Energy Conservation Standards Activities

Submitted Pursuant to Section 141 of the

Energy Policy Act of 2005

and to the Conference Report (109-275)

to the FY 2006 Energy and Water

Development Appropriations Act

U. S. Department of Energy

January 2006

EERE-2006-DET-0136 COMMENT 01.2
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Table of Contents

List of Acronyms ............................................................................................................. iv

Executive Summary .........................................................................................................v

1 Introduction .............................................................................................................. 1

2 History of the Appliance Standards Program ..................................................... 3

2.1 Energy Policy and Conservation Act ................................................................. 3

2.2 Process Improvement .......................................................................................... 4

3 Rulemaking Activities and Statutory Dates ...........................................

3.1 Overview of Statutory Requirements ................................................................. 6

3.2 DOE Charge and Challenges........ .....................................................................15

3.2.1 Backlog and Pre-EPACT 2005 .............................................................. 15

3.2.2 EPA CT 2005 ............................................................................................16

3.2.3 Other Activities ...................................................................................... 17

4 Background on the Rulemaking Process ............................................................ 18

4.1 Rulemaking Process and Stakeholder Involvement .......................................... 18

4.1.1 Advance Notice of Proposed Rulemaking and Prior Activities ..... 21

4.1.2 Notice of Proposed Rulemaking and Prior Activities ...................... 23

4.1.3 Notice of Final Rulemaking .................................................................. 25

4.1.4 Procedural Requirements ..................................................................... 25

4.1.5 Public Comment Requirements ........................................................... 28

4.2 Standards-Setting Decision-Making Process ................................................... 29

4.2.1 Selection of Candidate Standard Levels ............................................. 29

4.2.2 Factors in Selection of Proposed Standard ......................................... 29

4.2.3 Selection of a Final Standard ................................................................ 31

4.3 Process Rule Timetable Targets ........................................................................ 31

5 Reasons for the Delays in Issuing Rules ............................................................. 32

5.1 History of Rulemaking Scheduling ................................................................... 32

5.2 Consequences of the Process Rule ..................................................................... 34

5.2.1 Prioritization Process ............................................................................. 34

5.2.2 Stakeholder Input and Expert Review ................................................ 36

5.2.3 Complexity of Analysis ......................................................................... 37

5.3 Rulemaking Process .......................................................................................... 38

5.4 Document Development, Review and Clearance Process ................................ 38

5.4.1 Document Quality .................................................................................. 39

5.4.2 Issue Resolution ..................................................................................... 39

5.4.3 Senior Review and Clearance Process ................................................ 40

5.5 Delays of Priority Rules - 2004 ........................................................................ 40

6 Plan to Expedite Rulemaking ............................................................................... 42

6.1 Rulemaking Process Efficiency Enhancements ................................................ 42

6.1.1 Staggered Rulemakings 42

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6.1.2 "Valley Filling" Management Techniques ......................................... 42

6.1.3 Bundled Product Rulemakings ............................................................ 43

6.2 Stakeholder Input and Expert Review .............................................................. 44

6.2.1 Lock-Down of Analysis Following the Close of Formal Comment

Periods .......................................................................................44

6.3 Complexity of Analysis ..................................................................................... 44

6.3.1 Analytical Plans for Each Rulemaking ............................................... 44

6.3.2 "Streamlined Rulemaking" Analysis for Some Products ................ 45

6.4 Complexity of Rulemaking Process .................................................................. 46

6.4.1 Regulatory Procedures Guidelines and Training .............................. 46

6.4.2 Project Management Assistance from the National Energy

Technology Project Management Center ........................................................... 47

6.4.3 Fiscal Management ................................................................................ 47

6.4.4 "Expedited Rulemaking" Process ........................................................ 47

6.5 Document Review and Clearance Process ........................................................ 48

6.5.1 Product Quality ...................................................................................... 48

6.5.2 Document Consistency .......................................................................... 48

6.5.3 Crosscutting Review Team ................................................................... 49

6.5.4 Concurrence as an Event ....................................................................... 50

6.6 Three-Year Rulemaking Timetable ................................................................... 50

7 Implementation Plan and Schedules ................................................................... 53

7.1 Stakeholder Consultation .................................................................................. 53

7.1.1 Public Meeting Format .......................................................................... 53

7.1.2 Stakeholder Comments ......................................................................... 54

7.2 Development of the DOE Full-Compliance Scheduling Plan .......................... 61

7.3 Multi-Year Schedule ......................................................................................... 63

7.4 The Risks of An Even More Accelerated Schedule ........................................... 68

7.5 Financial Resources Necessary to Implement Schedule ................................... 68

APPENDIX A. Explanation of Delays to Priority Rules Announced in 2004 ...... 70

A.1 Reporting Requirements ........................................................................................ 70

A.2 Regulatory Agenda Dates and Delays ................................................................... 71

A.2.1 Distribution Transformers .......................................................................... 72

A.2.2 Commercial Unitary Air Conditioners and Heat Pumps ...................... 72

A.2.3 Residential Furnaces and Boilers ............................................................... 73

olf Tables

Table 1 Appliance and Equipment Standards Required by NAECA ...................... 7

Table 2 Appliance and Equipment Standards Required by EPACT 1992 ............... 9

Table 3 Appliance and Equipment Standards Required by EPACT 2005 ............. 12

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Table 4 Appliance and Equipment Standards Authorized but not Required by

EPACT 2005* .....................................................................................::................14

Table 5 Seven EPCA Criteria and Associated DOE Analyses .................................19

