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# EE-RM/STD-98-440

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# 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
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## 1 ~Conservation Standards; Proposed Rule



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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 ofEnergy Efficiency and send emails to: brenda.edwards- B.Policy Issues Renewable Energy jonesee.doe.gov.1. Burdens on Consumers 2.Burdens on Manufacturers Thehearing will begin at 9:00 a.m., in a.Cumulative Regulatory Burden 10 CFR Part 430 Room 1E-245 atthe 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 inthis rulemaking 1.Statutory Authority Conditioners and Heat Pumps Energy proceeding in Section VII, "Public B.Overview oftheProposed Standards Conservation Standards Comment," ofthis notice ofproposed 1.Central AirConditioner andHeat Pump rulemaking (NOPR). Features AGENCY: Office ofEnergyEfficiency and You mayread copies ofthepublic 2.Consumer Benefits Renewable Energy, Department of comments, the Technical Support 3.NationalBenefits Energy. Document for Energy Efficiency C.Technological Feasibility ACTION: Supplemental proposed rule; Standards for Consumer Products: D. General Discussion ofEconomic proposed withdrawal offinal rule. Central Air Conditioners and Heat Justification Factors

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- Pumps (TSD), thetranscript ofthe1. Economic Impact on Manufacturers and SUMMARY: Inresponse to a petition for Consumers public hearing, workshop-transcripts-in 2.Life-Cycle Costsand Rebuttable reconsideration, and as aresult 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 ofUtility orPerformance of ofEnergy (DOE)is proposing to and other post-promulgation Products withdraw itsJanuary 22, 2001 final rule submissions attheDOE Freedom of 5.Impact ofLessening ofCompetition setting forth energy conservation Information (FOI) Reading Room, U.S. 6.Need ofthe Nation to Conserve Energy standards forresidential central air Department ofEnergy, Forrestal 7.Other Factors conditioners and central air Room 1E-190 100nnE. Methodology Used inDOE Analyses conditionuilding heat pumps that are not1000 V. Analytical Results and Conclusions effconditioning heat pumps thatande not Independence Avenue, SW., A. Overview ofAnalytical Results yet effective andnot enforceable until Washington, DC 20585, (202) 586-3142, 1.General January 23, 2006. As a substitute, DOE between thehours of9 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 raisingthe holidays. You may obtain copies ofthe B.Re-weighting ofFactors minimum energy efficiency levelsby 20 TSD and analysis spreadsheets from the 1.Re-weighting ofBurdens on Consumers percent. DOE also invites public Office ofEnergy Efficiency and 2.Re-weighting ofBurdens on comment on proposed regulatory Renewable Energy's (EERE) web site at: Manufacturers amendments to define and implement a.erendo uildins/ 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 Saceorbefore October 9, 2001. DOEis Michael E. McCabe, U.S. Department of Constrained Products requesting a signed original, a computer Energy, Office ofEnergy Efficiency and VI. Procedural Issues and Regulatory Review diskette (WordPerfect 8) and 10 copies Renewable Energy, Forrestal Building, A.Review Under the National ofthe written comments. DOEwill also EE-41, 1000 Independence Avenue, Environmental Policy Act accept e-mailed comments, butyou 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 maybe 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 ofGeneral 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 ofyour 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 acomputer diskette Government Appropriations Act, 1999 (WordPerfect 8) ofeach statement at that TableofContents J.Review Under Executive Order 13211 

## ~~~~time. -,,~~~~~~~~~~~VII. Public Comment time. I.Introduction A. Written Comment Procedures ADDRESSES: Please submit written II.Authority toReconsider the January 22, B.Public Workshop/Hearing comments, oral statements, and requests 2001, Final Rule 1.Procedure forsubmitting 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 ofHearing Energy, Office ofEnergy Efficiency and 1.Falure to Obtai en the V oteI uction Department ofJustice on the Potential 1.Introduction Renewable Energy, Energy Conservation Anti-Competitive Impact of13 SEER Program for Consumer Products: Central Standards Pursuant to section 325 oftheEnergy Air Conditioners and Heat Pumps, 2.Failure ofthe Statement ofBasis 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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Procedure Act (APA) (5 U.S.C. 553), and whether the affirmative consideration ofcumulative burden DOE today publishes a three part determination ofeconomicjustification 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 thatmake upthe test of thepotential impact ofthe 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 ofhigher 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 ofan effective date DOEreceived petitions for manufacturers. for modifying the Code ofFederal reconsideration for each final rule. In DOE recognizes that its conclusion Regulations (CFR) set forth in the notice addition, DOE received notice thatthe that the January 22, 2001 final rule was offinal rulemaking and established Gas Appliance Manufacturers questionable on legal and policy consistent with the Congressional Association (withregard to the water grounds and the initiation oflitigation Review Act (5 U.S.C. 801-804). Second, heaterrule) and the Air-Conditioning in the Fourth Circuit has left less than in orderto correct arguable legal errors and Refrigeration Institute (ARI) (with ideal options for arulemaking that, had and policy shortcomings, DOE proposes regard to the central airconditioner itbeen concluded on time, would have
to withdrawthe 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 ofAppeals for the 6295(d)). IfDOE 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 oftheinternal review possibility ofa court ordered remand for published in the Federal Register (FR) conducted under thePresident's further consideration. The length of

onJanuary 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 thepetitions for reconsideration, DOE consequences ofa court ordered remand regarding the significance ofpotential received written statements in wouldbe substantial. It was just this
energy savings, technological feasibility, opposition to reconsideration ofeach of sort ofconsideration that motivated and other factors; and (2) factual thethree final rules.DOE also had an Congress to enact the 1987 amendments information already in the record DOE informal meeting with representatives of toEPCA thatrequire this rulemaking.
proposes to determine that elevation of various environmental advocacy groups As the legislative history ofthose the currently enforceable central air who had already filed statements amendments makes clear, anunderlying. conditioner and central air conditioning opposing reconsideration ofthe water legislative purpose was to cure the heat pump enerngyd conservatirconditioni heater and the central air conditioner problem ofindefinite delay that heatpump energy conservation ximu a;final rules, followed the decision inNatural standards by 20 percent isthe maximum Ultimately, DOE decided that neither ResourcesDefense Councilv. increase that iseconomically justified. the clothes washer rule nor thewater Herrington,768 F.2d 1355 (D.C.Cir. Consistent with thatproposed 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 forreconsideration. 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 acorresponding regard to central airconditioners and and H.R. Rep. No. 100-11, 100th Cong., Heating System Performance Factor central air conditioning heat pumps, 1stSess., 28 (1987). DOE also recognizes (HSPF) of7.4 which would apply to DOE concluded that ARI hadraised that, given the opposition to manufacturers in 2006. With respect to substantial questions as to the legal reconsideration, there is anear certainty space-constrained, through-the-wall sufficiency ofthe January 22, 2001 final ofa lawsuit challenging DOE's further product classes, DOE is today proposing rule and that theinterests ofjustice rulemaking actions. However, since

more modest increases in theexisting therefore dictated that DOE further litigation appears to be inevitable standards, which is discussed later in postpone the rule's effective date in regardless ofwhat option DOE chooses, this SUPPLEMENTARY INFORMATION. light ofthependency ofARI's petition DOE has concluded that thebetter

Today's action partly is a result of forjudicial review in the Fourth Circuit course isto 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 thatplan, DOE conducted an internal 2001). At that timeDOE indicated that publishing, afterconsidering public review ofthe three final rules issued it would likely resolve these issues comments, a final rule, as soon as under section 325 ofEPCA that DOE through supplemental rulemaking that possible in 2001. published atthe end ofthe Clinton wouldbe forthcoming shortly. Administration, including final rules For the reasons discussed in section II. Authority andPolicy Regarding concerning energy conservation III ofthis notice, DOEhas now Reconsideration ofFinal Rules Under standards for clothes washers, water concluded that theJanuary 22, 2001 Section 325(o)(1) ofEPCA heaters, and central airconditioners and final rule should be reconsidered and In reviewing theJanuary 22, 2001 central airconditioning heat pumps. therefore grants ARI's petition. In final rule under the President's Consistent with the EPCA criteria for particular, DOE is oftheview 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 ofJustice 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 ofthese rules to potential anti-competitive impact; (2) occasion to construe and apply the determine, among other things, whether thestatement ofbasis for the final rule provisions ofsection 325(o)(1) ofEPCA therulemaking record was complete didnot sufficiently explain DOE's for the firsttime since they were added

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

to EPCA by theNational Appliance 6295(d)(1) and (d)(2). The key question, 'onthe "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) ofEPCA provides energy efficiency" for central air required energy efficiency" levels below

as follows: conditioners and central air which the Secretary may notgo are the

The Secretary maynot prescribe any conditioning heat pumps that maynot ones established by the standards being amended standard which increases the be decreased by an amended standard. amended. Because ofthe various actions maximum allowable energy use, * * *or Had the new SEER and HSPF set out postponing theeffective date ofthe decreases the minimum required energy in theJanuary 22, 2001 finalrule been amendments tothe standards it efficiency, ofacovered 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 itspetition forreconsideration, 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 aclose question. A reasonable propose to amend are not the ones that argument could be made that the new would havebeen inplace had the Wenote thatthe provision in EPCAthat SEER and HSPFbecame "required" amendments set out inthe January 22 prohibits decreasing the minimum required immediately as to such appliances rule actually been made. Rather, they energy efficiency ofcovered 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 SEERis the minimum required energy afterJanuary 23, 2006. A reasonable (SEER of 10.0 and HSPF of6.8 for split efficiency. New efficiencyminimum would argument could also bemade that the systems manufactured afterJanuary 1, notberequired under therule untilseveral new SEER and HSPF would notbe 1992, SEER of9.7 and HSPF of6.6 for years from now (therule.provides forsuch "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 ofthe rule hasbeen 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 ofthe rule. Thus, therehas been no considerations bearing on the answer to theJanuary 22, 2001 rule. final resultrelated 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 thatEPCA is unambiguous

Referring to the 1987 amendments to final rule expressly stated that the on the question ofwhether standards EPCA, the environmental advocacy amendments it set outto existing that are published in the Federal organizations argued that "it is clear standards in the Code ofFederal Register,but not yet effective, represent that, underNAECA, DOE maynot Regulations would not take effect until the "minimum required energy amend therule to weaken its energy 30 days afterpublication 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 wenton to on February 2, 2001, DOE postponed pumps. Clearly, the standards set out in say: that effective date for an additional 60 theJanuary 22, 2001 notice of final

ThusDOEis statutorily precluded from days. Before that 60-day period had rulemaking cannot bethe "minimum amending theFinal Ruleto weaken itsenergy passed, on April 18, 2001, DOE further required energy efficiency" benchmarks efficiency standards, as ARIrequests inits postponed the amendments' effective forpurposes ofsection 325(o)(1). 1 The petition. ARI's argument (Petition atfootnote date pending the outcome ofpetitions question remains whether DOE should 2)thatthis provision is "inapplicable" by ARI forreconsideration and for construe the term "minimum required because the rule phases in tighterenergy 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

* * Thetiming ofthe phase-in ofthese though set out in a final rule, never in enforceable against the manufacturers, standards is irrelevant. any sense achieved the status ofbeing but that havebeen 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 datethat has environmental advocacy organizations' understanding ofthe 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 ifthey
are too summary to evaluate. DOE's including one manufactured after manufacture and sell anon-compliant interpretation ofthe statute is set forth January 23, 2006, could even arguably product. below, andDOE invites ARI and the have been legally required to be DOE believes that alternative (A) is environmental advocacy organizations manufactured in conformity with them. thepreferable construction ofthe term, to reexamine theirrespective positions Hence, whatever might have beenthe but only iftheeffective date selected for and to comment on DOE's analysis and case had the January 22 final rule been thefinal rule isconsistent 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 ofa final rule that allows the Secretary an opportunity

The starting point for analysis isthe would have changed those standards, promptly to correct legal and policy text ofthe 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. Ifthatprecondition is energy efficiency." EPCA does not establish "minimum required energy satisfied, DOE believes alternative (A) define thisterm. However, in context, it efficiency" benchmarks. will better advance therelevant isclear that a SEER and an HSPF are This interpretation of"minimum benchmarks of "minimumrequired required energy efficiency" is reinforced 'Wealso believe thateven ifthestatute were energy efficiency" for central air by the rest ofthe sentence in section foundto be ambiguous, forthe reasons setout in the discussion that follows, that would not bethe conditioners and central air 325(o)(1) ofwhich the phrase is a part. interpretation thatweshould select as amatter of conditioning heat pumps. See 42 U.S.C. That sentence establishes a limitation policy.

