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## U.S. DEPARTMENT OF ENERGY

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

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

**+ + + + + Wednesday**  **September 3, 2014**

**+ + + + +**

**The Public Meeting met in Suite 8E-089, 1000 Independence Avenue, S.W., Washington, D.C., at**  **9:00 a.m., Neil Eisner, Meeting Facilitator, presiding.** 

**PRESENT NEIL EISNER, Meeting Facilitator**  **ASHLEY ARMSTRONG, U.S. Department of Energy TIMOTHY BALLO, Earthjustice**  **LAURA BARHYDT, U.S. Department of Energy, General Counsel**  **KEITH DENNIS, National Rural Electric Cooperative Association**  **JORDAN DORIA, Ingersoll Rand GARY FERNSTROM, California Investment 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**

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## PRESENT: (cont'd) **STEVE PORTER, Johnstone Supply DOUG RAWALD, U.S. Department of Energy, General**  **Counsel ANIRUDDH ROY, Goodman Manufacturing Company**  **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 DANIEL COHEN, U.S. Department of Energy, General**  **Counsel LAURA DEGITZ, Navigant Consulting**  **JOHN HURST, Lennox International JON MELCHI, HARDI**  **CRAIG MESSMER, Unico*** **TERRY SMALL, Mortex Products Incorporated*** **ERIC STAS, U.S. Department of Energy, General Counsel** 

***via teleconference**

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## A-G-E-N-D-A **Presentation on Replacement Coils Terry Small. . . . . . . . . . . . . . . . . . . . 4**  **Discussion . . . . . . . . . . . . . . . . . . . .11 DOE Homework Assignments . . . . . . . . . . . . .56** 

**Issues Record Retention . . . . . . . . . . . . . . . . .64**  **Warranty Information . . . . . . . . . . . . . . 99 DOE Investigation Process. . . . . . . . . . . . 99**  **Consequences . . . . . . . . . . . . . . . . . . 134 Violation. . . . . . . . . . . . . . . . . . . . 163**  **Restrictions on Shipment . . . . . . . . . . . . 297**

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## 1 P-R-O-C-E-E-D-I-N-G-S **2 9:06 a.m. 3 MR. EISNER: Did everybody have a good**  **4 weekend? As you know, when we left off last week 5 Terry Small had wanted to do some talk. I think**  **6 it has to do with a waiver. 7 He did pass around some material. And**  **8 he is on the line. We agreed we'd let him start 9 off today with the issue he wanted to discuss.**  **10 So unless anybody's got any 11 preliminary stuff they want to ask about we'll go**  **12 right to Terry. 13 All right. Terry, you're online, you**  **14 can hear us? 15 MR. SMALL: Yes. Can everybody hear**  **16 me? 17 MR. EISNER: Yes.**  **18 MR. SMALL: Okay. First, I want to 19 thank the working group and of course Doug and**  **20 Neil for allowing me to make this presentation 21 concerning the proposed DOE guidance for**  **22 replacement coils.**

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## 1 I'm Terry Small, CEO of Mortex **2 Products, Inc. 3 Doug, I was wondering, before I get**  **4 started, could you restate your -- you know, it 5 was really hard to hear last week. Would you**  **6 restate the proposal you have for individual coil 7 replacements? If you've got it in front of you,**  **8 or you can remember it from memory. 9 MS. BARHYDT: So, Terry, this is Laura**  **10 Barhydt. Doug is going to be in around 10 this 11 morning. And so I'm sitting in for him.**  **12 MR. SMALL: Oh, okay. Okay. So, if 13 what I heard correctly was basically that the**  **14 individual coil had to have a rating, for 15 instance, to be used in the South had to have a**  **16 rating of at least 14 SEER. 17 MS. BARHYDT: That's correct.**  **18 MR. SMALL: Is that what I heard? 19 Okay. So, Laura, I'll continue on then.**  **20 So, basically the proposed guidance 21 is, you know, for the regulation of the**  **22 replacement of single evaporator coils. But you**

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## 1 know, really, this has really never been done **2 before for service coils to my knowledge. 3 And their coils are regulated as part**  **4 of the system. And the evaporator coil, 5 condenser coil and compressor are all components**  **6 of a matched system, whether it be a split system 7 or a packaged system.**  **8 So, if one of those components fails 9 for whatever reason it's typically replaced with**  **10 its original or like kind part and the system's 11 performance as it was installed new is**  **12 maintained. 13 So, I really, I've got two examples.**  **14 I think that it may be semantics and I know it's 15 just a proposed -- you're making the proposal**  **16 subject to comments and rethinking. 17 But the first slide I put up there**  **18 I've got two examples of replacement coil issues, 19 if everybody is seeing the slide on the**  **20 presentation. 21 So in the first example let's say that**  **22 this year there's a new system that's installed**

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## 1 in Virginia in somebody's basement. It's **2 basically, it's going along with the standard 3 efficiency gas furnace.**  **4 It's a legal 13 SEER 3-ton condensing 5 unit. It's got an 18-inch tall evaporator in the**  **6 case on top of the furnace, you know, et cetera. 7 So let's fast forward to 2015. Let's**  **8 say that next year there's a leak in that coil, 9 in that evaporator coil that's really not**  **10 repairable. 11 And of course, the coil is part of a**  **12 10-year warranty so it's only 1 year into the 13 warranty.**  **14 Would you change the slide, please, 15 Laura or whoever? Or Jeremiah? Go to the next**  **16 one? 17 So, the original evaporator is now --**  **18 evaporator coil is now not listed in any 14 SEER 19 combination.**  **20 So based on the proposal that Doug 21 made last week, or you know, further discussed**  **22 last week, it couldn't legally be installed as a**

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## 1 replacement in Virginia which is of course in the **2 South. 3 So, you know, the homeowner is faced**  **4 with either installing a larger evap coil which 5 might require tearing out the duct work, et**  **6 cetera, putting in some different duct work. 7 Or if the basement creates a tight**  **8 situation that you can't modify the duct work to 9 allow the taller coil then basically you might be**  **10 faced with completely changing the system out. 11 That would be very expensive.**  **12 Jeremiah, could you go to the next 13 slide?**  **14 Okay. Now, the second example, and I 15 think most of you know that we're active in the**  **16 manufactured housing/mobile home type air 17 conditioning stuff.**  **18 If this was a mobile home installation 19 in Virginia the coil really can't get any taller**  **20 because it has to fit into a cavity that's part 21 of a HUD-approved mobile home furnace. And you**  **22 know, you can't modify those things.**

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## 1 So, Jeremiah, next slide. **2 This is just an example for those of 3 you that aren't familiar with the way the mobile**  **4 home furnace works. 5 You know, it's a niche type product.**  **6 It's got a very specific footprint that's been -- 7 there are loads of these things out there.**  **8 They're built into typically an alcove. There's 9 just no room to modify anything at all. You**  **10 can't modify the actual furnace itself. 11 The cavity is what it is and it**  **12 typically would take maybe an 18-2 hot coil. So, 13 Jeremiah, could you go to the next?**  **14 So, here's the situation. If you look 15 at the coil on the right. So that coil in an**  **16 installation in Virginia to fit in that furnace 17 would be a legal combination of 3.5 ton coil,**  **18 say, 13 SEER. 19 So, if you go in and you had to rate**  **20 that same coil that would fit, that really would 21 end up being about a 2.5 ton coil at 14 SEER.**  **22 Or the proper combination to be legal**

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## 1 in the South would be this 24-inch tube hot coil, **2 24-inch hot coil in a 3.5 ton 14 SEER. But that 3 is not going to fit in that mobile home furnace**  **4 cavity. Jeremiah, next slide. 5 So, you know, to me, as I say, we**  **6 don't believe that DOE has really ever regulated 7 service coils before. We strongly feel like the**  **8 evaporator is a component. 9 You know, for instance, an evaporator**  **10 that's built into a package unit that sits 11 outside the house, if you have a coil fail in a**  **12 package unit, an evaporator coil fail, the 13 package unit sitting outside the house, you just**  **14 replace it. Nobody would ever argue about that. 15 Likewise if the compressor in that**  **16 package failed you'd just replace it. 17 But under the proposed treatment of**  **18 replacement coils; a built system obviously has 19 the evaporator in the house in a coil cavity, in**  **20 a mobile home coil cavity. 21 So, we'd like to see that service**  **22 coils or replacement coils, whatever you want to**

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## 1 call them, if they're going back in an existing **2 application, a casing cabinet, cavity, plenum, 3 whatever, that it is what it is, they should be**  **4 excluded from the guidance. In fact, I'm 5 wondering why the replacement coil should really**  **6 be in the guidance except when they come to -- it 7 comes to a new installation. We don't disagree**  **8 with that at all. 9 And I guess finally, if this first**  **10 solution is not adopted maybe, I guess the second 11 solution would be some sort of a waiver situation** **12 for these situations. Maybe even an industry 13 wide waiver you know, waiving anything that would**  **14 be considered a service coil. 15 So I will -- I guess I'll open it up**  **16 to the floor for any comments or questions or 17 whatever. Thank you.**  **18 MR. EISNER: Anybody have comments? 19 Harvey?**  **20 MR. SACHS: This is Harvey. And 21 Terry, thank you very much. It was very helpful**  **22 to me.**

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## 1 I do have just a straightforward **2 question. Suppose instead of your first example 3 from 2013 R410A installation in Virginia we think**  **4 about what seems to me the more likely case of an 5 8-year-old R22 unit that fails.**  **6 Are you proposing any different 7 treatment for that R22 coil which is likely to be**  **8 short tube or other fixed metering device. 9 Or how are we going to -- how are you**  **10 proposing we deal with that older equipment and 11 assuring that we get the appropriate charge when**  **12 that replacement is done? 13 MR. SMALL: Well, Harvey, and I don't**  **14 have to tell you. You're an expert in your own 15 right.**  **16 But you know, when you think about it, 17 let's just look at a package system as an**  **18 example. 19 You know, a package system basically**  **20 has a compressor. It has a condenser coil around 21 the compressor. It has a condenser fan.**  **22 Then on the other side of a piece of**

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## 1 sheet metal is a blower and an evaporator coil. **2 And that system was designed to work using that 3 specific evaporator.**  **4 And if you had a failure. Let's say 5 that you had an R22 package unit that wasn't --**  **6 you had a massive leak in the evaporator in the 7 field of the coil. You know, when I say the**  **8 field, in between the tubes and the fins that it 9 cannot be fixed, can't be braised or anything.**  **10 Would you think that it would be bad, 11 even if it's eight years old and if the consumer**  **12 didn't want to spend several thousand dollars on 13 a new package unit, would you have an issue if**  **14 they went back with the same service evaporator 15 coil? In that situation on a package unit.**  **16 MR. SACHS: Okay. So -- 17 MR. SMALL: After all, the system --**  **18 the original package unit was designed, it's 19 expecting to see R22, a certain size evaporator**  **20 coil. 21 The system was designed around that**  **22 evaporator coil and that refrigerant. So, true**

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## 1 that when you fix the -- when you put a new **2 service evaporator coil in the package unit, you 3 know, the SEER is probably still going to be 10,**  **4 Harvey. But, you know, you haven't violated the 5 design.**  **6 What I'm arguing on the split system, 7 if there's not the room -- now, if you're**  **8 replacing, you're putting a new condenser in and 9 a new coil sitting on top of the furnace, then**  **10 I'm adamant that it needs to be 14. It needs to 11 be R410A, 14 SEER. I have no qualms about that.**  **12 But if the unit sitting on the outside 13 is still the older R22 10 SEER it's designed for**  **14 a certain size evaporator, and there's only so 15 much space allocated for that evaporator, then I**  **16 believe the industry would always go back and put 17 in an equivalent like kind evaporator.**  **18 And you know that would, you'd 19 continue to be putting a Band-aid on a 10 SEER**  **20 R22 system. Make any sense? 21 MR. SACHS: No, it's very helpful,**  **22 Terry, and I appreciate it.**

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## 1 The other factual question it leads to **2 is just are you and your competitors still 3 manufacturing and stocking for your distributors**  **4 the exact replacement coils for the obsolete 5 systems?**  **6 MR. SMALL: Well, of course, the 7 question is how obsolete.**  **8 Now, my example was just a recently 9 built so that would be no problem.**  **10 And in fact, remember that the 11 consumer protection requirements which are state**  **12 by state, sometimes federal, I mean I would be 13 remiss if I didn't stock something that could**  **14 replace one of my older coils. 15 I mean, I would be -- just like I**  **16 stock, you know, a lot of control systems have 17 gone to digital, but I still stock analog stuff.**  **18 So, now how far back? I don't know. 19 Do I stock something that we would have made, you**  **20 know, 10-15 years ago? I doubt it. 21 But I do think that there's an**  **22 obligation to the consumer. I mean, we're not in**

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## 1 a position that we want to force the consumer to **2 buy a whole new system. 3 So, I guess there's a gray area,**  **4 Harvey. And I don't believe that DOE has really 5 in my mind ever regulated service coils.**  **6 I would love for one of my system 7 manufacturer OEM friends to jump in here if one**  **8 of you guys would. 9 MR. PORTER: This is Steve Porter,**  **10 Johnstone Supply. I don't see anything or have 11 read anything that is regulating replacement**  **12 coils. 13 So I mean, I plan on carrying the**  **14 coils as a distributor to support the replacement 15 of any older unit that that side of the system**  **16 failed with a leak. This is what we're talking 17 about is a system here on 14 SEER in the newer**  **18 unit. 19 So, unless somebody else has something**  **20 they can show me that gives different guidance 21 that's the way it is. So I think you're -- much**  **22 ado about nothing.**

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## 1 MR. ROCKY: So, this is Bryan Rocky **2 from Johnson Controls. 3 So, the guidance that was issued,**  **4 Steve, by DOE does not differentiate between a 5 replacement assembly or a part now. That's the**  **6 issue. It talks about individual condensing unit 7 or coils as replacements.**  **8 So to me the issue ends up being 9 basically if you're going to replace a service**  **10 coil that is a component just like a compressor. 11 You're putting a new coil in an existing box that**  **12 was sold as part of a previous system. 13 Unfortunately, the way the guidance**  **14 came out from DOE it does not read that. It says 15 a coil must be part of a 14 SEER system. So that**  **16 by the terminology that we have a couple of weeks 17 still to comment on to me says the Department is**  **18 trying to eliminate the replacement parts of 19 coils for equipment going back 15 years or so.**  **20 To answer Harvey's question, we 21 currently supply replacement parts for units**  **22 under direct warranty. We have 10-year**

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## 1 warranties available that are in force. So our **2 company position is we will provide those 3 replacement coils during the lifetime of that**  **4 warranty. 5 Not every manufacturer does it the**  **6 same. It is a volume-based business and in some 7 cases very low volume replacement parts might be**  **8 replaced with a new part as part of a design 9 system today. But we still sell -- the vast**  **10 majority of service coils are for products not 1 11 year, 2 years, 5 years, it's the 5 to 15 years**  **12 out. 13 MR. SACHS: This is Harvey again. All**  **14 of this is very helpful. 15 I'm an equal opportunity offender so**  **16 I want to then turn back to Laura as Doug's proxy 17 and ask -- get the question this way.**  **18 Given that a given coil, and 19 fortunately Ashley has just come in also.**  **20 MS. BARHYDT: Very fortunate for me. 21 MR. SMALL: Hey Ashley, you missed my**  **22 presentation.**

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## 1 MS. ARMSTRONG: I'm prepared. I read **2 it last night. I'm ready to go. 3 (Laughter)**  **4 MR. SMALL: So, did you just wait 5 until after I was finished to come in?**  **6 MS. ARMSTRONG: Not exactly planned. 7 I'm still adjusting to my daughter starting**  **8 kindergarten yesterday. 9 MR. SMALL: Oh, okay. Well, that's**  **10 important. 11 MS. ARMSTRONG: Thank you.**  **12 MR. SMALL: More important probably 13 than replacement coils.**  **14 (Laughter) 15 MR. SACHS: Returning to our theme and**  **16 my question for Laura -- Laura, now Ashley -- the 17 guidance document then says that if you replace a**  **18 coil but not the condensing unit it's got to meet 19 the new spec. Meaning it's got to yield a match**  **20 14. 21 Has the Department thought about how**  **22 that would be enforced in terms of persistent**

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## 1 violations or even individual violations? **2 It's something I've not come to any 3 conclusions on myself.**  **4 MR. ROCKY: So, this is Bryan. If I 5 could expand on that and give you ladies a chance**  **6 to think to that and answer that question. 7 What I see this is it comes down to**  **8 two different options. Terry talked about it 9 already in his presentation.**  **10 If I have a service part compressor or 11 a service part replacement coil I believe under**  **12 the guidance that I can still install that in the 13 field. That our distribution partners sell it to**  **14 a contractor. It's a replacement part. It's not 15 a component of the system.**  **16 However, if I'm in a situation I 17 cannot provide that replacement part because of**  **18 age, or inventory concerns, whatever, and I am 19 going to have the contractor install a new coil**  **20 assembly as a finished goods in lieu of a 21 replacement part, the guidance tells me that**  **22 replacement assembly has to meet the 14 SEER**

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## 1 system definitions. That's a different situation **2 than replacing a part. It's a component. 3 Now, that's my question to Ashley and**  **4 Laura and Doug as we go forward on the guidance. 5 And that's one of the things we're going to be**  **6 commenting on on this guidance. 7 I think it's a key descriptor of the**  **8 issues for our contractors as we -- what is legal 9 to be done.**  **10 If it's a part it's not regulated. If 11 it's an assembly, a finished good item that we**  **12 have for sale, then it has to be required as I 13 understand, or our understanding as a company of**  **14 this guidance. 15 MR. SACHS: Thank you very much and**  **16 you've certainly helped me with one issue, 17 clarified that despite Terry's suggestion I'm not**  **18 an expert. 19 MR. LATTANZI: This is Matt Lattanzi**  **20 at NORDYNE. And my company is -- we participate 21 heavily in the manufactured home market segment**  **22 along with Bryan's. And I agree with much of**

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## 1 what I heard. **2 And we talked about this in an earlier 3 session here. I can't remember which day. Some**  **4 of them are starting to run together a little bit 5 for me.**  **6 But the verbiage that's in question, 7 it's at the bottom of page 3 in the second**  **8 guidance, the last paragraph. It's the first 9 sentence.**  **10 And it reads, "An individual 11 condensing unit or coil must meet," and then it**  **12 goes on. 13 And again, we talked about this**  **14 earlier and the way I remember we left it is that 15 we would comment on it respectively and then go**  **16 from there. 17 But I mean, I do see an issue here on**  **18 the replacement side of the business. And I 19 agree with much of what I heard.**  **20 Relative to a new install if you're 21 replacing the indoor appliance and the outdoor**  **22 appliance then we've got to make sure that that**

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## 1 system makes 14 SEER. **2 But when that individual coil fails 3 and it's inside an alcove, I mean, there's an**  **4 issue here. 5 MR. EISNER: Anybody else want to**  **6 speak? Are you ready for them, Laura and Ashley? 7 Okay, I guess we can't put it off any longer.**  **8 MS. ARMSTRONG: Okay. Let me think 9 what I want to say first, Neil.**  **10 So, just to clarify. Obviously this 11 is draft guidance. It was put out as draft and**  **12 it's open for comments. So, a couple of things 13 for consideration while you formulate your**  **14 potential comments and then submit them to the 15 actual comment box associated with the guidance.**  **16 One would be that as Bryan explained 17 the guidance doesn't differentiate between what**  **18 you're calling coils that may go in what I'll 19 call replacement situations or fixing situations,**  **20 as you call them as parts, versus coils that may 21 go in as just a whole new package coil kind of**  **22 thing.**

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## 1 It's all coils. So if there is a **2 differentiation that you feel needs to be made we 3 would ask why and how and explain that to us.**  **4 Because right now it's all coils and all 5 condensing units. And that's explicitly how it's**  **6 written in the draft guidance that was put out 7 for comment.**  **8 So, if you're asking DOE to consider 9 differentiation between different types of coils**  **10 that may be sold as parts more like compressors 11 as you're explaining we would ask why they're**  **12 more like compressors and not like condensing 13 units.**  **14 I understand Terry's presentation and 15 some of the explanations in terms of the space**  **16 constraints issues and that type of stuff. So I 17 can appreciate those and that will go in the**  **18 docket. 19 But we're going to ask you why and how**  **20 you would differentiate those being sold as just 21 parts versus those being sold as -- as**  **22 replacement packages type things for lack of**

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## 1 better terms. And then how would we know what **2 difference. 3 MR. EISNER: Can I ask for**  **4 clarification? The issue about HUD regulations. 5 Is that an actual conflict, or is that something**  **6 that can be worked out? Do you know? I mean, is 7 this something that you have to talk to HUD about**  **8 or are you aware of this situation? 9 MS. ARMSTRONG: So, I think I need to**  **10 go back and look a little. I didn't have a 11 chance to look into their regulations.**  **12 I wasn't aware that there was an issue 13 before. But I'm happy to look into it now that**  **14 it's been brought to our attention. 15 MR. SACHS: This is Harvey with**  **16 another question. 17 Bryan, I think I understood from you,**  **18 leaving out mobile homes for now, but 19 conventional single-family and similar split**  **20 systems, a coil assembly would roughly correspond 21 to a cased coil and a coil as part would roughly**  **22 correspond to an uncased coil? Is that roughly**

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## 1 there, or can you help me? **2 MR. ROCKY: This is Bryan. So, by our 3 definition that would be correct, that a finished**  **4 goods part has a certain set of model numbers and 5 it's a complete assembly.**  **6 So, with sheet metal, with refrigerant 7 metering devices, with everything that you have**  **8 to drop that new finished good assembly into an 9 application.**  **10 A replacement part coil has a 11 different model nomenclature. It does not have a**  **12 finished goods number. It has a source 1. 13 Our trade, our warranty group has a**  **14 separate part number. It's the coil only. Not 15 refrigerant devices if it's not attached. It's**  **16 just the evap coil and a drain pan. And that's 17 the way it's shipped.**  **18 So the anticipation of the field is 19 you pull the old coil out because it's too costly**  **20 to repair, or it's not repairable. You slide the 21 new coil assembly in the existing sheet metal.**  **22 The uncased coils or the mobile home**

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## 1 coils is both. We track finished goods as a **2 finished good part number regardless and then we 3 track warranty parts as a different part number**  **4 to help us track sales, inventory. 5 And, again, a part, a replacement part**  **6 does not have all of the controls or components 7 that go into the finished good. They're not**  **8 serialized. There's no inventory tracking as far 9 as a date code on a replacement part. It's a**  **10 part. You can track finished goods by all of our 11 requirements.**  **12 MR. SACHS: This is Harvey. And thank 13 you very much, that's very helpful to me.**  **14 MS. ARMSTRONG: So, can I ask a 15 question? What are you doing today with those**  **16 that you're calling non-finished goods? Are you 17 rating them? Are they certified?**  **18 MR. ROCKY: So, a non-finished good, 19 a replacement part --**  **20 MS. ARMSTRONG: A replacement coil. 21 I'll talk coils.**  **22 MR. ROCKY: So, a replacement coil is**

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## 1 not part of a rated system today. It is not **2 serialized. It is not the same model numbers as 3 part of our rated coils. They're replacement**  **4 parts. 5 Just like a compressor or a condenser**  **6 coil is the same parts that go into a system that 7 is rated, it's not -- the repair parts for -- a**  **8 replacement coil, a compressor, a condenser fan, 9 an evap coil, a TXV, those are not -- they're** **10 part of systems that are certified, but as stand 11 alone components they're just parts. They go out**  **12 and be replaced in the field. 13 MS. ARMSTRONG: So, let me make sure**  **14 I understand this. You say they're parts of 15 systems that were certified. They were once**  **16 parts. So you may very well be discontinuing 17 that system, but continuing to make the coil. Is**  **18 that accurate? 19 MR. ROCKY: We sell a lot of**  **20 replacement parts, compressors, condenser fans, 21 evap coils and condensers for 10 SEER products**  **22 today.**

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## 1 We cannot build those products. We do **2 not rate those components today as a system. But 3 they're legitimate repair parts and they're sold**  **4 for the field to repair units that were certified 5 under 10 SEER requirements back, I can't remember**  **6 how many years ago now that was. 7 MR. LATTANZI: This is Matt. It was**  **8 2005, or the end of 2005 when we went to 13. 9 MR. ROCKY: And again, part of that is**  **10 we offer 10-year warranties. And you could still 11 have a 10 SEER unit that has failed under**  **12 warranty. 13 MR. LATTANZI: And that would be**  **14 correct because we stopped manufacturing at the 15 end of '05. And some of our warranties are 12**  **16 years. 17 MR. EISNER: Terry, you wanted to add**  **18 something? Terry Small, are you still there? 19 MR. SMALL: Oh, I think Bryan handled**  **20 what I was going to comment on. 21 MR. EISNER: Okay. Craig Messmer, you**  **22 wanted to make a point about striking the coil**

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## 1 from the language? Craig, are you there online? **2 MR. MESSMER: I'm here. Can you hear 3 me?**  **4 MR. EISNER: Yes. 5 MR. MESSMER: I'm sorry, I'm not in**  **6 the office so I'm on my mobile phone. 7 It makes no sense to consider putting**  **8 a new coil if it's rated into an old system. 9 There's no energy benefit at all. It should be**  **10 and it is today considered just a replacement 11 part. So, in order to correct this you just need**  **12 to strike the coil from the language in that 13 guidance.**  **14 Otherwise, the only way to get the 15 higher efficiency is to replace both indoor and**  **16 outdoor units. You're not going to get any 17 energy benefit, even if you put a new coil in.**  **18 So I don't see the issue here. 19 MR. EISNER: Is there any disagreement**  **20 on that point? 21 MR. ROCKY: This is Bryan Rocky. So**  **22 the issue becomes the way the guidance is written**

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## 1 today prevents us from doing as an industry **2 practice what we've done for a long time. And 3 that is maintain replacement parts for field**  **4 failures that match the original install. 5 MR. EISNER: But is there agreement**  **6 that it will not improve efficiency to use a 7 higher rated coil?**  **8 MR. ROCKY: The direction of the 9 guidance will create a mixed match system that we**  **10 cannot validate what the performance was. 11 That 10 SEER outdoor unit system when**  **12 you replace the coil with a 14 SEER equivalent 13 coil will not have the same performance, it will**  **14 not have the same operating characteristics and 15 it has the potential to create new field issues**  **16 because the coil would be not correctly sized for 17 the condenser and the line set.**  **18 So there is a real risk to our 19 customers. And I think Steve and Charlie and**  **20 others would agree as far as the field results of 21 this.**  **22 And I can't tell you what the results**

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## 1 are going to be because I can't rate a 10 SEER **2 outdoor unit with this new evap coil. 3 MR. EISNER: Is it possible efficiency**  **4 could be less than it would have been if you used 5 the original coil?**  **6 MR. ROCKY: I'll let somebody else 7 talk.**  **8 MR. PORTER: This is Steve Porter, 9 Johnstone Supply. Yes.**  **10 MS. ARMSTRONG: Why? 11 MR. PORTER: The coil was never**  **12 designed with this system. We'd have to go 13 through all kinds of testing to look at what the**  **14 rating could be. It could be oversized, it could 15 be undersized. There's a myriad of conditions.**  **16 I mean, what you're doing is you're 17 obsoleting every person's air conditioning unit**  **18 out there right now with that language. 19 So, if I bought a 12 SEER 11 years ago**  **20 now I have to put -- I have to get a new system, 21 or I have to match it with something that may**  **22 make my system less efficient? That's what**

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## 1 you're saying. **2 MR. SACHS: This is Harvey. Let me 3 try a lay approach to this.**  **4 My expectation would be that that SEER 5 14 rated -- if such a thing were possible -- coil**  **6 going into that SEER 10 unit -- and we'll assume 7 it fits -- that we don't have a refrigerant**  **8 change-out issue -- is going to be physically 9 larger and have larger surface area.**  **10 Now, just to add a little bit of 11 detail to what others have said, to me there are**  **12 a couple of issues. 13 One of them is it's likely to have a**  **14 whole lot more coil area which is likely to mean 15 that in this field installation we'll have --**  **16 which is presumably a PSC single stage 17 compressor, et cetera -- we're likely to have a**  **18 warmer evaporator and less humidity removal. And 19 we're talking about the South.**  **20 So we've got all these issues that our 21 lab ratings on which we base SEER are at**  **22 unrealistically low ESPs. So in general we're**

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## 1 getting lower air flow than we might like which **2 enhances humidity removal, but that's going to be 3 fought by the much larger surface area.**  **4 So, when Bryan says he can't calculate 5 it I think Hugh Henderson could but then another**  **6 part of DOE would say, gee, you can't even think 7 about a research paper that includes application**  **8 ratings. 9 So it really gets into a rough ball of**  **10 wax. And I don't know how one would predict the 11 performance.**  **12 MR. LATTANZI: This is Matt Lattanzi 13 with NORDYNE. In addition, I think where Harvey**  **14 was going was basically air flow. 15 But in addition to air flow issues I**  **16 think this larger coil is not only going to be a 17 larger surface area, but it's going to have more**  **18 volume and therefore require an adjustment in 19 refrigerant charge which if not done correctly**  **20 will definitely decrease the performance of that 21 system, likely below where it was operating with**  **22 the original coil.**

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## 1 MR. EISNER: Any other comments or **2 questions on this issue? 3 MR. LATTANZI: Just one other comment.**  **4 I mean, the manufacturers not having rated these 5 systems with the larger coils, I mean, there's no**  **6 published data to instruct the market on how to 7 charge that system. I mean, it's going to be a**  **8 guess which is going to be problematic at best. 9 MR. FERNSTROM: So, this is Gary for**  **10 the California IOUs. 11 Matt went to answering my question and**  **12 that was going to be, well, if you put in a 13 replacement coil that may have a different**  **14 volume, how do you know how to adjust the charge. 15 MR. LATTANZI: This is Matt. You**  **16 don't. 17 MR. FERNSTROM: Thank you.**  **18 MR. WINNINGHAM: This is Dave with 19 Allied.**  **20 There's two problems. One is what 21 metering device to select. And there's really --**  **22 without testing you really don't know.**

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## 1 And then the charge quantity. It **2 really puts you where they're engineering it in 3 the field.**  **4 MR. GIBBONS: This is John with 5 Carrier. And to that point it's the metering**  **6 device within the metering device. They're 7 different sizes.**  **8 And then the tube diameter is 9 something else that, I forget, Matt or Steve or**  **10 Harvey were -- back in 2006 when we introduced 13 11 SEER a lot of us changed tube diameters. So**  **12 that's a big problem. 13 MR. EISNER: Terry, you want to make**  **14 a point? 15 MR. SMALL: Yes. I want to just**  **16 follow up on what everybody else has said. 17 In the heat pump application in**  **18 particular it's critical. Heat pumps literally 19 are designed to be paired with certain indoor**  **20 coils. And they have an internal volume that's 21 pretty critical in terms of charging. You make**  **22 it -- you do a replacement that's too big or too**

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## 1 small, you're going to have nuisance tripping. **2 You'll have a disaster. 3 I don't think Steve Porter or any of**  **4 the contractors would ever recommend, 5 particularly on a heat pump, to ever go back with**  **6 anything but something similar that's already on 7 the older system.**  **8 So, I would say at the absolute 9 minimum anything having to do with heat pump**  **10 replacements should be excluded from the DOE 11 guidance. In other words, service coils for heat**  **12 pump replacements. Thank you. 13 MR. BALLO: This is Tim with**  **14 Earthjustice. And I'm just trying to understand 15 all the ramifications of this.**  **16 I'd just like to change the 17 hypothetical a little bit. And suppose that**  **18 there is this house out there that has an 19 evaporator coil that's located in an area where**  **20 there's -- expanding the size of that coil is 21 going to be very difficult.**  **22 If the homeowner gets a new condensing**

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## 1 unit installed and -- or also get a new **2 evaporator coil, essentially a new system, but 3 it's going to be very expensive to put in a**  **4 proper matched system because of the difficulty 5 of that indoor coil installation it seems to me**  **6 there would be an incentive for a contractor to 7 come up with a lower bid by getting a replacement**  **8 evaporator coil part and making it work with that 9 system.**  **10 And what I'm hearing, the difficulties 11 of this suggest to me that that's an unlikely**  **12 scenario just because of, you know, he's not 13 going to know the right amount of charge, and**  **14 it's not going to work well, and he's just going 15 to get called back. So, is this not a danger**  **16 that others see? 17 MR. ROCKY: Bryan Rocky from Johnstone**  **18 Controls. What you just described is the 19 conundrum of dry ship units today in our**  **20 industry. 21 And whether we like it or not, I would**  **22 much rather sell a new 14 SEER, high SEER**

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## 1 efficient system that has better comfort and **2 better energy savings, but the vast majority of 3 contractors out there do not sell that. They**  **4 sell replacement parts because of the economic 5 requirements of the homeowner.**  **6 And in a condenser mode that's 7 currently a dry ship condenser, and you don't**  **8 change the other parts if you don't have to. 9 Just as a comment, I had just sent**  **10 Alex a diagram from our source 1 documentation 11 that helps with the pictorial of this replacement**  **12 part. And I think he's going to pull it up to 13 show the breakout of our particular documentation**  **14 on service parts versus finished goods. 15 But yes, Tim, that's the issue with**  **16 the industry. If a consumer replaces a 17 condensing unit and I did this two weeks ago I**  **18 did not change out my evap coil. 19 And my condenser went out. Actually,**  **20 my compressor went out on a 15-year-old unit. 21 And I even didn't want to spend the money for a**  **22 lot of reasons on a new system. Partly because**

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## 1 I'm waiting for a field trial unit from my **2 engineering group. 3 But the reality of it is it's what**  **4 customers do every day. It's what our 5 contractors do and are used to doing. They**  **6 replace parts. They sell up when they can, but 7 they sell what the homeowner wants.**  **8 MR. MCCRUDDEN: So, this is Charlie 9 with ACCA.**  **10 I think Bryan referenced sort of 11 myself and Chuck earlier. And so what I want to**  **12 do is sort of say that I am in line with his 13 comments earlier and that ACCA -- and I see this**  **14 as a real problem for our folks. But I also have 15 a question while this is coming up.**  **16 Harvey mentioned this is sort of a 17 South-only issue, but it seems to me this may not**  **18 be a South-only issue. It's a national issue. 19 So this is the North too.**  **20 MS. ARMSTRONG: It's everywhere in my 21 opinion.**  **22 MR. MCCRUDDEN: Okay. All right.**

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## 1 Thanks. **2 MS. ARMSTRONG: It becomes a bigger 3 issue in the South when you have different**  **4 standards, more stringent standards. But it's a 5 national issue. It is a today issue.**  **6 We're all in on this one, Harvey. One 7 big happy family.**  **8 MR. ROCKY: So, Ashley, just to 9 continue on this thought. I mean, we separated**  **10 out in this guidance the discussion of coils. 11 And we get into the concern that I had**  **12 brought up, to me was are compressors next. 13 We have a certain set of compressors**  **14 that are required for 14 or 15 SEER product but 15 in the same situation it's a component.**  **16 MS. ARMSTRONG: No. The answer is no 17 from the Department.**  **18 MR. ROCKY: Thank you. 19 MS. ARMSTRONG: So, I'm going to ask**  **20 a question. And this gets back to your point 21 about -- I can appreciate all the concerns that**  **22 people have brought up about the coil language**

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## 1 and the guidance. And obviously, after getting **2 comments DOE will consider them. 3 One question I have is you say, you**  **4 know, the situation that Tim described, this is 5 the R22 issue, the issue that everyone likes to**  **6 talk about so much. 7 So, if you were the Department how**  **8 would you navigate that issue? 9 MS. BARHYDT: Karen looks like she**  **10 wants to say something. 11 MS. ARMSTRONG: Or John sitting in the**  **12 back. 13 MR. EISNER: If only the court**  **14 reporter could describe what was just happening. 15 (Laughter)**  **16 MR. HURST: John Hurst for Lennox. 17 All good points. I'd like to take**  **18 some time maybe with my industry compadres to 19 chew on it a little bit. But I do think it's**  **20 fair that we have the comment period. 21 But I don't have a good answer for**  **22 you. It's not an easy topic. So I'd ask that we**

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## 1 be able to take some time and talk about it to **2 come up with a consistent approach. 3 MR. ROCKY: This is Bryan Rocky. So,**  **4 Alex has pulled up this document. Just, again, 5 to highlight this.**  **6 An FC series is a fully cased finished 7 goods evaporator coil. As Harvey already talked**  **8 about it's a cased coil. So you can see in this 9 case, and we'll scroll down in a minute, but**  **10 there is -- and this is a repair parts list that 11 we provide. And every manufacturer does**  **12 something very similar if not nearly in the same 13 format.**  **14 That FC coil has a number of 15 components as you can see which is mostly sheet**  **16 metal and the coil. 17 And as you scroll down a little bit,**  **18 Alex -- that's far enough right there. So, an 19 FC18A4E is basically a 410A ton and a half**  **20 nominal capacity coil. You can see the FC number 21 is my finished goods number. And as you go down**  **22 item number 1 is the coil with drain pan, and**