Table 6 Pre-ANOPR and ANOPR Analyses .............................................................. 22

Table 7 Pre-NOPR and NOPR Analyses .................................................................... 24

Table 8 Summary of Regulatory Procedural Requirements .................................... 26

Table 9 How Regulatory Procedural Requirements are Incorporated into

Rulemaking ......................................................................................................... 27

Table 10 Historical Schedules under Process Improvement (Time Counted After

Process Improvement) ...................................................................................... 51

Table 11 Multi-Year Schedule to Issue One Standard for Each Product in Backlog,

and to Develop One Standard for Each Product per EPACT 2005 ............. 65

List of Figures

Figure 1 Appliance Standards Rulemaking Flowchart for ANOPR, NOPR, and

Final Rule ............................................................................................................ 20

Figure 2 Growing Backlog with the Appliance Standard Program ....................... 34

Figure 3 Thirty-Six Month Rulemaking Timetable ................................................... 52

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List of Acronyms

AFUE - Annual Fuel Utilization Efficiency

ANOPR - Advance Notice of Proposed Rulemaking

ANSI - American National Standards Institute

ASME - American Society of Mechanical Engineers

BT - Building Technologies Program

Btu - British Thermal Unit

DOJ - Department of Justice

EE - Office of Energy Efficiency and Renewable Energy

EIA - Energy Information Administration

ER/BR lamps - Ellipsoidal Reflector / Bulge Reflector Lamps

GRIM - Government Regulatory Impact Model

GC - Office of General Counsel for the U.S. Department of Energy

LCC - Life-Cycle Cost

IA - Manufacturer Impact Analysis

NETL - National Energy Technology Laboratory

NEMS - National Energy Modeling System

NOPR - Notice of Proposed Rulemaking

NPV - Net Present Value

OMB - Office of Management and Budget

PI - Office of Policy and International Affairs, U.S. Department of Energy

RECS - Residential Energy Consumption Survey

SBA - Small Business Administration

TSD - Technical Support Document

UEC - Unit Energy Consumption

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Executive Summa ry

This report was prepared in response to section 141 of the Energy Policy Act of 2005

(EPACT 2005 ), Pub. L. 109-58, which pertains to the Department of Energy's (DOE or

Department) failure to meet deadlines for new or amended energy conservation

standards. The report identifies all products for which DOE has missed the deadlines

established in the Energy Policy and Conservation Act (EPCA ). (42 U.S.C. 6291 et seq.,

as amended) It also describes the reasons for such delays and the Department 's plan for

expeditiously prescribing new or amended standards.

Appliance and equipment standards are clearly one of the Federal Government's most

effective energy-saving programs . The Appliance Standards Program is large and

complex, and is having a major positive impact . The Appliance Standards Program is

also strongly supported by the Administration.

Despite the commitment of this and prior Administrations to the effective implementation

of the Appliance Standards Program, there have been numerous delays in the

Department's rulemaking activities. Changes to the program ten years ago to address

quality issues resulted in a public priority -setting process that focused available resources

on those efficiency standards likely to have the largest benefits (e.g., refrigerators, clothes

washers, central air conditioners, water heaters, and distribution transformers), and

resulted in additional delays to standards likely to produce the smallest energy savings

(e.g., direct heating equipment, pool heaters , and dishwashers).

The Department is committed to addressing the backlog and meeting all of its statutory

requirements. This report presents multi-year schedules that are firm and achievable and

will enable the Department to produce at least one new or amended standard for all

products in the backlog no later than June 2011 , that is, five years from the issuance of

this plan. By June 2011 , the Department will issue standards for the following 18

products in the backlog:

- Residential furnaces and boilers

- Mobile home furnaces

- Small furnaces

- Residential water heaters

- Direct heating equipment

- Pool heaters

- Distribution transformers, MV dry-type and liquid-immersed

- Electric motors (1-200 hp)

- Incandescent reflector lamps

- Fluorescent lamps

- Incandescent general service lamps

- Fluorescent lamp ballasts

- Residential dishwashers

- Ranges and ovens (gas and electric) and microwave ovens

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- Residential clothes dryers

- Room air conditioners

- Packaged terminal air conditioners and heat pumps

- Residential central air conditioners and heat pumps

The Department will also issue determinations for small electric motors and highintensity discharge lamps in fiscal years 2006 and 2010, respectively. Test procedure

final rules will be issued for distribution transformers and residential central air

conditioners and heat pumps in fiscal years 2006 and 2007, respectively.

Additionally, while addressing the aforementioned products in the backlog, the

Department will meet all of the new rulemaking requirements in EPACT 2005. The

EPACT 2005 standards final rules that will be issued before June 2011 cover:

- Ceiling fan light kits (other than those with standards prescribed by EPACT

2005)

- Residential dehumidifiers

- Commercial clothes washers

- Refrigerated bottle or canned beverage vending machines

- Ice-cream freezers; self-contained commercial refrigerators , freezers, and

refrigerator-freezers without doors; and remote-condensing commercial

refrigerators, freezers and refrigerator -freezers

With regard to the rulemaking for ceiling fan light kits (other than those with standards

prescribed by EPACT 2005), it is not feasible to complete a rulemaking by the EPACT

2005 final rule deadline of January 1, 2007. Since EPACT 2005 includes a standard that

is scheduled to go into effect on January 1, 2009, in the event that the Department cannot

meet the deadline, the Department plans to adopt and codify the EPACT 2005 standard in

fiscal year 2007, conserving Departmental resources for more complex rulemakings with

higher potential benefits.