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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 ofthe 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 innew section 325(1)(1) ofthe manufacturers who must plan and make or afterJanuary 1, 1999. It similarly House bill, the House report states: the expenditures necessary to comply provides thatany amended standard DOE may notprescribe 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 onlyto products minimum requiredenergy efficiency ofa note that the relative certaintythe manufactured on or afterJanuary 1, covered product.The purpose ofthis interpretation set out in alternative (A) 2006. The purpose ofthese 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 ofthis significant amount oftime to develop for a covered product, whetherestablished in interpretation over the competing one, and manufacture new products after a thisAct or subsequently adopted. This serves is intimately tied to a proper effective new standard is adopted butbefore it tomaintain a cliate ofrelativestability with respecttofutureplanningbyallinterested date choice that facilitates prompt error becomes enforceable, thereby greatly parties * * * correction, thereby potentially avoiding diminishing the costs imposed by new litigation thatwould seriously standards. These delays also suggest House Report No. 100-11 at p. 22. Since undermine the certainty sought tobe that achange ofstandard onthe eve of the Senate report differs from the House achieved. the manufacture ofa product would be report and no conference committee

DOEbelieves thatthis resolution of quite disruptive-which stands to report exists, the Housereport language the ambiguities in the statute is reason given the lead-time necessary to does not represent the views ofthe consistent with the statute's text, be in aposition 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 atthe last minute contributory factor in construing section We believe that on balance this before the compliance deadline would 325(o)(1) and framing implementing approachbetter accomplishes the potentially leave arather large residual regulations. statute's objectives than either adopting uncertainty difficult toreconcile with The House report language indicates alternative (A)without the qualification the central purpose ofestablishing a that the term "minimum required set out above, thereby establishing aset climate ofregulatory stability served by energy efficiency" includes both the ofprocedures that could have the effect these closely related portions ofEPCA. legislated standards established by ofpreventing the Secretary, withina The legislative history ofsection Congress in 1987 and amended short period after publication ofa final 325(o)(1), although sparse, also suggests standards "subsequently adopted." rule that would modify such standards, thatthis interpretation maynotbe the However, the word "adopted" isnot a from correcting defects in them that one best suited to accomplish the termthat is used in EPCA or the APA. subsequently come to his attention; or statute's objectives. That history As applied to the sequence ofstepsthat adopting alternative (B), thereby reading suggests that section 325(o)(1) itselfwas make up therulemaking process, itis the phrase "minimum required energy infact also intended in significant unclearwhich step is deemed tobe the efficiency" to encompass onlyenergy measure to promote regulatory moment that an amended standard is efficiency standards as ofthe 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 suchcertainty not only at thetime of theHouse reportthat states with regard the latter approach may well be a manufacture but well before tohe underlying purpose ofsection permissible interpretation ofsection manufacture has begun, ifthe 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 ofrelative stability with respect out in our proposed rule is thebetter onlyafter the compliance date for that to future anning by all interested

one. DOE invites members ofthe 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, atleast inthe 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 arm o niou sly with the other provisions the most natural reading ofthe phrase. the Senate bill, the language that o f EPCA discussed above in facilitating Thisview, however, isin tension with became section 325(o)(1) wasregulatory certainty. The latterpurpose the rest ofthe sentence, which, as denominated new section 325(j). The isbetter accomplished by construing the explained above, suggests that the Senate report says the following about provision tobecome applicable at a relevant point ofcomparison 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, ifadopted, amended standards. The Secretary may not inthe 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 rightup to the minute before the efficiency ofa covered product. the earliest possible moment. Let us compliance date. This seems to slight Senate Report No.100-6 atp.8. That imagine, for example, that DOE were importantreliance interests given statement paraphrases thebill 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. Forexample, 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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30 days after publication.2 DOE also be viewed as having set "minimum rule at issue here. We did so, however, could refuse toreconsider any aspect of required energy efficiency" benchmarks. not because we had considered the such a rulerelevant to the standard Forthe reasons explained at the potential ramifications ofour prior (unless it could complete its beginning ofthis section, that timemust approach and ofthe approach we were consideration and correct any errors be after the final rule making the taking to this rule for purposes ofthe within that 30-day time period), no amendments tothe standard is in effect. applicability ofsection 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 ofthe Office ofthe Federal effectively, itwould have to prevent the related EPCA provisions ofpromoting Register, which distinguishes between standard from going into effect. regulatory certainty, andto harmonize the date on which afinal rule is

This approach, however, would not section 325(o)(1) with common effective for purposes ofmodifying the bethe best way for DOE to promote administrative practice and theCRA, Code ofFederal 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 areasonable purposes ofrequiring compliance with reconsideration at least for a short hiatus after the date ofpublication has its requirements. See National Archives period after issuance ofafinal rule as elapsed, allowing forprompt use of and Records Administration, Office of well as to correct errors ontheir own ordinary administrative error correction theFederal Register, DocumentDrafting motion during that time. Moreover, procedures and completion of Handbook,Chapter 2, p. 2-12 (October there isgood reason why agencies congressional review under CRA. This 1998). Consistent with the recent follow this course, since otherwise such isthe earliest that manufacturer guidance in the DocumentDrafting

errors would have to await the planning inreliance on a final major Handbook,butwithout taking into completion ofjudicial reviewbefore rule to amend appliance energy account either the-CRA.or:potential_ they could be corrected, thereby conservation standards canrealistically 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 tobe effective date consistent with theAPA too, in addition to running counter to achieved therefore cannot occur until and a compliance date ofJanuary 23, ordinary administrative practices that that time. 2006, consistent with EPCA. there isno reason tobelieve section Accordingly, DOEbelieves 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 otherrelated 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 alsowould create effective. It also believes, however, that adopt a series ofamendments 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 defineby 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 reportto 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 finalrule thathas become effective in within the meaning of 5U.S.C. 804(2), and also comports well with the the sense that it has modified the Code CRA provides for the passing ofa 60- ordinary understanding ofwhen a rule ofFederal Regulations. It further calendar-day-lie-before-the-Congress containing such standards has proposes to include in its definitionthat period, after submission ofthe agency established "require[ments]." to qualify, the final rule has tohave report, atthe end ofwhich afinal rule We note that DOE's own past practice made that modification on a date could become effective in the absence of onthe selection ofsuch effective dates selected consistent with the CRA and

aCongressional resolution of hasnot 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 notbeen avoid confusion, it proposes atechnical allows for anexception tothe 60-day- internally consistent evenvery recently, amendment,adding adefinition ofthe lie-before requirement only ifthe potentially creating wide variations EPCA term "effective date," which President determines that a majorrule regarding when section 325(o)(1) would EPCA, inconsistently with the Office of should take effect before the end ofthat become applicable as well asrunning Federal Register guidance, treats as period because ofan imminent health or afoul ofthe 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 ofcriminal laws or amendments to EPCA standards ofsection 325(o)(1). It also proposes to national security; or ifit 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 (5U.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 veryrecently in the case definitions would treat amendments to considerations alsopoints the way to ofthe rules setting out the amendments astandard contained in a final rule as the answer tothe question ofatwhat to standards for water heaters (66 FR establishing "maximum allowable timeamendments 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 ofsection 325(o)(1) on the date

2Under the APAin most cases it could notmake 1, 2004). We departed from that practice such a rule made those amendments them effectivebeforethem. in the case ofthe central air conditioner effective as to the Code ofFederal

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Regulations, provided that DOE sets out burdens by considering "to thegreatest manufacturers ofequipment to beused in the EFFECTIVE DATE line ofa notice of extent practicable" seven factors, toretrofit existing housing and used in final rulemaking under section 325 a including: "(V) the impact ofany manufactured housing. Third, it was date on which theCode ofFederal lessening ofcompetition, as determined concerned that theproposed 13 SEER Regulations willbe modified that is in writing by the Attorney General, that for central airconditioning heat pumps selected consistent with the CRA and is likely to resultfrom the imposition of could cause consumers to shift from any other applicable law. In most the standard" (42 U.S.C. heatpumps to other systems that instances, the date selected willbe 60 to 6295(o)(2)(B)(i)). Section 325(o) also include resistance heat systems, 80 days afterthe date ofpublication. provides that: reducing the competition that presently

Consistent withthe proposed For purposes ofclause (i)V),the Attorney exists between manufacturers ofair definitions tobe added to §430.34, DOE General shall make a determination ofthe conditioning heatpumps and intends to make the final rule based on impact, ifany,ofany lessening of manufacturers ofthose other heating today's proposal effective 75 days from competition likely to result from such systems. The Department ofJustice thedate ofpublication. standard and shalltransmit such urged DOE to take these concerns into

