f

EE-RM/STD-98-440

eE__M/S7D - 9 -dfO

7 REb \ ^ d Wednesday,

$^ a^ ^ ~July 25, 2001

x ^^ a

o ^ Part III

Department of

l^ Energy

A^^^ _Office of Efficiency and Renewable

Energy

10 CFR Part 430

Energy Conservation Program for

Consumer Products; Central Air

Conditioners and Heat Pumps Energy

iL__|_ 1 ~Conservation Standards; Proposed Rule

---

EE-RM-STD-98-440 COMMENT 200
EE-RM/STD-98a440.4 00

38822 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

DEPARTMENT OF ENERGY Independence Avenue, SW., Cumulative Regulatory Burdens on Washington, DC 20585-0121. You may Manufacturers

Office of Energy Efficiency and send emails to: brenda.edwards- B. Policy Issues

Renewable Energy jonesee.doe.gov.1. Burdens on Consumers 2. Burdens on Manufacturers

The hearing will begin at 9:00 a.m., in a. Cumulative Regulatory Burden 10 CFR Part 430 Room 1E-245 at the U.S. Department of b. Financial Burdens Associated with New

[Docket Number EE-RM-98-440] Energy, Forrestal Building, 1000 Standards

Independence Avenue, SW., C. Conclusion RIN 1904-AA77 Washington DC. You can find more IV. Proposed Rule

Energy Conservation Program for information concerning public A. Background Consumer Products; Central Air participation in this rulemaking 1. Statutory Authority

Conditioners and Heat Pumps Energy proceeding in Section VII, "Public B. Overview of the Proposed Standards

Conservation Standards Comment," of this notice of proposed 1. Central Air Conditioner and Heat Pump rulemaking (NOPR). Features

AGENCY: Office of Energy Efficiency and You may read copies of the public 2. Consumer Benefits

Renewable Energy, Department of comments, the Technical Support 3. National Benefits

Energy. Document for Energy Efficiency C. Technological Feasibility

ACTION: Supplemental proposed rule; Standards for Consumer Products: D. General Discussion of Economic

proposed withdrawal of final rule. Central Air Conditioners and Heat Justification Factors -------- - Pumps (TSD), the transcript of the1. Economic Impact on Manufacturers and SUMMARY: In response to a petition for Consumers public hearing, workshop-transcripts-in 2. Life-Cycle Costs and Rebuttable reconsideration, and as a result of this proceeding, the petition for Presumption reviewunder President Bushreconsideration submitted by the Air- 3. Energy Savings Regulatory Review Plan, the Department Conditioning and Refrigeration Institute, 4. Lessening of Utility or Performance of

of Energy (DOE) is proposing to and other post-promulgation Products

withdraw its January 22, 2001 final rule submissions at the DOE Freedom of 5. Impact of Lessening of Competition setting forth energy conservation Information (FOI) Reading Room, U.S. 6. Need of the Nation to Conserve Energy standards for residential central air Department of Energy, Forrestal 7. Other Factors

conditioners and central air Room 1E-190 100nnE. Methodology Used in DOE Analyses conditionuilding heat pumps that are not1000 V. Analytical Results and Conclusions

effconditioning heat pumps that ande not Independence Avenue, SW., A. Overview of Analytical Results

yet effective and not enforceable until Washington, DC 20585, (202) 586-3142, 1. General

January 23, 2006. As a substitute, DOE between the hours of 9 a.m. and 4 p.m., 2. Through-the-Wall Products

proposes to amend the currently Monday through Friday, except Federal 3. Other Space-Constrained Products

enforceable standards by raising the holidays. You may obtain copies of the B. Re-weighting of Factors

minimum energy efficiency levels by 20 TSD and analysis spreadsheets from the 1. Re-weighting of Burdens on Consumers

percent. DOE also invites public Office of Energy Efficiency and 2. Re-weighting of Burdens on comment on proposed regulatory Renewable Energy's (EERE) web site at: Manufacturers

amendments to define and implement uildins/ a.erendo Cumulative Regulatory Burden

statutory limitations on its authority to ttp//wwwerendoegovuildings/ b. Financial Burdens Associated with New

prescribe amended energy conservationty to codes standards/applbrf/ Efficiency Standards

standards.mended en y cn central air conditioner.html. C. Conclusions Regarding Conventional

DATES: Comments must be received on FOR FURTHER INFORMATION CONTACT: Dr. D.onclusions Regarding Saceor before October 9, 2001. DOE is Michael E. McCabe, U.S. Department of Constrained Products

requesting a signed original, a computer Energy, Office of Energy Efficiency and VI. Procedural Issues and Regulatory Review

diskette (WordPerfect 8) and 10 copies Renewable Energy, Forrestal Building, A. Review Under the National

of the written comments. DOE will also EE-41, 1000 Independence Avenue, Environmental Policy Act

accept e-mailed comments, but you SW., Washington, DC 20585-0121, (202) B. Review Under Executive Order 12866

must send a signed original. Oral views, 586-0854, e-mail: C. Review Under the Regulatory Flexibility

data, and arguments may be presented ME.mccabe@ee.doe.gov, or Eugene Act

at the public hearing in Washington, Margolis, Esq., U.S. Department of D. Review Under the Paperwork Reduction

DC., beginning at 9 a.m. on September Energy, Office of General Counsel, E. Review Under Executive Order 12988

F. Review Under Executive Order 12630 13, 2001. Iorrestal Building, GC-72, 1000 F. Review Under Executive Order 12630

DOE must receive requests to speak at Independence Avenue, SW., G. Review Under Executive Order 13132

the public hearing and a copy of your Washington, DC 20585, (202) 586-9507, H. Review Under the Unfunded Mandates

statements no later than 4 p.m., e-mail: eugene.margolis@hq.doe.gov. Reform Act of 1995 .

September 10, 2001, and we request that SUPPLEMENTARY INFORMATION: I. Review Under the Treasury and General

you provide a computer diskette Government Appropriations Act, 1999

(WordPerfect 8) of each statement at that Table of Contents J. Review Under Executive Order 13211 ~~~~time. -,,~~~~~~~~~~~VII. Public Comment time. I. Introduction A. Written Comment Procedures

ADDRESSES: Please submit written II. Authority to Reconsider the January 22, B. Public Workshop/Hearing

comments, oral statements, and requests 2001, Final Rule 1. Procedure for submitting Request to

to speak at the public hearing to: Brenda III. Proposal to Withdraw Final Rule Speak

Edwards-Jones, U.S. Department of A. Legal Issues 2. Conduct of Hearing

Energy, Office of Energy Efficiency and 1. Falure to Obtai en the V oteI uction Department of Justice on the Potential 1. Introduction Renewable Energy, Energy Conservation Anti-Competitive Impact of 13 SEER

Program for Consumer Products: Central Standards Pursuant to section 325 of the Energy Air Conditioners and Heat Pumps, 2. Failure of the Statement of Basis for the Policy and Conservation Act (EPCA) (42

Docket No. EE-RM/STD-98-440, 1000 Final Rule to Adequately Address U.S.C. 6295) and the Administrative

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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38823

Procedure Act (APA) (5 U.S.C. 553), and whether the affirmative consideration of cumulative burden

DOE today publishes a three part determination of economic justification attributable to other Federal agencies'

proposal with regard to energy was based on adequate findings with and State regulatory actions, which was

conservation standards for central air regard to the statutorily required necessary to DOE's conclusion regarding

conditioners and central air considerations that make up the test of the potential impact of the final rule on

conditioning heat pumps. First, DOE economic justification. manufacturers; and (3) DOE gave

proposes regulatory provisions to clarify While DOE examined the three inadequate weight to the potential

that section 325(o)(1), which qualifies appliance energy conservation impact of higher installation and

DOE's rulemaking authority to prescribe standards rulemakings under the equipment costs on some types of

amended energy conservation President's Regulatory Review Plan, consumers and to potential burdens on

standards, applies as of an effective date DOE received petitions for manufacturers.

for modifying the Code of Federal reconsideration for each final rule. In DOE recognizes that its conclusion

Regulations (CFR) set forth in the notice addition, DOE received notice that the that the January 22, 2001 final rule was

of final rulemaking and established Gas Appliance Manufacturers questionable on legal and policy

consistent with the Congressional Association (with regard to the water grounds and the initiation of litigation

Review Act (5 U.S.C. 801-804). Second, heater rule) and the Air-Conditioning in the Fourth Circuit has left less than

in order to correct arguable legal errors and Refrigeration Institute (ARI) (with ideal options for a rulemaking that, had

and policy shortcomings, DOE proposes regard to the central air conditioner it been concluded on time, would have

to withdraw the final rule entitled rule) filed petitions for review in the been final on January 1, 1994 (42 U.S.C.

"Energy Conservation Program for United States Court of Appeals for the 6295(d)). If DOE were to allow the

Consumer Products; Central Air Fourth Circuit. January 22, 2001 final rule to become

Conditioners and Heat Pump Energy While DOE did not seek public -effective; there is a significant

Conservation Standards' which was comment as part of the internal review possibility of a court ordered remand for

published in the Federal Register (FR) conducted under the President's further consideration. The length of

on January 22, 2001 (61 FR 7170). Third, Regulatory Review Plan or with regard time it would take to deal with

based on: (1) Previous determinations to the petitions for reconsideration, DOE consequences of a court ordered remand

regarding the significance of potential received written statements in would be substantial. It was just this

energy savings, technological feasibility, opposition to reconsideration of each of sort of consideration that motivated

and other factors; and (2) factual the three final rules. DOE also had an Congress to enact the 1987 amendments

information already in the record DOE informal meeting with representatives of to EPCA that require this rulemaking.

proposes to determine that elevation of various environmental advocacy groups As the legislative history of those

the currently enforceable central air who had already filed statements amendments makes clear, an underlying.

conditioner and central air conditioning opposing reconsideration of the water legislative purpose was to cure the

heat pump enerngyd conservatirconditioni heater and the central air conditioner problem of indefinite delay that

heat pump energy conservation ximu rules, a;final followed the decision in Natural

standards by 20 percent is the maximum Ultimately, DOE decided that neither Resources Defense Council v.

increase that is economically justified. the clothes washer rule nor the water Herrington, 768 F.2d 1355 (D.C. Cir.

Consistent with that proposed heater rule warranted further 1985) which vacated and remanded an determination and except for through- rulemaking action and denied the appliance energy conservation

the-wall product classes, DOE proposes related petitions for reconsideration. See standards rulemaking. See S. Rep. No.

a Seasonal Energy Efficiency Rating 66 FR 19714 (April 17, 2001). With 100-6, 100th Cong, 1st Sess., 4 (1987)

(SEER) of 12 with a corresponding regard to central air conditioners and and H.R. Rep. No. 100-11, 100th Cong.,

Heating System Performance Factor central air conditioning heat pumps, 1st Sess., 28 (1987). DOE also recognizes

(HSPF) of 7.4 which would apply to DOE concluded that ARI had raised that, given the opposition to

manufacturers in 2006. With respect to substantial questions as to the legal reconsideration, there is a near certainty space-constrained, through-the-wall sufficiency of the January 22, 2001 final of a lawsuit challenging DOE's further

product classes, DOE is today proposing rule and that the interests of justice rulemaking actions. However, since more modest increases in the existing therefore dictated that DOE further litigation appears to be inevitable

standards, which is discussed later in postpone the rule's effective date in regardless of what option DOE chooses,

this SUPPLEMENTARY INFORMATION. light of the pendency of ARI's petition DOE has concluded that the better

Today's action partly is a result of for judicial review in the Fourth Circuit course is to reopen the rulemaking

DOE activities under President Bush's and its related petition for record on issues regarding economic

Regulatory Review Plan. Pursuant to reconsideration. 66 FR 20191 (April 20, justification with the objective of

that plan, DOE conducted an internal 2001). At that time DOE indicated that publishing, after considering public

review of the three final rules issued it would likely resolve these issues comments, a final rule, as soon as under section 325 of EPCA that DOE through supplemental rulemaking that possible in 2001.

published at the end of the Clinton would be forthcoming shortly.

Administration, including final rules For the reasons discussed in section II. Authority and Policy Regarding

concerning energy conservation III of this notice, DOE has now Reconsideration of Final Rules Under

standards for clothes washers, water concluded that the January 22, 2001 Section 325(o)(1) of EPCA

heaters, and central air conditioners and final rule should be reconsidered and In reviewing the January 22, 2001

central air conditioning heat pumps. therefore grants ARI's petition. In final rule under the President's

Consistent with the EPCA criteria for particular, DOE is of the view that: (1) Regulatory Review Plan, and in

determining whether a standard level is DOE should have invited the considering ARI's petition for

economically justified under section Department of Justice to submit a reconsideration and the statement in

325 (42 U.S.C. 6295(o)(2)(B)), DOE supplemental determination on the opposition to it, DOE has had the

examined each of these rules to potential anti-competitive impact; (2) occasion to construe and apply the

determine, among other things, whether the statement of basis for the final rule provisions of section 325(o)(1) of EPCA

the rulemaking record was complete did not sufficiently explain DOE's for the first time since they were added

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38824 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

to EPCA by the National Appliance 6295(d)(1) and (d)(2). The key question, 'on the "amended standards" the

Energy Conservation Act of 1987 however, is which SEER and HSPF Secretary may prescribe. That wording

(NAECA) (Pub. L. 100-12). In relevant represent the "minimum required strongly suggests that the "minimum

part, section 325(o)(1) of EPCA provides energy efficiency" for central air required energy efficiency" levels below as follows: conditioners and central air which the Secretary may not go are the

The Secretary may not prescribe any conditioning heat pumps that may not ones established by the standards being

amended standard which increases the be decreased by an amended standard. amended. Because of the various actions

maximum allowable energy use, * * * or Had the new SEER and HSPF set out postponing the effective date of the

decreases the minimum required energy in the January 22, 2001 final rule been amendments to the standards it

efficiency, of a covered product. allowed to take effect, but (as the rule proposed, the January 22, 2001 rule

42 U.S.C. 6295(o)(1). set forth) been made applicable only to never actually effectuated any

In its petition for reconsideration, ARI appliances manufactured on or after amendment to the prior standards.

said the following about section January 23, 2006, we think this would Therefore, the standards that we now

325(o)(1): be a close question. A reasonable propose to amend are not the ones that

argument could be made that the new would have been in place had the We note that the provision in EPCA that SEER and HSPF became "required" amendments set out in the January 22

prohibits decreasing the minimum required immediately as to such appliances rule actually been made. Rather, they energy efficiency of covered products, 42

U.S.C. 562(o)(l)[sic] is inapplicable here 10 provided they were manufactured on or are the standards prescribed by EPCA

SEER is the minimum required energy after January 23, 2006. A reasonable (SEER of 10.0 and HSPF of 6.8 for split

efficiency. New efficiency minimum would argument could also be made that the systems manufactured after January 1,

not be required under the rule until several new SEER and HSPF would not be 1992, SEER of 9.7 and HSPF of 6.6 for

years from now (the rule.provides for such "required" until January 23, 2006, when single package systems manufactured

minimums in 2006). Moreover, the effective appliances manufactured after that date after January 1, 1993), unamended until

date of the rule has been suspended, and would have had to comply with them. now by anything, including the never- there is pending litigation challenging the We address this question, and other made-effective amendments set out in validity of the rule. Thus, there has been no considerations bearing on the answer to the January 22, 2001 rule.

final result related to the rulemaking. it, at greater length below. In our view, the foregoing analysis

ARI Petition, p. 3, n. 2. In fact, however, the January 22, 2001 establishes that EPCA is unambiguous Referring to the 1987 amendments to final rule expressly stated that the on the question of whether standards

EPCA, the environmental advocacy amendments it set out to existing that are published in the Federal

organizations argued that "it is clear standards in the Code of Federal Register, but not yet effective, represent that, under NAECA, DOE may not Regulations would not take effect until the "minimum required energy amend the rule to weaken its energy 30 days after publication in the Federal efficiency" for central air conditioners

efficiency standards." After quoting Register. Well before that date arrived, and central air conditioning heat

from section 325(o)(1), they went on to on February 2, 2001, DOE postponed pumps. Clearly, the standards set out in

say: that effective date for an additional 60 the January 22, 2001 notice of final

