this intent because**  **14 I don't think this is it. But that is what I 15 think she meant there.**  **16 MR. EISNER: And do we want to say 17 anything about retailers or resellers? For**  **18 example, this sometimes refers to retailers or 19 resellers are other names used for this group or**  **20 something like that. 21 MR. ROCKY: This is Bryan. I think we**  **22 have covered that as a language relative to what**

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## 1 a dealer is in the discussions. It covers that. **2 I think at this point we, as a group, 3 can decide yes or no this is a definition that we**  **4 want to put forward so that Doug can take it to 5 the Department and let his group and the lawyers**  **6 and everything else decide if this is an 7 acceptable definition. So, I think this is a**  **8 point where we vote either yes or no. 9 If the point is no that this is not**  **10 acceptable, we open it up back and we can go 11 through the next 45 minutes or whatever to decide**  **12 what the definition should be. So, this is the 13 process. I would like to call for a vote on**  **14 either accepting or not accepting that 15 definition.**  **16 MR. WHITE: This is Chuck White. I 17 second that.**  **18 MR. EISNER: Okay. Does anybody 19 object to this language? No objections. So, we**  **20 have got a unanimous consensus at this time on 21 that.**  **22 MR. RAWALD: Okay, so what I will do**

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## 1 is I will take these definitions back to the **2 Department and make sure everyone is content with 3 them and then bring them back. But I think it is**  **4 a good starting point. 5 So, as long as everyone is comfortable**  **6 with the fact, and it seems like they are, that 7 this would cover all of the entities we want.**  **8 So, now we know who the playing field is that we 9 are talking about for that prohibited act. So,**  **10 my question is, do you want to reengage on the 11 routine violator at this point? I mean, whatever**  **12 you feel you want to come back to. 13 MR. BALLO: This is Tim. I think it**  **14 would be helpful to go back to the slide of what 15 we had initially envisioned as prohibited acts**  **16 and are now thinking maybe about as violations to 17 see how the definitions need to fit into that**  **18 slide. 19 MR. RAWALD: Okay.**  **20 MR. DORIA: So, this is Jordan, 21 looking at the contractor dealer bullet, it is**  **22 solely right now about installing a product. And**

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## 1 if a dealer is an internet reseller, they are not **2 installing. 3 So, Doug, is this where we use that**  **4 unclear legal phrase, caused to be installed? I 5 don't know. I'm just sort of making it up. I**  **6 don't know what it is we need to insert but we 7 need something beyond just installed if dealer is**  **8 now internet resellers. 9 MR. RAWALD: Right. So, I like that**  **10 term because I am a lawyer and I like those kind 11 of fun words. The other idea which John Hurst**  **12 put forward and was kind of shouted down a little 13 bit yesterday was combining that provide and/or**  **14 install. So, which may be a little bit clearer 15 and easier for the average person to figure out,**  **16 as opposed to reading through my legal muckety 17 muck.**  **18 So, I think those were kind of the 19 options we have before us.**  **20 MR. ROCKY: So, this is Bryan. So, I 21 would suggest that the prohibited act terminology**  **22 matches the proposed definition where we just**

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## 1 said sells to and/or installs. **2 MR. RAWALD: Okay. 3 MR. ROCKY: Trying to keep it**  **4 consistent, and/or installs. 5 MR. RAWALD: Installs for and**  **6 knowingly sells. 7 MR. ROCKY: For an end user, et**  **8 cetera. And I think the rest of it is -- 9 MR. RAWALD: Right. So if we are**  **10 incorporating that, it is installs for an end 11 user, a -- after end user. So, make that**  **12 singular. A residential central air conditioner 13 covered by regional standards with the knowledge**  **14 that that product -- with the knowledge that that 15 product shall be installed in violation of the**  **16 applicable regional standard. 17 It is very wordy. Now, that is always**  **18 good. Exactly. 19 MR. DORIA: This is Jordan with**  **20 Ingersoll Rand. I mean we have knowingly and 21 knowledge, referring to what I interpret to be**  **22 fundamentally the same actions. It seems we**