Finally, tomake the technical change determination, not laterthan 60 days after account and consider "setting a lower referenced above, DOE proposes alsoto the publication ofa proposed rule SEER standard for heat pumps, such as add to §430.2 a definition ofthe term prescribing or amending anenergy 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 ofthe CFR 430.32. This definition clarifies nature and extent ofsuch impact. Anysuch airconditioners for retrofit markets that forpurposes ofconstruing the term determination and analysis shallbe where there are space constraints and under EPCA (but not for purposes of published by-the Secretary inthe Federal for manufactured housing." 66FR 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) ofEPCA. a corresponding 7.7 HSPF. The In this portion oft Because the Department ofJustice must preamble to the final rule addressed the Inths porton ofthe SUPPLEMENTARY transmit its determination to DOE Department ofJustice's specific INFORMATION, DwO sets forthe lel and ithin 60 days after the publication of concerns about the October 5proposed conclusions with regard to the legal and a proposed rule, EPCA contemplates rule (66 FR 7192-93). It also addressed policy issues thatDOE considered in that the Department ofJustice's the potential anti-competitive impact of deciding whether to propose determination on the anti-competitive the final rule's uniform 13 SEER withdrawal ofthe January 22, 2001 final effects ofaproposed 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 byARI in its to consider the Department's expert are adopting couldaccelerate the petition for reconsideration. opinion on the anti-competitive impact consolidation trend among major
A. LegalIssues ofa final standard. manufacturers. However, as discussed in the 1. F e To O nte V s ofte DOE submitted the October 5, 2000 manufacturer impact analysis, we do not 1. Failure To Obtainthe Views ofthe NOPR to the Attorney General for expect thatany manufacturer orgroup of Department ofJustice on thePotential reviewpursuant to the foregoing manufacturers will be able touse the Anti-Competitive Impact of 13 SEER provisions. TheNOPR described the standards as anopportunity to consolidate Standards 

### range ofpotential trial standards theirmarket power. (SeeTSD, Chapter 8). T APTn range ofpotential trial~standards Therefore, webelieve that competition will Inits petition, ARI contends that DOE considered byDOE, and proposed remin vigorous under the adopted standard, should have invited the Department of adoption ofTrial Standard Level 3, i.e., and any lessening ofcompetition that does Justice to submit a supplemental a minimum SEER of 12 for central air occur willnot result in price increases orloss statement ofits views on the potential conditioner product classes and a SEER ofchoice and utilityfor consumers. anti-competitive impact ofDOE'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 TSDreferenced chapter central airconditioners andheat pumps 7.7. The Department ofJustice, also concluded that, under Trial (ARIPetition Discussion, paragraph d). consistent with itspast 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 fromthe Department of Standard Level 3. the investment required to meet the new Justice on final rules, DOE concludes, The Department ofJustice conveyed standard or face the loss ofprofits for reasons set forth below, that it to DOE three concerns about the caused by the absence ofpremium should haverequested supplemental proposed rule's potential impact on products in themarketplace (see,TSD views from the Department ofJustice on competition (seeDecember 4, 2000, 8.7.4, p. 8-64). the effect ofa 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 ofJustice was manufacturer impact analysis in the question ofpotential 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 ofthe final rule's Trial

Section 325(o)(2)(B)(i) ofEPCA concerned that theproposed standard Standard Level 4 (13 SEER) standards. requires DOE to determine whether the for heatpumps, and in some instances DOE did not have the benefit ofthe benefits ofanew or amended energy the standard for air conditioners, would Department ofJustice's views on the conservation standard exceed its have an adverse impact on some potential anti-competitive impact ofthe

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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. ofthis SUPPLEMENTARY under a 13 SEER standard for split air conditioners and heatpumps. INFORMATION). conditioners, 39 percent and 50 percent

As theTSD shows, thecentral issue ofaverage and low income consumers, regarding the January 22 final rule is the B. PolicyIssues respectively, would be negatively potential effect of 13 SEER standards on DOE reviewed the basis andrationale impacted. A 12 SEER standard would consolidation in the central air for theJanuary 22, 2001 final rule result in a lower fraction ofconsumers conditioning andheat pump industry. pursuant to thePresident'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 ofaverage and low the final rule with the statement "that numerous claims by ARI oferror or income consumers, respectively. the standard levels we are adopting insufficiency in DOE's analyses andits In summary, DOE has decided that, in could accelerate the consolidation trend weighing ofthebenefits and burdens of issuing the January 22 final rule, among major manufacturers." 66 FR the final rule. As a resultofthis review, inadequate discussion and weight was 7176. Arguably, to comply with section DOE has decided to accord more weight given tothe fraction ofall 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 ofthe Department ofJustice on this issue. Administration's policies, support new standard.
2. Failure ofthe Statement ofBasis for DOE's decisions to propose withdrawal 2. Burdens on Manufacturers the Final Rule to Adequately Address ofthe January 22 final rule andto Cumuthe Finalative Rule to A dequately Address on publish today's proposed rule. a. CumulativeRegulatoryBurden.In Cumulative Regulatory Burdens on Consumers thepreceding section, DOE concluded thatthe statement ofbasis and purpose To determine whether a standard is During itsreview ofthe January 22 for the January 22 final rule did not economically justified, DOE must assess final rule, DOE reassessed itsweighing adequately address the issue of the economic impact ofthe standard on ofburdens and benefits ofthe standards, cumulative regulatory burden, which the manufacturers and consumers ofthe giving particular attention to the DOE recognizes is a key component of products subject to such standard (42 question ofwhether burdens on the assessment ofmanufacturer impact U.S.C. 6295(o)(2)(B)(i)(I)). One aspect of consumers received adequate (seeProcess Improvement Rule, section manufacturer burden is the cumulative consideration and weight. 10(g), codified at 10 CFR Part 430, impact ofmultiple DOE standards and DOE currently is particularly Subpart C, Appendix A). DOE's decision the regulatory actions ofother Federal concerned that new standards be to propose withdrawal ofthe January 22 agencies and States that affect the designed to distribute theirburdens and final rule is based in part on DOE's manufacture ofa covered product. benefits as fairly as practical. Although current view that the preamble to the

Inits 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 ofcumulative 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 ofmore concern at cumulative regulatory burdens. central air conditioning andheat 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 wasincluded in the paragraph m). The preamble to the final more sharply by lower income TSD, ofcumulative regulatory burdens. rule addressed the issue ofcumulative 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 briefsentences, 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 themanufacturer impact analysis ofthe fraction ofconsumers who are a particularhydrofluorocarbon (HCFC), TSDin adopting the new standard. negatively impacted by a 13 SEER HCFC-22, as arefrigerant, scheduled to These include cumulative burdens." 66 standard, in terms oflife-cycle cost take effect inJanuary 2010. In addition, FR 7174. The statement ofbasis and savings versus the existing standards, is an EPA ban on use ofHCFC-141b as a purpose required by theAPA-(5 U.S.C. substantially higher than the fraction foamblowing agent (usedin 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 recentDOE efficiency rules. To effect onJanuary 1,2003. The TSD the facts the agency found and the illustrate, the efficiency standard for reports thatcompanies must develop a choices it made. In light ofthe evidence clothes washers, published in the wealth ofnew knowledge and ofcumulative regulatoryburdens on Federal Register on January 12, 2001 experience to replace the refrigerant manufacturers documented in the TSD, (66FR 3314), will negatively impact 19 HCFC-22, and it estimates the cost of it is doubtful whether themere assertion percent ofall consumers and 19percent converting equipment to a substitute by DOE that it considered the oflow income consumers, and the refrigerant tobe 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 waterheaters, published in regulatory burdens on manufacturers of DOE's determination on manufacturer theFederal 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 forrefrigerators and

DOE's discussion and conclusions percent ofall consumers. 3 By contrast, freezers (effective July 1, 2001) and regarding the weight that should be given to cumulative regulatory burden 3For 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 thoseconsumers 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 ofall consumers exceeds 2percent ofthe total life-cycle cost, with incurring anyincrease in life-cycle costs forgas 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. Forclothes washers, the fraction conditioners is 55 percent.

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water heaters (effective January 20, Act,the program consists essentially of as a result ofthe 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 vaporignitions on water As discussed in the Introduction in The rebuttable presumption test is an heaters (under development); and EPA Section Iofthis SUPPLEMENTARY alternative path to establishing standards under section 112(d) ofthe INFORMATION, NAECA prescribed initial economic justification. Clean Air Act on emissions of Federal energy conservation standards hazardous airpollutants from the for central air conditioners and heat 2.Ruemaking History coating oflarge 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 thatthe uncertainty surrounding DOE's that DOE isto review and publish have been in effect since 1992. As estimates is high, theTSD 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 ofcentral airconditioner any new or amended standard mustbe efficiency descriptor for air conditioner and heat pumps to meet these designed so as to achieve the maximum andheat 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 costofmanufacturer 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 ofenergy efficiency for and heat pumps, which the TSD before DOE determines whether a the seasonal cooling performance of estimates is comparable the cost ofthe standard is economically justified, it central airconditioners andheat pumps. HCFC-22 phase-out (TSD, Section 8.6.). must first solicit comments on a HSPF is DOE's measure ofenergy

b.Financial BurdensAssociatedwith proposed standard (42 U.S.C. efficiency for the seasonal heating New Standards.TheTSD demonstrated 6295(o)(2)(B)(i)). That section further performance ofheat 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 thebenefits ofthe standard -Split system air conditioners andheat industry's net cash flow to drop below exceed its burdens, based, to thegreatest pumps-10 SEER/6.8 HSPF

zero (Section 8.4.6). It also noted that extent practicable, on a weighing ofthe -Single package air conditioners and
one segment ofthe industry following seven factors: heat pumps-9.7 SEER/6.6 HSPF (denominated "lower operating cost (i) The economic impact ofthe On September 8, 1993, DOE manufacturers" in the analysis) would standard on the manufacturers and on published an Advance Notice of likelybenefit from more stringent the consumers oftheproducts subjectto Proposed Rulemaking (ANOPR) standards, andthat another segment of such standard; announcing DOE's intention to revise the industry (denominated "higher (ii) The savings in operating costs theexisting central air conditioner and operating costmanufacturers") 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 tothe TSD, the class) compared to any increase in the 1998 DOE presented for comment an potential outcomes ofthese 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 ofinnovation. As a matter products which are likely to result from rulemaking. The analytical framework ofpolicy, DOE considers these the imposition ofthe standard; described the different analyses to be outcomes tobe 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 ofthe standard; the m

, e s ofnew spreadse and standards. DOE is proposing to (iv) Any lessening ofthe utility or the the e lationship o fthe v ariou s analyse withdraw the January 22 final rule, in performance ofthecovered 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 ofburdens on industry of 13 SEER (v) The impact ofany lessening of following publication ofthe original standards. DOE explicitly addresses competition, as determined in writing ANOPR. 64 FR66306. these issues in the preamble totoday's by the Attorney General, that is likely to On October 5,2000, DOE published a proposed rule in Section V.B.2. ofthis result from the imposition ofthenotce ofproposed rulemaking (October SUPPLEMENTARY INFORMATION. standard; 5, 2000, NOPR). 65 FR 59590. The (vi) Theneed 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 BofTitle IIIoftheEnergy Policy establishes arebuttable 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 etseq.). 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 tohereafter as will be less than three times the value In addition to the increase proposed "covered products") include central air ofthe energy * * *savings during the in SEER and HSPF, DOE requested conditioners andheat pumps. Underthe 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 (orEnergy tol2 SEER/7.4 HSPF for new central air represent a 20 percent improvement in Efficiency Ratio).4 The proposal ofan conditioning heat pumps. In its petition cooling efficiency and a 9 percent EER was designed to ensure more for reconsideration, ARI argued that ifa improvement in heating efficiency. The efficient operation athigh 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 ofsingle-package air electricity use by airconditioners 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. onNovember 16, 2000 persons who commented on the October efficiency ofsingle-package heat pumps to hear oral views, data and arguments 5 proposed rule, urged DOE to revise the by 12 percent. Finally, DOE isproposing