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## 1 it's an S1-373. And again, every manufacturer **2 does something very similar. 3 So if a contractor has an issue with**  **4 a failure in the field generally speaking they 5 will order that S1-37323, et cetera, et cetera,**  **6 et cetera, number because that's the part that 7 failed.**  **8 If they have an issue with the 9 distributor assembly they will order the S1-022**  **10 et cetera, item number 7. You only replace what 11 you need.**  **12 Now, if that coil assembly, the item 13 number 1, that S1 number is not available today**  **14 the contractor can replace that with a new FC18 15 and know he gets the equivalent performance for**  **16 that 13 or 14 SEER system. 17 If you go back into previous**  **18 generation products, a G2FD, for instance, is 19 exactly the same construction for a product that**  **20 was 10 SEER fully cased coil from 2004 for me. 21 It has exactly the same parts breakdown. It has**  **22 a different coil assembly.**

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## 1 So I just wanted to highlight again **2 when I'm talking about the replacement part to me 3 the coil is no different than the front access**  **4 cover plate, or the drain pan itself which can be 5 replaced, or the TXV.**  **6 If you buy the finished goods you get 7 all of those parts. You buy a replacement part,**  **8 you get just the part you need. So hopefully 9 that clarifies the situation from my viewpoint a**  **10 little bit. 11 MS. ARMSTRONG: And so just to be**  **12 clear, the FC18A is always rated and certified 13 today. That's industry practice.**  **14 MR. ROCKY: That is -- I believe so. 15 A finished goods part.**  **16 MS. ARMSTRONG: Even if it's a 10 SEER 17 legacy replacement coil. Is it then -- so, for**  **18 example, if the FC18A was representative of a 10 19 SEER unit from 2000, would that have been re**  **20 rated and re-certified as a case system -- as a 21 system for 13 SEER in 2006?**  **22 MR. ROCKY: So, Ashley, in my case,**

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## 1 and again, all I can speak to is this. When we **2 changed from 10 to 13 SEER we changed 3 nomenclature of the finished goods parts as part**  **4 of that system. 5 So the 10 SEER unit of the coil would**  **6 be a G2FD. The 13 SEER certified component is 7 the FC18. So I never rated a 13 SEER unit with**  **8 the previous generation. 9 MS. ARMSTRONG: Sure.**  **10 MR. ROCKY: We made a change in indoor 11 and outdoor at the same time.**  **12 MS. ARMSTRONG: But could I pull up 13 today your 10 SEER equivalent spec sheet and**  **14 order line 1? 15 MR. ROCKY: Yes.**  **16 MS. ARMSTRONG: But the FG part of it 17 is no longer -- is not certified. It's**  **18 discontinued. 19 MR. ROCKY: It's not -- that's**  **20 correct. 21 MS. ARMSTRONG: Okay.**  **22 MR. LATTANZI: Right. This is Matt**

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## 1 with NORDYNE. Not only is -- it's discontinued **2 and not available. So we don't sell the finished 3 good 10 SEER coil.**  **4 For us it's C3 and C4. I'll make it 5 easy. C3 was 10 SEER, C4 was 13. You can't buy**  **6 a C3B blah blah blah whatever. We don't sell it 7 anymore.**  **8 But you could buy the replacement 9 coil. In other words, his line 1.**  **10 MS. ARMSTRONG: The C3 coil for lack 11 of a better term.**  **12 MR. LATTANZI: Yes. 13 MS. ARMSTRONG: Just the coil.**  **14 MR. LATTANZI: The coil that was 15 inside the C3.**  **16 MS. ARMSTRONG: Okay. 17 MR. EISNER: Any other questions on**  **18 this issue? Comments? 19 MS. ARMSTRONG: Can I ask one more**  **20 question? 21 MR. EISNER: Sure.**  **22 MS. ARMSTRONG: Sorry. And do you**

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## 1 guys continue to offer them even past your **2 warranty span? 3 So, for example, if you have a 12-year**  **4 warranty as your max, if 2006 everything had to 5 change over would you still continue them after**  **6 the 12 years past 2006? 7 I realize that people will still have**  **8 them, but your warranty period is over. 9 MR. LATTANZI: This is Matt with**  **10 NORDYNE. I think that's going to vary from part 11 to part and manufacturer to manufacturer. And**  **12 depending upon volumes and service parts and 13 warranty rates.**  **14 I mean, there's some components, for 15 example, I'm going to use an example of a furnace**  **16 and a heat exchanger where the warranty period is 17 10 years or 12 years. The furnace is**  **18 discontinued. 19 At some point during the warranty**  **20 period it's not uncommon that the cost of that 21 replacement heat exchanger is more than the whole**  **22 appliance. So we would stop providing the**

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## 1 warranty part and at that point provide the whole **2 appliance. 3 So it's really all done on looking at**  **4 the financials and making the best economic 5 decision depending upon the part and the volume**  **6 you installed base. I think a lot of factors 7 come into that.**  **8 MS. ARMSTRONG: So, my ask is as part 9 of your comments if you could speak a little more**  **10 detailed about that issue. Maybe not as an 11 industry, but if you wanted to provide details.**  **12 I think that would be very helpful for the 13 Department to understand.**  **14 MR. EISNER: All right. Oh, I'm 15 sorry.**  **16 MR. ROY: This question is for Ashley. 17 Aniruddh Roy with Goodman.**  **18 Ashley, since we were discussing this 19 topic would it be acceptable to produce 14 SEER**  **20 dry charge R22 split ACC pump products after 21 12/31? Based on the guidance that you've**  **22 provided.**

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## 1 MS. ARMSTRONG: I think I need to **2 think about your question. 3 But at the same time the latest**  **4 guidance we've put out is draft for comment. So 5 we would still have to go through the process of**  **6 considering all the comments and then deciding 7 whether.**  **8 So I don't think the Department is in 9 a position to be able to answer that question**  **10 yet. 11 MR. ROY: Okay. But assuming that the**  **12 guidance stays the way it is? 13 MS. ARMSTRONG: We're not going to**  **14 answer right now. Sorry. 15 MR. EISNER: Okay. No more questions.**  **16 Any questions online? Comments? Okay, anybody 17 want to give a one-sentence summary to Doug of**  **18 what we accomplished in his absence? 19 MR. RAWALD: Luckily, the internet and**  **20 the phone world allowed me to listen in as I was 21 traveling in from the airport so I heard almost**  **22 everything.**

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## 1 MR. EISNER: Okay. How did the first **2 class go? 3 MR. RAWALD: It was great. It was**  **4 great. 5 I would note that Ray Ellis is not**  **6 here and we invited Keith to take his seat. So 7 he's a voting member of the Board today on Ray's**  **8 behalf. 9 MR. EISNER: All right. Now we should**  **10 go back to where we were last week, talking about 11 our five categories. Ask you how you'd like to**  **12 proceed. 13 There were a number of homework**  **14 assignments given out. Do we want to start with 15 that, or do we just want to start going over the**  **16 issues that we didn't discuss and then go back 17 later to the homework assignments? Any thoughts?**  **18 MR. SACHS: Neil, I don't think we got 19 our one-sentence summary.**  **20 MR. EISNER: It appeared that no one 21 was ready to do that so I was going to assume**  **22 that they would just go up to him at the break**

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## 1 and all give him their opinions. **2 MR. LATTANZI: This is Matt Lattanzi 3 with NORDYNE.**  **4 I don't know if I can do this in one 5 sentence but I'll try to summarize it as best I**  **6 can. 7 I think we talked about and identified**  **8 an issue that we've talked about previously. So 9 we've risen it back up again.**  **10 And it sounds to me like we're leaving 11 it where we left it the last time, that we need**  **12 to go back and provide the Department with 13 comments to further illustrate and explain the**  **14 problem. 15 Does that make sense?**  **16 MR. RAWALD: It does, Matt. This is 17 Doug. And I think also what we may have gotten**  **18 from Ashley's comments is it's not only relevant 19 for the regional standards, this is relevant writ**  **20 large for how we deal with this today I think is 21 what she said. So we want to make sure we're all**  **22 on the same page for how we refer to these**

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## 1 things. **2 And I think that she's very careful to 3 say we're really discussing -- this really only**  **4 relates to the coil, right? The indoor coil, 5 that's the issue.**  **6 So I know that Bryan had a concern 7 about other parts that are more at a subcomponent**  **8 level like the compressor. But that's not what 9 we're talking about here.**  **10 We view the coil to be treated 11 coequally as we treat the condensing unit. That**  **12 seems to be the question or the bone of 13 contention as I understand it.**  **14 MR. EISNER: Karen? We need to get 15 the body language in the document. Okay.**  **16 MR. SACHS: This is Harvey. And I'd 17 just like to say I think this morning's --**  **18 MR. SMALL: Doug, this is Terry Small. 19 I'm happy you joined the meeting.**  **20 I wonder if the coil issue shouldn't 21 be treated in a separate guidance. Because after**  **22 all it is a current issue. You know, it's an**

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## 1 issue right now. And I'm wondering if maybe the **2 Department, it would be better treated, a 3 replacement service coil situation separately in**  **4 its own guidance. What do you think about that? 5 MR. RAWALD: Terry, this is Doug and**  **6 that would be great comment to the draft 7 guidance, whether you feel we should split it**  **8 from the current guidance. 9 The current guidance as drafted is**  **10 meant to both deal with current situations and 11 future situations.**  **12 It's not only designed around the 13 regional standards. It's meant to be a more writ**  **14 large kind of statement or clarification of all 15 the things that we've said in the past about**  **16 these particular pieces of equipment. So I want 17 folks to understand that.**  **18 But I think if you feel there's a need 19 for separating it out that's something that we**  **20 can consider and certainly worth your comment to 21 the guidance as drafted.**  **22 MR. EISNER: Doug, the comment period**

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## 1 closes when? The 15th? Nineteenth. I believe **2 our next meeting is after that time. 3 How fast does the Department usually**  **4 work? Are they likely to have a new guidance 5 document out before then, or is that something**  **6 they might want to discuss at the next meeting 7 before they make it final?**  **8 MR. RAWALD: This is Doug. So it 9 varies depending on what we get in response.**  **10 So if we got 25 responses saying the 11 guidance was great as drafted, which I don't**  **12 think we will at this point, then it would 13 probably be easy to make it final the next day.**  **14 So, it's just because we're going to 15 be likely getting some seemingly very**  **16 intelligent, very well thought out but dissenting 17 comments that will require us to go back and**  **18 analyze and think about it. 19 So, I can say it probably won't be**  **20 finalized before our next meeting, but I will 21 give an update at the next meeting where we are**  **22 with it. That's the best I can promise at the**

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## 1 moment. **2 MS. MEYERS: So, this is Karen with 3 Rheem. Let me just ask a question.**  **4 The guidance that was published was on 5 how you rate certified products, correct?**  **6 MR. RAWALD: That is correct. 7 MS. MEYERS: Okay. I think that**  **8 should clear up a lot of questions around the 9 table.**  **10 MR. SACHS: This is Harvey. And I 11 realize this was the second round with this**  **12 conversation, but I for one learned an awful lot 13 and I don't think I'm the only one in the room**  **14 who did. 15 MR. EISNER: Okay, anything else? All**  **16 right. 17 Again, I ask do we want to go over the**  **18 homework assignments first or should we just 19 continue with the list and then go back and start**  **20 over? 21 MR. RAWALD: This is Doug. I'm going**  **22 to put my foot in the water at least and let**

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## 1 folks know what I have accomplished at the **2 request of the folks here. 3 And I've had several conversations.**  **4 Obviously I haven't had a whole lot of time in 5 the interim and a holiday weekend which in the**  **6 federal government means it was a three-day 7 weekend.**  **8 But what I can tell you is I did ask 9 some questions.**  **10 Now, Jon Melchi from HARDI asked a 11 good question about whether we could bring in**  **12 somebody to talk about the light bulb campaign 13 for some lessons learned for what we do here.**  **14 What I have heard from the program we 15 work with who controls the money is that the**  **16 scope of this compared to the light bulb campaign 17 is very different.**  **18 So, the light bulbs involved a lot 19 more energy savings and a lot more need for**  **20 publicity. So I don't know if there will be 21 Departmental money available for something of the**  **22 scope of what we saw in the light bulb campaign.**

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## 1 That being said, I'm still having **2 people look into bringing someone in to talk 3 about that.**  **4 What it seems like is something of a 5 smaller scale, like a trifold, or a leaflet, or a**  **6 pamphlet, or a posting type thing for the 7 contractors and the distributors.**  **8 It's certainly well within the bounds 9 of what the Department is willing to consider.**  **10 I'm just not sure that commercials, or other 11 large-scale things, or grants as we discussed to**  **12 advocates for something I can actually persuade 13 the money-spenders to spend.**  **14 But I will continue to ask the 15 question. But I think that we're looking at a**  **16 more limited pool of resources at the moment. 17 So, Jon, do you have a comment to that?**  **18 MR. MELCHI: Yes. Doug, this is Jon 19 Melchi with HARDI.**  **20 I talked with our members and they 21 particularly thought posters and trifolds would**  **22 be extremely helpful for them inside the store to**

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## 1 be able to have and to distribute. **2 So, understanding the Department's 3 limitations, those two things would be a priority**  **4 from distributors and we would be committed to 5 helping pass that information out.**  **6 MR. RAWALD: I appreciate that, Jon. 7 I also stressed from the contractor point of view**  **8 the value of having a trifold that they could 9 pass across the counter to a customer who was**  **10 saying I'm going to buy a 13 SEER from somebody 11 who's cheaper than you, so they could explain**  **12 well, that's why you shouldn't do it. So that 13 would be a helpful item for them.**  **14 And Charlie is nodding his head that 15 yes, he agrees that would be helpful.**  **16 So, those are things that I'm at least 17 pushing them to hopefully be able to open the**  **18 coffers for. So that's what we're working there. 19 I did note that -- I did a little**  **20 research myself and I saw there is a lot of 21 information on the internet about what**  **22 information folks gather.**

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## 1 And so I know the advocates were **2 really interested in where we can get information 3 about what's going where.**  **4 And it seems like there's at least 5 some information both at the distributor level**  **6 and also at the manufacturer level. I know the 7 AHRI has come forward and talked about how they**  **8 can provide us at least some shipment data and 9 where it's going.**  **10 But it seemed like there might be 11 something that HARDI could be able to provide us,**  **12 or another industry group of some sort on the 13 distributor level.**  **14 I don't know if, Steve or Jon, you 15 guys have any information on that. If there's**  **16 any more resources possible to kind of give the 17 advocates what they're looking for as far as kind**  **18 of a tracking of where shipments are going at a 19 more aggregate level.**  **20 MR. MELCHI: Jon Melchi with HARDI. 21 We have started a unitary report through HARDI.**  **22 However, there is a restriction on**

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## 1 that. At least for now it's a voluntary **2 reporting system for our distributor members. 3 And the policy right now is to not make that data**  **4 available to government entities. So we would 5 have to change that, obviously. And I can't**  **6 guarantee that our board of directors would 7 approve such a change.**  **8 We've had an instance where we've had 9 to deal with a certain state and we're not able**  **10 to provide them that data directly. 11 MR. RAWALD: Can you speak to what the**  **12 fears are of government entities? I mean, is it 13 that we'll use the information to somehow get at**  **14 folks so they won't provide real information? Is 15 that the concern?**  **16 MR. MELCHI: You know, I didn't set 17 the policy so I would have to double-check and**  **18 speak with that. 19 But I think part of the concern is**  **20 that it's a new report and we're just trying to 21 build up a sample size if you will. So I don't**  **22 know that I would necessarily classify it as**

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## 1 being statistically significant enough to be a **2 part of a federal enforcement scheme. 3 Additionally, our members are**  **4 extremely privacy aware. And it's been 5 challenging enough to get our members to provide**  **6 information to us for their own personal uses. 7 So if we disclose that we were going**  **8 to provide it to the government my own theory, 9 and I don't know if Steve could elaborate maybe a**  **10 little more, that a lot of our members would just 11 cease reporting.**  **12 MR. RAWALD: I see Steve is nodding 13 his head that he agrees with that.**  **14 So, once again, understand that HARDI, 15 you know, there are folks that aren't in HARDI**  **16 that are in the distributor world as well. 17 So that data has to be taken with a**  **18 grain of salt I think from all of us, right? And 19 Steve nodding his head in agreement there. So I**  **20 understand the limitations. 21 I think this is more of an ask from**  **22 the advocates because they were looking at it a**

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## 1 lot last week. And so maybe they could meet with **2 you guys offline and talk a little bit more about 3 different ways they could use this data. I'm**  **4 trying to think of ways that we could use it. 5 But to me the most important thing**  **6 from a record retention point of view, and I've 7 confirmed this with the folks that I work with,**  **8 is really the ability to track down individual 9 cases.**  **10 You know, tracking these big picture 11 numbers are interesting and helpful for us to**  **12 target proactive investigations, but in a 13 realistic practical kind of sense of things we're**  **14 going to be more in a reactive mode here. 15 We're going to be looking for people**  **16 that make complaints and how to follow up on 17 that. And so from a record retention point of**  **18 view and from what data I'd want reported if 19 requested it would be things that would help me**  **20 to follow up on individual cases and investigate 21 those individual complaints of non-compliance.**  **22 So I think that this data would be**

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## 1 helpful from the big picture if I had a lot of **2 resources, and it would be helpful with the 3 advocates because then they could call me and**  **4 say, Doug, you're looking in the wrong place. 5 But my urgent need would be kind of**  **6 the local records, the kind of detailed, hey, 7 this is what this individual -- this is where**  **8 this one unit went to and so we can confirm that 9 wasn't in the wrong place at the wrong time. So**  **10 that's the kind of stuff I'm spinning around in 11 my head.**  **12 MR. EISNER: Okay. Other thoughts? 13 Other comments? Questions?**  **14 All right, well let's go back to the 15 list. We've got the list up I guess. According**  **16 to my notes I think the last thing we were 17 talking about was record retention for a**  **18 specified time period. We had just started 19 talking about that.**  **20 And one of the questions that came up, 21 I don't know if you've had a chance to check, was**  **22 on the IRS and what they require.**

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## 1 MR. RAWALD: Right. So, this is Doug. **2 And so I haven't been able to run down exactly 3 what the bit-by-bit IRS requirements are.**  **4 So, what I've discussed with our 5 lawyers is that if we mirror the IRS in**  **6 collection, and obviously the burden inquiry will 7 be less and the PRA analysis will be even easier**  **8 because it will be things people are already 9 required to keep. So that's kind of where it**  **10 comes from. So I want to look at that some more. 11 I definitely think that the 3- to 5-**  **12 year time frame are the outside limitations of 13 what we want.**  **14 I can't imagine that less than three 15 years would be useful, but I definitely want to**  **16 make sure we talk more about that. So I guess I 17 want to keep that out there.**  **18 So I know that three years is what 19 folks are saying the IRS requires. I want to**  **20 take a look at that as well and get back to you 21 guys on that.**  **22 MR. EISNER: And are these records**

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## 1 that are kept for the IRS kept in a way that you **2 could simply go in and look at those records when 3 you wanted to? Or would they have to be --**  **4 MR. RAWALD: So, the point is that if 5 somebody's -- this is Doug -- if somebody's**  **6 already keeping the record because they have to 7 produce it if audited then we're not asking them**  **8 to do anything more than they're already doing. 9 So they would already have that in**  **10 their file cabinet or in their computer program. 11 So if we said produce this, okay, I already have**  **12 that for in case I was audited by the IRS so it's 13 no big deal for me to give it to DOE.**  **14 So, I think if it was stuff that was 15 provided to the IRS I would have very little**  **16 ability to get it because the IRS treats this 17 stuff very, very, very, very close hold for**  **18 obviously good reasons. 19 And so that's one area of government**  **20 where we don't share things. And I think people 21 should feel secure about that, that their data is**  **22 not thrown around aimlessly.**

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## 1 So, it would be very hard if it was **2 stuff produced to the IRS for then me to get it 3 through the IRS. It would be easier and probably**  **4 more practical, and I think the contractor and 5 the distributors would feel more comfortable if I**  **6 was going to them directly and they knew who was 7 asking for it and where it was being sent,**  **8 probably. 9 So I think production is different**  **10 from retention. But from a retainability point 11 of view if we're asking people to retain things**  **12 that the IRS is already asking that should be 13 pretty non-burdensome I would think.**  **14 MR. EISNER: Any comments on that? 15 Harvey?**  **16 MR. SACHS: This is Harvey. I do not 17 claim in this to speak for other advocates,**  **18 utilities, or anyone else. 19 But having thought a little bit about**  **20 it I certainly find myself resonating with two 21 things that Doug said.**  **22 One of them is that enforcement is**

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## 1 likely to be reactive. And the other is that **2 this does put -- this is not going to be possible 3 without a real records retention capability.**  **4 And I say that particularly because I 5 was quite impressed by Steve Porter's**  **6 differentiation of three classes of contractors. 7 The branded, the long-term reputable but not** **8 particularly brand loyal, and the over-the 9 counters.**  **10 And I think all of us are primarily 11 interested in making sure that the low-volume**  **12 over-the-counters, otherwise known as the 13 magnetic sign on the pickup truck people are**  **14 traceable because I think that's where some of us 15 feel the risks are concentrated.**  **16 I don't know what data that requires, 17 but I can't see us being able to have an**  **18 effective enforcement regime without having the 19 ability to recover serial number-level detail on**  **20 sales. So, I hope somebody is clever enough to 21 find something that would be less onerous.**  **22 MR. EISNER: Gary?**

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## 1 MR. FERNSTROM: Harvey, this is Gary **2 Fernstrom for the California IOUs. 3 I think there's two ways we might be**  **4 able to recover serial-level detail the way you 5 describe it.**  **6 One is the onerous and burdensome as 7 some have described it method of reporting where**  **8 all this stuff goes. 9 The other is some sort of a selective**  **10 field audit of places where we believe experience 11 a high level of replacement activity.**  **12 I suggest that either might be 13 sufficient for us to have a database of locations**  **14 that could be inspected for compliance. 15 What comes to my mind is a recent**  **16 activity that PG&E undertook to find out where 17 swimming pool pumps had been replaced in the past**  **18 five years to see how efficient pools were 19 operating and to determine whether or not the**  **20 replacement pumps and motors were compliant with 21 the CEC requirements.**  **22 What PG&E did is it commissioned a**

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## 1 robo-calling firm to call customers completely at **2 random, ask them if they have a swimming pool and 3 secondly whether or not they've had their pump or**  **4 motor replaced in the past five years. 5 Based on that a sample of customers**  **6 who met that requirement and would be willing to 7 have a representative come out and look at their**  **8 system was established. 9 And that I would submit would identify**  **10 locations which are compliant and not compliant 11 with the regulations.**  **12 The same thing I think could be done 13 at relatively low cost for air conditioning**  **14 condensing unit replacement. The cost of setting 15 up the telephone survey was in the order of**  **16 $5,000. And I believe the cost per call was in 17 the range of 50 cents. So, for a small amount of**  **18 money we were able to identify a large sample of 19 sites where customers were willing to have a**  **20 representative take a look at what was being 21 done.**  **22 MR. RAWALD: This is Doug. And Gary,**

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## 1 it's an idea I never have thought of. So, I **2 think it's a very interesting one. And certainly 3 this is a way to tackle a proactive type of**  **4 investigation that I haven't thought of before 5 and I'll bring up to folks that I work with.**  **6 I don't know if that would need to be 7 regulated. I don't know if there would need to**  **8 be an actual rulemaking saying we're going to do 9 that. It just seems like a good idea, a good way**  **10 for us to spend money possibly. 11 So, but I'll talk to those folks**  **12 upstairs and see what they think of that. 13 MR. FERNSTROM: Well, it seems to me**  **14 that what we're trying to do here can be 15 proactive, reactive, or some combination of the**  **16 two. And having confidence that the federal 17 government, DOE, or the states or someone would**  **18 follow up on a random basis like that would 19 certainly give the efficiency advocates some**  **20 confidence that there would be a mechanism to 21 cause people to think twice before they cheat for**  **22 fear that in some follow-up random audit they**

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## 1 would get caught. **2 MR. EISNER: Gary, are there any 3 reports on this program and how effective it was**  **4 and what it cost that could be made available? 5 MR. FERNSTROM: Well, there's no**  **6 report, but I have all the details. So I can 7 certainly share that.**  **8 And by the way, I promised previously 9 to provide this group with some information about**  **10 the effectiveness of California's compliance with 11 its regulations. And I've gotten clearance to**  **12 release that. So before we're done with this 13 two-day session I'll provide that to the group.**  **14 And I'll work on getting additional details about 15 how this robo-call effort worked for us.**  **16 MS. SHEPHERD: This is Amy Shepherd at 17 AHRI. I think it is important I think as Doug**  **18 sort of alluded to that we keep the scope in mind 19 though.**  **20 I mean, this enforcement rule is going 21 to be talking about the obligations of the**  **22 effective parties and it's going to be talking**

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## 1 about the authority of DOE. But it's not going **2 to be articulating the investigative techniques 3 that DOE is going to use.**  **4 They already have that and they're not 5 going to codify that in a regulation. They're**  **6 going to use that flexibility. 7 So I think we should stay focused on**  **8 kind of those two key aspects which are what are 9 the obligations of these parties.**  **10 So when we talk about records 11 retention, you know, the things we've been**  **12 talking about what they need and then what DOE's 13 authority is.**  **14 But, in terms of particular 15 investigative strategies I don't think that's**  **16 something that's going to be in the rule. 17 MR. FERNSTROM: Well, this is Gary**  **18 again. I don't disagree. However, for the 19 efficiency advocates if we had some confidence**  **20 that DOE was going to utilize some sort of 21 follow-up investigative technique that would**  **22 probably lessen our concern about how proactive**

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## 1 the regulations would need to be. **2 MR. RAWALD: No, this is Doug. I hear 3 that. I mean, you guys are standing on the**  **4 outside and you want to know what's happening on 5 the playing field and be able to see that you can**  **6 understand that things are actually taking place. 7 I get that, I do. And I'll pass that on to the**  **8 folks that make decisions on this stuff because I 9 think it's important.**  **10 So, I think also for our messaging 11 campaign, it seems like that kind of technique**  **12 would be to have a deterrent value of some way. 13 Like if folks know they're going to be audited.**  **14 It goes back to that point that Tim 15 brought up last week of who was going to be**  **16 actually finding out about these things. And 17 this adds another category of someone that's**  **18 likely to find out about it. 19 And so that just adds another reason**  **20 why the contractor is more likely to fall in line 21 if they're otherwise thinking it might be worth**  **22 the cut they're going to get to cheat. So I**

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## 1 think it's just a question of the terms that **2 might be added to this. 3 MR. FERNSTROM: So, this is Gary**  **4 again. When I think I previously alluded to some 5 approach like this one of the concerns raised was** **6 that anybody who was aware that they had a non 7 qualifying unit would certainly not agree to any**  **8 kind of field survey. 9 And while I believe that's true, I**  **10 think there would be enough situations where 11 homeowners would not necessarily be aware that it**  **12 would still act as a deterrent to contractors 13 that might want to take the low road.**  **14 MR. SACHS: This is Harvey. I mean, 15 I appreciate the concerns. And I would regard**  **16 Gary's comments as sort of a proof of concept 17 that it can be -- the reactive approach can be**  **18 done and justify it that way. 19 I'd also like to bring up a situation**  **20 that Elizabeth Noll helped lead several years ago 21 of thinking about ways that we might use a pre**  **22 approved waiver process for the hopefully rare**

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## 1 cases in which non-condensing furnaces would be a **2 better option than condensing furnaces in the 3 North. And that's been set aside now.**  **4 But what I wanted to bring out was 5 that I felt that that caucus which included a**  **6 number of the people who are here and all of the 7 interest came to feel that records submission,**  **8 routine records submission by industry people was 9 probably not required, but records retention**  **10 would be required. 11 And to me there's an enormous -- I**  **12 hypothesize an enormous difference between the 13 requirement that you be auditable and the**  **14 requirement that you send yet another set of 15 reports to DOE every six months or a year or**  **16 whatever it is. 17 So my question really is am I ringing**  **18 the bell true that there is that difference and 19 that a record retention auditability requirement**  **20 is much less onerous than a record submission 21 requirement. Thank you.**  **22 MR. PORTER: This is Steve Porter.**

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## 1 Yes, that would be correct. That's obviously -- **2 we do that today. I mean, we've had requests 3 from the DOE before to provide information which**  **4 we always do. 5 I don't know if it was me that said**  **6 that but that's pretty close to correct about the 7 contractors. I think it was my friend from**  **8 Lennox. 9 And I want to make clear that because**  **10 -- that a small contractor is not necessarily a 11 bad contractor.**  **12 I also want to make clear that if you 13 have a magnetic sign you're not a bad contractor.**  **14 (Laughter) 15 MR. PORTER: It's also -- I think**  **16 Chuck brought this up, Chuck White brought this 17 up before, that the homeowner is put in this --**  **18 the contractor is put in the position of meeting 19 the homeowner's financial ability. What can I**  **20 afford to get my air conditioner and my heat for 21 my family, and how can you do it the cheapest way**  **22 because I have no money.**

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## 1 And so a lot of times those selections **2 are made, Gary, you know, not because the 3 contractor is offering because what you're going**  **4 to find isn't necessarily the homeowner. 5 He's the doctor. He's giving you**  **6 options. And hopefully he's not giving an 7 illegal option and that he can hand some**  **8 literature and say you can't really do that. 9 Yes, it would be cheaper. I know you saw it**  **10 online and it was cheaper online. But the unit 11 you're looking at is not qualified. And**  **12 hopefully he has something to be able to provide 13 that consumer for that. But typically it's that.**  **14 That's why this whole thing with the 15 change in SEER ratings has driven to the lowest**  **16 common denominator and people now are making 17 really bad choices on their heating and cooling**  **18 options because they simply can't afford to make 19 the move up.**  **20 I mean, you can look at the room air 21 conditioner sales increases over this period of**  **22 time. You can look at a lot of other data that's**

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## 1 out there that I encourage other people to look **2 at. But people are just making really bad 3 decisions now because of the cost delta.**  **4 MR. FERNSTROM: Well, Steve, this is 5 Gary. I hear the argument over and over again**  **6 that low-income individuals and utility customers 7 can't afford equipment that meets the federal**  **8 standards. 9 And what we have here is really a**  **10 football that gets kicked back and forth between 11 the contractors, customers and the initial cost**  **12 of these appliances and what they pay from month 13 to month in their utility bill.**  **14 So, you have a choice. If you can't 15 afford it and you buy the very cheapest piece of**  **16 equipment on the market that may not be 17 consistent with what we deem to be cost-effective**  **18 efficiency standards then you wind up with a high 19 utility bill.**  **20 Conversely, if your contractor can 21 only sell you compliant equipment and that's the**  **22 minimum hurdle that has to be overcome somehow**

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## 1 you either do without the convenience or you **2 scrape up the money to buy it, and you have a 3 lower monthly utility cost.**  **4 So, I don't think it's quite as simple 5 as it seems on the surface that low-income**  **6 customers can't afford efficient appliances. 7 In some cases they're better off to**  **8 maybe be forced to spend a little more to buy a 9 cost-effective efficient appliance and reap the**  **10 benefits in a lower utility cost, and maybe not 11 be as angry at the utility as they might be at** **12 the contractor that is charging them for a code 13 compliant installation.**  **14 MR. PORTER: Well, this is Steve 15 Porter, Johnstone Supply.**  **16 So, you're leaving out a little issue 17 of credit there and whether they qualify for**  **18 credit or don't qualify, or they can make that 19 cost at that time.**  **20 It's a lot more about cash flow for 21 most Americans than it is about over the next 20**  **22 years if I buy this one I'll get my money back.**

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## 1 That's kind of a big miss. **2 MR. MCCRUDDEN: This is Charlie with 3 ACCA. I want to go back to what Harvey was**  **4 talking about and I think Steve answered from his 5 end.**  **6 From the contractor side on the 7 record-keeping I think one of my homework**  **8 assignments was to look at what is retained in 9 terms of our members. What are they doing**  **10 essentially voluntarily for their own business 11 purposes.**  **12 And at this point I want to make the 13 distinction between record-keeping and**  **14 information disclosure. Those are two very 15 different things.**  **16 Going back to the furnace waiver, I 17 believe the furnace waiver had information**  **18 disclosure as part of it. I think that in that 19 case the contractor was to -- I'm looking at**  **20 Elizabeth -- I think the contractor was to 21 provide documentation to the DOE upon making or**  **22 utilizing the waiver. It wasn't just to retain**

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## 1 records. I think that they had to -- I'll look **2 to Elizabeth on the answer to that. Yes. 3 Okay, so in that case it was an**  **4 information disclosure. So there was a turning 5 over of records to another entity versus just**  **6 maintaining them as we all do. 7 We maintain information. If you're**  **8 itemizing for your IRS you're going to keep 9 receipts or whatever you get from charitable**  **10 contributions. You donated some things to 11 Goodwill, things like that. And you voluntarily**  **12 keep those things. 13 I think, and I've talked to a number**  **14 of our folks since we last met. There seems to 15 be I think along the lines that Steve had**  **16 outlined with the three types of three tiers of 17 contractors.**  **18 Contractors who maintain very, very 19 good records and have exhaustive records and are**  **20 searchable. 21 But then at that bottom end where the**  **22 contractor may have a magnetic sign but he's a**

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## 1 very good contractor. He may have less -- **2 searchable is the best way to put it -- records. 3 I'm working with our folks to look at**  **4 that, what may be workable in terms of a -- I 5 guess what I would call -- I think it would be a**  **6 required record-keeping. But it would 7 essentially be in the event that it was a**  **8 reactive or potential audit. So, that's my 9 report on my homework assignment as answering**  **10 Harvey's question. 11 MR. SACHS: Charlie, this is Harvey.**  **12 And thank you very much for correcting my error. 13 I'm not batting real good today. The furnace**  **14 waiver would have required reporting back. 15 My personal feeling is that in this**  **16 instance the record retention which presumptively 17 would be quasi-required would be necessary. I**  **18 have not been convinced, and again, this is my 19 personal feeling, that submitting DOE reports**  **20 would be required, would be necessary. 21 So, I can imagine some people in my**  **22 community like my boss having divergent feelings.**

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## 1 So I look forward to getting the evidence so we **2 can do with that. 3 MR. RAWALD: This is Doug. And so I**  **4 want to speak from what we currently do as I 5 always try to do.**  **6 And so we currently require records to 7 be retained. And we require submission of very**  **8 limited information. 9 And that's proven to be very effective**  **10 as far as us not being overwhelmed by a lot of 11 useless information, people not feeling like**  **12 they're giving up too much information to the 13 government who they may or may not trust what's**  **14 going to happen with that information, and our 15 ability to then follow up on that information.**  **16 We don't dictate to people how they 17 maintain their records as long as they can**  **18 respond in a timely fashion to the request. 19 So, if there's some sort of operation**  **20 that is due to its lack of sophistication unable 21 to respond within a timely manner they can come**  **22 to us and explain, hey listen, this is the**

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## 1 problem I'm facing, can you work with us here. **2 And I'm a pretty reasonable guy. So 3 I think that we work with folks.**  **4 So, I think that that would be an 5 understanding, that there would be some ability**  **6 to work with people to give them time and the 7 ability to produce what's required, what we're**  **8 going to be asking them I think. 9 And this seems to be the course that**  **10 we're headed. I think it's pretty clear we're 11 going to have to do this. Some minimum level of**  **12 maintaining that information that we're going to 13 ask for, if necessary, later on down the road.**  **14 So I think that's kind of where I'm 15 at. So I think that retention is important.**  **16 Producing is to me is much less important, and in 17 fact probably negative because it causes people**  **18 to be really retrenched in what they're going to 19 give you, and it also causes a lot of paperwork**  **20 burden on my part that I don't really need to be 21 doing.**  **22 So I think there's a lot of reasons**

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## 1 for why retention is what's really the focus **2 here. 3 And I think that we're -- I think we**  **4 made a lot of headway here. I think that people 5 are pretty understanding of where we are and what**  **6 we're producing. 7 I think what might be constructive is**  **8 for us to kind of, maybe for Charlie and Steve 9 and I to sit down together and maybe come up with**  **10 an idea of, okay, what can we put down on paper 11 as being the things that we could put in actual**  **12 text of a regulation of some sort of what we 13 could say people should have at a minimum.**  **14 And to kind of discuss how descriptive 15 we could be or not descriptive. That might be a**  **16 constructive kind of way to bring that back to 17 the next meeting in late September for us to put**  **18 forward to the group and say here's what we think 19 we can do. And maybe folks can look at that. So**  **20 that might be a good way to go forward if you 21 guys are interested in us doing that.**  **22 And I'd like Chuck too. I didn't mean**

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## 1 to leave you out, Chuck. You're just not sitting **2 next to me. 3 MR. WHITE: That's all right. This is**  **4 Chuck White. 5 Several things. Record-keeping, the**  **6 contractor's the bulk of them. I'm sure there's 7 some out there that are not. But the vast**  **8 majority have records. 9 Whether they're searchable or not, you**  **10 know, maybe going through a wholesaler's file for 11 the year and looking for everything that has a**  **12 condensing unit on it. 13 It may be scouring all your jobs and**  **14 for a small guy that may not be very many. For a 15 larger contractor that could be a whole bunch.**  **16 But if record-keeping could get the 17 bottom feeder in our industry out of the supply**  **18 house and out of our work chain I think we'd all 19 love that. But that's not going to happen.**  **20 And we talk about magnets on the 21 truck. Just because you wear a spiffy shiny**  **22 uniform doesn't mean you're a good guy either.**