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## 1 could eliminate one of those. **2 MR. EISNER: We talked about that 3 earlier. The statute uses it also.**  **4 MR. DORIA: Right. But I am saying 5 using it twice in this one act.**  **6 MR. EISNER: I think the idea was to 7 keep the language consistent in each definition**  **8 and the first one is statutory. 9 MR. RAWALD: Right, so the purpose**  **10 behind that is there is the knowledge of your 11 sale and the knowledge of where it is going to**  **12 be. So, you both knowingly sell the product to 13 the person or install the product, so you know**  **14 you are doing that thing. And you also have 15 knowledge that the product has a regional**  **16 standard. 17 And the reason why this would be**  **18 significant it would be, and this is in defense 19 of the contractors, where it would be they are**  **20 going to knowingly install a product but if they 21 install a product we don't want them to be held**  **22 responsible for that lack of knowledge -- they**

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## 1 wouldn't have knowledge of products in violation. **2 That is why there is two knowinglys. 3 MR. ROCKY: This is Bryan.**  **4 Retailer/resellers are now somewhat redundant and 5 should be removed. Also the bullet to**  **6 distributors. 7 MR. RAWALD: Well, I want to not go so**  **8 fast with the distributor bullet because there is 9 still a party that could be in some way violating**  **10 the regional standards. So, we need to 11 understand what their violation would be.**  **12 So, is their violation going to be 13 sell to an end user? Because they are never**  **14 going to be selling to an end user. Right? So, 15 in order for there to be some sort of fulfillment**  **16 of the language in the statute which says that a 17 distributor could be the person that is violating**  **18 it. We need to define the violation vis-a-vis 19 the distributor.**  **20 MR. EISNER: Any thoughts on that? 21 MR. ROCKY: This is Bryan. So, I**  **22 think this dates back to the discussion of what**

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## 1 is a violation for a distributor. **2 MR. EISNER: This is not agreement 3 that we will still keep this in for distributors.**  **4 It is just changing the definitions to conform 5 with what we did earlier. I thought that is all**  **6 we were doing in this exercise. 7 MR. RAWALD: Right. So, right now, we** **8 are looking at what would be a violation, vis-a 9 vis the defined prohibited act in the statute.**  **10 So, Bryan's question is the exact question on the 11 table. What is a violation by a distributor?**  **12 And Amy had put forward this language as defining 13 what a violation would be yesterday, as a**  **14 starting point and I would be interested to hear 15 other people's thoughts on that.**  **16 MR. EISNER: This is now for the 17 purpose of you taking it back and talking to**  **18 everybody about what is acceptable and what is 19 not acceptable.**  **20 MR. MELCHI: I thought I would switch 21 mikes here. Jon Melchi from HARDI. I wore out**  **22 that one.**

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## 1 I think in the context of violation **2 via distributor, this language seems acceptable 3 to us in the context that it helps define how the**  **4 manufacturer would violate. 5 MR. DENNIS: Does the slide need to be**  **6 cleaned up so that the headers doesn't indicate 7 that those are both prohibited?**  **8 MR. RAWALD: Right. I think where it 9 says prohibited act, you would want to say**  **10 violation instead. 11 MR. DENNIS: Yes, that is just for the**  **12 second. It would be -- yes, right. 13 MR. RAWALD: Right. I think we are**  **14 all set where we are. 15 And Laurie is doing a good job of**  **16 updating the slides to reflect that the various 17 prohibited act versus the violation we discussed**  **18 is a violation. 19 MR. FERNSTROM: This is Gary. So, by**  **20 writing it this way, are we suggesting that 21 violations by distributors or contractors/dealers**  **22 are not prohibited acts and, therefore, they are**