Also in accordance with EPACT 2005, a determination will be issued in fiscal year 2008

for battery chargers and external power supplies. Regarding test procedures required by

EPACT 2005, the Department is scheduled to issue the battery chargers and external

power supplies test procedures in fiscal year 2007, a commercial refrigeration test

procedure in fiscal year 2008 , and will also codify the 11 test procedures prescribed by

the legislation in fiscal year 2006.

The Department's rulemaking history and approach moving forward are summarized

below and described in detail in this report . The Department's Appliance Standards

Program is conducted pursuant to Title III, Part B of the EPCA. (42 U.S.C. 6291-6309)

In 1987, the National Appliance Energy Conservation Act amended EPCA to establish

national efficiency standards for certain appliances . (National Appliance Energy

Conservation Act, Pub. L. 100-12 (1987)) As amended, EPCA also added a schedule for

DOE to follow to periodically review and update these standards. The products covered

by these standards included refrigerators and freezers, room air conditioners, central air

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conditioners and heat pumps, water heaters, furnaces, dishwashers, clothes washers and

dryers, direct heating equipment, ranges and ovens, pool heaters, and fluorescent lamp

ballasts. The statute requires the Secretary in conducting the rulemakings to set standards

at levels that achieve the maximum improvement in energy efficiency that is

technologically feasible and economically justified, based upon the consideration and

weighting of six factors specified in the legislation, plus other relevant factors.

The Energy Policy Act of 1992 (EPACT 1992) further amended EPCA to expand the

coverage of the standards program to include certain commercial and industrial

equipment, including commercial heating and air-conditioning equipment, water heaters,

certain incandescent and fluorescent lamps, :and electric motors. (Energy Policy Act of

1992, Pub. L. 102-486 (1992)) EPACT 1992 also called for determination analyses for

small electric motors, high-intensity discharge lamps, and distribution transformers.

Finally, EPACT 1992 established maximum water flow-rate requirements for certain

plumbing products and provided for voluntary testing and consumer information

programs for office equipment, luminaires, and windows.

EPACT 2005 significantly expands and changes the Department's regulatory

requirements in this area. EPACT 2005 establishes numerous prescriptive standards for

many types of products and expands the Department's authority to regulate other product

areas. In addition, EPACT 2005 directs DOE to develop standards for beverage vending

machines, and for certain kinds of ceiling fan light kits. DOE must also determine

whether to set standards for battery chargers and external power supplies. DOE is given

the authority to regulate ceiling fan motor energy use, furnace fans, and products that

serve more than one function. It also directs DOE to set standards for ice-cream freezers;

self-contained commercial freezers, refrigerator-freezers without doors; and remote

condensing commercial refrigerators, freezers, and refrigerator-freezers, and gives DOE

authority to set standards for other similar products and for other ice makers. In addition,

DOE is required to publish final rules to determine whether to amend the dehumidifier

standard, the commercial clothes washer standard, and the automatic ice maker standard.

While the Appliance Standards Program has produced many benefits resulting from past

rulemakings, the Department has accumulated a large backlog of rulemakings that were

not accomplished in the time allotted by Congress. Rulemaking delays have plagued the

Appliance Standards Program almost since its inception. When the Department

attempted to accelerate its rulemaking pace in the early 1990s, the Department's

decision-making and supporting analysis were questioned by Congress and a one-year

moratorium was imposed on the issuance of new or amended standards. During that

year, the Department worked with stakeholders to re-invent the standards rulemaking

process, resulting in the 1996 Process Rule. 61 FR 36974 (July 15, 1996). The Process

Rule committed the Department to more thorough analysis of the likely impacts of

efficiency standards under consideration and to earlier and more extensive consultations

with stakeholders. The Process Rule also committed the Department to an annual and

public priority-setting process designed to focus the Department's resources on those

efficiency standards that were likely to produce the largest benefits. The priority-setting

process explicitly established low, medium, and high priorities for the covered products.

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This public priority-setting process relegated a number of long-overdue efficiency

standards to a low-priority status. The Department indicated that these low-priority

standards would not receive resources over the coming year. In fact, no further resources

were committed to low-priority rulemakings.

In the ensuing ten years, the Department issued updated efficiency standards for a

number of important product categories and completed the analytical work necessary to

establish efficiency standards for others. While producing much improved analysis and

achieving notable success in spurring joint stakeholder recommendations, the Department

has still not been able to address the backlog of rulemaking requirements and remains far

behind in its rulemaking obligations. Despite efforts to improve the process, even high

priority rulemakings have continued to take much longer than planned.

In this report, the Department identifies several causes for its inability to accelerate the

rulemaking pace and reduce the backlog. The report notes that the Process Rule, though

credited with improved stakeholder participation, better analysis, joint stakeholder

recommendations, and the completion of a number of major rulemakings, also had less

desirable consequences on the Department's backlog of overdue efficiency standards.

The priority-setting process of the Process Rule openly and intentionally focused

resources on a few major rulemakings with large potential benefits but essentially

stopped work on a number of other products, even though the statutory deadlines for

Departmental action had already passed. Stakeholders actively took part in the priority

decision making process that led to delayed rulemakings. The open nature of the new

process has also inadvertently introduced delays in the rulemaking schedules as the

Department's policy of sharing draft analysis and accepting stakeholder comments on an

ongoing basis has resulted in an inefficient and disrupted analysis and decision-making

process. Finally, many aspects of the Process Rule that made the rulemaking analyses

more robust have also made them more voluminous, complex, and time-consuming.

