### 202-234-4433 Neal R. Gross & Co., Inc. Page 1 U.S. DEPARTMENT OF ENERGY OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY + + + + + REGIONAL STANDARDS ENFORCEMENT AND DISCLOSURE FOR FURNACES, CENTRAL AIR CONDITIONERS, AND HEAT PUMPS + + + + + PUBLIC MEETING + + + + + FRIDAY, DECEMBER 16, 2011 + + + + + The meeting convened in Room 8E-089 of the Forrestal Building, 1000 Independence Avenue, S.W., Washington, D.C., at 9:00 a.m., Doug Brookman, Facilitator, presiding. PRESENT: DOUG BROOKMAN, Public Solutions, Facilitator KARIM AMRANE, Air-conditioning, Heating, and Refrigeration Institute ASHLEY ARMSTRONG, Department of Energy DAN ARNOLD, Nordyne, LLC NICHOLAS ATWOOD, Natural Resources Defense Council LAURA BARHYDT, Office of General Counsel, Department of Energy WARREN L. BEETON, Emerson Climate Technologies, Inc. DONALD BRUNDAGE, Southern Company Services DAN BUUCK, National Association of Home Builders DAVID CALABRESE, Air-conditioning, Heating, and Refrigeration Institute DAVE CASE, Office of General Counsel,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 2 Department of Energy ROGER COOPER, Cleveland Park Policy Consulting, LLC JOHN CYMBALSKY, Department of Energy LUCY DeBUTTS, Department of Energy ANDREW deLASKI, Appliance Standards Awareness Project PAUL DOPPEL, Mitsubishi Electric GARY FERNSTROM, Pacific Gas & Electric J. KEITH GATES, Cause of Action TALBOT GEE, Heating, Air-conditioning & Refrigeration Distributors International KYLE GILLEY, Lennox International JEFF HARRIS, Alliance to Save Energy BRIAN JAMES, Southern California Edison KATHERINE KENNEDY, Natural Resources Defense Council JIM KIBLER, AGL Resources MATT LATTANZI, Nordyne, LLC PAUL C. LIN, Regal Beloit BENJAMIN LONGSTRETH, Natural Resources Defense Council JOSEPH MATTINGLY, Air-conditioning, Heating, and Refrigeration Institute JOANNA MAUER, Appliance Standards Awareness Project MICHAEL McCABE, Department of Energy CHARLES McCRUDDEN, Air Conditioning Contractors of America JONATHAN MELCHI, Heating, Air-conditioning & Refrigeration Distributors International KAREN MEYERS, Rheem Manufacturing Company SOFIE MILLER, Charles Koch Institute SCOTT MORRISON, American Public Gas Association HAMPTON NEWSOME, Federal Trade Commission ELIZABETH NOLL, American Gas Association JAY PERKINS, Mitsubishi Electric STEVE PORTER, Johnstone Supply DAVID D. RANSOM, McDermott, Will & Emery HARVEY SACHS, American Council for an Energy-Efficient Economy DAVE SCHRYVER, American Public Gas Association

### 202-234-4433 Neal R. Gross & Co., Inc. Page 3 FRANK STANONIK, Air-conditioning, Heating, and Refrigeration Institute LOIS STARKEY, Manufactured Housing Institute CHARLIE STEPHENS, Northwest Energy Efficiency Alliance RICHARD STEYER, Howe, Anderson & Steyer, PC ARTURO THUR de KOOS, Fujitsu General America JENNIFER TIEDEMAN, Office of General Counsel, Department of Energy MEG WALTNER, Natural Resources Defense Council JONATHAN WIENER, Earthjustice DANIEL WILLIAMS, Lennox TED WILLIAMS, American Gas Association

WEBINAR PARTICIPANTS: JENNIFER AMANN, ACEEE MARK ANDERSON, Cortez WES ANDERSON, DOE SHANE ANGLE, Emerson Climate Technologies, Inc. TIMOTHY BALLO, Earthjustice ALLAN BASS, Bass Air Conditioning MARK BERNARD, Bud Anderson Heating & Cooling DAN BRAMBLETT, ACCA JESSE BURD, Air Flow Designs STEPHEN BUSH, Res-com Heating & ac LES CALAHAN, Clark County Mechanical RYAN CARROLL, HPBA ABIGAIL CHINGOS, DOE ROBERT COCHELL, Gulf Coast Air Systems JIM CRAWFORD, Trane DAVE CULVER, KB Complete JOEY DAVENPORT, Lee County B.O.C. TANYA DAVIS, Franks AC PETER DEMPSEY, South Jersey Energy Service Plus LAURA DIFILIPPO, ACCA MARIANNE DIMASCIO, Appliance Standards Awareness Project JOE DISCEPOLA, Grace Energy GLEN DOWDING, ACCA TODD FERRARA, Standard Heating & AC TOM FESENMYER, Emerson Climate Technologies

### 202-234-4433 Neal R. Gross & Co., Inc. Page 4 MARCO FORTUNATO, Conversation Services Group RICHARD FOSTER, ZONEFIRST TIM GALLIGOS, Regal Beloit GREG GANNON, First Company MIKE GLOWKA, Airtron MARCUS GOODMAN, Houk AC TOM GOODNIGHT, Johnson Controls CHARLIE HARAK, National Consumer Law Center ABRAHAM HARVEY, Triple H Air Conditioning DEREK HENDRICKSON, Hendrickson HVAC TARI HENDRICKS, Reflectix FEY HIGHMAN, Pure Air JOHN HUDELSON, G.W. Berkheimer RAY ISAAC, Isaac Heating and Air Conditioning BILL JEFF, Comfort Designs MARK JENKINS, Comfort Professionals WESLEY KIZER, The A/C Guy, LLC BRENT KOERBER, Van Sant DOMINIC KOLANDAYAN, Daikin AC Americas MARK KREBS, Laclede Gas JULIE KRITZ, AGL Resources BIJIT KUNDU, Energy Solutions LAURIE LETTNER, Pure Air DAVID LIS, NEEP DON LLOYD, DHL Home Services LARISSA MARK, NAHB LOUIS MARRONGELLI, CSG SARAH MEDEPALLI, ICF International MARK MENZER, Intertek WILLIAM MILLER, American Public Gas Association CHRISTOPHER MORIN, Conservation Services Group MARK NAYES, Southside Heating and Air Conditioning WILLIAM NEELY, Premier Heating and Cooling ALISON NELIGAN, NYSERDA TED NISSLY, The McKee Group KAREN OLIVER, KO Energy Design, LLC RANDAL OYSTER, Regal Beloit ANDREA PAPAGEORGE, AGL Resources MARY PAULUS, Emerson Climate Technologies DAVID PAYNE, Northern High Performance STEPHEN PERKINS, Habitat for Humanity

### 202-234-4433 Neal R. Gross & Co., Inc. Page 5 JASON PIPER, Weather Master JOHN RITTERPUSCH, NAHB BARRY RIVEN, City of Bloomington BRYAN ROCKY, Johnson Controls ANIRUDDH ROY, AHRI ROBIN ROY, NRDC GREG SANDERS, GREG SCHLEIFER, Standard Heating & Air Conditioning FRANK SCHNEIDER, R.E. Michel Co. GARY SCHULTZ, Porter & Heckman KIMBERLY SCHWARTZ, The ACHR NEWS PAUL SELKING, Regal Beloit BEN SHERMAN, Brockman RONALD SHERMAN, Brockman Furnace JEFF SHRIVER, ACCA TERRELL SMALL, Mortex Products DAVID SPECHT, Comfortworks HVAC JASON STANEK, Metropolitan Utilities District ARLENE STEWART, AZS Consulting THOMAS STROUD, HPBA JERRY SUTHERLAND, Metfab Heating JASON THORSON, Fluid Market Strategies LOWELL UNGAR, Alliance to Save Energy TODD VAN ANTWERP, Van Antwerp Mechanical JIM VERSHAW, Ingersoll Rand-Trane JEFF WARAN, ACCA JACK WATSON, Watson A/C & Electric HEATHER WHEELER, Middletown Air Conditioning & Heating CHUCK WHITE, PHCC LINDA WILSON, NYS Office of the Attorney General DAVID WINIARSKI, Pacific Northwest National Laboratory MICHAEL WOODFORD, AHRI GUIDO ZUCCONI, AHRI

### 202-234-4433 Neal R. Gross & Co., Inc. Page 6 TABLE OF CONTENTS

Welcome, Introductions, Agenda 7 Review, and Opening Statements Regional Standards Enforcement 31 Overview

Information Disclosure Overview 198

Closing Remarks 244

### 202-234-4433 Neal R. Gross & Co., Inc. Page 7 1 P-R-O-C-E-E-D-I-N-G-S 2 (9:06 a.m.)

3 FACILITATOR BROOKMAN: Good 4 morning, everybody, and welcome. This is the 5 Regional Standards Enforcement and Disclosure 6 for Furnaces and Central Air Conditioners and 7 Heat Pumps. 8 Today is Friday, December 16, 9 2011, here at the Forrestal Building in 10 Washington, D.C. 11 Glad you could make it, get an 12 early start on the day. We are going to have 13 welcoming remarks from John Cymbalsky to start

14 us off. 15 MR. CYMBALSKY: Thank you, Doug. 16 I would like to welcome everybody to the Joint 17 Public Meeting by the Department of Energy and 18 the Federal Trade Commission. To my 19 knowledge, we have never done this before. So 20 certainly this will be an interesting meeting. 21 I can tell by the attendance we 22 have more than a few people who are interested

### 202-234-4433 Neal R. Gross & Co., Inc. Page 8 1 in this issue, so that's good. We hope to 2 have a lively discussion. 3 I'm not going to waste too much 4 time with an opening remark, but thanks to all 5 for coming, and Happy Holidays as we go 6 through the holiday season here. 7 FACILITATOR BROOKMAN: Thank you. 8 We typically start with introductions around 9 the room. And you can get used to turning 10 these microphones on and off, those of you 11 that are sitting the first table. Those of 12 you in the back, if you will just stand up 13 when it's your turn. 14 May I start with you? Will you 15 say your name and organizational affiliation? 16 and make sure the little green button comes

17 on. 18 MR. STEYER: My name is Richard 19 Steyer. I'm with Howe, Anderson & Steyer, 20 representing First Company. 21 FACILITATOR BROOKMAN: Thank you. 22 MR. ARNOLD: I'm Dan Arnold with

### 202-234-4433 Neal R. Gross & Co., Inc. Page 9 1 Nordyne. 2 MS. WALTNER: Meg Waltner, 3 National Resource Defense Council. 4 MR. KIBLER: I'm Jim Kibler with 5 AGL Resources, but I'm here on behalf of the 6 American Gas Association. 7 MR. McCRUDDEN: Charlie McCrudden, 8 Air Conditioning Contractors of America. 9 MR. LIN: Paul Lin with Regal 10 Beloit. 11 MR. GEE: Talbot Gee with the 12 Heating, Air Conditioning & Refrigeration 13 Distributors International. 14 MR. PORTER: Steve Porter, 15 Johnstone Supply. 16 DR. AMRANE: Karim Amrane, Air 17 Conditioning, Heating, and Refrigeration 18 Institute. 19 MS. MEYERS: Karen Meyers, Rheem 20 Manufacturing. 21 MR. DOPPEL: Paul Doppel, 22 Mitsubishi Electric.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 10 1 MR. FERNSTROM: Gary Fernstrom, 2 Pacific Gas & Electric Company. 3 MR. deLASKI: Andrew deLaski, 4 Appliance Standards Awareness Project. 5 MR. SACHS: Harvey Sachs, American 6 Council for an Energy Efficient Economy. 7 MR. CYMBALSKY: John Cymbalsky,

8 DOE. 9 MS. ARMSTRONG: Ashley Armstrong,

10 DOE. 11 MS. BARNHYDT: Laura Barnhydt,

12 DOE. 13 MR. NEWSOME: Hampton Newsome, 14 Federal Trade Commission.

15 FACILITATOR BROOKMAN: And let's 16 proceed, please. Stand up. 17 MS. TIEDMAN: Hi. Jennifer 18 Tiedman, DOE. 19 MR. CASE: Dave Case, DOE. 20 MR. STEPHENS: Charlie Stephens, 21 Northwest Energy Efficiency Alliance. 22 MR. HARRIS: Jeff Harris, the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 11 1 Alliance to Save Energy. 2 MR. WILLIAMS: Ted Williams, 3 American Gas Association. 4 MR. STANONIK: Frank Stanonik,

5 AHRI. 6 MR. BEETON: Warren Beeton,

7 Emerson. 8 MR. MATTINGLY: Joe Mattingly,

9 AHRI. 10 MR. CALABRESE: Dave Calabrese,

11 AHRI. 12 MS. MAUER: Joanna Mauer, 13 Appliance Standards Awareness Project. 14 MR. BUUCK: Dan Buuck, National 15 Association of Home Builders. 16 MR. COOPER: Roger Cooper on 17 behalf of the American Gas Association. 18 MR. JAMES: Brian James, Southern 19 California Edison. 20 MR. BRUNDAGE: Don Brundage, 21 Southern Company.

22 MR. THUR de KOOS: Arturo Thur de

### 202-234-4433 Neal R. Gross & Co., Inc. Page 12 1 Koos, Fujitsu. 2 MR. PERKINS: Jay Perkins, 3 Mitsubishi Electric. 4 MR. GATES: Keith Gates, Cause of 5 Action. 6 MR. LATTANZI: Matt Lattanzi, 7 Nordyne. 8 MS. NOLL: Elizabeth Noll, 9 American Gas Association. 10 MR. MELCHI: John Melchi, HARDI. 11 MR. MORRISON: Scott Morrison, 12 American Public Gas Association. 13 MR. SCHRYVER: Dave Schryver, 14 American Public Gas Association.

15 MR. RANSOM: Dave Ransom. I 16 represent equipment manufacturing. 17 MS. STARKEY: Lois Starkey, the 18 Manufactured Housing Institute. 19 MR. WILLIAMS: Dan Williams. I'm

20 here on behalf of Lennox. 21 FACILITATOR BROOKMAN: Thank you. 22 Did everyone get a chance?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 13 1 Once again, welcome, and thanks 2 for being with us this morning. It is typical 3 that the Department -- when each of you 4 registered this morning, they took a business 5 card, and they will create a photocopy of 6 those business cards, so everybody has got a 7 record of who is attending here today, just so 8 you'll know -- make that available. 9 My name is Doug Brookman from 10 Public Solutions in Baltimore. I'm going to 11 do a very brief agenda review. All of you 12 received a rather slim packet coming in the 13 door today -- 20 or so slides. 14 The agenda, as you see reflected 15 on page 2, immediately following this agenda 16 review there is an opportunity for those that 17 wish to do so to make opening statements, 18 hopefully fairly brief summarized statements. 19 If you've got a lengthy, lengthy statement, 20 then let's talk about how that can get in the 21 record effectively. 22 Following that, a presentation

### 202-234-4433 Neal R. Gross & Co., Inc. Page 14 1 followed by a discussion on regional standards2 enforcement overview. We'll take a break mid3 morning around about 10:45 or so. Immediately 4 following the break we will talk about 5 information disclosure overview and have 6 discussion and presentation on that. 7 There is an opportunity yet again 8 for closing remarks, any other issues that 9 haven't been raised sufficiently for you at 10 the end of the day today. Actually, it is 11 going to be more like noon-ish according to 12 the agenda, as listed here. We'll see how we 13 do with the timing of that. 14 Questions and comments on the 15 agenda? 16 (No response.) 17 I would ask for your 18 consideration. If you would, please, speak 19 one at a time as we are going along today. 20 Please say your name for the record each time 21 you speak. You don't need to say your 22 organizational affiliation every time. Some

### 202-234-4433 Neal R. Gross & Co., Inc. Page 15 1 of you are in the habit of doing that. That's 2 just fine. But please say your name, because 3 there will be a complete transcript of this 4 meeting today. 5 I'm going to be queuing 6 individuals by name as best I can to speak. I 7 wish to encourage follow-on comments. It is 8 sometimes very helpful for the Department to

9 have that back and forth. It can be 10 illuminating. 11 Please be concise, share the air 12 time today. There is a lot to be said on this 13 subject, I'm sure, and if you could keep the 14 focus here. Please turn your cell phones on 15 silent mode. Please limit side bar 16 conversations. 17 These microphones actually work 18 pretty well, but you need to turn them on. If 19 you are going to be talking a lot, you might 20 as well leave it on. Okay? 21 So questions and comments about 22 the agenda or about the process that we intend

### 202-234-4433 Neal R. Gross & Co., Inc. Page 16 1 to follow today? You received this packet. 2 Slides will be broadcast up on the screen. 3 We also have individuals joining 4 us via webinar. How many? Forty-seven via 5 webinar. That's a new record. There will be 6 more. Welcome to those joining via webinar. 7 We will endeavor to answer short 8 questions that come in over the webinar, if 9 it's at all possible. So let us know if 10 that's something you would like to do. 11 We are ready to proceed, then. 12 Yes? Let's proceed. 13 We typically start off by having 14 brief summary comments, opening remarks here

15 at the outset. So let's do that. Who would 16 like to start? Gary? Gary Fernstrom. 17 MR. FERNSTROM: Very briefly, I 18 would like to outline PG&E's interest in this 19 meeting. PG&E, Southern California Edison, 20 and Sempra Utilities are authorized by the 21 California Public Utilities Commission to 22 operate a codes and standards efficiency

### 202-234-4433 Neal R. Gross & Co., Inc. Page 17 1 improvement advocacy program. 2 We have been endeavoring for 3 probably a decade to work with the heating and 4 air conditioning industry to develop regional 5 standards, so that we could have air 6 conditioning products in California more 7 commensurate with that state's needs. 8 I have three simple goals for this 9 meeting. One is to hope to make sure that air 10 conditioning products are clearly, easily, and 11 recognizably marked in terms of their 12 compliance for hot, dry climates. 13 Two, to be able to identify where 14 those units are installed. The California 15 Energy Commission replicates DOE standards in 16 its Title 20 appliance standards, and in order 17 to assure compliance in California it is going 18 to be necessary to track this equipment and 19 know where it is installed. 20 And, thirdly, to have a mechanism 21 for assuring that equipment shipped into 22 California is tracked in terms of its

### 202-234-4433 Neal R. Gross & Co., Inc. Page 18 1 production, so that one can ascertain that 2 equipment produced matches what was 3 represented to be delivered into the state of 4 California. 5 Thank you. 6 FACILITATOR BROOKMAN: Okay. 7 Thank you. Yes, Karim. Karim Amrane. 8 DR. AMRANE: Karim Amrane with 9 AHRI. I'll read a brief statement. It is 10 going to be very brief, so -- "AHRI believes 11 that effective energy savings through 12 implementation of regional standards is 13 reliant upon the development and 14 implementation of a strong enforcement policy. 15 However, we recognize that the regional 16 standard developed by DOE presents unique 17 enforcement challenges.

18 "We feel that the enforcement 19 approaches proposed by DOE are not adequate, 20 in particular with respect to split air 21 conditioners, whether matching of the same 22 condensing unit with different indoor coils

### 202-234-4433 Neal R. Gross & Co., Inc. Page 19 1 could result in different energy efficiency 2 ratings. 3 "In this particular case, the 4 tracking of serial numbers from the point of 5 manufacture to the point of distribution or 6 installation presents serious logistical 7 issues and is likely to be overly burdensome 8 or even impractical. 9 "We believe that an effective 10 enforcement plan for regional standards should 11 require compliance at the point of 12 installation and can be accomplished without 13 the complicated and burdensome tracking 14 process. 15 "However, given that the 16 standards' effective date of May 1, 2013, for 17 regional -- or residential furnaces is just 18 around the corner, AHRI recommends that DOE 19 focus its efforts on developing an enforcement 20 plan for furnaces first. 21 "Focusing on furnaces first would 22 significantly reduce the complexity of the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 20 1 test, and will increase the probability of 2 putting a credible enforcement plan in place 3 before the effective date of the standards. 4 "On the other hand, the regional 5 standard for central air conditioners and heat 6 pumps would be effective much later, on 7 January 1, 2015. And while we understand that 8 the Energy Policy and Conservation Act 9 requires that the enforcement rulemaking be 10 completed within 15 months from issuance of 11 the final rule on energy conservation 12 standard, AHRI will not object if DOE takes 13 more time to complete the enforcement 14 provisions of the rule impacting central air 15 conditioners and heat pumps. 16 "It is critical for the 17 development of a successful enforcement plan 18 that all interested parties, such as 19 manufacturers, distributors, contractors, 20 energy advocacy groups, and possibly code 21 officials, be involved in the discussion. As 22 such, AHRI looks forward to working with the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 21 1 Department and others in establishing a 2 workable and credible enforcement plan." 3 Thank you. 4 FACILITATOR BROOKMAN: Thank you. 5 How are we doing with the webinar folks? Are 6 they getting the information? Yes. Okay. 7 Then, let's continue with these 8 opening remarks. Who else would like to make 9 a brief opening statement? Yes, please. 10 MR. KIBLER: Jim Kibler on behalf 11 of American Gas Association. Our comments

12 don't focus so much on the enforcement 13 mechanisms, as relate to the hard work by a 14 lot of stakeholders around a waiver from the 15 high efficiency standard in the northern 16 region residential furnaces. 17 I have a set of 14 principles that 18 the stakeholders have been working on now for 19 over a month, and at some point -- at the 20 appropriate point I would like to present 21 those for the agencies to hear. 22 FACILITATOR BROOKMAN: Okay. And

### 202-234-4433 Neal R. Gross & Co., Inc. Page 22 1 at the appropriate point you will say more

2 about who those stakeholders are. 3 MR. KIBLER: I will. 4 FACILITATOR BROOKMAN: Thank you. 5 Other opening remarks here before we launch 6 into this content? Good morning. Yes, 7 please, Talbot. 8 MR. GEE: Talbot Gee with HARDI, 9 the distributors in the industry. 10 Interestingly enough, we have a situation 11 where we are talking about, you know, what has 12 traditionally been a manufacturing-specific 13 compliance obligation being now possibly moved 14 into an installation-specific enforcement 15 situation.

16 But when we see the measures 17 presented in the framework document, they seem 18 to have the most direct effect and burden on 19 the distributors who have no control over 20 either one of those two aspects. So that 21 presents a bit of a problem. 22 This leads into another issue of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 23 1 having policy that may potentially be 2 unenforceable. And our friends and colleagues 3 in California I think can attest to some of 4 the challenges we have had with Title 24 5 compliance -- very rigorous and well meaning 6 code that has a very, very low compliance 7 rate, because the state is unable to put the 8 feet -- the boots on the ground, frankly, to 9 enforce it. 10 So I think going forward in 11 today's proceeding DOE needs to think long and 12 hard about what type of infrastructure it 13 could be prepared to put on the street to 14 enforce this, because certainly distributors 15 are not in a position to do it. I am not 16 quite sure why they have been targeted so much 17 in the framework document. 18 And, frankly, there is not a lot 19 of incentive to think of ways to take on 20 responsibility, because we have no idea what 21 that liability could look like or what the 22 enforcement or what the penalties that we

### 202-234-4433 Neal R. Gross & Co., Inc. Page 24 1 could be exposing distributors to could look 2 like. In fact, we don't even know how the 3 penalties are decided. 4 So that is a difficult thing to 5 think about. And then, you add on top of it 6 this concept of a waiver, that actually just 7 adds another whole level of uncertainty to an 8 already difficult, if not impossible to 9 enforce, environment. 10 So I think this -- the objective 11 of the meeting today should really try to 12 think long and hard about how in actual 13 practice, in the common instance, this is 14 going to be enforced, because we have looked 15 at this for two and a half years and have not 16 yet found a way that we think we could do it. 17 FACILITATOR BROOKMAN: Gary, let 18 me entertain other opening remarks before we 19 do the back and forth. Other -- yes, please. 20 MS. KENNEDY: Doug, I apologize 21 for being late, Kit Kennedy for NRDC. I have 22 a few remarks to make, both about labeling,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 25 1 enforcement, and about the waiver process. My 2 comments might logically follow Jim's, because 3 they agree with his without being a spoiler. 4 So would you like those comments -- 5 FACILITATOR BROOKMAN: Sure, right

6 now.

7 MS. KENNEDY: -- now or --

8 FACILITATOR BROOKMAN: Yes. 9 MS. KENNEDY: Would you like to -- 10 FACILITATOR BROOKMAN: Oh, you 11 want to do your 12 principles now? 12 MR. KIBLER: Whenever it is 13 appropriate. 14 FACILITATOR BROOKMAN: Yes, let's 15 wait until we get into the content then, 16 because I think there is an opportunity for it 17 to fit into the detailed content and the 18 presentation material. Did you have a brief 19 statement you wanted to make, Kit? 20 MS. KENNEDY: Yes, I'll make a 21 brief statement --

22 FACILITATOR BROOKMAN: Yes.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 26 1 MS. KENNEDY: -- if I may. And I 2 just wanted to sort of provide a little -- 3 NRDC's views about the context for this 4 particular meeting and the two rulemakings 5 here. This process started, of course, with 6 the Department's issuance of a direct final 7 rule for furnaces and air conditioners, which 8 for the first time contained regional

9 standards.

10 That standard or set of standards 11 became final in October, and I wanted to start 12 by commending the Department for their work on 13 that standard. It was a long road. It was a 14 difficult process, and that standard will 15 deliver tremendous energy savings, consumer 16 savings, and environmental savings. So thanks 17 for your work on that. 18 I also wanted to recognize the 19 efforts of the many folks around this table -- 20 manufacturers, states, consumer groups, energy 21 efficiency advocates, utilities -- who came 22 together to negotiate the consensus standards

### 202-234-4433 Neal R. Gross & Co., Inc. Page 27 1 that formed the basis for the Department's

2 rule. 3 And we are now in a different 4 forward-looking moment where the Department 5 and FTC are taking on two distinct but related 6 rules -- the disclosure rule and the

7 enforcement framework for the furnace rule. 8 Both are critically important to the smooth 9 and full implementation of the regional

10 standards. 11 NRDC will be submitting written 12 comments with detailed comments on both the 13 labeling issues and the enforcement framework 14 issues in the future, and will be contributing 15 to the conversation today. 16 Without stealing AGA's thunder, I 17 do want to thank AGA for their leadership role 18 in bringing together a wide array of 19 stakeholders, including NRDC, to develop some 20 principles for a very specific, limited waiver 21 process that we think will help to ensure a 22 smooth and full implementation of the furnace

### 202-234-4433 Neal R. Gross & Co., Inc. Page 28 1 standards and help to capture all of those 2 important benefits. 3 So I will close it there for now 4 and hope to contribute to the discussion. 5 FACILITATOR BROOKMAN: Okay. 6 Thank you. And, Jim, as you look through 7 these slides, figure out where your 12 8 principles would best fit. Okay? 9 Harvey Sachs. 10 MR. SACHS: Harvey Sachs, ACEEE. 11 And I would certainly echo Kit's comments. 12 But I do want to say three very brief things. 13 The first is, the goal in regional standards 14 enforcement must be substantial compliance. 15 Nobody is proposing that DOE special agents 16 with pistols on their belts follow every 17 installer to every site. Just as our Tax Code 18 is based on substantial compliance with 19 penalties, we must adopt that philosophy. 20 The second point is I think this 21 can work, and I think it can work with minimum 22 burden, but it will require a 21st century

### 202-234-4433 Neal R. Gross & Co., Inc. Page 29 1 approach that is explicitly built upon 2 minimally invasive but adequate database 3 development and compliance assurance largely 4 through data mining. 5 The third thing that I want to say 6 is I was really struck in the regional

7 standards enforcement framework document -- 8 and in its very nice summary table -- no role 9 laid out of significance for DOE in making 10 this happen. And I think that this thing will 11 require a DOE role in guiding the development 12 of the information architecture that will 13 underlie an enforcement mechanism that is 14 realistic, achievable, and minimum burden. 15 FACILITATOR BROOKMAN: Thanks, 16 Harvey. Okay. 17 So that was a good start. 18 Additional opening remarks? Did you have one? 19 No? Okay. 20 Yes, Gary, please. Follow on.