Thus DOE is statutorily precluded from days. Before that 60-day period had rulemaking cannot be the "minimum

amending the Final Rule to weaken its energy passed, on April 18, 2001, DOE further required energy efficiency" benchmarks

efficiency standards, as ARI requests in its postponed the amendments' effective for purposes of section 325(o)(1). 1 The

petition. ARI's argument (Petition at footnote date pending the outcome of petitions question remains whether DOE should

2) that this provision is "inapplicable" by ARI for reconsideration and for construe the term "minimum required because the rule phases in tighter energy judicial review. energy efficiency" to mean (A) energy efficiency standards over time, is incorrect. As a result, the new SEER and HSPF, efficiency standards that are not yet * * The timing of the phase-in of these though set out in a final rule, never in enforceable against the manufacturers, standards is irrelevant. any sense achieved the status of being but that have been prescribed in a final

Statement in Opposition, p. 5. the "required" "minimum energy rule amending prior standards, which

Although the diametrically opposed efficiency" benchmarks. There has amendments have been made to the CFR

conclusions reached by ARI and the never been a single moment under any pursuant to an effective date that has

environmental advocacy organizations' understanding of the word "required" at passed; or (B) energy efficiency

response are clear enough, those which any central air conditioner or standards that are currently enforceable

conclusions are based on arguments that central air conditioning heat pump, against the manufacturers if they are too summary to evaluate. DOE's including one manufactured after manufacture and sell a non-compliant interpretation of the statute is set forth January 23, 2006, could even arguably product. below, and DOE invites ARI and the have been legally required to be DOE believes that alternative (A) is

environmental advocacy organizations manufactured in conformity with them. the preferable construction of the term,

to reexamine their respective positions Hence, whatever might have been the but only if the effective date selected for

and to comment on DOE's analysis and case had the January 22 final rule been the final rule is consistent with other

the resulting proposed amendments to allowed to take effect, we do not see applicable laws and regulations and

10 CFR Part 430. how the publication of a final rule that allows the Secretary an opportunity The starting point for analysis is the would have changed those standards, promptly to correct legal and policy

text of the statute. The critical term in but was prevented by later agency errors that may have been contained in

section 325(o)(1) is "minimum required action from doing so, could possibly the final rule. If that precondition is

energy efficiency." EPCA does not establish "minimum required energy satisfied, DOE believes alternative (A)

define this term. However, in context, it efficiency" benchmarks. will better advance the relevant

is clear that a SEER and an HSPF are This interpretation of "minimum

benchmarks of "minimum required required energy efficiency" is reinforced ' We also believe that even if the statute were energy efficiency" for central air by the rest of the sentence in section found to be ambiguous, for the reasons set out in the discussion that follows, that would not be the conditioners and central air 325(o)(1) of which the phrase is a part. interpretation that we should select as a matter of

conditioning heat pumps. See 42 U.S.C. That sentence establishes a limitation policy.

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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38825

statutory and policy considerations respect to central air conditioners, any at least what the House committee

underlying section 325(o)(1): to promote amended standard contained in a final thought the purpose of the bill language

greater energy efficiency while rule published on January 1, 1994 can was. In describing that language, which

providing greater certainty to apply only to products manufactured on appears in new section 325(1)(1) of the

manufacturers who must plan and make or after January 1, 1999. It similarly House bill, the House report states:

the expenditures necessary to comply provides that any amended standard DOE may not prescribe an amended

with an amended energy conservation contained in a final rule published standard that increases the maximum

standard-which is often a multi-year between January 1, 1994 and January 1, allowable energy use or decreases the

endeavor with substantial costs. We 2001 can apply only to products minimum required energy efficiency of a

note that the relative certainty the manufactured on or after January 1, covered product. The purpose of this

interpretation set out in alternative (A) 2006. The purpose of these delays is requirement is to prevent the Secretary from

produces for manufacturers, which is a plainly to give manufacturers a weakening any energy conservation standard

key comparative advantage of this significant amount of time to develop for a covered product, whether established in

interpretation over the competing one, and manufacture new products after a this Act or subsequently adopted. This serves

is intimately tied to a proper effective new standard is adopted but before it to maintain a cliate of relative stability with respect to future planning by all interested date choice that facilitates prompt error becomes enforceable, thereby greatly parties * * *

correction, thereby potentially avoiding diminishing the costs imposed by new

litigation that would seriously standards. These delays also suggest House Report No. 100-11 at p. 22. Since

undermine the certainty sought to be that a change of standard on the eve of the Senate report differs from the House

achieved. the manufacture of a product would be report and no conference committee

DOE believes that this resolution of quite disruptive-which stands to report exists, the House report language

the ambiguities in the statute is reason given the lead-time necessary to does not represent the views of the

consistent with the statute's text, be in a position to manufacture a .Congress as a whole. Therefore, that

structure, legislative history, and the compliant product. Thus, to allow a language should be used cautiously as a

fundamental policy choices it makes. standard to be blocked at the last minute contributory factor in construing section

We believe that on balance this before the compliance deadline would 325(o)(1) and framing implementing

approach better accomplishes the potentially leave a rather large residual regulations.

statute's objectives than either adopting uncertainty difficult to reconcile with The House report language indicates

alternative (A) without the qualification the central purpose of establishing a that the term "minimum required

set out above, thereby establishing a set climate of regulatory stability served by energy efficiency" includes both the

of procedures that could have the effect these closely related portions of EPCA. legislated standards established by

of preventing the Secretary, within a The legislative history of section Congress in 1987 and amended

short period after publication of a final 325(o)(1), although sparse, also suggests standards "subsequently adopted."

rule that would modify such standards, that this interpretation may not be the However, the word "adopted" is not a from correcting defects in them that one best suited to accomplish the term that is used in EPCA or the APA.

subsequently come to his attention; or statute's objectives. That history As applied to the sequence of steps that

adopting alternative (B), thereby reading suggests that section 325(o)(1) itself was make up the rulemaking process, it is

the phrase "minimum required energy in fact also intended in significant unclear which step is deemed to be the

efficiency" to encompass only energy measure to promote regulatory moment that an amended standard is

efficiency standards as of the date upon certainty-a goal it would not achieve "adopted."

which manufacturers have to comply very effectively, given the importance of ore instructive is the sentence from

with those standards. Although at least such certainty not only at the time of the House report that states with regard

the latter approach may well be a manufacture but well before tohe underlying purpose of section

permissible interpretation of section manufacture has begun, if the provision 325(o)(1): "This serves to maintain a 325(o)(1), DOE believes that the view set is interpreted to apply to a standard climate of relative stability with respect

out in our proposed rule is the better only after the compliance date for that to future anning by all interested one. DOE invites members of the public standard has passed arties* * " This suests as noted

to comment on this proposed policy. The only significant information in parts gge, as The latter view-that a standard is section 325(o)(1)'s history appears in theabove, that secton 325(o)(1) was

only covered by section 325(o)(1) after committee reports which comment on specifically expected, at least in the

manufacturers are required to comply identical bill language that was v e w o f th e House Committee, to act

with it-does at first blush appear to be ultimately enacted without change. In h a rm o n i

ou sly w ith the other provisions

the most natural reading of the phrase. the Senate bill, the language that o f EP C A discussed above in facilitating

This view, however, is in tension with became section 325(o)(1) wasregulatory certainty. The latter purpose

the rest of the sentence, which, as denominated new section 325(j). The is better accomplished by construing the

explained above, suggests that the Senate report says the following about provision to become applicable at a

relevant point of comparison is the that new section: point well before the compliance date.

standard being amended, regardless of New section 325 establishes the criteria On the other hand, the reliance

whether manufacturers actually have to by which the Secretary may prescribe new or interests at stake asoare not best served

comply with it. Moreover, if adopted, amended standards. The Secretary may not in the long run by taking the opposite

this view would allow the Secretary to increase the maximum allowable energy use course and adopting the view that

change the energy efficiency standards or decrease the minimum required energy section 325(o)(1) becomes applicable at

right up to the minute before the efficiency of a covered product. the earliest possible moment. Let us

compliance date. This seems to slight Senate Report No.100-6 at p.8. That imagine, for example, that DOE were

important reliance interests given statement paraphrases the bill language routinely to make final rules containing

significant weight in other respects by without shedding any light on what the standards potentially subject to section

EPCA's provisions on central air language was supposed to mean. 325(o)(1) effective as soon as possible

conditioner standards. For example, By contrast, the House report does after publication. This would likely

section 325(d) provides that with add to our understanding by identifying result in its making such rules effective

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38826 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

30 days after publication.2 DOE also be viewed as having set "minimum rule at issue here. We did so, however,

could refuse to reconsider any aspect of required energy efficiency" benchmarks. not because we had considered the

such a rule relevant to the standard For the reasons explained at the potential ramifications of our prior

(unless it could complete its beginning of this section, that time must approach and of the approach we were

consideration and correct any errors be after the final rule making the taking to this rule for purposes of the

within that 30-day time period), no amendments to the standard is in effect. applicability of section 325(o)(1), but

matter how serious or legitimate a But, consistent with the objective of rather in an effort to follow the current

question might be raised, since to do so section 325(o)(1) and the other closely guidance of the Office of the Federal

effectively, it would have to prevent the related EPCA provisions of promoting Register, which distinguishes between

standard from going into effect. regulatory certainty, and to harmonize the date on which a final rule is

This approach, however, would not section 325(o)(1) with common effective for purposes of modifying the

be the best way for DOE to promote administrative practice and the CRA, Code of Federal Regulations and the

regulatory certainty either. It is common such final rules should ordinarily be date on which a final rule is effective for

for agencies to entertain petitions for made effective only after a reasonable purposes of requiring compliance with

reconsideration at least for a short hiatus after the date of publication has its requirements. See National Archives

period after issuance of a final rule as elapsed, allowing for prompt use of and Records Administration, Office of

well as to correct errors on their own ordinary administrative error correction the Federal Register, Document Drafting

motion during that time. Moreover, procedures and completion of Handbook, Chapter 2, p. 2-12 (October

there is good reason why agencies congressional review under CRA. This 1998). Consistent with the recent

follow this course, since otherwise such is the earliest that manufacturer guidance in the Document Drafting errors would have to await the planning in reliance on a final major Handbook, but without taking into

completion of judicial review before rule to amend appliance energy account either the-CRA.or:potential_

they could be corrected, thereby conservation standards can realistically section 325(o)(1) ramifications, DOE

creating substantial delay and be expected to begin. The certainty of specified a 30-day-after-publication

uncertainty. Accordingly, this approach the regulatory regime sought to be effective date consistent with the APA

too, in addition to running counter to achieved therefore cannot occur until and a compliance date of January 23,

ordinary administrative practices that that time. 2006, consistent with EPCA.

there is no reason to believe section Accordingly, DOE believes it should Having now considered these issues

325(o)(1) was intended to abrogate, is construe section 325(o)(1) as applying to more carefully, DOE believes it should

not the best way to advance the standards designed to set "minimum adopt the approach outlined above

regulatory stability sought by section required energy efficiency" benchmarks which is specifically designed to

325(o)(1) and the other related EPCA at the point in time a final rule accomplish the relevant EPCA policy

provisions discussed above. containing such a standard becomes objectives. Accordingly, it proposes to

This approach also would create effective. It also believes, however, that adopt a series of amendments to the

unnecessary tension between section it should take care to select effective EPCA rules intended to address these

325(o)(1) and the Congressional Review dates for final rules containing such general issues. First, it proposes to

Act (CRA) (5 U.S.C. 801-804) enacted in standards that are consistent with the define by rule the terms "maximum

1996. Under CRA, before a final rule can CRA and any other applicable law. This allowable energy use" and "minimum

become "effective," DOE must send a approach will best promote the required energy efficiency" as energy

report to Congress (5 U.S.C. 801(a)(1)(A) regulatory certainty sought by section conservation standards established by a and (B)). With respect to a "major rule" 325(o)(1) and its companion provisions final rule that has become effective in

within the meaning of 5 U.S.C. 804(2), and also comports well with the the sense that it has modified the Code

CRA provides for the passing of a 60- ordinary understanding of when a rule of Federal Regulations. It further

calendar-day-lie-before-the-Congress containing such standards has proposes to include in its definition that

period, after submission of the agency established "require[ments]." to qualify, the final rule has to have

report, at the end of which a final rule We note that DOE's own past practice made that modification on a date

could become effective in the absence of on the selection of such effective dates selected consistent with the CRA and

a Congressional resolution of has not been consistent with this other applicable law. Finally, in order to

disapproval (5 U.S.C. 801(a)(3)). CRA approach. But it also has not been avoid confusion, it proposes a technical

allows for an exception to the 60-day- internally consistent even very recently, amendment, adding a definition of the

lie-before requirement only if the potentially creating wide variations EPCA term "effective date," which

President determines that a major rule regarding when section 325(o)(1) would EPCA, inconsistently with the Office of

should take effect before the end of that become applicable as well as running Federal Register guidance, treats as

period because of an imminent health or afoul of the various considerations synonymous with "compliance date."

safety threat or other emergency; outlined above. To that end, DOE proposes to add a

because it is necessary to the Typically, DOE has not made new § 430.34 which tracks the language

enforcement of criminal laws or amendments to EPCA standards of section 325(o)(1). It also proposes to

national security; or if it is issued contained in final rules effective until add to the definitions section, § 430.2,

pursuant to a statute implementing an the date on which manufacturers have new definitions for "maximum

international trade agreement (5 U.S.C. had to comply with them. See 10 CFR allowable energy use" and "minimum

801(c)). 430.32. That is the approach we required energy efficiency." These

In DOE's view, this last set of followed even very recently in the case definitions would treat amendments to

considerations also points the way to of the rules setting out the amendments a standard contained in a final rule as

the answer to the question of at what to standards for water heaters (66 FR establishing "maximum allowable

time amendments to an energy- 4474, 4497, Jan. 17, 2001, effective Jan. energy use" and "minimum required

efficiency-setting-standard should best 20, 2004) and clothes washers (66 FR energy efficiency" benchmarks for

3314, 3331, Jan. 12, 2001, effective Jan. purposes of section 325(o)(1) on the date

2 Under the APA in most cases it could not make 1, 2004). We departed from that practice such a rule made those amendments

them effective before them. in the case of the central air conditioner effective as to the Code of Federal

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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38827

Regulations, provided that DOE sets out burdens by considering "to the greatest manufacturers of equipment to be used

in the EFFECTIVE DATE line of a notice of extent practicable" seven factors, to retrofit existing housing and used in

final rulemaking under section 325 a including: "(V) the impact of any manufactured housing. Third, it was

date on which the Code of Federal lessening of competition, as determined concerned that the proposed 13 SEER

Regulations will be modified that is in writing by the Attorney General, that for central air conditioning heat pumps

selected consistent with the CRA and is likely to result from the imposition of could cause consumers to shift from

any other applicable law. In most the standard" (42 U.S.C. heat pumps to other systems that

instances, the date selected will be 60 to 6295(o)(2)(B)(i)). Section 325(o) also include resistance heat systems,

80 days after the date of publication. provides that: reducing the competition that presently

Consistent with the proposed For purposes of clause (i)V), the Attorney exists between manufacturers of air

definitions to be added to § 430.34, DOE General shall make a determination of the conditioning heat pumps and

intends to make the final rule based on impact, if any, of any lessening of manufacturers of those other heating

today's proposal effective 75 days from competition likely to result from such systems. The Department of Justice

the date of publication. standard and shall transmit such urged DOE to take these concerns into

Finally, to make the technical change determination, not later than 60 days after account and consider "setting a lower

referenced above, DOE proposes also to the publication of a proposed rule SEER standard for heat pumps, such as

add to § 430.2 a definition of the term prescribing or amending an energy the standard included in Trial Standard

"effective date" as used in EPCA and 10 conservation standard, in writing to the Level 2, and a lower SEER standard for Secretary, together with an analysis of the CFR 430.32. This definition clarifies nature and extent of such impact. Any such air conditioners for retrofit markets

that for purposes of construing the term determination and analysis shall be where there are space constraints and

under EPCA (but not for purposes of published by-the Secretary in the Federal for manufactured housing." 66 FR 7200.

determining the point at which Register. DOE published a final rule on January

amendments to a standard qualify for 42 U.S.C. 6295(o)(2)(B)(ii). 22, 2001 adopting standards that

protection under section 325(o)(1)), the In context, it is clear that the term corresponded to Trial Standard Level 4