This report also identifies statutory requirements that lengthen the standards publication

schedules. For example, mandatory time for external review and comment on major

rulemakings takes 11 months of time during just one standards setting rulemaking. Other

statutory requirements for analytical rigor and completeness require sophisticated and

lengthy analysis. With the best of intentions, the 1996 Process Rule established a goal

that DOE could meet all of these requirements and complete a standards rulemaking in 36

months.

The Department has not managed these complexities well, and has produced only one

rule within the 36-month timetable, the residential central air conditioner rule. In

addition to the unintended consequences of the Process Rule and its explicit prioritization

of many products as low priority, the report also documents several deficiencies in the

review and concurrence process that have contributed to delays. The time used to review

and concur on the rulemaking analysis, supporting documents, and Federal Register

notices represents a significant portion of the rulemaking schedule. While some of these

reviews are by other entities such as the Office of Management and Budget (OMB), the

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Department of Justice (DOJ) and the Small Business Administration (SBA), the major

delays have occurred internally within the Department.

Recognition of these complexities and the resultant delays are now receiving significant

senior management attention . New management processes, including review and

reporting requirements, have been instituted. Productivity improvements in the

rulemaking program are taking effect and will significantly increase the number of new

standards to be issued. The Department is committed to improving the standards

rulemaking process. After extensive review of the root causes of the rulemaking delays,

this report documents the Department's recent and forthcoming process improvements

that will address these delays . These process improvements will increase the program's

standards output by increasing the number of products in the active rulemaking process,

by bundling multiple products into single rulemakings, by shortening the time to

complete successive rulemakings, and by implementing other productivity-enhancing

techniques.

Even as the Department implements these process improvements to increase output, it

recognizes that work cannot begin on all requirements simultaneously . Rulemakings will

be scheduled in consideration of statutory requirements and other factors. This was the

focus of a public meeting held by the Department on November 15, 2005 . In the past, the

Process Rule priority -setting process emphasized potential energy savings. The

Department has established new schedules to address the backlog in standards

rulemakings and to meet the requirements of EPACT 2005. In an effort to meet these

schedules and expeditiously clear the backlog , the Department's schedule has no

provision until after fiscal year 2011 for optional rulemakings or rulemakings initiated in

response to future petitions . Prior to fiscal year 2012, the Department shall neither

consider rulemakings in response to stakeholder petitions , nor will it conduct rulemakings

on products where it is authorized but not statutorily required to do so. As examples, the

Department will not consider starting rulemakings for residential refrigerators. or

residential furnace fans until fiscal year 2012.

These multi -year schedules are based on the statutory requirements and are designed to

be firm and achievable . They incorporate many of the public comments received on the

Department 's proposed approaches and reflect the adoption of all the new and recently

implemented process improvements. Implementation of these schedules, which the

Department has already initiated, will result in expeditious completion of the currently

active rulemakings and compliance with all deadlines for the newly covered EPACT

2005 products. The schedules also address all backlog rulemakings . The schedules

reflect a substantial commitment of resources by the Department that, if approved by

Congress, will enable the Department to produce at least one new or amended standard

for all products in the backlog no later than June of 2011 , that is, just five years from the

issuance of this plan.

The Department has a very full regulatory agenda, and is working aggressively to meet

its rulemaking requirements . The technical and economic analysis must be thorough and

accurate in order to set standards levels that are technologically feasible, economically

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justified and will result in significant conservation of energy, as required by statute. The

Department firmly believes that accelerating rulemaking output beyond what is proposed

in this plan would require compromises on the analytical work that could lead to poor

quality analysis and result in overly contentious and potentially flawed rulemakings. In

this manner, an overly accelerated schedule could lead to challenges to the Department's

regulations and ultimately slow the implementation of the standards.

Issuing one standard for every product in the backlog in five years, simultaneous with

implementation of the new requirements of EPACT 2005, will be challenging but

achievable. The Department has already begun in fiscal year 2006 to implement the

accelerated schedules.

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Introduction

This report was prepared in response to section 141 of the Energy Policy Act of 2005

(EPACT 2005), Pub. L. 109-58, which pertains to the Department of Energy's (DOE or

Department) failure to comply with deadlines for new or amended energy conservation

standards. This report also satisfies the requirement of the House Appropriations Committee

for a report on the Appliance Standards Program.

Appliance and equipment standards are clearly one of the Federal Government's most

effective energy-saving programs. The Appliance Standards Program is large and complex,

and is having a positive impact. Federal residential energy efficiency standards that have

gone into effect since 1988, or will take effect by the end of 2007, will save a cumulative

total of 34 quads (quadrillion (1015) British thermal units (Btu)) of energy by the year 2020,

and 54 quads by 2030 (in 2004, total U.S. consumption of primary energy was about 100

quads). Roughly 75 percent of these savings are attributable to efficiency standards for just

four product classes (refrigerators, clothes washers, water heaters, and central air

conditioners), with the other regulated residential product classes accounting for the

remaining 25 percent. The estimated cumulative net present value of consumer benefit

amounts to $93 billion by 2020, and grows to $125 billion by 2030, while the cumulative

cost of DOE's program to establish and implement these standards is in the range of $200-

250 million.' The benefits are even greater when the effects of energy efficiency standards

for commercial products are taken into consideration.