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 ofvarying 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 theJanuary 22, 2001 final rule, DOE determine that thenew 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 of7.7 order to maintain theoffsetbetween the technologically feasible and for heat pumps. Subsequent events, minimum SEER and the minimum economically justified as required by including notices delaying thefinal HSPF in the current standards. Because law. Several aspects oftoday's proposed rule's effective date pursuant to the heating energy is a large fraction oftotal standards warrant highlighting here, as President's Regulatory Review Plan, heat pump energy consumption, DOE follows: petitions forjudicial-review, and ARI's stated it would not relax the HSPF level petition forreconsideration ofthe final in the absence ofsound 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. Overview

oftheProposedStandards tothink an HSPF of7.4 isthe The e efficiency levels canbe B. Overview ofthe ProposedStandards 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 almostten-year old show that most models ofequipment inthe market. DOE fullyexpects minimum efficiency standards for new below 3-tons meet or exceed anHSPF of variations ofthese models to existunder central air conditioners andheat pumps. 7.4, and almost athird ofmodels 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 oftechnological exceed an HSPF of7.4. currently available products. advancements and would save Theproposed standards would apply 2. Consumer Benefits

consumers and the nation money, toproducts manufactured for sale in the significant amounts ofenergy, and have United States, as ofJuly 25, 2006. The Table 1 summarizes the substantial environmental and proposed standard for split-system air "characteristics" oftoday's typical economic benefits. conditioners, themost common type of central air conditioners and heat pumps.

Iftoday's proposed standards go into residential airconditioning equipment, Table 2presents the implications for the effect, they would essentiallyraise the represents a 20 percent improvement in average consumer ofthe 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

................................................ 18.4years

................. 18.4 years

................. 18.4years

................. 18.4 years. Energy Consumption peryear

......................... 2,305 kWh

................. 6,549 kWh

................ 2,305 kWh

................. 6,549kWh.

1"Typical" equipment have cooling and heating efficiencies of 10 SEER and 6.8 HSPF, respectively. 2Utility bill pertains to the energy cost ofoperating 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 perYear

................................. 384 kWh

.................... 768 kWh

.................... 384 kWh

.................... 768 kWh.

' EER isa steady-state measureofenergy outdoor temperature (95 °F), and is oneofthe test conditions inDOE's testprocedure used todevelop efficiency which measures efficiency at a prescribed the SEER.

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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 oftoday's central air proposed standards would avoid the as discussed in the January 22, 2001 conditioning and heat pump market) construction ofthree 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 the2006 proposed standard, DOE savings would result in cumulative range ofconsumers around the nation to estimates that theinstalled price ofa greenhouse gas emission reductions of estimate the rane inlife-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)ofcarbon, or an amount equal to achieve due to new standards. DOE has would be offsetby an annual energy that produced by approximately 2 made no change in itsassumptions and savings ofabout $31 on the utilitybills. million cars every year. Additionally, analysis oflife-cycle costs in proposing The most typical heat pump (i.e., split air pollution would be reduced bythe today's rule. system heat pump) currently has an elimination ofapproximately 70 As previously mentioned, NAECA installed price of$3,668 and annual thousand metric tons ofnitrous oxides established new ritria for minin 

### new criteria fordetermining utility costs of$453. Inorder 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 economiallyjustified.Section that the installed price ofatypical heat would have a netbenefit 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 wouldbe 2006 through 2030. if,aprocedure, the increasble initial price offset by an annual energy savings of C. Technological Feasibility ofan appliance due to a conservation about $50 onthe utility bills.

DOE recognizes that most consumers There are central air conditioners and standard would repay itselfto 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 DOEis 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 ofthe Thispresumption ofeconomic investigated the effects ofthe different proposed efficiency levels are justification can berebutted upon a energy prices across the nation and technologically feasible. proper showing. different air-conditioning usage Pursuant to section 325(p)(2) ofEPCA, 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 splitheat pumps and ofall consumers purchasing anew the maximum technologically feasible packaged heat pumps can be shown to 

### typical airconditioner would either the maximum technologically feasible stypical airmcoioney r would bneglity level (MaxTech Level) for cooling have satisfied the rebuttable save money or would benegligibly efficiency for all product classes and presumption requirements in section impactroposed as a resultofIn the2006case ofa new capacities covered by this rulemaking. 325(o)(2)(B)(iii). To avoid confusion, proposed standard.t In thecase ofa new 65 FR 59593. The Max Tech Level for DOE points out thatthe 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 orbe negligibly the highest HSPF rating currently procedure" to calculate thepayback

DOE also investigated how these available in residential heat pumps. periods for purposes ofthe rebuttable standards might affect low income D. General Discussionof Economic presumption. As explained in the

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) ofEPCArequires DOE to DOE's test procedure are significantly would also save money over the life of consider sevenfactors in determining greater than theweighted-average values theequipment as a result ofthe whether a conservation standard is fromDOE's life-cycle cost analyses standard, economicallyjustified. based on the 1997 Residential Energy 3.National Benefits 1;Economic Impact onManufacturers 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 p r approximately 3 quads ofenergy 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 theJanuary Results and Conclusions," are 22, 2001 final rule (66 FR 7174-78, 

### significantly longer than those Based onestimates supplied bythe industry7185-7191). As explained in Section 

### I calculated to determine whether the trade association, theAir-Conditioning and and Section V.B. ofthis SUPPLEMENTARY alculatedto determine whetherthe Refrigeration Institute(ARI). the installed price is rebuttable presumption applies to these estimated tobe $2,510, an increase of$274. INFORMATION, today's proposal is base oducts

6Based on estimates supplied by ARI, the in part on changes in emphasis orres DOE to installed price is estimated tobe $3.933, an increase weight that DOE, as a result ofits Whilesume the analysis requires adopted for of$265. reconsideration ofthe rulemaking presume that the standards adopted for

7Basedon estimates supplied by ARI, 61 percent record, now gives to certain aspects of split system and single package heat ofall consumers purchasinga newtypical air pumps are economically justified, it conditioner will either save money or will be its analysis ofmanufacturer and shows that split system air conditioners negligibly impacted asaresult ofthe 2006 standard, consumer impact. and single package air conditioners do

aBased on estimates supplied by ARI, 97 percent ofall consumers purchasing a new typical heat 9Net benefit assumes NAECA efficiency scenario. not meet the standard for use ofthe

pump will either save money or willbe negligibly Net benefit would be $3 billion for Roll-up rebuttable presumption ofeconomic impacted as a result ofthe 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 aletter except the through-the-wall product justified. Iftherebuttable 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 ruleto additional analysis to determine rule. 66 FR 7176, 7199-200. The theDepartment ofJustice for comment. economic justification. DOEhas 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 ofProposed Rulemaking. today's proposed rule. proposed today are indeed economically Pursuant to the President's Regulatory 6. Need ofthe Nation To Conserve justified. Review Plan, DOE invited the Attorney Energy 3.Energy Savings General to submit supplemental views DOE recognizes that energy 3. EnergySavings^^ ^ 2 ^ S~e^ DOErecognizes thatenergy

EPCA requires DOE, in determining epartment o Justie, in aleter de conservation benefits the nation in the economic justification of a standard, Department ofjustice, in a letter dated several important ways. Enhanced the economicjustification ofa standard, April 5,2001, provided briefwritten al important ways. Enhanced to consider the total projected energy comments as to whether the finalrule 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, andreduces the forecasted energy savings through the competition thatcould resultfrom the environmental impacts ofenergy

use ofanational energy savings (NES) October 5proposed standards. The production As part o the analysis spreadsheet, as discussed in the October Department ofJustice'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 ofthe The Department of stice concluded estimated reduction in emissions of NES that wouldresult from that the 13 SEER standards for t tt and greenhouse gases implementation oftoday'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 ofhowthese standards affect NOPR, section 325(o)(3)(B) ofEPCA competitive concerns. More specifically, NOPR, section 325(o)(3)(B)t ofJustice concluded energy savings andthose benefits. 65 FR prohibits DOE from adopting a standard 59622-3. The amount ofenergy savings for a product ifthat standard would notta lthefinalrus excluson of ultimately associated with a particular resultin "significant" energy savings niche products might alleviate standard level is also affected bythe The energy savings for the standard competitive problems for manufacturers effect ofa given standard on levels DOE is i t ar ofthose productposing today are 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 ofthe final rule on into account manufacturer-and "significant" within the meaning of manufacturers ofstandard equipment therefore inevitably consumer--costs, in section 325 ofthe Act.who could not make 13 order to encourage robust competition equipment that would fit into space- and heightened introduction of newer, 4. Lessening ofUtility or Performance of constrained sites. TheDepartment of more efficient units into the inventory Products Justice also concluded the final rule of nit i e for purchase and use ofunits available for purchase anduse This factor cannotbe quantified. In would have adisproportionate impact by consumers. establishing classes ofproducts, DOE on smaller manufacturers ofheat has attempted to eliminate any pumps. Finally, the Department of 7. Other Factors degradation ofutility orperformance in Justice was ofthe view that the 13 SEER Section 325(o) ofEPCA allows the the products covered by today's standard for air conditioners presents Secretary ofEnergy, in determining proposed rule. Attributes thataffect the same kinds ofanti-competitive whether a standard iseconomically utility include the product's ability to problems as the 13 SEER standard for justified, to consider anyother factors cool and dehumidify. In some heat pumps, andurged 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 ofutility. Product size or covered by the rule. this provision, DOE considered the configuration can also be considered As explained in Section III. ofthis potential improvement to the reliability utility ifa change in size would cause SUPPLEMENTARY INFORMATION, DOE's ofthe electrical system and health theconsumer to install the product in decision today to propose a 12 SEER effects caused by foregone air

a location or in amanner inconsistent standard formost 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 ofLessening ofCompetition pumps, is based primarily on itsre- FR 59605) andthe January 22 final rule

This economicjustification factor has weighting oftheburdens and benefits to (66 FR 7195). The UtilityImpacts two aspects: on the one hand, it assumes manufacturers and consumers, rather Analysis in Chapter 11 ofthe TSD also that there could be some lessening of than on theDepartment ofJustice's provides the technical analysis competition as a result ofstandards; on views regarding the anti-competitive estimating the effects ofadopting new the otherhand, it directs the Attorney effect ofthe January 22 final rule. The efficiency standards on installed General togauge the impact, ifany, of Department ofJustice's April 5 letter generation capacity. that effect. raises questions about the January 22