"effective date" is the date on which an "the standard" in section 325(o)(2)(B)(i) (the next higher level) and prescribed a amended energy conservation standard refers to any new or amended energy minimum SEER of 13 for all the product becomes enforceable. conservation standard prescribed by classes, except for niche products, with

m. Proposal To Withdraw Final Rule DOE under section 325(o) of EPCA. a corresponding 7.7 HSPF. The

In this of t portion Because the Department of Justice must preamble to the final rule addressed the In ths porton of the SUPPLEMENTARY transmit its determination to DOE Department of Justice's specific

INFORMATION, DwO sets forthe lel and ithin 60 days after the publication of concerns about the October 5 proposed

conclusions with regard to the legal and a proposed rule, EPCA contemplates rule (66 FR 7192-93). It also addressed

policy issues that DOE considered in that the Department of Justice's the potential anti-competitive impact of

deciding whether to propose determination on the anti-competitive the final rule's uniform 13 SEER

withdrawal of the January 22, 2001 final effects of a proposed rule will enable' standard, in general terms:

rule. Included among these issues are DOE to fulfill its substantive obligation We recognize that the standard levels we certain issues raised by ARI in its to consider the Department's expert are adopting could accelerate the

petition for reconsideration. opinion on the anti-competitive impact consolidation trend among major

A. Legal Issues of a final standard. manufacturers. However, as discussed in the

1. O F e n To te V s of te DOE submitted the October 5, 2000 manufacturer impact analysis, we do not

1. Failure To Obtain the Views of the NOPR to the Attorney General for expect that any manufacturer or group of

Department of Justice on the Potential review pursuant to the foregoing manufacturers will be able to use the

Anti-Competitive Impact of 13 SEER provisions. The NOPR described the standards as an opportunity to consolidate

Standards range of potential trial standards their market power. (See TSD, Chapter 8). T range APTn ofpotential trial~ standards Therefore, we believe that competition will In its petition, ARI contends that DOE considered by DOE, and proposed remin vigorous under the adopted standard,

should have invited the Department of adoption of Trial Standard Level 3, i.e., and any lessening of competition that does

Justice to submit a supplemental a minimum SEER of 12 for central air occur will not result in price increases or loss

statement of its views on the potential conditioner product classes and a SEER of choice and utility for consumers.

anti-competitive impact of DOE's final of 13 for central air conditioning heat

rule establishing a 13 SEER standard for pumps, with a corresponding HSPF of 66 FR 7176. The TSD referenced chapter

central air conditioners and heat pumps 7.7. The Department of Justice, also concluded that, under Trial

(ARI Petition Discussion, paragraph d). consistent with its past practice, Standard Level 4, several major

Although EPCA does not provide that confined its response to the proposed companies would likely consider selling

DOE must seek supplemental standards, corresponding to Trial their production assets rather than make

determinations from the Department of Standard Level 3. the investment required to meet the new

Justice on final rules, DOE concludes, The Department of Justice conveyed standard or face the loss of profits

for reasons set forth below, that it to DOE three concerns about the caused by the absence of premium

should have requested supplemental proposed rule's potential impact on products in the marketplace (see, TSD

views from the Department of Justice on competition (see December 4, 2000, 8.7.4, p. 8-64).

the effect of a uniform 13 SEER standard letter in the Appendix to this notice). Thus, DOE simply relied on the

on competition, particularly on the First, the Department of Justice was manufacturer impact analysis in the

question of potential consolidation in concerned the proposed rule would TSD to support its conclusion with

the central air conditioning and heat have a disproportionate impact on small respect to the potential impact on

pump industry. manufacturers. Second, it was competition of the final rule's Trial

Section 325(o)(2)(B)(i) of EPCA concerned that the proposed standard Standard Level 4 (13 SEER) standards.

requires DOE to determine whether the for heat pumps, and in some instances DOE did not have the benefit of the

benefits of a new or amended energy the standard for air conditioners, would Department of Justice's views on the

conservation standard exceed its have an adverse impact on some potential anti-competitive impact of the

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38828 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

final 13 SEER standards for both air Section V.B.2. of this SUPPLEMENTARY under a 13 SEER standard for split air

conditioners and heat pumps. INFORMATION). conditioners, 39 percent and 50 percent

As the TSD shows, the central issue of average and low income consumers,

regarding the January 22 final rule is the B. Policy Issues respectively, would be negatively

potential effect of 13 SEER standards on DOE reviewed the basis and rationale impacted. A 12 SEER standard would

consolidation in the central air for the January 22, 2001 final rule result in a lower fraction of consumers conditioning and heat pump industry. pursuant to the President's Regulatory who are negatively impacted: 25 percent

DOE adverted to this in the preamble to Review Plan, and it considered carefully and 34 percent of average and low

the final rule with the statement "that numerous claims by ARI of error or income consumers, respectively.

the standard levels we are adopting insufficiency in DOE's analyses and its In summary, DOE has decided that, in

could accelerate the consolidation trend weighing of the benefits and burdens of issuing the January 22 final rule,

among major manufacturers." 66 FR the final rule. As a result of this review, inadequate discussion and weight was 7176. Arguably, to comply with section DOE has decided to accord more weight given to the fraction of all and low

325(o)(2)(B)(i), DOE should have to certain factors, and those changes, income consumers who incur negative

requested supplemental views from the which reflect the current life-cycle cost impacts as a result of the

Department of Justice on this issue. Administration's policies, support new standard.

2. Failure of the Statement of Basis for DOE's decisions to propose withdrawal 2. Burdens on Manufacturers

the Final Rule to Adequately Address of the January 22 final rule and to Cumuthe Finalative Rule to A dequately Address on publish today's proposed rule. a. Cumulative Regulatory Burden. In

Cumulative Regulatory Burdens on Consumers the preceding section, DOE concluded

that the statement of basis and purpose

To determine whether a standard is During its review of the January 22 for the January 22 final rule did not

economically justified, DOE must assess final rule, DOE reassessed its weighing adequately address the issue of

the economic impact of the standard on of burdens and benefits of the standards, cumulative regulatory burden, which

the manufacturers and consumers of the giving particular attention to the DOE recognizes is a key component of

products subject to such standard (42 question of whether burdens on the assessment of manufacturer impact

U.S.C. 6295(o)(2)(B)(i)(I)). One aspect of consumers received adequate (see Process Improvement Rule, section

manufacturer burden is the cumulative consideration and weight. 10(g), codified at 10 CFR Part 430,

impact of multiple DOE standards and DOE currently is particularly Subpart C, Appendix A). DOE's decision

the regulatory actions of other Federal concerned that new standards be to propose withdrawal of the January 22

agencies and States that affect the designed to distribute their burdens and final rule is based in part on DOE's

manufacture of a covered product. benefits as fairly as practical. Although current view that the preamble to the

In its petition for reconsideration, ARI some disparity is expected in any final rule contained insufficient

criticized DOE for not discussing national standard, the disparity in discussion of cumulative regulatory

information in the TSD on the impacts between low-income and burdens and gave insufficient weight to

cumulative regulatory burden on the typical consumers is of more concern at cumulative regulatory burdens.

central air conditioning and heat pump more stringent efficiency standards As mentioned by ARI, DOE did have

industry (ARI Petition Discussion, because increases in first cost are felt information, which was included in the

paragraph m). The preamble to the final more sharply by lower income TSD, of cumulative regulatory burdens.

rule addressed the issue of cumulative consumers. The potential disparities The TSD for the final rule shows that

regulatory burden in conclusory terms would be diminished under the 12 the most significant regulation facing

in two brief sentences, as follows: "The SEER standard that DOE is proposing the central air conditioning industry is

Department has considered the today. the Environmental Protection Agency's

manufacturer burdens as described in DOE also has considered that the (EPA's) ban on new equipment utilizing the manufacturer impact analysis of the fraction of consumers who are a particular hydrofluorocarbon (HCFC),

TSD in adopting the new standard. negatively impacted by a 13 SEER HCFC-22, as a refrigerant, scheduled to

These include cumulative burdens." 66 standard, in terms of life-cycle cost take effect in January 2010. In addition,

FR 7174. The statement of basis and savings versus the existing standards, is an EPA ban on use of HCFC-141b as a purpose required by the APA-(5 U.S.C. substantially higher than the fraction foam blowing agent (used in water

553(c)) to accompany a final rule must who are negatively impacted in other heaters, refrigerators and freezers) takes

establish a rational connection between recent DOE efficiency rules. To effect on January 1, 2003. The TSD

the facts the agency found and the illustrate, the efficiency standard for reports that companies must develop a choices it made. In light of the evidence clothes washers, published in the wealth of new knowledge and

of cumulative regulatory burdens on Federal Register on January 12, 2001 experience to replace the refrigerant

manufacturers documented in the TSD, (66 FR 3314), will negatively impact 19 HCFC-22, and it estimates the cost of

it is doubtful whether the mere assertion percent of all consumers and 19 percent converting equipment to a substitute

by DOE that it considered the of low income consumers, and the refrigerant to be on the order of $50

cumulative burdens on manufacturers is efficiency standard for gas-fired million per company. Additional

adequate to establish a rational basis for residential water heaters, published in regulatory burdens on manufacturers of

DOE's determination on manufacturer the Federal Register on January 17, residential central air conditioner and

impact resulting from a 13 SEER 2001 (66 FR 4474), will result in heat pump products are new DOE

standard. negative life-cycle cost impacts for 12 efficiency standards for refrigerators and

DOE's discussion and conclusions percent of all consumers. 3 By contrast, freezers (effective July 1, 2001) and

regarding the weight that should be

given to cumulative regulatory burden 3 For split air conditions and gas water heaters, represents those consumers who incur any lifein this rulemaking are set forth in the the fraction provided represents those consumers cycle cost increase at all. For direct comparison

"Policy Issues" discussion immediately who incur an increase in life-cycle costs that with clothes washers, the fraction of all consumers exceeds 2 percent of the total life-cycle cost, with incurring any increase in life-cycle costs for gas following this section, and in the low-income data available only for split air water heaters in 22 percent and for split air

preamble to today's proposed rule (see conditioners. For clothes washers, the fraction conditioners is 55 percent.

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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38829

water heaters (effective January 20, Act, the program consists essentially of as a result of the standard, as calculated

2004); a Consumer Product Safety three parts: testing, labeling, and under the applicable test procedure

Commission voluntary standard for Federal energy conservation standards. * * * ." (42 U.S.C. 6295(o)(2)(B)(iii)).

flammable vapor ignitions on water As discussed in the Introduction in The rebuttable presumption test is an heaters (under development); and EPA Section I of this SUPPLEMENTARY alternative path to establishing

standards under section 112(d) of the INFORMATION, NAECA prescribed initial economic justification.

Clean Air Act on emissions of Federal energy conservation standards

hazardous air pollutants from the for central air conditioners and heat 2. Ruemaking History

coating of large appliances (expected to pumps (42 U.S.C. 6295(d)). NAECA The existing standards for residential

apply in 2004). While acknowledging further amended EPCA by specifying central air conditioners and heat pumps

that the uncertainty surrounding DOE's that DOE is to review and publish have been in effect since 1992. As

estimates is high, the TSD estimates the amended standards by January 1, 1994 described in the Introduction to this

total investment required by (42 U.S.C. 6295(d)(3)(A)). Under-EPCA, SUPPLEMENTARY INFORMATION, the

manufacturers of central air conditioner any new or amended standard must be efficiency descriptor for air conditioner

and heat pumps to meet these designed so as to achieve the maximum and heat pump cooling efficiency is

cumulative regulatory-burdens will improvement in energy efficiency that is SEER (or Seasonal Energy Efficiency

exceed $479 million. This estimate technologically feasible and Ratio), and the descriptor for heat pump

excludes the cost of manufacturer economically justified (42 U.S.C. heating efficiency is HSPF (or Heating

compliance with DOE's amended 6295(o)(2)(A)). Seasonal Performance Factor). SEER is

efficiency standard for air conditioners Section 325(o)(2)(B)(i) provides that DOE's measure of energy efficiency for

and heat pumps, which the TSD before DOE determines whether a the seasonal cooling performance of

estimates is comparable the cost of the standard is economically justified, it central air conditioners and heat pumps.

HCFC-22 phase-out (TSD, Section 8.6.). must first solicit comments on a HSPF is DOE's measure of energy b. Financial Burdens Associated with proposed standard (42 U.S.C. efficiency for the seasonal heating

New Standards. The TSD demonstrated 6295(o)(2)(B)(i)). That section further performance of heat pumps. The current

that the more stringent 13 SEER provides that, after reviewing the central air conditioner and heat pump standards adopted in the January 22 comments, DOE must determine efficiency standards are as follows:

final rule would likely cause the whether the benefits of the standard -Split system air conditioners and heat

industry's net cash flow to drop below exceed its burdens, based, to the greatest pumps-10 SEER/6.8 HSPF zero (Section 8.4.6). It also noted that extent practicable, on a weighing of the -Single package air conditioners and one segment of the industry following seven factors: heat pumps-9.7 SEER/6.6 HSPF

(denominated "lower operating cost (i) The economic impact of the On September 8, 1993, DOE

manufacturers" in the analysis) would standard on the manufacturers and on published an Advance Notice of

likely benefit from more stringent the consumers of the products subject to Proposed Rulemaking (ANOPR)

standards, and that another segment of such standard; announcing DOE's intention to revise

the industry (denominated "higher (ii) The savings in operating costs the existing central air conditioner and

operating cost manufacturers") would throughout the estimated average life of heat pump efficiency standard. 58 FR

bear nearly the total financial burden the covered product in the type (or 47326. During a workshop on June 30

(Section 8.5). According to the TSD, the class) compared to any increase in the 1998 DOE presented for comment an potential outcomes of these impacts price of, or in the initial charges for, or analytical framework for the central air

could include accelerated consolidation maintenance expenses of, the covered conditioner and heat pump standards

and stifling of innovation. As a matter products which are likely to result from rulemaking. The analytical framework

of policy, DOE considers these the imposition of the standard; described the different analyses to be

outcomes to be potentially serious, and (iii) The total projected amount of conducted the methods for conducting certainly material, consequences that energy savings likely to result directly e the e o s or d u ct ng

should be discussed when adopting new from the imposition of the standard; the m , e s of new spreadse an d

standards. DOE is proposing to (iv) Any lessening of the utility or the the e l

ation ship o f the v a riou s analyse

withdraw the January 22 final rule, in performance of the covered products O November 24 1999,DOE published

part, to give greater weight to the likely to result from the imposition of a Supplemental ANOPR and invited

negative cash flow and maldistribution the standard; additional comment on issues raised

of burdens on industry of 13 SEER (v) The impact of any lessening of following publication of the original

standards. DOE explicitly addresses competition, as determined in writing ANOPR. 64 FR 66306.

these issues in the preamble to today's by the Attorney General, that is likely to On October 5, 2000, DOE published a

proposed rule in Section V.B.2. of this result from the imposition of thenotce of proposed rulemaking (October

SUPPLEMENTARY INFORMATION. standard; 5, 2000, NOPR). 65 FR 59590. The

(vi) The need for national energy energy efficiency standards that DOE

IV. Proposed Rule conservation; and proposed for residential central air

A. Background (vii) Other factors the Secretary conditioners and central air

considers relevant, conditioning heat pumps (heat pumps) 1. Statutory Authority In addition, section 325(o)(2)(B)(iii) were as follows:

Part B of Title III of the Energy Policy establishes a rebuttable presumption of -Split-system and single-package air

and Conservation Act provides for the economic justification in instances conditioners-12 SEER

Energy Conservation Program for where the Secretary determines that -Split-system and single package heat

Consumer Products other than "the additional cost to the consumer of pumps-13 SEER/7.7 HSPF

Automobiles (42 U.S.C. 6291 et seq.). purchasing a product complying with -Through-the-wall air conditioners and

The consumer products subject to this an energy conservation standard level heat pumps-11 SEER/7.1 HSPF.

program (often referred to hereafter as will be less than three times the value In addition to the increase proposed

"covered products") include central air of the energy * * * savings during the in SEER and HSPF, DOE requested

conditioners and heat pumps. Under the first year that the consumer will receive comments on a proposal to adopt a

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38830 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

standard for steady-state cooling for new central air conditioners and pumps, the new standard would

efficiency, denominated EER (or Energy tol2 SEER/7.4 HSPF for new central air represent a 20 percent improvement in