21 MR. FERNSTROM: I wanted to -- 22 Gary Fernstrom. I wanted to rebut the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 30 1 allegation that compliance is generally 2 thought to be low with California's building 3 standard Title 24. The California utilities 4 -- PG&E, Edison, Sempra - operate energy 5 efficiency programs for new construction 6 through which we give incentives to builders 7 to exceed the building standards in 8 California. 9 We have done studies to determine 10 what the baseline is for those incentive 11 programs, which include compliance with 12 Title 24, and those studies have shown 13 compliance to be quite high. And I would be 14 happy to submit that information to the

15 record. 16 FACILITATOR BROOKMAN: Okay. I 17 guess that's relevant. 18 So then I take it, casting my eyes 19 around the room, that we are now done with 20 opening remarks and we can then proceed with 21 the presentation materials. All of you have 22 this packet, and all of you also received the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 31 1 regional standards enforcement framework 2 document, which I thought was a very useful 3 document, good information in there. 4 Okay. So let's proceed. Ashley 5 Armstrong. 6 MS. ARMSTRONG: I'm going to -- 7 for those -- in your packets, I'm going to 8 skip straight to Slide 7 to start off with, 9 because Doug has been nice enough to kind of 10 go over our ground rules and our agenda. 11 Really, the purpose of this 12 meeting is to gather your ideas and your 13 feedback. I mean, one of the main reasons 14 that I think the Department put out a 15 framework document first is because we wanted 16 to get, with some just potential ideas, was 17 because we wanted to get feedback to better 18 inform any proposal we might put forth. 19 So I am going to go through the 20 presentation. And as I do -- there is comment 21 boxes throughout -- I encourage you to provide 22 feedback on any aspect, provide ideas you

### 202-234-4433 Neal R. Gross & Co., Inc. Page 32 1 might have, even if they are not related to 2 what is in the presentation itself, any 3 thoughts you may have on what a workable, 4 regional standards enforcement scheme may look 5 like, we are open to at this point. 6 So just to go over a couple of 7 things, which I think have pretty much already 8 been stated, but DOE issued a direct final 9 rule for regional standards in June. The 10 statute then requires DOE to initiate an 11 enforcement rulemaking on regional standards 12 as well as it requires FTC to initiate a 13 rulemaking on information disclosures. 14 So compliance with standards -- 15 typically, as stated earlier, compliance with 16 the base national standards will be based on 17 the date of manufacture, and that includes the 18 date that a product is imported. 19 Manufacturers of the equipment themselves, 20 including the importers, must comply with the 21 national base standard beginning in the 22 compliance date specified. It differs

### 202-234-4433 Neal R. Gross & Co., Inc. Page 33 1 depending on product class and product type. 2 For regional standards, things are 3 a little different, and this is something new. 4 Compliance with the regional standards are 5 actually based on the installation location of 6 a covered product. The distributors and 7 installers are responsible for installing 8 equipment in that applicable region that meets 9 the regional standards, beginning on the 10 compliance date of the regional standards. So 11 installation date and location are key there 12 for the regional standards. 13 And then, obviously, at the bottom 14 the responsible parties include the 15 manufacturers, the distributors and dealers, 16 and the contractors and installers. So it is 17 all the key people throughout the chain.18 Okay. So this is kind of an open19 ended question. And before I get the question 20 the issue numbers throughout the presentation 21 match up with the way they are listed in the 22 framework. So that is why you will see Issue

### 202-234-4433 Neal R. Gross & Co., Inc. Page 34 1 Number 3 here. It's not Issue 1; I know that 2 through some of my colleagues. 3 But -- so we are seeking just an 4 open-ended question here, information that 5 would be necessary to help determine if the 6 basic model is compliant with the Department's 7 standards. So what information should the 8 Department look for? 9 Right now, we ask for 10 certification information from the 11 manufacturers, and that really just has to do 12 with the basic model numbers and some limiting 13 characteristics of the equipment, as well as 14 the efficiency. 15 But what type of information will 16 the Department need, or do you think the 17 Department would need, to enforce its regional

18 standards? 19 Don't be shy.

20 FACILITATOR BROOKMAN: Frank 21 Stanonik, please. 22 MR. STANONIK: Frank Stanonik,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 35 1 AHRI. 2 FACILITATOR BROOKMAN: Hey, Frank, 3 get a microphone, please. Sorry about that. 4 Maybe you can sit -- you can sit close if you

5 wanted to. 6 MR. STANONIK: Ashley, a simple 7 question. Why do you think you need more than 8 what you have today? 9 MS. ARMSTRONG: Frank, this is 10 Ashley. I'm not sure that we do. I think 11 it's open-ended. 12 MR. STANONIK: Okay.

13 MS. ARMSTRONG: Do we or don't we? 14 MR. STANONIK: Well, I was taking 15 inference from the question, but I would say 16 that the information being provided to DOE 17 today, as you mentioned, includes the 18 efficiency information. So you have the 19 information to determine whether a model 20 complies with the national standard or the 21 respective regional standard. I don't think 22 that aspect you need anything more than you

### 202-234-4433 Neal R. Gross & Co., Inc. Page 36 1 have today.

2 MS. ARMSTRONG: So --

3 FACILITATOR BROOKMAN: What about 4 the other aspects, Frank? 5 MS. ARMSTRONG: As I was saying -- 6 MR. STANONIK: I was answering the 7 first question. 8 (Laughter.) 9 MS. ARMSTRONG: I was going to 10 say, as a follow-on, you know, and how would 11 that information or what changes would need to 12 be made for the Department to consider if it 13 has been properly installed in a specific 14 location?

15 MR. STANONIK: If I had the answer 16 to that question right now, we could all go

17 home. 18 (Laughter.) 19 MS. ARMSTRONG: That's fair 20 enough. 21 MR. STANONIK: Hopefully, we will

22 work that out.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 37 1 I have one related question, and 2 maybe we can park it aside. You have talked 3 about date of manufacturer -- I'm sorry, date 4 of installation. Has the Department given any 5 thought to -- granted, it is going to be a 6 very unique situation. 7 But let's say that date of 8 installation is looming, and I'm a consumer 9 and the -- you know, I've got bids from the 10 contractor, and I'm buying the furnace in the 11 north, okay? And I agreed on, let's say, two 12 days before the effective date I've agreed to 13 buy this model from this contractor. You 14 know, I have given them my credit card, all

15 that stuff. 16 I have made the purchase, as far 17 as I'm concerned, but it's not going to get 18 installed because contractors don't 19 necessarily control the amount of their 20 business, let's say until five days later 21 after the date of installation effective date. 22 And yet I bought a -- at that

### 202-234-4433 Neal R. Gross & Co., Inc. Page 38 1 point, I purchased legally a -- let's say an 2 82 percent furnace. Have you thought about 3 that situation? 4 MS. ARMSTRONG: I think we have -- 5 so I think we have thought about it, but I 6 don't think we have answer to it. How about

7 that? 8 MR. STANONIK: Okay. Well, so 9 I'll ask that maybe we park that, because I 10 think that --

11 MS. ARMSTRONG: Sure.

12 MR. STANONIK: -- needs to be

13 solved also. 14 MS. ARMSTRONG: Do you have a 15 suggestion as to how the Department should 16 deal with that? 17 MR. STANONIK: Off the top of my 18 head, because we haven't really talked about 19 it that much, but off the top of my head I 20 would consider the date of the consumer's 21 purchase to be effectively the date of 22 installation, because they will be

### 202-234-4433 Neal R. Gross & Co., Inc. Page 39 1 disconnected. 2 FACILITATOR BROOKMAN: Harvey

3 Sachs. 4 MR. SACHS: Harvey Sachs. Just as 5 a follow-on to Frank Stanonik's question, it 6 might fit within my perception of minimal 7 additional database development work to ask 8 that AHRI mark each model. And conceptually I 9 am focused on furnaces now, additional work 10 for split systems, with the region for which 11 it is compliant, the analog being the 12 EnergyStar Windows program. 13 So we might for furnaces have one 14 that is 50-state for a condensing furnace 15 versus one that is southern only marked in a 16 column as an S in the database. And this 17 might be something that is helpful as we -- as 18 giving information that is more accessible to 19 contractors and consumers and others involved. 20 FACILITATOR BROOKMAN: Well, it 21 does seem as though the Department is here to 22 seek specific ideas about how this could be

### 202-234-4433 Neal R. Gross & Co., Inc. Page 40 1 implemented. Do you want to comment now, 2 Karim? 3 DR. AMRANE: Karim Amrane, AHRI. 4 I think just to follow up on what Harvey just 5 said, I think it is something that AHRI 6 intends to do moving forward, for not just 7 furnaces but central A/C as well.

8 FACILITATOR BROOKMAN: And AHRI 9 has the capacity to do that and -- 10 DR. AMRANE: Yes, AHRI will -- 11 yes, yes, we'll do it. 12 FACILITATOR BROOKMAN: Okay. 13 Thank you. That was constructive. 14 Other thoughts in response to 15 Ashley's question, information for the 16 Department to look for? Yes, Talbot. 17 MR. GEE: Talbot Gee with HARDI. 18 It may be more of a question back to DOE. I 19 mean, there is a very, very important 20 difference in nature of information between 21 model numbers and sales information. Has DOE 22 thought about how you would treat those two

### 202-234-4433 Neal R. Gross & Co., Inc. Page 41 1 different types of information differently? 2 MS. BARHYDT: I actually am not 3 sure I understand the question.

4 FACILITATOR BROOKMAN: That's 5 Laura speaking. Nor did I, Talbot. Can you 6 say a little more about that? 7 MS. ARMSTRONG: By "sales 8 information," I mean, do you mean like 9 shipments, or do you mean like serial numbers?

10 Or do we mean -- 11 MR. GEE: Frankly, it doesn't 12 matter, the point being, you know, right now 13 you receive information about model numbers 14 from manufacturers, but it is decoupled from 15 actual sales transactions. To start talking 16 about installation location, there is a 17 variety of sales transactions that happen 18 between there, and that type of data is of 19 highly different nature than just simple model 20 number stuff. So how would you plan on 21 handling that?

22 FACILITATOR BROOKMAN: And so --

### 202-234-4433 Neal R. Gross & Co., Inc. Page 42 1 and proprietary data. That's one of the big 2 concerns there, correct? 3 MR. GEE: Absolutely. 4 FACILITATOR BROOKMAN: Yes, okay, 5 just to be explicit. Do you have --

6 MS. ARMSTRONG: So -- 7 FACILITATOR BROOKMAN: Ashley?

8 MS. ARMSTRONG: I don't have an 9 explicit answer, but, you know, we have 10 information that we collect now about certain 11 -- obviously, it is on a smaller scale, just 12 on model numbers. And we have information 13 that we consider confidential and stays in -- 14 right? It stays within the Department, and it 15 is not -- we are not putting it on our online

16 database. 17 So if there is information about 18 geographic location, to the extent that sales 19 information was considered confidential in our 20 regs out in 429, in Part 429, we have set up a 21 system for which we identify information the 22 Department collects that it considers

### 202-234-4433 Neal R. Gross & Co., Inc. Page 43 1 confidential in nature.

2 FACILITATOR BROOKMAN: Talbot? 3 MR. GEE: Does that mean it's not 4 subject to a FISA request or something, then? 5 Or FOIA, I'm sorry. 6 FACILITATOR BROOKMAN: FOIA, yes.

7 Laura? 8 MS. BARHYDT: Confidential 9 business information is exempt from release 10 under FOIA. But the Department makes the 11 ultimate determination about releasability. 12 MS. ARMSTRONG: So we got a 13 question from -- if everyone is done with that 14 topic, we've got a question from the web that 15 says, "For proper geographic location, will it 16 be determined by zip code?" 17 And I think at this point the 18 Department doesn't know. We're open to ideas. 19 The regional standards that were adopted are 20 based on the state -- are at the state level, 21 so it -- I guess I'd ask, is there a reason 22 that someone thinks we may need zip code for

### 202-234-4433 Neal R. Gross & Co., Inc. Page 44 1 the location?

2 FACILITATOR BROOKMAN: Would I 3 guess the -- go ahead, Harvey. Harvey Sachs. 4 MR. SACHS: Harvey Sachs. Very 5 much conceptual. I have circulated a little 6 bit on this and will try to flesh it out. But 7 in the mental architecture that I am thinking 8 about of basing this on data mining, the zip 9 code and street address are critical 10 information to get into the system, so one can 11 look for egregious patterns of violation -- 12 someone who is shipping 10 units as installed 13 at my house's address, things like that. 14 Now, there is no problem with that 15 information remaining confidential. There is 16 no reason for that information to include 17 anything about price, but I don't think we can 18 get a solid enforcement mechanism unless we 19 have the ability to see what installers are 20 moving product to what addresses and look for 21 anomalous patterns.

22 FACILITATOR BROOKMAN: A state --

### 202-234-4433 Neal R. Gross & Co., Inc. Page 45 1 that would not be sufficient. 2 MR. SACHS: It would absolutely be 3 insufficient in my opinion, but I am certainly 4 open to much smarter folks, much more 5 experienced folks showing me I'm wrong. 6 FACILITATOR BROOKMAN: Please say 7 your name. 8 MR. BUUCK: Yes. Dan Buuck with 9 National Association of Home Builders.

10 FACILITATOR BROOKMAN: That's not 11 turned on, I don't think. 12 MR. BUUCK: Thank you. 13 FACILITATOR BROOKMAN: Yes, that's

14 better. 15 MR. BUUCK: Dan Buuck, National 16 Association of Home Builders. Speaking to the 17 enforcement part, when the enforcement 18 framework came out at our office we realized 19 that using the states as the northern region 20 for the furnaces was a way to simplify

21 enforcement. 22 However, we feel that it would

### 202-234-4433 Neal R. Gross & Co., Inc. Page 46 1 actually complicate things by not going -- 2 using the climate zone maps that are in the 3 energy codes, which are used around the 4 country. And so we would feel that the zip 5 codes would be the way to track these. 6 And if you look at the map, and 7 overlay it with the climate zones, there are 8 many large metropolitan areas in the northern 9 region, which are actually in a more milder 10 climate zone, that those metropolitan areas 11 include New York, much of New Jersey, 12 Philadelphia, and on and on and on. 13 And we feel that -- I think Mr. 14 Sachs was speaking to the data mining 15 database. It is easily done to track these by 16 zip code. It does not need to be by state. 17 Thank you. 18 FACILITATOR BROOKMAN: Karim, do 19 you want to comment here? 20 DR. AMRANE: Well, just to say 21 that the climate zones in the ECC -- there 22 were like eight climate zones and they go by

### 202-234-4433 Neal R. Gross & Co., Inc. Page 47 1 -- even cut the states, I mean, they cut 2 cities. So I don't know. I mean, it could be 3 -- I guess, I don't know. I'm not saying that 4 we cannot choose zip code, but that is going 5 to complicate the situation. 6 FACILITATOR BROOKMAN: Charlie. 7 MR. McCRUDDEN: Charlie McCrudden, 8 Air Conditioning Contractors of America. I 9 have two comments about essentially the 10 question that is posed here. The first is 11 that my members, their sales numbers, their 12 customers' location/addresses, that is their 13 confidential business information. That is 14 their whole business. 15 They are very, very careful and 16 very skeptical of providing that information 17 to the government, to even some of their 18 industry partners. So I would just put that

19 out there. 20 Secondly, you know, in terms of 21 collecting information, I think there is a 22 piece here that we may be overlooking. How is

### 202-234-4433 Neal R. Gross & Co., Inc. Page 48 1 that information transmitted? You know, how 2 would a distributor or a contractor or someone 3 transmit that information to DOE? What would 4 that look like? Could it be -- would it only 5 be electronic? Could it be paper filing? Not 6 all contractors are as sophisticated as to be 7 able to probably abide by I think what Harvey 8 might have -- as a 21st century database. 9 And this is I think sometimes the 10 unintended burdens -- not the unintended 11 consequences but the unintended burdens on the 12 smaller contractors. So I think we need to 13 think about, how does this -- how is this 14 information transmitted? How are you going to 15 use it? 16 You know, the fact that it is not 17 FOIA-able, you know, may make some folks still 18 very skeptical, and there -- it may be that 19 DOE has to do some type of education on this. 20 But again, there just -- there is a lot of

21 concern there. So -- 22 FACILITATOR BROOKMAN: Thank you.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 49 1 Karen, do you have a comment? 2 MS. MEYERS: Just a comment. This 3 is Karen Meyers with Rheem. You know, I would 4 be very concerned if there was some type of 5 online searchable database by state or zip 6 code, because it could easily release 7 manufacturers' market share data and -- by 8 location, and we would definitely consider 9 that confidential business information, and we 10 would be very much against that type of 11 information being released to anyone. 12 FACILITATOR BROOKMAN: Harvey

13 Sachs. 14 MR. SACHS: Harvey Sachs. Karen, 15 we agree. Again, I don't want to push any 16 particular approach except as a kind of thing 17 -- the database, as some of us think about it, 18 would be an internal to DOE database, perhaps 19 analogous -- and I hate to even use the 20 metaphor -- to IRS data, which are searchable 21 by IRS staff, but are certainly not an online 22 database that anyone without sophisticated

### 202-234-4433 Neal R. Gross & Co., Inc. Page 50 1 hacking skills could reach. 2 So we absolutely agree on the 3 importance of protecting proprietary 4 information, and absolutely agree with Charlie 5 on the need to do a large educational 6 component. And beyond that, as the advocates 7 have thought about this entire process, we 8 have tried to bear in mind how much of the 9 actual energy saving is attributable to the 10 work of the quality installer, a mission which 11 ACCA has taken on and which we wholeheartedly

12 endorse. 13 And if the enforcement of these 14 regulations happens to be a little bit more 15 difficult for the archetypal, let's call it 16 inadequate contractor, it does not -- the one 17 pickup, one magnetic sign "In Business One 18 Year" model, it does not particularly bother 19 us, because we don't think these people are in 20 the business of doing quality installations 21 and really serving their customers. 22 I may be a wide-eyed idealist, but

### 202-234-4433 Neal R. Gross & Co., Inc. Page 51 1 that's where I am. 2 FACILITATOR BROOKMAN: Okay. Kit 3 Kennedy. 4 MS. KENNEDY: Kit Kennedy for 5 NRDC. I mean, I think we are all hearing the 6 importance of keeping proprietary business 7 information confidential for all of your

8 members. 9 And, Laura and Ashley, I'm just 10 wondering if as part of this rulemaking there 11 might be some more guidance on the interplay 12 between FOIA and confidential business 13 information, as applied in this situation, or 14 I hate to provide more work, but an additional 15 rulemaking, so folks in advance would know 16 exactly what the definition of CBI is and 17 there could be confidence that -- you know, 18 what's in and what's out. 19 MS. BARHYDT: We certainly 20 appreciate the comments. As we did in the 21 certification enforcement rule where we began 22 requiring additional information that we

### 202-234-4433 Neal R. Gross & Co., Inc. Page 52 1 hadn't required before, we did take efforts to 2 make clear exactly which pieces of information 3 we considered to be public information. 4 And I see no reason why, within 5 the context of this rulemaking, we couldn't do 6 something similar to make absolutely clear 7 which types of information appear to be 8 proprietary information.

9 FACILITATOR BROOKMAN: Dan? 10 MR. ARNOLD: Yes. I'll make my 11 comments real brief, because several people 12 already stole my thunder. 13 FACILITATOR BROOKMAN: Give your 14 name first. 15 MR. ARNOLD: Dan Arnold, Nordyne. 16 I'm echoing Karen, Charlie, and others, so 17 I'm just glad to hear the discussion taking 18 place about proprietary data. We just second

19 that -- 20 FACILITATOR BROOKMAN: Okay. 21 Thank you.

22 MR. ARNOLD: -- that concern.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 53 1 There was a situation in California a number 2 of years ago that we submitted data directly 3 to the State of California. It was not to be 4 made public, and inadvertently we found a back 5 door way that we found information on all our 6 competitors, so we just want to make sure that 7 -- that's, again, a concern. I'm glad to hear 8 the discussion taking place.

9 FACILITATOR BROOKMAN: Good. 10 Thank you. And that's a useful illustration. 11 Charlie. 12 MR. McCRUDDEN: Yes, I just was 13 going to follow up on Harvey's comment. You 14 may be -- what was it, a wet-eyed idealist, 15 but I think you overgeneralized the industry. 16 I think there are more one-van legitimate

17 contractors than there are one-van 18 illegitimate or, you know, unscrupulous

19 contractors. 20 But nonetheless, this is a new 21 filing burden potentially, or this is a new 22 requirement on the contractors. And those

### 202-234-4433 Neal R. Gross & Co., Inc. Page 54 1 one-van operations, you know, of our 2 membership, 80 percent are less than 10 3 employees. And so a bulk of those are going 4 to be one in two. 5 And I think that we have to think 6 about how they are going to maintain 7 compliance, so I just have to stick up for my

8 folks. 9 FACILITATOR BROOKMAN: So this is 10 a rather open-ended question, Issue Number 3. 11 I thought I would just ask, does anybody have 12 a distinctly different perspective on this for 13 the Department to consider? 14 MS. ARMSTRONG: Well, actually,

15 can I -- 16 DR. AMRANE: Karim Amrane, AHRI. 17 Just one comment here. I hope it's -- we are 18 just talking here about enforcement of the 19 standard above the base national standard. We 20 see no reason why DOE should change its 21 enforcement that is currently in place for the 22 base national standard, so we are talking

### 202-234-4433 Neal R. Gross & Co., Inc. Page 55 1 about the levels above the base only. I guess 2 I'd like clarification from DOE on that. 3 MS. ARMSTRONG: So I think they 4 work hand in hand, right? I think at this 5 point, you know, our enforcement is up and 6 running for the base national standards. But 7 if something we do with respect to regional 8 standards warrants the changes there, I mean, 9 the Department would consider that. But we 10 hear your opinion that it should stay the

11 same. 12 So I actually have a question from 13 the web, and I'm going to defer this question 14 to Charlie and ask him hopefully to explain, 15 because they asked if we would work with ACCA 16 on your EnergyStar program as far as paperwork 17 with the information you currently collect on 18 model and serial number. And, unfortunately, 19 I am less familiar with that, so I was going 20 to wonder if you could explain what you 21 currently do with the EnergyStar program. 22 It asks if the Department will

### 202-234-4433 Neal R. Gross & Co., Inc. Page 56 1 work with ACCA's EnergyStar program as far as 2 paperwork, including model, serial number, and 3 all of the startup information addressed to 4 the property. So I'm wondering what you 5 currently collect for the EnergyStar program. 6 MR. McCRUDDEN: Well, this is a -- 7 this is a program that we have sort of just 8 developed. I don't know all the collection -- 9 the information that we collect for that 10 program, so I'll have to get back to you on 11 that, and I will confer with my folks who run 12 that. So, but that's potentially a model or

13 -- 14 MS. ARMSTRONG: Yes, I think the 15 Department would be very interested in 16 learning what you are going to do for that, 17 because -- to the extent that the information 18 seems to be like the information that people 19 in the room feel the Department should be 20 interested in. 21 MR. McCRUDDEN: Okay. I'll have 22 to get back to you on that one.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 57 1 MS. ARMSTRONG: Okay. Thank you.

2 FACILITATOR BROOKMAN: Talbot.

3 MR. GEE: Yes. Just on -- and I 4 don't know exactly what that is pertaining to. 5 But if it -- I know there is the EnergyStar 6 program that ACCA partners on for new 7 construction, and I hope everyone is clear 8 that there is a vast distinction between 9 compliance and enforcement of all of this for 10 new construction versus how it would actually 11 be in a retrofit situation. 12 So even if there is some model on 13 new construction that -- I don't think it 14 gleans as many lessons for a retrofit 15 application. 16 FACILITATOR BROOKMAN: Thank you.

17 MS. ARMSTRONG: So we have another 18 question from the web, and I'm going to get 19 hopefully Laura to answer this question. But 20 it says, "What efforts will be in place to 21 assure that units cannot be sold online or 22 shipped from the south to the north, creating

### 202-234-4433 Neal R. Gross & Co., Inc. Page 58 1 a black market for HVAC equipment?" 2 MS. BARHYDT: I definitely think 3 that's one of the issues that we are concerned 4 with, and that's certainly one of the things 5 that we are hoping to get substantive comments 6 from you on. What is it that you think is 7 workable and yet still will prevent that type

8 of black market? 9 FACILITATOR BROOKMAN: Gary

10 Fernstrom. 11 MR. FERNSTROM: Gary Fernstrom. I 12 think all of this discussion serves to focus 13 our attention on the importance of the 14 contractor in all of this, because ultimately 15 the contractor -- there are very few 16 homeowners that install their own HVAC 17 equipment. 18 Contractors know where they have 19 installed it and whether it's compliant or 20 not. I think it is -- it's tough for the 21 distributors, other than, you know, they know 22 what state they sold it into.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 59 1 FACILITATOR BROOKMAN: Thank you. 2 Charlie. 3 MR. McCRUDDEN: On the issue of 4 internet sales, I have had a lot of members 5 tell me -- and this is anecdotal -- I have had 6 a lot of members tell me that they get calls 7 once a week now. And it's someone who said, 8 "I bought this condensing unit on the 9 internet. What will you charge to install 10 it?" Or "I bought this furnace online." 11 One of my members told me she got 12 a call from a dentist, and he had purchased a 13 condensing unit online and wanted it installed 14 in his office. And she said, "What would you 15 say if I said, 'I bought some amalgam online. 16 Would you put it in my mouth?'" 17 (Laughter.) 18 And she declined, but -- 19 (Laughter.) 20 She declined to do the job. But 21 the point is, it's happening, it's happening a 22 lot. And I think -- and this was in our

### 202-234-4433 Neal R. Gross & Co., Inc. Page 60 1 comments on the DFR -- I think this is 2 something that we really have to look at, 3 because it is going to make the issue of 4 noncompliance along the borders moot, because 5 now potentially a furnace or an air 6 conditioner could come from Florida and arrive 7 in Maine. 8 And in those cases -- and, look, 9 these are folks probably -- you know, we don't 10 know who is selling them, we don't know who is 11 buying them, but I think it's an issue. 12 FACILITATOR BROOKMAN: So are you 13 in part agreeing with Gary's emphasis on the 14 installer, the contractor? 15 MR. McCRUDDEN: Well, obviously, 16 the contractor knows where things are going. 17 But I just think that in terms of how DOE sees 18 this, these are things -- I mean, this black 19 market exists, and it likely will get worse. 20 MR. FERNSTROM: Gary Fernstrom. 21 Let's explore that a little bit in terms of 22 the applicability of the regulations. And it

### 202-234-4433 Neal R. Gross & Co., Inc. Page 61 1 appears to be somewhat of a dilemma to me that 2 regulations I believe apply to the sale of the 3 product, so the internet firm that sold the 4 product to the dentist in a noncompliant area 5 is violating the regulation. 6 I suppose the ethical thing for 7 contractors to do would be to say, "I'm sorry, 8 I can't install that unit." But there is no 9 prohibition on the dentist buying it. The 10 prohibition was on the distributor who sold it 11 into a noncompliant address. 12 FACILITATOR BROOKMAN: How about, 13 Laura, did you want to comment here? I'm 14 coming back to you, Paul.

15 MS. BARHYDT: So the current

16 standards are on the manufacturer and on the 17 importer. They are not currently on the 18 distributor, and so the distributor, unless 19 they were an importer or a manufacturer, is 20 not in violation of DOE regulations.

21 FACILITATOR BROOKMAN: Let's let 22 Talbot follow on here, Paul. Go ahead,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 62 1 Talbot. 2 MR. GEE: Well, I would also point 3 out another great example for why this is 4 going to be a challenge, because there 5 actually is a prohibition against that dentist 6 buying that condensing unit. He is supposed 7 to have his EPA certification to be able to 8 purchase those things and you can't police 9 that right now. That was supposed to have 10 been one of those controls to help do this. 11 And this is the slippery slope we 12 get into where the whole industry is agreed 13 that it does not want to encourage internet 14 sales. But this regulation, in and of itself, 15 could encourage the explosion of internet 16 sales. So we've got a problem there.

17 FACILITATOR BROOKMAN: Paul. 18 MR. DOPPEL: Well, if that example 19 included a furnace instead of a condenser, 20 then, you know, it would be wide open for 21 that. But the point I was going to make is 22 that this particular example illustrates from

### 202-234-4433 Neal R. Gross & Co., Inc. Page 63 1 a manufacturer's perspective how difficult it 2 would be to track by serial number various 3 pieces of equipment, because once we sell to 4 distributors, then we essentially lose control 5 of where that equipment has gone. 6 FACILITATOR BROOKMAN: Kit? 7 MS. KENNEDY: Just a question for 8 Laura and Ashley. Is it the case that the 9 Department has taken enforcement actions 10 against online internet sellers of 11 noncompliant appliances in the case -- in the 12 past?