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## 1 (Laughter) **2 MR. WHITE: It's been mulling over in 3 my head, and I'm sorry with the holiday and**  **4 trying to contact several thousand members to get 5 a feel on their records and databases, but I did**  **6 talk to a few. 7 We're -- it keeps coming to me that we**  **8 have a micro issue and a macro issue. 9 And the micro issue is we have a**  **10 contractor that did one or two or three, or 11 several contractors that kind of is their routine**  **12 practice and they skirt the law. 13 They're going to be hard to find**  **14 because we're looking for 1 out of 100, or 1 out 15 of 1,000, or maybe it's 1 out of 10. I doubt**  **16 that. 17 Especially once the rules come into**  **18 play, once the sell-through period is pretty well 19 exhausted in most of those regions the product is**  **20 going to be compliant that's available to them. 21 The border areas are going to be more of an**  **22 issue.**

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## 1 But as it goes along it's going to **2 increase its compliance pretty quickly. 3 But if we do get the sense that we've**  **4 got a lot of micro issues then I think we're 5 starting to think we're more in the macro issue.**  **6 And really, to me the way you get 7 macro issues is it's up the supply chain. So, we**  **8 have a wholesaler doing something, we have some 9 big internet provider doing something. We have**  **10 some way that we're getting significant product 11 where it shouldn't be. And yes, the contractor**  **12 shouldn't be doing it, but how did he get it in 13 the first place.**  **14 And I've struggled with how do you try 15 to handle all this. But trying to find one guy**  **16 doing one system, that's probably going to be 17 your whistleblower, somebody found it,**  **18 complained. 19 Your next level up is maybe a random**  **20 check of an 1,000-apartment facility being built, 21 are all these products correct.**  **22 And how you go upstream to whether a**

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## 1 manufacturer shipped to the wrong place, or you **2 know, wholesalers transferring internally. I'm 3 not trying to accuse anybody, I'm just saying**  **4 this is kind of the micro/macro distinction to**
**5 me. 6 And they're really intertwined, but I**  **7 think there's going to be a couple of different 8 approaches going to have to happen to look at**  **9 those and consider those. 10 MR. EISNER: Other comments?**  **11 MR. RAWALD: So, Chuck brought up an 12 area that we've brought up a lot of times and we**  **13 don't have fully engaged at this point is the 14 internet sales.**  **15 And so obviously there's record 16 retention. I mean, I don't know how we'd put it**  **17 on the folks who are involved in internet sales. 18 My question really is how do the**  **19 products end up on the internet in the first 20 place. Like where in the supply chain is it**  **21 getting to them? Because it has to be leaving 22 the manufacturer at some point, right? So how** 

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## 1 does it get from the manufacturer to the person **2 on the internet that's selling it? And is there 3 a way for us to intercede in that chain in some**  **4 way? I mean what is that chain? Because I don't 5 have a conception or understanding of that.**  **6 MR. HURST: John Hurst with Lennox. 7 Doug, you have a good question. I presume that**  **8 most of it happens as a manufacturer sells to a 9 dealer.**  **10 A dealer then puts equipment on the 11 internet that they could presumably buy maybe**  **12 cheaper than somebody up and down the street. 13 There's also the ability for a dealer**  **14 to go, or a licensed contractor to go to a 15 distribution house, maybe buy products that are**  **16 on sale or in bulk and post that equipment for 17 sale on the internet.**  **18 One of the commitments that we're 19 looking at doing is maybe taking a harder stance**  **20 on those dealers within our dealer community that 21 are pursuing this practice.**  **22 MS. NOLL: This is Elizabeth. When**

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## 1 you say "we", you mean Lennox or the **2 manufacturers? 3 MR. HURST: My company.**  **4 MS. NOLL: Okay. 5 MR. HURST: I won't speak for anybody**  **6 else, but I think you'll get general agreement 7 from the manufacturers also.**  **8 MR. ROCKY: So, this is Bryan from 9 Johnson Controls.**  **10 Contractors selling over the internet 11 today buy products just like any contractor does**  **12 for install in their own region. They buy it 13 from a manufacturer. They buy it from a**  **14 distribution house. 15 What they do with that is open**  **16 commerce. We don't like it. We have statements 17 about not honoring warranties. But the end**  **18 result is we're still going to support our 19 homeowners that buy product from contractors that**  **20 have a legitimate right to sell it. 21 The issue is going to be how do you**  **22 determine as a manufacturer, which we've all**

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## 1 struggled with as an organization or the **2 Department with someone who is technically 3 legally doing what they're allowed.**  **4 And just because it's internet sales 5 from somebody in Minnesota doesn't mean that**  **6 they're not selling most of their units today to 7 someone in Wisconsin or North Dakota or South**  **8 Dakota. 9 What we want to try to prevent is the**  **10 selling of those same units into Virginia or 11 Alabama.**  **12 So, whatever we come up with for 13 contractors from an information standpoint, an**  **14 awareness standpoint or enforcement practices 15 actually falls exactly in the same situation for**  **16 someone selling over the internet as they do 17 going door to door trying to drum up business, or**  **18 getting quotes from people in their neighborhood. 19 It's still a contractor. They're the**  **20 ones selling the equipment. They may not be the 21 ones installing the equipment if they're selling**  **22 it over the internet.**

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## 1 MR. EISNER: Doug, how do you deal **2 with issues today about products that can be 3 readily sold on the internet like light bulbs**  **4 that don't meet your standards? 5 MR. RAWALD: Right. So the question**  **6 is different because our standards are 7 manufacturer-based.**  **8 So, we can purchase them over the 9 internet, but the manufacturer is ultimately**  **10 responsible for insuring their compliance. So we 11 go back to the manufacturer always.**  **12 So the question here is we have an 13 installation standard. So the folks can be**  **14 getting around all the things we're going to put 15 in place if they're doing the internet sales is**  **16 what folks are talking about. 17 So I want to make sure that if we have**  **18 a record retention scheme that we come up with, I 19 can then go to an internet provider and say, hey,**  **20 John Smith from the internet, you've got to 21 provide me those records. And they can't say no,**  **22 no, I'm not covered by this. I want to make sure**

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## 1 that we have that person in the group so I can **2 make sure I can single him out and work on him. 3 And frankly, from an investigative**  **4 point of view it's probably easier for me to have 5 somebody sit in an office all day and surf**  **6 websites and find people selling than it would be 7 to do a lot of other things that we talked about.**  **8 So, I think I could aggressively do 9 that if I have the ability and understand that.**  **10 People say, yes, the only scheme we 11 set up, we're going to say apply to those folks**  **12 who are selling on the internet. 13 MR. EISNER: What about foreign**  **14 manufacturers? Foreign sellers but the purchaser 15 is in the U.S.?**  **16 MR. RAWALD: Right. So, importers are 17 manufacturers. So there would be an obligation**  **18 if you're -- whoever is importing is going to 19 bear the responsibility of that importation. So,**  **20 and then the installation is going to have to be. 21 So I haven't really wrapped my head**  **22 around the scenario you're asking, but I think**

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## 1 it's -- like, what I'm getting at is I want to **2 make sure that we design in a way that I can 3 enforce it in a way to help thwart what I think**  **4 is a way of skirting around here which everyone 5 seems to be also not happy with as well, the kind**  **6 of situation we have here. 7 And John Hurst had a point back there.**  **8 And then Karen had a point before everyone I 9 think.**  **10 MR. HURST: Yes, Doug, John Hurst with 11 Lennox. Agree with everything you just said.**  **12 Those internet resellers have to 13 either be defined as a contractor, dealer, or a**  **14 distributor. And we would hope that however we 15 define this they would not be exempted from**  **16 compliance. But agree with everything you just 17 said.**  **18 The other thing I'd like to point out 19 is I don't have numbers on this but I know at**  **20 least within our company we believe that internet 21 reselling is a very, very, very small percentage**  **22 of the sales from our company.**

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## 1 I know it happens because I go out to **2 eBay and I see our equipment out there, but I 3 don't think it's pervasive.**  **4 MR. RAWALD: So John, this is Doug. 5 So perhaps folks can go back and look at the**  **6 definition we circulated after our meeting last 7 time and see if people have any ideas or feel**  **8 like that that would cover the internet sales, 9 and if not, ways to work on that. Because I want**  **10 to get that kind of finalized. 11 Karen has been waiting very patiently.**  **12 MS. MEYERS: So I think from my 13 company's perspective is when we write the**  **14 enforcement rule I would like internet resellers 15 specifically called out. Because they may be a**  **16 manufacturer/distributor, or dealer/contractor, 17 or they may not. They may be somebody who buys a**  **18 bunch of obsolete equipment and then tries to 19 sell it.**  **20 So as we're writing records retention 21 rules for everyone I would like that to almost be**  **22 a separate category. It could be one of these,**

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## 1 or it could be a completely different entity. **2 And so from my company's perspective we would 3 like them held to the same standards as the**  **4 traditional supply chain is. 5 MR. RAWALD: Right. So, this is Doug.**  **6 So my concern with writing something tailored to 7 internet providers would be that they could then**  **8 evolve to get around what I'm tailoring it to. 9 So I want to make sure that whatever**  **10 we do takes into consideration what could be done 11 to get around what I've put out there.**  **12 So that's why I want to -- so I'm up 13 for either idea. Either defining them separately**  **14 and including them in the bucket, or for defining 15 the terms "dealer" and "contractor" and**  **16 "distributors" broadly enough so they would 17 include these guys in whichever way we agree is**  **18 more effective. 19 So I'm up for both approaches. I just**  **20 don't know which one's the best. So I take that 21 idea with at least something to think about,**  **22 Karen.**

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## 1 MR. EISNER: Why don't we take a 10- **2 minute break now, come back at 5 of. 3 (Whereupon, the above-entitled matter**  **4 went off the record at 10:43 a.m. and resumed at 5 10:57 a.m.)**  **6 MR. EISNER: Anymore comments on 7 record retention? Then why don't we get onto**  **8 warranty information. Comments on that? 9 MR. RAWALD: This is Doug. I know**  **10 that we had a lot of discussion on that last 11 meeting because Steve brought it up as a way that**  **12 folks could track and we kind of diverged on 13 that.**  **14 And we've heard from several folks 15 about the caveats that they put in the warranty**  **16 information that it won't be released to anyone, 17 so some concerns about that.**  **18 So I don't think there's anything new 19 to be said on this. Does anyone have anything**  **20 new on this territory at all? 21 MR. EISNER: All right, let's go onto**  **22 DOT investigation process.**

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## 1 MR. RAWALD: Harvey, you're going to **2 become used to that. We just assume when he says 3 DOT he means DOE.**  **4 MR. EISNER: All right, first thing we 5 had under that is sting type operations.**  **6 MR. RAWALD: Right. This is Doug. 7 So, as Amy and I mentioned before I think this is**  **8 an area -- and I say Amy because she backed me up 9 on this point before -- this is an area where it**  **10 isn't necessarily going to be regulated. 11 I mean, it's going to be something**  **12 that we would do. But I don't think it's 13 necessary to have a regulation saying, hey, DOE**  **14 can buy products in a mock house where we're 15 going to have people tracked and then installing**  **16 things. 17 I don't even know how we want to write**  **18 those regulations or whether I think it would be 19 necessary.**  **20 DOE is going to use investigative 21 tools to investigate cases. And certainly a**  **22 sting type operation will be on the table, though**

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## 1 how we execute it and pay for it would be a **2 totally different question. 3 But I'm kind of adverse to regulating**  **4 the investigative tools that we would use to that 5 extent. But I'm interested in hearing contrary**  **6 comments to that. 7 MR. EISNER: Any thoughts on that?**  **8 Want to have any discussion of these items on 9 here, how they might be used that would be**  **10 different? All right. Nothing to add on that? 11 Let's go off to consequences.**  **12 MR. RAWALD: Well, we also had under 13 records -- we had under investigation records**  **14 production. 15 So we've talked at length about record**  **16 retention and we've thrown in records production 17 as part of the discussion. But I don't know if**  **18 anyone has anything else they want to say about 19 the idea of what records will be produced to what**  **20 process we would go through. 21 I mean, just to give folks an idea,**  **22 the Department has subpoena authority which we do**

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## 1 use, and we also have just basic record -- **2 request for information authority which we use as 3 well.**  **4 So, if I submit a request for 5 information to someone, if they're saying, hey,**  **6 just give me this couple of documents back that 7 we need, it's very targeted.**  **8 Whereas a subpoena requires some sort 9 of sworn statement affirming to the competence of**  **10 it. 11 So, it just depends on what we're**  **12 doing as far as what level of oath we require 13 with the things that we require back from people.**  **14 But I don't think there's anything 15 else really to go into on that. But I don't know**  **16 if anybody else has anything they want to say 17 about records production.**  **18 What I discussed last time was 19 whenever we require or request records to be**  **20 produced we do give the caveat that, hey, if you 21 provide confidential business information that**  **22 you give us two copies, one copy with the**

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## 1 information not redacted and one copy with it **2 redacted. 3 And then if we were to receive a FOIA**  **4 request or some sort of request for that 5 information later on we would go back to you, we**  **6 would discuss the redaction with you before we'd 7 ever produce that.**  **8 And so that would be codified in any 9 records production scheme that we would have.**  **10 That would be standard course of business for us. 11 But I know that raises concerns for**  **12 folks about what information is getting out 13 there.**  **14 So, if people want me to bring 15 somebody in to talk to the group about how we**  **16 handle confidential business information ,I can 17 have a lawyer come in and talk about that. Or if**  **18 you're comfortable with what I told you, I'd feel 19 that great about that too.**  **20 So just let me know your thoughts on 21 that. This is your time to kind of just say hey**  **22 Doug, we want to hear more about this, or we**

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## 1 don't. **2 MR. EISNER: Any questions? Anybody 3 want to say more?**  **4 MR. WHITE: Well, this is Chuck White. 5 I don't know whether I want to ask or not.**  **6 MR. RAWALD: You can have lunch and 7 think about it.**  **8 MR. WHITE: Are these -- how do you 9 envision the investigations? As a result of a**  **10 complaint? Or are you envisioning you're going 11 to just start calling people up out of the phone**  **12 book? 13 MR. RAWALD: Right. So, this is Doug.**  **14 So, I think as I talked to you about before we 15 have to be effective in how we target things.**  **16 And so what I definitely view is that 17 we will react to any phone call or complaint we**  **18 receive. As a baseline we will react. 19 And so if I get a complaint from a**  **20 contractor or from anyone saying hey, I think 21 that contractor X is not doing the right thing I**  **22 will consider then serving that contractor with**

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## 1 an information request if I feel it's prudent. **2 You know, I may not want to give that 3 guy a heads up that we're looking into him yet.**  **4 But at some point I'm going to ask to look at his 5 records. That's the most likely thing. So**  **6 that's the most likely scenario. 7 I'm less likely to just pick out of**  **8 the phone book somebody who's in South Carolina 9 and send him a records request saying produce all**  **10 your records. That's not very effective, so I'm 11 very unlikely to do that.**  **12 I'm not going to say we wouldn't do 13 that because I want to reserve the right for the**  **14 Department to do everything that they can that 15 makes sense. But as a practical matter that's**  **16 pretty ineffective and it's pretty unlikely that 17 we would do that.**  **18 What we're more likely to do is 19 respond to investigations or to complaints, or if**  **20 we see some sort of pattern. I get a letter 21 from, say, Tim saying hey Doug, I see a lot of**  **22 shipments to Bluffton, South Carolina. Can you**

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## 1 look into that? I might follow up on that. **2 So that's the kind of area where I'm 3 more likely to do some sort of more random**  **4 sounding information request. 5 But I think what's more likely is if**  **6 I had information about an area I'd want to do 7 some research before I start randomly targeting**  **8 burdensome requests to people. 9 Because I really, I feel like you have**  **10 to be targeted and specific in what you ask for 11 before you start doing these kind of requests.**  **12 Both because it can end up being a lot of 13 searching for needles in a haystack, that's not**  **14 useful. So, I want to assure you that we're 15 going to be at least judicious in what we do with**  **16 this, Chuck. 17 And I see Chuck nodding. That helps**  **18 him feel better about this. 19 MR. WHITE: Yes, thank you.**  **20 MR. RAWALD: I also want to put 21 forward that, you know, we're talking about an**  **22 investigation of things that are being installed**

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## 1 that shouldn't be there. **2 But there is another scenario that I 3 could envision that is of at least note to people**  **4 here. And I want to make sure we understand this 5 as well.**  **6 So, we've talked about, okay, well we 7 have a thing that the manufacturer rates as a 14**  **8 SEER. It's then for some reason installed in a 9 place where it shouldn't be.**  **10 There's also a thing that the 11 manufacturer rates as a 14 SEER but the**  **12 Department tests it and it proves to be a 13.6 13 SEER. And that thing has been installed in a**  **14 place it shouldn't be. 15 So, I would argue to you that that's**  **16 not the installer's fault, right? He's just 17 going off what's on the label or what he's been**  **18 told. 19 But the manufacturer has produced a** **20 product that has actually been now found non 21 compliant and installed in a region it shouldn't**  **22 be.**

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## 1 So that's a different scenario that we **2 haven't discussed at all but may be worthy of at 3 least discussion somewhat in this investigative**  **4 process point. 5 John Hurst jumped up as soon as I**  **6 mentioned this. 7 MR. HURST: As a manufacturer we'd fix** **8 it. We wouldn't penalize a consumer for a non 9 compliant product.**  **10 And it has happened. It's usually 11 caught early but we would fix it as a**  **12 manufacturer. 13 MR. WINNINGHAM: Doug, this is Dave**  **14 with Allied. 15 And I mean that situation, and it's in**  **16 effect today with 13 SEER minimum equipment. So, 17 you know, how it relates to regional requirements**  **18 probably isn't a lot different than how it is to 19 national minimum requirements today.**  **20 MR. RAWALD: Right. And this is Doug. 21 So I guess, what I envision though is -- so,**  **22 today if you have a 13 SEER product and we test**

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## 1 it and it turns out to be 12.6 we'd find it to be **2 non-compliant and you wouldn't be allowed to make 3 it and sell it anymore.**  **4 But if you had a 14 SEER product and 5 I then found it to be 13.6 it wouldn't be non**  **6 compliant with the national standard. So you 7 could conceptually still sell that in the North.**  **8 And so that would be a more thorny issue for us 9 to ferret out.**  **10 And John's kind of leaping out of his 11 chair here.**  **12 MR. HURST: You bring up an 13 interesting point. If you had a 13.6 product**  **14 that was sold as a 14.0 SEER in the South you 15 have a non-compliant product, but in the North**  **16 you still have a product that the consumer didn't 17 purchase.**  **18 And I think what we would do is we 19 would still honor the purchase with the consumer**  **20 for what they purchased. 21 I can't think of a residential**  **22 application where that's happened, at least with**

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## 1 my company. **2 I do know that we've had a rare 3 instance, one in the last six years that I can**  **4 think of with a commercial customer where we had 5 to go back to the customer and retrofit the**  **6 equipment to reach the standard. 7 But I think it still applies. I think**  **8 if the consumer bought something and it didn't 9 meet the standard I think you still have to go**  **10 back and rectify the situation with the consumer, 11 whether it's technically compliant or technically**  **12 not. 13 MR. LATTANZI: This is Matt Lattanzi.**  **14 Just an additional comment. 15 I echo everything that John just said.**  **16 But we already have in place through the AHRI 17 verification program and the DOE regulation that**  **18 unit, you're correct, we could still sell it in 19 the North.**  **20 But in many cases it's either got to 21 be fixed or re-rated per those programs.**  **22 MR. ROCKY: Bryan Rocky. So I think**

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## 1 the end result is the non-compliance process is **2 the same. What we'd end up doing is we're going 3 to get to some point of talking about the**  **4 labeling of the product. 5 And I think we're in a situation of a**  **6 product is non-compliant in the South or 7 Southwest, but still can be sold in the North.**  **8 We're talking about having to modify a label on 9 the product or in our literature about where it**  **10 can be sold. 11 MR. RAWALD: John, you want to make a**  **12 point? 13 MR. HURST: Yes, I was just going to**  **14 say if I put my advocate hat on I don't want you 15 to think that we do this just for altruistic**  **16 purposes and that we have our capes on and we're 17 doing the right thing. Which we should, it is**  **18 the right thing to do. 19 But we have brands to protect. Most**  **20 of us have been -- are with companies that derive 21 their history back over 100 years. And we do**  **22 protect our brand vigorously.**

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## 1 So it is the right thing to do. But **2 if you're wondering why we would do that, a lot 3 of it has to do with our reputation in the**  **4 marketplace with our distributors and our**
**5 contractors. 6 MR. RAWALD: And so this is Doug. And**  **7 if you'll go with me down the rabbit hole a 8 little bit further.**  **9 So, as you may well know once we find 10 something non-compliant, we then assess civil**  **11 penalties for how many units were sold that were 12 non-compliant.**  **13 So, what I would think in this 14 instance would be the concern that we would then**  **15 want to at least have the consideration of 16 assessing civil penalties for the non-compliant**  **17 units that were installed. 18 And so the manufacturer would have to**  **19 be able to figure out through their supply chain 20 how many were installed in the South versus the**  **21 North. 22 It wouldn't be simply a question of** 

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## 1 now we go to you and we say hey, model ABC was **2 non-compliant. How many do you distribute? And 3 you say, oh, we distributed 1,000 units.**  **4 But if you had 1,000 units but 500 of 5 which went South and 500 of which went North,** **6 that 500 which went North would not be non 7 compliant. The 500 that went South would be.**  **8 So. 9 MR. HURST: Point of clarification.**  **10 MR. RAWALD: Yes. 11 MR. HURST: So if we rated a unit**  **12 14.0. Regardless of where it went we rated it 13 14.0 and it didn't meet that rating. Is that, in**  **14 fact, still non-compliant? Because it's not 15 compliant with the rating that we stated that**  **16 unit was. Regardless of whether it went North or 17 South.**  **18 MR. RAWALD: Right. So, the 19 Department of Energy's finding of non-compliance**  **20 is limited to its meeting the standard, not its 21 rating.**  **22 So we don't issue Notice of Non-**

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## 1 compliance for products that fail to fall within **2 their rating range if they still are above the 3 minimum standard.**  **4 So if you have a 13.8 product and it 5 tests at 13.2 and AHRI would say oh no, no, that**  **6 can't be rated that high, we would still say we 7 wouldn't find it non-compliant because its**  **8 compliant with a 13.0 standard. 9 MR. EISNER: How big a problem is**  **10 this? How often do you find one that is less 11 than it's rated?**  **12 MR. RAWALD: So, I can't say the scope 13 of the issue, but it is something that we -- we**  **14 spend a lot of money and time testing products 15 and we find things non-compliant from across**  **16 product classes. I don't have the numbers on 17 central air conditioning units specifically, but**  **18 it's an issue. 19 And so we're going to buy a 14 SEER**  **20 product. We're going to test it. It's 21 conceivable we'll find that a 14 SEER product**  **22 tests at 13.8.**

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## 1 And so what I want folks to understand **2 is then there becomes a question of what civil 3 penalty ramification would that be and how would**  **4 DOE investigate that. 5 Because whereas if we're dealing with**  **6 a compliant upon an installed unit that everybody 7 knows is 13.0 and shouldn't be there in the first**  **8 place we're going from the bottom up. We're 9 going from the installer back upward and saying**  **10 okay, where it is. 11 But if we have a product that was put**  **12 out there as 14.0 that actually is 13.6 or 13.8, 13 that one we went from the top down. And so we're**  **14 going for the manufacturer and saying 15 Manufacturer, you have to tell us which went**  **16 where. 17 And if you don't, the presumption may**  **18 be all of them went the wrong place. Where do I 19 start? I can't presume they all went to the**  **20 right place. 21 So, there's kind of an emphasis on the**  **22 manufacturer to kind of know where things are, or**

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## 1 at least hope the distributors and manufacturers **2 are going to help -- or the dealers, help them 3 figure it out so they can minimize their**  **4 liability of what was installed in the wrong 5 place.**  **6 So this is kind of just a different 7 angle for you guys to think about as we start**  **8 thinking about this issue a little bit more. 9 Matt's nodding his head saying, where**  **10 are my lawyers. I should have brought them 11 today.**  **12 MR. LATTANZI: This is Matt. No, I'm 13 just acknowledging that you brought up something**  **14 that hadn't occurred to me. But I agree with 15 what you're saying.**  **16 MR. RAWALD: That's why I'm here, 17 Matt.**  **18 MR. LATTANZI: For the second week in 19 a row you've done that to me. But figuring out**  **20 how to track it through the channel, I see what 21 you're saying.**  **22 MR. GIBBONS: This is John from**

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## 1 Carrier. And I wish I could play poker with Matt **2 because it would be an easy win. 3 (Laughter)**  **4 MR. GIBBONS: No, that's not my 5 comment.**  **6 I'm not speaking for all 7 manufacturers, but I know that we do a very**  **8 thorough job of tracking at least the initial 9 shipment from where we bill it and ship it to.**  **10 So, after that though it gets 11 treacherous because as we've talked about earlier**  **12 in the earlier proceedings is that distributors 13 then, we ask them to track where they bill and**  **14 ship it as well. And I'll have to look at Steve 15 and see.**  **16 You know, I think again we're going to 17 get down to whose records are better at some**  **18 point. 19 MR. RAWALD: So, this is Doug. So I**  **20 guess you can understand my point, right? That 21 we need to know which ones were installed in the**  **22 place they shouldn't have been because those are**

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## 1 the ones that you should be charged for. **2 Otherwise, we would kind of be left I 3 think in the position of having to say well, all**  **4 of them might have been. And so that's the 5 question that you folks need to think about a**  **6 little bit with these records issues. 7 MR. GIBBONS: This is John again.**  **8 Similar to the IRS, isn't the onus of proving 9 that they were installed fall upon the**  **10 manufacturers through the chain then? 11 MR. RAWALD: That would be my**  **12 supposition. That would be my thought. 13 MR. GIBBONS: Okay. With the help of**  **14 distribution and the whole channel. 15 MR. RAWALD: Yes.**  **16 MR. EISNER: Other comments on this 17 issue? Okay, anything further?**  **18 MR. GIBBONS: My last comment is 19 that's going to be very difficult. Just make**  **20 sure you comprehend all that. 21 MR. RAWALD: No, I get it's difficult.**  **22 So what I'm saying is we need to make sure as we**

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## 1 develop this record retention/record production **2 scheme that we're considering all of these 3 angles. Not just the way of tracking from what**  **4 was installed upwards to figure out, you know, 5 did we know that that shouldn't be there, but**  **6 also from downwards when if we find it's going to 7 be non-compliant that a manufacturer is able to**  **8 sufficiently account for all the things that 9 should not have been installed in a place because**  **10 they rated it a 14 when in fact it didn't perform 11 at 14.**  **12 So, that's -- Jordan's shaking his 13 head because I don't know if you heard what we**  **14 were talking about before. Maybe you were out of 15 the room.**  **16 So that's the concern. You have a 17 product that you rated a 14 but upon our testing**  **18 it proves to be less than 14. You're going to 19 have to be able to come to us and say, yes, these**  **20 are the numbers of units that were installed in 21 places they shouldn't have been because they**  **22 actually are not compliant with the regional**

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## 1 standard. **2 I mean, it's certainly not the dealer 3 or the contractor's fault, right? Everyone**  **4 agrees with that. The contractor was just 5 putting in place what they thought was an**  **6 appropriate product. It really is the 7 manufacturer who gave them a product that was**  **8 less efficient than it should have been. 9 MR. EISNER: And the fine as I recall**  **10 is $200? 11 MR. RAWALD: So the maximum civil**  **12 penalty -- this is Doug from the Department of 13 Energy -- is $200 per unit.**  **14 MR. EISNER: So it might not be worth 15 the manufacturer's expense to figure out where**  **16 each one went. It might be cheaper to pay the 17 penalty if it weren't a large number of units.**  **18 MR. RAWALD: So, Charlie asked for a 19 clarification on the penalty. So, for fines of**  **20 non-compliance we charge per unit that are 21 distributed in U.S. commerce. So, for -- so it**  **22 would be $200 per unit maximum civil penalty,**

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## 1 though we take a lot of things in consideration **2 deciding what the actual civil penalty should be. 3 That's our maximum amount.**  **4 Karen, you had a response? 5 MS. MEYERS: So I'm not sure I**  **6 entirely agree. 7 So there is a method to go after**  **8 manufacturers if they rate their product 9 incorrectly. That's established. We have that.**  **10 But I think the issue that you're 11 bringing up, I don't know if I agree with it.**  **12 So if by chance that were to happen 13 and those products did get installed. I mean, I**  **14 don't know that that's -- I guess it makes me 15 really uncomfortable.**  **16 Because I for one would not be able to 17 tell you where those units were installed at.**  **18 So, it's almost like, you know, you've got double 19 jeopardy going on here against manufacturers.**  **20 I understand your point. I guess I'm 21 just very hesitant about this, you know, how**  **22 manufacturers would get penalized once. Under**

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## 1 the first scenario if they rated it wrong **2 definitely, you know, that's an issue. 3 But to then penalize them again under**  **4 a separate scheme for those units getting 5 installed in the wrong area to me is something**  **6 that I -- and not being able to tell you where 7 those units were installed at is problematic.**  **8 MR. RAWALD: Right, and I want to be 9 very clear. So we're not talking about double**  **10 charging. That's not the issue. 11 So, right now what we would do if**  **12 something was below a 13 SEER there would be the 13 penalty for it being below 13 SEER.**  **14 What I'm talking about is the issue 15 where it's not below the national standard, so**  **16 we're not charging you for being non-compliant 17 with the national standard.**  **18 So you have a product that was rated 19 at a value that allowed it to be installed in the**  **20 region. So 14 and above, or with the EER value 21 in the Southwest.**  **22 And when it's actually tested by the**

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## 1 Department of Energy proves to be not performing **2 at that minimum level, but above the national 3 standard.**  **4 So then the violation would be that 5 the product was non-compliant with the regional**  **6 standard when it was installed. 7 MS. MEYERS: But last week I thought**  **8 we clarified that every condensing unit sold in 9 the South must have a coil-only rating that meets**  **10 that minimum. 11 MR. RAWALD: I agree.**  **12 MS. MEYERS: So it would be below the 13 standard. It might not be below a 13, but even**  **14 if it's a 14 and it tests at 13.8 it's no 15 different than a 13 testing at 12.8.**  **16 MR. RAWALD: Right. So, I guess -- 17 but you have your 14 SEER rated model. And**  **18 you're selling it in both the South and the 19 North. So you're selling it everywhere.**  **20 And the question is if I find it to be 21 non-compliant with the regional standard do you**  **22 want to just pay the civil penalty for selling**

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## 1 all the ones that were sold? Because they would **2 have been legally sold in the North, Karen. 3 That's what I'm saying.**  **4 So I'm saying manufacturers should 5 think of a way of trying -- you may want to think**  **6 of a way of minimizing your liability. 7 So I'm coming to you saying -- I'm all**  **8 for the suggestion of saying hey, we can't follow 9 it so we're just going to take credit for all**  **10 1,000 units. 11 But if you only know that 500 of them**  **12 went to the South you may want to think about how 13 does record retention, record production and**  **14 these requirements, how do they help us to 15 minimize our liability. Because that's what**  **16 we're coming around here. 17 John Hurst stood up when we were**  **18 discussing that just now. 19 MR. HURST: I agree we'd prefer to be**  **20 penalized on the lower number. 21 (Laughter)**  **22 MR. RAWALD: That's a very logical**

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## 1 position. **2 MR. HURST: And I think we would work 3 with the Department to attempt to find as many of**  **4 those units as we possibly could. 5 To Karen's point we would know through**  **6 the distribution. Then we would have to ask our 7 distributors who they sold it to and go through**  **8 their dealer networks to attempt to locate those. 9 Much like we would if we had a safety issue on a**  **10 product. 11 Will you get 100 percent of them? I**  **12 don't know. But if there was a financial 13 incentive for me to segregate the ones that were**  **14 subject to a civil penalty I think I'd make a 15 good faith effort to reduce that liability.**  **16 MR. RAWALD: This is Doug. I think 17 that's very logical.**  **18 I guess what I'm trying to say is 19 there's some incentive here from your end to also**  **20 make sure that record retention and record 21 production are pretty well kept. So that way you**  **22 guys can minimize your liability I would think.**

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## 1 MR. FERNSTROM: So, this is Gary. **2 While we're talking about liability I'd just like 3 to mention that the California Energy Commission**  **4 is in the process of conducting an appliance 5 standards enforcement rulemaking.**  **6 And the California legislature has 7 given the CEC a penal authority of up to $2,500**  **8 per violation. 9 And the CEC replicates DOE's appliance**  **10 standards in its Title 20 appliance standards. 11 So, while the objective here isn't**  **12 punitive, the maximum penalty the CEC could levy 13 for a violation of the appliance standards is**  **14 $2,500 per event. 15 And that might influence those doing**  **16 business in California to be more concerned about 17 potential penalties than the $200 that DOE has**  **18 authorized. 19 MS. SHEPHERD: This is Amy Shepherd**  **20 from AHRI. 21 Back when we did our original list one**  **22 of the things that we did have up there was the**

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## 1 interplay between these requirements and state **2 enforcement and state adoption of these 3 requirements.**  **4 And I actually think that's something 5 that we need to set up as maybe a separate**  **6 conversation, to flesh that out a little bit. 7 Because I think we do have some questions just**  **8 about how that would work. So that kind of goes 9 to that point.**  **10 And then in terms of, Doug, the point 11 that you're discussing, you know, I think that**  **12 what you're talking about would require some 13 clarification within the rule that DOE has the**  **14 view that it has that authority. Because it's 15 not in there in black and white now. So I think**  **16 that's something we continue to discuss. 17 And I also think that this is**  **18 something where kind of a compliance -- or not 19 compliance, but in terms of DOE raising this**  **20 concern to manufacturers and their own 21 remediation plan.**  **22 Because if as it's been articulated**

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## 1 that because of the importance of their **2 reputation in the industry they may do much more 3 than whatever a $200 penalty would be per unit to**  **4 remedy this. 5 And if they have made that good faith**  **6 effort I think that's something the Department 7 certainly should consider.**  **8 MR. RAWALD: This is Doug. So we have 9 a policy statement out about how we deal with**  **10 civil penalties. And one of the things that we 11 discuss in there is remediation.**  **12 So we certainly always consider things 13 that manufacturers do to make things up to the**  **14 people who are affected in assessing the need for 15 or the amount of any civil penalty. So I would**  **16 of course say that applies equally in this case. 17 And to be clear, what you want**  **18 clarification on is our ability to assess a civil 19 penalty for selling a product that would be**  **20 compliant with the national standard but that was 21 installed in a region against manufacturers**  **22 because they were the ones who manufactured the**

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## 1 product that in fact was not at that standard. **2 MS. SHEPHERD: Right. I mean, I don't 3 think that's something that the manufacturers are**  **4 certainly -- I had really thought about, as you 5 suggested.**  **6 So I think that we need to know if 7 that is, in fact, one of the things the**  **8 Department is going to articulate as one of the 9 responsibilities for compliance.**  **10 MR. RAWALD: Right. And we can talk 11 about it more. Just for me, from a point of view**  **12 of in this case unlike the labeled product that 13 we know is being put in a place that it shouldn't**  **14 be, but it was labeled and the contractor ignored 15 it, or the distributor ignored it.**  **16 This is a case where the product was 17 labeled properly, it just was -- or the label was**  **18 what it was and everyone followed the label. But 19 it actually should not have been rated that way.**  **20 And so the responsibility would 21 seemingly fall on the shoulders of the**  **22 manufacturer, right? From a fairness point of**

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## 1 view. Because a contractor can't be responsible **2 for what the product would be tested at. 3 So there has to be some sort of check**  **4 on requiring the manufacturers to have their 5 product actually comply with the 14 SEER. And**  **6 that's one of the methods, I think. 7 MS. SHEPHERD: Well, I think so. But**  **8 I think that there certainly probably is the view 9 here that that's covered by the existing**  **10 regulations. 11 And when you add something on top of**  **12 it you're adding another penalty for what is 13 basically the same conduct. They didn't install**  **14 the product. 15 And, yes, the contractor wouldn't be**  **16 liable because they didn't knowingly violate the 17 law. Although we'd need to have that**  **18 conversation as well, I think, because that's 19 another area that's not really articulated.**  **20 But, so I guess from the question of 21 an effective enforcement plan does the Department**  **22 really think that this is going to be such a**

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## 1 problem that it does sort of need that double **2 penalty to ensure that this isn't going to 3 happen. Because it's going to be addressed at**  **4 the manufacturer level with the existing 5 regulations.**  **6 MR. RAWALD: This is Doug. I want to 7 jump back from the word "double penalty" again**  **8 because that's what Karen mentioned before. 9 I don't think there's any doubling**  **10 here. I mean, this is one penalty for something 11 that was non-compliant. And actually it's less**  **12 of a penalty than it would be for a national 13 standard on compliance because it's only limited**  **14 to those things that were in the region. So, 15 that's how I'm viewing it.**  **16 So we could talk more about why it 17 would be double, but I don't see it that way. I**  **18 see it as only one penalty. 19 MS. SHEPHERD: But it's the same**  **20 conduct. They didn't install the unit. So it's 21 not like you have a penalty for the manufacturer**  **22 and then you have a penalty for the installation.**

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## 1 **2 You have the conduct that was the 3 manufacture and labeling of the unit and that**  **4 already has a penalty on it. And now you're 5 saying well, we're also going to put another**  **6 penalty on -- they didn't do anything else. They 7 didn't install it. But that's what you're basing**  **8 the second penalty off of. 9 MR. RAWALD: I'm not. I'm not going**  **10 to charge both. It's only going to be one 11 penalty.**  **12 Because they're not manufacturing a 13 product that's non-compliant with the national**  **14 standard. So, once again -- 15 MS. SHEPHERD: So we're only talking**  **16 about when it's above the federal minimum. 17 MR. RAWALD: Right. That's the**  **18 scenario I'm talking about. If it's below the 19 minimum standard then it's going to be only one**  **20 penalty for that. If it's rated a 14.0 and tests 21 12.5 I'm going to charge you for all 1,000 units.**  **22 The question, if it's rated a 14 and**