Efficiency Ratio).4 The proposal of an conditioning heat pumps. In its petition cooling efficiency and a 9 percent

EER was designed to ensure more for reconsideration, ARI argued that if a improvement in heating efficiency. The

efficient operation at high outdoor 12 SEER standard is adopted for central standard would also increase the

temperature, during periods when air conditioning heat pumps, the HSPF cooling efficiency of single-package air

electricity use by air conditioners is at should be no higher than 7.3 (Petition conditioners and single-package heat

its peak. A public hearing was held in Discussion, paragraph n). ARI, and other pumps by 24 percent and the heating

Washington, D.C. on November 16, 2000 persons who commented on the October efficiency of single-package heat pumps

to hear oral views, data and arguments 5 proposed rule, urged DOE to revise the by 12 percent. Finally, DOE is proposing

on the proposed rule. HSPF levels to reflect differences among to adopt new standards for some As explained in the Introduction to the SEER-HSPF relationships across products to ensure that more efficient

this SUPPLEMENTARY INFORMATION, DOE equipment of varying capacity ratings. versions remain available for certain

published a final rule on January 22, As DOE explained in the preamble to niche applications. DOE proposes to

2001 that would have required a SEER the January 22, 2001 final rule, DOE determine that the new standards are

of 13 for product classes covered by the established the SEER-HSPF parings in the highest efficiency levels that are

rule with a corresponding HSPF of 7.7 order to maintain the offset between the technologically feasible and

for heat pumps. Subsequent events, minimum SEER and the minimum economically justified as required by

including notices delaying the final HSPF in the current standards. Because law. Several aspects of today's proposed

rule's effective date pursuant to the heating energy is a large fraction of total standards warrant highlighting here, as President's Regulatory Review Plan, heat pump energy consumption, DOE follows:

petitions for judicial-review, and ARI's stated it would not relax the HSPF level

petition for reconsideration of the final in the absence of sound evidence 1. Central Air Conditioner and Heat

rule, are also discussed in the regarding the burdens that would be Pump Features

Introduction. mitigated (66 FR 7184). DOE continues The oposedeffici l b

B. of Overview the Proposed Standards to think an HSPF of 7.4 is the The e efficiency levels can be

B. Overview of the Proposed Standards appropriate level for 12 SEER. Data met by central air conditioner and heat

DOE, through today's proposed rule, discussed in the TSD (Section 4.6.2.1) pump designs that are already available

would amend the almost ten-year old show that most models of equipment in the market. DOE fully expects

minimum efficiency standards for new below 3-tons meet or exceed an HSPF of variations of these models to exist under

central air conditioners and heat pumps. 7.4, and almost a third of models the new standards, offering all the

These amended standards would take available below 20,000 BTU/hr. meet or features and utility that are found in

into account a decade of technological exceed an HSPF of 7.4. currently available products.

advancements and would save The proposed standards would apply 2. Consumer Benefits

consumers and the nation money, to products manufactured for sale in the

significant amounts of energy, and have United States, as of July 25, 2006. The Table 1 summarizes the

substantial environmental and proposed standard for split-system air "characteristics" of today's typical

economic benefits. conditioners, the most common type of central air conditioners and heat pumps.

If today's proposed standards go into residential air conditioning equipment, Table 2 presents the implications for the

effect, they would essentially raise the represents a 20 percent improvement in average consumer of the standards

energy efficiency standards to 12 SEER energy efficiency. For split-system heat becoming effective in 2006.

TABLE 1.-CHARACTERISTICS OF TODAY'S TYPICAL CENTRAL AIR CONDITIONERS AND HEAT PUMPS 1

Split system air Split system heat Single package air Single package heat

conditioner pump conditioner pump

Average Installed Price .................................... $2,236 ....................... $3,668 ....................... $2,607 ....................... $3,599.

Annual Utility Bill 2 ............................................ $189 .......................... $453 .......................... $189 .......................... $453.

Life Expectancy ................................................ 18.4 years ................. 18.4 years ................. 18.4 years ................. 18.4 years.

Energy Consumption per year ......................... 2,305 kWh ................. 6,549 kWh ................ 2,305 kWh ................. 6,549 kWh.

1 "Typical" equipment have cooling and heating efficiencies of 10 SEER and 6.8 HSPF, respectively.

2 Utility bill pertains to the energy cost of operating the air conditioner or heat pump.

TABLE 2.-IMPLICATIONS OF NEW STANDARDS FOR THE AVERAGE CONSUMER

Split system air Split system heat Single package air Single package heat

conditioner pump conditioner pump

Year Standard Comes into Effect .................... 2006 .......................... 2006 .......................... 2006 .......................... 2006.

New Average Installed Price ........................... $2,449 ....................... $3,812 ....................... $2,765 ....................... $3,748.

Estimated Price Increase ................................. $213 .......................... $144 .......................... $158 .......................... $149.

Annual Utility Bill Savings ................................ $31 ............................ $50 ........................... $31 ............................ $50.

Average Net Saving over Equipment Life ....... $113 .......................... $365 .......................... $163 .......................... $421.

Energy Savings per Year ................................. 384 kW h .................... 768 kW h .................... 384 kW h .................... 768 kW h.

' EER is a steady-state measure of energy outdoor temperature (95 ° F), and is one of the test conditions in DOE's test procedure used to develop

efficiency which measures efficiency at a prescribed the SEER.

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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38831

The most typical air conditioner (i.e., equivalent to all the energy consumed 2. Life-Cycle costs and Rebuttable

split system air conditioner by nearly 17 million American Presumption

whichcomprises approximately 65 households in a single year. In 2020, the DOE considered life-cycle costs (LCC),

percent of today's central air proposed standards would avoid the as discussed in the January 22, 2001

conditioning and heat pump market) construction of three 400 megawatt coal- final rule. 66 FR 7173, 7175, 7187-90.

has an installed price of $2,236 and an fired plants and twenty-seven 400 DOE calculated the installed price and

annual utility costs of $189. In order to megawatt gas-fired plants. These energy operation and maintenance costs for a meet the 2006 proposed standard, DOE savings would result in cumulative range of consumers around the nation to

estimates that the installed price of a greenhouse gas emission reductions of estimate the rane in life-cycle cost

typical air conditioner would be $2,449, approximately 24 million metric tons benefits that consumers would expect to an increase of $213.5 This price increase (Mt) of carbon, or an amount equal to achieve due to new standards. DOE has

would be offset by an annual energy that produced by approximately 2 made no change in its assumptions and

savings of about $31 on the utility bills. million cars every year. Additionally, analysis of life-cycle costs in proposing The most typical heat pump (i.e., split air pollution would be reduced by the today's rule.

system heat pump) currently has an elimination of approximately 70 As previously mentioned, NAECA installed price of $3,668 and annual thousand metric tons of nitrous oxides established new ritria for minin new criteria for determining utility costs of $453. In order to meet the (NOx) from 2006 through 2030. In total, whether a standard level is

2006 proposed standard, DOE estimates DOE estimates this proposed standard economially justified. Section

that the installed price of a typical heat would have a net benefit to the nation's economically justified. Section

pump would be $3,812, an increase of consumers of $2 billion over the period o i ees

$144.8 This price increase would be 2006 through 2030. if, aprocedure, the increas ble initial price offset by an annual energy savings of C. Technological Feasibility of an appliance due to a conservation about $50 on the utility bills.

DOE recognizes that most consumers There are central air conditioners and standard would repay itself to the

pay energy prices that are higher or heat pumps in the market at the consumer in energy savings in less than

lower than the "typical" consumer and efficiency levels that would be three years, then DOE is to presume that

operate their equipment more or less prescribed by today's proposed rule. such standard is economically justified.

often. Consequently, DOE has DOE, therefore, believes all of the This presumption of economic

investigated the effects of the different proposed efficiency levels are justification can be rebutted upon a

energy prices across the nation and technologically feasible. proper showing.

different air-conditioning usage Pursuant to section 325(p)(2) of EPCA, Using the reverse engineering paeetterns Dir-E eontimates . that pernte and as discussed in the October 5, 2000 manufacturing costs, the standards DOE

patterl ns. DOE estimates that 75 percent NOPR, DOE determined that 18 SEER is proposes today for split heat pumps and

of all consumers purchasing a new the maximum technologically feasible packaged heat pumps can be shown to typical air conditioner would either the maximum technologically feasible stypical airmcoioney r would bneglity level (Max Tech Level) for cooling have satisfied the rebuttable save money or would be negligibly efficiency for all product classes and presumption requirements in section

impactroposed as a result ofIn the 2006case of a new capacities covered by this rulemaking. 325(o)(2)(B)(iii). To avoid confusion, proposed standard.t In the case of a new 65 FR 59593. The Max Tech Level for DOE points out that the statute requires typical heat pump, all consumers either heating efficiency is 9.4 HSPF, which is DOE to use "the applicable test

would save money or be negligibly the highest HSPF rating currently procedure" to calculate the payback

DOE also investigated how these available in residential heat pumps. periods for purposes of the rebuttable

standards might affect low income D. General Discussion of Economic presumption. As explained thein 

consumers. On average, DOE estimates Justification Factors cooling and heating energy

that it is likely that low income air As noted earlier, section consumption calculations based on conditioner and heat pump consumers 325(o)(2)(B)(i) of EPCA requires DOE to DOE's test procedure are significantly would also save money over the life of consider seven factors in determining greater than the weighted-average values

the equipment as a result of the whether a conservation standard is from DOE's life-cycle cost analyses standard, economically justified. based on the 1997 Residential Energy

3. National Benefits 1; Economic Impact on Manufacturers Consumption Survey, used in other

The proposed standards would and Consumers DOE analyses, including evaluation of

provide benefits to the nation. DOE DOE considered the economic impact se t 65 FR 59596. For

estimates the standards would save on manufacturers and consumers as resonte c thk rp approximately 3 quads of energy over 25 discussed in the October 5, 2000, NOPR ye~~app~~roximately 320 qhruad of30 energ is NP the preamble, entitled "Analytical years (2006 through 2030). This is (65 FR 59590, 59593) and the January Results and Conclusions," are

22, 2001 final rule (66 FR 7174-78, significantly longer than those Based supplied on by estimates the industry7185-7191). As explained in Section I calculated to determine whether the trade association, the Air-Conditioning and and Section V.B. of this SUPPLEMENTARY alculated to determine whether the

Refrigeration Institute (ARI). the installed price is rebuttable presumption applies to these

estimated to be $2,510, an increase of $274. INFORMATION, today's proposal is base oducts 6

Based on estimates supplied by ARI, the in part on changes in emphasis orres DOE to

installed price is estimated to be $3.933, an increase weight that DOE, as a result of its Whilesume the analysis requires adopted for

of $265. 

7 reconsideration of the rulemaking presume that the standards adopted for Based on estimates supplied by ARI, 61 percent record, now gives to certain aspects of split system and single package heat

of all consumers purchasing a new typical air pumps are economically justified, it

conditioner will either save money or will be its analysis of manufacturer and shows that split system air conditioners negligibly impacted as a result of the 2006 standard, consumer impact. and single package air conditioners do a Based on estimates supplied by ARI, 97 percent

of all consumers purchasing a new typical heat 9 Net benefit assumes NAECA efficiency scenario. not meet the standard for use of the

pump will either save money or will be negligibly Net benefit would be $3 billion for Roll-up rebuttable presumption of economic

impacted as a result of the 2006 standard. efficiency scenario. justification. Therefore, DOE does not

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38832 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

presume them to be economically General's determination; in a letter except the through-the-wall product

justified. If the rebuttable presumption dated December 4, 2000, was discussed classes that DOE proposes today.

does not apply, DOE must perform in the preamble to the January 22 final DOE will submit this proposed rule to

additional analysis to determine rule. 66 FR 7176, 7199-200. The the Department of Justice for comment.

economic justification. DOE has Attorney General's December 4, 2000, DOE also invites the public to submit

performed an analysis for all classes of determination is included in the views and information regarding the

central air conditioner and heat pump Appendix to this Supplemental Notice potential anti-competitive impact of

products that shows the standards of Proposed Rulemaking. today's proposed rule.

proposed today are indeed economically Pursuant to the President's Regulatory 6. Need of the Nation To Conserve

justified. Review Plan, DOE invited the Attorney Energy

3. Energy Savings General to submit supplemental views DOE recognizes that energy 3. Energy Savings^^ ^ 2 ^ S~e^ DOE recognizes that energy

EPCA requires DOE, in determining epartment o Justie, in a leter de conservation benefits the nation in

the the economic economic justification justification of a standard, Department of justice, in a letter dated several important ways. Enhanced of a standard, April 5, 2001, provided brief written a l important ways. Enhanced

to consider the total projected energy comments as to whether the final rule energy efficiency improves the nation's

savings that are expected to result effectively removed their concerns energy security, strengthens the

directly from revised standards. DOE arding possieconomy, and reduces the

forecasted energy savings through the competition that could result from the environmental impacts of energy

use of a national energy savings (NES) October 5 proposed standards. The production As part o the analysis

spreadsheet, as discussed in the October Department of Justice's April 5, 2001, supporting today's proposed rule, DOE

5, 2000 NOPR. 65 FR 59590, 59593. letter is also included in the Appendix estimated energy savings and the

DOE relies on the same spreadsheets to this notice. national consumer benefits and

and assumptions for its estimate of the The Department of stice concluded estimated reduction in emissions of

NES that would result from that the 13 SEER standards for t tt and greenhouse gases

implementation of today's proposed mp air conditioners in the resulting from those energy savings. See

standards. the October 5,2000 NOPR for a As discussed in the October 5, 2000 January 22 final rule still presented anti- discussion of how these standards affect

NOPR, NOPR, section section 325(o)(3)(B) 325(o)(3)(B)t of EPCA competitive concerns. of Justice More concluded specifically, energy savings and those benefits. 65 FR

prohibits DOE from adopting a standard 59622-3. The amount of energy savings

for a product if that standard would notta lthefinalrus excluson of ultimately associated with a particular result in "significant" energy savings niche products might alleviate standard level is also affected by the

The energy savings for the standard competitive problems for manufacturers effect of a given standard on

levels DOE is i t are ar of those productposing today Departmen of competition and consumer cost. Justice remained concerned about the trivial-indeed they are substantial- c n e onerne au Selecting a standard level should take

and therefore we consider them impact of the final rule on into account manufacturer-and

"significant" within the meaning of manufacturers of standard equipment therefore inevitably consumer--costs, in

section 325 of the Act.who could not make 13 order to encourage robust competition equipment that would fit into space- and heightened introduction of newer,

4. Lessening of Utility or Performance of constrained sites. The Department of more efficient units into the inventory

Products Justice also concluded the final rule of nit i e for purchase and use of units available for purchase and use This factor cannot be quantified. In would have a disproportionate impact by consumers. establishing classes of products, DOE on smaller manufacturers of heat

has attempted to eliminate any pumps. Finally, the Department of 7. Other Factors

degradation of utility or performance in Justice was of the view that the 13 SEER Section 325(o) of EPCA allows the

the products covered by today's standard for air conditioners presents Secretary of Energy, in determining

proposed rule. Attributes that affect the same kinds of anti-competitive whether a standard is economically

utility include the product's ability to problems as the 13 SEER standard for justified, to consider any other factors

cool and dehumidify. In some heat pumps, and urged DOE to adopt a that the Secretary deems to be relevant

applications, noise levels may also be an 12 SEER standard for all products (42 U.S.C. 6295(o)(2)(B)(i)(VI)). Under

aspect of utility. Product size or covered by the rule. this provision, DOE considered the

configuration can also be considered As explained in Section III. of this potential improvement to the reliability

utility if a change in size would cause SUPPLEMENTARY INFORMATION, DOE's of the electrical system and health

the consumer to install the product in decision today to propose a 12 SEER effects caused by foregone air

a location or in a manner inconsistent standard for most central air conditioner purchases. These issues are with the consumer's preferences. conditioners, with a corresponding 7.4 discussed in Sections IV.B.3. above, as HISPF for central air conditioning heat well as in the October 5, 2000 NOPR (65 5. Impact of Lessening of Competition pumps, is based primarily on its re- FR 59605) and the January 22 final rule

This economic justification factor has weighting of the burdens and benefits to (66 FR 7195). The Utility Impacts

two aspects: on the one hand, it assumes manufacturers and consumers, rather Analysis in Chapter 11 of the TSD also

that there could be some lessening of than on the Department of Justice's provides the technical analysis

competition as a result of standards; on views regarding the anti-competitive estimating the effects of adopting new the other hand, it directs the Attorney effect of the January 22 final rule. The efficiency standards on installed

General to gauge the impact, if any, of Department of Justice's April 5 letter generation capacity.

that effect. raises questions about the January 22

In order to assist the Attorney General final rule's treatment of space- E. Methodology Used in DOE Analyses

in making such a determination, DOE constrained or niche products, but those For this proposed rule, the

provided the Attorney General with questions do not require resolution methodologies used to evaluate the

copies of the October 5, 2000, NOPR given DOE's decision to propose a 12 seven factors described above are and the TSD for review. The Attorney SEER standard for all product classes unchanged from those used in the

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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38833

analyses that DOE relied on for the V. Analytical Results and Conclusions product classes. Briefly, DOE examined

October 5 proposed rule and the January A. Overview of Analytical Results five standard levels. Table 3 presents

22 final rule. DOE's methodology is the trial standards levels analyzed and

discussed in the October 5, 2000 NOPR 1. General 'the corresponding efficiency level for

(65 FR 59594-97) and the January 22 Although DOE has accorded different each class of product. Trial Standard

final rule (66 FR 7173-74). weight to certain factors in proposing Level 5 is the Max Tech Level for each

Additionally, the TSD that accompanies this rule, the underlying analyses, and class of product. Trial Standard Level 4

this rulemaking provides a detailed the results derived from those analyses, was the one DOE adopted for the

description of every aspect of the are unchanged from those presented in standards set forth in the January 22

various analytical methodologies used. the January 22 final rule except for final rule. Trial Standard Level 2 is the

additional analysis of through-the-wall one DOE is now proposing.