13 FACILITATOR BROOKMAN: Laura? 14 MS. BARHYDT: This is Laura 15 Barhydt. I'm trying to think if we have done 16 anything specifically on that. We have 17 certainly brought at least one action against 18 a company that we became aware of through the 19 internet, but I don't think they were selling 20 exclusively on the internet. 21 So we do monitor what is being 22 sold online. In all honesty, most of the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 64 1 things that we have identified online as being 2 noncompliant, being sold in the U.S., it was 3 noncompliant with EPA's regulations and not 4 DOE's, and in those cases we actually notify

5 EPA. 6 MS. KENNEDY: Just perhaps a quick 7 follow-on. I mean, we hear in the context of 8 many rulemakings on appliance efficiency that 9 rules will encourage internet sale of 10 products, and yet our sense is that when push 11 comes to shove appropriate products are sold 12 on the internet dependent on size, 13 availability of installation, and so forth. 14 So it's easy to buy a toaster over the 15 internet. 16 It's possible, of course, to buy 17 furnaces over the internet, as your dentist 18 example did. But I don't think we see in the 19 context of diverse efficiency rulemakings that 20 standards really influence what happens on the 21 internet, the availability of internet 22 products.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 65 1 FACILITATOR BROOKMAN: I saw Jim 2 first. 3 MR. KIBLER: Charlie and I just 4 did a quick Craigslist search for furnace, and 5 we found several listings, including an ad 6 here to buy a 92 percent AFUE up-flow furnace 7 starting at $1,350, to be installed virtually 8 anywhere in the metro area. So it's an 9 illustration that it is happening today. 10 I'm not quite sure my neighbor 11 would want me to disclose this, but last year 12 on Christmas Day when I went to his home he 13 took me to the basement, because he was very 14 proud of his new tankless gas water heater 15 that he had bought on Craigslist and installed 16 himself. 17 So, I mean, this happens. And 18 many of our states don't even require 19 licensure of installers. So it is an 20 enforcement issue, and it needs to be 21 addressed. And we don't -- part of the 22 comments that I am going to deliver later talk

### 202-234-4433 Neal R. Gross & Co., Inc. Page 66 1 about the unintended consequences of forcing 2 folks into making bad decisions, and we need 3 to be mindful of that is all I'm saying. 4 FACILITATOR BROOKMAN: Gary

5 Fernstrom. 6 MR. FERNSTROM: I would like to go 7 back to the applicability of the regulation 8 for a moment. So if I understood the 9 statement from DOE, DOE's current regulations 10 are applicable only to the manufacturer. If 11 that's the case, you know, that works fine for 12 a national standard, but I don't think it 13 works very well at all for regional standards, 14 because the manufacturer sells to distributors 15 and has no idea, you know, where the equipment 16 goes.

17 It would seem to me that the 18 applicability needs to take a step down to the 19 distributor that probably at least knows what 20 part of the country the equipment is going 21 into -- internet sales, you know, aside from

22 that.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 67 1 FACILITATOR BROOKMAN: Okay.

2 MS. BARHYDT: I have two comments 3 that came in over the internet.

4 FACILITATOR BROOKMAN: Yes. 5 Laura, please. 6 MS. BARHYDT: So I am just reading 7 comments. One is from Ted Ferrara and it 8 says, "We are very concerned about our data 9 being available to our competitors 10 demonstrating compliance could be obtained by 11 local inspectors and state codes being

12 enforced rather than a new federal law." 13 And the other one is from Chuck 14 White with PHCC and he said, "There are a lot 15 of small contractors filing documentation for 16 every furnace or air conditioner sold that 17 will be resisted by most contractors. If 18 contractors do the right thing, they are 19 facing additional paperwork and staff to 20 comply with this." 21 FACILITATOR BROOKMAN: Okay. 22 Thank you. And we encourage those comments

### 202-234-4433 Neal R. Gross & Co., Inc. Page 68 1 and questions from the web to the extent we 2 can fit them in here. 3 Charlie Stephens. 4 MR. STEPHENS: Charlie Stephens. 5 I'm starting to get a little bit confused 6 here. Maybe DOE could help us out here and 7 define for all of us what, after the effective 8 date of the regional standards, constitutes a 9 violation of those standards. 10 FACILITATOR BROOKMAN: Do you want 11 to try that, Laura? 12 MS. BARHYDT: Could you repeat the 13 question? I was reading more comments coming 14 in from the internet. 15 MR. STEPHENS: I would like to 16 just hear what DOE believes a violation of the 17 regional standards after the effective date of 18 those standards is comprised of? How would 19 you violate those standards, and who would -- 20 and who is in a position to violate those? 21 MS. BARHYDT: The installation of 22 an air conditioner that does not meet the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 69 1 regional standard at the time that the 2 standard is effective would be a violation, 3 and that's statutory. 4 MR. STEPHENS: So it's an 5 installation violation. 6 MS. BARHYDT: It is the -- yes, it 7 is the installation of a noncompliant product.

8 Now --

9 MR. STEPHENS: In the --

10 FACILITATOR BROOKMAN: Based on 11 the compliance state.

12 MS. BARHYDT: Based on the 13 compliance -- right.

14 MR. STEPHENS: Based on the states 15 that are listed as having a separate standard.

16 MS. BARHYDT: Yes. And there was 17 -- did you have a second part of that 18 question? 19 MR. STEPHENS: No, that's fine.

20 FACILITATOR BROOKMAN: Date and

21 state. 22 MS. BARHYDT: Okay. Yes, yes,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 70 1 it's a culmination of --

2 FACILITATOR BROOKMAN: Date and

3 state.

4 MS. BARHYDT: -- date and state. 5 FACILITATOR BROOKMAN: Right. 6 MR. FERNSTROM: Gary Fernstrom. I 7 have a second part to that question. So, 8 okay, if that's the violation, against whom 9 might be the recourse? 10 MS. BARHYDT: So there is also a 11 prohibited act that was added in EISA, and it 12 is -- it basically also makes it a violation 13 for a manufacturer or a distributor to sell a 14 product, basically to sell something that is 15 at the base national standard to a contractor 16 with a known history of installing products in 17 noncompliant regions. 18 So it also creates a potential 19 violation for distributors and manufacturers 20 that is not present for the base national 21 standard. It is specific to regional

22 standards.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 71 1 MR. FERNSTROM: Okay. So could I 2 go back to my question? If the improper 3 installation is the violation, against whom 4 would be the recourse? If you are limited in 5 your recourse only to the manufacturer, the 6 manufacturer didn't install it, so it doesn't 7 seem sensible to me that you could take 8 recourse against them.

9 FACILITATOR BROOKMAN: Back to 10 Laura, again. 11 MS. BARHYDT: This is Laura. So 12 when I said that the resource was against the 13 manufacturer, we were talking about you had 14 mentioned that it would be a violation for the 15 person who sold online the furnace to the 16 dentist, and I was just clarifying that that 17 right now is actually not a violation. 18 So my comment was limited to the 19 base national -- well, the national standard 20 in place right now. The whole idea of this 21 regional -- the enforcement plan for regional 22 standards is taking an entirely different

### 202-234-4433 Neal R. Gross & Co., Inc. Page 72 1 attack.

2 MR. FERNSTROM: I'm confused. 3 FACILITATOR BROOKMAN: Okay. Jeff 4 Harris, please. Find a microphone. 5 MR. HARRIS: Thanks. Jeff Harris. 6 I don't want to pile on, Laura, but I want to 7 just follow up on Charlie's question and

8 understand whether the date of manufacture or 9 import of that furnace is or is not relevant. 10 In other words, is it only the installation 11 and the installation date, or is it also

12 whether the furnace was manufactured before or

13 after the standards took effect?

14 MS. BARHYDT: So for the base 15 national standard, it is going to be 16 manufacture date. That's the way the statute 17 is written. So the product has to be 18 manufactured after the -- well, so after the 19 effective date of the base national standard 20 products manufactured in the United States or 21 imported into the United States must meet the 22 base national standard.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 73 1 When products are imported, when 2 they are manufactured they are not -- they are 3 not set in a region yet, so there is no 4 applicable regional standard yet. It just -- 5 conceptually, it doesn't make sense to say, 6 "Well, it doesn't meet the regional standard, 7 because it came in through the port of New

8 York." 9 It is -- as far as the 10 manufacturing and importation date is 11 concerned, that is for base national 12 standards. Regional standards just have no 13 meaning until the unit is actually tied to a 14 region. 15 MR. GEE: So I think what -- 16 FACILITATOR BROOKMAN: Talbot, 17 please. 18 MR. GEE: I'm sorry. Talbot Gee. 19 I think that's what we're asking is, do you 20 interpret this, then, that DOE could start 21 issuing penalties or fines against the 22 installing contractor?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 74 1 MS. BARHYDT: Yes, we do.

2 MR. GEE: And what's the reference 3 point for that? I mean, how -- I guess I'm 4 just looking for clarity on that, because 5 you're right, the only thing that it really 6 says as far as enforcement actions is about 7 the manufacturer or importer. 8 MS. BARHYDT: So our reading of 9 the definition of "manufacturer," just like an 10 importer in normal common jargon does not 11 encompass an importer, but under the statute 12 "manufacturer" includes importers. And we 13 believe that the definition of "manufacturer," 14 which includes "assemble", can bring in, 15 within the scope, installers. 16 (Laughter.) 17 MR. GEE: I'm going to guess the 18 likelihood of meeting the 12/15 end date just 19 changed. 20 (Laughter.) 21 MR. FERNSTROM: Gary Fernstrom. 22 Well, you know, regardless of our opinion of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 75 1 that interpretation, for this to work that is 2 the way it is going to have to be, because in 3 my view really only the installer knows where 4 this went. I mean, take into account the 5 internet sale, the complicated nature by which 6 this equipment might move through market

7 channels. 8 FACILITATOR BROOKMAN: Charlie. 9 MR. McCRUDDEN: I agree. I mean, 10 we are obviously the last one holding the box 11 before it's opened. So that's -- you know, I 12 agree with your point there. But I think the 13 question about the enforcement on the 14 manufacturer versus the shipper and the 15 contractor is about essentially, where in the 16 statute is the language that brings in the 17 contractor-distributor? Or is that your 18 interpretation? Or is that something that 19 this rule will set out? 20 MS. BARHYDT: So the statutory 21 authority is in the existing statutory 22 language. And we would -- through rulemaking,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 76 1 we would be defining which parties were 2 responsible for which items. 3 MR. McCRUDDEN: So you are going

4 to -- 5 MS. BARHYDT: And that is part of

6 what we want comment on. 7 FACILITATOR BROOKMAN: So right 8 now you are thinking that -- am I interpreting 9 this correctly? That the chain from the 10 installer through the distributor to the 11 manufacturer, they could all be subject to 12 some enforcement action -- 13 MS. BARHYDT: For different 14 possible violations. 15 FACILITATOR BROOKMAN: -- in a 16 regional context.

17 MS. BARHYDT: Yes. 18 MR. McCRUDDEN: And then, just a 19 follow up, how would an enforcement action 20 occur on a contractor? Have you considered or 21 contemplated that yet? 22 MS. BARHYDT: Well, I've certainly

### 202-234-4433 Neal R. Gross & Co., Inc. Page 77 1 thought about it. But I really don't want to 2 take a position on that, because I don't want 3 people to feel locked in by kind of my thought 4 process. I would welcome comments on that.

5 FACILITATOR BROOKMAN: Talbot. 6 MR. GEE: So this concept of 7 broadening the definition of "manufacturer" to 8 fit in the enforcement action authority, I 9 mean, frankly, doesn't that have ramifications 10 well far and beyond even just this rulemaking 11 by doing that?

12 FACILITATOR BROOKMAN: Laura. 13 MS. BARHYDT: This is Laura. I 14 think what the Department is saying is that we 15 believe we have statutory authority to enforce 16 against installers. This rulemaking would 17 clarify when and how we might exercise that 18 authority. So within the scope of this 19 rulemaking, I think the only thing that we 20 have laid out in the framework is that for the 21 purposes of regional standards, we believe we 22 have authority over installers. But how that

### 202-234-4433 Neal R. Gross & Co., Inc. Page 78 1 actually gets implemented --

2 FACILITATOR BROOKMAN: So the 3 issue of legal authority is one that is 4 hanging out there, if I understand it. That 5 is, DOE is going to have to make some 6 interpretation surrounding its authority and 7 how that gets translated into a rule. But I'm 8 just wondering about, maybe we could shift the 9 conversation to our practicalities, the kind 10 of practicality of making this system work. 11 I saw Gary first. 12 MR. FERNSTROM: Gary Fernstrom. 13 Doug, just as a point of reference, the 14 California regulations apply to products 15 offered for sale in the state of California, 16 and they apply to whoever sells it. So in 17 selling an HVAC unit, the contractor is 18 usually the last seller of that product, 19 except in the case where it might be purchased 20 through the internet and the contractor just 21 has to install it. 22 FACILITATOR BROOKMAN: Okay. So

### 202-234-4433 Neal R. Gross & Co., Inc. Page 79 1 that's the tie-in. Charlie, go ahead.

2 MR. McCRUDDEN: I had one 3 followup, before we move on to the 4 practicality. You mentioned -- you talked 5 about the knowing issue, knowingly selling for 6 the manufacturer and distributors to 7 contractors. That assumes there is a list I 8 guess of violators, or is there -- I mean, and 9 I don't -- this is an awful word, but is this 10 -- would this be a blacklist of contractors 11 that would be maintained, or how would that -- 12 I mean, I'm just trying to figure out how that

13 would work. 14 MS. BARHYDT: I think it could 15 work a lot of different ways, and we are 16 interested in your comments on what would -- 17 not only how could that work, but how could 18 that even practically be applied by the 19 Department? 20 MR. McCRUDDEN: And I would just 21 add -- this is just my initial comment on that 22 -- is that there are a lot of contractors in

### 202-234-4433 Neal R. Gross & Co., Inc. Page 80 1 this industry. Well, I shouldn't say -- there 2 are contractors in this industry who do fly

3 under our radar. There are states where there 4 is no licensing, and so nobody knows who is 5 out there installing, dealer or otherwise. 6 And it will be a challenge I 7 think, because I think you may -- keeping 8 track of those out there, so -- 9 FACILITATOR BROOKMAN: Ashley, let 10 me ask you, should we talk about the 11 practicalities of this globally, or should we 12 go -- 13 MS. ARMSTRONG: I'm going to move

14 forward.

15 FACILITATOR BROOKMAN: -- move

16 forward?

17 MS. ARMSTRONG: Yes. 18 FACILITATOR BROOKMAN: It strikes

19 me that --

20 MS. ARMSTRONG: But I have a 21 couple from the web, too. 22 FACILITATOR BROOKMAN: Yes, okay.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 81 1 Just a couple of additional comments, and 2 then we'll move on. But I think the specifics 3 that are in the slides will prompt more 4 specific comments. I saw Paul first, and then 5 to Harvey. 6 MR. DOPPEL: This is from the 7 manufacturer's perspective. In past when 8 there has been a change of the standard, the 9 manufacture date allows us to install products 10 that no longer meet the new standard. 11 Now, for the case of heat pumps, 12 split or A/C, the new standard would be 14. 13 So if a manufacturer, distributor, or 14 contractor still has those efficiency 15 products, manufactured prior to the date or 16 imported prior to the date, this is -- again, 17 the new standard is 14. 18 So for those products, does this 19 become a case where we have to scrap those? 20 Or would we still be permitted to install 21 those efficiency products? 22 FACILITATOR BROOKMAN: Harvey,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 82 1 let's see if the Department wants to comment

2 here. 3 MS. ARMSTRONG: We're looking at

4 each other.

5 MS. BARHYDT: The -- 6 FACILITATOR BROOKMAN: This is 7 Laura again. 8 MS. BARHYDT: Sorry. I'll catch 9 on to that eventually. The effective date for 10 the regional standard applies to installation. 11 So the product that is installed after the 12 compliance date for the regional standard must

13 meet the standard. 14 MS. MEYERS: But heat pumps don't 15 have a regional aspect to them. 16 MS. ARMSTRONG: Right. So the -- 17 if it's a base standard, right, it's -- the 18 base standard is on the date of manufacture, 19 period. So if they don't have a regional 20 standard, then the installation date is moot. 21 FACILITATOR BROOKMAN: Okay. Now, 22 Harvey, please.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 83 1 MS. ARMSTRONG: And that was 2 Ashley.

3 FACILITATOR BROOKMAN: Yes. Thank 4 you, Ashley. 5 MR. SACHS: Harvey Sachs. One of 6 them is, in every rulemaking there are 7 transition issues, one-time issues around the 8 date of implementation of the rule. These are 9 all very important. Talbot Gee has done a 10 great deal to educate me on some of the 11 specific issues that will arise, but they are 12 a separate class of issues from the general 13 issues ongoing after the rule is implemented.

14 And I want to turn to one of 15 those, which is of great concern to all of us, 16 which is the rise -- is finding legal ways to 17 make it harder to do internet sales that will 18 lead to poor quality installation of 19 noncompliant products. 20 And my naive view is that the 21 record keeping that will be required of 22 manufacturers and distributors is actually the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 84 1 only way that I have been able to think of to 2 prevent them from being harmed by such 3 unscrupulous sellers. That if -- you are 4 liable if you have sold what then was 5 installed illegally for having provided false 6 information. 7 This I think will be a protection 8 for the legitimate business people who are 9 trying to do the right thing. 10 FACILITATOR BROOKMAN: Since both 11 manufacturers and distributors would be 12 subject to potentially an enforcement action 13 by some unscrupulous installer. 14 MR. SACHS: If they have knowingly 15 -- to use Laura's words -- sold in a way that 16 will lead to a pattern of illegal 17 installations. So I view this, again perhaps 18 naively, as being a bulwark against 19 proliferation of poor practice. 20 FACILITATOR BROOKMAN: Karen, did 21 you wish to comment? 22 MS. MEYERS: Yes, this is Karen

### 202-234-4433 Neal R. Gross & Co., Inc. Page 85 1 Meyers. Just a clarification, please. As far

2 as the enforcement of the standards and 3 records of installation, that would only apply 4 to products that have a regional aspect to

5 them. Is that correct? 6 MS. ARMSTRONG: I don't think we 7 know yet, right? I think that's what is on 8 the table as far as what records you need to 9 maintain, what might come into the Department, 10 what information. You know, we are going to 11 touch on that when we get to approaches. But 12 as far as -- it depends on how we set up who 13 is responsible for what and what 14 responsibility they need to do. 15 So, you know, one of the schemes 16 is to track serial numbers from manufacture 17 all the way to the installation, right? And 18 then, somehow someone in that scheme would 19 give that information to the Department by 20 serial number. So, obviously, that would 21 require all parties involved -- I'm not saying 22 that's an optimal approach. I'm not saying

### 202-234-4433 Neal R. Gross & Co., Inc. Page 86 1 that's the Department's position. That was 2 just a potential, you know, talking point at 3 this point. 4 FACILITATOR BROOKMAN: Charlie 5 Stephens. Oh, go ahead, Karen. 6 MS. MEYERS: Can I ask just one 7 follow-up? So like for heat pumps where it's 8 a national standard, are you saying that we 9 would have to maintain installation, so -- and 10 serial number information on products that 11 have national standards, or is this discussion 12 strictly contained to split A/C and gas

13 furnaces? 14 MS. ARMSTRONG: I mean, I think 15 for all intents and purposes it is for 16 regional standards, right? It's just 17 applicable to regional standards, although the 18 Department could, as I said earlier, if it 19 needed to, expand the information it collects 20 for the national standards if it needed to. 21 But I hear your position in that the national 22 standards should stay the way they are.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 87 1 MS. MEYERS: Okay.

2 MS. ARMSTRONG: Now --

3 FACILITATOR BROOKMAN: And I'm 4 looking at Laura, who seemed to -- Ashley said 5 it -- says it all. 6 MS. ARMSTRONG: Can I jump in here 7 real quick, then? 8 FACILITATOR BROOKMAN: We've got 9 lots of comments from the web, and I note that 10 -- let's take these comments, or questions 11 perhaps. Who wants to do it? 12 MS. ARMSTRONG: I've got two -- 13 well, I have two comments and a question up 14 here, and then Laura has a couple in her hand,

15 too. 16 So this one is from Frank 17 Schneider. He says, "A distributor sold 18 quantities of equipment which will not have 19 access to address or zip codes at the point of 20 sale. After sale, collection of information 21 is not filed." 22 Okay. So this is from Chuck White

### 202-234-4433 Neal R. Gross & Co., Inc. Page 88 1 at PHCC. He says that, "We have lots of 2 internet sales. If we could stop it now, we 3 would. Customers think what contractors do is 4 easy, but don't find out otherwise until it's

5 too late." 6 And then, here is a question from 7 Bryan Rocky. Is the burden of proof on proper 8 installation the responsibility of the selling 9 contractor or the installing contractor?

10 FACILITATOR BROOKMAN: Laura.

11 MS. BARHYDT: As far as the last 12 question, I would say that I'm a lawyer and I 13 don't actually know what the difference is 14 between those two, but we would welcome your 15 comments and thoughts on what it should be. 16 FACILITATOR BROOKMAN: Okay. 17 MS. BARHYDT: I have a question 18 here from Mark Nayes. What is the penalty for 19 violation? Who enforces it? 20 And then, sort of a question and 21 comment. If the first penalty is not 22 sufficiently strict, what stops a homeowner

### 202-234-4433 Neal R. Gross & Co., Inc. Page 89 1 from doing their own HVAC? 2 As far as the penalty for 3 violation, the statute sets a maximum penalty 4 at $200 per unit. We issued penalty guidance 5 dealing with certification violations, 6 basically saying that in most cases the 7 penalty is $20 instead of $200. 8 We have similar discretion when it 9 comes to regional standards, so at this point, 10 obviously, we don't have any regional 11 standards, and we have no enforcement plan in 12 place. And so I can't tell you exactly what 13 the penalty would be, but I can tell you that 14 the statutory maximum is $200 per unit. 15 And in terms of who enforces it, 16 the Department of Energy enforces it. 17 FACILITATOR BROOKMAN: I saw Kit 18 first. 19 MS. KENNEDY: I just wanted to 20 step back and sort of note where we are in the 21 process. This is -- we are talking about a 22 notice of data availability here that will

### 202-234-4433 Neal R. Gross & Co., Inc. Page 90 1 kick off a process that will likely take 15 2 months. So I assume the Department of Energy, 3 at this early stage, pre-proposed rule, is 4 interested in comment on all of these issues

5 -- 6 MS. BARHYDT: Absolutely. 7 MS. KENNEDY: -- legal authority, 8 who bears compliance, penalties, all of that. 9 And you'll take that into account --

10 MS. BARHYDT: Yes. 11 MS. KENNEDY: -- in fashioning a 12 proposed rule. 13 MS. BARHYDT: Right.

14 MS. KENNEDY: And then ask for

15 comment on -- 16 MS. BARHYDT: Exactly 17 MS. KENNEDY: -- that again

18 before -- 19 MS. BARHYDT: Exactly. 20 MS. KENNEDY: -- going to a final 21 rule, and there will be another public meeting 22 at that stage likely.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 91 1 MS. BARHYDT: Yes, probably.

2 FACILITATOR BROOKMAN: And let me 3 note also, in a little bit we are going to get 4 into more specifics, possible approaches that 5 the Department has laid out in this packet. 6 I saw Charlie first. 7 MR. STEPHENS: Charlie Stephens. 8 I just -- I'm making a few observations here. 9 One is it seems to me that if you're a 10 contractor or anybody in Minnesota, you know 11 what the rules are. I mean, you know, the 12 only people who really have to really pay 13 attention, as a contractor that is, or even a 14 distributor, is on the border states. 15 Now, I'm in Oregon, and I am one

16 of those -- I am on one of those border 17 states. We border California. And I have 18 only talked to a couple of contractors about 19 this so far, and I probably am going to talk 20 to a lot more before this is over. But their 21 solution was -- and they sell different 22 brands, so they're different -- in different

### 202-234-4433 Neal R. Gross & Co., Inc. Page 92 1 distribution channels. 2 They each came to the same 3 conclusion on their own. Their solution is to 4 sell California-compliant air conditioning in 5 southern Oregon, and to sell Oregon-compliant 6 furnaces into northern California. 7 Now, they -- you know, their 8 concern was, how do I demonstrate to my 9 customers and to anybody else who is 10 interested that what I have done is compliant, 11 you know, easily? You know, what do I do to 12 make sure that everybody I deal with knows 13 that I've done compliant work? 14 And it seemed to me that that 15 could be done. The FTC may help us out in 16 that regard. But on the border states it just 17 seems like that's where whatever problem there 18 is is most obvious and where most of the 19 attention is going to have to be paid. 20 And I would like to hear from 21 other people if that's a similar view that 22 they have held or if I'm just being a Pollyana

### 202-234-4433 Neal R. Gross & Co., Inc. Page 93 1 here. I mean, any waiver process 2 notwithstanding. 3 FACILITATOR BROOKMAN: I'm eager 4 for us to move on to describing these 5 approaches, but, Gary, go ahead. 6 MR. FERNSTROM: Well, I just 7 wanted to comment on the internet question 8 about whether this applies to the selling 9 contractor or the installing contractor and 10 what the difference is. The way it works in 11 California, the regulations apply to the 12 vendor, the seller of the equipment, not 13 necessarily the installing contractor. 14 Normally, the installing 15 contractor is the last seller of the equipment 16 to the customer. However, in the case of 17 internet sales, you know, that isn't 18 necessarily the case. And who knows where 19 this is going to go in the future? I mean, I 20 might go down to the, you know, local retail 21 store and buy an air conditioning compressor 22 and ask some contractor to install it.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 94 1 So who then would be responsible? 2 Whoever sold the equipment. 3 FACILITATOR BROOKMAN: Okay. 4 Should we proceed, then, with the next set of 5 slides? Let's do that. 6 MS. BARHYDT: Real quickly -- 7 FACILITATOR BROOKMAN: Yes, Laura, 8 please.

9 MS. BARHYDT: I have several other 10 comments and questions here, and I think they 11 are largely raising some of the same issues. 12 So I just want to assure everyone that we will 13 get all of these comments into the record, 14 even though I don't know that we will take the 15 time to read each and every one of them. 16 FACILITATOR BROOKMAN: Okay. And 17 I note they are laid out like playing cards in 18 front of you, for the record, and so they are 19 written down in a manner that DOE can capture

20 them.

21 MS. BARHYDT: Yes. 22 FACILITATOR BROOKMAN: Okay.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 95 1 Then, let's proceed with these. 2 MS. ARMSTRONG: Okay.

3 FACILITATOR BROOKMAN: Back to 4 Ashley.

5 MS. ARMSTRONG: So what the 6 Department did in the framework document was 7 we came up with three just potential schemes. 8 And, really, this was meant to be talking 9 points. The Department could propose part of 10 a particular scheme. It could propose 11 something wholesale. It could propose 12 something completely different. 13 At this point, it's just a talking 14 point, and we have no proposal. What we 15 wanted to do is kind of -- some of the 16 feedback we had gotten during the rulemaking, 17 and some of the feedback we had gotten in 18 conversations we had had with people that were 19 concerned about this, you know, we wanted to 20 put these ideas out to talk about. We 21 understand that there is a lot of problems, 22 and here are some ideas that -- some potential

### 202-234-4433 Neal R. Gross & Co., Inc. Page 96 1 solutions. 2 So we welcome your feedback in 3 terms of whether these are -- their 4 feasibility, their viability, what you 5 currently do in terms of the records 6 contractors or distributors or manufacturers 7 maintain. 8 So as I go through each of these 9 -- and I probably won't read all of the 10 aspects, but feel free to chime in on any 11 specific -- any specific, you know, aspects of 12 any of these. 13 So Approach 1 really is kind of an 14 overview. Basically, you are required to -- 15 manufacturers are required to certify their 16 products, similar to what they do today. And 17 then, there are requirements to inform, you 18 know, down the chain about the appropriate 19 regions are there. 20 And then, just the requirements to 21 install things. So this is basically people 22 are supposed to do what they are required to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 97 1 do. This is that approach.