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## 1 it tests at 13.6, do I charge you for all 1,000, **2 or do you try to make an effort to figure out how 3 many of the 1,000 went South so you only pay for**  **4 part of it. 5 So I'm not double-charging you. I'm**  **6 trying to charge you less. Does everyone 7 understand that? But it requires everyone to --**  **8 MS. SHEPHERD: I think we do now. 9 (Laughter)**  **10 MR. RAWALD: Okay. But it requires 11 everyone to play ball. I mean, everyone has got**  **12 to be playing ball with the record 13 retention/record production so we can follow the**  **14 trail. If we can't then what am I left to do? 15 Okay, everyone follows me now. Now**  **16 everyone is clear. Thank you. I don't want to 17 be confusing.**  **18 MR. LATTANZI: Great, Doug. This is 19 Matt. I think John said it best. We're all**  **20 going to cooperate to find out and try and figure 21 out where these things are installed to minimize**  **22 the financial impact to our companies. I think**

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## 1 that's a given. **2 And with respect to John, I'm not a 3 poker player but I'll challenge him to a long**  **4 drive contest anytime. 5 (Laughter)**  **6 MS. SHEPHERD: It's got to be straight 7 too, Matt, though.**  **8 MR. LATTANZI: No, I take -- straight 9 doesn't count. It's pure distance.**  **10 MR. SACHS: This is Harvey. I just 11 want to say I do appreciate this exchange and I**  **12 like the way incentives fall to stack up in the 13 right direction.**  **14 MR. EISNER: Okay. Anything else on 15 this issue?**  **16 All right, let's go onto consequences. 17 First one is DOE finding of routine violation.**  **18 Anybody want to start the conversation? 19 MR. RAWALD: And this is Doug. I'd**  **20 like to ask Charlie or Chuck if they can give us 21 some opinion on this. Because last week Charlie**  **22 seemed to imply that he liked this more than the**

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## 1 idea of the compliant contractor list, or those **2 contractors who have said they would be compliant 3 with the regional standards. So I'd like to kind**  **4 of get more of their perspective on this from the 5 contractor point of view.**  **6 MR. MCCRUDDEN: This is Charlie with**
**7 ACCA. 8 Yes, I do prefer the list of violators**  **9 versus the list of good people, only because the 10 list of violators you're going to do. And**  **11 there's no reliance upon sort of an effort taken 12 by someone just to get their name on a list just**  **13 to show compliance. 14 It may be overlooked, it may be -- I**  **15 just think it's a lot more streamlined to do it 16 that way.**  **17 Now, within the -- I guess I didn't 18 realize that was in the context of this routine**  **19 violation manufacturer issue. And maybe I'm 20 reading this wrong.**  **21 Are we talking about the issue where 22 the manufacturers are held liable when they** 

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## 1 routinely sell to known violators? Or is this **2 separately as a -- 3 MR. RAWALD: Right. So, this is Doug.**  **4 So this goes to that. 5 So, what we discussed before is should**  **6 the Department adopt a process by which as a 7 threshold matter we issue a Notice of Finding of**  **8 Routine Violation by a 9 contractor/dealer/distributor that's announced**  **10 independent of our finding a civil penalty 11 against the manufacturer for dealing with them.**  **12 So, because there are kind of two ways 13 to approach this. Which is the way that's kind**  **14 of consistent with how we do things at the 15 Department now which is we issue a Notice of Non**  **16 compliance for a product that's non-compliant and 17 then we assess a civil penalty based upon how**  **18 many of those units were actually sold. 19 So similar to that we would have a**  **20 finding that someone was non-compliant or they 21 were a routine violator and then anyone that**  **22 dealt with them we would then charge a civil**

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## 1 penalty through a Notice of Proposed Civil **2 Penalty process against manufacturers. 3 The other process would simply to be**  **4 to go through a Notice of Proposed Civil Penalty 5 process where as part of that I would say, you**  **6 know, company X has dealt with contractor Y. 7 Contractor Y is a routine violator. Company X**  **8 therefore knew this. Company X owes us money. 9 So that's the other process.**  **10 So, there seems to be at least some 11 belief that having an independent finding of**  **12 routine violation may be helpful. But that has 13 its own concerns when we do that.**  **14 And so that's kind of where I wanted 15 you to go is what people think about that process**  **16 in general, whether we should have such a 17 process.**  **18 MR. DORIA: This is Jordan. Oh, 19 sorry. Charlie?**  **20 MR. MCCRUDDEN: This is Charlie, ACCA. 21 So, yes, I think I agree with you**  **22 there. I think the devil is in the details.**

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## 1 What's routine and at what point does routine **2 rise to the level of being noticed. 3 And I don't think we're going through**  **4 that right now. I have some ideas and I also 5 still want to talk to some other people when we**  **6 do get to that nitty-gritty discussion. 7 MR. EISNER: Jordan, did you want to**  **8 comment? 9 MR. DORIA: Yes. This is Jordan Doria**  **10 with Ingersoll Rand. 11 I think it's very important that the**  **12 Department make a determination on who is a 13 routine violator. And that conduct going forward**  **14 by manufacturers would be that you would be 15 prohibited from selling to those parties.**  **16 What I wanted to get clear on, Doug's 17 talking about enforcement. I don't believe it**  **18 would be appropriate to have the Department make 19 a determination that somebody is a routine**  **20 violator and then to look backwards and see who 21 has been engaged in some form of commerce with**  **22 them and then to assess civil penalties.**

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## 1 Because there would have been no **2 reasonable way for a manufacturer to know that 3 that party was going to eventually become a**  **4 routine violator and that their conduct at that 5 time was unlawful.**  **6 So I think there needs to be a finding 7 by the Department. And then moving forward the**  **8 party that is considered to be a routine 9 violator, manufacturers cannot sell to them.**  **10 MR. RAWALD: This is Doug. And I 11 think, Jordan, I staked this territory out last**  **12 week when I said that there may be occasions 13 where the Department would think that that would**  **14 be giving someone a pass for dealing with someone 15 they probably knew wasn't a good person to deal**  **16 with but they were able to get away and stop 17 doing it because we hadn't found them yet.**  **18 And I don't know if the Department -- 19 and I'll have to talk to a lot of people about**  **20 this because this is an issue that we haven't 21 dealt on.**  **22 But the Department wouldn't**

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## 1 necessarily want to give a pass on that kind of **2 conduct if we had evidence. 3 You know, if we had evidence that a**  **4 manufacturer knew that the distributor or dealer, 5 contractor was violating the regional standards,**  **6 just because we hadn't issued a finding yet at 7 that point. So that's the concern.**  **8 MR. DORIA: This is Jordan with 9 Ingersoll Rand again.**  **10 I think that the key phrase that I 11 just took away from what you just said is if the**  **12 Department of Energy in some manner came across 13 evidence that the manufacturer, in fact, knew.**  **14 I think that's a very important 15 clarification, right? My point before was if we**  **16 had no reasonable basis to suspect that this 17 party might eventually become known as a routine,**  **18 or determined to be a routine violator then I 19 think it would be unfair to sort of after the**  **20 fact penalize us. 21 If you were to unearth something that**  **22 said yes, we did, in fact, know I think that's**

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## 1 very different. And I think that would need to **2 be spelled out in the eventual rule here. 3 MS. SHEPHERD: I think another thing**  **4 that's important to clarity is that we need to 5 have some clarity not just about routine but what**  **6 a violation is. 7 What is a violation by a contractor,**  **8 what is a violation by a dealer and what is a 9 violation by a distributor?**  **10 Because this is basing -- the 11 manufacturer's liability is all contingent upon**  **12 their knowledge that one of these parties has 13 violated the law. And if we don't know what**  **14 those violations are then this law is just vague. 15 And there's no way that I think it could be**  **16 enforceable. 17 So I really think we have to come to**  **18 an agreement about what those violations are 19 going to be.**  **20 MR. RAWALD: Right. This is Doug. 21 So, I have a different perspective on vagueness,**  **22 which is that unfortunately vagueness then is**

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## 1 filled by the agency. And so that oftentimes **2 allows agency discretion to fill it. 3 MS. SHEPHERD: But the manufacturers**  **4 would have no notice of what conduct is 5 prohibited.**  **6 MR. RAWALD: Right. And so I think 7 it's important for us to either define it or for**  **8 us to then in some way provide more information 9 on that in a regulatory context.**  **10 MS. SHEPHERD: So you're saying we do 11 it or you do it, right?**  **12 MR. RAWALD: That's what I think is 13 going to happen. So, I would encourage you to go**  **14 look at this issue. I think it's very important. 15 Now, Jon Melchi pointed out that the** **16 violation in his mind is installation of a non 17 compliant unit. Which seems to make sense from a**  **18 dealer and a contractor point of view. 19 But I am left with this congressional**  **20 language that tells me a distributor can violate. 21 And so until I can hear what the distributor's**  **22 violation is, we're going to have to fill in that**

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## 1 gap somehow. **2 And so I need for people to kind of 3 think about and come to terms with the fact that**  **4 the statute has described the distributors as 5 being able to violate it in some way. So what**  **6 would be violative on the distributor's part? 7 MS. SHEPHERD: So, here's a suggestion**  **8 for discussion. What if the distributors' 9 liability or their violation mirrored the one for**  **10 the manufacturer that's in the statute. 11 So, obviously they wouldn't be**  **12 knowingly selling to any distributor, but 13 knowingly selling to a contractor. Basically the**  **14 same language. That way when you had clarity 15 around what the manufacturers could and couldn't**  **16 do it also would be applicable to the 17 distributors.**  **18 MR. EISNER: Any comments on this 19 suggestion?**  **20 MR. RAWALD: And Jon, you and Steve 21 can talk about it over lunch. You don't have to**  **22 feel obligated to give us an answer right now.**

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## 1 MR. MELCHI: Jon Melchi with HARDI. **2 If we could have a little time to discuss. 3 MR. RAWALD: Yes, I think that's**  **4 appropriate. 5 MR. WHITE: This is Chuck White. I**  **6 don't really want to weigh in on that, but I do 7 want to echo Charlie's comments that the list of**  **8 who's bad is certainly much more helpful than a 9 list of who's good.**  **10 We do need to get around to the 11 "routine" and the "violator" or violation.**  **12 That's probably the biggest can we've been 13 kicking down the road. Not that I'm volunteering**  **14 to solve it this moment, but certainly we need to 15 clear that up.**  **16 MR. RAWALD: And this is Doug. And 17 so, just so you understand, I don't think the**  **18 Department would publish a list per se. 19 What we do is when we find things non**  **20 compliant we post them to our website because we 21 have a finding of non-compliance.**  **22 So what I would envision would be just**

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## 1 -- because it's in with the standard of practice. **2 We would put our findings and routine violation 3 onto our website for people to have.**  **4 Now, if people wanted to codify a more 5 defined process we could. I just want to make**  **6 sure we're being very careful as we add more 7 processes on this thing that are divergent from**  **8 what we do that may cause more concerns. 9 MS. SHEPHERD: This is Amy Shepherd**  **10 from AHRI. 11 I don't think it necessarily has to be**  **12 something that's a shameful list or something 13 like that.**  **14 But it might -- and I'm not fully 15 aware of exactly what your notices now look like.**  **16 But it does need to be something 17 that's pretty easy to understand because this is**  **18 all contingent upon knowledge. And so you want 19 something that people can go to in a user**  **20 friendly way and sort of easily see who they 21 shouldn't be dealing with.**  **22 As opposed to like digging through**

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## 1 every single Notice of Violation and you get to **2 the end and you find out whether, you know. Or 3 whatever it might be.**  **4 MR. SACHS: Doug, this is Harvey. One 5 of the things that sank into me last week was**  **6 that a published list of known routine violators 7 is a death sentence for the contractor's**  **8 business. 9 And that carries with it the**  **10 implication that this has got some due process 11 steps and it takes some time.**  **12 And that is likely to mean a chunk of 13 time between your decision to launch an**  **14 investigation, your determination that it 15 probably is and whatever process is required. Is**  **16 that -- before you could put it on the web. 17 Does that all look like three months,**  **18 or a year, or two cooling seasons? Because I 19 think that has implications for when you're able**  **20 to start throttling that distribution channel, 21 start letting people know that there is some risk**  **22 associated with continuing business without**

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## 1 putting a gun to the head of that potentially **2 non-compliant contractor. 3 I just, I don't understand what this**  **4 process looks like in analogues today. 5 MR. RAWALD: Right. So, the Notice of**  **6 Non-compliance determination process now does 7 take awhile because it involves testing almost**  **8 always. 9 So what we do is we test a product.**  **10 We buy it. We test it. We get results. We then 11 go out and get more products from the**  **12 manufacturer. They get shipped to us. We test 13 those. We look at the data. We then make a**  **14 finding. So typically, a six- to nine-month 15 process.**  **16 I can envision this being as long 17 though it doesn't involve testing and so it's**  **18 more boots on the ground kind of investigations. 19 But it could take awhile to do a fulsome**  **20 investigation. So I want to -- especially 21 depending on what level of actual certitude and**  **22 investigation we want to go through with these**

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## 1 particular things. **2 So, not having a process in place that 3 effectively addresses this we have to really**  **4 think about it. 5 So it could be something that takes**  **6 three to nine months. I mean, it definitely 7 would not be shorter than three months I would**  **8 think. But I think on average you would see 9 something like that.**  **10 So, do I think it would take multiple 11 years? Absolutely not. But definitely could be**  **12 somewhere on the latter side of six months to a 13 year.**  **14 MR. SACHS: This is Harvey. In terms 15 of potential loose analogues like the dry shipped**  **16 condensing units, six months, it's a season's 17 worth of sales. And if we're seeing somebody who**  **18 is flagrant it is consequential for those who are 19 trying to do the right thing.**  **20 So, I don't have an answer, but I 21 think this is why we all have concerns about**  **22 making sure that parties are aware that they**

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## 1 might be concerned that you're dealing with a **2 potential routine violator before there's a final 3 determination so they can make business**  **4 decisions. 5 But on the other hand, the prudent**  **6 business decision might well be to terminate the 7 relationship on inadequate evidence.**  **8 MR. RAWALD: Right. And so -- this is 9 Doug. So, what I hear you saying is that there**  **10 might be some sort of process where we say this 11 person's being looked at before we make a final**  **12 determination. 13 The question is how fair is that to**  **14 the person we're looking at. Because if it's a 15 spurious claim and they're really -- we clear**  **16 that person, are they already stigmatized and 17 have they already lost business for a cooling**  **18 season such that they are out of business. 19 So, I want to be very careful with how**  **20 we approach this particular thorny issue. 21 And I get the fact that -- I mean,**  **22 enforcement is only effective if it's timely.**

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## 1 That's a baseline premise, right? And so my job **2 is to close cases. That's what I do. I look at 3 things as quickly as possible to get them closed.**  **4 Either an action has been taken or it's resolved. 5 And so I don't want to take a long**  **6 time. But I'm functioning in a very practical 7 real world in which I do business every day which**  **8 I can tell you the time-line is probably not 9 going to be not as short as I would like it to**  **10 be. 11 But without having done these. You**  **12 know, we give people a month to respond to the 13 information request. We give people time to**  **14 respond to things. So it's going to take time to 15 get information back and look at information and**  **16 respond to it. 17 MR. SACHS: The only thing I can think**  **18 of that might be helpful is there are process 19 things that can be done. DOE announced today**  **20 that 15 contractors are being investigated for 21 yada yada yada without naming them.**  **22 But I certainly don't have an answer**

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## 1 and am just trying to sharpen the query a bit to **2 balance everybody's responsibilities. 3 MR. RAWALD: This is Doug. I hear**  **4 everything you're saying, Harvey, I really do. 5 It's all very valid concerns.**  **6 MR. BALLO: So, this is Tim with 7 Earthjustice. And I guess I have a question for**  **8 you, Doug. 9 I'm wondering the way in which you're**  **10 conceiving of this if you do get a report of a 11 non-compliant installation.**  **12 Do you think it's likely that the 13 Department's -- it's an isolated instance of non**  **14 compliance. You have no further evidence that 15 there's a larger problem.**  **16 When you go to that installer do you 17 think it's likely that the Department would want**  **18 to take a look through records of additional 19 installations looking for a pattern that would**  **20 suggest they're a routine violator? 21 Or are you really going after that one**  **22 instance and maybe if you get a second call on**

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## 1 that contractor that's when you start looking or **2 a routine violation. 3 MR. RAWALD: What I would think is**  **4 that if somebody complains about a contractor or 5 dealer installing units improperly in their home,**  **6 I'm probably going to be more likely to want to 7 look at that particular contractor or dealer's**  **8 records to see if they have other installations 9 that meet that pattern.**  **10 MR. EISNER: Does anyone envision that 11 if you are identified as a routine violator you**  **12 should have a process for getting unidentified? 13 Proving you've changed the error of your ways.**  **14 MR. MCCRUDDEN: Well, this would be 15 Charlie with ACCA. And I think that that would**  **16 be part of this process. 17 I mean, you have the case where**  **18 there's the contractor who had somebody drop a 19 dime on them and it was just a disgruntled former**  **20 employee. And that's not one I'd like to see 21 show up on the list. I don't think that.**  **22 I think posting of that notice that**

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## 1 this contractor has been accused of doesn't serve **2 anybody until this contractor has been found 3 guilty of.**  **4 There could be the case too where 5 you've got a contractor who recognizes the errors**  **6 of his ways, finds himself lost in the wilderness 7 without a manufacturer who will deal with them,**  **8 realizes that they've only got one real skill and 9 they want to get back.**  **10 So I think part of this may be a way 11 to get back in the good graces or remove this**  **12 sort of black mark on their record. 13 And then I also wanted to sort of go**  **14 back to something Harvey mentioned before Tim had 15 his question.**  **16 And that is if we set up a threshold 17 then let's just assume the threshold is three**  **18 violations in some way, that that defines 19 routine.**  **20 One thing that may occur is that if a 21 contractor is bumping up against that threshold.**  **22 So, if it's three strikes and you're out, and**

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## 1 there's a contractor who's sitting at two, he may **2 find himself in a precarious position with his 3 own manufacturers because they may just say,**  **4 look, you're too close. We want to just cut off 5 with you now. So we could be creating an**  **6 artificial threshold by creating a real 7 threshold.**  **8 And I think I heard somebody mentioned 9 last week that the manufacturers, these are the**  **10 customers. They want to keep their dealers in 11 the fold because that's who sells their product.**  **12 But these are things that we have to 13 think about when we get down to this type of**  **14 stuff. 15 MR. PORTER: This is Steve Porter,**  **16 Johnstone Supply. 17 I mean, I would have trouble setting**  **18 a number or understanding a number until I was 19 really clear on the violation side, right? That**  **20 would be number one. 21 For what it's worth I think that, you**  **22 know, Doug, you talked about you would -- on a**

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## 1 single phone call that you would probably be **2 looking at that person. 3 What I would like to see possibly is**  **4 just a notice go out to that contractor right 5 away that they -- that the violation has been**  **6 reported, or an alleged violation has been 7 reported. And so at least they have some notice.**  **8 Because, you know, there still could 9 be some people that are unaware. I mean, it's a**  **10 new contractor coming into the business, whatever 11 it may be. Maybe they just don't quite**  **12 understand it. 13 So I think that probably would go a**  **14 long ways to stop being 90 percent of any 15 violators is just a letter saying you've been**  **16 reported. Here's a reminder of what the standard 17 is would probably take care of almost most issues**  **18 on a report basis. 19 MR. RAWALD: Steve, this is Doug. So,**  **20 that type of warning notice is not unprecedented. 21 So we do do warning notices for certain things I**  **22 discussed on the second day of our meeting here**

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## 1 as part of our standard practice. **2 But what might happen, and I can't say 3 -- I want to talk about this with the people that**  **4 I would work with -- would be the warning notice 5 would be attached to our request for information.**  **6 You know, that we'd say here's what 7 you should be doing. Please give us the**  **8 installation records for the last six months, or 9 a more cabined window, to see if that was a one**  **10 time thing or if they've been doing it a lot. 11 And if they've been doing it a lot**  **12 then say, okay, well now you've got a little more 13 of a concern. So that's -- at least I think that**  **14 the Department might want to have the discretion 15 to do that, to have that be hand in hand. That**  **16 seems to be an appropriate investigative tactic. 17 So, but I want to think about that some more.**  **18 MR. EISNER: Other comments? 19 MR. PORTER: This is Steve Porter,**  **20 Johnstone Supply. 21 And just whenever you enact that**  **22 process I do think that sell-through gray area**

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## 1 that we're going to have for a number of months **2 is the appropriate time just to be sending out 3 those notices on violations because there is**  **4 going to be confusion. 5 And some people may report people that**  **6 really aren't in violation, that they actually 7 are buying sell-through product.**  **8 MR. RAWALD: No, that's a valid point. 9 I get that.**  **10 MR. DORIA: This is Jordan with 11 Ingersoll Rand. I mean, this is the second**  **12 meeting and the third pretty substantive 13 discussion we've had on the subject of what is a**  **14 violation, what is routine violation. 15 We've kind of said in each of these**  **16 instances, well, we're going to need to define 17 it. Getting to that point where, okay, when,**  **18 right? 19 I mean, so I'd think it's just up to**  **20 us to decide. So, if this is really a critical 21 piece to come to agreement on that, do we try and**  **22 do that this afternoon? Do we try and do it**

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## 1 tomorrow? **2 I mean, we can't keep kicking it down 3 the road. I guess that's my view. So I'm open**  **4 to it being this afternoon or another time, but 5 some date and day certain seems good.**  **6 MR. EISNER: What's the consensus on 7 whether we should start with this after lunch?**  **8 Or even now if you want to start now? Do you 9 want to get to this issue next?**  **10 MR. MCCRUDDEN: This is Charlie with 11 ACCA.**  **12 I mean, I think we should blow this, 13 the rest of this page here. And I thought that**  **14 we had some issues from last week's agenda we 15 didn't get to.**  **16 MR. EISNER: That's correct. 17 MR. MCCRUDDEN: For example, I think**  **18 we wanted to talk about what is an effective 19 enforcement -- maybe we did or did not get to**  **20 that question of what is an effective enforcement 21 program. Yes, that was -- that was from Tuesday.**  **22 I'd like to get through everything and**

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## 1 then double back and then hang the pieces kind of **2 together. That's how I was looking at this, but 3 I could be the only one thinking that.**  **4 MR. PORTER: Steve Porter, Johnstone 5 Supply.**  **6 When you talk that we need to get 7 through effective enforcement, I don't think we**  **8 can get to effective enforcement, just my 9 opinion, until we understand the violation. So**  **10 to craft something to me would be difficult. 11 MR. EISNER: My sense was that we were**  **12 starting to think that some of these issues that 13 we didn't complete such as effective enforcement**  **14 were -- had become part of this list for us to 15 resolve.**  **16 But even on this list we have put off 17 some of the items. For example, with the**  **18 whistleblower and the tear-off label we had 19 decided to delay. A couple of others we had**  **20 talked about, decided we needed to get more 21 information.**  **22 So again, we can decide how we want to**

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## 1 go about this. If some are having trouble **2 answering even these questions because they don't 3 know what a violation is we could go to that**  **4 next, or we could finish this list and then start 5 to go into the details on all these things.**  **6 MR. MCCRUDDEN: This is Charlie with 7 ACCA. I think the question about what's an**  **8 effective enforcement. I mean, the sense I got 9 from that question was what are we willing to**  **10 essentially allow to happen, knowing that 11 something is going to happen.**  **12 You know, is it 90 percent of all 13 illegal installations are caught? Is it 90**  **14 percent of all installations are legal? 15 And I guess that's what I was thinking**  **16 about. Because to me that sort of frames sort of 17 how relaxed or draconian we want to look.**  **18 And within that we can sort of throw 19 out certain things. If we want things -- if this**  **20 thing is going to be tight, tight tight, then 21 that's a whole different world than if this was**  **22 going to be a recognition that, yes, things will**

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## 1 happen but let's get at the most we can. **2 MR. EISNER: If I understand you 3 you're saying what percentage would you have to**  **4 catch for it to be effective. That's a good 5 point.**  **6 I think the thought was that these are 7 the elements of what would be an effective**  **8 enforcement program. But nobody has focused on 9 will this achieve 90 percent or 80 percent, or**  **10 will we be at 98 percent before we do anything? 11 Will 98 percent comply just because they will**  **12 comply? 13 And it is a complicated issue. If you**  **14 have a program where the mere sending out of a 15 notice of potential violation because somebody**  **16 has made a phone call and Doug is now asking for 17 records might, as I think Steve pointed out,**  **18 might cause somebody to say, all right, he's got 19 a notice out there. I can't use him anymore.**  **20 That alone might make people 21 understand this is not a game where you want to**  **22 fool around. That label doesn't say 14 you can't**

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## 1 sell it in the South. You can't install it in **2 the South. 3 But that's where you have to come in**  **4 with your sense. I mean, Doug can put his 5 perspective in as I understand this. But you**  **6 also have to decide whether that one little step, 7 that he's going to send out a warning notice is**  **8 going to be so dangerous to the person who got 9 that notice that person's going to have to do**  **10 everything he or she can to avoid getting that 11 notice.**  **12 That in itself would be very, very 13 effective enforcement. However, it could be very**  **14 draconian if somebody makes a simple mistake. 15 Thoughts on some of these comments?**  **16 MS. SHEPHERD: I agree with Steve that 17 I think we need to define these violations. And**  **18 so I think it depends on how much time you guys 19 need to caucus or to think about it before we can**  **20 have that topic. 21 But I also agree with Jordan that the**  **22 sooner we have that I think then we can -- we'll**

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## 1 have an idea of exactly what we're talking about. **2 We'll have a better sense of how to assess what's 3 routine.**  **4 We'll have a better sense of how the 5 kind of information Doug's going to need in order**  **6 to prove that the activity occurred. So I really 7 think it's really important.**  **8 MR. EISNER: Other thoughts? You're 9 hungry? How about we take -- do we want to take**  **10 a longer lunch, come back, say, at 1:30? Would 11 that be enough time for people to have their**  **12 different caucuses and then start talking about 13 violation? Anybody disagree with that approach?**  **14 All right, why don't we come back at 15 1:30. Everybody will have answers prepared.**  **16 (Whereupon, the above-entitled matter 17 went off the record at 11:53 a.m. and resumed at**  **18 1:34 p.m.) 19 MR. EISNER: Did I understand there's**  **20 a question about whether or not we need to break 21 a little early tonight because of a reception on**  **22 the Hill for staff members? And I thought there**

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## 1 might have been some conversation over lunch. **2 Anybody wants to raise it again? Anybody think 3 it's necessary to break early?**  **4 All right. Is that what everybody 5 would like to do, 4:45?**  **6 Okay. We wanted to start off by 7 discussing violation. And just to make sure, I**  **8 checked with Doug. And we just want to talk 9 about violation as I understand it as it's used**  **10 in the statute and incorporated into the 11 regulations when it talks about "routinely**  **12 violates." 13 So, anybody want to start off the**  **14 conversation by where they need help, or what 15 they need help on, or the kinds of things they'd**  **16 like to say? And the regulation that DOE would 17 issue about the word? All right.**  **18 MR. MCCRUDDEN: So, this is Charlie 19 with ACCA.**  **20 In thinking about how this would work 21 this is obviously the part that talks about the**  **22 manufacturers. But it touches on the contractors**

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## 1 and the distributors. **2 I don't know if I have the answer but 3 I have some questions that I think need to be**  **4 answered. 5 And one is what is the term for the**  **6 violations. In other words, is it violations 7 over a year, over five years, over a lifetime?**  **8 Are we looking at an absolute number 9 in terms of defining "knowingly" or is it a**  **10 ratio? For routinely. What is the due process 11 that we're looking at?**  **12 Because I think, and we've heard this 13 before, but is it -- are we looking at just one**  **14 violation, two violations get you to the 15 definition of "routine."**  **16 Because routine is a trigger. Routine 17 is when you make the list I guess it is. And**  **18 that list is the one that the manufacturers are 19 looking at. And when someone shows up on that**  **20 list they're done. 21 Well, maybe not. But that trigger**  **22 there has consequences to the contractor.**

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## 1 And so how we get there, what defines **2 "routine" is going to be critical. 3 Doug, I think we had a conversation,**  **4 and I don't know if it was on the record or not, 5 but it was about sort of the enforcement**  **6 discretion that you have in terms of a first 7 violation or an honest mistake type violation.**  **8 We've talked about ways of getting 9 back into the good graces, or removing this mark.**  **10 And I think the other thing is at what 11 point does public notice occur. And I know you**  **12 have a name and shame, and I think that that is 13 the right way to go.**  **14 But when does name and shame occur? 15 When the first violation occurs, or when the**  **16 third, or whatever the trigger number for routine 17 is. That's the other thing.**  **18 And that's, I don't know if we start 19 there or if people add their own ideas.**  **20 MR. EISNER: Anybody want to comment 21 on that?**  **22 MR. RAWALD: So, this is Doug. So, I**

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## 1 just want to address the last point that Charlie **2 raised regarding the name and shame as he called 3 it. I will not take ownership of that term.**  **4 So, any action the Department takes 5 that where we actually put out notice of an**  **6 action we post publicly. 7 So, if we were to adopt or to**  **8 recommend adoption of a process by which we would 9 have a finding of routine violation that would**  **10 rise to that level. 11 If we were to take an action against**  **12 a manufacturer for knowingly selling to a known 13 violator that would be a public action.**  **14 If we were to decide that we wanted to 15 adopt some sort of mechanism of assessing**  **16 penalties against a contractor for individual 17 installations which we have not discussed yet and**  **18 that action was to be done on an individual 19 basis.**  **20 So if we were to consider possibly 21 charging a $200 maximum to an individual**  **22 contractor for knowing installation of a non-**

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## 1 compliant product, that would be a public action. **2 So, that's the things that would rise to the 3 level of being worthy of publicizing.**  **4 In our practice currently we don't 5 advertise investigations for a number of reasons**  **6 now. 7 There have been occasions where we**  **8 have published investigations akin to the one 9 that Harvey talked about prior to our break where**  **10 DOE is currently investigating 15 contractors for 11 X. So we have risen to that level.**  **12 But typically from our point of view 13 we advertise things once the matter is resolved.**  **14 For a number of reasons. 15 One, out of fairness because we want**  **16 to make sure that we have all the answers before 17 we go ahead and approach it.**  **18 Two, out of completeness. We want to 19 make sure we give complete and accurate**  **20 information to the public. 21 And I think three, out of not**  **22 disclosing our hand. So we are investigating.**

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## 1 And so sometimes when you announce things **2 prematurely it may affect your ability to get 3 appropriate information in the course of an**  **4 investigation. 5 You know, you may end up actually**  **6 thwarting your investigation by announcing things 7 too early. And so I think those are all**  **8 considerations that we have in kind of deciding 9 what would be public and what would not be**  **10 public. 11 So, that's kind of how I view that**  **12 writ large in response to your question. 13 MR. WHITE: So, this is Chuck White.**  **14 So my question I guess, Doug, is for -- does DOE 15 have something in mind? Would they find it**  **16 helpful? Would it be aimed at so many times 17 becomes routine?**  **18 Or does DOE want to consider case by 19 case the situation and someone who did it twice**  **20 in these circumstances it may be routine, but 21 someone else who did it five times in a different**  **22 set of circumstances may not.**

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## 1 Or would it be beneficial to have a **2 line in the sand, here's what constitutes or does 3 not constitute?**  **4 MR. RAWALD: So, this is Doug. DOE in 5 its collective notion has nothing in mind. There**  **6 is no preconceived notion or preconceived 7 discussion of this topic.**  **8 I think it's fair to say I'm raising 9 it for the first time for a lot of people's**  **10 attention. I think it's very important that we 11 resolve it.**  **12 From past practice the preference is 13 always to have factors I think Neil discussed**  **14 early on in this conversation rather than bright 15 line rules. Because there are so many different**  **16 cases and it's very hard to apply bright-line 17 rules in a case-by-case analysis.**  **18 And it also has impacts on how things 19 happen. So people look and say well, if the line**  **20 is three, I can do two and get away with it. So 21 you want to be very careful about what kind of**  **22 sense you're creating among the community of**

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## 1 people you're regulating. **2 So, what I think is always a more 3 palatable practice from the Department's point of**  **4 view is establishing factors such as how many 5 were sold, how close in time, to how many people,**  **6 the size of the number of operations. 7 So is the guy selling a thousand a**  **8 year and 10 percent of them are, so a ratio. So 9 there's a number of factors I think that are**  **10 maybe more palatable. 11 But I can't say the Department is**  **12 predisposed to either approach. I'm just 13 thinking from our past practice in other cases**  **14 that are analogous that a factorized approach may 15 be more palatable overall.**  **16 But I want to leave open to the group 17 kind of discussion. Because I think those**  **18 factors can somewhat create uncertainty. And so 19 people may want to have more defined numbers**  **20 because they're more comfortable with that. But 21 I think it's worth at least kind of discussing**  **22 the contours of that.**

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## 1 So I think we're open, but that's my **2 thoughts on the level of palatability I guess, 3 Chuck.**  **4 MR. EISNER: Before we get too far 5 into what is routine, should we discuss what is a**  **6 violation? Let's keep it simple in the 7 beginning.**  **8 In order for there to be a violation 9 would you argue DOE has to make a finding that**  **10 the statute was violated? 11 Or if you know without question that**  **12 the person has installed an illegal piece of 13 equipment in the South would that be a violation?**  **14 Does DOE have to make a finding, or 15 can you have facts that would actually allow you**  **16 to know there was a violation? 17 MR. RAWALD: This is Doug. I think,**  **18 Neil, you're actually packaging two questions 19 together.**  **20 So, there's a question of what 21 constitutes a violation and there's a question of**  **22 what constitutes knowledge to the manufacturer.**

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## 1 And so I want to draw everyone's **2 attention. If you can go back to the slide that 3 shows the -- so it sounds like what we were**  **4 talking about with Jordan earlier is 5 manufacturers do not want to feel like they have**  **6 to be the arbiter of "with knowledge" that the 7 entity routinely violates. That's the area of**  **8 concern. 9 And what may be a palatable kind of**  **10 middle ground here is that we could -- because 11 "knowingly" is defined. So the knowingly selling**  **12 a product to a distributor, that's defined as 13 knowledge or actual knowledge. Manufacturers**  **14 should know or do know who they're selling to. 15 The question is can we look at**  **16 knowledge and say that knowledge will be obtained 17 through either a finding by DOE or actual**  **18 knowledge on the part of the manufacturer. So 19 the manufacturer has knowledge. They are aware**  **20 of this guy's practice even though DOE hasn't 21 found it.**  **22 So, we could talk about possibly**

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## 1 defining it that way and that might be a **2 palatable middle ground between what Jordan and I 3 have been discussing over the past couple of**  **4 weeks. He's nodding his head yes so that's an 5 idea of worthy of discussion at least.**  **6 MR. EISNER: That's what I was getting 7 at, I was trying to say. Is it a violation**  **8 before DOE has found cause for penalizing a 9 company? If does doesn't say anything, do**  **10 anything, is it a violation? 11 You're thinking in terms of what**  **12 Congress intended as opposed to it's simply a 13 violation if they illegally install it. And then**  **14 we get into the question do you know that. 15 But is that a violation before DOE**  **16 finds it to be one, or not? Would anybody make 17 that argument that DOE has to make a finding**  **18 first? 19 MR. DORIA: This is Jordan. I think**  **20 -- I would like to find some middle ground 21 approach and I think there is one.**  **22 My concern would be if we were to sort**

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## 1 of play out how this could actually work. **2 So if we as a manufacturer come into 3 possession of knowledge and we are fairly certain**  **4 that a particular distributor is actually the one 5 that we think is potentially violating.**  **6 And I say distributor because of 7 course we're not actually selling to contractors.**  **8 So, we then make the decision that, 9 well, this is precarious at best. We then**  **10 decide, well, we're going to stop selling to 11 them.**  **12 My guess would be that whatever means 13 by which we came into possession of that**  **14 knowledge because it would not be something that 15 the Department would have disclosed as a matter**  **16 of the public record would not necessarily be 17 something that one of our competitors would know**  **18 about. 19 So now we have given up on that**  **20 distributor and one of our competitors moves in 21 and just takes that.**  **22 I don't think that really gets us**

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## 1 where we want to be in terms of actually **2 increasing compliance. 3 So, that's why I believe there needs**  **4 to be effectively a heavy reliance on DOE 5 determinations here, at least insofar as it**  **6 governs legally what manufacturers are liable 7 for.**  **8 But I do believe that there needs to 9 be some sort of statement that knowledge would**  **10 include a manufacturer coming into possession of 11 that knowledge.**  **12 Maybe that means you have to then 13 report on it in some capacity. But otherwise it**  **14 just gets into this game of saying, well, it was 15 the other guys who knew. I didn't know anything**  **16 and now I'm just selling to the same people. 17 That doesn't get us anywhere.**  **18 MR. RAWALD: Right. So, this is Doug. 19 And so I guess this does get us back to that**  **20 reporting kind of moral obligation we talked 21 about earlier.**  **22 And it seems to me that if you as a**

