1

November 13, 2014

Via Electronic Mail

The Honorable Ernest Moniz

Secretary 

U.S. Department of Energy

1000 Independence Avenue, S.W. 

Washington DC 20585

Re: Energy Conservation Program; Proposed Energy Efficiency Standards for Automatic 

Commercial Ice Makers; 79 Fed. Reg. 14846 (March 17, 2014).

Dear Secretary Moniz,

On behalf of the Office of Advocacy, I am writing to bring to your attention the concerns of 

small manufacturers regarding the Department of Energy’s (DOE) Appliance and Equipment 

Standards program. Advocacy supports the Department’s efforts to fulfill the mandate of the 

Energy Policy Conservation Act (EPCA) to reduce national energy consumption through the 

development of energy efficiency standards; however, Advocacy has concerns about the 

cumulative and disproportionate impact that DOE’s standards may be having on small 

manufacturers. DOE has recently proposed and adopted several energy efficiency regulations 

that will have significant economic impacts on small business manufacturers, according to 

DOE’s own analyses.

1 Most recently, small manufacturers have expressed concerns regarding 

DOE’s proposed efficiency standards for automatic commercial ice makers.2 Advocacy 

recommends that DOE use its discretion to adopt an alternative to the proposed standard that is 

achievable for small manufacturers. Additionally, Advocacy recommends that DOE give similar 

consideration to small manufacturers in all future energy efficiency rulemakings.

 

1

 See Energy Conservation Program: Energy Conservation Standards for Small, Large, and Very Large AirCooled Commercial Package Air Conditioning and Heating Equipment, 79 Fed. Reg. 58947 (September 30, 2014); 

Energy Conservation Program: Energy Conservation Standards for General Service Fluorescent Lamps and 

Incandescent Reflector Lamps, 79 Fed. Reg. 24067 (April 29, 2014); Energy Efficiency Standards for Certain 

Commercial and Industrial Electric Motors. 78 Fed. Reg. 73589 (December 6, 2013); Energy Conservation 

Program: Energy Conservation Standards for Commercial Refrigeration Equipment, 78 Fed. Reg. 55889 (September 

11, 2013) (all containing RFA analyses showing disproportionate and significant costs for small manufacturers).

2

 See e.g. comments of Hoshizaki America and Ice-O-Matic, www.regulations.gov, RIN 1904-AC39.
2

About the Office of Advocacy

Congress established Advocacy under Pub. L. 94-305 to represent the views of small entities 

before Federal agencies and Congress. Advocacy is an independent office within the U.S. Small 

Business Administration (SBA); as such the views expressed by Advocacy do not necessarily 

reflect the views of the SBA or the Administration. The Regulatory Flexibility Act (RFA), as 

amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), gives small 

entities a voice in the Federal rulemaking process. For all rules that are expected to have a 

significant economic impact on a substantial number of small entities, Federal agencies are 

required by the RFA to assess the impact of the proposed rule on small business and to consider 

less burdensome alternatives. The Small Business Jobs Act of 2010 requires agencies to give 

every appropriate consideration to comments provided by Advocacy. The agency must include, 

in any explanation or discussion accompanying the final rule’s publication in the Federal 

Register, the agency’s response to these written comments submitted by Advocacy on the 

proposed rule, unless the agency certifies that the public interest is not served by doing so.

Advocacy’s Comments

Small Manufacturers Play an Important Role in Energy Efficiency Policy

Given the steadily rising cost of energy, manufacturers should have ample incentive to create 

innovative products to meet growing consumer demand for energy efficient products. Indeed, in 

many cases, large manufacturers are already meeting or exceeding DOE’s proposed energy 

efficiency standards under EPCA. Small manufacturers can provide efficient and affordable 

choices to consumers that would not otherwise be in the market for high-end replacement 

products. They also often manufacture niche products that serve consumers with unique needs.

It is important that DOE’s energy efficiency policy recognizes the value that small manufacturers 

bring to the table. Adopting energy efficiency standards that impede the ability of small 

manufacturers to remain in the market is harmful from both an economic and energy efficiency 

standpoint.

Current DOE Policy May Significantly Disadvantage Small Manufacturers

EPCA requires DOE to adopt efficiency standards that achieve significant energy savings to the 

extent they are economically justified. DOE’s current interpretation of this mandate often greatly 

disadvantages small manufacturers, as evidenced by DOE’s own RFA analyses. EPCA provides 

DOE with a rebuttable presumption that standards are economically justified when the consumer 

payback period is less than or equal to three years3; however, in making this calculation, DOE 

averages costs across small and large firms. When DOE simply sets its standards at the level 

where average costs meet EPCA’s rebuttable presumption, DOE often imposes extremely 

disproportionate costs on small entities. This is especially problematic when small manufacturers 

only represent a small portion of the overall market for a given product, and their compliance 

with a burdensome standard contributes relatively insignificant energy savings. 