TABLE 3.-TRIAL STANDARDS LEVELS FOR CENTRAL AIR CONDITIONERS AND HEAT PUMPS (SEER)

Trial standard level Split air Packaged air Split heat Packaged heat conditioners conditioners pumps pumps

1 ...................................................................................... 11 11 11 11

2 ....................................................................................... 12 12 12 12

3 ....................................... 12 12 13 13

4 ....................................................................................... 13 13 13 13

5 ....................................................................................... 18 18 18 18

For each trial standard examined, Measures of Costs and Benefits and the October 5 proposed rule. The design

several different scenarios were Format of Accounting Statements. assessment sought to identify the cost

analyzed consisting of variations on: (1) Through-the-Wall Products and efficiency impacts of employing

Electricity price and housing2. Through-the-Wall Productscommonly applied techniques to

projections; (2) equipment efficiency In the October 5 proposed rule, DOE improve efficiency including reduction

distributions; (3) manufacturer cost proposed to establish a separate product of air leakage and improvement in

estimates; and (4) societal discount rate. class for through-the-wall (TTW) airflow, utilizing more efficient

Electricity price and housing projections products with a minimum 11 SEER for compression and fan motors, and were based on three different forecasts air conditioners and 7.1 HSPF for heat increasing heat exchanger surface area. from the Energy Information Agency's pumps, noting that they face Emerging technologies and modulating

2000 Annual Energy Outlook (AEO): (1) particularly acute size constraints that technologies were not considered since

Reference Case, (2) High Growth Case, make increasing their efficiency more they are not likely to be applied in

and (3) Low Growth Case. DOE analyzed difficult compared to conventional conventional baseline equipment.

three efficiency scenarios, each of which products, or even other space- The cost estimation for the analysis

assumed a different efficiency constrained products. In comments was based on a modified version of the

distribution after new standards would received responding to the proposed reverse engineering cost models

take effect: (1) NAECA scenario, (2) standards, Carrier suggested that such a developed as part of this rulemaking for

Roll-up scenario, and (3) Shift scenario. differential could open a loophole and conventional products. The

See October 5, 2000, NOPR for an cause TTW products to be broadly performance impacts of employing

explanation of the three scenarios. 65 applied in traditionally'non-TTW various design options were estimated

FR 59596 (footnotes 10 through 12 and applications. (Carrier #92 at p. 9). utilizing a spreadsheet model populated

accompanying text). Under the standard National Comfort Products suggested with actual performance data and

levels in today's proposed rule, DOE 'that they did not believe that their engineering guidelines.

believes that the NAECA scenario most product could attain even the proposed

closely represents the likeliest impact of 1:1 SEER standard and that the DOE did The analysis concluded that utilizing

the new standards, as explained in not conduct sufficient analysis to commonly applied technologies and

Chapter 8 of the TSD. DOE analyzed two support the proposed level. (NCP #77 at designs, the most constrained TTW

manufacturer cost scenarios: (1) Based p.3, 4). However, Armstrong commented split-system analysis could increase its

on reverse engineering estimates, and that they did believe their TTW SEER rating from 10.0 SEER to as high

(2) based on ARI-provided mean cost products could attain 11 SEER, although as 11.4 SEER, and the packaged system

estimates. For the reasons expressed in they had concerns about their larger analysis could increase its SEER rating

the preamble to the January 22 final capacity products. (Armstrong #86 at p. from 9.7 SEER to 10.6 SEER. Employing

rule, DOE expects manufacturer costs 3). all improvements would add $106 and

under the proposed standards will lie In response to the comments, DOE $129 to the retail price of the

closer to the estimates produced conducted additional analysis on the equipment, respectively, comparable to

through DOE's reverse engineering cost and technical issues related to TTW the increases expected in conventional

analysis, which lie between ARI's products. The analysis is described in equipment moving to a 12 SEER

minimum and ARI's mean cost values. detail in Appendix L of the TSD and is standard.

66 FR 7177-78. DOE assumed a societal summarized here. To explore the effects that more

discount rate of 7 percent for calculating DOE performed a design assessment stringent standards for TTW'products

net present value (NPV). However, a 3 on two split TTW systems and one would have on consumers, DOE

percent value was investigated as an packaged TTW system. All systems are performed a life-cycle cost (LCC)

alternative scenario in accordance with designed primarily for the replacement analysis. The LCC analysis for TTW

the Office of Management and Budget's market and fit the physical definition of consumers used a subset of consumers

(OMB) Guidelines to Standardize TTW equipment proposed in the identified as living in multi-family

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38834 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

dwellings, which are the predominate January 22 final'rule would accrue to a by the TSD to result in a negative cash

application for TTW products. much smaller fraction of consumers flow for the industry in the year

3. Other Space-Constraid than is the case for recent standards for preceding the new standards' 3. Other Space-Constrained Products other products, particularly low income enforcement. However, the standards

Some products, other than through- consumers. Today's proposed rule would impose far greater financial

the-wall products, face space- attempts to mitigate those burdens by burdens on manufacturers whose

constraints. However, as discussed in reducing the increase in equipment cost operating costs exceed the industry the October 5 NOPR, DOE proposed to compared to the 13 SEER requirements average. Those manufacturers typically conclude that it is economically issued on January 22. Overall, the engage in more research and

justified and technologically feasible for proposed standards would reduce the development or provide additional sales

all of those products to comply with the burdens on consumers while still or service support than do their lower same efficiency requirements as providing substantial benefit to the operating cost competitors. The 12 SEER

conventional products. Comments nation in the form of energy savings. standard that DOE proposes today received in response to that proposal would reduce the maldistribution of

focused mainly on the 13 SEER heat 2. Re-Weighting of Burdens on financial impacts on manufacturers and

pump requirement. After reviewing the Manufacturers would allow manufacturers to maintain

comments, DOE again proposes to a. Cumulative Regulatory Burden. a positive cash flow.

conclude that a 12 SEER requirement is Although DOE included information on c. Conclusions Regarding

the maximum technologically feasible the cumulative burden of Federal and Conventional Products. EPCA specifies and economically justified level for all State regulations on air conditioner that any new or amended energy space-constrained products except manufacturers in the TSD, DOE did not conservation standard for any type (or through-the-wall products. DOE is fully explain how it considered the class) of covered-product-shall be

interested in receiving further comment results of its study in the preamble designed to achieve the maximum on this issue. statement of basis for the January 22 improvement in energy efficiency which

B. Re-Weighting of Factors final rule. See discussion in Section III the Secretary determines is

of this SUPPLEMENTARY INFORMATION. technologically feasible and

1. Re-Weighting of Burdens on DOE considers that a proposed standard economically justified (42 U.S.C.

Consumers is not economically justified if it 6295(o)(2)(A)). In determining whether a

The record associated with this contributes to an unacceptable standard is economically justified, the

rulemaking includes numerous cumulative regulatory burden. Section Secretary must determine whether the

examples of discussions of the Ill.B.2.a. above provides a summary of benefits of the standard exceed its

distributions, extent, and type of the cumulative regulatory burden burdens (42 U.S.C. 6295(o)(2)(B)(i)). The

burdens on the typical consumer as well analysis contained in Section 8.6 of the amended standard must "result in as on low-income consumers. 65 FR TSD. DOE concluded that the burden on significant conservation of energy" (42

59623-59624 and 66 FR 7189-7190. In manufacturers due to all other recent or U.S.C. 6295(o)(3)(B)).

the January 22 notice of final imminent federal regulations exceeds In conducting its analysis, DOE

rulemaking, DOE determined that most $479 million. Revising the standard for considers the impacts of standards

consumers, including low-income air conditioner and heat pump beginning with the Max Tech Level, i.e.,

consumers, would likely benefit efficiency would contribute up to an Trial Standard Level 5 in this

financially over the life of the additional $300 million, bringing the rulemaking. DOE then considers less

equipment, but that all consumers total cumulative regulatory burden to as efficient levels until it reaches the level

would bear higher initial costs, and low- high as $779 million. In light of that which is technologically feasible and

income consumers would not benefit heavy burden, DOE today is proposing economically justified. financially as much as would the standards that would reduce the To aid the reader in the discussion of

average consumer. DOE also recognized expected financial burden on the benefits and burdens of the trial

that the payback periods associated with manufacturers from all new Federal and standard levels, DOE includes a the January 22 final rule are long, and State regulations by $144 million summary of the analysis results for all

that many consumers, though not the compared to the 13 SEER final rule of of the levels in Table 4. 1

0 Table 4

majority, would never recover the January 22. presents a summary of quantitative

higher first costs in the form of savings b.-Financial Burdens Associated with analysis results for each trial standard

in their utility bills. However, the New Efficiency Standards. In addition to level based on the assumptions DOE

previous Administration concluded that cumulative regulatory burden, both the considers most plausible. These include

the national energy savings and the TSD and public comments warn that too manufacturing cost estimates from the

slight financial benefit to the typical stringent efficiency standards would reverse engineering, an 18.4-year consumer overrode any negative and result in unacceptable financial burdens equipment lifetime with one compressor

maldistributed consumer impacts. for some major manufacturers and could replacement at 14 years, and electricity

Energy conservation is an important accelerate consolidation in the central prices based on the AEO2000 Reference

part of the Bush Administration's air conditioning and heat pump Case

energy policy, but this Administration is industry. As explained in Section

particularly sensitive to burdens, and Il[.B.2.b. of this SUPPLEMENTARY cumuate effects that are not monetary are 1oAll cumulative effects that are not monetary are potential burdens, on consumers. The INFORMATION, the 13 SEER standards in not discounted. Monetary effects are discounted to

benefits of the standards adopted in the the January 22 final rule are projected 1998 dollars.

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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38835

TABLE 4.-SUMMARY OF QUANTITATIVE RESULTS

Trial std 1 Trial std 2 Trial std 3 Trial std 4 Trial std 5

Primary Energy Saved (quads) ............................................................... 1.7 3.0 3.5 4.2 8.8

Generation Capacity Offset (GW)2 ......................................................... 6.5 10.6 12.4 15.5 28.8

NPV ($billion):

7% Discount Rate ........................................ ................. 2 2 1 1 (10) Industry Impacts (million $):3 5 '

Cumulative Change in Industry NPV ................................................ (62) (179) (199) (300) Differential impact between Industry Sub-groups4 ........................... 75 238 261 429

Cumulative Regulatory Burden on Industry ..................................... (>541) (>658) (>678) (>779) Minimum net cash flow ..................................................................... 62 31 18 (3) Life-Cycle Cost Savings ($):s

Split AC ....................................... 75 113 113 113 (137) Packaged AC ..................................................... 78 163 163 29 (276) Split HP .......... ................................................ ............. 209 365 372 372 (41) Packaged HP ..................................................... 207 421 353 353 166

Equipment Price Increase ($): Split AC ............................................................................................. 91 213 213 335 754

Packaged AC ..................................................... ........ 89 158 158 425 859

Split HP .................................... ............................... ................... 55 144 332 332 -1039

Packaged Heat Pump ................................... 92 149 435 435 985

Fraction of all Consumers with Net LCC Losses >2% (%): Split AC ........... ................................................... 2 25 25 39 68

Packaged AC ........................................ ....................................... 9 9 52 73

S plit H P ............................................................................................. 0 0 6 6 57

Packaged Heat Pump ....................................................................... 0 0 12 12 48

Fraction of Low Income Consumers with Net LCC Losses >2% (%): Split AC ............................................................................................. 5 34 34 50 77

Packaged AC .................................................................................... 2 14 14 61 80

S plit H P ............................................................................................. 0 0 12 12 75

Packaged Heat Pump ....................................................................... 0 0 20 20 66

Parentheses indicate negative (-) values. Unless otherwise noted, Trial Standard Levels 1-3 refer to the NAECA efficiency scenario, and

Trial Standard Levels 4 and 5 refer to the Roll-up efficiency scenario.

2 Values based on NAECA efficiency scenario.

3 Not calculated at Trial Standard Level 5.

4 The benefit accruing to the Higher Operating Cost subgroup compared to the Lower Operating Cost subgroup. 5 Negative values indicate LCC increases.

In addition to the quantitative results, DOE also recognizes that the adopted result in the avoidance of approximately

DOE also considers other burdens and standards could result in additional 29 gigawatts (GW) of installed

benefits that affect economic . unquantifiable burdens. These include a generation capacity in 2020. For

justification. The potential to improve possible increase in health problems comparison, the generating capacity is

the reliability of the electricity system is caused by consumers foregoing air equivalent to roughly 73 large, 400

the major benefit DOE has not conditioner purchases, a possible megawatt, power plants, and reduced

quantified explicitly. In areas where the reduction in the ability of the product emissions would range up to 63 Mt of occurrence of blackouts (and to dehumidify, a possible lessening of carbon equivalent and up to 184

brownouts) can be reduced through competition, and possible difficulty in thousand metric tons (kt) of NOx.' 2

expansion of system capacity, the installing the new baseline products At Trial Standard Level 5, the average

economic value of avoided blackouts into replacement applications. Section consumer would experience an increase

associated with reductions in peak load IV of the preamble to the January 22 in life-cycle cost. Compared to today's

cannot exceed the value of the avoided final rule discusses DOE's response to standards, purchasers of split central

capacity expansion. That value is comments regarding benefits and air-conditioners, the predominate class

already captured in DOE's analysis as burdens. of central air conditioner with 65

savings in consumer utility bills. First DOE considered Trial Standard percent of the sales of central air

However, in areas that do not expect to Level 5, the Max Tech Level for each of conditioners and heat pumps, would

be able to maintain adequate capacity four classes of products, representing most likely lose in excess of $137 over reserves, the value of avoided blackouts uniform 18 SEER requirements. The the life of the appliance. Purchasers of

associated with reductions in peak manufacturing cost DOE assumes for split heat pumps, the predominate class

demand can far exceed the normal costs Trial Standard Level 5 is equal to 15 of heat pump, would most likely lose in

of capacity expansion." SEER equipment, although DOE would excess of $41. These life-cycle cost

expect that assumption to understate the estimates represent lower bounds to the 1 For instance, if capacity-related blackouts cost cost and price of the product. Trial actual costs because they do not include a region $1 billion, society would be willing to pay t

up to $1 billion to prevent them. If those blackouts Standard Level 5 would likely save 8.6 the additional price the consumer can be prevented through either a capacity quads of energy between 2006 and 2030 would pay over the price of a 15 SEER

expansion or a reduction in peak demand, and the which DOE considers significant. The product, which would increase the life- new capacity would cost $100 million, the value of energy savings through 2020 would cycle cost considerably. Furthermore, the reduction in peak demand can be no more than

$100 million. If the region is short on capacity and

cannot add new capacity quickly, however, the value of tho avoided blackout ($1 billion) since 12 Generating capacity, carbon and NO x same reduction in peak demand then can equal the there is no feasible alternative. reductions are based on NAECA efficiency scenario.