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## 1 business decision decide you don't want to deal **2 with someone because you have knowledge that they 3 are routinely violating the standards, or at**  **4 least you feel you're pretty close to that 5 knowledge.**  **6 You, one, make your business decision 7 not to deal with them anymore, and then two,**  **8 notify the Department so the Department then 9 takes their steps so that no one else can deal**  **10 with them too, right? That would be the second 11 step you would want to take.**  **12 And then we would say, okay, well, it 13 seems like as soon as you became aware of it you**  **14 told us. So we would then want to essentially 15 try to consider whether we want to have some sort**  **16 of safe harbor for you at that point. Because 17 you are the one that's coming to us and saying**  **18 we've been aware of this, we're reporting it to 19 you and we don't want to deal with them anymore.**  **20 So that's kind of I guess the nebulous 21 kind of area that we're looking to kind of get to**  **22 here. I think that makes the most sense at the**

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## 1 moment as we're talking about this out loud. **2 Jordan is nodding his head in 3 agreement that that at least is someplace we can**  **4 discuss. 5 MR. MCCRUDDEN: This is Charlie with**  **6 ACCA. Do we have to define installation and/or 7 an illegal installation?**  **8 MR. RAWALD: Right. So, do we have 9 to? There's no have to. Would it be prudent to**  **10 do so? It might be. Right? 11 So, if we're saying the violation is**  **12 the installation which has been what's bandied 13 about by some folks it would seem like we'd want**  **14 to define what installation actually means. Is 15 installation actually, you know, what is the**  **16 beginning and end of installation. Because while 17 it seems easy to define it could be more**  **18 complicated, right? 19 So, you tell me. I mean, is there**  **20 some area, some gray area there that needs to be 21 somewhat fleshed out in a definition?**  **22 MR. MCCRUDDEN: I don't know. This is**

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## 1 Charlie again. I don't know the answer. And I **2 think that technically we're closing in on a 3 definition possibly with the guidance that we**  **4 expect to come out at some point. Because I 5 think that informs what an installation is.**  **6 I mean, in my shorthand I've been just 7 using wrong box, wrong state. But maybe you're**  **8 right, maybe we don't need to do that. 9 MR. FERNSTROM: So this is Gary for**  **10 the California IOUs. 11 Aren't most of the rest of the federal**  **12 appliance standards focused on the sale of 13 products?**  **14 And my question would be why in this 15 specific case are we talking about installation**  **16 versus sale. 17 So, I'm kind of seeing these two**  **18 things as synonymous. The installation 19 contractor probably sold it, or the entity that**  **20 sold it probably installs it. 21 MR. RAWALD: This is Doug. So, we**  **22 don't use the word "sale", we use the word**

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## 1 "distribution in commerce" because I guess **2 there's some more breadth to that term. So 3 that's the term we typically use.**  **4 But it is focused around manufacturers 5 being the person who then would distribute in**  **6 commerce the thing. 7 So, the question is, is there an**  **8 analogous provision? Because we are talking 9 about -- this is an installation requirement.**  **10 So, would the sale of it to the individual fit 11 within the moniker of distribution in commerce,**  **12 or do we need to be -- have a different term. 13 But I do get what you're saying.**  **14 Because is the act that's bad, is it the 15 contractor selling it to the person? Is that the**  **16 bad act right there so we have enough? Or do we 17 want to actually have them put it in the house**  **18 before we could say that he's done something bad. 19 MR. FERNSTROM: Well, we've had the**  **20 discussion about whether the responsibility party 21 is the technician who installs it, or the**  **22 contracting firm who maybe sells it. And I would**

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## 1 believe that it's the contracting firm that sells **2 it as a contrast to their employee or 3 subcontractor who installed it.**  **4 And I kind of like the idea of getting 5 back to the term you used which was, what,**  **6 participant in commerce or? 7 MR. RAWALD: Distribution in commerce.**  **8 MR. FERNSTROM: Distribution in 9 commerce. So, I really think it's the entity**  **10 that sells it for the purpose of being installed 11 rather than the individual technician who may**  **12 install it. 13 MR. EISNER: Are you saying for the**  **14 purpose of being installed in the South? 15 MR. FERNSTROM: Well, anywhere. But**  **16 with regard to these regional standards, 17 particularly in one of those states deemed to**  **18 have higher standards than the rest of the 19 country.**  **20 MS. MEYERS: So this is Karen with 21 Rheem. I think it says that the effective date**  **22 of regional standards is based upon the date of**

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## 1 installation. So to me it's not based upon the **2 date -- to me it's not a violation until it's 3 installed. Because that's when it's effective.**  **4 Right? 5 MR. DORIA: This is Jordan with**  **6 Ingersoll Rand. I agree. I think we need what 7 we do here to sync up with that statutory**  **8 requirement which is based on date of 9 installation.**  **10 MR. FERNSTROM: Well, I don't think 11 the determination of the responsible party**  **12 necessarily has to be linked to the date of sale 13 or the date of installation. I think the**  **14 responsible party is whoever sold it. And the 15 corresponding date may well be the date of**  **16 installation. That's not a problem in my mind. 17 MR. DORIA: This is Jordan with**  **18 Ingersoll Rand. But then you have an act that 19 you cannot do which is different than the party**  **20 doing it. I think you absolutely need to have 21 the date of installation and installation be the**  **22 act. That's what it's predicated on. That's how**

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## 1 it's based. **2 I mean, date of sale is, frankly, what 3 a national standard was. You know, we moved away**  **4 from that to a date of install. So I'm very much 5 of the opinion that we need to define "install"**  **6 and that that needs to be the basis for 7 determination of compliance.**  **8 MR. RAWALD: So, this is Doug. From 9 a very practical point of view we bring our**  **10 actions against the corporate entity that's 11 responsible for what happened.**  **12 So, the installer technician, the 13 contractor's technician who installs it would --**  **14 the contract they would have as an agent or the 15 principal of that agent would have liability for**  **16 his actions under our theory. 17 So we would bring the action against**  **18 the contractor regardless of whether it was based 19 upon the fact that the contractor sold it, or**  **20 that the contractor's technician installed it. 21 So we would still find the contractor to be the**  **22 liable party.**

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## 1 MR. FERNSTROM: Okay. I think this **2 has been a useful discussion for me anyway. I 3 see Jordan's point of view and concur with you**  **4 all. 5 MR. ROCKY: This is Bryan. So, one of**  **6 the things that we don't want is the unintended 7 consequences. And so we've already talked about**  **8 internet sales. And so the contractor that sells 9 it in that case is not generally speaking the**  **10 contractor that installs it. 11 So in this case, Doug, I guess I'm**  **12 looking for you, but the installer is the one -- 13 the company, the entity that installs the product**  **14 is the one that is going to be held liable. 15 So in internet sales, somebody in**  **16 Minnesota sells a unit into Dallas. John goes 17 and gets one of his buddies to install it. The**  **18 guy who installed it is the one who is liable. 19 Not the guy who sold it in Minnesota.**  **20 MR. DORIA: This is Jordan with 21 Ingersoll Rand. I think what we're talking about**  **22 here is we're trying to clarify that installation**

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## 1 is, in fact, one of the violations. Not that it **2 necessarily has to be the only one, right? 3 So, it could be that we would get to**  **4 the point where you say an internet retailer who 5 sold it to somebody for installation with**  **6 whatever, you know, direct knowledge that it was 7 going to be installed in the South, they're also**  **8 guilty of a violation. 9 I would agree with that. But I think**  **10 we're just trying to get clarity on at least this 11 point.**  **12 MR. ROCKY: Well, and again. So this 13 is leading to other discussions and other points**  **14 coming up. 15 But basically as Matt has already**  **16 talked about in a manufactured housing world is 17 the date of installation for the system when the**  **18 full system is actually complete in one location? 19 For instance, the outdoor unit is**  **20 located and installed at the location where the 21 home is placed, but the indoor side is placed in**  **22 the home and transported from the mobile home**

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## 1 manufacturer. **2 So, is the system now the point when 3 all components are put together, hooked up and**  **4 powered up? Because that's the point where 5 violation could occur, or would occur.**  **6 And in a residential application again 7 you have townhomes, apartments, condominiums that**  **8 do the same thing. The indoor sides are applied, 9 put in place possibly months before the outdoor**  **10 units are hooked up. And in a complex of 500 11 apartments they may be installed but not turned**  **12 on for months. Weeks, usually. So where is the 13 point of installation that was the issue for the**  **14 contractor? 15 I'm not trying to throw things out**  **16 here, but we're talking broad terms. 17 MR. RAWALD: No, I think -- Bryan,**  **18 this is Doug. I think you're raising a valid 19 point that I have never discussed with anyone in**  **20 the Department regarding installations that are 21 not complete in one session.**  **22 So that's something that we'll have to**

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## 1 take back and talk about with others. Because I **2 think that you're raising a scenario which I 3 could see possibly going both over -- before and**  **4 after the compliance date, and also the before an 5 end of the grace period, right?**  **6 So you could have a job that starts 7 before the compliance date. Looks like it's**  **8 going to be great, you know, it's going to be 9 compliant. And then they get delayed by some**  **10 sort of construction delay. And then suddenly 11 they're hooking up the condenser and turning it**  **12 on on January 2. Are they suddenly violative 13 when they had everything in place beforehand? Do**  **14 they have to change things around to make sure 15 they meet the standard?**  **16 So that's an issue that we have not 17 discussed. And so I want to bring back to the**  **18 folks so that we can think about these things 19 some more.**  **20 MR. MCCRUDDEN: This is Charlie with 21 ACCA. EPA struggled I think with this same thing**  **22 during the 2010 appliance rules.**

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## 1 And if it's helpful for you they did **2 allow for that exact situation whereby 3 essentially systems were installed but not turned**  **4 on. I think it was, what, a year? Was it 18 5 months? Of equipment manufactured before the**  **6 January 1, 2010 deadline. 7 MR. RAWALD: This is Doug. So this**  **8 gets back to the question you asked earlier. Do 9 we need to define "installed"?**  **10 And so, given what Bryan is saying, it 11 may be prudent to consider defining "installed"**  **12 so we're all clear as far as what the playing 13 field is here.**  **14 But let me go back and talk to people 15 tonight about this because it's something we**  **16 haven't talked about at all and come back to you 17 guys on that.**  **18 MR. GIBBONS: So, Doug, John again. 19 One of the things you've got to think about is**  **20 when that -- and I'm thinking single-family large 21 builders, they usually have an AHRI certificate**  **22 pulled when they start the HVAC process.**

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## 1 So that certificate may be to your **2 point. You know, the furnace goes in. Obviously 3 they dry the drywall in December and they don't**  **4 put the outdoor in until January. They have the 5 certificate says it was 13 SEER in Atlanta,**  **6 Georgia, for example. 7 So you've got to think about the sale**  **8 side too, or the letting -- permitting side. 9 MR. RAWALD: No, John, I get that.**  **10 And so it's really interesting because it's 11 something different if you plan for the job to**  **12 straddle the hurdle, but construction as we all 13 know always has delays. And so that's a unique**  **14 tweak on the scenario that we haven't discussed 15 and I do want to think about some more.**  **16 MR. FERNSTROM: This is Gary. So, 17 when a building permit is not pulled how are we**  **18 going to know that the reported date of 19 installation is, in fact, the date of**  **20 installation? You know, what's to stop somebody 21 from backdating?**  **22 MR. DORIA: This is Jordan with**

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## 1 Ingersoll Rand. I think that's a fair point, but **2 it's no more or less true for new construction or 3 when building permits are being pulled than any**  **4 other time ultimately. 5 But I would think just like any -- I**  **6 mean, what we're really talking about is somebody 7 phonying up records. And people do that to cover**  **8 up crimes all the time. Hopefully an 9 investigative process is able to work through**  **10 that. 11 I mean, but what we're really saying**  **12 is, is somebody going to be doing that on every 13 single job in the event that they get called to**  **14 task. That strikes me as possible but unlikely. 15 MR. GIBBONS: This is John again. I**  **16 think I answered my own question after I thought 17 about.**  **18 We have the grace period. So the 19 transition between now and, what, June 30, 2016**  **20 kind of takes care of that. 21 MR. FERNSTROM: Well, the problem that**  **22 comes to my mind with the building permit is**

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## 1 oftentimes the energy efficiency requirement that **2 is imposed will be interpreted by the local 3 enforcement jurisdiction, the building department**  **4 to go back to when the original permit was 5 pulled.**  **6 So if someone's building a condo 7 complex. They pull the foundation permit. The**  **8 building isn't completed until five years later. 9 Well, instead of needing to comply with the**  **10 current code they're only expected to comply with 11 the code that was in effect five years previous.**  **12 So it seems to me the same issue could 13 arise around installation date. I don't know the**  **14 answer to this question, but it's certainly a 15 good question to raise.**  **16 MR. SACHS: This is Harvey. And I'm 17 actually hearing a couple of different issues.**  **18 One of them is, what is installation? 19 The second one is, what exceptions do we need to**  **20 make for special classes such as mobile homes? 21 And the third is, what do we mean by "date of**  **22 installation?" What's enforceable?**

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## 1 I'd offer the following language or **2 something like it for what is installation. 3 Given that we've adopted a condensing**  **4 unit-centered definition of what a compliant or 5 non-compliant product is it seems to me to be**  **6 relatively straightforward to start out with 7 installation means the connection -- placement --**  **8 no, the connection of the refrigerant, of 9 electrical lines for a split system and the**  **10 commissioning of the operating system. 11 MR. EISNER: What does commissioning**  **12 mean? 13 MR. SACHS: Making sure it works**  **14 right. It's honored more in the breach than the 15 discharge of the duty.**  **16 MR. EISNER: What do people think of 17 this?**  **18 MR. ROCKY: So, actually I had a 19 counter proposal to what Harvey just said that I**  **20 was thinking about at lunchtime. 21 You know, again, we had the discussion**  **22 of violation. Violation is the installation of**

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## 1 any system that is non-compliant with regional **2 and energy efficiency standards applicable to the 3 product.**  **4 Installation means the startup and 5 first use of the system in a residential**  **6 application. 7 MR. EISNER: And would you mean first**  **8 use for -- 9 MR. ROCKY: If you start it up and you**  **10 start using it to heat or cool your home you are 11 now installed and using.**  **12 MR. EISNER: So that's an act by the 13 homeowner as opposed to the last act by the**  **14 "installer." 15 MR. ROCKY: The installer is going to**  **16 conduct a startup procedure and turn on the 17 system to make sure it's operating correctly**  **18 before he walks away. It may not be a full 19 detailed commissioning process but I think**  **20 Charlie and Chuck would say most contractors at 21 least turn it on to see if it's going to power up**  **22 and work. To me that's a startup and first use.**

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## 1 MR. EISNER: So then the last act by **2 the installer. 3 MR. ROCKY: Turn it on and see if it**  **4 turns on and works. 5 MR. EISNER: And that's what would be**  **6 essentially the definition, the last act. 7 MR. ROCKY: That's a proposal.**  **8 MR. EISNER: What do people think of 9 these two different interpretations?**  **10 MR. SACHS: I'm happy with that except 11 as we've already heard I think there's some**  **12 ambiguity about first use. And I wonder if we 13 could find a term that indicates that this is**  **14 what the contractor does. 15 I used "commissioning" and that also**  **16 has some formal meaning that we may want to 17 reject.**  **18 But since common understanding might 19 take "first use" as the residents rather than the**  **20 contractors I'm a little concerned about that 21 term. Otherwise I love your language.**  **22 MS. MEYERS: Doug, this is Karen with**

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## 1 Rheem. It seems to me that installation is **2 defined somewhere in some reg. Maybe it's EPA, 3 but I thought it was DOE. And I thought it was**  **4 something about when power is applied to the 5 unit, or something like that. But -- it's EPA?**  **6 MR. MCCRUDDEN: This is Charlie with 7 ACCA. I think that's what they were looking at**  **8 in the R22 on the equipment ban. 9 So in order to beat the equipment ban**  **10 for installation they -- I think it was when the 11 loop was sealed or something like that -- and**  **12 these are the technical terms I don't get -- 13 powered up and ready for use.**  **14 I've been trying to find it. I can't 15 find the exact language on my phone but I'm going**  **16 to keep looking. 17 MR. RAWALD: So, Karen, luckily we**  **18 have two lawyers here now to assist. So they may 19 leave quickly because they don't want to answer**  **20 any questions. 21 So, the -- we'll look at that. I**  **22 mean, my preference would be of course if there's**

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## 1 already a term that's used in the industry that **2 you're familiar with from another government 3 agency to stick with that unless we thought it**  **4 was unworkable for some reason. 5 MS. MEYERS: No, I absolutely would**  **6 like to stay consistent if possible. 7 MR. RAWALD: Right. No, I get that.**  **8 And so it makes it so it works across the board. 9 So we'll look into that and come back on that**  **10 issue. 11 So we have a proposed definition from**  **12 Bryan and from Harvey, but Harvey seems to be 13 acquiescing to Bryan's definition as long as we**  **14 can add an agent of some sort to who's doing the 15 first startup.**  **16 And the possibility of adopting an EPA 17 definition, but we'll take a look for it and see**  **18 if we can come back to that. 19 So that's going to answer the**  **20 installation question at least, you know, what 21 does that mean.**  **22 And so the bigger question which Bryan**

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## 1 focused us in on was that he defined a violation **2 to be an installation of a unit. 3 Which from the point of view from a**  **4 contractor and a dealer at least seeming on its 5 face to make sense.**  **6 But we still have the question of what 7 are violations regarding a distributor. And so**  **8 we had some language put forward by Amy before 9 the break as to what a violation would be from a**  **10 distributor. 11 And I don't know if we want to turn to**  **12 that, or if we still want to look at what other 13 possible things might constitute a violation from**  **14 the contractor and dealer point of view. 15 MS. SHEPHERD: Maybe we should look at**  **16 what you said, what the definition of "violation" 17 would be just in terms of installation.**  **18 MR. RAWALD: Okay. 19 MS. SHEPHERD: And see what we think**  **20 about that. 21 So we would need a violation which**  **22 would be -- what did you read? That you think it**

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## 1 should be a person? **2 MR. ROCKY: The violation -- just, 3 again, trying to get it back to who is installing**  **4 the system is all I said. So, you know, a 5 violation is the installation of a system that is**  **6 non-compliant with regional energy efficient 7 standards applicable to the product.**  **8 MR. EISNER: Why do you need to add 9 the non-compliant in there? Why isn't it just**  **10 installation of the system with the regional -- 11 with whatever equipment it's supposed to have**  **12 hooked up and commissioned or turned on. 13 MR. RAWALD: He's defining the term**  **14 "violation." 15 MR. EISNER: Hmm?**  **16 MR. RAWALD: He's defining the term 17 "violation." Violation. That's what he's** **18 defining there. That's why he has the word "non 19 compliant."**  **20 MR. EISNER: Okay. 21 MS. SHEPHERD: It probably should be**  **22 the applicable.**

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## 1 MR. DORIA: This is Jordan with **2 Ingersoll Rand. This is a question going back to 3 something I think Tim raised in one of our**  **4 discussions of this point which is the sort of -- 5 I think it was definitions of sort of the actors.**  **6 And I think you talked about -- 7 because we talked about -- it came up in the**  **8 subject of is it the contracting company or is it 9 the ultimate -- the actual individual who did the**  **10 install. And I think Tim was able to shed some 11 light on that based on existing definition. I**  **12 think it might have been a person or something 13 like that?**  **14 So I just want to make sure because 15 there is a big difference between a contracting**  **16 company versus an actual individual who did an 17 installation.**  **18 MR. RAWALD: Right. Tim pointed us to 19 the definition in EPCA of a person which is**  **20 pretty broad. 21 MR. BALLO: So, this is Tim. I'm**  **22 wondering if it -- and I meant to look up the way**

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## 1 the current regs are structured in terms of **2 whether they identify who can violate them. I 3 believe they typically do.**  **4 Whether it would be worth saying is a 5 violation -- it is a violation for a contractor**  **6 to install the system. And we already have a 7 definition for contractor already.**  **8 MR. RAWALD: Right. So, what Tim is 9 talking to I think is the prohibited acts which**  **10 is the way they're laid out in 6302. And it 11 always says a violation for this person, the**  **12 manufacturer, private labeler, to do the 13 following.**  **14 And so we could, if we want to make 15 this specific to the contractor and the dealer**  **16 say the violation is a violation if a contractor 17 or dealer does the following.**  **18 MR. PORTER: This is Steve Porter, 19 Johnstone Supply.**  **20 So, in the case where I see this 21 probably happening most often where installation**  **22 could be a problem on date would be apartments.**

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## 1 We do have the sell-through period so **2 I think that lessens it dramatically. I do think 3 we're -- I do think we have this covered with**  **4 manufacturers knowingly because a lot of those 5 jobs go for bid, they're involved in the bid, bid**  **6 in location. I don't know if we need anything**
**7 more. 8 I think we're building something here**  **9 around an exception. And as we talked about 10 definition of installation it seems like we're**  **11 making this more and more complicated. 12 And I'm just looking at it from the**  **13 education standpoint of how I'm going to explain 14 all this when I get back home.**  **15 So you know, hopefully we don't get to 16 I have a house and it's on the border state but**  **17 the outdoor unit's in the region North, but the 18 indoor part of the house is being cooled in the**  **19 southern region because then I'm going to put a 20 gun to my head.**  **21 (Laughter) 22 MR. RAWALD: Well, who would they pay** 

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## 1 taxes to? **2 MR. WHITE: This is Chuck White. The 3 question I have is in our number 2 there it's**  **4 only a violation if a contractor or a dealer does 5 the following.**  **6 So by that broad brush anybody that 7 installs equals a contractor or dealer if it's**  **8 some homeowner's buddy that hooks it up? Or a 9 fireman on the weekend?**  **10 MR. DORIA: This is Jordan with 11 Ingersoll Rand. I think when we define dealer**  **12 contractor we shift it from the focus on how we 13 think of it to the actual act itself.**  **14 So, if you were that person, so the 15 firefighter doing it on the weekend, if you were**  **16 doing this you became a dealer-contractor for the 17 purposes of enforcement.**  **18 MR. WHITE: So if we've defined that 19 do we have to have that in there? I mean, the**  **20 violation is you put the unit in. Doesn't really 21 matter who did it.**  **22 Isn't the violation the installation**

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## 1 of the system that's non-compliant? **2 MR. PORTER: This is Steve Porter, 3 Johnstone Supply.**  **4 Yes, because I mean, apartment 5 building could also have -- or owner, or large**  **6 company could have people that work for them that 7 are going to do that.**  **8 So, I mean it's not going to be where 9 they outsource it. It would be that entity**  **10 itself that can do it. 11 MR. RAWALD: So, this is Doug. I'm**  **12 comfortable that I don't need the terms, the 13 actual actors to be in the violation.**  **14 I think what Tim was applying would be 15 that we would start, number one, with what's now**  **16 in number 2. But I don't think it's necessary, 17 but it's something at least he wanted to put**  **18 forward to be consistent with the way we define 19 prohibited acts currently in the regulations or**  **20 in the statute. 21 But I don't think it's necessarily**  **22 necessary if folks have a problem with it.**

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## 1 MR. BALLO: I just wasn't -- I don't **2 remember what our definition of "contractor" was. 3 So is it possible that there could be someone who**  **4 installs a unit without ever becoming a 5 contractor under the way we've defined it?**  **6 MR. RAWALD: I think that's a good 7 question. And so we passed around our**  **8 definition. If we could pull it up again. 9 But it may be one of those things that**  **10 we defined it kind of in the abstract, but now 11 that we're kind of seeing what the meaning of the**  **12 definition is we may want to take another whack 13 at defining it to make sure we include everyone**  **14 we want. 15 So that may be a good practice as we**  **16 define -- as we think about this. 17 MS. SHEPHERD: This is Amy Shepherd**  **18 from AHRI. 19 Doug, I have a question for you. So,**  **20 would the Department view the installation by a 21 contractor who works for a contracting company,**  **22 that's within the scope of that person's**

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## 1 employment. Therefore the Department would have **2 the authority to go after the contracting 3 company? Does that take care of that?**  **4 MR. RAWALD: So, this is Doug. So I 5 don't have the Department's definitive answer on**  **6 that. 7 It would be consistent with our**  **8 practice I can say fairly that we'd go after the 9 company based upon the principal and agency**  **10 relationship that would be established there. 11 But I don't have a definitive answer for you so**  **12 I'll ask the question. 13 MR. EISNER: First of all, just for**  **14 clarity for me, unless we intended to handle it 15 otherwise the statute uses distributor,**  **16 contractor, dealer. 17 Was there a reason why we just said**  **18 contractor or dealer here? Would we handle 19 distributor elsewhere?**  **20 MR. RAWALD: So, the reason why we had 21 contractor and dealer here is because this**  **22 particular action, the installation, is never**

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## 1 done by the distributor. **2 So Tim's point was this violation 3 number 1 is one that would be endemic to the**  **4 contractor or dealer, what they do in their daily 5 workplace.**  **6 MR. EISNER: So, how can under the 7 statute a distributor ever routinely violate?**  **8 MR. RAWALD: That's the question I 9 posed to the group earlier. And so that's the**  **10 one Amy suggested a violation in the distribution 11 we'd go back and think about over lunch and**  **12 possibly come back with an answer for us. 13 MR. EISNER: So, you've got an answer**  **14 for us now? 15 MR. RAWALD: It's Steve Porter and Jon**  **16 Melchi you need to look at. 17 MR. WHITE: This is Chuck White. That**  **18 kind of leads to when we were having our 19 discussion about, was it "introduces into**  **20 commerce?" Is that what the phrase is? 21 MR. RAWALD: Distribution in commerce.**  **22 MR. WHITE: Distribution in commerce.**

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## 1 The contractor is not necessarily -- certainly **2 would be if he is the guy that installed it he's 3 part of that. But there can be additional people**  **4 in that chain who knowingly collude, or 5 cooperate, or however that might be that the**  **6 point of the violation is the thing was 7 installed. So that's how we know the violation.**  **8 But the law is distribution in 9 commerce. So we know it's distributed in**  **10 commerce because it was installed. So we can 11 hang our hat on that.**  **12 But everybody that was involved in the 13 distribution in commerce is now subject to**  **14 question about what did you know when. So it's - 15 -**  **16 MR. EISNER: When we looked at these 17 terms, and I thought it included distributor. I**  **18 thought at one time we said that the distributor, 19 the contractor and the dealer could perform any**  **20 of the functions in the chain. 21 So I thought there was some feeling**  **22 that the distributor could be involved in**

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## 1 installation if as part of the job as a **2 distributor they also did installation work. But 3 I may have recalled that incorrectly.**  **4 MR. WHITE: This is Chuck White again. 5 The installation is what triggers it, but it's**  **6 the distribution in commerce. 7 And so it was installed so we know it**  **8 is somewhere. That's its final resting place. 9 But the distribution in commerce is the whole**  **10 chain of events that got it to its resting place. 11 It's not the contractor bolted the**  **12 thing together in the back of his truck. So that 13 certainly if the contractor did the installation,**  **14 knew it shouldn't be there, certainly he has some 15 issues.**  **16 But if there's other people in that 17 chain that knew or should have known this was**  **18 going to happen they should have some scrutiny as 19 well.**  **20 So the violation, our violation of the 21 installation just gives us the marker that**  **22 something happened. But the thing that needs to**

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## 1 be investigated is the chain of events because **2 it's the distribution in commerce that's illegal. 3 Our violation is how we know that.**  **4 MR. RAWALD: So this is Doug. So, 5 some very lawyerly type language that I'm never a**  **6 huge fan of but it seems to kind of always 7 encompass this kind of situation would be using**  **8 something like "causing to be installed." So, 9 those parties whose actions cause to be installed**  **10 that thing. 11 And so then you could say, well, the**  **12 distributor who switched the Energy Guide label 13 so the thing went out when it shouldn't have to**  **14 the South, his actions helped cause that thing to 15 be installed. That's the violation. So, the**  **16 causing to be installed. 17 So the contractor's having a**  **18 technician go out and put the thing in place when 19 it was non-compliant, he caused that to be**  **20 installed. 21 So that's one area that we could**  **22 possibly consider using that kind of language**

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## 1 which, once again, is very lawyerly and less **2 clear than I might like. But it's kind of broad 3 enough to kind of suck all those people in with**  **4 only one term. 5 MR. DORIA: This is Jordan. I think**  **6 we were moving to what are some of the other 7 violations. And I would tend to agree that there**  **8 are other violations we need to talk about. 9 But to maybe just try and get some**  **10 final clarity on the installation. Back to our 11 definitions. We had definitions of dealer, of**  **12 contractor and of installer. And the installer 13 is the person that installs.**  **14 So, if we have an installation to be 15 defined and an installer that would seem to --**  **16 yes, installer would include people who are truly 17 a contractor by trade and anybody else who does**  **18 it. So it seems to me that would -- pegging the 19 installation to you are an installer if you did**  **20 the installation. Seems easy. Maybe too easy. 21 MR. EISNER: Any further thoughts or**  **22 suggestions?**

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## 1 MR. RAWALD: So I'm hearing both from **2 Charlie who did some quick internet research as 3 well as the lawyers who have looked around that**  **4 they have not been able to find any installation 5 definition from EPA. So that right now is a dead**  **6 end but we'll keep looking at that. 7 So, just getting back to what I was**  **8 proposing was -- because we're dancing around the 9 idea of what would be a distributor violation.**  **10 So my thought would be that if we 11 could use language like "causing to be" that may**  **12 be broad enough to kind of encompass all the 13 actions that would be in any way leading to the**  **14 ultimate bad act which is the installation of the 15 bad system.**  **16 So, rather than trying to think 17 through every variable violation we could have**  **18 that would constitute at the end of the day an 19 installation of a system that was non-compliant.**  **20 We could possibly do it that way though I'm open 21 to different approaches.**  **22 And John Hurst is standing up there**

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## 1 with some ideas, I'm sure. **2 MR. HURST: No, not an idea, just to 3 add a little more confusion.**  **4 We also need to handle retailers. So, 5 if you think of a big box retailer. The contract**  **6 is between the homeowner and the big box 7 retailer, not the contractor or the installer.**  **8 So we need to make some accommodation for that as 9 well.**  **10 MR. RAWALD: And John, this is Doug. 11 So, the reason why I've been focusing on these**  **12 three parties is because they are the ones 13 specified in the statute for this particular**  **14 provision. 15 But I do understand what you're saying**  **16 as far as they have a role to play here and we 17 have to think about that some more.**  **18 MR. HURST: Well, and I think the 19 value proposition for the consumer going to a big**  **20 box retailer is the brand and the backing of the 21 big box retailer.**  **22 So I don't know how you want to handle**

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## 1 it. I just -- if we're going to do it, let's do **2 it right the first time. 3 MR. BALLO: So, this is Tim. In**  **4 thinking about what a distributor could do that 5 would be a violation I'm having a hard time**  **6 coming up with something other than just 7 distributing -- it's sort of following what the**  **8 statute says, distributing a model down the chain 9 that -- where they should know that it's going to**  **10 be ultimately installed in violation of a 11 regional standard.**  **12 You brought up the example of 13 switching the label, but that's an independent**  **14 violation already under the statute. So I don't 15 think we need to cover something like that.**  **16 MR. EISNER: So you're saying the 17 reverse of that would be that you could never**  **18 violate this provision if you sold all your 19 products through a distributor?**  **20 MR. BALLO: Well, what I was saying is 21 if you're a distributor the only liability I**  **22 think you would have is if you sold a product**

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## 1 where you knew or had reason to believe, or you **2 know, judged on a reasonability standard that it 3 was going to be ultimately installed in violation**  **4 of a regional standard. 5 MR. RAWALD: So this is Doug. So,**  **6 we're using some very loaded terminology and I 7 want to be really clear.**  **8 So this is the prohibited acts for 9 manufacturers. So we're not clearing up an**  **10 independent prohibited act for distributors. 11 What we're saying is the prohibited**  **12 act is the knowing or knowingly selling to the 13 guys who committed a violation.**  **14 And so that violation could be under 15 the prohibited act. So, you know, doing anything**  **16 that's otherwise prohibited for that entity to do 17 could be a violation if it fits within the ambit**  **18 of the regional standard. 19 So, we're not trying to define a**  **20 prohibited act for distributors for this process. 21 We're simply trying to look at what would be the**  **22 violation the distributor would be routinely**

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## 1 engaged in that the manufacturer would be held **2 responsible for knowing sales to him if he was 3 doing those things.**  **4 MR. BALLO: Why aren't we trying to 5 define a prohibited act for distributors? Why**  **6 would the manufacturer be responsible for this 7 sale that is going down the chain for an improper**  **8 installation, but not the distributor? 9 MR. RAWALD: So, Tim, what I've given**  **10 you is the statutory text. We have that Congress 11 gave us a statute that says, hey, it's a**  **12 prohibited act for manufacturers to knowingly 13 sell to distributors, dealers and contractors who**  **14 routinely violate the regional standards. So 15 we're trying to define the contours of that.**  **16 So it's a prohibited act regarding 17 manufacturers. But it has consequences for**  **18 everybody else because there's some sort of 19 labeling that's going to be attached to them in**  **20 that finding. 21 And so the violation is not limited,**  **22 or is not defining itself a prohibited act. It's**

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## 1 simply defining the violation in the context of **2 that prohibited act. 3 So they're two separate questions in**  **4 my opinion. And I don't think there's any 5 consensus of the group that we're going to define**  **6 a prohibited act. Though it's been discussed 7 there's no consensus of the group that we're**  **8 going to define prohibited acts per se for 9 anyone. And I don't want to muddy those waters**  **10 together. I think they're two separate 11 questions.**  **12 I'm not saying we won't, Tim. I'm not 13 saying we won't get there. I'm not foreclosing**  **14 you from bringing this up. I'm just letting you 15 know that I think we're talking about something**  **16 slightly different. 17 So, the fact that the labeling example**  **18 per se is something that would be covered by an 19 FTC violation, that still could -- or a**  **20 prohibited act under the FTC. Excuse me, I'm 21 using the wrong language now.**  **22 That could still be constituting a**

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## 1 violation of the routine regional standards if we **2 felt that way. So we need to look at what we're 3 trying to say.**  **4 So manufacturers have notice on, okay, 5 what kind of conduct do we need to be aware that**  **6 the people downstream are doing that's going to 7 get us in trouble for them doing it if we're**  **8 dealing with them. 9 MS. SHEPHERD: This is Amy Shepherd**  **10 from AHRI. 11 So, what if as I suggested slightly**  **12 before the break the liability that the 13 manufacturers would be responsible for in terms**  **14 of the conduct of the distributors was that 15 distributors cannot distribute in commerce any**  **16 new covered product which is not in conformity 17 with an applicable energy -- I'm sorry, I'm on**  **18 the wrong section. 19 That distributors I guess -- or it**  **20 could be realtors -- will not knowingly sell a 21 product to a contractor or installer with**  **22 knowledge that the contractor or installer**

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## 1 violates any applicable regional standard. **2 So we know we have guidance from DOE 3 that distributors are not going to be subject to**  **4 civil penalties which means -- and Doug, correct 5 me if I'm wrong -- this would be injunctive**  **6 relief only that the Department would seek. 7 Are you making a face? That's not**  **8 true? 9 So, that's just my thought. Because**  **10 if that is in fact really what the consequence 11 is, it's saying the Department is going to stop**  **12 you from distributing products to contractors 13 that are violating the regional standards I'm not**  **14 really sure what's being lost. 15 Because the flip side of that is**  **16 saying that distributors could do that which 17 doesn't really make any sense.**  **18 MR. EISNER: But under this statutory 19 provision it looks like the only party that can**  **20 violate that section are manufacturer or private 21 labelers.**  **22 MS. SHEPHERD: I understand that.**

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## 1 MR. EISNER: You're talking about **2 something completely different. 3 MS. SHEPHERD: A parallel provision,**  **4 yes. And because of what came out of the 5 settlement there are not going to be civil**  **6 penalties on that. It would be injunctive 7 relief.**  **8 So that means the action that DOE 9 would take would say stop doing that. Which is**  **10 stop selling to people that we know are violating 11 the regional standards by installing product that**  **12 doesn't comply with them. 13 MR. RAWALD: So Amy put a lot of stuff**  **14 into a quick package that we need to respond to. 15 So, what Amy is putting forward is**  **16 something I think that probably makes Tim's ears 17 perk up because she's describing a separate**  **18 prohibited act for which we would not be able to 19 assess civil penalties in her analysis.**  **20 And I said earlier that we do have 21 this policy statement. But I have discussed**  **22 further with the lawyers.**

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## 1 And so while we have that policy **2 statement, if we were to come to an accord and 3 through notice and comment rulemaking we were to**  **4 decide that there would be some sort of need for 5 that we could of course change direction on that**  **6 through a proper notice and comment rulemaking. 7 So, policy statements are not**  **8 ironclad. So there's more to be talked about. 9 And if Dan wants to jump in here**  **10 because he feels like I'm flubbing it certainly 11 he could. But I think I've got that pretty much**  **12 down where we are. So, that is open for 13 discussion.**  **14 The point though to me is that what we 15 need -- we need to really wrestle with head on is**  **16 this manufacturer violation, or manufacturer 17 prohibited act. Now I'm mixing my terms again**  **18 because I'm getting confused by what I'm saying 19 here.**  **20 So, the prohibited act regarding 21 manufacturers is the knowing sales to these folks**  **22 who are violating routinely the statute or the**