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## 1 not subject to penalty? **2 MR. RAWALD: So, we are not saying 3 that exclusively. We are defining violation and**  **4 we have tabled the question of prohibited act so 5 you are productive on this discourse.**  **6 So, we could separately decide that we 7 have prohibited acts, which these violations**  **8 would constitute a prohibited act. So, what we 9 are saying is these are the violations in terms**  **10 of the manufacturer defined prohibited act we 11 have.**  **12 MR. FERNSTROM: Thank you. 13 MR. EISNER: Okay, other thoughts on**  **14 this? Acceptable? 15 MR. RAWALD: So, the one concern I**  **16 have from my point of view as the Department 17 would be so we have to think about how these**  **18 terms work together. So, if the prohibited act 19 by the manufacturer is to -- it is what it is.**  **20 It shall be unlawful for any manufacturer or 21 private labeler to knowingly sell a product to,**  **22 in a distributor context, to a distributor with**

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## 1 knowledge that the distributor routinely violates **2 any regional standard. 3 So, it would then be the violation**  **4 would that he sells to someone who routinely 5 sells to the contractor/dealer.**  **6 So, I need to find the distributor 7 routinely sells to someone and then the**  **8 manufacturer has to observe him doing that 9 routinely. So, it is now a double burden on the**  **10 Department as saying okay, we have got to find 11 that the distributor is dealing with someone who**  **12 routinely violates it and the distributor 13 routinely does that. So, be it with multiple**  **14 dealers or multiple times with that same person. 15 So, that is kind of the double layer we are**  **16 putting on the Department, as far as finding a 17 violation vis-a-vis the distributor here.**  **18 MR. DORIA: This is Jordan with 19 Ingersoll Rand. I appreciate that and I think**  **20 that is an important point. Is it possible to 21 address that by potentially differing thresholds**  **22 around what is routine for the different parties,**

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## 1 as opposed to either modifying or adding **2 violations? 3 MR. RAWALD: So, I think that if we**  **4 define routine differently, it is going to become 5 extremely confusing. Because that is going to be**  **6 hard to enforce. 7 So, I would rather not do that. I**  **8 would rather keep it similar. So, I would rather 9 streamline the distributor prohibited acts such**  **10 that it works more in concert with this about 11 putting a double layer on there.**  **12 I don't think that is what we intend. 13 MR. PORTER: Doug, this is Steve**  **14 Porter, Johnstone Supply. I mean that was my 15 concern about that communication level all the**  **16 way up the channel when there is a violation. I 17 mean it should be all at one time because we are**  **18 just holding temporarily for a period of days 19 product that ends up in the violation. So, we**  **20 are just in the stream as a distributor, pulling 21 the product, selling the product.**  **22 So, if we all have that communication**

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## 1 at the same time, then you are not really a **2 double check there. Because as long as we have 3 some agreement that hey, we have seen this two or**  **4 three times or whatever, and I don't think we 5 need to put a number on it because I think there**  **6 needs to be that whether you want to be able to 7 do that warning or whether we want to have some**  **8 freedom here and wiggle room, we know they look 9 like honest mistakes here, we know it was honest**  **10 mistakes because they have communicated I'm not 11 going to do this again I didn't know or whatever**  **12 it is. 13 I think that as long as we are**  **14 communicating when you find the violation and we 15 are all pinged on the same message on the entity,**  **16 then we all have line of sight to it. And that 17 would make everything happen at the same time.**  **18 And with today's communication vehicles and the 19 emails and notices, I mean, it is like that.**  **20 MR. RAWALD: I get that. I hear what 21 you are saying.**  **22 MR. EISNER: I would ask under the**

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## 1 construct of the statute what are we saying when **2 we say it shall be unlawful on the second and 3 third where it carries no penalty, whereas in the**  **4 first it is a prohibited act when we say it is 5 unlawful? We might have to reword those but I**  **6 will leave that to the group to decide. 7 MR. RAWALD: Right, so if we are going**  **8 to just limit the violation, we would take out 9 the it shall be unlawful and say it would be a**  **10 violation for any distributor to knowingly sell a 11 product.**  **12 MR. EISNER: Well, then we say that it 13 would be a violation to routinely violate. Yes,**  **14 actually, that would work. 15 That will still raise the question of**  **16 so what. 17 MR. WHITE: So this is Chuck White.**  **18 The way I see this structured at the moment, we 19 have a prohibited act and then we have, which we**  **20 deal with routine violators, so here is the 21 violations and now you can start counting them.**  **22 So, if a distributor does it once,**