The Appliance Standards Program is strongly supported by the Administration. The

Administration's National Energy Policy explicitly supports the Appliance Standards

Program, and includes recommendations that higher standards be set for existing covered

products where technologically feasible and economically justified, and that the program

should be expanded to include additional appliances where technologically feasible and

economically justified. The Department is committed to ensuring that the program is

effectively administered and implemented.

Chapter 2 of the report presents a history of the Appliance Standards Program and the

Process Rule adopted in 1996 that gives the reader a full understanding of the historical

context and statutory requirements for the program.

Chapter 3 summarizes all rulemaking activities and requirements under existing statutes,

including EPACT 2005. This section will allow the reader to appreciate the full scope and

complexity of the requirements . This chapter documents significant rulemaking activity that

has occurred and is ongoing.

' "Realized and Prospective Impacts of U.S. Energy Efficiency Standards for Residential Appliances: 2004

Update," S. Meyers, J. McMahon, M. McNeil, Lawrence Berkeley National Laboratory, May 2005, LBNL56417.

2 National Energy Policy: Report of the National Energy Policy Development Group, Chapter 4, May 2001.

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Chapter 4 provides a detailed description of the Department's rulemaking processes and the

statutory requirements for conducting rulemakings.

Chapter 5 describes the reasons for the delays in completing rulemakings, including the

unintended consequences of the Process Rule that introduced delays into rulemaking

activities. In short, this chapter lays out the problems and issues facing the Department that

must be addressed.

Chapter 6 presents the Department's plan for addressing the problems and issues identified in

Chapter 5, and explains several productivity enhancements that will be used to significantly

increase the production of energy conservation standards.

Chapter 7 presents and explains the multi-year schedule the Department will follow as it

addresses the backlog and implements the requirements of EPACT 2005. This chapter

documents the public process and stakeholder comments that helped shape the Department's

schedules. Chapter 7 also discusses the resource requirements needed to implement the

multi-year schedules.

Appendix A provides a status report on the three high-priority rulemaking activities as

requested by the Appropriations Committee.

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2 History of the Appliance Standards Program

The Department of Energy's Appliance Standards Program is conducted pursuant to Title III,

Part B, of the Energy Policy and Conservation Act (EPCA). (Pub. L. 94-163) EPCA

established test procedures, conservation targets (followed by standards if targets are not set),

and labeling requirements for certain major household appliances. EPCA also provided for

DOE to establish test procedures for evaluating compliance by manufacturers with applicable

efficiency standards. In 1978, DOE was authorized to set mandatory energy efficiency

standards for 13 household appliances and products under the National Energy Conservation

and Policy Act (NECPA). (Pub. L. 95-619)

In 1987, EPCA was amended and updated by the National Appliance Energy Conservation

Act (NAECA), which superseded existing State requirements . (Pub. L. 100-12) The

products covered by these standards included refrigerators and freezers , room air

conditioners, central air conditioners and heat pumps, water heaters, furnaces, dishwashers,

clothes washers and dryers, direct heating equipment, ranges and ovens, and pool heaters.

NAECA also contains requirements and deadlines for updating the initial standards through

rulemakings conducted by DOE using criteria included in the law. Fluorescent lamp ballasts

were added by an amendment in 1988. In conducting the rulemakings to update the

standards, the Secretary is to set standards at levels that achieve the maximum improvement

in energy efficiency that is technologically feasible and economically justified. NAECA

1988 added ballasts to the statutory list of covered products . (Pub. L. 100-357)

The Energy Policy Act of 1992 (EPACT 1992) further amended EPCA to expand the

coverage of the standards program to include certain industrial equipment, including

commercial heating and air-conditioning equipment, water heaters, certain incandescent and

fluorescent lamps, distribution transformers, and electric motors. (Pub. L. 102-486) EPACT

1992 established maximum water flow-rate requirements for certain plumbing products and

provided for voluntary testing and consumer information programs for office equipment and

luminaires. EPACT 1992 also established a labeling program for commercial products. It

also allowed for the future development of standards for many other products.

in September 1995, DOE announced a formal effort to consider further improvements to the

process used to develop appliance efficiency standards. On July 15, 1996, the Department

published Procedures for Consideration of New or Revised Energy Conservation Standards

for Consumer Products, which established guidelines for DOE regarding the consideration

and promulgation of new or amended appliance efficiency standards under EPCA. 61 FR

36974 (July 15, 1996).

EPACT 2005 significantly expands and changes the Department 's regulatory requirements in

appliance standards. EPACT 2005 establishes numerous prescriptive standards for many

types of products and expands the Department's authority to regulate other product areas.

New standards are legislated for ceiling fan light kits, dehumidifiers , unit heaters, torchiere

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lamps, medium base compact fluorescent lamps, fluorescent lamp ballasts, mercury vapor

lamp ballasts, illuminated exit signs, traffic signals and pedestrian signals, commercial prerinse spray valves, low voltage dry-type distribution transformers, commercial package airconditioning and heating equipment; commercial refrigerators, freezers, and refrigeratorfreezers; automatic commercial ice makers; and commercial clothes washers.

In August 1995, Congress passed the Department of the Interior and Related Agencies

Appropriations Act of 1996 (H.R. 1977). Although not signed into law, this act stated that

none of the funds appropriated could be used by the Department to propose, issue, or

prescribe any new or amended efficiency standards.

In September 1995, the Department announced a formal effort to consider further

improvements to the process used to develop appliance efficiency standards, calling on

energy efficiency groups, manufacturers, trade associations, State agencies, utilities and other

interested parties to provide input to guide the Department. On July 15, 1996, the

Department published Procedures for Consideration of New or Revised Energy Conservation

Standards for Consumer Products (hereinafter referred to as the Process Rule). 61 FR 36974.