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38836 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

for the nation as a whole, Trial Standard and produce a total saving with a net costs exceeding 2 percent of the total

Level 5 would result in a net cost in present value of $29 over the 18.4 year life-cycle cost of today's baseline units.

excess of $10 billion in NPV. DOE did life of the product. Thus, 39 percent of the households with

not calculate manufacturer impacts at The average purchaser of a split split system air conditioners, 52 percent

this trial standard level, determining system heat pump, which.represents 22 with single package air conditioners, 6

based on preliminary evaluation that percent of all shipments, would see the percent with split system heat pumps

they would be severe and unacceptable. average installed price of $3668 rise to and 12 percent with single package heat

DOE proposes to conclude that at $4000, an increase of $332. Lower pumps would experience a net cost. The

Trial Standard Level 5, the benefits of utility bills from the energy savings percentage of low-income consumers energy savings, generating capacity would repay this increase in 6.4 years who would experience net costs

reductions and emission reductions and produce a total saving with a net exceeding 2 percent of the total lifewould be outweighed by the negative present value of $372 over the 18.4 year cycle cost of today's baseline units is

economic impacts to the nation, to the life of the product. The average greater than that of the average

vast majority of consumers and to the purchaser of a single package heat household. Thus, 50 percent of lowmanufacturers. Consequently, DOE pump, which represents 4 percent of all income households with split system air

proposes to determine that Trial shipments, would see the average conditioners, 61 percent with single Standard Level 5, the Max Tech Level, installed price of $3599 rise to $4034, an package air conditioners, 12 percent is not economically justified. increase of $435. Lower utility bills with split system heat pumps and 20

Next, DOE considered Trial Standard from the energy savings would repay percent with single package heat pumps Level 4. This level specifies 13 SEER this increase in 8.4 years and produce. would experience a net cost. Also, the

equipment for all product classes. In a total saving with a net present value possibility that consumers would incur

considering Trial Standard Level-4, DOE of $353 over the 18.4 year life of the substantial-installation costs-is-great assumed the Roll-up efficiency scenario product. Trial Standard Level 4 would because 13 SEER equipment is not

and reverse engineering cost estimates lower peak electricity demand likely to fit in the same space as current

to be the most probable. (See Section compared to the base case. That would 10 SEER equipment. In light of the

8.4.8 of the TSD for the reasons DOE allow utility service areas to either higher purchase cost increase

considers the Roll-up efficiency avoid new capacity or, to the extent that experienced by all consumers and the

scenario most probable above Trial peak loads contribute to reliability percentage of households, which

Standard Level 3 and the NAECA problems, improve system reliability. experience life-cycle cost increases, efficiency scenario most probable at A measure of an efficiency standard's consumer burdens, in particular those Trial Standard Levels 1, 2, and 3. See economic benefit to the nation is the for low-income households, are Section 7.2.2.5 of the TSD for the increase in net present value, which is especially acute under Trial Standard

current efficiency distribution for each the difference in total cost, both initial Level 4.

product class and for the assumed cost and discounted operating cost, DOE proposes to conclude that at

efficiency distributions after new between the base case (without a new Trial Standard Level 4, the benefits of

standards.) Primary energy savings standard) and the case with a new energy savings generating capacity and

between 2006 and 2030 would likely be energy savings, generating capacity and between and 2006 2030 would likely be standard. For Trial Standard Level 4, the emission avoidance, possible 4.2 quads, which DOE considers increase in national net present value ip emn in lectric system significant. The estimated energy would be $1 billion. improvements in electric system

savings through 2020 would result in "n DEep steRolureliability, and net benefit to the savings through 2020 would result in Since DOE expects the Roll-up nation's consumers would be

avoidance of approximately 15.5 GW in efficiency scenario to result from outweighd b e installed generating capacity in 2020. standards adopted at Trial Standard consumer benefits, the poaldistribution of

For comparison, the generating capacity Level 4, the burdens of Trial Standard incr in ins ese ttion costs for some is equivalent to avoiding the need for 39 Level 4 on manufacturers are likely to crease n stallaton coss for some large 400 megawatt consumers related to installing power plants, and be severe. Not only does DOE expect the potentially larger equipment, and the

reduced emissions would range up to 33 average loss in industry NPV to be ot to manufacturers taking into

Mt of carbon equivalent and up to 85 kt around 20 percent, but impacts on most costt he cumulative regulatory of NOx.' 3 manufacturers would reach almost 30un e c lative reglatr At this standard level, the average percent. Their long term drop in return burden. Trial tandard Level 4

purchaser of a split system air on.investment and short term drop in producestive owners conditionin that

conditioner, the predominate class with cash flow suggest that standardsprospective owners of a conditioning 65 percent of all shipments, would see heat pump systems would instead 65 percent of all shipments, would see adopted at Trial Standard Level 4 could h e a t p u rchase less costly ai

r c

o nd i t

i

oen r

the installed price of $2236 rise to accelerate the consolidation trendrcse less costly air conditioner

$2571, an increase of $335. Lower possibly resulting in fewer choices for resistance heater combinations because

utility bills from the energy savings consumers and in a slowing of the pace differential purbetween heat pumps and air

would repay this increase in 11.3 years of innovation well into the future. nditio ners. As discussed in the

and produce a total saving with a net Furthermore, the cumulative impact onin the

present value of $113 over the 18.4 year the industry of all new Federal and January 22 notice of final rulemaking

life of the product. The average atere ionsd (66 FR 7196), the energy savings from life of te The product. average State regulations would exceed $779 the more efficient heat pumps would be purchaser of a single package air more efficient heat pumps would be

conditioner, which represents 10 While the average consumer eliminated if only a small fraction of

percent of all shipments, would see the purchasing a 13 SEER air conditioner or heat pump owners (4 percent) switched

average installed price of $2607 rise to heat pump would experience a net toresistance heating. Those households

$3032, an increase of $425. Lower saving over the lifetime of the product, esiding in manufactured housing, utility bills from the energy savings some households would experience net which is often shipped from the actory

would repay this increase in 14.5 years _ without aa air conditioning system but

14 Under the NAECA efficiency scenario, the with a resistance furnace, might be '

3Generating capacity, carbon, and NO x increase in national net present value would be inclined to simply add a lower cost air

reductions are based on NAECA efficiency scenario. zero. conditioner and retain the resistance

EE-RM-STD-98-440 COMMENT 200
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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38837

furnace instead of replacing the would repay this increase in 6.4 years resistance heating and other lower cost

resistance furnace with a heat pump. In and produce a total saving with a net heating systems.

short, the large financial burdens of present value of $372 over the 18.4 year DOE proposes to conclude that, at

Trial Standard Level 4 are not life of the product. The average Trial Standard Level 3, the benefits of

outweighed by the expected financial purchaser of a single package heat energy savings, generating capacity and

benefits. Other potential burdens pump, which represents 4 percent of all emission avoidance, possible

include possible health effects caused shipments, would see the average improvements in electric system

indirectly by foregone air conditioning installed price of $3599 rise to $4034, an reliability, and net benefit to the

purchases and possible lessening of increase of $435. Lower utility bills nation's consumers would be

competition. Consequently, DOE from the energy savings would repay outweighed by the maldistribution of

proposes to determine that Trial this increase in 8.4 years and produce consumer benefits and manufacturer

Standard Level 4 is not economically a total saving with a net present value costs, the likelihood of higher

justified. of $353 over the 18.4 year life of the installation costs resulting from

Next, DOE considered Trial Standard product. Trial Standard Level 3 would potentially larger equipment, and the

Level 3. This level specifies 12 SEER lower peak electricity demand net impact on the industry in light of

equipment for air conditioners and 13 compared to the base case. That would the cumulative regulatory burden. The

SEER equipment for heat pumps. In allow utility service areas to either most serious concern is the possibility considering Trial Standard Level 3, DOE avoid new capacity or, to the extent that of equipment switching that would

assumed the NAECA efficiency scenario peak loads contribute to reliability likely substantially reduce the

and reverse engineering cost estimates problems, improve system reliability. calculated energy savings, drastically

to be the most probable. (See Section The increase in national net present reducing the potential benefits. Other

8.4.8 of the TSD for the reasons DOE value would be $1 billion.' possible burdens include lessening of

considernce the Roll-up effNAECA DOE expects competition and health effects caused

scenario most probablen at Trl Standard efficiency scenario to result from by forgone air conditioner purchases.

efficiency scenario most probable at standards adopted at Trial Standard Consequently, DOE proposes to

Trial Standard Levels 1,2, and 3.) a Level 3, the burdens of Trial Standard determine that Trial Standard Level 3 is

Trial Standard Levels , 2, anufacturers are likely to not economically justified. Primary energy savings between 2006 evel 3 on manufacturers are likely to not economically justified. and 2030 would likely be 3.5 quads be less severe than at Trial Standard Next, DOE considered Trial Standard

which DOE considers significant. The Level 4. DOE expects the average loss in Level 2. This level specifies 12 SEER

energy savings through 2020 would industry NPV to be around 11 percent, equipment for all product classes. In

result in avoidance of approximately but impacts on most manufacturers considering Trial Standard Level 2, DOE

12.4 GW in installed generating capacity would be around 17 percent. Their long assumed the NAECA efficiency scenario

in 2020. For comparison, the generating term drop in return on investment and and reverse engineering cost estimates

capacity is equivalent to avoiding the short term drop in cash flow suggest to be the most probable. Primary energy

need for 31 large 400 megawatt power that standards adopted at Trial Standard savings between 2006 and 2030 would

plants, and reduced emissions-would Level 3 could accelerate the likely be 3 quads, which DOE considers

range up to 28 Mt of carbon equivalent consolidation trend, possibly resulting significant. The energy savings through

and up to 84 kt of NOx 15 in fewer choices for consumers and in 2020 would result in avoidance of

At this standard level, the average a slowing of the pace of innovation well approximately 10.6 GW in installed

purchaser of a split system air into the future. Furthermore, the generating capacity in 2020. For

conditioner, the predominate class with cumulative impact on the industry of all comparison, the generating capacity is

65 percent of all shipments, would see new Federal and State regulations equivalent to avoiding the need for 27

the installed price of $2236 rise to would exceed $678 million. large 400 megawatt power plants, and

$2449, an increase of $213. Lower Similar to the concern over Trial reduced emissions would range up to 24

utility bills from the energy savings Standard Level 4, Trial Standard Level Mt of carbon equivalent and up to 73 kt

would repay this increase in 9.8 years 3 raises the serious concern that of NOx.' 7

and produce a total saving with a net prospective owners of air conditioning At this standard level, the average

present value of $113 over the 18.4 year heat pump systems would purchase less purchaser of a split system air

life of the product. The average 'costly air conditioner resistance heater conditioner, the predominate class with

purchaser of a single package air combinations. In this case there is a 65 percent of all shipments, would see

conditioner, which represents 10 potential loss of energy savings because the installed price of $2236 rise to

percent of all shipments, would see the of the lower standards for air $2449, an increase of $213. Lower

average installed price of $2607 rise to conditioners compared to heat pumps. utility bills from the energy savings

$2765, an increase of $158. Lower which could eliminate all energy would repay this increase in 9.8 years

utility bills from the energy savings savings from the more efficient heat and produce a total saving with a net

would repay this increase in 7.5 years pumps if only a small fraction of heat present value of $113 over the 18.4 year

and produce a total saving with a net pump owners (4 percent) switched to life of the product. The average

present value of $163 over the 18.4 year resistance heating. Trial Standard Level purchaser of a single package air

life of the product. 3 poses a serious concern regarding conditioner, which represents 10

The average purchaser of a split potential anti-competitive effects percent of all shipments, would see the

system heat pump, which represents 22 because the size and cost of the higher average installed price of $2607 rise to

percent of all shipments, would see the efficiency heat pumps could reduce $2765, an increase of $158. Lower

average installed price of $3668 rise to competition between manufacturers of utility bills from the energy savings

$4000, an increase of $332. Lower heat pumps and manufacturers of would repay this increase in 7.5 years

utility bills from the energy savings and produce a total saving with a net

I8 Under the Roll-up efficiency scenario, the '

1 Generating capacity, carbon, and NO x increase in national net present value would be $2 'Generating capacity. carbon, and NOx

reductions are based on NAECA efficiency scenario. billion. reductions are based on NAECA efficiency scenario.

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38838 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

present value of $163 over the 18.4 year percentage of low-income consumers implemented, as proposed, DOE's

life of the product. who would experience net costs analysis suggests that of all potential

The average purchaser of a split exceeding 2 percent of the total life- space-constrained products, only those

system heat pump, which represents 22 cycle cost of today's baseline units is with through-the-wall condensers need

percent of all shipments, would see the greater than that for an average special consideration. The TSD contains

average installed price of $3668 rise to household. Thus, 34 percent of low- a new appendix (Appendix L)

$3812, an increase of $144. Lower income households with split system air describing the results of our recent reutility bills from the energy savings conditioners and 14 percent with single evaluation of those products. The

would repay this increase in 3.9 years package air conditioners would results of that analysis are summarized

and produce a total saving with a net experience a net cost. No low-income in Section V.A.2 above. They

present value of $365 over the 18.4 year households with heat pumps would demonstrate that split TTW equipment

life of the product. The average experience a net cost. Also, the can attain 10.9 SEER using designs and

purchaser of a single package heat possibility that consumers would incur technologies that are commonly applied

pump, which represents 4 percent of all substantial installation costs is less than or available, with price impacts similar

shipments, would see the average that with a 13 SEER standard because 12 to those that conventional equipment

installed price of $3599 rise to $3748, an SEER equipment is more likely to fit in would experience in meeting the

increase of $149. Lower utility bills the same space as current 10 SEER proposed 12 SEER standard. The

from the energy savings would repay equipment. In light of the moderate packaged equipment analyzed was

this increase in 4 years and produce a purchase cost increase experienced by demonstrated to be capable of attaining

total saving with a net present value of all consumers, the percentage of only a 10.6 SEER rating, although

$421 over the 18.4 year life of the households, in particular low-income comments received indicate that one

product. Trial Standard Level 2 would households,-which experience life-cycle manufacturer of packaged TTW

lower peak electricity demand cost increases, consumer burdens are equipment, Armstrong, expects their

compared to the base case. That would less severe under Trial Standard Level equipment to be capable of attaining 11

allow utility service areas to either 2. SEER. (Armstrong No. 86 at p.3).

avoid new capacity or, to the extent that After carefully reconsidering the Based on this evaluation, DOE is

peak loads contribute to reliability analyses and comments, and adjusting proposing to establish new product

problems, improve system reliability. the weight given to consumer impacts classes for products that have throughThe increase in national net present and cumulative regulatory burden in the the-wall condensers and are intended

value would be $2 billion, which assessment of the benefits and burdens, for replacement applications. The new

represents the highest level for all the DOE is proposing to amend the energy classes would be required to meet

standard levels considered.8 conservation standards for central air minimum efficiencies lower than those

Since DOE expects the NAECA conditioners and central air of the other classes: 10.9 SEER and 7.1

efficiency scenario to result from conditioning heat pumps at Trial HSPF for through-the-wall air

standards adopted at Trial Standard Standard Level 2. DOE proposes to conditioner and heat pump splitLevel 2, the burdens of Trial Standard conclude this standard saves a systems, and 10.6 SEER and 7.0 HSPF

Level 2 on manufacturers are likely to significant amount of energy and is for through-the-wall air conditioner

be moderate. DOE expects the average technologically feasible and single-package systems. DOE's analysis

loss in industry NPV to be around 10 economically justified. In determining suggests those products can attain these

percent, with impacts on most economic justification, DOE proposes to levels without substantial redesign or

manufacturers around 16 percent. Their conclude that the benefits of energy price increases that would result in a

long term drop in return on investment savings, the projected amount of loss of market share to conventional

and short term drop in cash flow are avoided power plant capacity or products. Also, the life-cycle cost

moderate, suggesting that standards improvement in system reliability that analysis confirms that, on average,

adopted at Trial Standard Level 2 would accompanies expected reduction in consumers of split TTW equipment

not accelerate the consolidation trend, peak demand, consumer life-cycle cost would not incur an increase in life-cycle

and could result in more choices for savings, national net present value cost, and that consumers of packaged

consumers and raise the pace of increase, and emission reductions TTW equipment would incur an

innovation. The cumulative impact on resulting from the standards outweigh increase of $52 over the life of the

the industry of all new Federal and the burdens. The burdens include the equipment. In no case would any