2 FACILITATOR BROOKMAN: Karen. 3 MS. MEYERS: This is Karen Meyers. 4 Just -- maybe this is just a syntax issue, 5 but on the third bullet under "manufacturer," 6 be able to look up distributor by serial 7 number of installed units. I don't know what 8 the distributor has sold, and, therefore, I 9 don't know -- and I doubt they know what has 10 been installed, so as a manufacturer I could 11 not provide you serial numbers by distributor 12 of installed units. 13 MS. ARMSTRONG: Okay. 14 FACILITATOR BROOKMAN: If you ask 15 them for it, could they give it to you, or is 16 it just out of the realm of possibility? 17 MS. MEYERS: Well, you would have 18 to -- well, the distributor would have to 19 collect it from the contractor. I mean, I 20 could tell you what I sold by serial number to 21 distributor, period. 22 MS. ARMSTRONG: Okay.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 98 1 MS. MEYERS: But I could not tell 2 you, of those units, you know, which ones have 3 been installed.

4 MS. ARMSTRONG: Sure.

5 FACILITATOR BROOKMAN: So one 6 thing as we go along today, since this is at 7 the very front end of this process, not only 8 describing what is tough to do but describing 9 what is possible to do, what is practical to 10 do, in terms of making this work. 11 MS. MEYERS: Yes. This Bullet 3, 12 as written, would be impossible. 13 FACILITATOR BROOKMAN: Okay. 14 MS. MEYERS: I'll tell you what we 15 could do, but certainly we would not know 16 which of those units that we sold had been 17 installed. 18 FACILITATOR BROOKMAN: Okay.

19 MS. ARMSTRONG: Sure.

20 FACILITATOR BROOKMAN: Talbot. 21 MR. GEE: Yes, we'll just keep 22 going down the supply chain here.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 99 1 FACILITATOR BROOKMAN: Yes, yes. 2 (Laughter.) 3 MR. GEE: So, okay, now my 4 question is, your brand-new counter guy, first 5 week on the job, forgets to do whatever is 6 required to inform the installer, or forgets 7 to have them sign whatever they are supposed 8 to be signing. What does that mean? What 9 happens then? 10 MR. NEWSOME: I'm sorry. Can you 11 repeat the question? 12 (Laughter.) 13 I just -- I had a phone call and I 14 was looking -- 15 FACILITATOR BROOKMAN: Talbot, 16 please repeat the question. 17 MR. GEE: What happens if a 18 distributor employee forgets to inform the 19 installer or forget to have them sign some 20 sort of acknowledgment? 21 MR. NEWSOME: So we're talking 22 about informational disclosures between the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 100 1 entities here? 2 MR. GEE: Well, that's what it 3 says you are required to do. What happens if 4 you don't do it? 5 MR. NEWSOME: Well, that's what we 6 will talk about in the next section. But the 7 -- and like DOE said, you know, FTC is in the 8 same position here. We have not proposed 9 anything on this, and this is to get ideas 10 about this. 11 Now, under the current rules, 12 there are disclosure requirements, in addition 13 to the labeling requirements, for these types 14 of products. And so the manufacturers have to 15 label the product. The manufacturers also 16 have to provide energy information about the 17 products to the distributors. Then, the 18 distributors have to provide that to the 19 installers, and the installers have to make 20 that available to consumers that are buying 21 the product. That's what the current rule is. 22 These additional information

### 202-234-4433 Neal R. Gross & Co., Inc. Page 101 1 disclosures in order to deal with the regional 2 standards, they would presumably add 3 information that would help everyone in the 4 chain realize which products were compliant in 5 which areas. 6 If someone -- if those 7 requirements go in, the penalties are whatever

8 I assume would be the same as those that are 9 currently applied, which is, you know, if the 10 distributor does not provide information to 11 the installer like they are required to do 12 under the rule, then it would be a violation 13 and there is a civil penalty for, you know, 14 each unit that is involved. 15 But, you know, all of this is -- 16 you know, it is very early to nail down 17 exactly, you know, how this is going to work. 18 What we want to talk about today is, you 19 know, what is the content, the right content 20 for those disclosures, just ideas about that,

21 what form should that take. 22 But obviously, if we are going to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 102 1 have requirements, to make sure that everyone 2 in the chain understands what products are 3 compliant and what are not, and to make sure 4 that these are not installed in the wrong 5 areas, there will need to be some enforcement 6 mechanism, so that everybody that is passing 7 this information has a responsibility.

8 FACILITATOR BROOKMAN: It seems 9 like we are trying today to describe some 10 basic architecture that has the potential to 11 work, if we -- right? 12 MR. GEE: Right. 13 FACILITATOR BROOKMAN: In addition 14 to saying what is not going to work, if we 15 could say what is possible that could work, 16 that would be a good thing. 17 MR. GEE: But I think the 18 confusion is we talked earlier about what the 19 illegal act is, and the illegal act is 20 manufacturing a noncompliant product or 21 installing a product in the wrong region. Are 22 we now expanding that definition to informing

### 202-234-4433 Neal R. Gross & Co., Inc. Page 103 1 installers and maintaining records and 2 submitting records? I mean, are those all now 3 becoming part of this longer definition of 4 "illegal acts"? 5 MR. NEWSOME: Well, let's be 6 clear. This is Hampton again. What we have 7 been talking about in this first session are 8 the standards and how DOE is going to figure 9 out whether people are complying with the

10 standards or not. 11 My agency -- FTC -- we are 12 responsible for setting the disclosure 13 requirements, and Congress has asked us to set 14 disclosure requirements to help people, 15 everyone -- the industry members and the 16 consumers -- help them avoid installing 17 products that shouldn't be installed in 18 certain areas. 19 Those disclosure requirements are 20 the things that we have to develop. What I'm 21 saying is that there are already disclosure 22 requirements in the rules related to energy

### 202-234-4433 Neal R. Gross & Co., Inc. Page 104 1 efficiency under the EnergyGuide Program. In 2 addition to the labels, there is also -- there 3 are also requirements that energy information 4 be passed from the manufacturer to the 5 distributor to the installer to the consumer. 6 Those requirements are there now, 7 and if that information is not passed through 8 it is a violation. So there is nothing new 9 being added here in terms of enforcement, in 10 terms of violations. 11 What would be new is this 12 additional information to ensure that people 13 understand that there are regional standards 14 and that there are certain products that can't 15 be installed in certain areas. 16 So we are not talking about -- at 17 least in the labeling area, which is, you 18 know, there are different things we are 19 talking about here, but the labeling, the 20 disclosure area, and the FTC framework, I 21 don't expect we are really talking about 22 anything entirely new in terms of enforcement

### 202-234-4433 Neal R. Gross & Co., Inc. Page 105 1 or, you know, violations. So -- 2 FACILITATOR BROOKMAN: Yes, 3 please. Steve? 4 MR. PORTER: Yes, that's not 5 really a labeling -- I'm Steve Porter, 6 Johnstone Supply, represent about 128 7 independent distributors across the United

8 States. 9 Maintaining the record is not -- 10 or getting a signed signature is not a 11 labeling issue. 12 MR. NEWSOME: Yes, and that's why 13 I was a little confused by the question, 14 because the question seems to be a question 15 about labeling and disclosure. 16 In terms of information to DOE, to 17 allow them to enforce the standards, that is 18 an entirely different issue, and that is what 19 we are talking about in this session. So -- 20 MR. PORTER: Right. And that's 21 what I think Talbot's question was, was what 22 happens when a distributor doesn't get a

### 202-234-4433 Neal R. Gross & Co., Inc. Page 106 1 signed document? 2 MR. NEWSOME: Okay. Then, that is 3 a DOE question. 4 MS. BARHYDT: Okay. So --

5 MR. PORTER: Correct.

6 FACILITATOR BROOKMAN: Laura? 7 MS. BARHYDT: I think what we are 8 trying to do with the signed disclosures is to 9 actually create a paper trail to show that 10 people actually had knowledge of what it was 11 they were supposed to be doing. And, again, 12 this was an idea of something we might do to 13 create that paper trail. 14 And so I don't think I have an 15 answer to your question, because it was -- we 16 are throwing out ideas to try and generate 17 comments and ideas on how we can actually 18 create a plan by which we will be able to tell 19 where units are going. 20 FACILITATOR BROOKMAN: Yes, 21 please, Steve.

22 MR. PORTER: In reference back to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 107 1 the installed units by the manufacturer to 2 look up by distributor, we also sell multiple 3 units to contractors that don't go in for 4 immediate installation. Just so you're aware 5 that in rural areas all across the U.S. -- and6 large contractors take positions and pre7 season buys on parts and equipment -- and, 8 therefore, they may not be installed for days 9 or months or a year later. 10 FACILITATOR BROOKMAN: Thank you. 11 Talbot, I was just thinking about the 12 practicalities of your question. So let's say 13 that the installer doesn't know that there is 14 something to sign off on. When he shows back 15 up to whomever with paperwork, would that be 16 caught at that point? Not caught? What? 17 MR. GEE: Well, I think perhaps 18 the root of this is -- I mean, it was kind of 19 a wake up call this morning talking about some 20 vast expansions of liability here. And I'm 21 trying to get a sense of exactly how broad 22 that universe is of actions that expose you to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 108 1 liability. 2 So, and any of this enforcement 3 only matters as much as the -- whether you 4 like it or not, the worst actor complies or 5 not. So if you are going to incur any cost in 6 compliance, you'd better be pretty certain 7 that everybody is going to incur that cost of 8 compliance. 9 So my question is: if there is a 10 requirement here that changes a business 11 practice, what happens if you don't do it? 12 Because, I mean, when you read the statement 13 of what an illegal act is, it doesn't list 14 anything about reporting or any of -- or 15 record keeping in the statute. You know, it 16 says it is manufacturing. 17 So that's -- I'm just worried, 18 because I'm afraid we're going to make maybe 19 -- by not asking the question now, will lead 20 to the assumption that it is an okay thing and 21 it is okay liability to assume. And I'm not 22 quite so sure it is yet.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 109 1 FACILITATOR BROOKMAN: Do we have 2 additional questions on potential Approach 3 Number 1? You see it laid out there on 4 Slide 11. Okay. Yes, Charlie. On Approach 5 Number 1, yes. 6 MR. McCRUDDEN: Charlie McCrudden. 7 The question on the contractor requirements 8 -- required to maintain records and paperwork 9 about installation location, serial number -- 10 FACILITATOR BROOKMAN: Hang on 11 just a second, okay? Okay, now. 12 MR. McCRUDDEN: Okay. On the 13 requirement that a contractor is to maintain 14 records and paperwork, is that to be 15 searchable upon request? Or is it just 16 maintain records? 17 MS. ARMSTRONG: Yes. So there is 18 a couple of different ways, and I guess we are 19 open to comment. We put a couple of different 20 aspects in here. One is maintain records, 21 however that -- you know, to the extent the 22 Department ever decides to ask for them, that

### 202-234-4433 Neal R. Gross & Co., Inc. Page 110 1 a contractor or distributor or manufacturer 2 can provide them. 3 Another option would be to 4 actually maintain them and then provide them 5 in some shape or form to the Department. And 6 that would have to be -- you know, right now 7 the only -- right now for most products, 8 except motors, we only collect information 9 electronically online through our 10 certification system. So that is another 11 option. 12 These approaches were meant to be 13 options. I don't know what they currently do 14 -- what type of records do contractors 15 currently maintain? And how long do they 16 maintain them for? 17 MR. McCRUDDEN: I would say that 18 most contractors are keeping records of 19 customers, so that is going to likely include 20 installation location addresses. I would say 21 most -- in those records they are going to 22 have probably model number. I'm not so sure

### 202-234-4433 Neal R. Gross & Co., Inc. Page 111 1 they are going to have serial number or not. 2 I don't know. That may be getting too deep. 3 And my question was generated by 4 the idea that if you -- if DOE shows up and 5 wants to know where a serial number product 6 now exists, that is not going to be the file 7 name. That is -- and let's say it's paper 8 files. It is now the situation where the 9 contractor has to go through file by file by 10 hand, looking for a serial number on a form. 11 So my comment, since we are 12 generating comments here, is clarify that, 13 whether it should be searchable. But I will 14 also say that the requirement of making it 15 searchable, I don't know if there is a -- I'm 16 sure there are programs, software that our 17 members use, but maybe not all of them have 18 that. And so that may be a burden. 19 MS. ARMSTRONG: Okay. Thank you. 20 FACILITATOR BROOKMAN: Harvey

21 Sachs. 22 MR. SACHS: Harvey Sachs. I

### 202-234-4433 Neal R. Gross & Co., Inc. Page 112 1 certainly hear you, Charlie, but the reasons I 2 would like to see the data submitted -- and 3 would prefer to see the data submitted 4 electronically -- is, again, the potential to 5 mine the database and find those miscreants 6 who are systematically violating the regional 7 regulations.

8 I don't know how I can do that9 when my worst case in my mind is the fly-by10 night who is undercutting the legitimate 11 business person. And if I go back to his post 12 office box a year from now looking for the 13 records, I may have a long wait at that post 14 office box. 15 So, again, it is a question of, 16 what is the minimum burden that tilts the 17 field toward the legitimate business person?

18 End of comment. 19 FACILITATOR BROOKMAN: Okay. 20 MS. ARMSTRONG: Okay. So let's 21 talk about Approach 2. And it's similar along 22 the things we have already -- you know, it is

### 202-234-4433 Neal R. Gross & Co., Inc. Page 113 1 similar to what we already talked about in 2 some of the aspects. 3 But I guess one of the questions I 4 have -- and, Talbot, this is for you -- what 5 records do your distributors maintain? And 6 how do they maintain them? Or, yes, either

7 one. 8 MR. GEE: Well, I think it is 9 actually not too dissimilar from what Karen 10 described from the manufacturer-distributor 11 level. The distributor is going to be able to 12 tell you what models were sold to maybe a 13 contracting company. 14 MS. ARMSTRONG: Okay. 15 MR. GEE: But they are certainly 16 not going to know where that product 17 eventually ended up. And, frankly, the 18 lifetime of that information is going to be 19 rather finite, because -- just because ABC 20 Heating and Air was there in January doesn't 21 necessarily mean ABC Heating and Air is there 22 in July.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 114 1 And so, again, it -- and the level 2 of data will, again, depend on the level of 3 sophistication of the distributor. I would 4 agree that we will be having model numbers, 5 but those model numbers change very, very 6 frequently. So that's not a real reliable

7 source. 8 Serial numbers -- in many 9 instances you will have that information, but 10 not always. So it is not necessarily a 11 certainty that you will always, in those 12 instances, have serial numbers. 13 MS. ARMSTRONG: Okay. So I guess 14 -- this is a question for everyone. If the 15 Department -- this is completely theoretical, 16 but if the Department got a complaint and 17 said, you know, "Unit number at address XYZ is 18 noncompliant with the regional standards," and 19 the Department wanted to track that all the 20 way back, how would it do that? What is a 21 feasible scheme that it would do? Or is that 22 just infeasible?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 115 1 FACILITATOR BROOKMAN: Talbot. 2 MR. GEE: Frankly, I was going to 3 ask you guys that question. Well, and I'm 4 serious, I'm not trying to be a wiseacre about 5 it. But literally, what was the thought 6 process that you would know -- would you be 7 working from the top down or bottom up? 8 In other words, would you be 9 thinking that you are going to have this 10 database that is going to show you all of the 11 80 percent furnaces and you are going to try 12 to see where -- make sure those 80 percenters 13 didn't go anywhere in the north? Are you 14 going to work it that way? That's one 15 question. 16 The other one is, is it more a 17 case of you think you might get like a whistle 18 blow and you want to try to work the other way 19 through the channel? I have no recommendation 20 on how you do that. I'm curious how you would 21 -- this is going to be a lot of data. 22 MS. ARMSTRONG: Right.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 116 1 MR. GEE: And, frankly, we have 2 had California consider this, and CEC even 3 acknowledged this is probably a little more 4 data than they might be able to handle. So I 5 don't know how you actually use this to 6 enforce anything. 7 MS. ARMSTRONG: Right. So let's 8 talk about what we do now, right? So now we 9 collect data to -- and it's much simpler for 10 the base products, but we just collect data on 11 our efficiencies, we check all the data that 12 comes in for compliance. So we do that from 13 the top -- as you were saying, top up. 14 And then, we also get complaints 15 where we -- we get complaints that, you know, 16 Model ABC is potentially noncompliant. So 17 that starts with the investigation from the 18 bottom up. We do it both ways now. 19 So we check from the certification 20 for compliance, and then we investigate from 21 the bottom up. So I don't know if that would 22 translate into regional -- and I think that's

### 202-234-4433 Neal R. Gross & Co., Inc. Page 117 1 what a lot of our questions and some ideas -- 2 how that would translate. So we are open at 3 this point. 4 MR. GEE: So of course a liability 5 concern that of course we, as distributors, 6 have -- and, you know, Steve may want to speak 7 on this, who runs large distribution centers 8 -- you could find a whole boatload of 80 9 percenters that got shipped to a northern 10 region. But that's just because that is where 11 the CEC is. 12 So, you know, does that trigger an 13 enforcement action at that point in time? And 14 then, how does -- you know, what is his CYA, 15 frankly, for making sure that those didn't all 16 stay in that northern region? 17 MS. ARMSTRONG: Right. And I 18 think that's part of our -- part of what we 19 are trying to flesh out now. In other words, 20 what kind of records are viable to maintain, 21 to basically show that you are doing the right 22 thing, you have done the right thing, that you

### 202-234-4433 Neal R. Gross & Co., Inc. Page 118 1 are compliant with the regs? In case of the 2 point of an investigation. 3 So both -- all the entities 4 involved understand what they have to do and 5 the Department can actually, if it needs to 6 investigate -- hopefully that won't ever 7 happen. But if it does, that, you know, it 8 can get records that shows who might be doing 9 the wrong thing.

10 FACILITATOR BROOKMAN: Paul. 11 MR. DOPPEL: Yes, Paul Doppel, 12 Mitsubishi. I think just to put some numbers 13 on this, if you look at what is generally 14 released, condensers, you know, you are 15 looking at like three and a half, four million 16 furnaces, maybe up to two million. And, you 17 know, that is the amount of data that would

18 have to be tracked.

19 FACILITATOR BROOKMAN: That's 20 annually? 21 MR. DOPPEL: Annually. 22 MR. GEE: And so let's go the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 119 1 other route in the scenario we're playing 2 here. You get a call from somebody saying, 3 "Look, ABC Heating and Air I think just put an 4 80 in Minneapolis. He just installed an 80 in 5 Minneapolis." 6 How would you use the data to act 7 on that call? Because I don't know how you

8 would use the data to act on that call.

9 MS. ARMSTRONG: I'm not sure. So 10 that's assuming that we have a full line of -- 11 so if we've collected serial number from the 12 point of manufacture all the way to the point 13 of installation. 14 MR. GEE: But you -- in that 15 instance, you have no serial number reference 16 point to start with. 17 MS. ARMSTRONG: For the complaint? 18 We would have location, no? Or we don't 19 know? You're just asking -- so if the 20 complaint comes in generally that contractor 21 -- everything Contractor or Installer ABC is 22 installing, you know, this is more for Laura

### 202-234-4433 Neal R. Gross & Co., Inc. Page 120 1 to speak, but I think we'd start asking 2 questions which -- starting at the contractor 3 level, right? 4 And then, if the contractor says, 5 "Well, such and such distributor sold me all 6 these," you know, then we might start asking 7 more questions.

8 Does that make sense? 9 MR. GEE: That's reassuring. 10 (Laughter.) 11 MS. ARMSTRONG: But we're trying 12 to -- we're trying to understand -- and for 13 you guys to understand -- what information is 14 viable, not necessarily that needs to be sent 15 in -- I mean, that is an option -- but what 16 information is viable, or do you currently 17 keep now, that if we do start asking questions 18 are easily answered? 19 MR. GEE: I guess when I take that 20 scenario, though, wouldn't the next logical 21 question be you go to ABC and -- 22 MS. ARMSTRONG: That's why I

### 202-234-4433 Neal R. Gross & Co., Inc. Page 121 1 started with that. 2 MR. GEE: Right.

3 MS. ARMSTRONG: I started there. 4 MR. GEE: But then, frankly, at 5 that point, what else do you need anybody 6 else's data for? Either they installed an 80 7 in Minneapolis or they didn't.

8 MS. ARMSTRONG: I understand. 9 FACILITATOR BROOKMAN: Go ahead, 10 Harvey. 11 MR. SACHS: Harvey Sachs. I am 12 certainly learning a lot this morning and 13 appreciate that, but I think we need to 14 separate a couple of different questions. One 15 of them is, what data is required? And the 16 other is, what is done with the data? And 17 then, yet a third is, who is liable? 18 And if I envision this cloud of 19 data and think about what companies in 20 marketing do about their knowledge of me 21 today, I would be looking at the database for 22 patterns. Am I seeing an awful lot of 80s

### 202-234-4433 Neal R. Gross & Co., Inc. Page 122 1 shipped to a zip code in Cleveland or 2 Minneapolis? 3 Am I looking -- I am looking for 4 patterns of that type, and you can think of a 5 lot of different ones. And those become the 6 triggers rather than looking installation by 7 installation. 8 I think that Talbot has raised 9 another important resource, which is 10 information that comes over the threshold 11 about potential suspect installations from 12 individuals, whether they are contractors who 13 have come in to clean up the mess by 14 somebody's DIY installation, or whatever the 15 source is. 16 And, again, I would expect DOE to 17 convert these to electronic information, and 18 at some trigger that, gee, I'm getting -- 19 getting notes on a particular contractor, or 20 whatever, it would become a matter of 21 interest. But I don't think anyone is 22 thinking about this as combat-booted DOE

### 202-234-4433 Neal R. Gross & Co., Inc. Page 123 1 agents walking out to every installation 2 behind the contractor.

3 FACILITATOR BROOKMAN: Let's hear 4 from Frank, and then to Dan. 5 MR. STANONIK: Frank Stanonik with 6 AHRI. Something Paul said, and then something 7 Ashley said, triggered a thought here. And 8 basically, the question I think Ashley said 9 was, "Well, what do we need to track?" 10 And I'm going to use furnace as an 11 example, actually because, as Karim said, we 12 kind of think we ought to focus on furnaces 13 first, because that's the immediate effective 14 date. And, in fact, maybe -- I hate to say it 15 -- we can maybe use that as a test learning 16 experience to tackle the much tougher issue of 17 what you're going to do with split systems. 18 But anyhow, the reason I'm up here 19 is consider this, okay, the only violation 20 relative to furnaces that will exist when the 21 regional standards become effective is the 22 installation of a lower than 90 percent

### 202-234-4433 Neal R. Gross & Co., Inc. Page 124 1 furnace in the north. Okay? The only 2 information, theoretically, you really need is 3 information on 80 percent furnaces. You don't 4 -- any 90 percent AFUE furnace or above, okay, 5 can be sold, installed anywhere in the United

6 States. You don't need to track those 7 products. 8 The only issue that regional 9 standards present is the tracking of the 10 "noncompliant" in the north. 11 FACILITATOR BROOKMAN: Okay. 12 Thanks, Frank. Dan. 13 MR. ARNOLD: Yes, my question or 14 my comment will just kind of follow Frank's 15 train of thought there. I just want everybody 16 to be sensitive to the burdens. Again, it has 17 been mentioned, so maybe I'm piling on here, 18 but of collecting data. 19 There has got to be a solution 20 here somewhere, but, you know, our industry 21 has submitted mountains of data to various 22 agencies and states -- and California comes to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 125 1 mind -- over the years at a cost of hundreds 2 of thousands of dollars to our business, and I 3 would sort of challenge anybody to prove that 4 that saved a BTU of energy at the end of the 5 day, because the data goes in the hole and 6 what it's used for we don't know. You know,

7 the data should be useful to the extent that 8 it justifies the cost of us collecting it and 9 providing it. 10 So, again, we understand we are 11 here to find an enforcement solution, but to 12 send data into a black hole somewhere that 13 really doesn't add value is a burden to our 14 business that, you know, we already have 15 enough of. 16 FACILITATOR BROOKMAN: Okay. We 17 have been at this for almost two hours now. 18 I'm going to suggest we take a break. We have 19 covered DOE's possible or potential Approach 1 20 and 2. There is one more to go. We have had 21 a good starting point conversation. I'm sure 22 we will get further as the day goes on.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 126 1 It is now -- let's try and resume 2 at 10 minutes after 11:00. And the agenda 3 reflects that we are supposed to break today 4 at 12:30. It is conceivable we might go a 5 little longer, so be prepared for that if 6 that's what it turns out to be. 7 Wear your badges inside the 8 Forrestal Building. There are restrooms on 9 both ends of the hall. There is a coffee shop 10 directly below us, if you take the elevator 11 shaft down to the ground floor. So go quickly 12 if you are going for coffee. 13 We will resume at 10 minutes after 14 11:00, and thanks for a good start. 15 (Whereupon, the proceedings in the foregoing

16 matter went off the record at

17 10:54 a.m. and went back on the 18 record at 11:11 a.m.) 19 FACILITATOR BROOKMAN: Okay. 20 Let's start. First and foremost, I think all 21 of you received -- Brenda handed out a copy of 22 the photocopies of the business cards. If you

### 202-234-4433 Neal R. Gross & Co., Inc. Page 127 1 didn't get one, they are available at the 2 registration table. 3 And, secondly, as a way of 4 resuming, Laura and Ashley both have been 5 receiving from Simone, who has been managing 6 the webinar portion, questions coming from 7 those listening online, and so we are going to 8 just listen to Laura now. She is going to

9 read some of these. 10 Perhaps -- I guess there are 11 dozens of questions. Maybe we will have a 12 sampling of them here, not a complete listing.

13 Go ahead. 14 MS. BARHYDT: Some are questions 15 and some are comments. And I think it might 16 be useful if some of the comments trigger 17 additional discussion -- we would certainly 18 appreciate that -- but maybe if I say 19 something that you want to comment on, if you 20 can hold that and then we will just take

21 comments at the end. 22 Frank Schneider says, "Equipment

### 202-234-4433 Neal R. Gross & Co., Inc. Page 128 1 sales can be tracked the same way as product 2 safety recalls are tracked -- by brand and 3 serial number beginning with the manufacturer 4 to the distributor to the contractor." 5 Let's see. In response to a 6 comment from Harvey, Bryan Rocky says, 7 "Shipments and tracking patterns do not work 8 well if the waiver process is allowed, and 9 some additional reference to waivers would 10 have to be included." 11 Somebody else said that, 12 basically, they don't think that we can track 13 the data if we keep talking about regional 14 standards and tracking is impossible. If an 15 80 percent furnace is installed in the north, 16 the only way it can be detected is if another 17 company comes out to service the unit. At 18 that point, what happens to the consumer? Do 19 you condemn the furnace and they are without 20 heat? Do you force the consumer to purchase 21 the more expensive unit? 22 That is something I want to be

### 202-234-4433 Neal R. Gross & Co., Inc. Page 129 1 very clear about. The Department does not 2 enforce against the consumers, ever. The 3 consumer, if they purchase a noncompliant 4 product, that is an issue we take up with the 5 -- in this case it would be the installer. In 6 other situations, it is the -- we take it up 7 with the manufacturer. It is not something 8 that the consumer is ever liable for, and we 9 don't require them to rip out their furnace 10 that they just purchased. 11 We got another comment from Louis 12 Marrongelli -- and I apologize, I probably 13 really messed up your name -- regarding record 14 keeping. "I believe the U.S. Consumer Product 15 Safety Commission requires HVAC contractors to 16 record and keep on file model and serial 17 numbers of equipment they install and where 18 they install them." 19 The main purpose is locating 20 equipment after a recall has been issued, with 21 the ability to locate this equipment and 22 address the recall. I believe the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 130 1 distributors have the same requirement in 2 regards to where they sold the equipment, and 3 so that is something I would definitely 4 appreciate additional comment on. 5 Let's see. Jim Vershaw suggests 6 that rather than each time there is an 7 exchange why not have a one-time signature in 8 order to do business with the distributor. 9 Mark Nayes says, "As a contractor, 10 we keep records of model and serial numbers 11 for all customers from 1984 until today on a 12 computer system. We cannot buy anything from 13 a distributor without signing for it. A $200 14 fine is about the same as the permit fee 15 application. It is a very light slap on the 16 wrist." 17 Chuck White from PHCC comments 18 that, "Some contractors do track serial 19 numbers, but others don't. The job records 20 are saved by customer, not equipment numbers. 21 Some records are kept for a long time, others 22 keep three years, some keep minimal records.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 131 1 And contractors would be very reluctant to 2 share all of that data with the local

3 wholesaler." 4 Mark Nayes also asked, "Will there 5 be a whistle blowing reward as there is with 6 releasing refrigerant?" That is something 7 that I certainly had not considered, so we 8 would welcome comments on that idea. 9 Todd Ferrara with Standard Heating 10 and A/C says, "Manufacturers and distributors 11 have recalls and rebates that require 12 contractors to provide them serial numbers and 13 installed addresses. This is why they can and 14 should be held responsible. They, or at least 15 some, already have the infrastructure to pass 16 this information on." 17 Glen Dowding says, "What we are 18 discussing is what EPA is requiring for 19 Version 3.0. I don't think the information 20 about serial numbers is that big of a deal. 21 Version 3.0 also requires readings of 22 equipment to ensure proper installation."