The Process Rule set forth guidelines for developing efficiency standards. These guidelines

are designed to provide for greater and more productive interaction between the Department

and interested parties throughout the process. They are also designed so that key analyses are

performed earlier in the process, with early opportunities for public input to, and comment

on, the analyses. The guidelines are consistent with the procedural requirements of law, but

add some important steps to enhance the process. These improvements can be summarized

as follows.

® Provide for early input from stakeholders

• Increase the predictability of the rulemaking timetable

• Reduce the time and cost of developing standards

® Increase the use of outside technical expertise

• Eliminate problematic design options early in the process

® Conduct thorough analyses of impacts

® Use transparent and robust analytical methods

• Fully consider non-regulatory approaches

• Articulate policies to guide the selection of standards

® Support efforts to build consensus on standards

® Establish an annual priority-setting process to focus available resources on those

efficiency standards likely to produce the greatest benefits

The process was designed with stakeholders in mind and with the intent to enhance the

productivity of the program through improved communication. Collaboration and interaction

with stakeholders has enhanced the quality of the resulting rules, typically by way of

additional analysis conducted as issues are raised.

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The priority-setting process in place for the last nine years originated in the Process Rule and

was implemented annually. This process was developed in response to an explicit

recognition by the Department and affected stakeholders that sufficient resources were not

available to permit work simultaneously on all efficiency standards rulemakings mandated by

statute. As part of this priority-setting process, the Department analyzed the likely impacts of

all pending efficiency standards rulemakings and, based on this analysis, categorized each

rulemaking as high, medium, or low priority. High priority rulemakings would receive the

bulk of all resources appropriated to the program for the coming fiscal year. Medium priority

rulemakings would receive some resources, sufficient for the completion of certain

preparatory analyses. Low-priority rulemakings would receive no resources. The

Department's analysis and priority rankings of pending rulemakings were made available to

the public and comments were solicited. Every two years, a public meeting was held to

discuss this priority-setting process and to solicit stakeholder input. During the nine years

that this priority-setting process was followed, it enjoyed widespread support from energy

efficiency advocates, product manufacturers, and other stakeholders. It focused

Departmental resources on the completion of a number of efficiency standards that are

expected to produce very large energy savings and economic benefits, including

refrigerators, clothes washers, central air conditioners, water heaters, fluorescent lamp

ballasts, and distribution transformers. However, it also resulted in the postponement of

further work on many efficiency standards that could also have produced some benefits,

including direct heating equipment, pool heaters, dishwashers, and others.

U.S. Department of Energy 5

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

3 Rulerna king Activities and Statutory Dates

This section of the report summarizes all of the Department's rulemaking responsibilities and

the program's progress towards meeting its goals.

The four tables that follow provide the appliance and equipment standards mandated by

EPCA as amended, including the provisions in EPACT 2005. The products are divided into

tables based on the authorizing legislation. Tables I and 2 address the statutory requirements

from NAECA (and NAECA 1988) and EPACT 1992, respectively. Table 3 addresses the

statutory requirements of EPACT 2005, and Table 4 addresses products for which EPACT

2005 grants DOE statutory authority to regulate but does not require DOE to conduct a

rulemaking.

Tables 1, 2, and 3 identify the original standards dates (for standards prescribed by statute)

and the dates set by law for all updates and revisions. In cases where DOE has completed a

rulemaking, the actual dates are shown. Legislation generally requires that two updates to a

statutorily prescribed standard be completed. If a standard is statutorily prescribed, any

additional mandated rulemakings are referred to by DOE as updates or revisions. However,

where no standard is prescribed by the statute, the first update column contains the initial

rulemaking by DOE and the second update column contains the first revision to the initial

rulemaking (as clearly indicated by the parenthetical notes in the table column headings).

The following tables also indicate the program's progress in meeting its statutory

requirements. Blank cells under a statutory requirement heading indicate the absence of a

statutory requirement. Under the actual column heading, those items in the backlog are

clearly designated as such.

U.S. Department of Energy 6

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Table I Appliance and Equipment Standards Required by NAECA

Appliancc and Equipment Standards Required by NAECA

First Update Second Update

(or initial if standard not specified by statute) (or first update if no initial standard)

Product

Standard

Specified in

Standard

Effective Statutory

Actual

Statutory

Actual

Statute? Date

Requirement Requirement

Final Effective Final Effective Final Effective Final Effective

Rule Date Date Rule Date Date Rule Date Date Rule Data Date

Refrigerators, Refrigerator-Freezers, and Yes January 1990 July 1989 January November January 5 years 5 years April 1997 July 2001

Freezers 1993 1989 1993 after after

[Residential] previous previous

final rule effective

(Nov. date

1994) (January

1998)

Room Air Conditioners Yes January 1990 January January September October 5 years 5 years Backlog Backlog

[Residential] 1992 1995 1997 2000 after after

previous previous

final rule effective

(September date

2002) (October

2005)

Central Air Conditioners and Heat Pumps Yes January 1992 January January January January January January Backlog Backlog

[Residential] (split), 1994 1999 2001 2006 2001 2006

January 1993 (SEER and (SEER),

(single- HSPF) January

package) 2002

(HSPF)

Water Heaters Yes January 1990 January January January January January January Backlog Backlog

[Residential] 1992 1995 2001 2004 2000 2005

Pool Heaters Yes January 1990 January January Backlog Backlog January January Backlog Backlog