State regulations would exceed $658 loss of manufacturer net present value, consumer of split TTW products be

million. taking into account the cumulative expected to incur life-cycle costs greater

While the average consumer regulatory burden and annual cash flow, than 2 percent of the total life-cycle

purchasing a 12 SEER air conditioner or increases in life-cycle cost for some cost, and only 17 percent of consumers

heat pump would experience a net users of products covered by today's of packaged TTW equipment would be

saving over the lifetime of the product, proposed rule, any possible increase in expected to incur cost increases greater

some households would experience net health problems caused by consumers than 2 percent of the total life-cycle

costs exceeding 2 percent of the total foregoing air conditioner purchases, any cost.

life-cycle cost of today's baseline units. possible reduction in the ability of the DOE proposes to conclude that

Thus, 25 percent of the households with product to dehumidify, any possible standard levels higher than 10.9 SEER

split system air conditioners and 9 lessening of competition, and any (split TTW) and 10.6 SEER (packaged

percent with single package air possible difficulty in installing the new TTW) are not technologically feasible.

conditioners would experience a net baseline products into replacement DOE's analysis on three TTW models

cost. No households with heat pumps applications. suggests that those products could attain

would experience a net cost. The D. Coefficiencies as high as 11.4 SEER using wouldexpereD. Conclusions Regarding Space- design options that would likely be

Under the Roll-up efficiency scenario, the Constrained Products economically justified. However, the

increase in national net present value would be $3 If a 12 SEER minimum requirement results are not conclusive and cannot be

billion. for air conditioners and heat pumps is confidently applied to all TTW

EE-RM-STD-98-440 COMMENT 200
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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38839

products. DOE's analysis does not VI. Procedural Issues and Regulatory notice or from the contact person named

provide enough evidence to convince us Review at the beginning of this notice. The TSD

that levels higher than 10.9 SEER (10.6 A. Review Under the National provides: (1) A statement of the problem

SEER for packaged TTW) will be nvironmentl Policy Act addressed by this regulation, and the

technologically feasible during the five mandate for government action; (2) a

year period during which manufacturers DOE prepared an Environmental description and analysis of the feasible

would prepare to meet the new Assessment (EA) (DOE/EA-1352) policy alternatives to this regulation; (3)

requirements. DOE's analysis does available from: U.S. Department of a quantitative comparison of the

indicate that opportunities for efficiency Energy, Office of Energy Efficiency and impacts of the alternatives; and (4) the

improvement do exist, and that Renewable Energy, Forrestal Building, national economic impacts of the

manufacturers of those products should Mail Station EE-1, 1000 Independence proposed standard.

continue to investigate those Avenue, SW, Washington, DC 20585-

opportunities. 0121, (202) 586-0854. DOE found the C. Revew Under the Regulatory

A serious concern that DOE has environmental effects associated with Flexibility Act

considered is that the lower TTW various standard efficiency levels for The Regulatory Flexibility Act, 5

standards could encourage purchasers central air conditioners and heat pumps U.S.C. 601 et seq., requires that a

of conventional equipment to shift to to be not significant, and therefore DOE Federal agency prepare a regulatory

TTW products, undermining the published in the Federal Register (66 flexibility analysis for any rule for

benefits of the 12 SEER standard for FR 7201), A Finding of No Significant which the agency is required to publish

conventional products. DOE is therefore Impact (FONSI) pursuant to the a general notice of proposed

proposing that the new through-the-wall National Environmental Policy Act of rulemaking. Such an assessment of the

classes would consist only of products 1969 (NEPA), 42 U.S.C. 4321 et seq., the impact of regulations on small

manufactured before July 26, 2010. See regulations of the Council of businesses is not required if the agency

proposed definition of "through-the- Environmental Quality (40 CFR Parts certifies that the rule would not, if

wall air conditioner and heat pump." 1500-1508), and DOE's regulations for promulgated, have a significant

Thus, the classes would exist only for a compliance with NEPA (10 CFR Part economic impact on a,substantial

period of four years following the 1021). number of small entities (5 U.S.C.

establishment of the new standards. bReview . Under Executive Order 12866 605(b)). To be categorized as a "small"

During that time, the availability of air conditioning and warm air heating

suitable high-efficiency components Today's regulatory action has been equipment manufacturer, a firm must

will likely increase and the determined to be an "economically employ no more than 750 employees.

manufacturers of through-the-wall significant regulatory action" under In the October 5, 2000 NOPR, DOE

products would be able to investigate Executive Order 12866, "Regulatory discussed the potential impacts on

options for meeting the more stringent Planning and Review." 58 FR 51735 small businesses of the October 5

12 SEER level. Both will make it easier (October 4, 1993). Accordingly, today's proposed rule (corresponding to Trial

for through-the-wall products to attain action was subject to review under the Standard Level 3), and certified that the

the 12 SEER minimum efficiency Executive Order by the Office of proposed standard levels would not

required of other products, thereby Information and Regulatory Affairs have a significant economic impact on

making 12 SEER a technologically (OIRA) of the Office of Management and a substantial number of small entities.

feasible and economically justified Budget. 65 FR 59629-30. DOE reported that

level. The sunset provision will help to The draft submitted to OIRA and nearly all small businesses engaged in

ensure that other manufacturers will not other documents submitted to OIRA for the manufacture of central air

make the investment required to market review have been made a part of the conditioners and heat pumps produce

through-the-wall products heavily for rulemaking record and are available for products that DOE has called "niche"

conventional applications during the public review in DOE's-Freedom of : products. To avoid.adversely impacting

four year period. It will also limit the Information Reading Room, 1000 manufacturers of niche products, DOE

time during which lower efficiency Independence Avenue, SW, proposed a separate product class for

TTW equipment is installed, ensuring Washington, DC 20585, between the through-the-wall equipment, much of

that additional energy savings hours of 9 a.m. and 4 p.m., Monday which is manufactured by small

associated with the 12 SEER level are through Friday, telephone (202) 586- manufacturers. See 65 FR 59609-11. In

realized in a certain time period. 3142. the preamble to the January 22 final

To further limit the application of the The October 5, 2000, NOPR contained rule, DOE addressed comments

through-the-wall class, products in a summary of the Regulatory Analysis regarding the impacts more stringent

these classes may not exceed 30,000 which focused on the major alternatives standards might have on the availability

BTU/hr in cooling capacity, may not considered in arriving at the approach of niche products, and although the

contain special weatherization features to improving the energy efficiency of final rule adopted the higher Trial

that would allow them to be installed consumer products. 65 FR 59627-29. Standard Level 4 standards, DOE

totally outdoors, and must be marked The alternatives considered in DOE's deferred setting an amended standard

for installation only through an exterior analysis are consumer product labeling, for niche products. 66 FR 7175, 7196-

wall. DOE also proposes limiting the consumer education, prescriptive 97. Because the final rule excluded most

size of.the area used for condenser air standards, consumer tax credits, products made by small manufacturers,

exchange to attempt to limit these consumer rebates, manufacturer tax DOE affirmed its certification.

classes to those products intended credits, voluntary efficiency targets, low Today DOE is proposing energy

primarily for replacement applications. income subsidy, mass government conservation standards for central air

No other new product classes are purchases, and performance standards. conditioners and heat pumps that

proposed since all other products types The reader is referred to the complete correspond to Trial Standard Level 2.

of which we are aware have draft "Regulatory Impact Analysis," Because of severe size constraints, DOE

demonstrated the ability to compete in which is contained in the TSD, available is again proposing a separate product

the market at the 12 SEER level. as indicated at the beginning of this class for through-the-wall equipment,

EE-RM-STD-98-440 COMMENT 200
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38840 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

with a lower SEER. No other provisions rule under the standards of section 3 of by state, local, and tribal governments

for niche products are being proposed. the Executive Order and determined on a proposed significant

DOE certifies, based on its analysis that, to the extent permitted by law, this intergovernmental mandate. DOE's

and public comments, that today's proposed rule meets the relevant consultation process is described in a proposed rule would not have a standards. notice published in the Federal Register

significant impact on a substantial F. Review Under Executive Order 12630 on March 18, 1997. 62 FR 12820.

number of small entities. Accordingly, Today's proposed rule may impose

DOE has not prepared a regulatory DOE has determined pursuant to expenditures of $100 million or more on flexibility analysis. This certification is Executive Order 12630, "Governmental the private sector. It does not contain a based on an assessment of the impact Actions and Interference with Federal intergovernmental mandate.

the proposed standards would have on Constitutionally Protected Property Section 202 of UMRA authorizes an small entities that would be directly Rights," 52 FR 8859 (March 18, 1988), agency to respond to the content

affected by their implementation, which that this proposed regulation would not requirements of UMRA in any other

is all the Regulatory Flexibility Act result in any takings that might require statement or analysis that accompanies

requires. The assertion by ARI, in its compensation under the Fifth the proposed rule. 2 U.S.C. 1532(c). The

petition for consideration, that DOE is Amendment to the United States content requirements of section 202(b)

required to assess the indirect effects of Constitution. of UMRA relevant to a private sector

proposed standards is contrary to G Review Under Executive Order 13132 mandate substantially overlap the

established case law interpreting the economic analysis requirements that

Act. Executive Order 13132, "Federalism," apply under section 325(o) of EPCA and

64 FR 43255 (August 4, 1999) imposes Executive Order 12866. The

D. Review Under the-Paperwork certain requirements on agencies SUPPLEMENTARY INFORMATION section of Reduction Act formulating and implementing policies the January 22, 2001, notice of final

No new information or record keeping or regulations that preempt State law or rulemaking and "Regulatory Impact requirements are imposed by this that have federalism implications. Analysis" section of the TSD for this

rulemaking. Accordingly, no Office of Agencies are required to examine the proposed rule responds to those

Management and Budget clearance is constitutional and statutory authority requirements.

required under the Paperwork supporting any action that would limit Under section 205 of UMRA, DOE is

Reduction Act. 44 U.S.C. 3501 et seq. the policymaking discretion of the obligated to identify and consider a

E. Review Under Executive Order 12988 States and carefully assess the necessity reasonable number of regulatory for such actions. Agencies also must alternatives before promulgating a rule

With respect to the review of existing have an accountable process to ensure for which a written statement under

regulations and the promulgation of meaningful and timely input by State section 202 is required. DOE is required new regulations, Section 3(a) of and local officials in the development of to select from those alternatives the

Executive Order 12988, "Civil Justice regulatory policies that have federalism most cost-effective and least

Reform," 61 FR 4729 (February 7, 1996), implications. DOE published its burdensome alternative that achieves

imposes on Executive agencies the intergovernmental consultation policy the objectives of the rule unless DOE

general duty to adhere to the following on March 14, 2000. 65 FR 13735. DOE publishes an explanation for doing requirements: (1) Eliminate drafting has examined today's proposed rule and otherwise or the selection of such an errors and ambiguity; (2) write has determined that it would not have alternative is inconsistent with law. As

regulations to minimize litigation; and a substantial direct effect on the States, required by section 325(o) of the Energy (3) provide a clear legal standard for on the relationship between the national Policy and Conservation Act (42 U.S.C.

affected conduct rather than a general government and the States, or on the 6295(o)), today's proposed rule would

standard and promote simplification distribution of power and establish energy conservatiofn standards

and burden reduction. With regard to responsibilities among the various for central air conditioners and heat

the review required by section 3(a), levels of government. State regulations pumps that are designed to achieve the

section 3(b) of Executive Order 12988 that may have existed on the products maximum improvement in energy specifically requires that Executive that are the subject of today's proposed efficiency that DOE has determined to

agencies make every reasonable effort to rule were preempted by the Federal be both technologically feasible and ensure that the regulation: (1) Clearly standards established in NAECA. States economically justified. A full discussion

specifies the preemptive effect, if any; can petition DOE for exemption from of the alternatives considered by DOE is

(2) clearly specifies any effect on such preemption to the extent, and presented in the "Regulatory Impact existing Federal law or regulation; (3) based on criteria, set forth in EPCA. Analysis" section of the TSD for today's provides a clear legal standard for proposed rule.

affected conduct while promoting H. Review Under the Unfunded

simplification and burden reduction; (4) Mandates Reform Act of 1995 .Review Under the Treasury and

specifies the retroactive effect, if any; (5) With respect to a proposed regulatory General Government Appropriations

adequately defines key terms; and (6) action that may result in the Act, 1999

addresses other important issues expenditure by State, local and tribal Section 654 of the Treasury and

affecting clarity and general governments, in the aggregate, or by the General Government Appropriations

draftsmanship under any guidelines private sector of $100 million or more, Act, 1999 (Pub. L. 105-277) requires

issued by the Attorney General. Section section 202 of the Unfunded Mandates Federal agencies to issue a Family

3(c) of Executive Order 12988 requires Reform Act of 1995 (UMRA) requires a Policymaking Assessment for any

Executive agencies to review regulations Federal agency to publish estimates of proposed rule or policy that may affect

in light of applicable standards in the resulting costs, benefits and other family well-being. Today's proposed

section 3(a) and section 3(b) to effects on the national economy. 2 rule would not have any impact on the

determine whether they are met or it is U.S.C. 1532(a), (b). UMRA also requires autonomy or integrity of the family as unreasonable to meet one or more of each Federal agency to develop an an institution. Accordingly, DOE has

them. DOE reviewed today's proposed effective process to permit timely input concluded that it is not necessary to

EE-RM-STD-98-440 COMMENT 200
EE-RM/STD-98-440-t 9)O0

Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38841

prepare a Family Policymaking preamble to the January 22 final rule. 66 submitted include: (1) A description of

Assessment. FR 7181-82, 7194. DOE's analysis the items; (2) an indication as to

J. Review Under Executive Order 132 1 shows the proposed standards would whether and why such items are result in an estimated reduction in customarily treated as confidential

Executive Order 13211, "Actions installed generation capacity in the year within the industry; (3) whether the

Concerning Regulations That 2020 of approximately 11 gigawatts. information is generally known by or Significantly Affect Energy Supply, This would be the equivalent of three available from other sources; (4)

Distribution, or Use," (66 FR 28355, 400 megawatt coal-fired plants and whether the information has previously

May 22, 2001) requires Federal agencies twenty-three 400 megawatt gas-fired been made available to others without

to prepare and submit to the Office of plants. obligation concerning its

Information and Regulatory Affairs DOE acknowledges that projections confidentiality; (5) an explanation of the

(OIRA), Office of Management and indicate that the standard levels set out competitive injury to the submitting Budget, a Statement of Energy Effects for in the January 22, 2001 rulemaking person which would result from public

any proposed significant energy action. would avoid electricity consumption to disclosure; (6) an indication as to when

A "significant energy action" is defined an even greater extent than under the such information might lose its as any action by an agency that standard level proposed in today's confidential character due to the

promulgates or is expected to lead to the supplemental notice of proposed passage of time; and (7) whether

promulgation of a final rule, and that: rulemaking. However, section 325 of disclosure of the information would be

(1) Is a significant regulatory action EPCA requires DOE to weigh all of the contrary to the public interest.

under Executive Order 12866, or any significant costs and benefits associated B. Puc successor order; and (2) is likely to have with standard levels that are being B. Publc Workshop/Hearing

a significant adverse effect on the considered and not just avoided 1. Procedure for Submitting Requests To

supply, distribution, or use of energy; or electricity costs. DOE has set forth its Speak (3) is designated by the Administrator of evaluation of costs and benefits

OIRA OXRA as a sienificant enerev action f ; cost s b and ene _ v f i s wl a as a significant energy action. For elsewh6re in this notice (see Section Y ill find the time and place of

any proposed significant energy action, the public hearing listed at the

the agency must give a detailedregu a and non-rebeginning of this notice. We invite any Todeagcy'ust al wo~regulatory p and non-regulatory person who has an interest in today's statement of any adverse effects on alternatives to today' proposed noie, son who has an interest i todays

energy supply, distribution, or use standard (see Section VIB., "Review group or hclas a represen tative t of a

should the proposed action be Under Executive Order 12866," and the in thas aintert an

implemented, and of reasonable Regulatory Impact Analysis portion of oortnity thee i an orue s 

alternatives toe the ation and their the TSD). DOE has concluded thatun tho et a o n rald like

expected benefits on energy suppl, costs associated with elevating the apresenti ea o a d o s distribution, and use. the public hearing, please notify Ms.