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## 1 standards. **2 So, let's stick with that and not 3 diverge to other prohibited acts that we could**  **4 create. But let's look at that. 5 So what would be a violation of the**  **6 regional standards by a distributor? How would 7 they be violative of that?**  **8 And it sounds like Amy was suggesting 9 before that it would be knowing sales to someone**  **10 else who you know routinely violates. 11 So, the only concern I have with that**  **12 is it does at least avoid the notion of, hey, I 13 know I have a contractor that routinely complies**  **14 with the standards, but I'm going to go ahead and 15 I'm going to give him the wrong thing and he just**  **16 trusts me so he's going to put it in place. 17 So if it's the distributor who's**  **18 trying to get out ahead and make a couple of 19 dollars -- I mean, I know, Steve, this doesn't**  **20 happen -- but if there is a distributor that did 21 do that I want to make sure that we're saying,**  **22 hey, there's no way the distributor can be the**

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## 1 one who's sending out the wrong thing. **2 We want to make sure that that's a 3 violation of them putting the wrong thing in the**  **4 hands of the installer to then be installed. If 5 the installer is completely devoid of any actual**  **6 intelligence of the issue the distributor can be 7 held -- at least, the person who routinely**  **8 violated the standard in some way. 9 That's kind of where I'm thinking.**  **10 This is -- I want to think about it more with you 11 folks. I want to really understand this better.**  **12 MR. PORTER: Doug, Steve Porter, 13 Johnstone Supply.**  **14 I mean, yes, do we want to carry twice 15 the inventory for the same sale? That's really**  **16 not a motivator for us at all. 17 I think the -- I think it is all**  **18 handled somewhat in your manufacturer statement 19 that -- where they knowingly sell a distributor,**  **20 contractor. 21 Because there's folks in this room**  **22 that sell direct to contractors today that are**

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## 1 distributors, and have entities, and have **2 distribution models that support that. 3 And there's those that just sell**  **4 independent. Which again I appreciate. 5 But I think the fact that they hold**  **6 the power of the contract with the distributor 7 for the rights to sell that product is the trump**  **8 card. 9 If you put in there that they**  **10 knowingly sell distribution or contractors, 11 that's self-policing right there. Because if**  **12 that contractor was coming -- being sold through 13 that distributor that find in violation, and you**  **14 work your way up the food chain back to -- and go 15 look, you've had five of your distributors now**  **16 that we find are in violation all the time. 17 You're not doing a very good job of vetting your**  **18 distribution model, right? And they have the 19 power to control that.**  **20 I think where it falls short is if 21 everybody's in communication about that that**  **22 somebody doesn't come in on the backside and sell**

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## 1 to them. Just as I would have concerns about **2 somebody coming in and I can't sell to the 3 contractor, but now he just goes down the street**  **4 and buys from somebody else. 5 But the process with the manufacturer**  **6 to the distributor is where you're going to see 7 it. You'll see the chain when it all happens,**  **8 when the violation happens. 9 That's up to the manufacturer. Do**  **10 they want to keep selling to somebody that's 11 going to continually violate to make them look**  **12 bad? 13 I mean, to me it's right there. He**  **14 doesn't need to go any further than where you 15 have it.**  **16 MS. SHEPHERD: This is Amy Shepherd 17 from AHRI.**  **18 I think the problem is though the way 19 it's written it says that if a manufacturer**  **20 knowingly sells a product to a distributor, 21 contractor, or dealer with knowledge that the**  **22 entity routinely violates any regional standard.**

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## 1 So, if the only violation that we've **2 found of a regional standard is the installation 3 then that means the distributor would never**  **4 violate the regional standard. 5 Which actually, you know, probably**  **6 from a manufacturer's standpoint that would be 7 fine because that would take that piece out of**  **8 that -- this enforcement provision. 9 But I don't think, and Doug, correct**  **10 me if I'm wrong, that DOE is going to go for 11 that.**  **12 MR. RAWALD: I don't think so either. 13 MS. SHEPHERD: So, I think we come**  **14 back to the other conversation we have is that if 15 we just leave that undefined DOE is not just**  **16 going to leave it undefined. They're going to 17 define it for us. So I think that's where we**  **18 are. 19 Because otherwise it just, it takes**  **20 that out of the statute because there's nothing 21 for them to enforce.**  **22 MR. RAWALD: So I guess the question**

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## 1 is really to Steve and Jon. If you guys over **2 lunch had time to talk to some folks and see if 3 it was palatable to your folks you represent to**  **4 have a distributor violation defined in some way 5 akin to what Amy offered or a different**  **6 alternative. 7 MR. MELCHI: Jon Melchi with HARDI.**  **8 I think we were still waiting to hear back from a 9 larger group of folks.**  **10 MR. RAWALD: And that's a fair 11 response, Jon. We're not trying to press you to**  **12 have an immediate answer. And I told the group 13 last week we can be patient with that kind of**  **14 thing. So, if you guys need more time, you need 15 more time. So that's just -- we'll table that.**  **16 MR. MELCHI: Yes, I think what we'd be 17 interested in getting some clarification on is**  **18 your statement earlier about deviating from -- 19 MR. RAWALD: The policy statement?**  **20 MR. MELCHI: -- the policy statement. 21 MR. RAWALD: Yes, I'm sure that caught**  **22 your ear.**

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## 1 So, what I want to make clear is, and **2 Tim called me on this earlier on about how this 3 doesn't seem fair because it's rulemaking.**  **4 So, policy statements can be 5 superseded by notice and comment rulemaking which**  **6 is what we're looking at here. 7 So if the consensus of the group was,**  **8 hey, okay, this is where we have to go, and the 9 notice and comment rulemaking was executed**  **10 properly the policy statement could be superseded 11 by a rule taken in accordance with notice and**  **12 comment rulemaking. 13 Once again I'm turning to Dan Cohen**  **14 because he's much smarter with this stuff than I 15 am to make sure I'm saying this correctly. He's**  **16 saying he agrees with me. So that's where we 17 are.**  **18 So I'm not saying we are, or that we 19 will, or that we must. I'm just saying that's --**  **20 I want to be very clear about the legal 21 parameters here because I don't want people**  **22 operating on the wrong legal advice that I may**

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## 1 have given. So I want to make sure that we're **2 all clear what the parameters are. 3 MR. EISNER: If we could go back to**  **4 installation and the people like the distributors 5 and Doug could use some similar language.**  **6 If a violation was defined as a 7 violation is the installation of, or the sale or**  **8 distribution to someone who intends to install a 9 system that is non-compliant would that take care**  **10 of some of the problems? 11 MR. PORTER: This is Steve Porter,**  **12 Johnstone Supply. I mean, intends? 13 MR. EISNER: Doug used another term**  **14 earlier. I forget what the phrase was that you 15 used.**  **16 MR. PORTER: I think we talked about 17 this earlier, Neil. I mean, where, you know, I**  **18 may sell a piece of that system. So I may not 19 sell it all. So, he may buy one piece of it from**  **20 me and another piece from somebody else in town. 21 So we wouldn't have any way to know. So, his**  **22 intent.**

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## 1 MR. EISNER: If you didn't have any **2 way to know you wouldn't be in violation. But if 3 you knew it was going to be used, installed in a**  **4 place where it shouldn't be installed, and you 5 distributed to that person knowing that. Again,**  **6 part of it is trying to figure out what Congress**
**7 -- 8 MR. PORTER: I'd be interested in**  **9 reviewing any language about the way that you 10 stated intent, that the contractor has intent to**  **11 install it incorrectly. 12 MR. EISNER: I thought that was**  **13 stronger in the sense that the contractor says to 14 you I want to install this in Virginia. And it's**  **15 a 13 SEER product. 16 MS. MEYERS: So let me see if I can**  **17 repeat what I think you said. This is Karen with 18 Rheem, sorry.**  **19 A violation is the intentional sale of 20 a system that is non-compliant with the**  **21 applicable regional efficiency standards. 22 MR. EISNER: Well, no. Again, I** 

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## 1 intended to -- **2 MR. RAWALD: What I heard Neil say, 3 Karen, was a violation is the installation or**  **4 intended to install. So, it actually is on a 5 different --**  **6 MR. EISNER: Yes, it was a little bit 7 longer. I think I said something like a**  **8 violation is the installation -- 9 COURT REPORTER: I'm sorry, sir. I'm**  **10 not picking up what you're saying. 11 MR. RAWALD: You need a microphone.**  **12 MR. EISNER: A violation is the 13 installation or sale or distribution intended for**  **14 installation of a system that is non-compliant. 15 Something along those lines.**  **16 MR. RAWALD: And so this is Doug. So 17 I would definitely have to huddle with the**  **18 lawyers and talk more about whether we have the 19 authority to extend it to a system that's not**  **20 installed but merely intended to be installed. 21 So we need to talk more about that.**  **22 MR. EISNER: It is the installation or**

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## 1 sale or distribution to a party or whatever we **2 want to call them who intends to install a system 3 that is non-compliant.**  **4 MS. SHEPHERD: This is Amy Shepherd 5 with AHRI. I actually think it's much more**  **6 practical and you're probably better off with the 7 standard of knowledge that they routinely violate**  **8 because that's knowledge of a specific fact. 9 I don't know how you'll ever prove --**  **10 I mean, you can't -- I think that's going to be 11 very difficult to get into the subjective intent**  **12 of a particular person. 13 MR. PORTER: This is Steve Porter,**  **14 Johnstone Supply. Yes, I think we get -- as 15 Jordan brought up before, I think once we get**  **16 away from installation as the violation as it's 17 written that it gets a lot more complicated.**  **18 MR. EISNER: -- complicated then 19 you're writing distributor out. Someone might**  **20 have a problem with that. You're saying the 21 distributor can't violate this provision.**  **22 MS. MEYERS: Well, what I like about**

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## 1 number 4 is how it covers the internet side of **2 things. I don't know that it's still correct, 3 but I like it because it really kind of covers**  **4 everyone within the chain, whether it's the, you 5 know, the online seller, or the fireman**  **6 installer, or whomever. But I don't know that we 7 have it correct. I think it deserves more**  **8 discussion. 9 MR. SACHS: This is Harvey wearing my**  **10 very comfortable libertarian hat. And I share a 11 little bit of the disease or unease about the**  **12 term "intends to install" but I haven't figured 13 out a way around it.**  **14 MR. EISNER: Plans to install. 15 MR. SACHS: Well, if you were to**  **16 assume that prima facie evidence is that he's 17 shipping it to an address where its installation**  **18 would be non-compliant that to me is more 19 specific and more comfortable.**  **20 Intent, if I really were a Tea Party 21 type, would summon up images of IRS going after**  **22 NGOs and stuff like that.**

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## 1 So I'm just uncomfortable and wonder **2 if we can get something that's cleaner and more 3 specific. And the only thing I've thought of is**  **4 tied to this question of the location to which 5 it's shipped.**  **6 MR. LATTANZI: This is Matt with 7 NORDYNE. Suppose we change it to say "that**  **8 installs a system that is non-compliant." 9 I mean, I realize it's after the fact**  **10 now. The violation is the installation of, or 11 sale, or distribution to a party that installs a**  **12 system that is non-compliant with the applicable 13 regional efficiency standards.**  **14 MR. EISNER: The problem I see with 15 that is you didn't know. So why is the**  **16 distributor at fault? The distributor has to 17 know that it's being used to install a non**  **18 compliant one. 19 MR. DORIA: This is Jordan with**  **20 Ingersoll Rand. I think we need to further 21 define this, but I would recommend separating out**  **22 these two. I think it becomes extremely complex**

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## 1 to try and lump the two together. **2 And I think they're actually -- 3 assuming we get to a point where we have multiple**  **4 violations it would be easy I think for all of us 5 to go and say distributors, these are the**  **6 violations that apply to us. Manufacturers, 7 these are the violations that apply to us, and**  **8 for others as well. So I think if we could 9 separate it out it might be a little easier.**  **10 MS. SHEPHERD: This is Amy Shepherd 11 with AHRI. What if it said a violation is the**  **12 installation, what we had before, an installation 13 of a system that is non-compliant with applicable**  **14 regional energy efficiency standards, or the sale 15 or distribution to a party with knowledge that**  **16 the -- to an installer with knowledge that the 17 installer routinely violates any regional**  **18 standard applicable to the product. 19 So I'm basically just pulling out that**  **20 last sentence of what manufacturers are 21 responsible for.**  **22 So what I'm trying to cover is the**

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## 1 installation itself and sale to someone who **2 routinely installs things in violation of that 3 provision.**  **4 MR. EISNER: Could you repeat that? 5 MS. SHEPHERD: Probably not. Okay.**  **6 So, a violation is the installation of a system 7 that is non-compliant with the applicable**  **8 regional efficiency standards or the sale -- what 9 did we have before -- I can't remember what we**  **10 had before. Oh, there we go. 11 Or the sale or distribution to a party**  **12 with knowledge that the party routinely violates 13 any regional standard applicable to the product.**  **14 MR. EISNER: Isn't that just a 15 restatement of the statute?**  **16 MS. SHEPHERD: It's a restatement of 17 the last sentence of the statute that's**  **18 applicable to manufacturers. 19 So it would -- so what I'm thinking**  **20 with that is I am trying to make this as simple 21 as possible. That way when we're getting clarity**  **22 around what manufacturers can be doing in terms**

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## 1 of knowledge and in terms of routine violations **2 we can just use those same standards for 3 distributors.**  **4 So it would be consistent throughout 5 the parties that are in the product chain.**  **6 Because I don't think we should have 7 something that's vastly different. But if**  **8 manufacturers are going to be held responsible 9 for sale to a distributor that's violating they**  **10 just, they have to know what that means. 11 MR. RAWALD: This is Doug. There's**  **12 going to be a slight language problem from 13 enforcement for me which is going to be -- so**  **14 what we're going to say is it shall be unlawful 15 for any manufacturer of a private label to**  **16 knowingly sell or provide to a distributor with 17 knowledge that the distributor routinely --**  **18 knowingly sells to a party that routinely 19 violates any regional standards applicable to the**  **20 product. 21 So it's not just that they sold to the**  **22 person that they know was a routine violator, but**

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## 1 they have to routinely sell to that person that **2 they know was routinely selling. 3 MS. SHEPHERD: Okay. I'm happy to**  **4 tweak and fix whatever. 5 MR. RAWALD: Right, right, right.**  **6 That's the one thing. 7 MS. SHEPHERD: The idea that I'm just**  **8 getting at is that it is simple. It's the basic 9 -- you can't install something and you can't sell**  **10 something knowing that people -- to people who 11 are routinely violating.**  **12 And that's true whether you're a 13 manufacturer, it's true whether you're a**  **14 distributor, it's true whether you're on the 15 internet. I mean, if we can have kind of one**  **16 thing that would be communicated as what the 17 prohibited act was, it doesn't vary from where**  **18 you are, I think that is going to make an 19 effective enforcement plan.**  **20 MR. BALLO: Just to be clear though, 21 this wouldn't actually get at the internet sales**  **22 directly by going after the seller online. It**

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## 1 would go after the person who sold it to the **2 internet seller. 3 Because the internet seller isn't**  **4 selling the product to someone who routinely 5 violates the standard. They're presumably**  **6 selling it to someone who's just buying one, to 7 violate the standard one time.**  **8 MR. RAWALD: And this is Doug. So to 9 be hyper-technical you would be getting at the**  **10 manufacturer who sold to the person who sold to 11 the internet seller, right? So, I think that's**  **12 really -- it's a prohibited act regarding the 13 manufacturer, but it would have -- so that's what**  **14 we're really -- just keep that all in our sense 15 of scope.**  **16 MR. EISNER: It's almost time for a 17 break. Would it help for people to just caucus**  **18 about different variations of the language and 19 come back in 15 minutes?**  **20 Since we have unanimous agreement 21 we'll take a break and come back in 15 minutes.**  **22 (Whereupon, the above-entitled matter**

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## 1 went off the record at 2:45 p.m. and resumed at **2 3:12 p.m.) 3 MR. EISNER: If we could get started.**  **4 Does anybody have any suggestions they want to 5 put on the table?**  **6 MR. RAWALD: So, this is Doug. And I 7 just want to -- I was approached a couple of**  **8 times at the break about my steadfast devotion to 9 focusing on the prohibited act as described by**  **10 Congress. 11 And I want to dispel the notion that**  **12 I'm trying to focus all the weight on the 13 manufacturers, or that I'm trying to be resistant**  **14 to any other ideas. 15 What I'm really trying to do though is**  **16 we have a prohibited act that's been given to us 17 by Congress. We have this thing that we have to**  **18 deal with. 19 And I want to make sure that everybody**  **20 is comfortable with how that's defined in the 21 context of itself going forward because I don't**  **22 want anyone caught off guard if and when we start**

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## 1 bringing in violations of this thing. **2 So I'm not trying to imply that 3 manufacturers need to carry all the weight here.**  **4 What I'm trying to make sure we're 5 clear about is that we have a prohibited act**  **6 defined by the statute that calls out 7 manufacturers as having a certain responsibility,**  **8 but as I've described has implications for folks 9 downstream. And so I want to make sure that we**  **10 have this thing fleshed out to everyone's 11 satisfaction if at all possible.**  **12 There are other pieces to this. Folks 13 want to suggest other prohibited acts. Folks**  **14 want to possibly think about what else could be 15 unlawful.**  **16 When we're defining the term 17 "violation" it's within the context of this one**  **18 prohibited act. That's what we're talking about 19 is what would be for purposes of the**  **20 manufacturers being put on notice here the thing 21 that we're trying to say manufacturers should be**  **22 aware of. Hey, if this guy does it they're**

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## 1 routinely violating this thing. And therefore **2 you should not deal with them or else you'll be 3 charged money by DOE. That's where I'm trying to**  **4 make sure we wrestle with this. 5 And I think it's very easy to pull on**  **6 other ideas. That's kind of why I'm trying to 7 focus us on.**  **8 And if I'm doing that too much please 9 tell me. I'm just trying to make sure that we**  **10 stay focused on this one thing because I want to 11 make sure we have it clear so if and when I bring**  **12 an action based upon this in the future folks 13 understand where it's coming from and what it's**  **14 all about. 15 MS. SHEPHERD: This is Amy Shepherd**  **16 from AHRI. Okay, but just to -- this is just to 17 clarify what you just said.**  **18 But it is DOE's view that however 19 "violation" is defined under this prohibited act**  **20 that you would have a separate basis for 21 enforcing that? Or no? Does that make sense?**  **22 My question.**

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## 1 MR. RAWALD: Right. So you're asking **2 me if I think how we define "violation" would 3 then be a prohibited act separate and apart from**  **4 that. 5 MS. SHEPHERD: I am asking you that.**  **6 MR. RAWALD: Right. So, I won't 7 commit to that.**  **8 MS. SHEPHERD: Okay. 9 MR. RAWALD: What I have said so far**  **10 is that DOE views our authority as expansive 11 enough to interpret the statute as we have it**  **12 before us to create additional prohibited acts if 13 necessary as this group it is advisable and want**  **14 to recommend that. 15 MS. SHEPHERD: But I do think it would**  **16 be helpful for us to kind of know which side of 17 that line we're on.**  **18 Because I think that if we're just 19 clearly talking about that this is -- if this is**  **20 a situation we're talking about, okay, here's 21 where the manufacturer is liable and we've got to**  **22 define these things so the manufacturer knows**

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## 1 that they're liable. **2 But parties, the other parties in the 3 chain are not going to have separate liability**  **4 for that. That gives them a level of comfort. 5 That is an easier decision for them to make to**  **6 say okay, yes, that's fine. 7 For this purpose, for defining what**  **8 manufacturers are going to be liable for I can 9 live with that.**  **10 Versus when I say I can live with that 11 I'm signing onto a separate enforceable**  **12 commitment that that's what I'm going to have to 13 do.**  **14 So I think we do need to have some 15 clarity about what the Department's view is on**  **16 that in order for these discussions to kind of 17 really work.**  **18 MR. RAWALD: Right. I can't give you 19 a definitive answer to that at the moment, Amy.**  **20 I really can't. So I have to talk to people that 21 are smarter about these things and have more say**  **22 so than I do on this matter.**

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## 1 But what I can say is that what we're **2 trying to define is the act that if someone does 3 it routinely and the manufacturer is aware of**  **4 that routinely being done then the manufacturer 5 could be held liable.**  **6 So the question is, if that act is 7 done one time, that violation, will we hold the**  **8 entity who does that thing one time financially 9 responsible or through injunctive relief stop**  **10 them from doing it. And I can't answer that 11 particular question.**  **12 MS. SHEPHERD: Ever? Or -- 13 MR. RAWALD: No, no. Right for you on**  **14 the spot here right now. 15 MS. SHEPHERD: Okay, well that's**  **16 probably fair. But so is that something then 17 that you think we could get some feedback on**  **18 relatively shortly? 19 MR. RAWALD: I will try my best.**  **20 MS. SHEPHERD: Because I think that 21 would be a huge facilitator of where we're trying**  **22 to go with this.**

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## 1 MR. RAWALD: Okay. I will try my **2 best. I will definitely try my best and see what 3 I can do there.**  **4 MR. EISNER: Let me ask, if we focus 5 as Doug said just on the statute for now we seem**  **6 to have agreed on a definition of "violation." 7 MS. MEYERS: We have five.**  **8 MR. EISNER: Well, I know. And we've 9 used it a few times. A violation is the**  **10 installation of a system -- look at number 5 -- 11 that is non-compliant with applicable regional**  **12 efficiency standards period. That is a 13 violation. All right?There may be more that you**  **14 need to add to explain how it might apply to 15 somebody else in the scheme of things because**  **16 distributors don't seem to be involved in that. 17 But that is the violation.**  **18 Then the next thing you have to look 19 at is what is routine, and the third thing you**  **20 have to look at is what are the responsibilities 21 of the various parties.**  **22 MS. MEYERS: Neil, this is Karen. So,**

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## 1 that definition is so disconnected from the **2 prohibited act that I am totally confused. 3 Because a manufacturer has nothing to**  **4 do with the installation in 9 times out of 10. 5 But we're saying the violation is the**  **6 installation. But we're working back to this 7 prohibited act.**  **8 And so I'm confused. I do not get how 9 these are working at all. And I think that's why**  **10 we're not getting a lot of forward progress in 11 this afternoon's discussion.**  **12 MR. EISNER: And then I'm suggesting 13 that if that is not -- if that is the violation**  **14 you then get into it in terms of the word 15 "knowledge."**  **16 So if the manufacturer is selling to 17 a distributor, as I understand it, it might be**  **18 very hard to determine that. But if the 19 manufacturer is selling to a contractor or a**  **20 dealer would it be that hard for the manufacturer 21 to know that?**  **22 MS. MEYERS: So this is Karen again.**

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## 1 I mean, I think the purpose is to come up with an **2 enforcement plan. 3 So, you have no enforcement plan**  **4 working on that definition and the prohibited 5 act. Because there would never be any knowledge**  **6 I guess is what I'm trying to say. 7 MR. RAWALD: Karen, if I hear what**  **8 you're saying, and this goes back to a point I 9 think you made two weeks ago, that the way the**  **10 prohibited act is structured and the way we're 11 looking at it now the manufacturer will never**  **12 have knowledge that the dealer or contractor 13 installed a non-compliant product.**  **14 So it's a prohibited act with no 15 teeth. There will never actually be a way of**  **16 saying, well, you broke it, Manufacturer, because 17 you're -- you're never knowingly selling it to**  **18 someone that's routinely violating. That 19 interchange is not happening.**  **20 So, unless you're in the model where 21 you're a manufacturer-distributor and then you're**  **22 dealing with a dealer-contractor and you could**

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## 1 have some knowledge there. **2 Is that a possibility? So like in the 3 Lennox case that John has volunteered numerous**  **4 times, he would be the only one kind of on the 5 hook for this compared to you who don't ever deal**  **6 with the distributor. 7 So, now you're consoling him. Steve**  **8 Porter wants to talk. 9 MR. PORTER: Yes. This is Steve**  **10 Porter, Johnstone Supply. 11 Yes, I agree. If you brought us, you**  **12 know, you -- as you said it's going to be more 13 reactive, right? You get reactive.**  **14 And then that person rolls up and we 15 find that contractor in violation. And you come**  **16 out with a list that says violator. If you sell 17 them, you're going to be in violation.**  **18 That's something I can get my head 19 around because you've now just told me that's a**  **20 violating contractor and we wouldn't sell him. 21 That's something I can get my head around.**  **22 MR. EISNER: Even if they don't tell**

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## 1 you that they have evidence they violated it, if **2 the contractor or the installer said to you here 3 is what I'm going to do with that product. I'm**  **4 going to install them in Virginia. Would you -- 5 and I've done it before, I've done it multiple**  **6 times before, don't worry about it. Would you 7 sell to that person? Under this statute if there**  **8 was no rule. 9 MR. PORTER: The difficulty as I**  **10 mentioned in being in the middle, and being that 11 I deal with -- my phone rings daily on rumors**  **12 that this contractor did this, this contractor 13 didn't put covers on condensing units in this**  **14 state or this town. 15 And aren't you going to do -- you**  **16 know, that's how they got the job. They got the 17 job because they violated, you know. That's**  **18 something we deal with all the time. 19 We're not set up as a police**  **20 organization. I'm not set up to hear, you know, 21 somebody who picks up the product saying, yes,**  **22 we're running these up to Tennessee. Am I going**

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## 1 to call and ask? **2 Or he says it to the counter person. 3 For example, I'll just give our organization.**  **4 We're 3,300 employees. Where does that, you 5 know.**  **6 I mean, the difficulty I have, as DOE 7 regulates manufacturing which I think they're**  **8 really good at, and if they understand when it 9 leaves the dock it was a 12.8 and not 13, it's**  **10 really clear. 11 This is not as clear. So I mean, I**  **12 think for anything for us to get our heads around 13 or put language around, you know, we'll have to**  **14 come up with something that we can give you 15 that's really clear language that we would be**  **16 okay with. Because it's so kind of squishy. 17 Not that -- everybody wants to do the**  **18 right thing. They really do. In fact, Jon made 19 the comment today as we were driving here. We**  **20 were sitting there, you know. What's really 21 interesting about the group is that everybody**  **22 wants to sell equipment. And everybody wants to**

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## 1 sell the higher SEER and everybody wants to do **2 that thing in the room. 3 That's why we are all here. We are**  **4 all the right ones in the room wanting to do the 5 right thing which is great. Advocates. We want**  **6 to do -- we want to sell up. We want to do all 7 those things.**  **8 And what we really keep coming back to 9 is these really exceptions, and building rules**  **10 around exceptions. 11 You know, I think we have a pretty**  **12 good process in that you will have a website and 13 a whistleblower to start there and then work your**  **14 way up the channel, that we would have records. 15 We would provide records. We'll agree to some**  **16 set time to maintain records, all of those 17 things.**  **18 But when it gets into this knowingly 19 did, tying up business for that time, that's**  **20 where it's difficult for me to get what that is 21 or have an understanding of that. Maybe I'm**  **22 confusing you right now.**

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## 1 It's just difficult. It's not want. **2 It's not any of those things. It's not somebody 3 told me. Probably going to hear most of the**  **4 stuff second, third, fourth-hand. And then am I 5 supposed to run that down every time I hear that?**  **6 That would be really difficult to do. 7 MR. EISNER: Your points are well**  **8 made. It's easy to regulate a manufacturer. The 9 product shall have X on it. It comes off the**  **10 line, it doesn't have X on it, it's in violation. 11 This is a very difficult area to**  **12 regulate. The statute, however, is setting the 13 standard.**  **14 You guys have to come up with 15 something that is a reasonable interpretation of**  **16 that statute. 17 You're suggesting the hard cases. I**  **18 wouldn't know -- I wouldn't have the ability to 19 check out every rumor. So I'm trying to give you**  **20 the easy ones. 21 If they came down with a decision that**  **22 this party had violated the requirement that you**

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## 1 not put a 13 SEER in Virginia that would be a **2 public record. Whether they had any rule or 3 anything else that would be a public record that**  **4 this company you're selling to or you're dealing 5 with did it.**  **6 You could take a step back from there. 7 MR. PORTER: Correct.**  **8 MR. EISNER: The company comes in and 9 tells you that they've already installed it in a**  **10 number of places in Virginia. That's something 11 else that's very difficult for you to avoid.**  **12 It gets beyond that when you start to 13 hear rumors. That's why we talked about giving**  **14 them factors to consider -- 15 MR. PORTER: And it gets beyond that**  **16 if it's an ex-employee. It gets beyond that even 17 though they work for that company. It gets**  **18 difficult even if it's their employee that drove 19 the truck over.**  **20 I mean, and I send -- do I send a 21 salesman out to check to start questioning him?**  **22 And then Chuck gets mad and takes all his**

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## 1 business and moves it over to one of the **2 manufacturers that sells direct. 3 But --**  **4 (Laughter) 5 MR. PORTER: Anyway. You know, that's**  **6 the difficulty. We're not really set up to be a 7 police agency. So that's why I need it really**  **8 clear for us. 9 MR. RAWALD: Can I jump in real quick?**  **10 MR. PORTER: Maybe I'm not making a 11 good --**  **12 MR. RAWALD: No, as Neil said, I think 13 you're making some very good points. This is**  **14 Doug. And I think it's very helpful to hear 15 that.**  **16 We all want to make this simple 17 because goodness knows there are people that are**  **18 maybe a little less intelligent than us that are 19 going to be trying to understand this as well.**  **20 And I want to make sure they understand it. 21 And I try to make it a purpose when I**  **22 do to make sure that the person who speaks**

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## 1 English the worst and also has the least amount **2 of knowledge can understand what we're doing. 3 Because that's -- I have to make sure**  **4 that everyone understands what's going on when 5 you're being enforced. It's very important that**  **6 they understand what's going on around them. 7 So, how about -- Amy's asking to look**  **8 at a very important thing. We seemingly at least 9 run into roadblocks because of that important**  **10 thing. 11 If we could put this aside and maybe**  **12 turn to the issue that Tim has been pressing on 13 and Bryan has some ideas about on if we were to**  **14 think about other prohibited acts that we want to 15 create, what those would be.**  **16 And maybe that could help us better 17 understand kind of what folks are thinking at**  **18 large. Maybe that would be a more fruitful 19 discussion.**  **20 I don't know, do people feel like that 21 would be something we could turn to and possibly**  **22 look at a little bit? Would that help?**

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## 1 Because I've been the one stopping **2 that discussion from taking place and maybe I 3 shouldn't be. So how about I get out of the way**  **4 and we talk about that a little bit. Seems to be 5 general nodding around the table.**  **6 And so Tim was kind of leading the 7 way, but I know Bryan has some ideas too. I**  **8 don't know if one of the two of you want to jump 9 in here with some thoughts. Tim seems to be**  **10 pointing towards Bryan. 11 MR. ROCKY: All right. So this is**  **12 Bryan and I will state that I have not fully 13 explained this statement to the other**  **14 manufacturers, or Amy, or anybody else. 15 So, when you go back to the proscribed**  **16 act which we've talked about. I'm not going to 17 worry about trying to change any of that text.**  **18 But I think there is an appropriate corollary for 19 distributors, retailers, resellers.**  **20 So my proposal would be that what's in 21 there as currently becomes item 1 as a header**  **22 would be Manufacturer/Private Labeler.**

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## 1 And then that same text as it is. And **2 then the second item would be for 3 retailer/reseller. I think that covers all of**  **4 our major concerns. 5 And you could, Laura, copy the same**  **6 text and I'll give you one or two edits to that. 7 Trying to keep it consistent.**  **8 It shall be unlawful for any 9 distributor, retailer, or reseller to knowingly**  **10 sell a product to a contractor or dealer with 11 knowledge that that entity routinely violates any**  **12 regional standard applicable to the product. 13 So basically it takes the information**  **14 from manufacturer to distributors, contractors 15 and dealers. We know that.**  **16 The second step, for distribution 17 points, retailers, resellers basically says the**  **18 same thing. We shall not knowingly sell to a 19 contractor-dealer that they're going to routinely**  **20 violate. 21 The third bullet becomes Contractors**  **22 Dealer prohibited act. And again we can --**

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## 1 basically it's the -- very similar. But it shall **2 be unlawful for any contractor or dealer to 3 knowingly install a product to consumers with the**  **4 knowledge that such sale or installation violates 5 applicable regional standards for that product.**  **6 Knowingly installs so you can get rid of the 7 private labeler.**  **8 And I just said knowingly installs a 9 product to a consumer with the knowledge that**  **10 such sale or installation routinely violates, et 11 cetera, et cetera, regional standards applicable**  **12 to the product. 13 MR. RAWALD: You took out the word**  **14 "routinely" right? The first time you said it 15 you had the word "routinely" in there. Because**  **16 it would be a one-time affair. 17 MR. ROCKY: Yes, I'm sorry. Violates**  **18 non-routinely. That was the difference, again. 19 And that it does leave it a little open, but for**  **20 a contractor that could give them the situation 21 that they're going to be held responsible for any**  **22 and every sale, and then we can talk about the**

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## 1 definition of violation or parameters, et cetera, **2 around that. 3 I thought that puts those three items**  **4 in a consistent approach. We've been talking 5 around it for a couple of days. And so I was**  **6 thinking of this last night knowing that Tim had 7 -- was working on something similar, Amy was**  **8 working on something similar. But I just wanted 9 to have consistent language.**  **10 MR. RAWALD: Tim, did you have any 11 additional acts you would want to put on the**  **12 table? 13 And this is -- what I want you to tell**  **14 you right now, just put them all on the table, 15 let's put them all out there, say these are the**  **16 acts we've been thinking about, percolating 17 about.**  **18 MR. BALLO: That actually uses the 19 three sort of categories I was thinking along the**  **20 same lines. 21 The only thing I'm -- I mean, I don't**  **22 know if we want to get into the language yet.**

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## 1 MR. RAWALD: I'd rather just let's put **2 them all on the table. Let's just get 3 everything, hey, here's all the things we think**  **4 we need to prohibit so we can kind of just have 5 everyone kind of get an idea of what the sense of**  **6 the universe of things we want prohibit would be. 7 MR. BALLO: I think the only big**  **8 difference -- and the way I have been thinking 9 about this, I'm not sure of the role of**  **10 "knowingly" and the knowledge that the contractor 11 needs to have.**  **12 I think it's more a strict what did 13 the contractor do, not what did the contractor**  **14 know. 15 Maybe there's an issue there if they**  **16 don't get the right information from somebody. 17 But I think that's a separate violation.**  **18 MR. RAWALD: But is that obviated by 19 the fact that "knowingly" is defined as actual or**  **20 should have known? Constructive knowledge as 21 well.**  **22 I mean, the fact that they should have**

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## 1 known as the installer what the value would be. **2 Does that relieve that concern for you? 3 MR. BALLO: I think so.**  **4 MR. RAWALD: Okay. Jon, you're 5 standing up in the back.**  **6 MR. MELCHI: Jon Melchi with HARDI. 7 Could we go back to the slide -- yes, thank you.**  **8 My question, Bryan, kind of focuses on 9 the retailers/resellers. And the reason for that**  **10 is that those entities typically sell to the 11 homeowner.**  **12 If you go on Craig's List to buy from 13 an online retailer a non-compliant product that's**  **14 delivered typically to the homeowner. Then the 15 contractor would then install it.**  **16 So the contractor is obviously on the 17 hook for installing an illegal product, but that**  **18 retailer or reseller has not sold directly to a 19 contractor but to a homeowner.**  **20 So I'm just trying to wrap my head 21 around how under this scenario we might be able**  **22 to attack those which I think there was a**

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## 1 consensus around the table where may be likely to **2 be violators. 3 And I'm open to suggestions. I'm just**  **4 bringing that up. 5 MR. ROCKY: So, this is Bryan. Just**  **6 from my comment was the discussion on retailer 7 covers the big box situation.**  **8 And in this particular case I was 9 using the term "reseller" specifically for those**  **10 internet businesses that are basically 11 contractors or obsolete inventory resellers or**  **12 something. 13 They're going to still sell it to a**  **14 homeowner, but then a contractor who installs it 15 is the one who's going to be liable.**  **16 MR. PORTER: This is Steve Porter. I 17 think that I guess if you're calling contractors**  **18 anybody that installed it, I'll agree with that 19 statement.**  **20 So that means -- because the homeowner 21 is going to install it, right? I mean they sell**  **22 retail and you get retired guy, or I was**

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## 1 maintenance man for a factory and I know how to **2 pull a vacuum and set a charge on a system. 3 Because most of this stuff is going to**  **4 homeowners. And so, I mean, I have a little 5 trouble just with distributors in with retailers**  **6 that have a total different model, that don't do 7 training, don't do the right thing, don't invest**  **8 in the industry and have just a website. 9 And where I think the greatest**  **10 violations by far, by far are going to be from 11 that sector is on the retail side.**  **12 MR. RAWALD: So Steve, would you want 13 there to be a separate prohibited act then for**  **14 those from the distributors? Is that what you're 15 suggesting on the table?**  **16 MR. PORTER: I don't want -- those 17 that sell to homeowners direct is not -- that's**  **18 not what we do. We're selling to licensed 19 contractors wholesale only.**  **20 That's a different issue than people 21 that sell on a retail basis or put it direct to**  **22 the public right now.**

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## 1 MR. RAWALD: I don't think I have the **2 impression that Bryan would be opposed to 3 separating those out into two different things if**  **4 that would be cleaner for you folks. Tim, would 5 that be okay with you too?**  **6 I think everyone would be okay with 7 that if we made four instead of three.**  **8 MR. SACHS: We have to do that because 9 "routinely" makes no sense in terms of an**  **10 individual consumer who might want to buy one. 11 MR. RAWALD: Okay.**  **12 MR. SACHS: Thank you. This was 13 Harvey.**  **14 MR. PORTER: This is Steve Porter, 15 Johnstone. Karen just asked me about whether**  **16 they should be under with contractors and 17 dealers. So it's a one-time violation.**  **18 Because when you think about it from 19 the retail side they actually know the ship-to of**  **20 the home address they're putting it in. So I 21 mean it should be a no knowing anything other**  **22 than they are shipping it right into the wrong**