[Residential] 1992 1995 2000 2005

Direct Heating Equipment Yes January 1990 January January Backlog Backlog January January Backlog Backlog

[Residential] 1992 1995 2000 2005

Furnaces and Boilers Yes January 1992 January January Backlog, Backlog January January

[Residential] 1994 2002 ANOPR 2007 2012

published

July 2004

Small Furnaces, <45 kBtu/hr No NA January January November January January January Backlog, Backlog

[Residential] 1989 1992 1989 1992 1994 2002 ANOPR

published

in 2004

U.S. Department of Energy 7

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Appliance and Equipment Standards Required by NAECA

First Update Second Update

S

(or initial if standard not specified by statute) (or first update if no initial standard)

Product

tandard

Specified in

Standard

Effective Statutory

Actual Statutory

Actual

Statute? Date Requirement Requirement

Final Effective Final Effective Final Effective Final Effective

Rule Date Date Rule Date Date Rule Date Date Rule Date Date

Mobile Home Furnaces Yes September January January Backlog, Backlog January January Backlog Backlog

[Residential] 1990 1992 1994 ANOPR 1994 2002

published

in 2004-

Dishwashers Yes January 1988 January January May 1991 May 1994 5 years 5 years Backlog Backlog

[Residential] 1990 1993 after after

previous previous

final rule effective

(May 1996) date (May

1999)

Clothes Washers Yes January 1988 January January May 1991 May 1994 5 years 5 years January January

[Residential] 1990 1993 after after 2001 2004

previous previous

final rule effective

(May 1996) date (May

1999)

Clothes Dryers Yes January 1988 January January May 1991 May 1994 5 years 5 years Backlog Backlog

[Residential] 1990 1993 after after

previous previous

final rule effective

(May 1996) date (May

1999)

Ranges and Ovens and Microwave Ovens Yes January 1990 January January September October January January Backlog Backlog

[Residential] 1992 1995 1998 1998 1997 2000

(electric (electric

products products

only) only)

Backlog Backlog

(for gas (for gas

products) products)

Fluorescent Lamp Ballasts Yes 1990/ 1991 January January September April 2005 5 years 5 years Backlog Backlog

[Commercial] 1992 1995 2000 after after

previous previous

final rule effective

(September date (April

2005) 2010)

U.S. Department of Energy 8

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Table 2 Appliance and Equipment Standards Required by EPACT 1992

Ap pliance and Equipment Standards Required by EPACT 1992

First Update Second Update

(or initial if standard not specified by statute) (or first update if no initial standard)

Product

Standard

Specified in

Standard

Effective Statutory

Actual Statutory

Actual

Statute? Date Requirement Requirement

Final Effective Final Effective Final Effective Final Effective

Rule Date Date. Rule Date Date Rule Date Date Rule Date Date

Incandescent General Service Lamps No NA 3.5 years 3 years Backlog Backlog April 2002 April 2005 Backlog Backlog

[Residential] after FTC after final

rule issued rule (Nov.

(Nov. 2000)

1997)

Fluorescent Lamps Yes April 1994 / April 1997 April 2000 Backlog Backlog April 2002 April 2005 Backlog Backlog

[Commercial] October 1995

Incandescent Reflector Lamps Yes October 1995 April 1997 April 2000 Backlog Backlog April 2002 April 2005 Backlog Backlog

[Commercial]

Electric Motors (1-200 hp) Yes October 1997 October October Backlog Backlog 2 years 5 years

[Commercial] / October 1999 / 2002/ after after

1999 October October effective effective

2001 2004 date of date of

previous previous

standard standard

Commercial Air-Cooled Unitary AC & ASHRAE 1992 Triggered NA Withdrawn NA

HP. 65-240 kBtu/hr 90.1 (1989) by Oct.

1999 Preempted

revision of hr EPACT

ASHRAE 2005

90.1

Single-Packaged Vertical Units (SPVU); ASHRAE 1992 Revision has not been triggered by ASHRAE.

Commercial Oil- and Gas-Fired 90.1

Packaged Boilers; Tankless Gas-Fired (1989)

Instantaneous Water Heaters

Packaged Terminal Air Conditioners and ASHRAE 1992 Backlog.

Heat Punips 90.1 ASHRAE revised Standard 90.1 in October 1999.

(1989)

There are no specific legal deadlines for final rules and effective dates. IfASHRAE revises Standard 90.1 again,

DOE will need to update date standards again.

Commercial Air-Cooled AC & HP, 3- ASHRAE 1992 Will adopt new ASHRAE standard after ASHRAE acts.

phase, <65 kBtu/hr 90.1

(1989) There are no specific legal deadlines for final rules and effective dates. If ASHRAE revises Standard 90.1 again,

DOE will need to update standards again.

U.S. Department of Energy 9

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Appliance and Equipment Standards Required by EPACT 1992

First Update Second Update

(or initial if standard not specified by statute) (or first update if no initial standard)

Product

Standard

Specified in

Standard

Effective Statutory

Actual Statutory

Actual

Statute:' Date Requirement Requirement

Final Effective Final Effective Final Effective Final Effective

Rule Date Date Rule Date Date Rule Date Date Rule Date Date

Commercial Warm Air Furnaces ASHRAE 1992 Triggered NA January October ASH RAE revised Standard 90.1 in October 1999. There

90.1 by Oct. 2001 2003 are no specific legal deadlines for final rules and

(1989) 1999 effective dates. If ASHRAE revises Standard 90.1

revision of - again, DOE will need to update standards again.