In order to assist theAttorney General final rule's treatment ofspace- E.Methodology UsedinDOEAnalyses in making such a determination, DOE constrained or niche products, but those For this proposed rule, the provided the Attorney General with questions do notrequire resolution methodologies used to evaluate the copies ofthe October 5, 2000, NOPR givenDOE'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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analyses that DOE relied on for the V. Analytical Results and Conclusions product classes. Briefly, DOE examined October 5proposed rule and the January A. Overviewof AnalyticalResults five standard levels. Table 3presents 22 finalrule. 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 ofproduct. Trial Standard final rule (66 FR 7173-74). weightto certain factors inproposing Level 5 is the Max Tech Level for each Additionally, the TSD that accompanies this rule, theunderlying analyses, and class ofproduct. Trial Standard Level 4 this rulemaking provides a detailed theresults derived from those analyses, was the one DOE adopted for the description ofevery aspect ofthe are unchanged from those presented in standards set forth in the January 22 various analytical methodologies used. theJanuary 22 final rule except for finalrule. Trial Standard Level 2 is the additional analysis ofthrough-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

Foreach trial standard examined, Measuresof CostsandBenefitsandthe October 5 proposed rule. The design several different scenarios were Formatof AccountingStatements. assessment sought to identifythe cost analyzed consisting ofvariations on: (1) Through-the-Wall Products and efficiency impacts ofemploying Electricity price andhousing2. Through-the-Wall Productscommonly applied techniques to projections; (2)equipment efficiency In the October 5proposed rule, DOE improve efficiency including reduction distributions; (3)manufacturer cost proposed to establish a separate product ofair 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 theEnergy Information Agency's pumps, noting thatthey face Emerging technologies and modulating 2000Annual Energy Outlook (AEO): (1) particularly acute size constraints that technologies were not considered since Reference Case, (2) High Growth Case, make increasing theirefficiency 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 ofwhich products, or even other space- The cost estimation for the analysis assumed adifferent efficiency constrained products. In comments was based on a modified version ofthe 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 ofthis 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 tobe broadly performance impacts ofemploying explanation ofthe three scenarios. 65 applied in traditionally'non-TTW various design options were estimated FR 59596 (footnotes 10 through 12 and applications. (Carrier #92 atp. 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 analysisto commonly applied technologies and Chapter 8 ofthe TSD.DOE analyzed two support the proposed level. (NCP #77 at designs, themost 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. Forthe reasons expressed in they had concerns about their larger analysis could increase its SEERrating 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 Inresponse to the comments, DOE $129 to the retail price ofthe closer to the estimates produced conducted additional analysis on the equipment, respectively, comparable to through DOE's reverse engineering cost andtechnical issuesrelated 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 costvalues. detail in Appendix Lofthe TSD and is standard. 66 FR 7177-78. DOE assumed a societal summarized here. Toexplore the effects thatmore discount rate of7percent for calculating DOE performed a designassessment stringent standards for TTW'products netpresent value (NPV). However, a 3 on two splitTTW 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 ofManagement and Budget's market and fit the physical definition of consumers used a subset ofconsumers (OMB) GuidelinestoStandardize TTW equipment proposed in the identified as living in multi-family

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dwellings, which are thepredominate January 22 final'rule would accrue toa by the TSD to resultin a negative cash application for TTW products. much smaller fraction ofconsumers flowfor 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 thoseburdens by burdens on manufacturers whose constraints. However, as discussed in reducing the increase in equipment cost operating costs exceed the industry the October 5NOPR, 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 orprovide additional sales all ofthose 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 ofenergy 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 ofBurdens on financial impacts on manufacturers and pump requirement. After reviewing the Manufacturers would allowmanufacturers to maintain comments, DOE again proposes to a. CumulativeRegulatory Burden. a positive cash flow. conclude that a 12 SEER requirement is Although DOE included information on c. ConclusionsRegarding the maximum technologically feasible the cumulative burden ofFederal and ConventionalProducts.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 anytype (or through-the-wall products. DOE is fully explain howit considered the class) ofcovered-product-shall be interested in receiving further comment results ofits study in the preamble designed to achieve the maximum

on this issue. statement ofbasis for the January 22 improvement in energy efficiency which B.Re-Weightingof Factors final rule. See discussion in Section III the Secretary determines is ofthis SUPPLEMENTARY INFORMATION. technologically feasible and 1.Re-Weighting ofBurdens on DOE considers that a proposed standard economicallyjustified (42 U.S.C. Consumers is not economically justified ifit 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 ofdiscussions ofthe Ill.B.2.a. above provides a summary of benefits ofthe 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 ofthe amended standard must "result in

as on low-income consumers. 65 FR TSD. DOE concluded that the burden on significant conservation ofenergy" (42 59623-59624 and 66 FR 7189-7190. In manufacturers dueto all other recent or U.S.C. 6295(o)(3)(B)). theJanuary 22 notice offinal imminent federal regulations exceeds In conducting its analysis, DOE rulemaking, DOE determined that most $479 million. Revising the standard for considers the impacts ofstandards 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 ofthe 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. Inlight ofthat which istechnologically feasible and income consumers would not benefit heavy burden,DOE today is proposing economicallyjustified. 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 financialburden on the benefits and burdens ofthe 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 Stateregulations by $144 million summary ofthe analysis results for all that many consumers, though not the compared to the 13 SEER finalrule of ofthe levels in Table 4. 10Table 4 majority, would never recover the January 22. presents a summary ofquantitative higher first costs in the form ofsavings b.-Financial BurdensAssociatedwith analysis results for each trial standard in theirutility bills. However, the NewEfficiency Standards.In addition to level based on the assumptions DOE previous Administration concluded that cumulative regulatory burden, boththe considers most plausible. These include the national energy savings and the TSD and public comments warn that too manufacturing cost estimates fromthe 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 isan important accelerate consolidation in the central prices based on theAEO2000 Reference part ofthe 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. ofthis 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 arediscounted to benefits ofthe standards adopted in the the January 22 final rule are projected 1998 dollars.

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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 cashflow

..................................................................... 62 31 18 (3) Life-Cycle Cost Savings ($):s SplitAC

....................................... 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 ($): SplitAC

............................................................................................. 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 Fractionof all Consumers with Net LCC Losses >2% (%): Split AC

........... ................................................... 2 25 25 39 68 Packaged AC

........................................ ....................................... 9 9 52 73 S

plit HP

............................................................................................. 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 HP

............................................................................................. 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 4and 5 refer to the Roll-up efficiencyscenario.

2 Values based on NAECA efficiency scenario. 3Not calculated atTrial Standard Level 5. 4 The benefit accruing tothe Higher Operating Cost subgroup compared to the Lower Operating Cost subgroup. 5Negative values indicate LCC increases.

In addition to the quantitative results, DOE alsorecognizes that the adopted result in the avoidance ofapproximately DOE also considers otherburdens and standards could result in additional 29 gigawatts (GW) ofinstalled 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 oftheelectricity system is caused by consumers foregoing air equivalent to roughly 73 large, 400 the majorbenefit DOE has not conditioner purchases, a possible megawatt, powerplants, and reduced quantified explicitly. In areas where the reduction in the ability ofthe product emissions would range up to 63 Mt of

occurrence ofblackouts (and to dehumidify, a possible lessening of carbon equivalent and upto 184 brownouts) can be reduced through competition, and possible difficulty in thousand metric tons (kt)ofNOx.' 2 expansion ofsystem capacity, the installing the newbaseline products At Trial Standard Level 5,the average economic value ofavoided blackouts intoreplacement applications. Section consumer would experience an increase associated with reductions in peak load IV ofthe preamble to theJanuary 22 in life-cycle cost. Compared totoday's cannot exceed the value ofthe avoided final rule discusses DOE's response to standards, purchasers ofsplit central capacity expansion. Thatvalue is comments regarding benefits and air-conditioners, the predominate class already captured in DOE's analysis as burdens. ofcentral airconditioner with 65 savings in consumer utilitybills. FirstDOE considered Trial Standard percent ofthe sales ofcentral air However, in areas that do not expect to Level 5,the Max Tech Level for each of conditioners and heatpumps, would be able to maintain adequate capacity four classes ofproducts, representing most likely lose in excess of$137 over reserves, the value ofavoided blackouts uniform 18 SEERrequirements. The the life ofthe appliance. Purchasers of associated with reductions in peak manufacturing cost DOE assumes for splitheat pumps, the predominate class demand can far exceed the normal costs Trial Standard Level 5 isequal to 15 ofheat pump, would most likely lose in ofcapacity 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 1Forinstance, ifcapacity-related blackouts cost cost and price ofthe product. Trial actual costs because they do not include
aregion$1billion, society would bewilling to pay 

### t upto $1billion toprevent them.Ifthoseblackouts Standard Level 5 would likely save 8.6 the additional price the consumer
canbeprevented through either acapacity quads ofenergy between 2006 and 2030 would pay over the price ofa 15 SEER expansion orareduction in peakdemand, and the which DOE considers significant. The product, which would increase the life-
new capacity would cost$100 million,thevalue of energy savings through 2020 would cycle cost considerably. Furthermore, the reduction in peakdemand canbe nomore than $100 million. Iftheregion is short oncapacity and cannot add new capacityquickly, however, the value oftho avoided blackout ($1 billion) since 12Generating capacity, carbonand NO x samereduction inpeak demand then can equal the there is nofeasible alternative. reductions are based onNAECA efficiency scenario.

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for the nation as awhole, Trial Standard and produce a total saving with a net costs exceeding 2percent ofthe total Level 5 would result in a net cost in present value of$29 over the 18.4 year life-cycle cost oftoday's baseline units.

excess of$10 billion in NPV. DOE did life oftheproduct. Thus, 39 percent ofthehouseholds with not calculate manufacturer impacts at The average purchaser ofa split split system air conditioners, 52 percent this trial standard level, determining system heat pump, which.represents 22 with single package airconditioners, 6 based on preliminary evaluation that percent ofall 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 oflow-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 2percent ofthe total lifewould be outweighed by thenegative present value of$372 over the 18.4 year cycle cost oftoday's baseline units is economic impacts to the nation,to the life ofthe product. The average greaterthan that ofthe average vast majority ofconsumers and to the purchaser ofasingle package heat household. Thus, 50percent oflowmanufacturers. Consequently, DOE pump, which represents 4 percent ofall 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 TechLevel, 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 andproduce. would experience a netcost. 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 ofthe substantial-installation costs-is-great assumed theRoll-up efficiency scenario product. Trial Standard Level 4 would because 13 SEERequipment 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 tothe base case. That would 10 SEER equipment. In light ofthe 8.4.8 ofthe TSD for the reasons DOE allow utility service areas to either higher purchase cost increase considers theRoll-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 ofhouseholds, which Standard Level 3 and the NAECA problems, improve system reliability. experience life-cycle cost increases, efficiency scenario most probable at A measure ofan efficiency standard's consumer burdens, in particular those Trial Standard Levels 1,2, and 3.See economic benefit to the nation isthe for low-income households, are Section 7.2.2.5 ofthe 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 forthe assumed cost and discounted operating cost, DOE proposes to conclude that at efficiency distributions after new between thebase 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 2006 and 2030 would likely be standard. ForTrial 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 netbenefit to the savings through 2020 would result in Since DOE expects the Roll-up nation's consumers wouldbe avoidance ofapproximately 15.5 GW in efficiency scenario toresult from outweighd b e installed generating capacity in 2020. standards adopted at Trial Standard consumer benefits, thepoaldistribution of Forcomparison, thegenerating capacity Level 4, the burdens ofTrial Standard incr ese inins 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 consumers related to installing large 400 megawatt 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 ofcarbon equivalent and up to 85 kt around 20percent, but impacts on most costt hecumulativeregulatory ofNOx.' 3 manufacturers wouldreach almost 30un e c lative reglatr