### 202-234-4433 Neal R. Gross & Co., Inc. Page 132 1 Let's see. Who is this? Karen 2 Oliver suggests that it is the responsibility 3 of the contractor to abide by state statutes 4 to permit every installation, including 5 component installation. Enforcement occurs 6 from the local building department, who then 7 can refer DOE repeat offenders. And I'm 8 paraphrasing some of these. 9 Todd Ferrara says, "If the 10 manufacturer and distributor were also fined 11 as a result of a violation, then as a 12 contractor I can better accept the burden of 13 enforcement. However, placing this on a

14 contractor or even a homeowner should be the 15 last and lowest priority." And then he asks, 16 "What if the contractor is unknown? What if 17 jobs are installed anonymously? This is the 18 reality of the contractor side of work, and I 19 would be interested in knowing more about

20 that." 21 Let's see. And Chuck White from 22 PHCC comments that, "As it applies to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 133 1 furnaces, you only need to track sub 90 2 percent furnaces. Higher efficiency would be 3 approved everywhere." I think we have -- I 4 think that issue has come up previously. 5 Karen Oliver comments that 6 recourse has to be against the end user, and, 7 again, says that local codes and energy code 8 will ensure compliance. If a system or 9 component is installed without a permit, the 10 end user is noncompliant. 11 William Neely asks, "What do you 12 do with homeowners that are lower income and 13 cannot afford to pay for higher efficiency 14 equipment? Tell them to go without heat or 15 will there be government financial help to

16 meet the new code?" 17 And that's the last question. 18 FACILITATOR BROOKMAN: Wow. Okay, 19 good. Thanks for that, Laura. 20 Those are now in the record -- you 21 received many questions. Did you read all of

22 them?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 134 1 MS. BARHYDT: No.

2 FACILITATOR BROOKMAN: Yes.

3 MS. BARHYDT: There were more. 4 FACILITATOR BROOKMAN: So maybe -- 5 is there something you can say that you'll do 6 with those questions? 7 MS. BARHYDT: Yes. We will take 8 all of these, and we will add them to the 9 transcript. And that way it will all be on 10 the record and put into the docket. 11 FACILITATOR BROOKMAN: Excellent, 12 okay. 13 MS. ARMSTRONG: And the people on 14 the webinar want to know when the transcript 15 will be available. It's usually available 16 online on the DOE website certification and 17 enforcement page where you found the NODA and 18 framework document. Give us a week or two 19 after the meeting, and it should be posted up

20 there. 21 FACILITATOR BROOKMAN: Okay. So 22 then, I am hopeful that in the remaining time

### 202-234-4433 Neal R. Gross & Co., Inc. Page 135 1 we have together today that, in addition to 2 reviewing the final slides that are here, 3 everybody in the room can be thinking towards 4 how practically to make a system like this

5 work. 6 It seems that most of you, perhaps 7 all of you, have an interest in helping the 8 Department of Energy figure out a way to 9 construct a system that both works and doesn't 10 put too much burden on all of you. So let's 11 see if we can zero in on that. 12 Yes, please, Talbot.

13 MR. GEE: Talbot from HARDI. To 14 kick us off on that point, we have concerns of 15 this premise that we should kind of separate 16 consideration for the furnaces from the 17 central air conditioners and heat pumps, as we 18 get into the more details of how -- any type 19 of reporting, because frankly, Frank was 20 right, the harder part is certainly the 21 cooling equipment. 22 And so just because maybe some

### 202-234-4433 Neal R. Gross & Co., Inc. Page 136 1 theory could be thought up that is not too 2 hard for the furnaces, it just -- that just 3 kicks the problem down the road. I think this 4 has to be looked at holistically, because, I 5 mean, the fact is you are going to be talking 6 about 13 SEER condensing units that could be 7 compliant anywhere in the country, depending

8 on a lot of other factors. 9 So we can't ignore that when we 10 are thinking about this, if there were 11 reporting what it would look like.

12 FACILITATOR BROOKMAN: I recall 13 the origin of that comment was surrounding the 14 practicality of the implementation date. 15 MR. GEE: I mean, to be honest with you, 16 the enforcement is where the teeth are. And 17 to think that, you know, you can solve half 18 the problem now and then you are just going to 19 go back and tackle it again -- 20 FACILITATOR BROOKMAN: Okay. 21 MR. GEE: -- because you then end 22 up with -- you end up with a patchwork of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 137 1 enforcement strategies, too, and that just 2 makes it even worse. 3 FACILITATOR BROOKMAN: Okay.

4 Thanks for that comment. 5 So then, do you want to proceed 6 with the next slide --

7 MS. ARMSTRONG: Yes.

8 FACILITATOR BROOKMAN: -- and then 9 we'll put on our thinking caps here. 10 MS. ARMSTRONG: I'm actually going 11 to go -- we have touched on a bunch of -- 12 already the possible approaches, and the 13 different ideas that the Department threw out 14 there just to get some comments on. 15 So I'm going to move to some of 16 the questions that are in the framework 17 document that we are specifically seeking 18 comment on. So one of those is we were asking 19 comments on the data submissions, and we have 20 talked about this a little bit. 21 But the existing certification 22 requirements that currently reside with the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 138 1 manufacturers, is there any alterations that 2 people can think of that need to be made to 3 those to accommodate regional standards? And 4 we talked a little bit about that earlier, 5 whether it's, you know, certifying that your 6 equipment applies to an applicable region, or 7 a national standard, or whatever it is. 8 But specifically, you know, when 9 it comes to -- for central air conditioners, 10 you know, and independent coil manufacturers, 11 and how they might certify equipment, 12 especially in regional standards, you know, we 13 are open to feedback on that issue. 14 FACILITATOR BROOKMAN: Charlie. 15 MR. McCRUDDEN: Almost a point of 16 order. Did we skip Approach 3? 17 FACILITATOR BROOKMAN: We did. 18 MS. ARMSTRONG: Well, so I skipped 19 a slide. I thought we went through it all, 20 but do you want to talk about Approach 3? We 21 can go back. 22 MR. GEE: We can eliminate 3 if

### 202-234-4433 Neal R. Gross & Co., Inc. Page 139 1 you want. 2 MS. ARMSTRONG: Okay. Well, so is 3 that -- that is a valid comment. Thank you. 4 (Laughter.)

5 FACILITATOR BROOKMAN: Well -- 6 MS. ARMSTRONG: You know, it is 7 kind of -- basically, Approach 3 is everyone 8 is required to track all the way from the 9 point of manufacture to the point of 10 installation, by serial number, every unit, 11 and the Department will collect that 12 information. 13 FACILITATOR BROOKMAN: And if you 14 look at the side by side that is provided in 15 the framework document, in this thing, which 16 is on about -- it's page 6 -- you can see how, 17 from Approach 1 through Approach 3, the 18 requirements kind of ramp up.

19 Karen? 20 MS. MEYERS: Karen Meyers. I just 21 have one question about all of these 22 approaches. You know, there is always one

### 202-234-4433 Neal R. Gross & Co., Inc. Page 140 1 bullet that says, like manufacturers are 2 required to inform distributors or 3 distributors are required to inform

4 contractors. 5 And my question is, does DOE have 6 any responsibility for letting contractors, 7 distributors, and manufacturers really know -- 8 you know, informing them and educating them 9 about this process beyond, you know, what is 10 printed in the Federal Register? Because

11 that's --

12 MS. ARMSTRONG: Sure. 13 MS. MEYERS: -- not, you know, 14 daily reading for most people. So I was just

15 -- 16 (Laughter.) 17 -- curious what you guys might do, 18 and if there is going to be an educational 19 process or -- 20 MS. ARMSTRONG: I mean, I think, 21 you know, we are happy -- we are open to, you 22 know, doing webinars, doing presentations,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 141 1 going to annual meetings, whatever it may be. 2 You know, we are happy to present anything 3 that comes out of this to help better inform, 4 to answer questions, as we are doing right now 5 with the CC&E program.

6 Laura and I have done a half dozen 7 to a dozen webinars for all different covered 8 products, and we are happy to continue doing 9 that if you find that helpful. 10 FACILITATOR BROOKMAN: Yes, Paul. 11 MR. DOPPEL: Paul Doppel with 12 Mitsubishi. For the manufacturers, each of 13 the approaches is exactly the same. So if we 14 comply with those three, do we have any other 15 potential liability issues? 16 MS. ARMSTRONG: If you comply with 17 the regulations, then you're good. Is that 18 what you're asking? I mean, to the extent -- 19 these are just ideas, right? And the ideas 20 for manufacturers are that you guys already 21 certify equipment. 22 What you certify might change

### 202-234-4433 Neal R. Gross & Co., Inc. Page 142 1 slightly depending on regional standards and 2 the feedback we get, but I guess, you know, it 3 depends on what we come out with. As long as 4 you comply with what we come out with, yes, 5 you're fine.

6 FACILITATOR BROOKMAN: You're 7 referring to these three bullets.

8 MR. DOPPEL: The three bullets

9 here. 10 FACILITATOR BROOKMAN: Yes, at the 11 top of the page on each of the three 12 approaches.

13 MR. DOPPEL: Yes. 14 MS. ARMSTRONG: I mean, it would 15 be, you know, what comes out of this rule in 16 terms of a proposal, and then, you know, 17 whatever changes -- whatever comes out of this 18 rule that gets adopted. The requirements 19 would be specific to a manufacturer and 20 importer, or a distributor, or an installer, 21 and they would be laid out in such a manner. 22 MR. DOPPEL: Okay. Then, we

### 202-234-4433 Neal R. Gross & Co., Inc. Page 143 1 would -- 2 MS. ARMSTRONG: So you would know. 3 MR. DOPPEL: Well, the one point 4 -- and Karen brought this up earlier is that 5 -- the issue of look up distributors by serial 6 number of installed units. That is an 7 impracticality. 8 MS. ARMSTRONG: Right. We got 9 that, too. 10 MR. DOPPEL: Okay. 11 MS. ARMSTRONG: Yes, and these are 12 just ideas at that point, so that feedback is 13 very helpful. 14 FACILITATOR BROOKMAN: Yes,

15 Talbot. 16 MR. GEE: There are instances 17 where the same company could be all three of 18 those. Are they then subject to a $600 per 19 unit violation? 20 (Laughter.)

21 MS. ARMSTRONG: I don't know. We 22 haven't thought about it. But that is a fair

### 202-234-4433 Neal R. Gross & Co., Inc. Page 144 1 point. 2 FACILITATOR BROOKMAN: Please say 3 your name. 4 MR. BUUCK: Dan Buuck, NAHB. I 5 have a question for the three groups involved 6 in the supply chain. If you look at the 7 Approach Number 3, if doing all of that data 8 collection, would that affect the price of the 9 appliances? And if so, just any comments on

10 that.

11 FACILITATOR BROOKMAN: Steve? 12 MR. PORTER: I would be happy to 13 comment about that. The cost on any of these 14 data collection, as we do on warranty, we 15 usually figure that in distribution that is 16 going to cost us around two percentage points. 17 If you put two percentage points 18 on a product that is already -- our margin 19 range is anywhere from eight to the low teens, 20 it puts a significant burden in cost to the 21 industry, and we estimate that cost based on 22 product in the field at initial startup of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 145 1 this program would be in the range of over 2 $200 million to the industry, just on the 3 distribution side, and that's only calculated 4 on the equipment, not on all the supporting 5 products.

6 FACILITATOR BROOKMAN: That's the 7 additional cost that distributors would bear 8 record keeping, labeling, all aspects of that 9 compliance.

10 MR. PORTER: That's correct. And 11 that's calculated on the low side. 12 FACILITATOR BROOKMAN: Do you want 13 a followup question, because -- 14 MS. ARMSTRONG: No. I mean, I 15 guess I'm trying to understand. It seems like 16 for the number you just calculated, I am 17 trying to understand what exactly that 18 entails, and is it safe to say that that is -- 19 you know, in totality, getting information 20 from the manufacturers and/or installation 21 locations and/or by serial number, and then 22 submitting all that and maintaining all of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 146 1 that infrastructure, building all of that 2 infrastructure electronically, that is what I 3 am trying to understand. 4 MR. PORTER: Yes, that would just 5 be collection, just like we do on warranty 6 right now if we were to put additional 7 information we would have to maintain and keep 8 on file just on our dealing with the 9 contractor side. 10 MS. ARMSTRONG: Okay. 11 MR. PORTER: So since you brought 12 it up -- all of that -- the burden would be 13 much higher. 14 MS. ARMSTRONG: Okay. 15 FACILITATOR BROOKMAN: Karen, did 16 you want to comment? 17 MS. MEYERS: Just making sure we 18 can have this discussion in this room about 19 price and margin.

20 FACILITATOR BROOKMAN: Thanks for 21 bringing that up. Dan?

22 MR. BUUCK: Excuse me. What was

### 202-234-4433 Neal R. Gross & Co., Inc. Page 147 1 that comment? 2 MS. MEYERS: Just concerned, since 3 we have competitors in this room, whether we 4 can actually even address this question in 5 this room. We have a lot of attorneys in 6 here. No one is raising their hand, so I 7 guess we're okay. But I know that if it 8 continues, I will have to leave the meeting. 9 I am not allowed to stay in --

10 FACILITATOR BROOKMAN: Thanks for 11 that clarification. Dan. 12 MR. BUUCK: Thank you. The point 13 I wanted to make was the cost-benefit analysis 14 that was done on these -- going to a higher 15 efficiency furnace was based on prices from 16 '05 and '09 and not with the possible cost of 17 the data collection and labeling, and what 18 not. And our association has definite 19 concerns about the Approach Number 3. 20 Thank you. 21 FACILITATOR BROOKMAN: And, Dan, 22 the Department would really like to see any

### 202-234-4433 Neal R. Gross & Co., Inc. Page 148 1 data your association can provide. 2 MR. BUUCK: Okay. Thank you. 3 FACILITATOR BROOKMAN: Yes, thank 4 you. 5 Okay. Ashley has laid out 6 Approach 3, and then she was going to her 7 questions, which you see up there on the

8 screen.

9 MS. ARMSTRONG: Yes. So I 10 adjusted this a little bit, but I don't know 11 if anyone has any specific comments or ideas 12 about, you know, the certification 13 requirements -- that is, the information the 14 Department would actually collect -- what 15 should be collected, from whom. Anyone?

16 FACILITATOR BROOKMAN: Talbot? 17 MR. GEE: I will just state for 18 the record that I don't think we agree 19 necessarily with the premise that you -- that 20 all of this information is still inherently 21 required to be -- for enforcement. So I'll 22 just leave it at that.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 149 1 FACILITATOR BROOKMAN: Well, I 2 guess -- 3 MS. ARMSTRONG: Yes. Talbot, back 4 to you -- what do you think that -- what do 5 you think you would like to either maintain or 6 -- what information do you think is necessary 7 for the Department to enforce these? 8 MR. GEE: Well, you know, the best 9 case scenario you might see, I mean, the 10 manufacturers are already giving you at least 11 what the products available on the market are. 12 So you already have that. But, you know, I 13 have not heard anything from DOE staff saying 14 that you plan to set up some big task force of 15 all these people who are going to comb through 16 all of this data and come up with these 17 intricate strategies of how to slice and dice 18 it. 19 I am hoping you are not going to 20 outsource it to Harvey. I know he is 21 volunteering to do it. 22 (Laughter.)

### 202-234-4433 Neal R. Gross & Co., Inc. Page 150 1 But so until -- I guess for me I 2 would like to hear that that is your plan, to 3 have this infrastructure, and then we are 4 talking about how you use the data and how 5 we'd get it to you. I'm not necessarily 6 thinking it is such a good idea that we think 7 of all these ways to give you all this 8 information to where there is no 9 infrastructure to do anything with it anyway. 10 That is a lot of exposure without a lot of 11 benefit. 12 MS. ARMSTRONG: Okay. So let me 13 explain what we do now, and I realize that 14 would have to change. But now what we do when 15 we collect information, either from 16 manufacturers or third party representatives, 17 it is submitted electronically. All of it is 18 checked, and it is not -- all of it is checked 19 for compliance purposes, and then it is housed 20 in a database. 21 So the Department can, at any 22 time, look up. It will be going online next

### 202-234-4433 Neal R. Gross & Co., Inc. Page 151 1 year, end of this year. You know, and it will 2 be -- that information which is public will be 3 going online. But right now the Department 4 actually does do stuff with all the data, the 5 certification data it collects. 6 And I don't know if something 7 viable is -- something like that is viable for 8 regional standards or, you know, expanding to 9 that information, but that is kind of the 10 model we use right now.

11 FACILITATOR BROOKMAN: So DOE has 12 provided, for that database, its own 13 infrastructure, and it fits the data into that 14 infrastructure.

15 MS. ARMSTRONG: Yes. 16 MR. CYMBALSKY: We have already 17 collected over in the millions of records that

18 we have checked. So we can --

19 FACILITATOR BROOKMAN: Several 20 people wish to speak. I'm going to go to 21 Karim first, and then to Paul. 22 DR. AMRANE: Karim Amrane, AHRI.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 152 1 I guess we -- as far as the manufacturers, we 2 don't see why you should be changing what you 3 are already doing. So I think it will apply 4 as well for regional standards. So -- 5 MS. ARMSTRONG: Okay. 6 DR. AMRANE: -- we are fine with 7 the requirement.

8 FACILITATOR BROOKMAN: Paul.

9 MR. DOPPEL: From the 10 manufacturer's perspective, I mean, to me 11 providing all of this information on where 12 things are installed is almost meaningless as 13 a -- I cannot see any manufacturer sending 14 information to DOE that would be of an 15 installation that was noncompliant. I'm not 16 saying that manufacturers would withhold. I'm 17 saying that they would check that out ahead of 18 time. 19 And so, you know, it just -- it 20 creates a situation where you are putting -- 21 the other part of this is the first six months 22 after this goes into effect you are going to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 153 1 have so many contractors and distributors in 2 bad situations because they are going to have 3 inventories of products that overnight become 4 noncompliant. And what are they going to do 5 with all of that? 6 So that's the two situations. You 7 know, why would someone report something 8 that's a bad situation? You know, they would 9 check that out. I mean, you're reporting 10 thousands and thousands of good situations. 11 If there was something bad, I think they would

12 -- the manufacturers would take that and 13 report it individually. So maybe it should be 14 done on an exception basis rather than 15 reporting the thousands and thousands and 16 thousands of good installations. 17 FACILITATOR BROOKMAN: Okay. 18 Harvey. 19 MR. SACHS: Harvey Sachs. I very 20 much appreciate Talbot volunteering our 21 organization to generate this database. We 22 are not in that business. This is most to be

### 202-234-4433 Neal R. Gross & Co., Inc. Page 154 1 -- this is not part of our work. We are not 2 soliciting, nor would we accept that task. 3 Thank you. 4 FACILITATOR BROOKMAN: Thank you.

5 Laura has a comment. 6 MR. SACHS: I'm flattered anyhow. 7 MS. BARHYDT: I actually have a 8 followup question to Paul's comment that isn't 9 -- isn't that an argument in favor of 10 requiring complete tracking of the serial 11 number from manufacturer to the end, so that 12 then the Department can identify all of the 13 serial numbers that vaporized, and then we can 14 work from there to figure out where those

15 went? 16 MR. DOPPEL: Okay. What you are 17 presuming, then, is that we would send in all

18 of the -- we wouldn't have -- as a 19 manufacturer, we wouldn't have the information 20 until there was an installation. Okay. And 21 if we got that information back. So that is 22 one thing.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 155 1 MS. BARHYDT: Well, so I'm 2 thinking this could work many different ways, 3 and so one argument would be, well, the 4 manufacturer knows the serial number they told 5 to distributor, and then if distributor is 6 providing information of distributor sold that 7 serial number to somebody else. Then, at some 8 point we noticed that that serial number just 9 vaporized.

10 And whether all of that 11 information is coming up and down the chain or 12 whether it is all coming individually or -- or 13 -- and then that gets back to the argument of, 14 should that information be coming into the 15 Department for everything? Or should people 16 just be retaining records that can be audited? 17 And there is that whole issue as well. 18 I mean, admittedly, there are many 19 different options and many different 20 alternatives. It just seemed like the 21 scenario you were posing seemed to be actually 22 arguing in favor of the Department getting all

### 202-234-4433 Neal R. Gross & Co., Inc. Page 156 1 of the information. 2 MR. DOPPEL: No. Actually, what 3 -- the point I was trying to make is that as a 4 manufacturer, we wouldn't, you know -- we 5 would know if something was wrong, and we 6 wouldn't, you know, send it in without saying 7 something, you know, hoping you wouldn't 8 uncover it. You know, so it's -- that's the 9 whole point of that. 10 So that's -- if we send in all of 11 these, good. You know, it's just -- it's just 12 wasted time, wasted transmission. You know, 13 if there is something that is uncovered that 14 is bad, then it needs to be identified. So -- 15 FACILITATOR BROOKMAN: Well, if 16 you uncover something bad, will you try and 17 fix it, or is that beyond your scope?

18 MR. DOPPEL: We would -- there 19 would have to be, you know, conversation with 20 the distributor and with that contractor. But 21 again, according to what you are saying, our 22 liability is only to the extent that we sell

### 202-234-4433 Neal R. Gross & Co., Inc. Page 157 1 something to a distributor who sells something 2 to a contractor who knowingly installs a 3 noncompliant product. 4 And, you know, with a certain 5 distributor, I mean, we could have sold a 6 thousand units to a distributor, and this 7 contractor could have installed a hundred 8 noncompliant systems before we even know about 9 the first one. 10 FACILITATOR BROOKMAN: Thank you. 11 Harvey. 12 MR. SACHS: Harvey Sachs. Laura, 13 I think the Department needs some help in 14 understanding the business and the 15 transactions and the concerns out there in the 16 field. Lord knows I have no business speaking 17 for Charlie McCrudden, but I am going to do it 18 anyhow. 19 FACILITATOR BROOKMAN: Do you want

20 to defer? 21 (Laughter.) 22 MR. SACHS: Yes, I'll defer,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 158 1 because I think Charlie should have first 2 crack at this. 3 FACILITATOR BROOKMAN: Thank you. 4 That was generous of you. Charlie. 5 MR. McCRUDDEN: I'm not exactly 6 sure what I'm commenting on. I thought you 7 were just teasing, so -- 8 (Laughter.) 9 -- I just -- I mean, honestly, I 10 was sort of just watching to see what people 11 were thinking, so - 12 MR. SACHS: Charlie said -- Harvey 13 Sachs again. Charlie said very early in this 14 meeting that contractors have enormous 15 concerns about potential for manufacturers 16 using -- or implied -- using data about the 17 end customers in ways that would not be good

18 for the contractor. 19 And I believe that if DOE does not 20 work to establish a firewall that protects 21 this information that the contractor regards 22 as her crown jewels, from the manufacturer,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 159 1 DOE is going to walk into a buzzsaw. And it's 2 a very big one, so --

3 FACILITATOR BROOKMAN: We've 4 covered that point now several times I think. 5 Charlie, do you want in here? 6 MR. McCRUDDEN: No. And I think 7 -- I think you are exactly right in looking at 8 just the contractor side of things. But I 9 think, Doug, you're right. I think we've 10 covered that. I think everybody has concerns 11 about what happens to this information. 12 FACILITATOR BROOKMAN: It's good 13 to raise that. I see Don Brundage. Don? 14 MR. BRUNDAGE: Don Brundage, 15 Southern Company. I'm not really involved 16 directly in this fight, but I've got some just 17 general observations on filling out federal 18 paperwork. You don't ask somebody to fill out 19 paperwork for what somebody else did. You can 20 only fill out paperwork on what you did. 21 I mean, if a manufacturer says, "I 22 shipped these units to this distributor with

### 202-234-4433 Neal R. Gross & Co., Inc. Page 160 1 this serial number," that's the paperwork they 2 have. It's not fair to hold them responsible 3 for getting accurate information from somebody 4 downstream. Each step along the way you say 5 who you sold it to, and you can stick a 6 requirement that if you see suspicious 7 activities you might notify DOE. 8 But you can't ask somebody to 9 certify information that they got third-hand 10 from someone else. So I think if you just 11 limit it to manufacturers, I shipped these 12 units with these serial numbers to so and so; 13 for the distributors, we shipped these serial 14 numbers to so and so contractors, or we 15 installed directly through our own in-house 16 party; you just -- you need to have paperwork 17 based on what each party actually did, and 18 they can only certify what they actually did, 19 not what someone else did. 20 Thank you.

21 FACILITATOR BROOKMAN: Karen? 22 MS. MEYERS: Karen Meyers. And

### 202-234-4433 Neal R. Gross & Co., Inc. Page 161 1 just a point I would like to make, that from 2 our perspective, you know, we would really 3 only be willing to do that if there was a 4 complaint or an issue/notice of perhaps 5 noncompliant. We would not be in favor of 6 supplying all of this information up front, 7 because that is our sales information, and we 8 would consider that confidential business 9 information that we -- 10 FACILITATOR BROOKMAN: Even with a 11 complete firewall, confidentiality, all that

12 stuff. 13 MS. MEYERS: It's still sales 14 information, and that -- we would be against 15 that. Now, if there were a complaint and 16 somebody needed the information, then we would 17 of course, you know, be very helpful -- you 18 know, could tell you, you know, that serial 19 number who we sold it to. But to just -- on 20 every single transaction that we make, to 21 provide that information would be -- it would 22 be a very -- I just think we would be very

### 202-234-4433 Neal R. Gross & Co., Inc. Page 162 1 against that. 2 MS. ARMSTRONG: So I think it's 3 fair to say that you would be in favor of like 4 maintaining records, just not -- 5 MS. MEYERS: We maintain records, 6 but just to -- on every day have to supply our 7 sales information would not be --

8 FACILITATOR BROOKMAN: So as a 9 model, this would be like -- 10 MS. MEYERS: We do maintain that 11 information. And if there were a complaint, 12 we could provide -- 13 FACILITATOR BROOKMAN: Earlier in 14 the day someone referenced the model the IRS, 15 right? That would be maintain the records, do 16 some level of reporting, but have those 17 available for an audit-based system, or 18 something like that.

19 Talbot. 20 MR. GEE: So I think my -- the 21 concern here that I'm getting -- the 22 perception is that this is a lot cleaner

### 202-234-4433 Neal R. Gross & Co., Inc. Page 163 1 transactional industry than it really is. And 2 I think -- I'm afraid that your assumption is 3 you are going to get this data that is going 4 to paint these nice pictures and everything 5 falls into good black and white boxes. 6 But, frankly, it is just not. I 7 mean, there is going to be the bulk shipments 8 where who knows what happens. Then, there is 9 going to be a lot of shipments in the regions 10 that might, on first blush, look like it is 11 leading the noncompliance, but ends up not. 12 Then, you have the whole issue of, 13 you know, the homeowner that purchases the 14 full system but only does the furnace in the 15 winter, and then waits until the spring to do 16 the condensing unit. 17 You know, I mean, you're going to 18 have a lot of mismatching data points that 19 could lead you to a lot of wrong conclusions, 20 if you were able to process to that level of 21 granularity. And I -- again, it kind of goes 22 back to questioning the premise as to whether

### 202-234-4433 Neal R. Gross & Co., Inc. Page 164 1 all of this data is really going to help you. 2 And let's not forget central air 3 conditioners and heat pumps. You are going to 4 see -- if this all went this way, you are 5 going to get all of this data dump on 6 condensing unit and indoor air handler, 7 movements perhaps, but what does that help you 8 with? It really doesn't. You are not going 9 to see that nice, pretty picture until you 10 actually see, if possible, that last 11 transaction. 12 And I don't -- I just don't see a 13 feasible way, an affordable way you are going

14 to be able to do that.