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## 1 state and they know it. And it's going to the **2 address where it's actually going to reside. So 3 if anybody has clear line of sight to an illegal**  **4 or prohibited act it would be them. 5 MR. RAWALD: And John Hurst, our big**  **6 box expert, is standing up and nodding his head. 7 MR. HURST: Yes, I agree. I think you**  **8 could, instead of breaking it into four you could 9 say contractors, dealers, retailers, resellers**  **10 and then change the bottom to say it shall be 11 unlawful for any contractor or dealer -- or I**  **12 guess you'd say it shall be unlawful for any 13 contractor, dealer, retailer, or reseller to**  **14 knowingly provide and/or install. 15 And Chuck and I were having a**  **16 conversation -- 17 MR. ROCKY: Sorry. Go back to four**  **18 bullets then. Keep it simple for the contractor 19 who's installing it.**  **20 You've got a distributor. I agree 21 with what Steve was saying. You've got a**  **22 reseller selling direct to a homeowner. That's**

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## 1 another category. Make it a fourth bullet. Then **2 we're not -- 3 MR. HURST: You can, but the outcome**  **4 is the same. 5 MR. ROCKY: Yes, but you're confusing**  **6 the guys that Charlie and Chuck are -- you know, 7 you're lumping them in with these other**  **8 discussions. And now it's -- 9 MR. HURST: If it makes you feel**  **10 better we can go with four categories. I'm just 11 making a point that, you know, the -- if a**  **12 reseller sells to a homeowner south of the border 13 it's a reasonable assumption that that product is**  **14 going to be installed in a non-compliant 15 location.**  **16 The reason I want to put a retailer, 17 a big box retailer has the contract or holds the**  **18 paper with the consumer, not the dealer. And so 19 that's why I think they should be in that**  **20 category with contractors and dealers. 21 MR. PORTER: This is Steve Porter,**  **22 Johnstone Supply. Yes, because I think you're**

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## 1 going to end up saying the exact same statement **2 underneath it is the only reason he was thinking 3 of putting it there.**  **4 But I'd prefer to hear Charlie or 5 Chuck's thoughts on this issue.**  **6 MR. WHITE: This is Chuck White. I 7 guess I'd prefer not to be in with retailers and**  **8 resellers. 9 (Laughter)**  **10 MR. WHITE: But beyond that they're 11 not installing it. They're selling it but**  **12 they're probably not installing it, where the 13 contractor is doing the installation.**  **14 MR. GIBBONS: This is John from 15 Carrier. Does manufacturer include importers?**  **16 Or do we need a separate one for importers? 17 MR. RAWALD: No. So dealer writ**  **18 large. Anytime we use a manufacturer, importer 19 is always assumed to be part of the group.**  **20 MR. GIBBONS: We've been talking about 21 so many I just wanted to make sure.**  **22 MR. LATTANZI: This is Matt Lattanzi**

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## 1 with NORDYNE. Under contractors and dealers **2 would it make sense to change install a product 3 to end users as opposed to consumers?**  **4 What I'm getting at there, for 5 example, my daughter's daycare has single-phase**  **6 13 SEER equipment installed all over it. 7 I think you guys get my -- convenience**  **8 stores, other applications other than the home. 9 MR. PORTER: This is Steve Porter,**  **10 Johnstone Supply. So on retailers/resellers you 11 need to make it -- it says for -- you have**  **12 contractor/dealer to be changed to retailer or 13 resellers.**  **14 And what was the other point, Karen? 15 End user, yes.**  **16 MR. LATTANZI: Same point there, 17 right. Change that -- exactly.**  **18 MR. EISNER: Any other prohibited 19 acts?**  **20 MR. MCCRUDDEN: I don't have a 21 prohibited act, but I was -- a comment on this**  **22 one.**

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## 1 Under contractors/dealers the -- at **2 the end of the second line where it says "with 3 knowledge that such sale or installation" do we -**  **4 - I mean, should we just say installation? We're 5 not looking at the sale, we're just looking at**  **6 the installation. 7 MR. LATTANZI: I think that was added**  **8 when John was talking about adding retailers and 9 resellers.**  **10 MR. MCCRUDDEN: Yes. And then back to 11 the private labeler. I have a vague**  **12 understanding of what a private labeler is. 13 But I know that some of my members are**  **14 private labelers in the sense that you have 15 contractors who have essentially a Joe's Heating**  **16 & Cooling brand of equipment. Does that capture 17 them?**  **18 MR. RAWALD: Right. So private 19 labeler as defined by the statute. Maybe Tim has**  **20 it in front of him so he can read it to us. So 21 as defined by the statute.**  **22 And this prohibited act, that first**

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## 1 one is also by the statute. So we're not **2 changing that one. So the question is would 3 those folks be subsumed.**  **4 So, Tim do you have it in front of you 5 in 6291?**  **6 MR. BALLO: 6291, paragraph 15, "The 7 term 'private labeler' means an owner of a brand**  **8 or trademark on the label of a consumer product 9 which bears a private label."**  **10 And then there's a definition of when 11 a consumer product bears a private label.**  **12 MR. MCCRUDDEN: This is Charlie again. 13 So, should -- if a contractor is -- okay. I**  **14 think I cleared it up. Thanks. 15 MR. PORTER: Charlie, this is Steve**  **16 Porter, Johnstone Supply. So yes, a private 17 labeler could be any of the other entities.**  **18 MR. HURST: John Hurst with Lennox. 19 Just a point of clarification. It says, "It**  **20 shall be unlawful for any manufacturer or private 21 labeler to knowingly sell a product." And then**  **22 it goes down and says "distributor to knowingly**

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## 1 sell a product." **2 The way this is defined I can't sell 3 them air filters, parts, compressors. I think we**  **4 want to limit it to just non-compliant product. 5 So I can -- can I still sell products,**  **6 14 SEER products for that? 7 MR. EISNER: Look at the statute.**  **8 MR. RAWALD: Right, so John, so I want 9 to make the point again. The first prohibited**  **10 act is the one that's in the statute. 11 MR. HURST: Okay.**  **12 MR. RAWALD: So, the way we would view 13 that as the DOE is the term "product" applies to**  **14 the covered product which is the air conditioning 15 system.**  **16 MS. MEYERS: So, let me ask this 17 question. Am I prohibited from selling them a 16**  **18 SEER air conditioner -- 19 MR. HURST: Right, that's my --**  **20 MS. MEYERS: -- covered product. But 21 it's not a minimum efficiency product.**  **22 MR. RAWALD: Right. That's a good**

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## 1 question, right? Because I think I might have **2 posed this before. 3 So, you know a guy typically who**  **4 violates the standard. So, are you only 5 prohibited from selling him things through which**  **6 he could violate the standard? Or are you 7 prohibited from doing any business with him at**  **8 all? 9 And that's an open question that has**  **10 not been posed as far as I know to the Department 11 in any way, shape, or form. We have not answered**  **12 it in any way, shape, or form. 13 MS. MEYERS: Well, consider it now**  **14 posed. 15 (Laughter)**  **16 MR. RAWALD: I know. And I presume 17 the preference of the manufacturer would be oh**  **18 no, no, I only want to not be able to sell him 19 things that could allow him to violate --**  **20 MR. HURST: Thirteen SEER. 21 MR. RAWALD: Right. You still want to**  **22 be able to deal with him with things that would**

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## 1 be okay. **2 MR. EISNER: If it's sell a product 3 then it ends by routinely violates the standard**  **4 applicable to the product which arguably could go 5 back to a product. That's the only one you can't**  **6 sell. But I'm sure others could interpret it 7 differently.**  **8 MR. HURST: Right. And that's really 9 the clarification that I'm asking.**  **10 MR. RAWALD: That's a fair legal 11 question for the Department to answer. That's a**  **12 fair and square question on us. And Eric and I 13 will go back and talk to those people that are**  **14 knowledgeable about these things and get a good 15 answer for you. But it has not been posed**  **16 before. 17 MS. SHEPHERD: This is Amy Shepherd**  **18 with AHRI. And when you do that though, I mean 19 you look at those two sections that go together**  **20 that were added through the regional standards. 21 Because that is clearly what they're talking**  **22 about, I think.**

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## 1 If you guys want my opinion you can **2 call. 3 (Laughter)**  **4 MR. RAWALD: I love when the industry 5 tells me what clearly a statute meant.**  **6 (Laughter) 7 MR. RAWALD: That's very helpful.**  **8 MS. SHEPHERD: Look, I know you're a 9 busy guy. I'm just trying to cut down on your**  **10 workload. 11 MR. PORTER: Isn't that why we're**  **12 here? 13 MR. EISNER: Anybody else want to add**  **14 to the list? 15 MR. RAWALD: So, while we're**  **16 discussing prohibited acts what may be fair to 17 now broach is the issue of do folks think it's**  **18 germane or prudent to have a prohibited act for 19 failing to provide or retain records? We've**  **20 discussed at length. Was that something people 21 want to discuss at all?**  **22 So, DOE currently has a prohibited act**

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## 1 for manufacturers and private labelers who fail **2 to provide records when requested to do so within 3 30 days. So that's our current prohibited act.**  **4 So, the fact of the matter is we're 5 trying to -- we're considering strongly a record**  **6 retention requirement. And there would also be a 7 production requirement of some sort.**  **8 Do folks want to propose or consider 9 recommending the additional prohibited act for**  **10 distributors, dealers, retailers, contractors for 11 failing to provide information it's requested by**  **12 the Department? Harvey. 13 MR. SACHS: This is Harvey. And I**  **14 have strongly advocated that we work toward 15 minimum burden.**  **16 And I think I've heard pretty much 17 consensus that it means and that you've supported**  **18 the idea of a reactive process in which somebody 19 is squealing about a non-compliant unit and that**  **20 works its way back up. 21 This process cannot work without**  **22 retention of records. It is my understanding**

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## 1 that the dominant participants in this market **2 already have pretty good to excellent record 3 retention capabilities so that this is minimal**  **4 burden on the reputable market players, although 5 it may be a burden on those who are part of a**  **6 less formal economy. 7 My personal gut feeling is that some**  **8 of those are the more likely ones to try to skirt 9 all sorts of requirements, whether it's pulling**  **10 the vacuum before charging or whatever. 11 So, I believe that the only way I can**  **12 sell to my management and others the concepts 13 we've talked about of this reactive policy**  **14 framework are to have a record retention 15 capability at each level in the chain.**  **16 MR. RAWALD: Right, but I guess, 17 Harvey, do you feel you'd have to say to your**  **18 supervisors, and if DOE requests records and 19 they're not produced, DOE has the authority to**  **20 then charge civil penalties for failing to 21 produce those records? That's the question.**  **22 MR. EISNER: Can I ask a question**

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## 1 here? Are you distinguishing between a **2 requirement to keep the records and a prohibited 3 act if you don't keep the records in terms of the**  **4 penalty that can be applied to each? 5 MR. RAWALD: Right. So, what I've**  **6 heard from several people over the course of the 7 last few days is that -- so, what we currently**  **8 have is we don't have a penalty. 9 Everyone is required to keep records.**  **10 But if I ask for the records from a manufacturer 11 or private labeler and they don't give them to me**  **12 I can charge you money for failing to give them 13 to me. That's a prohibited act.**  **14 MS. NOLL: This is Elizabeth. I would 15 agree that failure to produce records is by**  **16 default a violation. 17 MR. SACHS: I would agree with that.**  **18 On the other hand, there's one thing 19 I did not say that is important so I want to**  **20 state it now. 21 I'm not sure that I would have**  **22 consensus in our community, but at this point I**

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## 1 do not feel that we need an affirmative **2 obligation for market participants to submit 3 reports or data to DOE on a regular basis unless**  **4 they are challenged with what we can informally 5 call an audit. You're looking for evidence of a**  **6 particular violation. 7 So I'm not asking for routine**  **8 submission, but I am asking for routine 9 retention, duration to be determined. Thank you.**  **10 MR. BALLO: So, this is Tim. I guess 11 you could address Harvey's concern by narrowing**  **12 the prohibited act to failure to provide records 13 to the Department upon request as part of an**  **14 investigation. 15 MR. RAWALD: I'm pretty certain that's**  **16 all we would want, right? Because that's what we 17 do right now for manufacturers and private**  **18 labelers. So we would only want to keep it 19 constrained to what we currently do.**  **20 So, where the current prohibited act 21 reads as failure to provide records to the**  **22 Department when requested, and you get a 30-day**

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## 1 window there before we -- then it's going to be a **2 prohibited act facing a penalty of $200 per day 3 that you don't provide the records.**  **4 So now, as I explained to folks. We 5 have prosecutory discretion. We can work with**  **6 people in individual cases where we would relieve 7 them of that day.**  **8 If they come to me and say my records 9 are a mess, I'm trying really hard, I can't find**  **10 them. We're not going to start charging them 11 $200 the first day.**  **12 But if you failed to run up the 13 shredder that day and that's why they need more**  **14 time then that's why you have those kind of 15 provisions in place.**  **16 And so I just want to gauge from the 17 group if they feel as we're looking at prohibited**  **18 acts if having a failure to produce records 19 should be a prohibited act extended to those**  **20 parties that we're now extending this requirement 21 to retain records to here as part of this**  **22 situation.**

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## 1 Jon Melchi has been sitting there a **2 little patiently. 3 MR. MELCHI: Thanks, Doug. Jon Melchi**  **4 with HARDI. 5 Doug, for me it would be just helpful.**  **6 I talked with a variety of our members as far as 7 what records were kept.**  **8 But specifically if you had some 9 thoughts in mind about what types of -- what you**  **10 would need, what the Department would need the 11 distributor to maintain.**  **12 For instance, we had discussed I 13 believe when we were over at ACEEE whether it**  **14 would be -- whether it was possible for a 15 wholesaler to go through records and see if a**  **16 product had been delivered or picked up in the 17 store.**  **18 And I heard from our members, half - 19 yes they can do that, half - no, they cannot. So**  **20 that type of information would be difficult to 21 maybe track down.**  **22 But by and large I think most**

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## 1 distributors have records that would be able to **2 satisfy your investigative needs. 3 You know, I don't know whether it**  **4 absolutely needs to be a prohibited act. I think 5 you would have subpoena power to get those**  **6 records regardless of whether it was prohibited**
**7 not. 8 Whether you've decided to fine them,**  **9 I don't know that -- personally I don't know that 10 that would make much of a difference, but I do**  **11 think most distributors would be able to comply 12 with an investigation with very little. If**  **13 indeed you're pretty specific in your ask. 14 MR. RAWALD: Right. So, this is Doug.**  **15 So I think what I suggested this morning I think 16 would be very helpful is if you and Steve and I**  **17 and Charlie and Chuck sit down and kind of craft 18 the language that you think would be best and**  **19 then forward it to the group. 20 So, about what records to retain, how**  **21 detailed we need to be. So that would be 22 helpful.** 

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## 1 What I really need is the what, the **2 where and when. Those are the three questions I 3 kind of have of the contractors. And so any way**  **4 that you guys can fill that in would be helpful. 5 And I understand that you can't**  **6 control the ultimate where, but at least the, you 7 know, it was sold to a guy who operates in this**  **8 area, that kind of thing would be helpful. 9 MR. MELCHI: Yes. This is Jon from**  **10 HARDI. And Steve can maybe elaborate a little 11 more. Most distributors would be able to tell**  **12 you which branch the sale was conducted out of. 13 Something along those lines.**  **14 And given the 18-month grace period 15 there would be a little more allowable, I would**  **16 say, information education period for us to 17 consult with our distributors.**  **18 The fear was I think if the Department 19 needed something beyond what we normally keep**  **20 that could require tweaking of ERP systems which 21 would incur significant costs and obviously tweak**  **22 the cost of the enforcement.**

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## 1 MR. RAWALD: Right. And we're not **2 trying to do that. We're trying to keep it to 3 what you people already have. That's always been**  **4 my thought. 5 So, with the $200, the purpose behind**  **6 that as I see it, the way we use it now is for 7 folks that are trying to avoid being caught.**  **8 They just don't want to provide their records 9 because they know they'll be caught with the**  **10 records. So they just don't give them to you. 11 And so then we say, okay, well, if you**  **12 don't give them to us then we're going to start 13 charging you dollars per day that you don't give**  **14 me the things that are out there. 15 So that's why that exists. It kind of**  **16 helps people, okay, I'm going to give them 17 something. We don't use it very often but I**  **18 think it is a stick that we do use on occasion so 19 it's worthy of discussion.**  **20 I've heard from Elizabeth that she's 21 pro that. It sounds like Tim and Harvey are at**  **22 least thinking it might be useful to have that as**

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## 1 a stick to if you don't produce your records **2 you're being charged some sort of civil penalty. 3 It's a prohibited act not to produce records.**  **4 So, what do other folks think? Do you 5 want to have that as a proposed prohibited act or**  **6 do you want to think about it some more which is 7 a fair question as well?**  **8 MR. PORTER: This is Steve Porter, 9 Johnstone Supply. I'm a little confused because**  **10 you make that request now. We provide them. I 11 believe if we don't respond what happens**  **12 currently today? 13 MR. RAWALD: Right. So currently**  **14 today we'll go ahead and get an injunction and 15 we'll get a subpoena from the court and we'll get**  **16 it from you which is one process that people find 17 okay, I don't want to go through that, I want to**  **18 go ahead and avoid that hassle. So, we have the 19 ability to go ahead and do that.**  **20 I don't always issue a subpoena 21 though. So sometimes we just do a request for**  **22 information. So I'd have to issue a subpoena in**

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## 1 order to go get a court order for that subpoena. **2 So, what the Department says, well, if 3 I come to a manufacturer and I request**  **4 information from him and he doesn't respond, even 5 if there's not a subpoena we can still go ahead**  **6 and charge them money because they're failing to 7 give me that information. So there's kind of a**  **8 lower level but so there's consequences from 9 avoiding that.**  **10 Once again, by and large this is 11 something that folks when they're requested they**  **12 give the information. And I don't think it will 13 be used very often hopefully.**  **14 But it's hard to have a requirement 15 than have nothing to do if somebody gives you,**  **16 you know, laughs at you and doesn't fulfill it. 17 You know, do you want to have some sort of**  **18 ability to have a stick if they ignore the 19 requirement that you're giving them.**  **20 And so I'm putting it before the group 21 as a discussion.**  **22 MR. FERNSTROM: So, this is Gary for**

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## 1 the California IOUs with an opinion. **2 If we're going to expect that we will 3 achieve a reasonable degree of compliance we have**  **4 to have all of the tools necessary in order to 5 determine whether or not compliance has been**  **6 achieved. So, I suggest that we do need this 7 requirement.**  **8 MR. EISNER: Anybody want to speak on 9 behalf of not having a requirement?**  **10 MR. RAWALD: This is Doug. So I think 11 I heard from Jon Melchi that he thought the**  **12 subpoena power was intimidating enough that you 13 wouldn't need the $200 penalty. So at least**  **14 that's what his argument was. 15 We haven't heard from the**  **16 manufacturers at all. I know this wouldn't 17 affect them because they already have a record**  **18 retention and they already have a prohibited act 19 for them. So they don't have a vested interest**  **20 in this. It really would just affect the 21 contractors, dealers and distributors.**  **22 MR. FERNSTROM: Well, this is Gary**

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## 1 again. The $200 penalty is really kind of **2 inconsequential. But I would prefer to see DOE 3 have direct authority to levy a fine, small**  **4 though it might be. And if that doesn't work 5 then the backup opportunity to get a subpoena is**  **6 still there. 7 MR. RAWALD: And this is Doug. And I**  **8 would guess given the size of some of these 9 operations, $200 wouldn't be necessarily**  **10 inconsequential. I mean, that could be the 11 difference between them actually making their**  **12 margins that month and missing that. 13 So, it might be enough to spur**  **14 behavior in some way for some of these 15 operations. From what I'm hearing from folks,**  **16 from Chuck and Charlie especially. 17 Anyway, so --**  **18 MR. SACHS: I want to rewind for a 19 second. I'm not sure that you and I heard the**  **20 same things from Jon. And I would like to ask 21 him for repeated clarification. This is Harvey.**  **22 What I heard was a feeling without**

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## 1 having polled all his members that the necessary **2 information is likely to be an easy thing and 3 part of general practice today.**  **4 Now, I may have gone further than you 5 meant me to so that's why I'm asking for**  **6 clarification. Because I think that's very 7 important.**  **8 MR. MELCHI: This is Jon with HARDI. 9 I wouldn't necessarily use the term "easy." I**  **10 would say available, you know, with some due 11 diligence.**  **12 MR. SACHS: Thank you very much. 13 That's helpful and really important to me.**  **14 MR. WHITE: This is Chuck White. 15 Harvey, a little perspective for you.**  **16 At my business, small business, only 17 a couple of technicians our most used HVAC vendor**  **18 I would probably have a manila folder, file 19 folder, oh an inch and a half thick at the end of**  **20 the year. And not all those in that file are air 21 conditioners.**  **22 So, anybody of any size would have a**

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## 1 lot of invoices from a wholesaler. And there's **2 multiple wholesalers usually. So, it would be 3 some sorting. Especially if we go back a couple**  **4 of years there's going to be a lot of sheets of 5 paper to paw through and read what's on them,**  **6 look for model numbers, look for that. 7 So there's information available but**  **8 it's not searchable in an easy form. But 9 certainly whatever's there we can pull together**  **10 and answer their questions. 11 And as Doug stated, if you come and**  **12 say we need this in 30 days and we're in the 13 height of air conditioning season I'd say, Doug,**  **14 here's what I've got. You can start looking 15 through it if you want. But if you give me**  **16 another 10 days I can have a better job. I would 17 bet he will be amenable.**  **18 MR. SACHS: This is Harvey. And 19 thanks, Chuck. That's certainly helpful. And**  **20 that burden of sorting is why I did not ask for 21 reporting to be done, but only to have the**  **22 information available, continuing this reactive**

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## 1 thing. Thank you. **2 MR. PORTER: Doug, this is Steve 3 Porter, Johnstone Supply. Two hundred dollars a**  **4 day is a heavy fine for a lot of contractors and 5 a lot of small distributors that would be out**  **6 there. 7 I think the fear in what Jon talks**  **8 about on the subpoena side is since all of us in 9 the industry top to bottom deal with lawsuits the**  **10 cost for the attorney to fight the subpoena is 11 far greater so that is the encouragement that**  **12 nobody would want to go through. Because that 13 cost per day would be far greater.**  **14 I think it's unnecessary because we do 15 it in about a day and we react quickly, I**  **16 believe, when we have been asked just due to that 17 fact that we don't want to go -- nobody wants to**  **18 go through that process at all. 19 MR. MELCHI: Doug, Jon Melchi with**  **20 HARDI. 21 From the Department's perspective how**  **22 often is a subpoena not effective where you do**

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## 1 have to go full injunction? **2 I mean, I tend to agree with Steve 3 that getting that piece of paper is likely to be**  **4 the kick in the rear if somebody wasn't 5 necessarily eager to submit records that would be**  **6 much more I think -- having to call your attorney 7 again and get that clock rolling is expensive**  **8 enough. 9 MR. RAWALD: Right. So, I can't think**  **10 of an occasion where I've had to go and get an 11 injunction.**  **12 However, I have used the $200 penalty. 13 And I've also been awfully persuasive in maybe a**  **14 pressuring sort of way. 15 So I think that combination helps me**  **16 avoid having to get the subpoena. I think people 17 have paid a fine for not cooperating with us. So**  **18 that is a consequence. I feel they probably feel 19 that's easier. Then ultimately they come around**  **20 before we ever get to the injunction route. 21 MR. MELCHI: Okay. A follow-up**  **22 question. I know you described before that the**

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## 1 Department has some leeway in Chuck's scenario **2 where he may need an extra 10 days. 3 As I was talking with some of my**  **4 members the scenario came up where one of my 5 members acquires another company. And they**  **6 acquire all of their records. 7 But maybe those records aren't**  **8 exactly, you know, kept up to tiptop shape and it 9 would take them awhile. Or if there's an ERP**  **10 transition. I know with Chuck, anybody that 11 there would be some records that maybe are lost**  **12 permanently but need to be found. 13 How often does the Department kind of**  **14 provide that sort of discretion or delay? It 15 would help as I talk to my members to kind of**  **16 provide them that assurance. 17 MR. RAWALD: Listen, we're not in the**  **18 business of making money from $200 a day civil 19 penalties, right? We're trying to make sure that**  **20 products are compliant. So we're pretty 21 understanding because we want to get to the right**  **22 answer and make sure people have their behavior**

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## 1 go in the right direction. **2 That's -- as a general rule I would 3 say we're very understanding. And I come from a**  **4 world of prosecuting crimes where people are a 5 lot less understanding. I think we're pretty**  **6 reasonable. 7 But you can't put in a regulation DOE,**  **8 we're pretty reasonable, right? But I will tell 9 you that that's what our -- that's the way we've**  **10 approached these things. 11 MR. MELCHI: Sorry, one last question.**  **12 Now, when you do have to, say, submit a subpoena 13 that becomes a public record, correct?**  **14 MR. RAWALD: So, the way the 15 Department handles subpoenas typically is that we**  **16 don't publish subpoenas like we do the Notice of 17 Non-compliance, the Notice of Proposed Civil**  **18 Penalty. 19 So, if it goes to a court and we get**  **20 an injunction that is a matter of public record. 21 There is now a court order. That is a lot more**  **22 visible, absolutely.**

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## 1 MR. MELCHI: Thank you. **2 MR. SACHS: This is Harvey. And for 3 the record my organization, ACEEE, has not**  **4 supported LFEA of 2014. That's the Lawyers Full 5 Employment Act.**  **6 MR. MCCRUDDEN: And this is Charlie 7 with ACCA. I think I'm the only -- yes, I think**  **8 Chuck chimed in. 9 I have to think about this one because**  **10 I think sometimes just the hammer that's there 11 may be enough.**  **12 But I do think that for this to be -- 13 this to work, maybe another hammer. So I'll have**  **14 to confer and get back with you on that one. 15 MR. RAWALD: That's fair. I'm asking**  **16 -- oh, Keith. 17 MR. DENNIS: So, I would have to check**  **18 with my members too, but I think that if you have 19 something that is working or workable now, a**  **20 penalty would be something that we would probably 21 oppose.**  **22 Just because it could lend itself to**

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## 1 people who are not guilty of anything being asked **2 for information and maybe not having the ability 3 to get something quick enough and ending up with**  **4 a fine. 5 Whereas if they were issued a subpoena**  **6 they would potentially be able to come up with 7 the documentation without being at a financial**  **8 loss. 9 So I'm uncomfortable with it. I**  **10 wouldn't hold anything up right now, but I would 11 want to check with people before I said I**  **12 supported an additional potential fine for not 13 producing paperwork in a certain amount of time.**  **14 MR. RAWALD: Okay. And just to be 15 clear, I'm not asking anyone to commit to**  **16 anything today. I think everyone should and 17 could, must talk to their people. I certainly**  **18 need to talk to the Department about that. 19 But I wanted to get up on the board**  **20 all the universe of prohibited acts that people 21 had in their mind so we can make sure that we**  **22 have them all kind of adequately described here**

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## 1 at this juncture. **2 MS. MEYERS: So, this is Karen Meyers 3 with Rheem. Just to opine on this.**  **4 I don't know if it needs to be a 5 prohibited act or not, but I do think there needs**  **6 to be something in the enforcement rule that lets 7 people know that they are going to have to be**  **8 able to produce these records in a certain amount 9 of time.**  **10 If nothing else, I think it may signal 11 to the smaller entities that they need a way to**  **12 be able to track and file this information in 13 case they were to get called upon to provide it.**  **14 And so if you get a subpoena you may 15 not know I even had to keep that information.**  **16 But if you have it listed somewhere in this rule 17 whether it's a prohibited act or not it may at**  **18 least say, hey, here's a requirement in the 19 enforcement rule that if I get asked I have to**  **20 provide the information in 30 days. 21 If I were a small entity that would**  **22 signal to me that I might -- may or may not,**

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## 1 depending upon how you do your filing system, **2 that I might need to make changes. 3 MR. RAWALD: Are there any other**  **4 proposed prohibited acts people have in their 5 minds? We've been going over this stuff now the**  **6 last six days, so the meetings. Or does this 7 cover the universe of the acts you would want to**  **8 have prohibited? 9 MR. EISNER: Anything else? Okay.**  **10 Now, we've put off violation. We've talked about 11 reports and findings.**  **12 Next thing on our list if we want to 13 go back to that is restrictions of manufacturers**  **14 to ship some products to distributors in certain 15 states.**  **16 The following one is restrictions on 17 distributors to ship to contractors in certain**  **18 states. People who originally put those on the 19 list want to talk about them?**  **20 MS. NOLL: This is Elizabeth with 21 NRDC. So I think I was the one that brought**  **22 those up.**

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## 1 And to be clear, when I was discussing **2 them and putting them on the table what I 3 envisioned was a prohibition on an actor to ship**  **4 a product to a state that was not compliant with 5 the regional standard.**  **6 And that could be at any level, or on 7 a specified level if it's more appropriate.**  **8 MR. EISNER: Comments? Reactions? 9 MR. PORTER: I'm sorry, Elizabeth,**  **10 that last part. What was your ask there? 11 MS. NOLL: I guess when I was thinking**  **12 about it the prohibition would have been on the 13 manufacturer to ship air conditioners below 14** **14 SEER into the states where they would be non 15 compliant.**  **16 We could go further and put another 17 prohibition on distributors under the same**  **18 scheme. 19 Would we need to go to that level, or**  **20 would then we be ensuring that the products are 21 only going to areas where they would be**  **22 compliant?**

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## 1 MR. PORTER: Steve Porter, Johnstone **2 Supply. So, the difficulty that I see in this, 3 not that -- I think we have a pretty good rule**  **4 with who's a violator. And once we get that set 5 I think that kind of takes care of the issue.**  **6 The difficulty in restricting 7 shipment, well number one, if the violation is**  **8 installation it would be difficult to manage. 9 But also the fact that a lot of -- I**  **10 have distribution centers that ship all over the 11 United States as well as I think many of the**  **12 manufacturers have distribution centers that do. 13 We have contractors that work out of**  **14 various states that ship and do work in Texas 15 from as far away as Michigan that do contracting**  **16 work in Texas. So that would be the difficulty 17 of managing that.**  **18 I think the fact that they know the 19 rule and they're violators would take care of**  **20 that. 21 But restricting just shipment or**  **22 distribution in general will be difficult,**

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## 1 especially all the way across the borders. I **2 mean I've got stores that are having -- stores 3 and GCs that are going to have to deal with all**  **4 three regions. So. 5 MS. NOLL: So, my concern with that is**  **6 that if we are making this completely a reactive 7 plan then we need to put as many mechanisms in**  **8 place to ensure that non-compliant products are 9 not ending up in the hands of bad actors.**  **10 So, that means we need to have as many 11 pieces put in place so that we're limiting that**  **12 from even happening. So this to me seems like a 13 way to ensure that you are never even presented**  **14 with the opportunity to be a bad actor. 15 "Never" is a strong word, but we're**  **16 putting as many pieces of the puzzle together 17 that limit bad acting.**  **18 And I guess I would ask that those 19 that have distribution that would be impacted, if**  **20 we could get -- I mean, we're talking about a 21 scenario under today's business models. Would**  **22 distributors react and change their businesses,**

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## 1 or would we be putting distributors out of **2 business because they're located in Kentucky and 3 selling into Indiana? And what is that impact?**  **4 Or are we just talking in hypotheticals? 5 MR. PORTER: This is Steve Porter,**  **6 Johnstone Supply. We're certainly not talking in 7 hypotheticals at all. This is -- these are**  **8 planned build-outs that are built decades out. 9 Distribution strategies and plans that are**  **10 planned for 10-15 year build-outs. So. 11 MS. NOLL: Right, but my question is**  **12 would you not be able to modify those and -- I 13 mean, if you're not going to be able to sell that**  **14 product in South Carolina would your business not 15 be changing anyway to reflect that?**  **16 MR. PORTER: I'm confused by the -- or 17 maybe I'm not explaining myself well on how**  **18 distribution or the movement of product is. 19 Number one, we have movement of**  **20 product on build-out of DC. So somebody may have 21 a distribution center that is assigned to support**  **22 a geographic region and that geographic region is**

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## 1 designed for optimum use around fuel efficiency, **2 trucks going in and lowest cost of delivery. 3 So I mean it's all planned about**  **4 making sure that you can deliver that product at 5 the most economically low-cost, lowest energy**  **6 usage to get that product to the point of order, 7 or the point of resale.**  **8 So that's all designed in those 9 models. And people build stores in those**  **10 regions. 11 I was talking to Harvey about this.**  **12 That's why I think the minimal impact of some of 13 this stuff we're talking about is going to be**  **14 pretty low just from the standpoint of the cost 15 delta for somebody to even drive to put a deck in**  **16 a car, drive an hour in Kentucky up to Ohio to 17 get a unit and come back would negate all**  **18 profitability in that item, or make it -- and it 19 may even get worse as those regional standards**  **20 come in place and those price depressions 21 becoming more and more competitive in those**  **22 markets with those regional products will make it**

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## 1 even less of an impact, a likely scenario that **2 that's going to happen. 3 That's why I actually believe the most**  **4 likely scenario for violations is really going to 5 be around the fact that I'm a homeowner online**  **6 shopping and I have no clue about regional 7 standards.**  **8 And that online retailer or retailer 9 doesn't have anything up on his website and so I**  **10 just look at the lowest-cost unit and that's what 11 I buy.**  **12 But that will never be the case for a 13 contractor even on the border states unless he's**  **14 right exactly on the border and is able to run 15 back and forth easily.**  **16 And then, you know, then I think those 17 -- that's where you're going to see people get**  **18 turned in. 19 But the cost of distribution in those**  **20 models are really set up to optimize lowest cost 21 because this product is so expensive to ship and**  **22 handle and move around. It's the most costly**

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## 1 product that we handle. **2 MS. NOLL: So I guess then if you're 3 optimizing then the only units that would be**  **4 going into southern states would be compliant 5 products. So what is the justification for not**  **6 having a prohibition on non-compliant products 7 going into non-compliant states?**  **8 MR. PORTER: Because I have a 9 distribution center that's set up to handle**  **10 stores along border states. 11 Or that distribution center may be in**  **12 a border state. It could be in Kentucky and it 13 services Michigan, Illinois, South Dakota, North**  **14 Dakota. All of those things that distributor 15 could handle, would handle that region. And that**  **16 region could be North. 17 MR. MCCRUDDEN: This is Charlie with**  **18 ACCA. The typical example I've used over the 19 years is a contractor. So let's forget about**  **20 distributors. Let's talk about a contractor. 21 MR. PORTER: Let's not forget about**  **22 them.**

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## 1 MR. MCCRUDDEN: Well, no, no. But **2 just for the purpose of the example. 3 MR. PORTER: Unless there's a fine**  **4 involved. 5 (Laughter)**  **6 MR. MCCRUDDEN: Is a contractor who's 7 based out of Cincinnati. And as we all know if**  **8 you've ever flown in and out of Cincinnati you 9 actually fly into Kentucky because Covington is**  **10 where the airport is. 11 A lot of contractors in and around**  **12 Cincinnati service Kentucky. And it goes back 13 and forth.**  **14 So if you were to say to a contractor 15 in Covington you can't receive shipment of a 13**  **16 SEER unit then you've whacked his service area in 17 half. Unless he opens a new plant or receiving**  **18 facility in Ohio. 19 Look at Philadelphia area. It's a**  **20 similar large metro area that sort of straddles 21 between the southeastern Pennsylvania with**  **22 Wilmington and all that. And I think in**

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## 1 Missouri there's a similar Missouri border. **2 So to basically deny shipment to a 3 state almost arbitrarily doesn't violate the**  **4 rule, but it also denies access to product, legal 5 product to install to a contractor.**  **6 I did talk to a contractor a couple of 7 days ago who's out of Michigan and he runs a lot**  **8 of jobs all over the country because he's just 9 that big and there's a niche market that he**  **10 services. 11 And he'll throw employees, equipment,**  **12 and everything, tools, into a truck and they all 13 go down and they'll bang out a bunch of jobs**  **14 staying in hotels and then come back. And he's 15 just got crews.**  **16 But everything runs for him out of 17 Michigan just because that's how he operates.**  **18 And that would also -- he would have to figure 19 out how do I get product in order to do his work.**  **20 So I don't think it's practical to 21 deny shipment of equipment to states where it**  **22 ultimately and likely won't end up anyway.**

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## 1 MR. HURST: John Hurst with Lennox. **2 Just as an example. I know that this is 3 inverted, but we serve -- we have regional**  **4 distribution centers. And our southern 5 California distribution center serves Washington**  **6 and Oregon. And that's not unusual for a hub and 7 spoke system to exist.**  **8 We have a factory in Orangeburg, South 9 Carolina, and then we have a distribution center**  **10 in Orangeburg, South Carolina. So under your 11 definition we wouldn't be able to ship to our own**  **12 DC across the street. 13 It would require manufacturers and**  **14 distributors to employ a lot of capital to redo 15 our entire distribution network.**  **16 MS. MEYERS: So, this is Karen with 17 Rheem. I know you put these on there last week**  **18 when we were talking about this, but with the 19 additional proposed prohibited acts do you think**  **20 these are still necessary proposals? Just a 21 question.**  **22 We kind of really tightened up that**