At this standard level, the average percent. Their longterm drop inreturn burden. Trial tandard Level 4 purchaser ofa 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 ofa conditioning 65 percent ofall shipments, would see heat pump systems would instead 65 percent ofall shipments, would see adopted at Trial Standard Level 4 could hea t pu rchase less costly air c o n d i tio n e 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 ofthe pace differential purbetween heat pumps andair would repay this increase in 11.3 years ofinnovation 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 ofall newFederal and January 22 notice offinal rulemaking life ofthe product. The average atere ionsd (66 FR 7196), the energy savings from life of te product. The average State regulations would exceed $779 themore efficient heat pumps would be purchaser ofa single package air more efficient heat pumps would be conditioner, which represents 10 While the average consumer eliminated ifonly a small fraction of percent ofall shipments, would see the purchasing a 13 SEER air conditioner or heat pump owners (4percent) switched average installed price of$2607rise to heat pump would experience anet toresistance heating. Those households $3032, an increase of $425. Lower saving over thelifetime ofthe product, esiding in manufactured housing, utilitybills from the energy savings some households would experience net which is often shippedfrom the actory wouldrepay this increase in 14.5 years

_ without a a airconditioning system but

14Under theNAECAefficiency scenario, the with aresistance furnace, might be

' 3Generating capacity, carbon, and NO x increase in national net present value wouldbe inclined to simply add a lower cost air reductions are based on NAECA efficiency scenario. zero. conditioner and retain theresistance

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furnace instead ofreplacing 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 ofthe product. The average Trial Standard Level 3, thebenefits of outweighed bythe expected financial purchaser ofa single package heat energy savings, generating capacity and benefits. Other potential burdens pump, whichrepresents 4 percent ofall 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 tothe purchases and possible lessening of increase of$435. Lowerutility bills nation's consumers would be competition. Consequently, DOE from the energy savingswould repay outweighed by the maldistribution of proposes to determine thatTrial this increase in 8.4 years and produce consumer benefits and manufacturer Standard Level 4 is not economically a total saving with anet present value costs, the likelihood ofhigher justified. of$353 over the 18.4 year life ofthe 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 isthe possibility considering Trial Standard Level 3, DOE avoid new capacity or, to the extent that ofequipment switching that would assumed theNAECA 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 bethe most probable. (See Section The increase in national net present reducing the potential benefits. Other 8.4.8 ofthe TSDfor the reasons DOE value would be $1 billion.' possible burdens include lessening of considernce DOE expects theRoll-up effNAECA competition and health effects caused scenario most probablenat Trl Standard efficiency scenario to resultfrom 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, theburdens ofTrial 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 savingsthrough 2020 would industry NPV tobe around 11 percent, equipment for all product classes. In result in avoidance ofapproximately 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 incash flow suggest to bethe 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 3could accelerate the likely be 3 quads, which DOE considers
range upto 28Mt ofcarbon equivalent consolidation trend, possibly resulting significant. The energy savings through and up to 84 kt ofNOx 15 in fewer choices for consumers and in 2020 would result in avoidance of

At this standard level, the average a slowing ofthe pace ofinnovation well approximately 10.6 GW in installed purchaser ofa split system air intothe future. Furthermore, the generating capacity in 2020. For conditioner, the predominate class with cumulative impact on the industry ofall comparison, the generating capacity is 65 percent ofall shipments, would see new Federal and State regulations equivalent to avoiding the need for 27 the installed price of$2236 riseto 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 ofcarbon equivalent and up to 73 kt would repay this increase in 9.8years 3raises the serious concern that ofNOx.' 7
and produce a total saving with anet prospective owners ofair 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 ofthe product. The average 'costlyair conditioner resistance heater conditioner, the predominate class with purchaser ofa single package air combinations. In this case there is a 65 percent ofall shipments, would see conditioner, which represents 10 potential loss ofenergy savings because the installed price of$2236 rise to percent ofall shipments, would see the ofthe lower standards for air $2449, an increase of$213. Lower average installed price of$2607 rise to conditioners compared to heat pumps. utilitybills 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 andproduce atotal saving with a net would repay this increase in 7.5 years pumps ifonly a small fraction ofheat present value of$113 over the 18.4 year and produce a total saving with a net pump owners (4percent) switched to life ofthe product. The average present value of$163 over the 18.4year resistance heating. Trial Standard Level purchaser ofa single package air life ofthe product. 3poses a serious concern regarding conditioner, which represents 10

The average purchaser ofa split potential anti-competitive effects percent ofall shipments, would see the system heat pump, which represents 22 because the size and cost ofthe higher average installed price of$2607 rise to percent ofall shipments, would see the efficiency heat pumps could reduce $2765, anincrease of$158. Lower
average installed price of $3668rise to competition between manufacturers of utilitybills from the energy savings $4000, an increase of$332. Lower heat pumps and manufacturers of would repay this increase in 7.5 years utilitybills from the energy savings andproduce atotal saving with anet

I8 Under theRoll-up efficiency scenario, the

' 1 Generating capacity, carbon, and NO x increase in national net present value wouldbe $2 'Generating capacity. carbon, and NOx reductions arebased onNAECA efficiency scenario. billion. reductions arebased on NAECAefficiency 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 oflow-income consumers implemented, as proposed, DOE's life ofthe product. who would experience net costs analysis suggests that ofall potential

The average purchaser ofa split exceeding 2percent ofthe total life- space-constrained products, only those system heat pump, which represents 22 cycle cost oftoday'sbaseline units is with through-the-wall condensers need percent ofall shipments, would see the greater than that for an average special consideration. The TSD contains average installed price of$3668 rise to household. Thus, 34percent oflow- anew appendix (Appendix L) $3812, an increase of$144. Lower income households with split system air describingthe results ofour recent reutility bills from the energy savings conditioners and 14percent with single evaluation ofthose products. The would repay this increase in 3.9 years package air conditioners would results ofthat 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 ofthe product. The average experience anet cost. Also, the can attain 10.9 SEERusing designs and purchaser ofa single package heat possibility that consumers would incur technologies that are commonly applied pump, which represents 4 percent ofall substantial installation costs isless 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 riseto $3748, an SEERequipment 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 wouldrepay equipment. In light ofthe moderate packaged equipment analyzed was this increase in4 years andproduce a purchase cost increase experienced by demonstrated to becapable ofattaining total saving with anet present value of all consumers, the percentage of only a 10.6 SEERrating, although $421 over the 18.4 year life ofthe households, inparticular low-income comments received indicate that one product. Trial Standard Level 2 would households,-which experience life-cycle manufacturer ofpackaged TTW lower peak electricity demand cost increases, consumer burdens are equipment, Armstrong, expects their compared to thebase case. That would less severe under Trial Standard Level equipment to be capable ofattaining 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 establishnew 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 wouldbe $2 billion, which assessment ofthebenefits and burdens, for replacement applications. The new represents the highestlevel 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 andcentral air ofthe otherclasses: 10.9 SEER and 7.1 efficiency scenario to resultfrom 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, theburdens ofTrial Standard conclude this standard saves a systems, and 10.6 SEER and 7.0HSPF Level 2on manufacturers are likely to significant amount ofenergy 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 economicallyjustified. 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 thebenefits ofenergy price increases thatwould result in a long term drop in return on investment savings, the projected amount of loss ofmarket 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 ofsplit TTW equipment
not accelerate theconsolidation 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 ofpackaged

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 overthe life ofthe the industry ofall new Federal and the burdens. The burdens include the equipment. In no case would any State regulations would exceed $658 loss ofmanufacturer net present value, consumer ofsplit TTW products be million. taking into account thecumulative expected to incur life-cycle costs greater

While the average consumer regulatory burden and annual cash flow, than 2 percent ofthe total life-cycle purchasing a 12 SEER airconditioner or increases in life-cycle cost for some cost, and only 17 percent ofconsumers heat pump would experience a net users ofproducts covered by today's ofpackaged TTW equipment would be saving over the lifetime ofthe 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 ofthe total life-cycle
costs exceeding 2percent ofthe total foregoing air conditioner purchases, any cost. life-cycle cost oftoday's baseline units. possible reduction in the ability ofthe DOE proposes to conclude that Thus, 25 percent ofthe households with product to dehumidify, any possible standard levels higher than 10.9 SEER split system air conditioners and 9 lessening ofcompetition, 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 SEERusing wouldexpereD. Conclusions RegardingSpace- design options thatwould likelybe UndertheRoll-upefficiency scenario,the Constrained Products economically justified. However, the increaseinnational net presentvalue wouldbe $3 Ifa 12 SEER minimum requirement results are not conclusive and cannotbe billion. for air conditioners andheat pumps is confidently applied to all TTW

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products. DOE's analysis does not VI. Procedural Issues and Regulatory notice or fromthe contact person named provide enough evidence to convince us Review atthe beginning ofthisnotice. The TSD that levelshigher than 10.9 SEER (10.6 A. Review UndertheNational provides: (1) A statement ofthe problem SEER for packaged TTW) willbe nvironmentlPolicyAct 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 ofthe 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 aquantitative comparison ofthe indicate that opportunities for efficiency Energy, Office ofEnergy Efficiency and impacts ofthe alternatives; and (4) the improvement do exist, and that Renewable Energy, Forrestal Building, national economic impacts ofthe manufacturers ofthose 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 UndertheRegulatory

A serious concern that DOE has environmental effects associated with Flexibility Act considered is that thelower TTW various standard efficiency levels for TheRegulatory Flexibility Act, 5 standards could encourage purchasers central air conditioners and heat pumps U.S.C. 601 etseq., requires that a ofconventional equipment to shift to to be not significant, andtherefore DOE Federal agency prepare a regulatory TTW products, undermining the published in theFederal Register (66 flexibility analysis for anyrule for benefits ofthe 12 SEER standard for FR 7201), A Finding ofNo Significant which the agency isrequired to publish conventional products. DOE istherefore Impact (FONSI) pursuant tothe ageneral notice ofproposed proposing that the new through-the-wall National Environmental Policy Act of rulemaking. Such an assessment ofthe classes would consist only ofproducts 1969 (NEPA), 42 U.S.C. 4321 etseq., the impact ofregulations on small manufactured before July 26, 2010. See regulations ofthe Council of businesses is not required ifthe agency proposed definition of "through-the- Environmental Quality (40 CFR Parts certifies that the rule would not, if wall airconditioner and heat pump." 1500-1508), and DOE's regulations for promulgated, have a significant Thus, the classes would exist onlyfor a compliance with NEPA (10 CFRPart economic impact on a,substantial period offour years following the 1021). number ofsmall entities (5 U.S.C. establishment ofthenew standards.