Today's proposal would not have anyt standard to the sta Brenda Edwards-Jones at (202) 586-

adverse effects on the supply, set forth in the January 22, 2001, final 2945. You may hand deliver requests to

distribution, use or of energy in the nefit o oied benet speak to the address indicated at the centralution, a r use nc luding of e the it b enef ded eavoi term because neither the January 22, incudin the enefit of aoiddbeginning of this notice between the

2001 final rule nor any final rule electricity consumption h s of 8 a. and 4 p.m., Monday

resulting from this action would have VII. Public Comment through Friday, except Federal holidays.

any effect on the manufacture of central You may also send them by mail or Eair conditioners and heat pumps until A. Written Comment Procedures mail to brenda.edwards2006. In the longer term, beginning in DOE invites interested persons to jones@ee.doe.gov.

2006, the proposed rule, if participate in the proposed rulemaking The person making the request should

implemented, would have a positive by submitting data, comments, or state why he or she, either individually

impact on the reliability of electricity information with respect to the or as a representative of a group or class

supply in the United States. The proposed issues set forth in today's of persons, is an appropriate

standards that DOE is proposing would proposed rule to Ms. Brenda Edwards- spokesperson, briefly describe the

represent a 20 percent improvement in Jones, at the address indicated at the nature of the interest in the rulemaking,

the energy efficiency of split-system beginning of this notice. We will and provide a telephone number for

central air conditioners, and a 9 percent consider all submittals received by the contact. We request each person

improvement in heating efficiency for date specified at the beginning of this selected to be heard to submit an heat pumps. The proposed standards notice in developing the final rule. advance copy of his or her statement at

would improve the cooling efficiency of According to 10 CFR 1004.11, any least two weeks prior to the date of this

single-package heat pumps by 24 person submitting information that he hearing as indicated at the beginning of

percent and the heating efficiency of or she believes to be confidential and this notice. At our discretion, we may single-package heat pumps by 12 exempt by law from public disclosure permit any person who cannot do this

percent. As explained in Section IV.B.3. should submit one complete copy of the to participate if that person has made

of this SUPPLEMENTARY INFORMATION, document and ten (10) copies, if alternative arrangements with the Office

DOE estimates the standards would save possible, from which the information of Building Research and Standards in

approximately 3 quads of energy over 25 believed to be confidential has been advance. The request to give an oral

years (2006 through 2030). Also, in deleted. DOE will make its own presentation should ask for such

determining whether the proposed determination with regard to the alternative arrangements.

standards are economically justified, confidential status of the information

DOE considered as a benefit the and treat it according to its 2. Conduct of Hearing

potential of the proposed standards to determination. DOE will designate a DOE official to

improve the reliability of the electric Factors of interest to DOE when preside at the workshop and we may

generation and distribution system. See evaluating requests to treat as also use a professional facilitator to

Section IV.D.7 ("Other Factors") and the confidential information that has been facilitate discussion. The workshop will

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38842 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

not be a judicial or evidentiary-type List of Subjects in 10 CFR Part 430 for a covered product, expressed in

hearing, but DOE will conduct it in Administrative practice and terms of a minimum efficiency quotient,

accordance with 5 U.S.C. 553 and procedure, Energy conservation, which is established by statute or by a

Section 336 of the Act and a court Household appliances. final rule that has modified this part

reporter will be present to record the . pursuant to a date DOE has selected

transcript of the workshop. We reserve Isse d W a sh g

t on, D.C., on July 18, consistent with the Congressional

the right to schedule the presentations Davi. Grman, ew Act (5 U.S.C. 801-804) and any

by workshop participants, and tostant Sec y other applicable law. Assistant Secretary, EnergyEfficiency and . establish the procedures governing the Renewable Energy.

conduct of the workshop. For the reasons set forth in the Through-the-wall air conditioner and

DOE will permit each participant to preamble, Part 430 of Chapter II of Title heat pump means a central air

make a prepared general statement, 10, Code of Federal Regulations is conditioner or heat pump that is

limited to five (5) minutes, prior to the proposed to be amended, as set forth designed to be installed totally or

discussion of specific topics. DOE will below. partially within a fixed-size opening in

permit other participants to briefly an exterior wall, and:

comment on any general statements. PART 430-ENERGY CONSERVATION (1) Is manufactured prior to July 26, PROGRAM FOR CONSUMER 2010; DOE will introduce each topic with a PRODUCTS (2) Is not weatherized

brief summary of the relevant parts of our analysis and of the proposed rule, 1. The authority citation for Part 430 (3) Is clearly and permanently marked

and the significant issues involved. We continues to read as follows: for installation-only-through an exterior

will then permit participants in the Authority: 42 U.S.C. 6291-6309; 28 U.S.C. wall;

hearing to make a prepared statement 2461 note. (4) Has a rated cooling capacity no

limited to five (5) minutes on that topic. Section 430.2 is amended by greater than 30,000 Btu/hr;

At the end of all prepared statements on adding definitions for "effective date," (5) Exchanges all of its outdoor air a topic, DOE will permit each "maximum allowable energy use," across a single surface of the equipment

participant to briefly clarify his or her "minimum required energy efficiency," cabinet; and

statement and comment on statements and "through-the-wall air conditioner (6) Has a combined outdoor air

made by others. Participants should be and heat pump" in alphabetical order to exchange area of less than 800 square

prepared to answer questions by us and read as follows: inches (split systems) or less than 1,210

by other participants concerning these square inches (single packaged systems)

issues. Our representatives may also ask §430.2 Definitions. as measured on the surface described in

questions of participants concerning * * (5).

other matters relevant to the hearing. Effective date for purpose of the part, * * * * *

The total cumulative amount of time means the date on and after which a 3. Section 430.32 of Subpart C is

allowed for each participant to make manufacturer must comply with an amended by revising paragraph (c) to

prepared statements will be 20 minutes. energy conservation standard in the read as follows: manufacture of a covered product. The official conducting the hearing * * * * * §430.32 Energy and water conservation

will accept additional comments or Maximum allowable energy use standards and effective dates.

questions from those attending, as time means an energy conservation standard (c) Central air conditioners and

permits. The presiding official will for a covered product, expressed in central air conditioning heat pumps. (1) announce any further procedural rules, terms of a maximum amount of energy Split system central air conditioners and or modification of the above procedures, that may be consumed, which is central air conditioning heat pumps needed for the proper conduct of the established by statute or by a final rule manufactured after January 1, 1992, and

hearing. that has modified this part pursuant to before July 25, 2006, and single package

We will make the entire record of this a date DOE has selected consistent with central air conditioners and central air

rulemaking, including the transcript, the Congressional Review Act (5 U.S.C. conditioning heat pumps manufactured

available for inspection in DOE's 801-804) and any other applicable law. after January 1, 1993, and before July 25,

Freedom of Information Reading Room. *- * * * * 2006, shall have Seasonal Energy

Any person may purchase a copy of the Minimum required energy efficiency Efficiency Ratio and Heating Seasonal

transcript from the transcribing reporter. means an energy conservation standard Performance Factor no less than:

Product class Seasonal energy Heating seasonal

efficiency ratio performance factor

1. Split systems ............................................................................................................................... . . . . . . . . 10.0 6.8

2. Single package system s ...................................................................................................................... 9.7 6.6

(2) Central air conditioners and central air conditioning heat pumps manufactured on or after July 25, 2006, shall

have Seasonal Energy Efficiency Ratio and Heating Seasonal Performance Factor no less than:

Seasonal energy Heating seasonal

Product class efficiency ratio performance factor

(SEER) (HSPF)

1. Split system air conditioners ............................................................................................................... 12 ................................ 2. Split system heat pum ps ..................................................................................................................... 12 7.4

3. Single package air conditioners .......................................................................................................... 12.......

4. Single package heat pum ps ................................................................................................................ 12 7.4

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Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules 38843

Seasonal energy Heating seasonal

Product class efficiency ratio performance factor

(SEER) (HSPF)

5.A. Through-the-wall air conditioners and heat pumps-split system ........................................ 10.9 7.1

5.B. Through-the-wall air conditioners and heat pumps-single package ............................................. 10.6 7.0

* * * * * standard is based on a joint recommendation could not make units that comply with the

4. Section 430.34 is added to Subpart submitted to DOE of Energy by rule and fit into the available space.

C to read as follows: manufacturers and energy conservation Third, the proposed heat pump standard of

advocates. That recommendation states that 13 SEER could make heat pumps less

§ 430.34 Energy and water conservation virtually all manufacturers of clothes washers competitive with alternative heating and

standards amendments who sell in the United States participated in cooling systems. Because the standard will

The Department of Energy may not arriving at the recommendation through their result in increases in the size and cbst of heat

prescribe any amended standard which trade association, that the recommendation pumps, it is possible that purchasers will

increases the maximum allowable was developed in consultation with small shift away from heat pumps to other systems ncreases maximum the allowale manufacturers, and that the manufacturers that include electric resistance heat,

energy use or, in the case of believe the new standard would not likely reducing the competition that presently showerheads, faucets, water closets or reduce competition. We note further that, as exists between heat pumps and those other

urinals, water use, or which decreases the industry recommended, the proposed systems.

the minimum required energy efficiency standard will be phased in over six years, Department of Justice urges DOE of Energy

of a covered product. which will allow companies that do not to take into account these possible impacts already have products that meet the proposed on competition in determining its final

Appendix standard sufficient time to redesign their energy efficiency standard for air

(The following letters from Department of product lines. conditioners and heat pumps. DOE of Energy

Justice will not appear in the Code of Federal With respect to the proposed residential should consider setting a lower SEER

Regulations.) central air conditioner and heat pump standard for heat pumps, such as the standard, we have concluded that there could standard included in Trial Standard Level 2, DEPARTMENT OF JUSTICE-Antitrust be an adverse impact on competition. The and a lower SEER standard for air

Division proposed standard, Trial Standard Level 3, is conditioners for retrofit markets where there

A. DOUGLAS MELAMED-Acting Assistant expressed in terms of two industry are space constraints (such as markets served

Attorney General measurements: SEER (Seasonal Energy by niche products) and for manufactured

Pennsylan Efficiency Ratio) and HSPF (Heating Seasonal housing. Main Justice Building, 950 Pennsylvania Performance Factor).' These standards would Sincerely, Avenue. NW., Washington, DC 20530- change from the current central air

0001, (202) 514-2401/ (202) 616-2645 (f), c n A. Douglas Melamed. conditioner and heat pump efficiency antitrustjustice.usdo)gov (internet), http: standards of 10 SEER/6.8 HSPF for split DEPARTMENT OF JUSTICE-Antitrust

Decembw ov (Word Wide Web)0 system air conditioners and heat pumps and Division-Antitrust Division

9.m SEER/6.6 HPSF for single package air JOHN M. NANNES-Acting Assistant Mary Anne Sullivan, General Counsel, conditioners and heat pumps to 12 SEER for Attorney General

Department of Energy, Washington, D.C. air conditioners and 13 SEER/7.7 HPSF for

20585 heat pumps. Main Justice Building, 950 Pennsylvania

Dear General Counsel Sullivan: I am We have identified three possible Avenue NW., Washington, DC 20530-0001,

responding to your October 16, 2000 letter competitive problems presented by the (202) 514-2401/ (202) 616-2645 (f),

seeking the views of the Attorney General proposed standards. First, the proposed 13 antitrust@justice.usdoj.gov (internet)

about the potential impact on competition of SEER heat pump standard.would have a http://www.usdoj.gov (World Wide Web)

two proposed energy efficiency standards: disproportionate impact on smaller April 5, 2001 one for clothes washers and the other for manufacturers. Currently less than 20% of Eric J. Fygi, Acting General Counsel,

residential central air conditioners and heat the total current product lines meet the Department of Energy, Washington, DC

pumps. Your request was submitted pursuant proposed standards, but for some small 20585

to Section 325(o)(2)(B)(i) of the Energy Policy manufacturers, 100% of their product lines Dear Acting General Counsel Fygi: I am and Conservation Act, 42 U.S.C. § 6291, 6295 fail to satisfy the proposed standard. responding to your letter dated March 20, ("EPCA"), which requires the Attorney Second, the proposed standard for heat 2001, seeking the views of the Attorney General to make a determination of the pumps, and in some instances for air General about the potential effect on impact of any lessening of competition that conditioners, would have an adverse impact competition of the final rule published on is likely to result from the imposition of on some manufacturers of these products January 22, 2001, setting forth new energy proposed energy efficiency standards. The (including those products referred to in the efficiency standards for central air

Attorney General's responsibility for Federal Register notice as "niche products") conditioners and heat pumps. You

responding to requests from other used to retrofit existing housing and used in specifically asked for our views about the

departments about the effect of a program on manufactured housing. These manufacturers impact on competition of the rule's

competition has been delegated to the prescription of a 13 SEER (Seasonal Energy Assistant Attorney General for the Antitrust , The Federal Register notice also requested Efficiency Rating) standard for all product Division in 28 CFR § 0.40(g). comments on a proposal to adopt a standard for classes, except for niche products, and the

We have reviewed the proposed standards steady-state cooling efficiency (EER) and discussed desirability of reducing the standard to a 12

and the supplementary information several options DOE of Energy is considering. The SEER level for all subcategories. Your letter

published in the Federal Register notices and proposed rule set forth in the notice does not, requested our views by March 30, but your submitted to the Attorney General, which however, include a provision regarding an EER staff agreed to extend the response date to

include information provided to DOE of standard. and the views of Department of Justice April 6.

Energy by manufacturers. We have expressed in this letter are limited to the impact of As you noted in your letter to the Attorney

additionally conducted interviews with any lessening of competition * * that is likely to General, the Antitrust Division had earlier

members of the industries. result from the imposition of the proposed expressed its views on the proposed rule, standard," as required by EPCA. If DOE of Energy We have concluded that the proposed proposes a rule in the future incorporating an EER which provided for a 12 SEER standard for

clothes washer standard would not adversely standard, DOE will then evaluate that proposed rule air conditioners and a 13 SEER standard for

affect competition. In reaching this and express its views about the competitive impact heat pumps. The Division had concluded

conclusion, we note that the proposed of that standard. that the 13 SEER standard for heat pumps

EE-RM-STD-98-440 COMMENT 200
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38844 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

could have an adverse effect on competition manufacturers 2 and an adverse effect on eliminate the difficulties for manufacturers of

and urged the Department of Energy to adopt manufacturers of specialized equipment (the standard equipment who could not make

a 12 SEER standard for heat pumps. We niche product manufacturers) and equipment that complied with the 13 SEER

noted only minor concerns about the manufacturers of equipment for space- standard and still fit into space-constrained

proposed 12 SEER standard for air constrained installation sites (such as sites. The final rule also continues to have a

conditioners. manufactured housing, which accounts for a disproportionate impact on smaller

We have reviewed the final rule and significant percentage of the country's manufacturers of heat pumps. The 13 SEER

determined that the 13 SEER heat pump housing starts). The exception made in the standard for air conditioners raises the same

standard still raises competitive problems. final rule for niche product manufacturers kinds of competitive problems as the 13

We have further determined that the 13 SEER may alleviate competitive problems for their SEER standard does for heat pumps. tandard cditioner forar al raies products, but the exception does not We urge the Department of Energy to

standard for air conditioners also raises consider the impact on competition and to

competitive concerns. d adopt a 12 SEER standard for all products

In our earlier letter, we identified and e ot ourr us letter that ss than covered by the rule. 20% of the total current heat pump product lines

described three competitive problems meet the new standard, but for some small Sincerely,

resulting from the proposed 13 SEER manufacturers, 100% of their product lines failed John M. Nannes.

standard for heat pumps, including a to satisfy the standard. The same is true for air

disproportionate impact on smaller conditioner manufacturers when the standard is 13 FR Doc. 01-18429 Filed 7-24-01; 8:45 am]

SEER. BILUNG CODE 6450-01-P

EE-RM-STD-98-440 COMMENT 200