15 FACILITATOR BROOKMAN: Is there 16 some way to capture that last transaction to

17 look for the bad actors? 18 MR. GEE: Well, the --

19 FACILITATOR BROOKMAN: The 20 noncompliant actors? 21 MR. GEE: Frankly, the bad actors 22 are probably going to be the ones that would

### 202-234-4433 Neal R. Gross & Co., Inc. Page 165 1 be the hardest to document anyway. So, you 2 know, I mean, you are basically adding burden 3 to the folks who will go -- bend over 4 backwards to do it the right way, and they are 5 just going to get killed by those who don't, 6 because you really are not going to have a way 7 of finding them. 8 FACILITATOR BROOKMAN: Gary

9 Fernstrom.

10 MR. FERNSTROM: I can understand 11 why no one wants to give up confidential sales 12 data. But for this to work, we have got to 13 know the output, you know, where this 14 equipment was ultimately installed, and we've 15 got to make sure that that matches the input.

16 So let's take Contractor ABC. You 17 know, for example, if Contractor ABC were good 18 enough to tell somebody that they installed 19 five air conditioning units, how do we know 20 that Contractor ABC didn't get seven, and he 21 told us about the five that were compliant but

22 the two that weren't?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 166 1 At the contractor level, we have 2 kind of got to know the input and the output, 3 and then be able to go look and see whether or 4 not what that contractor said is in fact true 5 on some kind of spot check or audit basis.

6 FACILITATOR BROOKMAN: So does 7 that mean the records need to be kept for the

8 full stream? 9 MR. FERNSTROM: I don't believe 10 that needs to be kept for the full stream, if, 11 say, we trust the distributor to tell us that. 12 But maybe the distributor is not, you know, 13 matching in terms of input versus output. 14 Probably serial numbers and all of 15 this compounding information about the 16 ultimate installation location isn't necessary 17 just as long as the volumes match.

18 FACILITATOR BROOKMAN: Steve. 19 MR. PORTER: Yes. I mean, we 20 would -- the information you want in many 21 cases would be maybe handwritten down and have 22 to be keyed. I'm sure that's the same with

### 202-234-4433 Neal R. Gross & Co., Inc. Page 167 1 the contracting group. They are not going to 2 have maybe even a database to put that in 3 right now, or exists today, so I think --

4 FACILITATOR BROOKMAN: That work 5 order is written up by hand, and the serial 6 number is -- 7 MR. PORTER: Happens all the time.

8 FACILITATOR BROOKMAN: Yes.

9 MR. PORTER: Yes. 10 FACILITATOR BROOKMAN: Okay. Dan. 11 MR. BUUCK: Thank you. Dan Buuck, 12 NAHB. In order to get this last piece of 13 information with the installation, have you 14 considered working with the code officials in 15 their localities, in their jurisdictions? 16 Many of them will have to be onsite anyway at 17 the final installation, taking the burden off 18 the contractors and the distributors. 19 Also, they know the bad actors in 20 their area, in small towns and in rural areas. 21 Up until a year and a half ago I was a 22 building inspector in Minnesota, and so they

### 202-234-4433 Neal R. Gross & Co., Inc. Page 168 1 will be able to track those wrong 2 installations, probably know offhand five 3 contractors who might have done it. 4 FACILITATOR BROOKMAN: Aside from 5 internet sales, do the great majority of these 6 installations require a permit to be pulled?

7 Does that work? 8 MR. BUUCK: Yes. Well, it doesn't 9 matter how they are sold. It is based on 10 installation. We are talking furnaces, we are 11 talking also the A/C units. 12 FACILITATOR BROOKMAN: Okay.

13 Paul. 14 MR. DOPPEL: Just, again, for -- 15 make sure everyone understands, for split 16 systems, there are two serial numbers 17 involved. And in the case of multi-splits, it 18 could be, you know, many more than that. And 19 so, you know, that increases the burden of 20 reporting and trying to match. 21 Also, if a condenser only is 22 replaced, does the contractor then have to try

### 202-234-4433 Neal R. Gross & Co., Inc. Page 169 1 to figure out what the model and serial number 2 is of the indoor unit? Or if he is installing 3 only an indoor unit, then does that also have 4 to be reported as, you know, a change?

5 FACILITATOR BROOKMAN: Yes. 6 Charlie. 7 MR. McCRUDDEN: Charlie McCrudden. 8 I was -- Dan's question about, have you 9 considered code officials? I didn't know if

10 there was an answer to that.

11 FACILITATOR BROOKMAN: Laura? 12 MS. BARHYDT: Considered. I guess 13 my question is how -- to throw it back to you 14 as to how exactly you would envision something 15 like that working. 16 MR. McCRUDDEN: To throw it back 17 to you -- 18 (Laughter.) 19 I'll make a comment, though, is 20 that, you know, permitting is not required 21 everywhere. And code officials, permit 22 officials, have a burden now that they find

### 202-234-4433 Neal R. Gross & Co., Inc. Page 170 1 very difficult to meet adding one -- I don't 2 even know if you have the authority to direct 3 local officials to carry out your police 4 operations. But I didn't know if it had been 5 considered. 6 FACILITATOR BROOKMAN: But they 7 would spot -- Dan says they know the bad 8 actors maybe, right? And they would spot bad 9 applications at least -- 10 MR. McCRUDDEN: Potentially, yes. 11 FACILITATOR BROOKMAN: -- right,

12 some of the -- some. 13 Kit? 14 MS. KENNEDY: Yes. I mean, I 15 think that's an interesting concept, and, you 16 know, speaking for myself, I don't see a way 17 that you could place compliance 18 responsibilities on code officials. 19 But there is a whole piece of this 20 which is about education and training on top 21 of enforcement, and I'm hoping that some of 22 that can come out over the next year as we do

### 202-234-4433 Neal R. Gross & Co., Inc. Page 171 1 this rulemaking. You know, what is the 2 education piece? What is the training piece? 3 Who are the partners? You know, local code 4 officials are now a good idea. Can you 5 leverage some of the information that is 6 already out there in a helpful way? 7 And, you know, I'm sure there are 8 a host of other people in this space, you 9 know, other organizations, you know, there are 10 code organizations, there are states, who, 11 again, aren't going to have a formal role in 12 compliance, but could be helpful if there 13 could be some convening. 14 And I'm not sure if that's DOE's 15 role or, you know, some of the trade 16 associations' role. You know, we are happy to 17 play a hand in sort of bringing together the 18 various different stakeholders to talk about 19 how education and training and partnering can 20 help with this effort. 21 Obviously, it doesn't replace, you 22 know, some of the compliance responsibilities

### 202-234-4433 Neal R. Gross & Co., Inc. Page 172 1 we talked about today, but it could be helpful 2 to have that information.

3 FACILITATOR BROOKMAN: Dan. 4 MR. BUUCK: Dan Buuck, NAHB. I 5 understand that, yes, code inspections are not 6 carried out everywhere, but there are, you 7 know, the major metropolitan areas they are.

8 That would at least take a lot of burden off

9 of DOE as well. 10 Also, unfortunately, the train has 11 left the station. The rule has gone into 12 effect, and if this had gone through the 13 energy code route, and it had gotten into the 14 energy codes, then that would have simplified 15 all of this enforcement. 16 Also, it is made a little more 17 difficult by not meshing the regions with the 18 climate zones again. 19 FACILITATOR BROOKMAN: Thank you. 20 MS. ARMSTRONG: Okay. Moving on, 21 it seems like we have dealt with this as far 22 as record keeping schemes, tracking shipments.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 173 1 I don't think anyone else has much to add 2 there, but feel free if you do. I'm going to 3 keep going. Go ahead. 4 MR. McCRUDDEN: In the previous 5 slide -- 6 FACILITATOR BROOKMAN: Charlie, 7 please. 8 MR. McCRUDDEN: I'm sorry. 9 Charlie McCrudden, ACCA. The previous slide 10 you -- DOE keeps coming up -- periodicity and 11 timing. So what were you thinking? Were you 12 thinking instant filing, monthly, quarterly?

13 You want comments.

14 MS. ARMSTRONG: That one. 15 MR. McCRUDDEN: Okay. 16 MS. ARMSTRONG: Yes. Currently, 17 the way we do it now, just so you know, every 18 time a new basic model, before it's entered 19 into commerce, a manufacturer must certify it, 20 and then annually they have to do a -- tell us 21 once what -- annually what they made. So 22 there is an annual cert requirement, too.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 174 1 MR. McCRUDDEN: The one 2 distinction I would make, though, you keep 3 talking about how much you are already 4 collecting. You are collecting that from

5 manufacturers.

6 MS. ARMSTRONG: Yes. 7 MR. McCRUDDEN: You are collecting 8 that from large corporations. And, yes, and 9 really a handful. This is very different, I 10 think, what you are proposing here. You are 11 asking small businesses to provide a level of 12 compliance. 13 So I don't think you can sort of 14 make the assumption that it's going to be the 15 same. I think it is going to be very -- 16 MS. ARMSTRONG: Yes, and I don't 17 think we are at this point. I think we are 18 trying to understand what is feasible. 19 MR. McCRUDDEN: Okay. 20 FACILITATOR BROOKMAN: Karim? 21 DR. AMRANE: No, I was just about 22 to say that they are collecting it from AHRI.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 175 1 So we are doing the hard work for you guys. 2 (Laughter.) 3 MS. ARMSTRONG: I'm pleading the 4 Fifth on that one. 5 Okay. So I'm going to talk a 6 little bit, just a second, about something we 7 put forth in the framework document, and then 8 I am going to turn it over to someone who has 9 been waiting patiently to talk more about 10 this. 11 So we have had concerns expressed 12 to the Department by several interested 13 parties regarding select customers, that they 14 may be stranded as a result of these high 15 installation costs from difficult venting 16 situations. This is for furnaces. 17 DOE is open to alternatives to, 18 obviously, mitigate unintended consequences of 19 its direct final rule for the subset of 20 installations that may be severely impacted. 21 One of the things that we put in the framework 22 document -- a possible approach that DOE could

### 202-234-4433 Neal R. Gross & Co., Inc. Page 176 1 consider would be some type of waiver process. 2 And with that, I am going to turn 3 it over. 4 MR. KIBLER: Thank you. Jim 5 Kibler from AGL Resources on behalf of the 6 American Gas Association. I have four pages 7 of comments that, in the interest of time, I 8 won't read fully into the record. And I'm 9 going to paraphrase some of it, but I do want 10 to pay particular attention to some 11 principles. And I will read from them, 12 because a lot of good work by a lot of very 13 smart and good intentioned folks have gone 14 into this. 15 And I will observe for any of my 16 friends here in the room who are members of a 17 trade association that the challenge of 18 obtaining consensus within your own trade 19 organizations is often a challenge, a 20 remarkable challenge. But getting consensus 21 among the variety of the stakeholders that

22 have been at the table for the last several

### 202-234-4433 Neal R. Gross & Co., Inc. Page 177 1 weeks is something that I view as very 2 remarkable in the duration of my career. 3 And so I want to emphasize to the 4 agencies that, as you hear a lot of questions 5 today about implementation, there are some 6 organizations who are very talented and 7 committed to helping you find the light for 8 some of those questions, and we are here 9 today. 10 As a backdrop, just as it relates 11 to my company -- although we are based in 12 Atlanta and we have four and a half million 13 customers in the United States. We are the 14 largest natural gas only distributor in the 15 nation. Two and a half million of those 16 customers reside in the northern region. 17 So this is a very important issue 18 for us, and it is -- as perhaps with the 19 exception of the installers having the most 20 direct day-to-day interaction with our 21 customers, I think we have a fairly unique 22 vantage point.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 178 1 What I have been impressed by, 2 especially as we met with the other 3 stakeholders, is the willingness to entertain 4 the practical impact of the rule and how you 5 avoid some truly unintended consequences.

6 So we have -- the stakeholders 7 have agreement on a very broad set of 8 principles for a waiver design. And the 9 following stakeholders have agreed to these 10 principles and objectives: the Air 11 Conditioning Contractors of America, the 12 Alliance to Save Energy, the American Council 13 for an Energy Efficient Economy, the American 14 Gas Association, the Appliance Standards 15 Awareness Project, and the Natural Resources 16 Defense Council, as well as a number of AGA 17 member companies who participated in these 18 sessions.

19 There are other stakeholders who 20 have been actively involved in this process 21 and who are currently reviewing it. And there 22 is a lot of work still to be done.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 179 1 For those who have not been 2 involved, Elizabeth Noll with AGA is here 3 today. If you give her your business card, I 4 know we'd be happy to include you in the 5 conversations. 6 But there are 14 principles and 7 objectives that I do want to read from 8 specifically, just because we have spent a lot 9 of time making sure that we do agree to these. 10 The first is that the Department 11 should absolutely establish an installation 12 waiver provision as part of the enforcement

13 rule. 14 Second, the waiver, as we envision 15 it, should apply to furnace replacements in 16 existing homes only, including conversions of 17 oil-fired furnaces but excluding new 18 construction. 19 Third, the waiver must be 20 specific, limited, fair, easily enforced, 21 protect against fraud and abuse, but also 22 maintain the integrity and intent of the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 180 1 regional standard with regard to securing 2 efficiency gains. We all believe that. 3 Fourth, the use of a waiver should 4 not place any additional compliance 5 obligations on the homeowner beyond those 6 already established for standard 7 installations. 8 Fifth, the waiver implementation 9 process should not increase the time required 10 by an installer to replace a furnace or cause 11 delays for the owner or installer to comply 12 with its requirements. As an aside there, 13 most furnaces are not replaced as part of a 14 plan or design. They are replaced because 15 they fail and they usually fail in the winter. 16 So it is very important practically to 17 establish an easy system for the waiver. 18 Sixth, the waiver application 19 should be granted under a blanket pre-approval 20 for specified sets of conditions. So all of 21 the documents, the filings, and the 22 verification requirements can be completed

### 202-234-4433 Neal R. Gross & Co., Inc. Page 181 1 after the installation is done. 2 Seventh, the installers must 3 evaluate whether the waiver conditions are met 4 before installing a furnace below 90 AFUE in 5 the northern region, and certify that, we 6 submit, using a standard form. 7 Eighth, while waiver calculations 8 -- qualifications, excuse me, and 9 documentation requirements should not add 10 significant time to the furnace installation, 11 the document requirements after installation 12 need not be so streamlined as to introduce a 13 general incentive to make the use of a waiver 14 the default approach to a furnace replacement. 15 Ninth, after a specific period of 16 time, to be determined later, the waiver 17 process should be reviewed by DOE and the 18 stakeholders to evaluate its effectiveness and 19 any needed modifications. This should include 20 an analysis of all, or a valid sample of all, 21 waivers issued prior to that date. 22 Tenth, the waiver, as we envision

### 202-234-4433 Neal R. Gross & Co., Inc. Page 182 1 it, would apply only to those cases where 2 condensing furnace installation costs would be 3 unreasonable or prohibitively high in one 4 category or, alternatively, in another, where 5 the installation of a condensing furnace would 6 conflict with the zoning ordinance, building, 7 plumbing, or health safety provisions of local 8 codes, or historic preservation ordinances in 9 effect in the jurisdiction of the home. 10 Eleventh, the waiver is not 11 intended to address each instance where the 12 life cycle cost of a complying furnace would 13 likely be negative or to overcome the 14 difficulty of financing a furnace replacement. 15 We will make clear those are -- that's an 16 entirely different set of circumstances. 17 Twelfth, the qualification 18 criteria should be clearly defined, so they 19 can be easily demonstrated by the installer 20 and easily verified. They should be based on 21 the physical characteristics of the house and 22 the installation difficulties or costs, as

### 202-234-4433 Neal R. Gross & Co., Inc. Page 183 1 documented by the installer, again, on a 2 standard form that we submit. 3 Thirteenth, in order to protect 4 against the unnecessary -- issuance of 5 unnecessary waivers and to ensure a smoothly 6 running system, contractors authorized to 7 request a waiver should meet stipulated 8 certification and/or training requirements. 9 Specifics are still being looked at in that 10 regard. 11 Lastly, we believe that DOE should 12 establish an enforcement system for the waiver 13 that is based on the consultation with this 14 group of stakeholders and others. 15 I do want to reiterate that those 16 who have been around the table have really 17 worked in good faith, and I am seeing great 18 promise in the work that we have done so far, 19 and I am optimistic that by the deadline on 20 February 16th -- or February 6th, excuse me -- 21 we will have a much more detailed set of

22 comments around the enforcement rule.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 184 1 FACILITATOR BROOKMAN: Okay. 2 Thank you. And would those comments be 3 broader than the ones with respect to waivers? 4 Is that what you have in mind? 5 MR. KIBLER: Potentially broader, 6 but I think the waiver comments themselves are 7 going to need to be fairly specific, as we 8 have discussed previously. 9 FACILITATOR BROOKMAN: Okay. 10 Thanks. Good job with that presentation. 11 Don Brundage. 12 MR. BRUNDAGE: Don Brundage, 13 Southern Company. I've just got a question 14 for Mr. Kibler. I haven't been involved in 15 any of this process, but it seems that if the 16 penalty for noncompliance is $200 per unit, it 17 would -- did you consider as an alternative 18 approach a streamlined method of just 19 declaring this unit as not in compliance and 20 paying the $200? 21 MR. KIBLER: We did not. 22 MR. BRUNDAGE: Okay. That would

### 202-234-4433 Neal R. Gross & Co., Inc. Page 185 1 seem -- if it's just a civil penalty and not 2 implying anything else, that would seem to be 3 more straightforward than doing a waiver, 4 which I have questions about what part of the 5 energy codes, the energy regulations, you 6 could justify that. I mean, they've got some 7 things in there for special waivers. 8 We had the high velocity -- low 9 temperature/high velocity system, HVAC, that 10 for years had special hardship waivers. But 11 it would seem like just declaring 12 noncompliance and sending in the money might 13 be a simpler and legally cleaner approach. 14 Thank you. 15 FACILITATOR BROOKMAN: Thank you. 16 Gary Fernstrom.

17 MR. FERNSTROM: That's 18 problematic, because contractor could easily 19 decide that changing the venting requirements 20 to accommodate a fully condensing furnace is 21 going to cost more than $200. So, you know, 22 why not just have -- you know, pay a lot of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 186 1 $200 fees, then, and not bother whenever the 2 condensing furnace is more expensive. 3 FACILITATOR BROOKMAN: Thank you. 4 Please say your name. 5 MR. SCHRYVER: Dave Schryver, 6 American Public Gas Association. Just by way7 of background, our members are community8 owned. They are owned by their citizens, 9 owned by the city, and they are not for 10 profit. 11 We are interested in the waiver 12 option. We are discussing it with our

13 members. our members have a lot of concerns 14 in terms of the practicality of a waiver, as 15 well as ultimately the reasonableness of a 16 waiver. 17 In terms of the $200 issue, our 18 concern with that, while it does make sense, 19 and it certainly would be cheaper for the 20 homeowner, ultimately the homeowner is bearing 21 the additional cost through no fault of their 22 own, and it is a disincentive for natural gas

### 202-234-4433 Neal R. Gross & Co., Inc. Page 187 1 appliances, which, at the end of day, 2 ultimately hurts efficiency and greenhouse gas 3 emissions. 4 FACILITATOR BROOKMAN: Okay. 5 Thank you. 6 So additional comments related to 7 Jim's waiver presentation? And, Jim, you will 8 submit that entire document to the Department, 9 right? 10 MR. KIBLER: We will. 11 FACILITATOR BROOKMAN: Thank you. 12 Okay. Frank first. 13 MR. STANONIK: Frank Stanonik, 14 AHRI. I didn't hear it, but I certainly -- 15 maybe just I inferred it. I just want to make 16 sure. It seems to me in this waiver process 17 that at the end of the process there would be 18 a requirement by the installing contractor to 19 notify DOE they have installed a waiver -- in 20 this example -- furnace, because, as an 21 example, if I am a manufacturer asking for a 22 waiver from a test procedure, I obviously have

### 202-234-4433 Neal R. Gross & Co., Inc. Page 188 1 to ask for it. 2 But then, in my future reportings 3 to DOE, I have to tell them that this rating 4 is based on a waiver. And it seems to me in 5 this case that if the -- especially if it's a 6 blanket waiver, and Talbot's distributor has 7 sold me this noncomplying furnace, it seems to

8 me that would be the one case where there 9 would be an obligation by that contract -- 10 installing contractor to tell DOE, "Oh, yes, I 11 installed an otherwise noncomplying model in 12 this ZIP code," or something.

13 FACILITATOR BROOKMAN: But I was 14 wondering, Jim, did your group consider that 15 issue? 16 MR. KIBLER: I believe that's 17 contemplated. The goal would be to have a 18 waiver that would apply to a certain set of 19 circumstances. The installer would be trained 20 and certified to make a site-based assessment 21 on whether those circumstances exist and sign 22 a certification that the homeowner is eligible

### 202-234-4433 Neal R. Gross & Co., Inc. Page 189 1 for the waiver. 2 FACILITATOR BROOKMAN: Okay. 3 MR. KIBLER: It's that simple. 4 And there would be back end communication to 5 the Department that the installation had

6 occurred.

7 FACILITATOR BROOKMAN: I see 8 Ashley wants -- has a comment or question. 9 MS. ARMSTRONG: I actually have a 10 question, and it's going to go to the person 11 next to you. So you just mentioned that the 12 installer would be trained to identify the 13 sort of circumstances. Do you think you can 14 train your installers to do this, to handle 15 something like that, to be able to evaluate 16 this set of circumstances? 17 FACILITATOR BROOKMAN: That person 18 next to Jim is Charlie. Charlie. 19 MR. McCRUDDEN: I was waiting for 20 Kit. I thought she meant -- 21 (Laughter.) 22 FACILITATOR BROOKMAN: I'm going

### 202-234-4433 Neal R. Gross & Co., Inc. Page 190 1 to Kit next, after you. 2 MR. McCRUDDEN: Do we think we can 3 -- I think there is a way to create with the 4 form, and the elements that would exist from 5 the typical waiver situation, that a 6 contractor could recognize those situations, 7 make the evaluation, and file at the back end 8 that this is a waiver situation. 9 FACILITATOR BROOKMAN: Kit, did 10 you want in here? Yes, you earlier suggested 11 your comments would dovetail with Jim's. 12 MS. KENNEDY: Sure. And I just 13 want to, again, applaud the very constructive 14 problem-solving approach here, which a wide 15 variety of stakeholders have been engaged in, 16 I think in a short period of time. 17 As Jim says, we have made a great 18 deal of progress. Obviously, there are 19 details to be worked out. And as Jim said, it 20 is great to hear all of these comments, and, 21 you know, we can figure out going forward some 22 of these issues. And the input is helpful,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 191 1 and we hope that others will sort of join this 2 process moving forward of answering some of 3 these questions and taking a constructive 4 approach to implementation of the rule. 5 On the legal authority point, the 6 Department of Energy organizing statute does 7 set up a waiver process. There is a 8 delegation of authority to the Office of 9 Hearing and Appeals to run a hardship waiver 10 process, but the Secretary has the ability to 11 -- we believe to delegate authority to EERE or 12 to another appropriate entity to want a waiver 13 process. And the Department of Energy of 14 course has the authority to set up enforcement 15 policies and guidance as OGC has done over the 16 last two years. That might be another route. 17 So there are a variety of ways in 18 which a waiver process might be established

19 under the relevant statutes. 20 FACILITATOR BROOKMAN: Okay. Dan. 21 MR. ARNOLD: Dan Arnold. My 22 question is, does this set a precedent where

### 202-234-4433 Neal R. Gross & Co., Inc. Page 192 1 the Department might consider, for example, a 2 waiver for 13 SEER systems in the south based 3 on space constrained installations of split 4 systems, package systems? You know, again, 5 you are setting a precedent here where, what 6 is the difference? 7 I've got a space -- a situation in 8 the north where I've got, you know, economic 9 hardship for installing a 90 percent furnace. 10 That same logic could be applied to the 11 south, where I've got an economic hardship to 12 apply a 14 SEER system where I have a closet, 13 for example, in a manufactured house, where 14 I've got to enlarge the closet. That leads to 15 installation costs that are higher. 16 FACILITATOR BROOKMAN: Gary

17 Fernstrom. 18 MR. FERNSTROM: Gary Fernstrom. I 19 just -- 20 FACILITATOR BROOKMAN: Pardon me, 21 Gary. I dropped this gentleman out. Please 22 say your name.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 193 1 MR. MORRISON: Sure. Scott 2 Morrison, APGA. I just sort of -- on the 3 question of practicality, going back to the 4 fact that what was said earlier by DOE that 5 manufacturer encompasses -- the definition of 6 "manufacturer" encompasses an installer, and 7 the liability questions that arise from that, 8 I have serious questions about whether or not 9 distributors in the 30 northern states will 10 continue to carry an 80 percent AFUE furnace. 11 So that calls into question the 12 practicality of a waiver, in the sense that 13 even if I qualify for a waiver, how am I going 14 to get an 80 percent furnace? When they are 15 not available, hypothetically, in the 30 16 northern states, without having to ship one up 17 north and incur that additional cost. 18 And I would defer to my friends in 19 the distributor community, but it seems to me 20 that that is a serious practical question. 21 FACILITATOR BROOKMAN: Okay. 22 Thank you. Charlie.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 194 1 MR. STEPHENS: Charlie Stephens, 2 Northwest Energy Efficiency Alliance. I guess 3 I can confirm some of what people have been 4 saying. First of all, I kind of agree with 5 Don Brundage from a contractor's perspective. 6 If I just have to pay 200 bucks and report a 7 noncompliant installation, that may be the 8 cheapest thing for my customer and fastest way 9 to get them back into heat. 10 But I was one of those candidates 11 when my furnace died in January, and it was 12 cold, I can assure you. My contractor, a 13 little three-man shop, showed up and said, 14 "You know, it's going to cost me quite a bit 15 of time and money to get your venting system 16 straightened up for a 90 percent furnace." 17 And I said, "Well, I'm cold, my 18 wife is cold, what are you going to do?" And 19 he said, "Well," he said, "I've got" -- he 20 said, "My distributor doesn't stock 80 percent 21 furnaces. It is going to be a little while 22 before I can get one of those. But as luck

### 202-234-4433 Neal R. Gross & Co., Inc. Page 195 1 would have it, I have eight or nine of those 2 things sitting in the shop that I have pulled 3 out that are perfectly serviceable. I will 4 put one of those in in the next two hours. 5 We'll fire it up. You're in heat. We'll come 6 in and put your venting in. And when you're 7 ready, we'll bring in the 90 and install it." 8 And that process all worked out, 9 quite frankly, very well. It did cost some 10 extra money, but it was actually pathetically 11 simple to accomplish. 12 However, he did say, "I'm sorry, 13 but I -- even the size and the space of your 14 closet here, I am not going to be able to put 15 in an air conditioning coil for you that meets 16 the standards." And so I don't have air 17 conditioning right now. 18 So, yes, you know, there are some 19 -- there are some circumstances out there, and 20 there are ways around some of them, and maybe

21 not for others. 22 FACILITATOR BROOKMAN: Okay.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 196 1 Thank you. Harvey. 2 MR. SACHS: Harvey Sachs. Ashley, 3 I want to respond to your question whether 4 trained contractors can do this and whether 5 the training is possible. 6 My own sense, having worked with 7 some contractors and watched some, is that, if 8 I were a contractor, I couldn't bid a job 9 unless I was cable of doing the things that 10 are asked for in the conceptual proposal that 11 Jim has brought forward. This is just 12 absolutely inherently required for bidding 13 without losing my shirt, for writing up the

14 contract. 15 Thank you. 16 FACILITATOR BROOKMAN: Okay.

17 Thanks. Talbot. 18 MR. GEE: Yes, I will echo 19 Harvey's comments. I mean, our industry won't 20 start selling furnaces the day the new 21 standard comes into place. They have been 22 doing this for a long time.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 197 1 So, yes, that core-based analogy 2 of assessing the situation is not a new thing, 3 which is why there are still 80 percenters in 4 the north. It is not because they didn't want 5 to sell them a high efficiency furnace, it's 6 because there is a reason they couldn't. 7 However, that is more of an issue 8 of what the standard should be, not this 9 waiver concept, because the first question I 10 have is, exactly who is supposed to be 11 verifying and making the judgment call on each 12 waiver claim? Who is that?