. bReview Under Executive Order12866 605(b)). To be categorized as a "small" Duringthat 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 tobe an "economically employ no more than 750 employees. manufacturers ofthrough-the-wall significantregulatory action" under Inthe October 5, 2000 NOPR, DOE products wouldbe able to investigate Executive Order 12866, "Regulatory discussed the potential impacts on options for meeting themore stringent Planning and Review." 58 FR 51735 small businesses ofthe October 5 12 SEER level. Both will make iteasier (October 4, 1993). Accordingly, today's proposed rule (corresponding toTrial for through-the-wall products to attain action was subject to reviewunder the Standard Level 3), and certified that the the 12 SEERminimum efficiency Executive Order by the Office of proposed standard levelswould not required ofother products, thereby Information and Regulatory Affairs have a significant economic impact on making 12 SEER atechnologically (OIRA) ofthe Office ofManagement and a substantial number ofsmall entities. feasible andeconomically 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 ofcentral air make the investment required to market review have been made a part ofthe conditioners andheat 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 ofniche products, DOE time during which lower efficiency Independence Avenue, SW, proposed a separate product class for TTW equipment is installed, ensuring Washington, DC 20585, betweenthe through-the-wall equipment, much of that additional energy savings hours of9 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 certaintime period. 3142. the preamble tothe January 22 final

To further limit the application ofthe The October 5,2000, NOPR contained rule, DOE addressed comments through-the-wall class, products in a summary oftheRegulatory 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 ofniche products, and although the contain special weatherization features to improving the energy efficiency of final rule adopted the higherTrial that would allow themto be installed consumer products. 65 FR 59627-29. Standard Level 4 standards, DOE totallyoutdoors, andmustbe 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 attemptto 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 othernew product classes are purchases, and performance standards. conditioners and heat pumps that proposed since all other products types The reader isreferred to the complete correspond to Trial Standard Level 2. ofwhich we are aware have draft "Regulatory Impact Analysis," Because ofsevere size constraints, DOE demonstrated the ability to compete in which is contained in the TSD, available isagain proposing a separate product the market at the 12 SEER level. as indicated atthe beginning ofthis class for through-the-wall equipment,

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38840 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

with a lower SEER. No otherprovisions rule underthe standards ofsection 3of by state, local, and tribal governments for nicheproducts are being proposed. the Executive Order and determined on a proposed significant

DOE certifies, based on its analysis that, to theextent permitted by law, this intergovernmental mandate. DOE's and public comments, thattoday's proposed rule meets therelevant 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 ofsmall entities. Accordingly, Today's proposed rule may impose DOE has notprepared aregulatory DOE hasdetermined pursuant to expenditures of$100 million or more on flexibility analysis. This certification is Executive Order 12630, "Governmental theprivate sector. It does notcontain a based on an assessment ofthe impact Actions and Interference with Federal intergovernmental mandate. theproposed standards would have on Constitutionally Protected Property Section 202 ofUMRA 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 ofUMRA 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 theUnited States contentrequirements ofsection 202(b) required to assess the indirect effects of Constitution. ofUMRA relevant to a private sector proposed standards is contrary to G Review UnderExecutiveOrder13132 mandate substantially overlap the established case law interpreting the economic analysis requirements that Act. Executive Order 13132, "Federalism," apply under section 325(o) ofEPCA and 64 FR 43255 (August 4, 1999) imposes Executive Order 12866. The D.Review Underthe-Paperwork certain requirements on agencies SUPPLEMENTARY INFORMATION section of ReductionAct formulating and implementing policies the January 22, 2001, notice offinal

Nonew information orrecord keeping orregulations that preempt State law or rulemaking and "Regulatory Impact requirements are imposed by this thathave federalism implications. Analysis" section oftheTSD for this rulemaking. Accordingly, no Office of Agencies are required to examine the proposedrule responds to those Management and Budget clearance is constitutional and statutory authority requirements. required underthe Paperwork supporting any action that would limit Under section 205 ofUMRA, DOE is Reduction Act.44 U.S.C. 3501 etseq. thepolicymaking discretion ofthe obligated to identify and consider a E.Review Under Executive Order12988 States and carefully assess the necessity reasonable number ofregulatory for such actions. Agencies also must alternatives before promulgating arule With respect to the review ofexisting have an accountable process to ensure for which awritten statement under regulations and the promulgation of meaningful and timely inputby State section 202 isrequired. DOE isrequired
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. DOEpublished its burdensome alternative that achieves imposes on Executive agencies the intergovernmental consultation policy the objectives ofthe 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 ofsuch an errors and ambiguity; (2)write has determined thatit 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) oftheEnergy (3)provide aclear legal standard for on therelationship 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 ofpower and establish energy conservatiofn standards and burden reduction. With regard to responsibilities among thevarious for central air conditioners and heat thereview required by section 3(a), levels ofgovernment. State regulations pumps that are designed to achieve the section 3(b) ofExecutive Order 12988 that may have existed on the products maximum improvement in energy specifically requires thatExecutive that are the subject oftoday'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, ifany; can petition DOE for exemption from ofthe alternatives considered byDOE is (2) clearly specifies any effect on such preemption to the extent, and presented in the "Regulatory Impact existing Federal law orregulation; (3) based on criteria, set forth in EPCA. Analysis" section ofthe TSD for today's provides a clear legal standard for proposed rule. affected conduct while promoting H.Review Underthe Unfunded simplification and burden reduction; (4) MandatesReformAct of1995

.Review Underthe Treasuryand specifies the retroactive effect, ifany; (5) With respect to a proposed regulatory GeneralGovernmentAppropriations 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 ofthe Treasury and affecting clarity and general governments, in the aggregate, or by the General Government Appropriations draftsmanship under anyguidelines private sector of$100 million or more, Act, 1999 (Pub. L. 105-277) requires issuedby theAttorney General. Section section 202 ofthe Unfunded Mandates Federal agencies toissue a Family 3(c) ofExecutive Order 12988 requires Reform Act of 1995 (UMRA) requires a Policymaking Assessment for any Executive agencies toreview regulations Federal agency to publish estimates of proposed rule or policythat may affect in light ofapplicable standards in theresulting 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 ofthe 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 isnot necessary to

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prepare a Family Policymaking preamble to theJanuary 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 UnderExecutiveOrder 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 ofapproximately 11 gigawatts. information is generally known by or Significantly Affect Energy Supply, This would be theequivalent ofthree 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 thatprojections confidentiality; (5)an explanation ofthe (OIRA), Office ofManagement and indicate thatthe standard levels set out competitive injury to the submitting Budget, a Statement ofEnergy Effects for in the January 22, 2001 rulemaking person which wouldresult frompublic 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 ofproposed passage oftime; and (7)whether promulgation ofa final rule, andthat: rulemaking. However, section 325 of disclosure ofthe information would be (1)Is a significant regulatory action EPCA requires DOE to weigh all ofthe contrary to thepublic interest. under Executive Order 12866, or any significant costs and benefits associated B. Puc
successor order; and (2) is likely to have with standard levelsthat are being B.PublcWorkshop/Hearing

a significant adverse effect on the considered and notjust avoided 1.Procedure for SubmittingRequests To supply, distribution, or use ofenergy; or electricity costs. DOE has set forth its Speak (3) is designated by the Administrator of evaluation ofcosts and benefits OXRA as a sienificant enerevaction f ; costs and b ene wl f i s

_ v a OIRA as a significant energy action. For elsewh6re in this notice (see Section Y ill find the time andplace of any proposed significant energy action, the public hearing listed atthe the agency must give a detailedregu a and non-rebeginning ofthis notice. We invite any Todeagcy'ust p al wo~regulatory and non-regulatory person who has an interest in today's statement ofany 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 represent tative of a should the proposed action be Under Executive Order 12866," and the aintert in thas an implemented, and ofreasonable Regulatory Impact Analysis portion of oortnity thee i ues anor alternatives toe the ation and their the TSD). DOE hasconcluded thatun tho

e t a n o rald like expected benefits on energy suppl, costs associated with elevating the apresenti ea o d a 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 mayhand deliver requests to distribution, or use ofenergy in the nefit o oied benet speak to the address indicated at the centralution, a ruse ofe nc

luding the b enef it eavoi ded term because neither theJanuary 22, incudin the enefit ofaoiddbeginning ofthis notice between the 2001 final rule norany final rule electricity consumption h s of8 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 ofcentral You may also send them by mail or Eairconditioners and heat pumps until A. Written CommentProcedures mail to brenda.edwards2006. In thelonger 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 therequest should implemented, would have a positive by submitting data, comments, or state why he or she, either individually impact on the reliability ofelectricity information with respect to the or as a representative ofa group or class supply in the United States. The proposed issues set forth in today's ofpersons, is an appropriate standards that DOE is proposing would proposed rule to Ms. Brenda Edwards- spokesperson, briefly describe the represent a 20percent improvement in Jones, at the address indicated atthe nature ofthe interest in the rulemaking, the energy efficiency ofsplit-system beginning ofthis notice. We will andprovide a telephone number for central air conditioners, and a 9percent consider all submittals received by the contact. We request each person improvement in heating efficiency for date specified atthebeginning ofthis selected to be heardto submit an heat pumps. The proposed standards notice in developing thefinal rule. advance copy ofhis or her statement at would improve the cooling efficiency of According to 10 CFR 1004.11, any least two weeks prior to the date ofthis single-package heat pumps by 24 person submitting information thathe hearing as indicated atthe beginning of percent and the heating efficiency of or she believes tobe confidential and this notice. At our discretion, wemay single-package heat pumps by 12 exemptby law from public disclosure permit anyperson who cannot do this percent. As explained in Section IV.B.3. should submit one complete copy ofthe to participate ifthatperson has made ofthis SUPPLEMENTARY INFORMATION, document andten (10) copies, if alternative arrangements with the Office DOE estimates the standards would save possible, fromwhich the information ofBuilding Research and Standards in approximately 3 quads ofenergy over 25 believed to beconfidential has been advance. Therequest togive an oral years (2006through 2030). Also, in deleted. DOE will make its own presentation should ask for such determining whether the proposed determination with regard tothe alternative arrangements. standards are economically justified, confidential status ofthe information DOE considered as abenefit the andtreat it according to its 2. Conduct ofHearing potential ofthe proposed standards to determination. DOE will designate a DOE official to improve the reliability oftheelectric Factors ofinterest to DOE when preside atthe workshop and we may generation and distribution system. See evaluating requests to treat as also use a professional facilitatorto Section IV.D.7 ("Other Factors") and the confidential information that has been facilitate discussion. The workshop will

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not be ajudicial or evidentiary-type List ofSubjects in 10 CFR Part430 for a covered product, expressed in hearing, but DOE will conduct it in Administrative practice and terms ofa minimum efficiency quotient, accordance with 5 U.S.C. 553 and procedure, Energy conservation, which is established by statute or by a Section 336 ofthe Act and acourt Household appliances. finalrule that has modified this part reporter will be present torecord the

. pursuant to a date DOE has selected transcript ofthe workshop. We reserve Isse d W ash g ton