 

3

 EPCA provides for a rebuttable presumption that an energy conservation standard is economically justified if the 

additional cost to the consumer of equipment that meets the standard level is less than three times the value of the 

first-year energy savings resulting from the standard, as calculated under the applicable DOE test procedure, see 42 

U.S.C. 6295(o)(2)(B)(iii).
3

The Proposed Standard for Commercial Ice Makers Will Harm Small Manufacturers 

DOE’s proposed energy efficiency standards for automatic commercial ice makers will have a 

disproportionately negative impact on small business manufacturers. Small manufacturers have 

commented that the proposed standards for automatic commercial ice-makers are not 

technologically achievable or economically feasible within the three year period prescribed by 

DOE.4 Yet, their compliance with the rule will not result in significant energy savings. The 

majority of firms manufacturing automatic commercial ice makers are small businesses, but they 

only represent 5 percent of the total market, and thus will contribute only 5 percent of the overall 

energy savings achieved.

5

 According to DOE’s own data, the adopting proposed trial standard

level (TSL3) will reduce the industry net present value (INPV) of these small businesses

manufacturing by $4.0 million, which represents a 78.6 percent reduction in INPV for small 

business manufacturing in the industry overall.6 In contrast, the proposal will result in only a 

23.8 percent reduction in INPV for large manufacturers.

7

 

DOE Should Adopt an Alternative Standard to Reduce Small Manufacturing Impacts

DOE should exercise its discretion to adopt a standard for commercial automatic ice-makers that 

still achieves significant energy savings without imposing costs that will cause small businesses 

to exit the market. While DOE can achieve the highest level of energy savings without exceeding 

a three year consumer payback period by adopting the proposed standard, DOE has clearly 

demonstrated that the costs of achieving those gains will be disproportionally felt by small 

manufacturers.8 DOE is expressly permitted to balance energy savings with costs to 

manufacturers under EPCA, and may adopt a less burdensome standard as long it achieves

significant energy savings. For example, adopting TSL1 instead of TSL3 would reduce costs for 

small businesses by 41 percent and will still result in a 4 percent increase in national energy 

savings over the current baseline.9 Advocacy believes that DOE has ample basis in the record to 

make the determination that adopting TSL1 will achieves significant energy savings and is 

economically justified. 

DOE Must to Explain Its Rationale for Rejecting Significant Alternatives

The RFA requires that agencies analyze significant alternatives to proposed rules that will reduce 

disproportionate impacts of their rules on small entities. In its Initial Regulatory Flexibility Act 

Analysis (IRFA), DOE cites to TSL1 and TSL2 as significant alternatives.10 If DOE declines to 

adopt either of these less burdensome standards, the RFA requires DOE to explain its legal and 

policy reasons that decision in its Final Regulatory Flexibility Act Analysis (FRFA).

11

 However, 

if DOE believes it lacks the legal authority to adopt TSL1 or TSL2, it cannot also claim to have 

analyzed any significant alternatives under the RFA. Significant alternatives under the RFA 

 

4

 See supra note 2.

5

 Proposed Energy Efficiency Standards for Automatic Commercial Ice Makers, 79 Fed. Reg. 14846 at 14942

(March 17, 2014).

6

 Id.

7

 Id.

8

 Id.

9

 Id. 14927, 14943.

10

 Id. 14944.

11

 5 U.S.C § 604(a)(5). 
4

must be alternatives that both “accomplish the stated objectives of applicable statutes and which 

minimize significant economic impacts on small entities”.

12 If DOE lacks statutory authority to 

adopt TSL1 or TSL2, then DOE must publish a supplemental IRFA which analyzes significant 

alternatives. Significant alternatives might include a delayed compliance date for small 

manufacturers, or other flexibilities DOE believes are permitted under EPCA. If DOE believes 

is unable to adopt any small business flexibilities under EPCA, it should state the basis for that 

conclusion clearly in its FRFA.

Conclusion

Small business compliance with DOE’s proposed energy efficiency standard for automatic 

commercial ice makers will yield very little in the way of energy savings, but will cause 

significant economic harm. DOE should adopt a standard that is feasible not only for large 

manufacturers, but also for small manufacturers. EPCA gives DOE ample latitude to adopt

standards that will achieve significant energy savings without inflicting serious harm on small 

business manufacturing. In setting its EPCA policy going forward, DOE should consider the 

cumulative costs and benefits of imposing burdensome standards that reduce small business 

participation in the manufacturing sector. Please do not hesitate to contact me or my staff at 202-

205-6533 should you have any questions.

Sincerely,

Winslow L. Sargeant, Ph.D.

Chief Counsel

Jamie Belcore Saloom

Assistant Chief Counsel 

cc: The Honorable Dr. Howard Shelanski

Administrator, Office of Information and Regulatory Affairs

 

12

 5 U.S.C. § 603(c).