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## 1 that is one. Now we see it twice. Now we see it **2 three times. At some point, you could make an 3 evaluation this was routine. So, you can go**  **4 upstream with it. 5 So, wouldn't similar to the**  **6 contractor, what you are looking for is did 7 somebody do it. Did the distributor do it once**  **8 or that the distributor knew of a contractor that 9 did it once.**  **10 So, take the routinely out of 11 distributors?**  **12 MR. RAWALD: Right. So, that is what 13 I would prefer. As long as it is not a**  **14 prohibited act. We are not talking about 15 prohibited acts right now. We are talking --**  **16 MR. WHITE: That seems logical. 17 MR. RAWALD: To me, I would prefer it**  **18 to read without that. That the entity will -- 19 and I would actually will install the product in**  **20 a violation of the regional standard. 21 MR. BALLO: This is Tim. I don't**  **22 think it can just be installed because they could**

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## 1 be selling to a dealer. **2 MR. RAWALD: Right. You are right, 3 Tim. That's a good point.**  **4 MR. RAWALD: So Neil, the point of 5 what -- I am just really concerned because a lot**  **6 of people are actually leaving. So, is there a 7 quorum point for this? We are down to ten, maybe**  **8 less soon. 9 MR. BALLO: You can really get things**  **10 done. 11 MR. RAWALD: Right, if it is just me**  **12 alone in the room, we can get a lot done. 13 MR. PORTER: Yes, you just changed**  **14 something that I am going to have to think about 15 here, too.**  **16 MR. RAWALD: Right, I got that and I 17 don't want to do it without you.**  **18 MR. PORTER: And I guess Chuck timed 19 that as I was leaving the room.**  **20 MR. FERNSTROM: This is Gary. Even 21 though our numbers are dwindling, I think we are**  **22 getting much closer. This wording provides some**

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## 1 protection for the manufacturer because they **2 don't necessarily know where this stuff is going. 3 The distributor probably has a better idea where**  **4 it is going but it doesn't necessarily know 5 either, unless there is some sort of routine**  **6 violation going on by the purchaser. The 7 contractor/dealer knows certainly every time**  **8 whether a violation is occurring. 9 So, in terms of the level of**  **10 responsibility at each stage in the market chain, 11 I think we are pretty close here with what seems**  **12 reasonable. 13 MR. EISNER: So, does the group want**  **14 to continue with so few people here? Do you 15 think we can get something done?**  **16 MR. RAWALD: I think we could get 17 something done. It is a question of the**  **18 legitimacy of our accomplishing that without them 19 being here and the anger that we might feel in**  **20 three weeks when they come back and see what a 21 mess we have made. So, that is the question we**  **22 have to ask ourselves.**

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## 1 MR. MELCHI: This is Jon Melchi with **2 HARDI. Just seeing that I believe we have lost 3 the majority of the manufacturers, including the**  **4 representatives from AHRI. I think it would 5 probably be best to maybe punt until we are -- I**  **6 don't normally speak for our manufacturer 7 friends.**  **8 MR. EISNER: So, John, just to 9 identify, we still have five of seven**  **10 manufacturers here. 11 MR. MELCHI: Oh, I'm sorry. I was**  **12 just counting the chairs. Sorry. 13 MR. FERNSTROM: So, this is Gary. We**  **14 don't have enough people at this point to take an 15 action, do we? I mean --**  **16 MR. EISNER: I mean, again, the way we 17 have been proceeding on almost every one of these**  **18 issues, if not all of them is to say is this okay 19 for now. You know we are going to go back and**  **20 have to look at this whole thing and see the way 21 it fits together, just like these got modified**  **22 after we worked on the earlier definition.**