, D.C., on July 18

, consistent with theCongressional the rightto 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. AssistantSecretary, EnergyEfficiency and

. establish the procedures governing the RenewableEnergy. conduct ofthe workshop. Forthe reasons set forth in the Through-the-wallairconditioner and DOEwill permit each participant to preamble, Part 430 ofChapter II ofTitle heat pump means a central air make a prepared general statement, 10, Code ofFederal Regulations is conditioner or heat pump that is limited to five (5) minutes, prior to the proposed tobe amended, as set forth designed to be installed totally or discussion ofspecific topics. DOE will below. partially within a fixed-size opening in permit otherparticipants 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 briefsummary oftherelevant parts of

our analysis and ofthe proposed rule, 1.The authority citation for Part 430 (3)Is clearly and permanently marked and the significant issues involved. We continues toread 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 2461note. (4) Has arated 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 ofall prepared statements on adding definitions for "effective date," (5)Exchanges all ofits outdoor air

a topic,DOE will permit each "maximum allowable energy use," across a single surface oftheequipment participant tobriefly clarify his or her "minimum required energy efficiency," cabinet; and
statement andcomment on statements and "through-the-wall air conditioner (6) Has a combined outdoor air made by others. Participants should be and heatpump" in alphabetical order to exchange area ofless than 800 square prepared to answer questions byus 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 ofparticipants concerning * * (5). other matters relevant to the hearing. Effective dateforpurpose ofthe part, * * * * * The total cumulative amount oftime means the date on and after which a 3. Section 430.32 ofSubpart C is allowed for each participant to make manufacturer must comply with an amended byrevising paragraph (c)to prepared statements will be 20 minutes. energy conservation standard in the read as follows: manufacture ofa covered product. The official conducting the hearing * * * * * §430.32 Energy andwaterconservation will accept additional comments or Maximum allowableenergyuse standardsand effective dates. questions from those attending, as time means an energy conservation standard (c) Centralairconditionersand permits. The presiding official will for a covered product, expressed in centralairconditioningheat pumps. (1)

announce any further procedural rules, terms ofa maximum amount ofenergy Split system central airconditioners and
or modification ofthe above procedures, thatmay be consumed, which is central air conditioning heat pumps needed for the proper conduct ofthe established by statute orby 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 theentire record ofthis adate DOE has selected consistent with central airconditioners and central air rulemaking, including the transcript, theCongressional 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 ofInformation Reading Room. *- * * * * 2006, shall have Seasonal Energy Any person maypurchase a copy ofthe Minimumrequiredenergyefficiency 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 systems

...................................................................................................................... 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 pumps

..................................................................................................................... 12 7.4 3. Single package air conditioners

.......................................................................................................... 12....... 4. Single package heat pumps

................................................................................................................ 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 airconditioners and heat pumps-single package

............................................. 10.6 7.0

* * * * * standard isbased on ajoint recommendation could notmake unitsthat comply with the

4. Section 430.34 is added to Subpart submitted to DOE ofEnergyby rule and fit intothe available space. C to read as follows: manufacturers and energy conservation Third, the proposed heat pump standard of advocates. Thatrecommendation statesthat 13 SEERcould makeheat pumps less §430.34 Energy andwaterconservation virtually all manufacturers ofclothes washers competitive with alternative heating and standardsamendments who sell inthe United Statesparticipated in cooling systems. Because the standard will

The Department ofEnergy may not arriving at therecommendation through their result inincreases in the sizeand cbstofheat prescribe any amended standard which trade association, that the recommendation pumps, itis possible that purchasers will increases the maximum allowable was developed in consultation with small shiftaway from heatpumps toother systems

ncreases the maximum allowale manufacturers, and thatthe manufacturers thatinclude electric resistance heat, energy use or,in the case of believe the newstandard would notlikely reducing the competition that presently showerheads, faucets, water closets or reduce competition. We notefurther that,as existsbetween heat pumps and those other urinals, water use, or which decreases the industryrecommended, the proposed systems. the minimum required energy efficiency standard will be phased in over sixyears, Department ofJustice urgesDOE ofEnergy ofa covered product. which will allow companies that do not to take into account these possible impacts already haveproducts thatmeet the proposed on competitionin determining its final Appendix standard sufficient timeto redesign their energy efficiency standard for air (The following lettersfrom Department of product lines. conditioners and heat pumps. DOE ofEnergy Justice will not appear in theCode ofFederal With respect to the proposed residential should consider setting alower SEER Regulations.) central airconditioner and heat pump standard for heatpumps, such asthe standard, wehave concluded that therecould standard included inTrial Standard Level 2, DEPARTMENT OFJUSTICE-Antitrust be an adverse impact oncompetition. The and alower SEER standard for air Division proposed standard, Trial Standard Level 3,is conditioners for retrofit markets where there A. DOUGLAS MELAMED-Acting Assistant expressed interms oftwo industry are space constraints (such asmarkets served Attorney General measurements: SEER (Seasonal Energy by niche products) and formanufactured Pennsylan Efficiency Ratio) and HSPF (Heating Seasonal housing. Main Justice Building, 950Pennsylvania Performance Factor).' These standards would Sincerely,

Avenue. NW., Washington, DC 20530- change fromthe current central air 0001, (202) 514-2401/ (202) 616-2645 (f), c n A. Douglas Melamed. conditioner andheatpump efficiency antitrustjustice.usdo)gov (internet), http: standards of 10 SEER/6.8 HSPFfor split DEPARTMENT OF JUSTICE-Antitrust Decembw ov (WordWide Web)0 system air conditioners andheat pumps and Division-Antitrust Division 9.m SEER/6.6 HPSF for singlepackage air JOHN M. NANNES-Acting Assistant Mary Anne Sullivan, General Counsel, conditioners and heat pumps to 12 SEER for Attorney General

Department ofEnergy, Washington, D.C. air conditioners and 13 SEER/7.7 HPSF for 20585 heat pumps. Main Justice Building, 950 Pennsylvania Dear General Counsel Sullivan: Iam We have identifiedthree possible Avenue NW., Washington, DC 20530-0001, responding toyour October 16, 2000 letter competitive problems presented bythe (202) 514-2401/ (202) 616-2645 (f), seeking the views ofthe Attorney General proposed standards. First, the proposed 13 antitrust@justice.usdoj.gov (internet) about the potential impacton competition of SEER heat pump standard.would have a http://www.usdoj.gov (WorldWide Web) two proposed energy efficiency standards: disproportionate impact on smaller April 5,2001

one for clothes washers andthe other for manufacturers. Currently less than 20% of Eric J.Fygi, Acting General Counsel, residential central airconditioners and heat the total current product lines meet the Department ofEnergy, Washington, DC pumps. Yourrequest was submitted pursuant proposed standards, butfor some small 20585 to Section 325(o)(2)(B)(i) ofthe EnergyPolicy manufacturers, 100% oftheirproduct lines Dear Acting GeneralCounsel Fygi: Iam and Conservation Act,42 U.S.C. §6291, 6295 failto satisfy the proposed standard. responding to your letterdated March 20, ("EPCA"), whichrequires the Attorney Second, the proposed standard forheat 2001, seeking the views ofthe Attorney General to make a determination ofthe pumps, and in some instances for air General aboutthe potential effect on impact ofanylessening ofcompetition that conditioners, would have an adverseimpact competition ofthe finalrule published on is likely to resultfrom theimposition of on some manufacturers ofthese products January 22, 2001, setting forth new energy proposed energy efficiency standards. The (including those products referred to inthe efficiency standards for central air Attorney General's responsibility for Federal Registernotice as "niche products") conditioners and heat pumps. You responding to requests from other usedto retrofit existing housing and usedin specifically askedfor our views about the departments about theeffect ofa program on manufactured housing. Thesemanufacturers impacton competition oftherule's competition hasbeen delegated to the prescription ofa 13 SEER (Seasonal Energy Assistant Attorney General for the Antitrust

,The FederalRegister notice alsorequested Efficiency Rating) standard forall product Divisionin 28 CFR §0.40(g). comments onaproposal toadopt astandard for classes, exceptfor niche products, and the

We havereviewed the proposed standards steady-statecooling efficiency (EER)and discussed desirability ofreducing the standard to a 12 and the supplementary information severaloptionsDOE ofEnergy isconsidering. The SEERlevel for all subcategories. Your letter published in the Federal Register notices and proposedrule set forthinthenoticedoesnot, requested our views byMarch 30, but your submitted tothe Attorney General, which however, include aprovision regarding an EER staffagreed toextend the response date to include information provided to DOE of standard. and the views ofDepartment ofJustice April 6. Energy by manufacturers. We have expressed inthisletter are limitedto theimpactof Asyou noted inyour letter tothe Attorney additionally conducted interviews with any lessening ofcompetition * * thatislikelyto General, the Antitrust Division had earlier members ofthe industries. resultfrom the imposition ofthe proposed expressed itsviews on the proposedrule, standard," as required by EPCA. IfDOE ofEnergy Wehave concluded that the proposed proposes arule inthefutureincorporating anEER whichprovided for a 12 SEER standard for clothes washer standard would not adversely standard, DOE willthen evaluate thatproposed rule airconditioners and a 13 SEER standard for affect competition. In reaching this and express its viewsabout thecompetitive impact heatpumps. The Divisionhad concluded conclusion, we notethatthe proposed ofthat standard. thatthe 13 SEER standard for heat pumps

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38844 Federal Register/Vol. 66, No. 143/Wednesday, July 25, 2001/Proposed Rules

couldhave an adverse effect oncompetition manufacturers 2and an adverse effect on eliminate the difficulties for manufacturers of and urgedthe Department ofEnergy to adopt manufacturers ofspecialized equipment (the standard equipment who could notmake

a 12 SEER standard for heat pumps. We niche product manufacturers) and equipment thatcomplied with the 13 SEER noted only minor concerns aboutthe manufacturers ofequipment for space- standard and stillfit into space-constrained proposed 12 SEER standard for air constrained installation sites (such as sites. The final rule also continues tohave a conditioners. manufactured housing, which accounts for a disproportionate impact on smaller

We have reviewed the final rule and significant percentage ofthecountry's manufacturers ofheat pumps. The 13 SEER determined that the 13 SEER heat pump housing starts). The exception made in the standard forair conditioners raises the same standard still raises competitive problems. final rule forniche product manufacturers kinds ofcompetitive problems as the 13 We have further determined thatthe 13 SEER may alleviate competitive problems for their SEER standard does forheat pumps. tandard forar cditioner al raies products, but the exception does not Weurge the Department ofEnergy 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% ofthetotal current heatpump productlines described three competitive problems meetthenew standard,but for some small Sincerely, resulting from theproposed 13 SEER manufacturers, 100% oftheirproduct lines failed John M. Nannes. standard forheat pumps, including a to satisfy the standard. The same is truefor air disproportionate impact on smaller conditionermanufacturers when the standard is 13 FRDoc. 01-18429 Filed 7-24-01; 8:45 am] SEER. BILUNG CODE 6450-01-P