13 FACILITATOR BROOKMAN: Let me note 14 -- and Gary gets the final word -- there are 15 some additional content slides we need to 16 cover here. Gary, go ahead. 17 MR. FERNSTROM: Okay. Quickly, I 18 just wanted to clarify my previous comment 19 that waivers are preferred to paying the $200 20 penalty to avoid mass circumvention of the 21 requirement. And that concerns me, because if 22 a contractor makes a habit of just paying the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 198 1 $200, I would think the Department of Energy 2 ought to have the capacity to pursue further 3 recourse in order to avoid mass circumvention. 4 FACILITATOR BROOKMAN: Okay. If 5 you will look in your slide packet to 17, we 6 are going to hear some additional content yet 7 to be covered -- information disclosures, and 8 we are going to hear from Hampton Newsome. 9 MR. GEE: Is this separate to or 10 connected to the waiver? 11 MR. NEWSOME: Yes, I think we are 12 going to go to the disclosures now, to the 13 labeling section. Well, it depends. Are 14 you planning on considering it or not? I 15 mean, if you are --

16 MS. MEYERS: Can I make one more 17 comment on the waivers? 18 FACILITATOR BROOKMAN: Yes, 19 please, Karen. I didn't -- yes. Okay. We'll 20 keep going with waivers. I don't mean to 21 diminish the content on waivers.

22 MS. MEYERS: One concern that I

### 202-234-4433 Neal R. Gross & Co., Inc. Page 199 1 have -- this is Karen Meyers with Rheem - is 2 if we, as a manufacturer, get an order from 3 somebody in Minnesota for 80 percent furnaces, 4 where can they ship it, I mean, what is the 5 liability back to the distributor and the 6 manufacturer? Likely, there will be 7 contractors that pop up that specialize in 8 this, and that is probably actually kind of a 9 good thing, because they will know the rules 10 inside and out. 11 But are we knowingly selling 12 products to -- noncompliant products to 13 people? Is there a process where the 14 distributor and the manufacturer get copies of 15 these waivers? Or, you know, how are we 16 covered in that instance? And that will just 17 be a question that I would make -- want to 18 make sure is clarified in the final rule is 19 that, you know, there may be contractors that 20 specialize in this. 21 And I'm not saying that's a bad 22 thing, but then we are knowingly selling

### 202-234-4433 Neal R. Gross & Co., Inc. Page 200 1 noncompliant product to people who we I guess 2 assume have waivers. But I don't know if 3 there is an avenue in the process to make sure 4 that we are informed that they have waivers. 5 So that would just be, maybe as you guys flesh 6 out the program, you might kind of think about 7 and, you know, we would just kind of 8 appreciate that -- looking at that point. 9 FACILITATOR BROOKMAN: Laura, do 10 you want to comment on this? 11 MS. BARHYDT: I was just going to 12 comment that if the installation has a waiver, 13 then it is not noncompliant, because it has a 14 waiver.

15 MS. MEYERS: We wouldn't know 16 that. But we are being asked to ship a 17 noncompliant unit. That was just my point. 18 MS. BARHYDT: Okay.

19 MS. MEYERS: So -- 20 MS. BARHYDT: We wouldn't know, 21 and so we are like, you know, hoping that that 22 does, but --

### 202-234-4433 Neal R. Gross & Co., Inc. Page 201 1 MS. MEYERS: So are you suggesting 2 that we should post a list of all the people 3 who have used a waiver?

4 FACILITATOR BROOKMAN: What 5 difference does it make? 6 MS. BARHYDT: Yes. You know, I 7 don't know, but at least some way that, you 8 know, we are not held responsible for selling 9 noncompliant units, because I doubt that, you

10 know -- and I don't know that manufacturers 11 need a copy of every waiver installation, 12 because likely, you know, distributors may 13 stock these units before they even know where 14 those locations are, if they are going to -- 15 so that they could service them if one came 16 in. You know, so it's just kind of a loophole 17 that we might need to kind of clarify.

18 FACILITATOR BROOKMAN: Paul. 19 MR. DOPPEL: Yes, Paul Doppel with 20 Mitsubishi. So I live in Minnesota. It is 10 21 below. I have an 80 percent furnace. How 22 long do I have to wait to get a waiver?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 202 1 FACILITATOR BROOKMAN: When it 2 goes bad.

3 MR. DOPPEL: Do I have to move 4 out, move into a hotel until -- 5 MR. KIBLER: No, the hope and 6 expectation of the group that is working on 7 the waiver proposal is that that decision 8 would be made onsite by the contractor when 9 the contractor arrives to assess your 10 situation. 11 FACILITATOR BROOKMAN: Okay. 12 Thanks, Jim. Dan. Coming to you next. 13 MR. ARNOLD: Just my hunch, to 14 answer that question, would be there is going 15 to be entrepreneurs that spring up to help you 16 expedite your waivers, just like they help 17 expedite passports and other things. You are 18 creating, again, I'm not sure a slope that you 19 want to go down, but that's our position. I 20 just think, again, there is going to be 21 unintended consequences to that solution to 22 the unintended consequences.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 203 1 FACILITATOR BROOKMAN: And,

2 therefore -- 3 MR. ARNOLD: And, instead, to 4 create a competitive advantage for some folks 5 that have the inside track, because when it is 6 20 below and they can get a waiver quick, you 7 know, they have a competitive advantage. 8 FACILITATOR BROOKMAN: Your name, 9 please. 10 MR. COOPER: Roger Cooper on 11 behalf of the American Gas Association.

12 Let me talk about the last two 13 points -- Karen's and how long you have to 14 wait. Jim is somewhat limited to talking 15 about what we have agreed on with the larger 16 stakeholder group. But our discussions have 17 gone into every one of these questions that 18 are being raised today.

19 We haven't reached consensus on 20 them. I expect we will. But generally, just 21 conceptually, to get an idea of what -- where 22 some of the thinking is going, this waiver

### 202-234-4433 Neal R. Gross & Co., Inc. Page 204 1 form quite possibly would be something the 2 contractor would complete that would show each 3 cost that they would have to do -- say, power 4 venting, relining chimney flues, whatever -- 5 that would be associated with putting in a 90 6 percent furnace that would not be associated 7 with putting in an 80 percent furnace. These 8 are the incremental costs. 9 And we might break down those for 10 all incremental and non-incremental costs. 11 That is all being discussed. But the thought 12 would be you would go down this checklist and 13 put amounts that would be the incremental cost 14 that the contractor was bidding for this. And 15 there is, again, a number of different ways 16 you could do it.

17 You could have the contractor 18 essentially bid an 80 percent and have him bid 19 a 90 percent, and show those differentials. 20 But when those differentials exceeded a 21 certain amount on the prong of being too 22 expensive -- and that amount is to be

### 202-234-4433 Neal R. Gross & Co., Inc. Page 205 1 determined -- that itself would be the 2 trigger, and the contractor would sign this

3 document. 4 And our discussions have been a 5 copy to the homeowner, a copy to the customer, 6 presumably a copy could go to the distributor, 7 to be determined again, whether a copy goes to 8 the manufacturer or just the distributor, to 9 be determined. 10 But anyway, I wanted to make the 11 point that all of this is something that the 12 stakeholder group is delving into. We hope 13 to, at the end of this process, be able to put 14 forth something well beyond these principles 15 and actually perhaps even offer a sample 16 waiver form and how it would be completed, so 17 that would be -- and that is a stretch goal, 18 but that would be where we want to go. 19 So I just want to thank people for 20 the questions that are being raised here, and 21 encourage anyone who is not involved with this 22 discussion, we will be reconvening in January,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 206 1 that you are welcome to join us. 2 FACILITATOR BROOKMAN: Thank you.

3 That's a useful comment. 4 MS. ARMSTRONG: Doug, can I 5 actually follow up? 6 FACILITATOR BROOKMAN: Ashley, 7 please. 8 MS. ARMSTRONG: And I just have a 9 -- whomever may want to answer that. And 10 perhaps this is not an issue, but, you know, 11 some of the comments that have been raised 12 seem to point to whether this type of waiver 13 process may be utilized by people that are -- 14 or may be taken advantage of per se. 15 So when you send in information to 16 the Department, how -- is the Department 17 supposed to believe it on its face? How will 18 we ever verify anything like this? Is this 19 something you are thinking about? I mean, 20 because if an influx of waivers come in, I 21 guess I -- what is the magnitude? What is the 22 scale of what this -- of when you think these

### 202-234-4433 Neal R. Gross & Co., Inc. Page 207 1 waivers would be used? 2 FACILITATOR BROOKMAN: Harvey. 3 MR. SACHS: A couple of points. 4 Harvey Sachs. To amplify, these are -- the 5 effort now is to develop a set of call it 6 physical criteria and economic criteria which 7 would be used for a pre-approved waiver. So 8 we do not have the cold house phenomena. I 9 went through that one winter for five days. 10 All of us are sensitive to this issue.

11 In terms of -- and the second 12 point that Jim made, and Roger reinforced, is 13 this group of stakeholders is open. Dan, we 14 hope you guys, from the manufacturer's 15 perspective, will be providing your insights 16 and your concerns on anything from stocking to 17 safety. 18 And, thirdly, about the 19 enforcement -- again, I think that I speak -- 20 I know I speak for myself and not for other 21 organizations. But the expectation would be 22 that DOE would be able to look for patterns

### 202-234-4433 Neal R. Gross & Co., Inc. Page 208 1 that might be indicative of abuse. No one 2 expects this to work from the assumption that 3 every installer is an assassin, and that every 4 installer's goal is to circumvent the law. We 5 are looking for substantial compliance. 6 FACILITATOR BROOKMAN: Okay. Let 7 me see, Steve. 8 MR. PORTER: I was just concerned 9 about the ability of the DOE. If they are 10 concerned about handling waivers, wouldn't 11 they be just as concerned about enforcement 12 and all the data that they are going to get 13 around the installation and the -- well, you 14 seem concerned about the waiver and how you 15 would handle that and who would verify. I 16 don't see much difference in that than in what 17 we are talking about in general enforcement of 18 the rule on any of the approaches you talked 19 about earlier. 20 FACILITATOR BROOKMAN: Okay. 21 Thank you. Kit. 22 MS. KENNEDY: Ashley, just in

### 202-234-4433 Neal R. Gross & Co., Inc. Page 209 1 response to your question, I mean, it is early 2 in the process. As with everything, again, we 3 don't even have a proposed rule yet from the 4 Department. We are all just sharing ideas. 5 But we have committed to these principles, 6 this group who Jim -- which Jim read off, and 7 the principles cover some of your concerns. 8 So, for instance, the third -- the 9 third waiver talks about protecting against 10 fraud and abuse and making sure -- maintaining 11 the integrity of the standard. 12 Now, of course we have work to do 13 to flesh that out, and this group is committed 14 to doing that. So by February 6th we hope to 15 have more details. And, you know, we were 16 pleased to see in the framework document that 17 the Department is open to a waiver concept, 18 that you are asking for comment on that. 19 And, you know, everything we have 20 discussed at this public meeting, you know, 21 the Department can't comment on. You haven't 22 taken any final position on any of the issues.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 210 1 It is all for determination during this 2 process. 3 I know the Department is always 4 interested in when stakeholders come together 5 and present consensus agreements, whether it's 6 on standards or anything else, and, you know, 7 the group of stakeholders here is committed to 8 continuing to work together to present sort of 9 a fully fleshed out set of proposals to you on 10 the 6th hopefully, and to kind of continue 11 down that process. 12 So we appreciate, you know, your 13 openness and the openness of folks who have 14 spoken. 15 FACILITATOR BROOKMAN: Yes, John, 16 John Cymbalsky. 17 MR. CYMBALSKY: John Cymbalsky, 18 DOE. Just to follow up I think on Ashley's 19 first question to Charlie about training the 20 Mom and Pop installers to do the waiver 21 process, I think earlier in the meeting, just 22 for consistency, these are the same people who

### 202-234-4433 Neal R. Gross & Co., Inc. Page 211 1 I think you guys were saying couldn't even 2 fill out the basic paperwork to -- just the 3 record keeping, but they will be able to do 4 the waiver. I mean, is this a different set 5 of paperwork or -- 6 FACILITATOR BROOKMAN: Charlie? 7 MR. McCRUDDEN: Well, you're 8 addressing two different things. One is, do 9 you have the -- essentially the infrastructure 10 to file, submit records that are related to 11 all installations, or potentially just those 12 80 percenters, if that's what you choose to

13 look at? 14 This is limited situations, and I 15 would hope there would be opportunities to 16 file non-electronically, because this is 17 limited situations. Perhaps it is by mail. I 18 mean, what we know in some of the comments 19 about whether these things will be -- will 20 people come out of the woodwork to expedite? 21 I mean, you know, it's essentially an 22 instantaneous assessment. You know, you are

### 202-234-4433 Neal R. Gross & Co., Inc. Page 212 1 granting a blanket waiver. So all of the 2 legwork occurs post installation. 3 FACILITATOR BROOKMAN: Jim, do you

4 want to follow on? 5 MR. KIBLER: Yes. And just to go 6 back to the thirteenth principle that I 7 discussed, I think what we contemplate is that 8 anyone could install a 90 AFUE or higher 9 furnace. But only those who have been trained 10 and certified would have the authority to 11 apply the waiver. 12 So it would be a subset of 13 installers that would have the legal authority 14 to install the 80s.

15 FACILITATOR BROOKMAN: And that -- 16 those individuals would be, as you said 17 earlier, working with established criteria, 18 qualifications, that sort of stuff as put 19 together by this working group.

20 MR. KIBLER: Yes. 21 FACILITATOR BROOKMAN: Okay. 22 Okay. Talbot.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 213 1 MR. GEE: Yes, and there will be a 2 thorough scenario planning of what happens if 3 an after-the-fact waiver is denied, and what 4 is the recompense for all of that for everyone 5 involved in that. I mean, that's a legitimate 6 concern, especially if you do figure that 7 there's supply issues with 80 percenters at 8 some point. You could go through considerable 9 expense just to get the 80 percent to them, 10 then find out later that the waiver gets 11 denied. What happens then? 12 FACILITATOR BROOKMAN: Harvey. 13 MR. SACHS: There is -- Harvey 14 Sachs. There is a lever there. And, again, 15 it is conceptual, it is not consensus, and you 16 all are part of it. But the lever there is we 17 are talking about needing some kind of 18 training or certification to be allowed to do 19 this install. That gets revoked if there is a 20 pattern of denials. Okay? 21 It doesn't mean that you have to 22 get -- go back and yank every one of those

### 202-234-4433 Neal R. Gross & Co., Inc. Page 214 1 furnaces out at your expense as a contractor 2 or that the distributor has to bear that. But 3 your continued permission, your license, is --

4 FACILITATOR BROOKMAN: Your name 5 again, please. 6 MR. COOPER: Yes. Roger Cooper 7 again on behalf of the American Gas 8 Association. 9 Conceptually, there is no denial 10 of the waiver. When we talk about a blanket 11 certificate, it is a certificate. That means 12 if you comply with these requirements, you 13 have the waiver. The requirements are set out 14 in advance. And just by analogy, as we worked 15 on this, other federal agencies have dealt 16 with the same type of issue when they move 17 from dealing with large commercial entities to 18 the average consumer. 19 Federal Communications Commission 20 requires that any broadcaster be licensed -- a 21 very long, convoluted process. What happens 22 when they came up with CB radios? Every

### 202-234-4433 Neal R. Gross & Co., Inc. Page 215 1 American was going to become now a broadcast 2 licensee, and you got a little card from the 3 FCC with the CB radio, you filled it out, you 4 sent it in, you are now licensed. That was 5 their blanket attempt to deal with the 6 licensing requirement. 7 The Federal Energy Regulatory 8 Commission has blanket waiver provisions for 9 their certification going through pipelines 10 when they are spending smaller amounts of 11 money, which in that case is usually millions 12 of dollars, but small millions of dollars. 13 So other agencies have dealt with 14 this. This is not new in the conceptual 15 process of dealing with it. And it makes 16 sense when you are moving from large -- 17 relatively small number of large commercial 18 institutions to lots of smaller institutions. 19 So that is the thought behind the waiver 20 process. 21 Thank you. 22 FACILITATOR BROOKMAN: Thank you.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 216 1 John? 2 MR. CYMBALSKY: Just to be clear, 3 the Department is very open to the idea of the 4 waiver. My questions have nothing to do with 5 choosing A or B on that. 6 FACILITATOR BROOKMAN: So final 7 comments on waivers, because there is some 8 more content to be covered with respect to 9 labeling. And I would like to -- I would like 10 to just keep pushing and get this -- get this 11 taken care of rather than pause at this point.

12 So should we do that? Let's move ahead. No 13 additional comments on waivers? 14 (No response.) 15 We are moving ahead, then. 16 MR. NEWSOME: Okay. Is everybody 17 feeling fresh? 18 (Laughter.) 19 Pretty good? Okay. I'm Hampton 20 Newsome from FTC, and I believe that I gave 21 most of this presentation when I answered 22 Talbot's question that he wasn't asking

### 202-234-4433 Neal R. Gross & Co., Inc. Page 217 1 earlier. So I'm not going to spend much time 2 on this. 3 I am supposed to say whenever I 4 speak at these meetings that these views are 5 my own and they don't necessarily represent 6 the Commission or any individual Commissioner.

7 So that's that. 8 Okay. So the statute -- 9 basically, Congress tasked FTC as part of this 10 to -- to issue some disclosure requirements 11 that helps everyone easily determine whether 12 equipment meets the standard. We have -- FTC 13 is given a lot of flexibility here, so the 14 disclosures can go in the EnergyGuide label or 15 they can go in addition or in lieu of on other 16 things, you know, other methods to get this 17 information across. 18 We put out an ANPR at the end of 19 November. Everyone has seen that. Comments 20 are due in January. The current requirements 21 -- there are basically two sets of 22 requirements here. One is the EnergyGuide

### 202-234-4433 Neal R. Gross & Co., Inc. Page 218 1 label that manufacturers put on the products 2 themselves. They go right on the product, not 3 on the packaging.

4 And the second are the 5 requirements I discussed earlier, which are 6 basically they have been around in one form or 7 another for decades. But they are basically 8 requirements that the manufacturer provides 9 energy information aside from the labeling, 10 additional label, and that is meant to go down 11 the chain and be available to consumers for 12 their purchase. 13 So in terms of what we are looking 14 for and what I hope we can discuss in the next 15 few minutes, basically there are two areas -- 16 two basic topics that we are thinking about 17 here, but there may be a different way to 18 think about it. 19 But one is that the -- you know, 20 what is the content of this disclosure? In 21 the notice, we provided a bunch of examples. 22 Those should not be seen as any kind of formal

### 202-234-4433 Neal R. Gross & Co., Inc. Page 219 1 proposal. They are just examples to kind of 2 get everybody started. 3 And basically the examples have -- 4 there is, you know, a statement that would go 5 in the label, or whatever material we are 6 talking about that is passing through the 7 chain here that says, "This particular product 8 cannot be installed in the following states." 9 You know, very straightforward, but there may 10 be another way to do it. But that's the 11 content issue. You know, what is the content 12 of this disclosure? 13 And then, the other issue is, what 14 is the format? How should this be done? 15 Should it be on the label? The label is not 16 something that participants, you know, in the 17 chain here, the distributors, the installers, 18 are necessarily going to be looking at all the 19 time, because it is on the product. 20 Even the consumer is usually not 21 going to be looking at it. They are not 22 shopping for it like they are a refrigerator.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 220 1 But the label is certainly where most of the 2 disclosures are now, but are there other 3 options? 4 And these are the things that we 5 don't -- we don't know because I -- you know, 6 I am not an expert in this particular field or 7 industry, and we need to know from you what 8 are the easiest ways, the most effective ways, 9 to make sure this information is passed along 10 -- contracts, invoices, delivery tickets, 11 things like that, websites. 12 And another issue that we can 13 discuss -- and I hope you address in your 14 comments -- are how to -- is how to deal with 15 internet sales. Our rules have -- already 16 have requirements for labeling our energy 17 information for covered products that are sold 18 off of catalogs, which would include most 19 websites. And so how do we incorporate these 20 disclosures into those existing requirements? 21 That's all I have. But I'm going 22 to sit down, so -- you know, because I hope,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 221 1 you know, this is more of a discussion, 2 because we -- you know, I have a very open 3 mind on this, and also I -- you know, I hope 4 to learn about, you know, how these 5 transactions are done and what the easiest way 6 to do it is. 7 We will also -- you know, in doing 8 this, we will explore how Congress has 9 directed to us for these disclosures, how that 10 matches up with existing enforcement 11 provisions in the statute. And these are, you 12 know, things DOE is looking at with their 13 provisions. 14 But, you know, those are all 15 things that we will be looking at during this 16 process. So thanks.

17 FACILITATOR BROOKMAN: So comments 18 both on content and format. Charlie Stephens. 19 MR. STEPHENS: Charlie Stephens, 20 Northwest Energy Efficiency Alliance. I want 21 to just make a couple of observations. I 22 think the furnace information should be

### 202-234-4433 Neal R. Gross & Co., Inc. Page 222 1 relatively straightforward, at least compared 2 to air conditioning and heat pumps. 3 But there were some issues raised 4 earlier in the group by people who wondered 5 how this will go when you are replacing only 6 the condensing unit or only the indoor unit, 7 and how those would get labeled. 8 At some point, the label for an 9 air conditioning condensing unit or an 10 evaporator is going to have to have some sort 11 of nominal rating, because any given outdoor 12 unit can deliver a pretty wide range of 13 efficiencies when combined with a wide range 14 of indoor units, and vice versa. 15 And so I am hoping that AHRI can16 come forward with maybe some special report17 writing out of their database or something 18 that might make this the production of 19 something that would at least let someone 20 looking at any given piece of this thing, have 21 the information you need, because they're the 22 ones that have all of the combinations that in

### 202-234-4433 Neal R. Gross & Co., Inc. Page 223 1 theory would lead to an actual rating of a 2 system that would meet the numbers that are in

3 the law. 4 So I'm just looking for more 5 discussion of this, but I see some issues when 6 implemented in the field. 7 FACILITATOR BROOKMAN: Okay. 8 Thank you. Don Brundage.

9 MR. BRUNDAGE: Just to comment on 10 formatting on the label, I think it would be 11 more descriptive and probably take up less 12 space, rather than listing 20 states in which 13 you can't install, to just stick a little map 14 of the country with an outline of where it can 15 and cannot be installed. 16 I think for most consumers, when 17 they are looking down through a long list, 18 that would be more descriptive. And I agree 19 with Charlie's comments also. That's 20 problematic, but they find some way now to get 21 a SEER rating on the unit, even with the 22 infinite number of coil possibilities. So it

### 202-234-4433 Neal R. Gross & Co., Inc. Page 224 1 seems like there is a way to do it. 2 FACILITATOR BROOKMAN: Karim. No?

3 Go ahead. 4 DR. AMRANE: Karim Amrane. Right 5 now, what is happening right now for split 6 system is that we -- the label goes on the 7 condensing unit for the higher sells test 8 combination. So you get -- you give the label 9 for that, and then the -- actually, if you 10 look at the FTC label, it says it is -- it 11 says that for the combination the rating might 12 be slightly different. 13 The only difference today is that 14 everything -- it's the minimum. It's a base 15 standard. Now, when you have original 16 standard, obviously, you could have a 17 condensing unit. The same condensing unit 18 could get you a 13 or it could get you a 14. 19 So we will have to think about the other means 20 of providing the information, and I believe 21 the directory that we have could play a big

22 role here.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 225 1 FACILITATOR BROOKMAN: Karen,

2 follow on.

3 MS. MEYERS: Would the FTC 4 labeling changes apply to date of manufacture? 5 MR. NEWSOME: Generally, under the 6 statute, any labeling changes apply to date of 7 manufacture or import. So it is -- because 8 the labeling is done under the same statute 9 DOE operates under. So that's the general 10 approach. 11 I don't believe there is anything 12 different for these requirements. 13 FACILITATOR BROOKMAN: Thank you, 14 Hampton. Ashley? 15 MS. ARMSTRONG: I have a question 16 for Karim. It has to do with something you 17 just said. I guess right now what's on the 18 label is the representations based on highest 19 sales volume units. Do you see there needing 20 to be a highest sales volume unit for 21 different regions? Like, in other words, that 22 means something different now, because it's

### 202-234-4433 Neal R. Gross & Co., Inc. Page 226 1 not just -- 2 DR. AMRANE: I think that is going 3 to be problematic. I mean, again, the 4 condensing unit, when it is manufactured, can 5 be matched with a variety of indoor coils. 6 And I -- it is going to be very hard to say, 7 "Well, you know, this one is going just in the 8 north, this one is going just in the south." 9 I mean, I don't know. I mean, to be honest 10 with you, it is something we need to think

11 about. 12 MS. ARMSTRONG: Okay. 13 FACILITATOR BROOKMAN: Harvey? 14 MR. SACHS: Harvey Sachs. I want 15 to just flag two other issues on this agenda. 16 For air conditioning units, there are things 17 we are going to have to be considering. The 18 first one is an area where the ball got 19 dropped somewhere between the handoff between 20 DOE and EPA. If we still have R-22 units 21 being sold when this takes effect, dry shipped 22 R-22, we are in deep doodoo, because that

### 202-234-4433 Neal R. Gross & Co., Inc. Page 227 1 allows you to easily keep the old evaporator. 2 We can be darn sure that is not going to be a 3 complying unit. 4 The second issue in this category 5 is that at the margin some combinations will 6 depend on whether they qualify at 14 on 7 whether or not there is an ECM or a PFC in the 8 air handler. I don't have any answers, don't 9 have any particular wisdom. 10 I'm told that is typically half of 11 a SEER point, but it is something that we will 12 all have to put our noggins together on and 13 see what can be done that gets substantial 14 compliance and keeps the burdens appropriated. 15 So I just want to cue those up for when we 16 have solved all the furnace issues. 17 FACILITATOR BROOKMAN: Okay. 18 MR. SACHS: Thank you.

19 FACILITATOR BROOKMAN: Other

20 comments related to both content and format?

21 MR. NEWSOME: I have two 22 questions.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 228 1 FACILITATOR BROOKMAN: Hampton, 2 please. 3 MR. NEWSOME: Well, just two 4 questions. One is the suggestion was given 5 that we use a map instead of state names, and 6 I was wondering if anyone has any thought on 7 that, because this is not just for the end use 8 consumer. It is mainly for the installer, to 9 make sure the installer is doing it correctly. 10 And the second is, I am interested 11 in details as to the -- you know, what is the 12 best vehicle for this disclosure in whatever 13 documentation is given, you know, from the 14 manufacturer to the distributor to the 15 installer? 16 And is it -- should this just be 17 required in sales contracts, or, you know, 18 what is the best way to do it? Aside from a 19 label or a website, I don't know what paper is 20 being exchanged and what people are most 21 likely to look at, and that's what I'm 22 interested in.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 229 1 FACILITATOR BROOKMAN: Let's see, 2 Harvey first, and maybe then I'll go to Steve.

3 No? 4 MR. SACHS: Thank you, Hampton. 5 Harvey Sachs. ACEEE has filed several times 6 comments on various aspects of the labels, and7 what we have tried to do is to take a fact8 based approach, a research-based approach. 9 And I think everyone in this room would 10 encourage FTC to fund or find studies that 11 would illuminate with answers to questions 12 like map versus state list or map and state 13 list. 14 I don't think that any of us is 15 prepared now to know what is -- to state what 16 is obviously most effective for consumers. 17 But we do think it is discoverable. 18 Thank you. 19 MR. NEWSOME: Just to follow up on 20 that, given our time here, and given how long 21 it takes to do that kind of research with all 22 the clearances you need, it is something we

### 202-234-4433 Neal R. Gross & Co., Inc. Page 230 1 can consider, but I'm not sure it's something 2 that is feasible in this -- in our timeframe. 3 But we will consider that.

4 MR. SACHS: In that case -- thank 5 you. This is Harvey, and I certainly 6 understand that. And one alternative is to 7 look at the experience from a similar type 8 thing, and I would refer you specifically to 9 the pioneering work on regional EnergyStar 10 levels for fenestration, for Windows. And 11 they did a little bit of work. They tried 12 hard on this, and found that a map is a good 13 way to illustrate where a product is 14 compliant, at least on the websites.