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## 1 MR. FERNSTROM: So, thank you, Neil. **2 I think that is a good way to proceed. And this 3 is okay for now with me.**  **4 MR. EISNER: Okay. I mean you guys 5 could decide. You know there is however many**  **6 hours of the meeting, you could decide no, we are 7 going to impose all these new things on people**  **8 and get a unanimous vote. But if everybody is 9 ready to leave, then let's do that.**  **10 I'm going on vacation Saturday, so I 11 am ready to start early. All right? Let's**  **12 adjourn then. 13 Well, that is what I am saying, does**  **14 anybody want to continue talking? 15 MR. DORIA: This is Jordan with**  **16 Ingersoll Rand. I mean I think there was a 17 discussion by Harvey, who is now gone, too, of**  **18 action items and just making sure that we are 19 doing as much as we can between now and the next**  **20 meeting. 21 I mean I think there was one action**  **22 for party members to talk about this violation**

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## 1 and make sure it was right or that comports. **2 MR. EISNER: There were a whole bunch 3 of items. In fact, Doug alone, I think, assumed**  **4 about ten of them. Maybe what we should do is 5 put together a list circulated to everybody and**  **6 make sure we covered everything we thought we 7 should and then people can get to work on it. Is**  **8 that okay? 9 MR. RAWALD: Yes, let's do it while we**  **10 are all in the room here, so everyone knows, 11 everyone has on their list what they have.**  **12 So, I have the AHRI is working on the 13 label, a possibility of the EnergyGuide label**  **14 recommendation to FTC. So that is what they are 15 working on for us.**  **16 So, I have that the manufacturers -- 17 MR. EISNER: Wait and let Laura catch**  **18 up with you. 19 MR. RAWALD: I have the manufacturers**  **20 are going to be working on some proof of concepts 21 for the nameplate or the nameplate located near**  **22 the nameplate, which would discuss the exclusion**

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## 1 of the sale from the area in which it could not **2 be sold in. 3 The distributors are going to bring**  **4 back the idea of the definition that we have now 5 put forward for a violation regarding**  **6 distributors to their membership and talk about 7 that.**  **8 So from a DOE point of view, I am 9 working on getting some clarity regarding the**  **10 term "product" in this prohibited act, as defined 11 by the statute.**  **12 I am also going to get the 13 Department's opinion on the definitions that we**  **14 have proposed and voted on as being acceptable to 15 the group.**  **16 I am going to put forward the 17 violations that we have described for both the**  **18 manufacturer and the -- I mean for the 19 distributor and for the dealer and contractors**  **20 for consideration by the Department. 21 I am going to present the issue that**  **22 there are some people in the room who want there**

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## 1 to be a prohibited act carrying a civil penalty **2 versus some that do not. 3 I will be reflecting the fact that the**  **4 manufacturers never stated a definitive position 5 as a group on that issue. It seemed that the**  **6 distributors had a definitive position and the 7 advocates had a definitive position that were**  **8 diametrically opposed to one another but the 9 manufacturers seemed to be leaning away from**  **10 taking a position at the moment. They were 11 really just listening to what everyone else was**  **12 saying, with Jordan and Jon voicing an opinion 13 but not being definitive on yes or no.**  **14 And possibly thinking about the 15 manufacturers are going to come back with** **16 possible alternatives to having civil penalty 17 producing prohibited acts that would be sticks**  **18 and carrots in this situation. 19 MR. EISNER: You were supposed to do**  **20 something, I'm not sure if it is up there 21 already, an authority to require fixes, since you**  **22 don't currently do this when you find a product -**

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## 1 - **2 MR. RAWALD: Right. So, I said the 3 lawyers would look at the question of whether we**  **4 have legal authority to require performance by 5 the contractors to replace or make good on an**  **6 installation that was not in compliance with the 7 regional standards.**  **8 MS. NOLL: You were also going to work 9 with the distributors and contractors on what**  **10 would be required -- 11 MR. RAWALD: Right, record retention.**  **12 MS. NOLL: -- in a record retention. 13 MR. RAWALD: Right, I was going to**  **14 send around some language to them about record 15 retention. And I was going to come back to you**  **16 with the Department's position on the length of 17 time for record retention.**  **18 MS. NOLL: And I think right now in 19 our slide deck, we are showing record retention**  **20 as a prohibited act. Is that as well going to be 21 something that we are going to determine?**  **22 MR. RAWALD: So, I can ask the**