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## 1 sale even happening, so where the inventory is **2 located to me is not as much a concern since you 3 can't sell or install it.**  **4 MS. NOLL: So my concern I think 5 remains that if we are going down a path that is**  **6 completely reactionary and we want to ensure that 7 Doug gets the right information of where the**  **8 violation has occurred that requires a scheme put 9 in place where as many actors as possible are**  **10 giving that information to Doug so he knows where 11 the violations are occurring.**  **12 But I think that also hinges on we 13 have confidence that non-compliant products are**  **14 not getting into the hands of those that are 15 going to do -- do the wrong thing.**  **16 So, I agree with you that if we feel 17 that the prohibited act is going to be a**  **18 significant deterrent and there's going to be 19 records retention that is enough information that**  **20 upon request we know where they're happening 21 then, yes, this does start to eliminate.**  **22 But I do believe that if you are**

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## 1 located in Orangeburg, South Carolina, **2 manufacturing a 13 SEER unit, why does it need to 3 go to the distributor in Orangeburg, South**  **4 Carolina? Why wouldn't it go to the area of the 5 country where it's compliant to be installed?**  **6 MR. RAWALD: Elizabeth, I want to 7 reassure you that I don't view anything that**  **8 we've done here to restrict me from being 9 proactive in my investigations.**  **10 What I want people to understand is 11 the practical reality of resourcing and the way**  **12 we approach investigations is that reactive is by 13 and large the name of the game as far as I can**  **14 see it. 15 But I think that I would embrace the**  **16 idea of being proactive. And if given 17 information, we would be proactive.**  **18 So I do want to make sure that you 19 guys are aware of that fact. I don't think**  **20 anything is here to limit me from being 21 proactive.**  **22 MR. EISNER: John?**

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## 1 MR. HURST: John Hurst with Lennox. **2 To answer the question. So let's take 3 Orangeburg, South Carolina out of the mix here**  **4 for a second. It's a beautiful place. You 5 should go sometime.**  **6 Let's say the product is manufactured 7 south of the border in Mexico. It is cheaper**  **8 both from a transportation, from a fuel 9 efficiency, from a product damage standpoint to**  **10 ship in truckload quantities and then ship it to 11 a re-distribution facility, say, in Dallas,**  **12 Texas. 13 And you may break those loads down and**  **14 then repackage them for shipment to a 15 distributor, who then would take it and**  **16 potentially repackage that shipment to their 17 various branches.**  **18 And we would ship in some cases to 19 distributors that have branches in Chicago, in**  **20 Louisville, Kentucky and points in between. 21 So it's really about, I think somebody**  **22 said it earlier, getting it from point A to point**

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## 1 B to point C to point D in the most cost**2 effective manner. 3 And that could be gasoline, damage,**  **4 energy, all of the above. 5 MR. SACHS: This is Harvey. What I**  **6 hear Elizabeth asking for is belt and suspenders. 7 And that certainly adds to comfort factor.**  **8 No, it doesn't add to comfort. For 9 comfort you don't need the belt. I'm corrected**  **10 by Steve. It's suspenders with a belt. 11 But trying to move beyond that and get**  **12 into serious. I think we've learned or done a 13 couple of things today that are relevant to it**  **14 from that perspective. 15 One of them is the list of prohibited**  **16 acts which -- and the commitments we've heard 17 from HARDI in particular, for example, have made**  **18 me feel better about my suspenders. 19 The other thing that came out in part**  **20 from Steve's comments here and in part from a 21 little bit of side conversation, and it's been**  **22 reinforced by John is that the economics strongly**

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## 1 favor putting as many things on the truck all at **2 once as possible. 3 My own gut feeling is that when the**  **4 regional standards take effect the price gap 5 between 13's and 14's nationally is likely to**  **6 narrow. 7 And my gut feeling for which I have**  **8 zero data is that at that point the cost of a 13 9 plus a single condensing unit shipment is going**  **10 to wind up being more than the cost of a 14. I 11 don't know that for sure, but it's certainly**  **12 going to be at least in the same ballpark. 13 So that there will be less -- if I'm**  **14 right there will be less economic incentive to 15 try to put in a 13 condensing unit where it's**  **16 non-compliant. 17 I'd love to have some reinforcement**  **18 for these gut feelings, but if I'm getting the 19 economics to stack up as well as the information**  **20 it would tend to make me less uncomfortable with 21 giving up my belt.**  **22 MR. EISNER: Any other comments?**

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## 1 Where do you stand on this, Elizabeth? Still **2 need convincing? Still feel it's important? 3 MS. NOLL: I still feel it's important**  **4 that we try to eliminate as many potential 5 pathways to bad acting as possible.**  **6 MR. EISNER: Are there ways to address 7 Elizabeth's concerns in terms of packaging, or**  **8 marking, or the way they're delivered to 9 distribution centers?**  **10 What I hear is it's not a matter of 11 just distributing your packages to another place**  **12 because you may not have a place that can easily 13 serve the areas you want.**  **14 It's a matter of building new 15 buildings, or adding more places they have to go.**  **16 But is there something you can do within the 17 existing system that can address some of the**  **18 concerns? 19 MR. HURST: John Hurst for Lennox. I**  **20 think the answer to your question is there are 21 things that I think we're all already doing.**  **22 For example, if you walk through at**

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## 1 least our warehouse you can look at the box and **2 you can tell when the product was made. You can 3 tell what it is just by looking at the side of**  **4 the box. And that's nothing that's been required 5 by the Department of Energy or the Federal Trade**  **6 Commission. 7 In addition, our business units are**  **8 looking at ways to segregate that product through 9 systems and by visual identification as well.**  **10 And that's not a requirement by the Department. 11 That's something that we're doing to ensure that**  **12 we comply as both a manufacturer and as a 13 distributor.**  **14 I know that distributors have asked us 15 also to provide visual identification beyond what**  **16 the Department requires. 17 So I'd like to point out maybe the**  **18 presumption is that we won't do anything unless 19 compelled to do so. It's not true. We're trying**  **20 to comply with this and devising our own ways. 21 And I'm not going to speak for any**  **22 other manufacturer what they're doing, but I**

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## 1 think they probably have the same issue. I think **2 Steve has the same issue and he's probably trying 3 to think through ways that his company can**  **4 comply. 5 But, again, we all know our own**  **6 systems, our distribution, our customers and 7 we're all working through ways to maybe help**  **8 compliance without being compelled to do so by a 9 regulation.**  **10 MR. WINNINGHAM: To add to what John 11 said. Kind of aligned with this change is a**  **12 change to the FTC Energy Guide label. And it has 13 to be viewable from basically the outside of the**  **14 box. 15 Whether it's through a window or**  **16 whatever, but there will be a means to -- you 17 know, you've got the model number information,**  **18 you've got some of the segregation tactics and 19 you'll also have a viewable Energy Guide.**  **20 Particularly in line with what we've talked about 21 as guidance for setting kind of the bottom of the**  **22 bar.**

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## 1 MR. GIBBONS: This is John from **2 Carrier. And that Energy label is viewable on 3 AHRI website and all the OEMs manufacturer sites.**  **4 Or websites, excuse me. 5 MR. PORTER: Steve Porter, Johnstone**  **6 Supply. So that's going to make it a lot easier 7 to pick when you do have mixed product within a**  **8 distribution center, Elizabeth. So as we sort 9 that and we send people down to pick that product**  **10 and we're shipping it across. 11 But I can guarantee you the regional**  **12 standards will obviously put some pressure on us 13 that are going to make us -- we'll be looking at**  **14 different ways to handle that product and 15 different ways to deal with the issue.**  **16 Just because there's nobody in 17 distribution -- because what we are is we don't**  **18 make anything. We're just finding the quickest, 19 most economical way to get that product to**  **20 market, and land it, and have it there when they 21 need it when it's 100 degrees outside. So we**  **22 carry all that inventory to make sure it's there**

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## 1 on time in the area where it's needed. **2 So there's nobody, especially my folks 3 that have to deal with three market areas now**  **4 when they had one piece of equipment, their 5 inventory just increased, who knows, twofold to**  **6 keep the order quantities needed to go through a 7 season to meet demand.**  **8 This is a very expensive proposition 9 right now the way it is on distribution. It's**  **10 huge. Because I'm now carrying two to three 11 equipment models to make the same sale I made**  **12 before with one. 13 Each one of those, just to give**  **14 everybody a quick, boring distribution issue 15 requires a new pick face. So it's not they all**  **16 take up the same area. Those are different pick 17 faces that somebody has to go to and has to**  **18 maintain. Different overflow areas where that 19 product has to be maintained.**  **20 This is potentially, you know, it's 21 going to cost us -- it's costing us a lot of**  **22 money to do right now. Besides moving -- if we**

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## 1 had to move distribution centers across the U.S. **2 and close them and put those people out of work. 3 And stuff that we just bought a year ago, you**  **4 know. 5 We have closed it, but we did have a**  **6 -- just to give you another boring piece here -- 7 we had -- Memphis is probably the most**  **8 recommended distribution spot in America. That 9 served everything from South Dakota -- or North**  **10 Dakota for us down to Texas. So, and all around. 11 So it actually would hit the -- if**  **12 you're in Memphis and potentially a distributor 13 could be in Memphis, he would touch all of those**  **14 regions to get the product there effectively. 15 That's the problem that distribution faces with**  **16 it. 17 MR. EISNER: Elizabeth, any reaction?**  **18 Anything more you want? 19 MS. NOLL: We can move on.**  **20 MR. EISNER: Okay. 21 MR. RAWALD: It's 4:30.**  **22 MR. EISNER: We agreed on quarter of.**

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## 1 MR. FERNSTROM: Doug, this is Gary. **2 Before we run out of time today I'd just like to 3 note that I sent to Alex and he distributed to**  **4 the group the PowerPoint presentation PG&E Codes 5 and Standards Consultants prepared for the**  **6 California Energy Commission. 7 And what it is is a summary of studies**  **8 the CEC has done about compliance with their 9 appliance standard programs.**  **10 And we, the California Investor-Owned 11 Utilities, are charged by the Public Utilities**  **12 Commission to support codes and standards 13 improvement. That includes education and**  **14 outreach with respect to compliance. 15 So, we did this literature review to**  **16 present to the CEC to get a better idea where 17 opportunities existed to improve compliance**  **18 through education. And you should all have this 19 on your email to take a look at.**  **20 I think it makes interesting reading. 21 One caveat. I don't think the studies were**  **22 perfect. That is to say that there were some**

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## 1 flaws in the way they were done that may lead to **2 less than perfect conclusions. However, they're 3 the best information we've got.**  **4 MR. EISNER: Okay, thank you. All 5 right, do we want to start with adding burden to**  **6 contractors to fix non-compliant installations, 7 or start there in the morning? We've got about**  **8 10 more minutes left till we agreed to depart 9 tonight.**  **10 MR. LATTANZI: This is Matt. I'd 11 suggest starting there in the morning.**  **12 I would ask could we get copies of the 13 prohibited acts that we just put together? Can**  **14 you have that emailed out to us? 15 MR. RAWALD: Yes.**  **16 MR. LATTANZI: Thank you. 17 MS. NOLL: Can we also get the Word**  **18 document that Laura has been working on? That 19 would be helpful since it's got a lot of**  **20 information that has been added. 21 MR. RAWALD: Yes, it's not a problem.**  **22 And if you guys want we can ask to have it**

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## 1 printed in the morning as well if you'd like. **2 So what we'll do is we'll email out 3 the Word document, the PowerPoint slideshow with**  **4 the prohibited acts in it, and then we'll have 5 printed for the morning the Word document that**  **6 Laura has been updating as we've been going 7 along.**  **8 MS. NOLL: Is it the prohibited acts 9 and the definitions? I don't think we ever got--**  **10 MR. RAWALD: You definitely should 11 have an email out to you after the last meeting**  **12 from Jeremiah. So if you look back in your email 13 it's there. There should be two -- it was sent**  **14 out, but don't worry. I mean, we can send it out 15 again. It's not a huge problem.**  **16 MR. EISNER: All right. Anybody have 17 anything else? All right. Tomorrow morning, 9**  **18 o'clock. Same place. 19 (Whereupon, the above-entitled matter**  **20 went off the record at 4:36 p.m.) 21**  **22**

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40:14 52:14 85:1 114:9 131:1 151:15 182:16 190:21 200:22 203:22 224:18 231:20 233:14 236:12 318:15 320:21 321:15

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## 343 problematic 35:8 122:7 problems 35:20 228:10 procedure 193:16 proceed 51:12 proceedings 117:12 process 3:7 50:5 75:22

99:22 101:20 108:4 111:1 126:4 136:6 137:2,3,5,9,15,17 145:5 146:10,15 147:4,6,15 148:2 149:10 150:18 152:12 152:16 156:22 165:10 167:8 188:22 190:9 193:19 214:20 224:5 251:12 275:18,21 284:16 290:18 processes 145:7 produce 49:19 66:7,11

85:7 103:7 105:9 276:21 277:15 279:18 284:1,3 296:8 produced 67:2 101:19

102:20 107:19 276:19 producing 85:16 86:6

295:13 product 9:5 41:14

44:19 88:19 89:10 92:19 107:20 108:9 108:22 109:4,13,15 109:16 111:4,6,9 114:4,16,20,21 115:11 119:17 120:6 120:7 121:8 122:18 123:5 125:10 128:19 129:1,12,16 130:2,5 130:14 132:13 136:16 147:9 154:11 157:7 168:1 173:12 184:13 192:5 193:3 198:7 213:22 217:16,21 219:11 223:7 224:20 229:15 234:18 235:13 236:5,20 238:4 247:13 249:3,21 252:9 257:10,12 258:3,5,9,12 261:13 261:17 266:13 268:2 270:8,11,21 271:1,4 271:13,14,20,21 273:2,4,5 280:16 298:4 301:14,18,20 302:4,6 303:21 304:1 306:4,5,19 310:6,9 314:2,8 316:7,9,14,19 317:19 318:14 production 67:9 101:14

101:16 102:17 103:9 119:1 124:13 125:21 133:13 275:7 products 2:14 5:2

18:10 28:21 29:1 44:18 49:20 56:5 89:21 90:19 91:15 92:11 94:2 100:14 114:1,14 121:13 147:11 179:13 213:19 218:12 271:5,6 292:20 297:14 298:20 300:8 302:22 304:5,6 308:13 profitability302:18 program 57:14 66:10

72:3 110:17 158:21 161:8,14 programs 110:21 319:9 progress 246:10 prohibit260:4,6 prohibited 138:15

142:5 200:9 203:19 214:8,10,11,15,16,20 215:5,12,16,22 216:2 216:6,8,20 219:18 220:17,20 221:3 237:17 238:12 239:9 239:16 240:5,13,18 241:19 242:3,12 246:2,7 247:4,10,14 255:14 257:22 263:13 265:4 268:18,21 269:22 271:9,17 272:5,7 274:16,18,22 275:3,9 277:2,13 278:12,20 279:2,17 279:19 281:4,6 284:3 284:5 286:18 295:20 296:5,17 297:4,8 307:19 308:17 311:15 320:13 321:4,8 prohibition 298:3,12,17

304:6 promise 55:22 promised 72:8 proof 75:16 proper 9:22 38:4 220:6 properly 129:17 227:10 proposal 5:6 6:15 7:20

192:19 194:7 256:20 proposals 307:20 propose 275:8 proposed 4:21 5:20

6:15 10:17 137:1,4 196:11 284:5 293:17 297:4 307:19 proposing 12:6,10

211:8 proposition 212:19 317:8 proscribed 256:15 prosecuting 293:4 prosecutory279:5 protect 111:19,22 protection 15:11 prove 163:6 231:9 proven 84:9 proves 107:12 119:18

123:1 provide 18:2 20:17

43:11 49:1,11 52:12 60:8,11 61:10,14 62:5 62:8 72:9,13 77:3 78:12 81:21 94:21 102:21 142:8 236:16 251:15 265:14 274:19 275:2,11 278:12,21 279:3 283:8 284:10 292:14,16 296:13,20 314:15 provided 49:22 66:15 provider 89:9 94:19 providers 98:7 providing 48:22 proving 118:8 152:13 provision 180:8 212:14

213:18 218:19 219:3 225:8 231:21 235:3 provisions 279:15 proxy 18:16 prudent 105:1 149:5

178:9 188:11 274:18 PSC 33:16 public 1:5,11 166:11

167:13 168:1,20 169:9,10 175:16 253:2,3 263:22 293:13,20 319:11 publicity57:20 publicizing 168:3 publicly 167:6 publish 144:18 293:16 published 35:6 56:4

146:6 168:8 pull 26:19 39:12 46:12

191:7 204:8 241:5 263:2 289:9 pulled 43:4 188:22

189:17 190:3 191:5 pulling 234:19 276:9 pump 36:17 37:5,9,12

49:20 70:3 pumps 36:18 69:17,20 punitive 126:12 purchase 94:8 109:17

109:19 purchased 109:20 purchaser 95:14 pure 134:9 purpose 181:10,14

243:7 247:1 254:21 283:5 305:2 purposes 81:11 111:16

202:17 240:19 pursuing 91:21 pushing 59:17 put 6:17 14:1,16 23:7

23:11 24:6 30:17 32:20 35:12 38:3 50:4 56:22 68:2 77:17,18 83:2 86:10,11,17 90:16 94:14 98:11 99:15 106:20 111:14 115:11 129:13 132:5 145:2 146:16 159:16 162:4 167:5 180:17 186:3,9 189:4 197:8 201:19 202:20 203:17 209:18 219:13 221:16 223:9 239:5 240:20 249:13 250:13 253:1 255:11 259:11,14,15 260:1 263:21 266:16 293:7 297:10,18 298:16 300:7,11 302:15 307:17 308:8 312:15 316:12 318:2 320:13 puts 36:2 91:10 259:3 putting 8:6 14:8,19

17:11 30:7 120:5 147:1 219:15 222:3 264:20 267:3 285:20 298:2 300:16 301:1 312:1 puzzle 300:16 Q qualified 78:11 qualify80:17,18 qualifying 75:7 qualms 14:11 quantities 310:10 317:6 quantity36:1 quarter 318:22 quasi-required 83:17 query 151:1 question 12:2 15:1,7

17:20 18:17 19:16 20:6 21:3 22:6 25:16 27:15 35:11 40:15 41:20 42:3 47:20 49:16 50:2,9 53:12 56:3 57:11 58:15 75:1

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76:17 83:10 90:18 91:7 94:5,12 101:2 112:22 115:2 118:5 123:20 130:20 132:22 149:13 151:7 153:15 158:20 160:7,9 163:20 169:12,14 172:11,20,21 173:15 174:14 179:14 180:7 188:8 190:16 191:14 191:15 196:20,22 197:6 199:2 202:3 204:7,19 205:12 206:8 207:14 225:22 233:4 241:22 244:6 244:11 261:8 270:2 271:17 272:1,9 273:11,12 276:21,22 284:7 291:22 293:11 301:11 307:21 310:2 313:20 questioning 253:21 questions 11:16 35:2

47:17 50:15,16 56:8 57:9 64:13,20 104:2 127:7 160:2 165:3 172:18 195:20 216:3 216:11 282:2 289:10 quick211:2 219:14

254:9 295:3 317:14 quickest 316:18 quickly89:2 150:3

195:19 290:15 quite 68:5 80:4 155:11 quotes 93:18 R R22 12:5,7 13:5,19

14:13,20 42:5 49:20 195:8 R410A 12:3 14:11 rabbit 112:7 raise 164:2 191:15 raised 75:5 167:2 199:3 raises 103:11 raising 127:19 170:8

186:18 187:2 ramification 115:3 ramifications 37:15 Rand 1:18 138:10 140:9

157:11 182:6,18 184:21 190:1 199:2 202:11 233:20 random 70:2 71:18,22

89:19 106:3 randomly 106:7 range 70:17 114:2 rare 75:22 110:2 rate 9:19 29:2 32:1 56:5 121:8 rated 28:1,3,7 30:8 31:7

33:5 35:4 45:12,20 46:7 113:11,12 114:6 114:11 119:10,17 122:1,18 123:17 129:19 132:20,22 rates 48:13 107:7,11 rating 5:14,16 27:17

32:14 113:13,15,21 114:2 123:9 ratings 33:21 34:8

78:15 ratio 165:10 171:8 RAWALD 2:2 50:19

51:3 52:16 54:5 55:8 56:6,21 59:6 61:11 62:12 65:1 66:4 70:22 74:2 84:3 90:11 94:5 95:16 97:4 98:5 99:9 100:1,6 101:12 104:6 104:13 106:20 108:20 111:11 112:6 113:10 113:18 114:12 116:16 117:19 118:11,15,21 120:11,18 122:8 123:11,16 124:22 125:16 128:8 129:10 131:6 132:9,17 133:10 134:19 136:3 139:10 141:20 142:6 142:12 143:20 144:3 144:16 147:5 149:8 151:3 152:3 155:19 157:8 166:22 170:4 172:17 176:18 178:8 179:21 181:7 183:8 186:17 188:7 189:9 195:17 196:7 197:18 198:13,16 199:18 200:8 201:22 203:11 204:6 205:4,20 206:8 206:15,21 209:4 211:1 212:10 214:5 215:9 219:13 225:12 225:22 226:10,19,21 230:2,11,16 236:11 237:5 238:8 239:6 242:1,6,9 243:18 244:13,19 245:1 247:7 254:9,12 258:13 259:10 260:1 260:18 261:4 263:12 264:1,11 265:5 267:17 269:18 271:8 271:12,22 272:16,21 273:10 274:4,7,15 276:16 277:5 278:15 281:14 283:1 284:13 286:10 287:7 291:9 292:17 293:14 294:15 295:14 297:3 309:6 318:21 320:15,21 321:10 Ray51:5 Ray's 51:7 re-certified 45:20 re-distribution 310:11 re-rated 110:21 reach 110:6 react 104:17,18 290:15

300:22 reaction 318:17 reactionary308:6 Reactions 298:8 reactive 63:14 68:1

71:15 75:17 83:8 248:13,13 275:18 276:13 289:22 300:6 309:12 read 16:11 17:14 19:1

197:22 269:20 289:5 readily 94:3 reading 135:20 319:20 reads 22:10 278:21 ready 19:2 23:6 51:21

195:13 real 31:18 40:14 61:14

68:3 83:13 150:7 153:8 154:6 254:9 realistic 63:13 reality40:3 309:11 realize 48:7 56:11

135:18 233:9 realizes 153:8 really5:5 6:1,1,13 7:9

8:19 9:20 10:6 11:5 16:4 34:9 35:21,22 36:2 49:3 53:3,3 60:2 63:8 76:17 78:8,17 79:2,9 85:18,20 86:1 89:6 90:6,18 95:21 102:15 106:9 120:6 121:15 129:4 130:19 130:22 141:17 144:6 148:3 149:15 151:4 151:21 154:19 157:6 157:20 163:6,7 175:22 181:9 189:10 190:6,11 202:20 214:7 218:10,14,17 220:15 222:11,15 226:1 232:3,20 238:12,14 239:15 243:17,20 250:8,10 250:15,18,20 251:8,9 252:6 254:6,7 273:8 279:9 282:1 286:20 287:1 288:13 303:4 303:20 307:22 310:21 realtors 217:20 reap 80:9 rear 291:4 reason 6:9 74:19 107:8

196:4 205:17,20 212:11 214:1 261:9 266:16 267:2 reasonability214:2 reasonable 85:2 139:2

140:16 252:15 266:13 286:3 293:6,8 reasons 39:22 66:18

85:22 168:5,14 reassure 309:7 recall 120:9 recalled 208:3 receipts 82:9 receive 103:3 104:18

305:15 receiving 305:17 reception 163:21 recognition 160:22 recognizes 153:5 recommend 37:4 167:8

233:21 242:14 recommended 318:8 recommending 275:9 record 3:6 63:6,17

64:17 66:6 76:19,20 83:16 90:15 94:18 99:4,7 101:15 102:1 119:1 124:13,13 125:20,20 133:12 153:12 163:17 166:4 175:16 239:1 253:2,3 275:5 276:2,14 286:17 293:13,20 294:3 321:20 record-keeping 81:7,13

83:6 87:5,16 records 64:6 65:22 66:2

68:3 73:10 76:7,8,9 82:1,5,19,19 83:2 84:6,17 87:8 88:5 94:21 97:20 101:13 101:13,16,19 102:17 102:19 103:9 105:5,9 105:10 117:17 118:6 151:18 152:8 156:8 161:17 190:7 251:14 251:15,16 274:19 275:2,22 276:18,21 277:2,3,9,10,15

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## 345 278:12,21 279:3,8,18 279:21 280:7,15 281:1,6,20 283:8,10 284:1,3 291:5 292:6,7 292:11 296:8 308:19 recover 68:19 69:4 rectify 110:10 redacted 103:1,2 redaction 103:6 redo 307:14 reduce 125:15 refer 52:22 referenced 40:10 reflect 301:15 refrigerant 13:22 26:6

26:15 33:7 34:19 192:8 Refrigeration 2:6,10 reg 195:2 regard 75:15 181:16 regarding 167:2 186:20

197:7 215:16 220:20 238:12 regardless 27:2 113:12

113:16 183:18 281:6 regime 68:18 region 92:12 107:21

122:20 128:21 131:14 201:17,19 301:22,22 304:15,16 regional 1:3 52:19

54:13 108:17 119:22 123:5,21 135:3 140:5 181:16,22 193:1 198:6,10 213:11 214:4,18 215:14 217:1 218:1,13 219:11 221:6 224:22 225:2,4 229:21 233:13 234:14,17 235:8,13 236:19 245:11 257:12 258:5 258:11 273:20 298:5 302:19,22 303:6 307:3 312:4 316:11 regions 88:19 300:4

302:10 318:14 regs 200:1 regular278:3 regulate 252:8,12 regulated 6:3 10:6 16:5

21:10 71:7 100:10 regulates 250:7 regulating 16:11 101:3

171:1 regulation 5:21 73:5

86:12 100:13 110:17 164:16 293:7 315:9 regulations 25:4,11 70:11 72:11 74:1 100:18 130:10 131:5 164:11 203:19 regulatory 142:9 reinforced 311:22 reinforcement 312:17 reject 194:17 relates 53:4 108:17 relationship 149:7

205:10 Relative22:20 relatively70:13 192:6

244:18 relaxed 160:17 release 72:12 released 99:16 relevant 52:18,19

311:13 reliance 135:11 176:4 relief218:6 219:7 244:9 relieve 261:2 279:6 remains 308:5 remediation 127:21

128:11 remedy 128:4 remember 5:8 15:10

22:3,14 29:5 204:2 235:9 reminder 155:16 remiss 15:13 removal 33:18 34:2 remove 153:11 removing 166:9 repackage 310:14,16 repair 26:20 28:7 29:3,4

43:10 repairable 7:10 26:20 repeat 229:17 235:4 repeated 287:21 replace 10:14,16 15:14

17:9 19:17 30:15 31:12 40:6 44:10,14 replaced 6:9 18:8 28:12

45:5 69:17 70:4 replacement 3:2 4:22

5:22 6:18 8:1 10:18 10:22 11:5 12:12 15:4 16:11,14 17:5,18,21 18:3,7 19:13 20:11,14 20:17,21,22 22:18 23:19 24:22 26:10 27:5,9,19,20,22 28:3 28:8,20 30:10 31:3 35:13 36:22 38:7 39:4 39:11 45:2,7,17 47:8 48:21 54:3 69:11,20 70:14 replacements 5:7 17:7 37:10,12 replaces 39:16 replacing 14:8 21:2

22:21 replicates 126:9 report 60:21 61:20 72:6

83:9 151:10 155:18 157:5 176:13 reported 63:18 155:6,7

155:16 189:18 reporter42:14 230:9 reporting 61:2 62:11

69:7 83:14 176:20 177:18 289:21 reports 72:3 76:15

83:19 278:3 297:11 represent 226:3 representative45:18

70:7,20 reputable 68:7 276:4 reputation 112:3 128:2 request 57:2 84:18

102:2,4,19 103:4,4 105:1,9 106:4 150:13 156:5 278:13 284:10 284:21 285:3 308:20 requested 63:19 275:2

275:11 278:22 285:11 requests 77:2 106:8,11

276:18 require 8:5 34:18 55:17

64:22 84:6,7 102:12 102:13,19 127:12 282:20 307:13 required 21:12 41:14

65:9 76:9,10 83:6,14 83:20 85:7 146:15 277:9 314:4 requirement 70:6 76:13

76:14,19,21 180:9 182:8 191:1 252:22 275:6,7 277:2 279:20 285:14,19 286:7,9 296:18 314:10 requirements 15:11

27:11 29:5 39:5 65:3 69:21 108:17,19 124:14 127:1,3 276:9 requires 65:19 68:16

102:8 133:7,10 308:8 314:16 317:15 requiring 130:4 resale 302:7 research 34:7 59:20

106:7 211:2 reseller257:9 261:18

262:9 265:13,22 266:12 resellers 96:12 97:14

256:19 257:17 262:11 265:9 267:8 268:13 269:9 reselling 96:21 reserve 105:13 reside 265:2 residential 109:21

186:6 193:5 residents 194:19 resistant239:13 resolve 159:15 170:11 resolved 150:4 168:13 resonating 67:20 resources 1:22 58:16

60:16 64:2 resourcing 309:11 respect 134:2 319:14 respectively22:15 respond 84:18,21

105:19 150:12,14,16 219:14 284:11 285:4 response 55:9 121:4

169:12 226:11 responses 55:10 responsibilities 129:9

151:2 245:20 responsibility95:19

129:20 180:20 240:7 responsible 94:10

130:1 182:11,14 183:11 215:2,6 217:13 234:21 236:8 244:9 258:21 rest 158:13 179:11

181:18 restate 5:4,6 restatement235:15,16 resting 208:8,10 restrict 309:8 restricting 299:6,21 restriction 60:22 restrictions 3:9 297:13

297:16 result 92:18 104:9

111:1 results 31:20,22 147:10 resumed 99:4 163:17

239:1 retail 262:22 263:11,21

264:19 retailer 185:4 212:5,7

212:20,21 257:9 261:13,18 262:6 265:13 266:16,17 268:12 303:8,8 retailer/reseller257:3

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retailers 212:4 256:19

257:17 263:5 265:9 267:7 269:8 275:10 retailers/resellers

261:9 268:10 retain 67:11 81:22

274:19 279:21 281:20 retainability67:10 retained 81:8 84:7 retention 3:6 63:6,17

64:17 67:10 68:3 73:11 76:9,19 83:16 85:15 86:1 90:16 94:18 97:20 99:7 101:16 124:13 125:20 275:6,22 276:3,14 278:9 286:18 308:19 retention/record 119:1

133:13 rethinking 6:16 retired 262:22 retrenched 85:18 retrofit 110:5 Returning 19:15 reverse 213:17 review 319:15 reviewing 229:9 rewind 287:18 Rheem 1:21 56:3

181:21 195:1 229:18 296:3 307:17 rid 258:6 right 4:12,13 9:15 12:15

24:4 32:18 38:13 40:22 43:18 46:22 49:14 50:14 51:9 53:4 54:1 56:16 61:3 62:18 64:14 65:1 87:3 90:22 92:20 94:5 95:16 98:5 99:21 100:4,6 101:10 104:13,21 105:13 107:16 108:20 111:17 111:18 112:1 113:18 115:20 117:20 120:3 122:8,11 123:16 129:2,10,22 132:17 134:13,16 136:3 138:4 140:15 141:20 142:6,11 143:22 147:5 148:19 149:8 150:1 154:19 155:4 157:18 161:18 163:14 164:4,17 166:13 176:18 177:10 178:8 178:10,18 179:8 180:16 182:4 185:2 187:5 192:14 196:7 199:18 200:8 211:5 213:2 223:11,18 224:13 237:5,5,5 238:11 242:1,6 243:18 244:13,14 248:13 250:18 251:4 251:5,22 256:11 258:14 259:14 260:16 262:21 263:7,22 264:22 268:17 269:18 271:8,19,22 272:1,21 273:8 276:16 277:5 278:16,17 281:14 283:1 284:13 291:9 292:19,21 293:1,8 295:10 301:11 303:14 308:7 312:14 317:9 317:22 320:5 321:16 321:17 right?There 245:13 rights 223:7 ringing 76:17 rings 249:11 rise 138:2 167:10 168:2 risen 52:9 168:11 risk31:18 146:21 risks 68:15 road 75:13 85:13

144:13 158:3 roadblocks 255:9 robo-call 72:15 robo-calling 70:1 Rocky2:4 17:1,1 20:4

26:2 27:18,22 28:19 29:9 30:21,21 31:8 32:6 38:17,17 41:8,18 43:3,3 45:14,22 46:10 46:15,19 92:8 110:22 110:22 184:5 185:12 192:18 193:9,15 194:3,7 198:2 256:11 258:17 262:5 265:17 266:5 role 212:16 260:9 rolling 291:7 rolls 248:14 room 9:9 14:7 56:13

78:20 119:15 222:21 251:2,4 rough 34:9 roughly25:20,21,22 round 56:11 route 291:20 routine 76:8 88:11

134:17 135:18 136:8 136:21 137:7,12 138:1,1,13,19 139:4,8 140:17,18 141:5 144:11 145:2 146:6 149:2 151:20 152:2 152:11 153:19 157:14 163:3 165:15,16,16 166:2,16 167:9 169:17,20 172:5 217:1 236:1,22 245:19 278:7,8 routinely 136:1 164:11

165:10 173:7 177:3 206:7 214:22 215:14 220:22 221:10,13 222:7 224:22 231:7 234:17 235:2,12 236:17,18 237:1,2,11 238:4 241:1 244:3,4 247:18 257:11,19 258:10,14,15 264:9 273:3 row 116:19 Roy2:3 49:16,17 50:11 rule 72:20 73:16 97:14

127:13 141:2 227:11 249:8 253:2 293:2 296:6,16,19 299:3,19 306:4 rulemaking 71:8 126:5

220:3,6 227:3,5,9,12 rules 88:17 97:21

170:15,17 187:22 251:9 rumor 252:19 rumors 249:11 253:13 run 22:4 65:2 252:5

255:9 279:12 303:14 319:2 running 249:22 runs 306:7,16 Rural 1:17 S S.W 1:11 S1 44:13 S1-022 44:9 S1-373 44:1 S1-37323 44:5 SACHS 2:4 11:20 13:16

14:21 18:13 19:15 21:15 25:15 27:12 33:2 51:18 53:16 56:10 67:16 75:14 83:11 134:10 146:4 148:14 150:17 191:16 192:13 194:10 232:9 232:15 264:8,12 275:13 277:17 287:18 288:12 289:18 294:2 311:5 safe 177:16 safety 125:9 sale 21:12 91:16,17

179:12,16,22 180:10 182:12 183:2 189:7 215:7 222:15 228:7 229:19 230:13 231:1 233:11 234:14 235:1 235:8,11 236:9 258:4 258:10,22 269:3,5 282:12 308:1 317:11 sales 27:4 68:20 78:21

90:14,17 93:4 94:15 96:22 97:8 148:17 184:8,15 215:2 220:21 221:9 237:21 salesman 253:21 salt 62:18 sample 61:21 70:5,18 sand 170:2 sank 146:5 satisfaction 240:11 satisfy281:2 savings 39:2 57:19 saw 57:22 59:20 78:9 saying 33:1 55:10

59:10 65:19 71:8 90:3 100:13 102:5 104:20 105:9,21 115:9,14 116:9,15,21 118:22 124:3,4,7,8 132:5 142:10 149:9 151:4 155:15 161:3 176:14 177:17 178:11 180:13 181:13 188:10 190:11 200:4 212:15 213:16 213:20 214:11 216:12 216:13 218:11,16 220:18 221:21 227:15 227:16,18,19 230:10 231:20 246:5 247:8 247:16 249:21 265:21 267:1 says 17:14,17 19:17

34:4 100:2 181:21 189:5 200:11 213:8 215:11 224:19 229:13 248:16 250:2 257:17 268:11 269:2 270:19 270:22 285:2 scale 58:5 scenario 38:12 95:22

105:6 107:2 108:1 122:1 132:18 187:2 189:14 261:21 292:1 292:4 300:21 303:1,4 scheme 62:2 94:18

95:10 103:9 119:2 122:4 245:15 298:18

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308:8 scope 57:16,22 72:18

114:12 204:22 238:15 scouring 87:13 scrape 80:2 scroll 43:9,17 scrutiny208:18 se 144:18 216:8,18 sealed 195:11 searchable 82:20 83:2

87:9 289:8 searching 106:13 season 149:18 289:13

317:7 season's 148:16 seasons 146:18 seat 51:6 second 8:14 11:10 22:7

56:11 116:18 132:8 151:22 155:22 157:11 177:10 191:19 252:4 257:2,16 269:2 287:19 310:4 secondly70:3 section 217:18 218:20 sections 273:19 sector263:11 secure 66:21 see 10:21 13:19 16:10

20:7 22:17 30:18 38:16 40:13 43:8,15 43:20 62:12 68:17 69:18 71:12 74:5 97:2 97:7 105:20,21 106:17 116:20 117:15 131:17,18 138:20 145:20 148:8 152:8 152:20 155:3 156:9 184:3 187:3 193:21 194:3 196:17 197:19 200:20 224:6,7 226:2 229:16 233:14 245:2 280:15 283:6 287:2 299:2 303:17 309:14 seeing 6:19 148:17

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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 356

Central Air Conditioning Regional Standards Enforcement Working Group

US DOE

09-03-14

Washington, DC