15 FACILITATOR BROOKMAN: Yes. So 16 let me reflect back Hampton's question, 17 specifically about maps and then other issues

18 as well. Talbot. 19 MR. GEE: Yes. The only 20 difference there is that is for -- actually 21 for recognition, not compliance. So that's a 22 big difference. But for this -- I think one

### 202-234-4433 Neal R. Gross & Co., Inc. Page 231 1 thing that I would ask that you be especially 2 conscientious of is not creating a scenario 3 where essentially the same condensing unit 4 potentially has three different labels. 5 That -- I mean, to boil this down, 6 that is -- would be the worst possible 7 outcome, even though we know that one 8 condensing unit could potentially qualify in 9 all three regions. That same unit should not 10 have -- be subject to three models to where, 11 you know, Steve actually has three different 12 stocks of the exact same product, just because 13 of where they are projecting it might end up. 14 FACILITATOR BROOKMAN: Yes, 15 Charlie. 16 MR. McCRUDDEN: Charlie McCrudden. 17 From the contractor's point of view -- 18 actually, let me go back to a previous one. 19 You asked about a map. You know, looking at 20 the EnergyGuide label as it is, you've got one

21 color. 22 So if you put up a map, and you

### 202-234-4433 Neal R. Gross & Co., Inc. Page 232 1 say this appliance is legal in these states, 2 are those states black, or are they the 3 background yellow? And with only one color, 4 that I think may create more confusion, 5 because you -- how do you -- unless you say 6 "the states in black," and I don't know how a 7 map -- you would have to have a map that would 8 actually not just show all the states 9 contiguous. You would actually have to show

10 the borders. 11 I don't know if that's feasible. 12 I don't know -- I don't know enough about the 13 label itself. Is the label confined to this 14 size? Or can it get larger?

15 MR. NEWSOME: It can be -- we can 16 change the size of the label. But like I 17 mentioned earlier, you know, I would like 18 people to also think about whether the label 19 -- we can put these disclosures on the label, 20 and obviously that is kind of the first 21 candidate. 22 But whether that is enough -- you

### 202-234-4433 Neal R. Gross & Co., Inc. Page 233 1 know, to put it on the label -- to make sure 2 that your people, you know, get the 3 information, because I don't know whether they 4 are looking at, you know, these labels all the 5 time, because they're on the product, or at 6 least before, you know, they're selling them.

7 So -- 8 MR. McCRUDDEN: My guess is 9 keeping the label the same size would be 10 preferable. I would probably say that having 11 a list of the states over a map, with your 12 limited ability to distinguish between 13 essentially black and yellow. 14 The other question you asked about 15 was, what materials are in the transaction? 16 You know, according to the statute now, the 17 contractor is to provide some of this 18 information already. So if you were to put 19 this information on the label, I think that 20 would satisfy the requirements that the 21 consumer sees this. 22 But there are other -- you had

### 202-234-4433 Neal R. Gross & Co., Inc. Page 234 1 mentioned there are other pieces of 2 information in the transaction that -- and 3 likely that is -- there is a way to -- and 4 maybe there is a uniform sheet from FTC that 5 explains -- that could apply to all 6 transactions, maybe all central air 7 conditioners, all heat pumps, and all furnace 8 transactions, that is just a one-pager that 9 you provide on your website that any 10 contractor can download or request by mail 11 free, just -- because I know there are other 12 federal programs that have similar information 13 disclosure requirements. 14 I'm thinking of EPA's lead 15 contractor rules and things like that. And 16 all of that is available for download. Those 17 are only used in specific situations where the 18 -- you invoke the lead rules. But that's -- 19 FACILITATOR BROOKMAN: Karim. 20 DR. AMRANE: Karim Amrane, AHRI. 21 AHRI right now, when you use a directory, you 22 can print out a certificate. And so we could

### 202-234-4433 Neal R. Gross & Co., Inc. Page 235 1 use that as well as a tool, for example, to 2 ask the contractor to print out a certificate 3 that would say this unit is complying to where 4 you live or the state you live or city or 5 whatever. So it's something that we can do. 6 MR. McCRUDDEN: And to follow up, 7 that form in a situation where the appliance 8 is eligible for a federal tax credit, is 9 required to be maintained by the taxpayer. 10 Now, as of today, we don't have a 11 tax credit available for May 1st of 2013. So 12 maybe that's -- you know, but this is a form 13 that actually is frequently provided to the 14 homeowner is the certificate. 15 FACILITATOR BROOKMAN: Charlie? 16 MR. STEPHENS: Charlie Stephens. 17 Just to pick up a little on what Karim was 18 saying, I kind of like what he mentioned in 19 terms of a certificate, because I think in the 20 end what you need to know, I think more people 21 than just an installer needs to have this 22 information.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 236 1 Ultimately, there is going to be 2 -- this is going to have to be consistent in 3 some cases, like in California and Oregon, 4 where this -- these things are written into 5 the code, code officials are going to be 6 looking at this. 7 There are other people who are 8 going to be wanting to know if what they are 9 looking at complies or doesn't comply, and so 10 there is more disclosure. But all they need 11 to know is where I live, where this building 12 is where I am standing, whether I'm an 13 installer or a -- whoever I am, is this piece 14 of equipment I am looking at legal or not? 15 And it is kind of a binary thing, depending on 16 what the rating of the thing is. It is or it 17 isn't. 18 FACILITATOR BROOKMAN: So is it 19 state by state, or zip code by zip code? 20 MR. STEPHENS: Well, it is state 21 by state, because there is northern states and 22 southern states, in the case of furnaces, and

### 202-234-4433 Neal R. Gross & Co., Inc. Page 237 1 there is hot, dry states in case of air 2 conditioners. I mean, you know, there is a 3 collection of states, whether it's on a map or 4 whatever it is, you know, some shade of gray 5 in the background on the EnergyGuide label or 6 whatever it is. 7 It is just -- I know that these -- 8 this piece of equipment -- I'm in Oregon, you 9 know? I know that when I'm in Oregon I need 10 to see a 90 plus furnace, or I need to see 11 this heat pump or this air conditioner. And 12 these ratings -- and it is just used to say 13 that this is legal in my state or it's not. I 14 mean, yes or no. 15 And so I don't think it's all that 16 complicated, and I think Karim sort of, you 17 know, highlighted one way in which we could 18 make it not so complicated.

19 FACILITATOR BROOKMAN: These are 20 good comments on the issues of labeling. Any 21 additional comments on -- yes, Hampton. 22 MR. NEWSOME: I'll just close it

### 202-234-4433 Neal R. Gross & Co., Inc. Page 238 1 out. Just two things I would like everybody 2 to consider as you are preparing your 3 comments, and I appreciate your thoughts 4 today. 5 One is that most of the -- I think 6 all of the labels that FTC does under this 7 program are consumer labels. This is -- for 8 the first time is really a label or a 9 disclosure that is designed to help people 10 other than consumers, you know, in addition to 11 consumers. So when you are thinking about 12 your proposals, you have to think about that. 13 It's not just for the consumer. 14 And then, the second is I always 15 tell people to try to be as specific as 16 possible, so we -- you know, we can get a 17 proposal out that, you know, avoids the land 18 mines and, you know, works with how the 19 industry operates, you know, so we are not 20 proposing something that, you know, doesn't

21 work.

22 So thanks.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 239 1 FACILITATOR BROOKMAN: So say 2 again your timeline. What is your --

3 MR. NEWSOME: The comments are due 4 January 10th. 5 FACILITATOR BROOKMAN: Okay. Karim. 6 DR. AMRANE: Karim Amrane. I hope 7 you realize that January 10th is just around 8 the corner. With the holidays and things like 9 that, hopefully you will be accepting comments 10 if they come a little bit later than January

11 10th. 12 MR. NEWSOME: Generally, you know, 13 we can't guarantee that they are considered, 14 but, you know, if you have a problem meeting 15 January 10th, you know, let me know, so -- 16 FACILITATOR BROOKMAN: Harvey. 17 MR. SACHS: Harvey Sachs. 18 Hampton, this onrush is getting to me. And 19 I'm hereby specifically requesting that you 20 align your date with DOE's, because so much of 21 the information we will want to provide is 22 relevant to both, and it is really pushing us

### 202-234-4433 Neal R. Gross & Co., Inc. Page 240 1 all to have to get our act together for the 2 DOE comments very quickly in response to what 3 we have learned today. 4 FACILITATOR BROOKMAN: Okay. 5 MR. NEWSOME: We'll consider that. 6 MR. SACHS: Do you need that in 7 writing? Do you need us all to petition you? 8 MR. NEWSOME: It would probably 9 help if someone sent it in in writing, so we 10 can get it on the record. 11 DR. AMRANE: We would support 12 that, too. 13 MR. NEWSOME: Thank you. 14 MS. MEYERS: We'll support that.

15 FACILITATOR BROOKMAN: So several 16 individuals around the room have noted that 17 they would support that. 18 MS. KENNEDY: I think there's a

19 consensus. 20 (Laughter.) 21 FACILITATOR BROOKMAN: The first 22 one today.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 241 1 Okay. So thanks for that good 2 content there. I think we have now covered 3 the material that we intended to cover, and as 4 provided in the agenda there is yet another 5 opportunity for those that wish to do so to 6 make closing remarks, cover any issue that

7 needs to be covered that hasn't been covered 8 sufficiently. 9 Yes, Charlie. 10 MR. McCRUDDEN: Charlie McCrudden. 11 In the interest of time, I will keep this

12 short. The framework document has a footnote 13 on page 3 that alludes to an inadvertent 14 statement about products being manufactured 15 and installed. 16 This is big. This is really big

17 for a lot of us. So I don't know what 18 happened, but, I mean, this -- you know, this 19 -- I think a lot of people interpreted the 20 rule one way. I think it caused a lot of 21 confusion, and it may be part of why you get 22 late comments or whatever it is.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 242 1 But this addresses sell-through, 2 and, as we heard, I have been -- I have 3 contractors who, believe it or not, keep a 4 stock. And they need to figure out what is 5 going to happen with that stock very soon, 6 because we've got a furnace rule that takes 7 effect very soon. 8 FACILITATOR BROOKMAN: Okay. 9 MR. McCRUDDEN: That's my comment. 10 FACILITATOR BROOKMAN: Thank you.

11 Talbot.

12 MR. GEE: That was -- I want to 13 echo his comments. That was the one thing we 14 could not leave this room without bringing up. 15 This is a significant change in precedent for

16 how these standards are enforced. And the 17 sell-through -- you know, wholesaling is all 18 about inventory, and so you are talking about 19 trying to predict the day on which your 20 inventory goes to zero, and that day has to be 21 X day. That could be a back-breaking problem 22 for a lot of distributors. Absolutely.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 243 1 FACILITATOR BROOKMAN: Okay.

2 Steve. 3 MR. PORTER: Yes, I would like to 4 echo that also, you know, and many of the 5 distributors' equipment represents -- and I 6 will try and be careful here, Karen -- 7 (Laughter.) 8 -- represents half of their 9 business, you know, of what they sell in a 10 year's time. The expense to rehandle that 11 equipment, stranded inventory in the field, 12 and get it back to where it could be sold 13 would negate any profitability and will 14 severely harm -- severely harm, if not end, 15 many wholesalers' businesses. 16 FACILITATOR BROOKMAN: Okay. 17 Thank you. Additional comments at this time? 18 (No response.) 19 You will note that I am handing 20 out the evaluation form. John, are those the 21 evaluation forms?

22 MR. CYMBALSKY: Yes.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 244 1 FACILITATOR BROOKMAN: Do you want 2 to hand them down, please? And so then, from 3 my perspective, I will just say thanks to all 4 of you. I hope you all have a lovely holiday. 5 I will turn it back to Ashley 6 and/or John for closing remarks. The final 7 slide? 8 MS. ARMSTRONG: That's fine. So 9 -- you can just let it go. So I just want to 10 thank everyone for coming. There's two -- 11 everyone knows the Department's comment period 12 is open until the beginning of February. 13 Hampton has already heard what you would like 14 to do with the FTC's comment period. 15 So we appreciate all the feedback 16 and any ideas you may have that the Department 17 should consider as it develops its proposal. 18 Other than that, have safe travels 19 for those traveling and a good holiday. 20 (Whereupon, at 1:01 p.m., the proceedings in 21 the foregoing matter were 22 concluded.)

### 202-234-4433 Neal R. Gross & Co., Inc. Page 245 1 2 Regional Standards and Enforcement Framework 3 Webinar Attendees’ Questions and Comments 4 Appended by the Department 5 December 16, 2011 6 Schneider, Frank 7 R. E. Michel Co., Inc. 8 Questions Asked by Attendee 9 1. Distributors sell "Bulk" quantities of 10 equipment which will not have access to 11 addresses or zip codes at the point of 12 sale. After sale collection of 13 information is not viable. 14 2. As a National Distributor, we have 15 internal technology to distribute 16 regionally approved product to specific 17 Energy Standard Regions, however all 18 product is shipped to our CDC and 19 redistributed. Are there Any thoughts 20 regarding restrictions being placed on 21 manufacturers regards shipment of 22 products which do not fall within the 23 Distributors Regional Energy standards 24 3. Will Distributors and contractors with 25 inventories of products which do not meet 26 their local Regional Energy standards as 27 of the implementation date be forced to 28 scrap the non-conforming inventories? Is 29 there some consideration regards a grace 30 period to allow distributors /31 contractors to sell off remaining non32 conforming inventories?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 246 1 4. Equipment sales can be tracked the same 2 way as product safety recalls are 3 tracked...by Brand and serial number, 4 beginning with the manufacturer, to the 5 distributor, to the contractor. 6 7 5. Also, should Distributors be required to 8 collect the installed addresses and zip 9 codes, the list isn't protected by DOE's 10 confidentiality data base. 11 Dowding, Glen 12 ACCA 13 Questions Asked by Attendee 14 1. What you are discussing is what EPA is 15 requiring for version 3.0; I don’t think 16 the information about serial #s is that 17 big of deal. Version 3.0 also requires 18 readings of equipment to ensure proper 19 installation 20 2. I don’t think you can track the data, if 21 you keep talking about regional standards 22 and tracking is impossible. If an 80% 23 furnace is installed in the north the 24 only way it can be detected is if another 25 company comes out to service the unit. At 26 that point what happens to the consumer? 27 Do you condemn the furnace and they are 28 without heat? Do you force the consumer 29 to purchase the more expensive unit? 30 3. Why have regions? Why not use a national 31 standard for all states. Why not use the 32 same model used when 10seer units were 33 fazed out?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 247 1 Neely, William 2 Premier Heating and Cooling 3 Questions Asked by Attendee 4 1. For Proper geographic location will it 5 will be determined by zip code? 6 2. What do you do with homeowners that are 7 lower income and cannot afford to pay for 8 higher efficient equipment? Tell them to 9 go without heat, or will there be 10 government financial help to meet the new 11 code. 12 3. Will you be working with ACCA's Energy 13 Star program, as far as paper work, with 14 model and serial numbers plus all the 15 start-up information and address of the 16 property? 17 Rocky, Bryan 18 Johnson Controls Inc. 19 Questions Asked by Attendee 20 1. Question to Ashley: TO DOE, is the burden 21 of proof on proper installation the 22 responsibility of the selling contractor 23 or the installing contractor? 24 2. If waivers are allowed, every 25 manufacturer will have to have inventory 26 available to the distribution chain or 27 they will lose that sales opportunity to 28 another manufacturer who does have that 29 inventory on hand. 30 3. Comment to Harvey Sachs comments: 31 shipments and tracking patterns do not 32 work well if the waiver process is

### 202-234-4433 Neal R. Gross & Co., Inc. Page 248 1 allowed. Some additional cross reference 2 to waivers would have to be included. 3 4. Comment: contractors do not sell AC 4 systems based on the FTC energy guide 5 label on the AC equipment - they sell off 6 spec sheets, tech guides, etc. this issue 7 is when label on the equipment does not 8 match what consumer paid for due to 9 ratings being different then the highest 10 sales volume system. 11 5. Jim’s waiver process comments (14 points) 12 will result in manufacturers and 13 distributors to ship non-compliant 14 products to those contractors desiring 15 waivers, and then have to report that to16 DOE. How would DOE reconcile those non17 compliance shipment reports to waivers 18 granted? 19 Stewart, Arlene 20 AZS Consulting Inc. 21 Questions Asked by Attendee 22 1. Will you be posting the transcript? 23 2. Someone said there would be a transcript? 24 3. And will the list of attendees be 25 available? 26 Marrongelli, Louis 27 CSG 28 Questions Asked by Attendee 29 1. Regarding recording keeping, I believe 30 the U.S. Consumer Product Safety 31 Commission requires HVAC contractors to 32 record and keep on file Model and Serial 33 numbers of equipment they install and

### 202-234-4433 Neal R. Gross & Co., Inc. Page 249 1 where they install them. The main purpose 2 is locating equipment if a recall has 3 been issued with the ability to locate 4 this equipment and address the recall. I 5 believe the distributors have the same 6 requirement in regards to where they sold 7 the equipment Regards, Lou Marrongelli 8 2. Regarding recording keeping, I believe 9 the U.S. Consumer Product Safety 10 Commission requires HVAC contractors to 11 record and keep on file Model and Serial 12 numbers of equipment they install and 13 where they install them. The main purpose 14 is locating equipment if a recall has 15 been issued with the ability to locate 16 this equipment and address the recall. I 17 believe the distributors have the same 18 requirement in regards to where they sold 19 the equipment. Does some know if this it 20 true? Regards, Lou Marrongelli 21 Ferrara, Todd 22 Standard Heating & AC Co 23 Questions Asked by Attendee 24 1. Standard Heating & AC Minneapolis, Todd 25 Ferrara Owner, VP - #1. what efforts will 26 be in place to assure that units cannot 27 be sold on line or shipped from the south 28 to the north creating a black market for29 HVAC equipment30 2. Standard Heating & AC Minneapolis, Todd 31 Ferrara Owner, VP (ACCA) - #2. We are 32 very concerned about our data being 33 available to our competitors -

### 202-234-4433 Neal R. Gross & Co., Inc. Page 250 1 demonstrating compliance could be 2 obtained by local inspectors and state 3 codes being enforced rather than a new 4 federal 5 3. Standard Heating & AC Minneapolis, Todd 6 Ferrara Owner, VP - Question #2 7 (continued) the federal gov. (in my 8 opinion) should enforce manufactures and 9 distributors, not contractors and the 10 local inspectors and distributors can 11 regulate contractors. 12 4. Standard Heating & AC Minneapolis, Todd 13 Ferrara Owner, VP - Manufacturers & 14 distributors have recalls & rebates that 15 require contractors to provide them 16 serial numbers and installed addresses 17 all the time for years! This is why they 18 can and should be held responsible- they 19 (OR SOME) already have the infrastructure 20 to pass this on. 21 5. Standard Heating & AC Minneapolis, Todd 22 Ferrara Owner, VP - In Minnesota we have 23 unities company that sell the equipment 24 and subcontract to contractors who 25 install - this adds another layer to the 26 chain -!! 27 6. I have to go- now great discussion. 28 Standard Heating & AC Minneapolis, Todd 29 Ferrara Owner, VP - 30 7. Standard Heating & AC Minneapolis, Todd 31 Ferrara Owner, VP - If the manufacturer 32 and distributor were also fined as a 33 result of a violation, then as a

### 202-234-4433 Neal R. Gross & Co., Inc. Page 251 1 contractor, I can better accept the 2 burden of enforcement. However, placing 3 this on contractor or even homeowner 4 should be the last and lowest priority. 5 What if the contactor is unknown - what 6 if jobs are installed anonymously (this 7 is the reality of side work) 8 8. Standard Heating & AC Minneapolis, Todd 9 Ferrara Owner, VP - (ACCA member). Local 10 inspectors and local distributors need to 11 see that this equipment is not approved 12 for certain areas. Then we need stronger 13 local enforcement requirements -

- 14 Nayes, Mark 15 Southside Heating and Air Conditioning 16 Questions Asked by Attendee 17 1. Our installers are trained to install 90+ 18 furnaces to code with venting 19 requirements, if there are any codes or 20 rules that will allow a waiver furnace, 21 we can be trained to see those as well. 22 2. Mark Nayes, Southside Heating and Air 23 Conditioning. I work in Bloomington, 24 Minnesota. We have done work in an 25 apartment complex with common vented 80% 26 furnaces. To vent a 90%+ furnace to code 27 I would need to take the vent pipes out 28 their closet wall, across their kitchen, 29 through their living room and out the 30 sidewall of the home to make all my 31 clearances. Most of the installs that 32 would be needing waivers for are not

### 202-234-4433 Neal R. Gross & Co., Inc. Page 252 1 economic in nature, but simply common 2 sense. 3 3. Mark Nayes-A 13 SEER air conditioner 4 condenser properly matched with a furnace 5 and a-coil can reach 14 or 14.5 SEER. How 6 will that condenser be labeled for sale? 7 4. Will there be a whistle blowing reward as 8 with releasing refrigerant? 9 5. Mark Nayes (like a horse neighs) As a 10 contractor we keep records of 11 model/serial numbers for all customers 12 from 1984 until today on computer system. 13 We cannot buy anything from any 14 distributor without signing for it. A 15 $200 fine is about the same as a permit 16 fee application, 17 18 it is a very light slap on the wrist. 19 6. Mark Nayes-Since the Recovery Act with 20 the large tax credit for high efficient 21 equipment, we have given our customers 22 the AHRI certificate showing the matched 23 efficiency ratings of the furnace, air 24 conditioner, and a coil. That AHRI number 25 is all that makes most systems compliant 26 or not. 27 7. What is the penalty for violation, who 28 enforces it, and if the first penalty is 29 not sufficiently strict, what stops a 30 homeowner from doing their own hvac? 31 8. Mark Nayes-as part of the waiver process 32 being proposed would single stage psc 33 motor furnaces be allowable or would

### 202-234-4433 Neal R. Gross & Co., Inc. Page 253 1 multiple stage variable speed furnaces be 2 required that use less gas and 3 electricity and are more in tune with the 4 intent of this rule in using less energy 5 by being more efficient? 6 Jenkins, Mark 7 Comfort Professionals 8 Questions Asked by Attendee 9 1. Serial number and installation address to 10 the distributor would be a conflict of 11 interest for the contractor as the 12 distributor can now sell or market our 13 customers directly with exactly what 14 equipment we have installed. The consumer 15 has no ties to the distributor as they 16 are buying us the contractor.... 17 2. model and serial numbers for each piece 18 of equipment is already being required to 19 be turned in on version 3 of Energy Star 20 worksheets 21 22 23 Anderson, Wes 24 Dept. of Energy 25 Questions Asked by Attendee 26 1. Ashley: It might be helpful to remind the 27 audience that this is just the framework 28 phase and there will be another 29 opportunity to comment once DOE files the 30 NOPR. This isn't the final rule. It 31 appears that people are looking for 32 answers 33 Goodnight, Tom

### 202-234-4433 Neal R. Gross & Co., Inc. Page 254 1 Johnson Controls 2 Questions Asked by Attendee 3 1. Question: How will the situation of 3rd 4 party coil manufacturers being 5 responsible for split system ratings be 6 handled? They could rate an AC match as 7 14 SEER, but the homeowner will receive 8 outdoor equipment with a 13 SEER FTC hang 9 tag. 10 2. Comment: From a split condensing unit 11 point of view, the installed efficiency 12 depends on the indoor section to which it 13 is matched. The same condensing unit may 14 be compliant (14 SEER) with a large 15 indoor coil, but non-compliant with the 16 same furnace or air handler with a 17 smaller coil. In other words, a southern 18 region ‘‘13 SEER AC’’ could be compliant 19 in the northern region with an ECM indoor 20 section; also, a ‘‘14 SEER AC’’ could be 21 non-compliant in a retrofit installation 22 with a small indoor coil. Compliance 23 can’t be assured at point of sale, it 24 must be verified as installed. 25 3. Comment: With respect to FTC hang tags, 26 many ‘‘13 SEER’’ AC condensing units can 27 be compliant with the southern region 14 28 SEER when matched with ECM indoor units. 29 In this situation, a 14 SEER system would 30 arrive with a 13 SEER FTC hang tag on the 31 outdoor unit. In the case of split 32 equipment, compliance can’t be imposed on 33 the condensing unit only - - it relates to - it relates to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 255 1 the system as installed, which pushes 2 compliance verification to the point of 3 installation rather than the point of 4 sale. 5 4. Had northern/southern reversed in 6 previous comment. 7 Oliver, Karen 8 KO Energy Design, LLC 9 Questions Asked by Attendee 10 1. Contractors will not comply with 11 submitting information. This has to be 12 done on a distributor level, possibly 13 tracing location of shipments, and to 14 what type of ultimate end user, ie, 15 2. Contractor would be noncompliant with DOE 16 and local codes. 17 3. Thank you for your question, it has been 18 passed along to the panelist to address. 19 4. It is the responsibility of the homeowner 20 to make sure the contractor obtains the 21 proper permits. It is the responsibility 22 and the Contractor must abide by the 23 State statutes to permit every 24 installation, including component 25 installation. Enforcement occurs from the 26 local bldg. department who then can 27 pursue DOE and EPA for repeat offenders. 28 5. Recourse has to be against the end user. 29 Local codes and Energy code will ensure 30 compliance. If a system or component is 31 installed without a permit, the end user 32 is non-compliant. 33 VerShaw, Jim

### 202-234-4433 Neal R. Gross & Co., Inc. Page 256 1 Ingersoll Rand--

- -Trane 2 Questions Asked by Attendee 3 1. Please show agenda on webinar 4 2. Why not have a one time signature in 5 order to do business with a distributer? 6 White, Chuck 7 PHCC--National Association 8 Questions Asked by Attendee 9 1. Chuck White PHCC As applies to furnaces; 10 don't you only need to track sub 90% 11 furnaces? Higher efficiency would be 12 approved everywhere. 13 2. Chuck White PHCC I agree with Charle, 14 there are a lot of small contractors. 15 Filing documentation for every furnace or 16 A/C sold will be resisted by most 17 contractors. If contractors do the right 18 thing, they are facing additional 19 paperwork and staff to comply with this. 20 3. Chuck White PHCC Some contractors do 21 track SN's in customer records, others do 22 not, but the SN's are not saved first, 23 the job records are saved by customer not 24 equip numbers. Some records are kept for 25 a long time (until someone sorts them and 26 discards) others keep 3 years, some keep 27 minimal records. Contractors would be 28 reluctant to share all that data with a 29 local wholesaler. 30 4. Chuck White PHCC Scenario: Contactor 31 tired of losing job to xyz heating 32 because they haul in a truckload of 80%

### 202-234-4433 Neal R. Gross & Co., Inc. Page 257 1 furnaces and here's an address. Who is 2 going to go look? 3 5. Chuck White PHCC permits are required in 4 most jurisdictions not necessarily all. 5 6 7 6. Chuck White, PHCC Lots of internet sales, 8 if we could stop it now we would. 9 Customers think what contractors do is 10 easy but don't find out otherwise until 11 it is too late. 12 7. Chuck White PHCC I think most inspection 13 agencies don't have additional funding 14 for doing additional work. Perhaps they 15 will create fines also. 16 8. Chuck White PHCC A contractor that 17 installs non-compliant equipment has to 18 buy it somewhere, even internet sales had 19 to come from a manufacturer. If these 20 items are found, tracking back by Serial 21 Number will soon paint the picture of how 22 this is happening. 23 9. Chuck White PHCC Manufacturers report on 24 the Models, not each individual item 25 manufactured, sold, and installed. Much 26 larger scale of products. 27 10. Doesn't item 3 for Mfg. mean if you 28 find an installed product, the 29 manufacturer can tell you who the 30 distributor was not the manufacturer 31 knows where they all went? 32 33

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### 202-234-4433 Neal R. Gross & Co., Inc. Page 292 121:6 124:3 128:15 193:10,14 194:20 197:3 199:3 201:21 204:7,18 211:12 213:7,9 80s 121:22 212:14 80% 246:22 251:25

256:32 82 38:2 9 9 257:23 9:00 1:12 9:06 7:2 90 123:22 124:4 133:1 181:4 192:9 194:16 195:7 204:5,19 212:8 237:10 251:17 90% 251:26 256:10 92 65:6NEAL 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 293

Standards Enforcement and Disclosure for Furnaces, Cen A/C and Heat Pumps

US DOE

12-16-11

Washington, DC