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## 1 Department's opinion on that. What I heard is **2 that once again, there is divergent opinion. So, 3 whereas the advocates thought I was helpful, the**  **4 distributors were wholesale against it. The 5 manufacturers remain agnostic because they**  **6 already have, they -- they won't be able to add 7 to that thing.**  **8 And I never heard anything from the 9 contractors one way or the other about how they**  **10 felt about adding that prohibited act. 11 MR. EISNER: There is an issue about**  **12 you checking into or thinking about if training 13 is not offered, whether you can then factor that**  **14 into routine violations. 15 MR. RAWALD: I don't have that an open**  **16 item, no, because I think we resolved that, which 17 is that we are not going to put that in the text**  **18 of this and it something I would just consider. 19 MR. FERNSTROM: This is Gary. I would**  **20 just like to observe that if not maintaining 21 records is not a violation or a prohibited act,**  **22 it would make it pretty difficult to achieve**

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## 1 enforcement. Because when you went to go find **2 what you are looking for, you might well receive 3 the response sorry we haven't got the**  **4 information. 5 MR. RAWALD: Yes. No, Gary, I agree.**  **6 And that is the position I heard also from Harvey 7 yesterday. I think it is pretty consistent.**  **8 And I am lumping you in with them when I say the 9 advocates because I think you are kind of aligned**  **10 with them on these particular issues. And I 11 don't mean to speak ill of you otherwise. I**  **12 didn't mean to imply that. 13 MR. DENNIS: In that case, there was**  **14 the subpoena authority, though. 15 MR. RAWALD: Right, as an alternative**  **16 to the civil penalty. That is absolutely true. 17 And don't worry, I am going to make that fulsome**  **18 discussion. 19 MR. FERNSTROM: So with respect to the**  **20 subpoena authority, if they haven't got the 21 record, they haven't got the record. So, you can**  **22 subpoena it and if isn't there, you are not going**

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## 1 to get it. **2 MR. RAWALD: Right, I am just going to 3 have an injunction that is going to be**  **4 unfulfilled, if I have to go to a court and get 5 it.**  **6 MR. ROCKY: So, this is Bryan. Doug, 7 one of the other things I saw in the notes was we**  **8 had the discussion on the interplay of this 9 enforcement with state standards or state**  **10 enforcement. So, I think that is in your court, 11 Doug.**  **12 MR. RAWALD: What I promised to do was 13 to go back and get some research going on this**  **14 issue. So, what I am also going to do is have 15 folks start working on what would be some**  **16 proposed ideas for a trifold/web page concepts 17 and bring that back for consideration.**  **18 And the rulemaking folks are going to 19 start at least putting together a skeleton of**  **20 what a rule would look like so we could spot any 21 of the issues that we want to bring to you folks**  **22 and say hey, this is how this is going to go,**

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## 1 with the hope that we are trying to jumpstart **2 this as much as possible so that when we come up 3 with an opinion to add or subtract, we can get**  **4 the rule actually moving quickly. 5 MR. EISNER: Anybody see anything else**  **6 that should be on the list? Do you remember 7 anything else?**  **8 As long as he is here, anybody got any 9 assignments, other assignments they want to give**  **10 Doug? 11 Nobody feels a bit sheepish about**  **12 that, huh? Give Doug more work. 13 MR. RAWALD: You have to wonder what**  **14 I did bad to deserve this job, who I made angry. 15 MR. EISNER: Okay, anything else? All**  **16 right, see everybody in a few weeks. 17 (Whereupon, the above-entitled matter**  **18 went off the record at 4:19 p.m.) 19**  **20 21**  **22**

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

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### NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### C E R T I F I C A T E

This is to certify that the foregoing transcript

In the matter of:

Before:

Date:

Place:

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

----------------------- Court Reporter 334

Central Air Conditioning Regional Standards Enforcement Working Group

US DOE

09-04-14

Washington, DC