ASHRAE

90.1

Commercial Water-Cooled AC & Water- ASHRAE 1992 Triggered NA January October ASHRAE revised Standard 90.1 in October 1999. There

Source HP 90.1 (1989) by Oct. 2001 2003 are no specific legal deadlines for final rules and

1999 effective dates. If ASHRAE revises Standard 90.1

revision of again , DOE will need to update standards again.

ASHRAE

90.1

Commercial Water Heaters ASHRAE 1992 Triggered NA January October ASHRAE revised Standard 90.1 in October 1999. There

90.1 (1989) by Oct. 2001 200, are no specific legal deadlines for final rules and

1999 effective dates. If ASHRAE revises Standard 90.1

revision of again, DOE will need to update standards again.

ASHRAE

90.1

Plumbing Products (Showerheads. Yes January 1994 12 months 12 months ASME/ 12 months 12 months

Faucets, and Toilets/ Urinals) after after final ANSI after after final

[Commercial] changes to rule standards changes to rule

ASME/ have not ASME/

ANSI been ANSI

standards revised standards

or 5 years or 5 years

after after

previous previous

standard standard

Medium-voltage Dry-type and liquid- No NA October October Backlog, Backlog

immersed Distribution Transformers 1996, if 1999, if determine-

[Conmmerci al] positive positive tiny: made

delerininn- deter,nina- in October

Lion lion 1997.

ANOPR

published

Jul 2004.

U.S. Department of Energy 10

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Ap pliance and Equipment Standards Required by EPACT 1992

First Update Second Update

(or initial if standard not specified by statute) (or first update if no initial standard)

Product

Standard

Specified in

Standard

Effective Statutory Actual Statutory Actual

Slatutc° Date Requirement Requirement

Final Effective Final Effective Final Effective Final Effective

Rule Date Date Rule Date Date Rule [)ate Date Rule Date Date

HIT) Lamps No NA October October Backlog, Backlog,

[Commercial] 1996, if 1999, if if positive if positive

positive positive determina- determinadetermi770- deter177 in n- Pion tion

1 1077 Lion

Small Electric Motors No NA October October Backlog, Backlog,

[Commercial] 1996, if 2001 / ifpositive if positive

positive October deternrina- deferminadelermina- 2003, if tion Lion

tion positive

deterrninntion

U.S. Department of Energy 11

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Table 3 Appliance and Equipment Standards Required by EPACT 2005

Appliance and Equipment Standards Required by UPACT 200 5

First Update Second Update

Standard Standard (or initial if standard not specified by statute) (or first update if no initial standard)

Product Specified in Effective

Statute? Date Statutory Requirement Statutory Requirement

Final Rule Date Effective Date Final Rule Date Effective Date

Ceiling Fans Yes January 2007

[Residential]

Ceiling Fan Light Kits Yes January 2007 January 2007 (for those January 2009

[Residential] lighting kits not covered

by EPACT 2005)

Compact Fluorescent Lamps. Medium Yes January 2006

Base

[Residential]

Dehumidifiers Yes October 2007 October 2009 October 2012

[Residential]

Package Air-Conditioning and Heating Yes January 2010

Equipment. Small

[Commercial]

Package Air-Conditioning and Heating Yes January 2010

Equipment, Large

[Commercial]

Package Air-Conditioning and Heating Yes January 2010

Equipment. Very Large (240-760

kBtu/hr)

[Commercial]

Unit Heaters Yes August 2008

[Commercial]

Automatic Ice Makers Yes January 2010 January 2015 3 to 5 years after final rule 5 years after previous rule 3 to 5 years after final rule

[Commercial] date effective date date

(Jan. 2023 / Jan. 2025)

Sc] f Contained Commercial Yes January 2010

Refrigerators, Freezers, and RefrigeratorFreezers with Doors for Holding

Temperature Applications

[Commercial]

Self-Contained Commercial Refrigerators Yes January 2010

with Doors for Pull-Down Temperature

Applications

[Commercial]

U.S. Department of Energy 12

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Appliance and Equipment Standards Required by EPACT 200 5

First Update Second Update

Standard Standard (or initial if standard not specified by statute) (or first update if' no initial standard)

Product Specified in Effective

Statute? Date Statutory Requirement Statutory Requirement

Final Rule Date Effective Dale Final Rule Date Effective Date

Ice-Cream Freezers, Self-Contained No NA January 2009 January 2012 January 2013* January 2016

Commercial Refrigerators, Freezers, and (or January 2018 if 3-year

Refrigerator-Freezers without doors, and compliance period is not

remote-condensing commercial adequate)*

refrigerators. freezers. and refrigeratorfreezers

[Commercial]

Refrigerated Bottle or Canned Beverage No NA August 2009 August 2012

Vending Machines

[Commercial]

Clothes Washers Yes January 2007 January 2010 January 2013 January 2015 January 2018

[Commercial]

Distribution Transformers, Low-Voltage Yes January 2007

Dry-Type

[Commercial]

Fluorescent Lamp Ballasts Yes 2009/2010

[Commercial]

Illuminated Exit Signs Yes January 2006

[Commercial]

Mercury Vapor Lamp Ballasts Yes January 2008

[Commercial] (Product Ban)

Torchieres Yes January 2006

[Commercial]

Traffic Signal Modules and Pedestrian Yes January 2006

Modules

[Commercial]

Prerinse Spray Valves Yes January 2006

[Commercial]

*Second update required with final rule due 3 to 5 years after the effective date of the first update.

U.S. Department of Energy 13

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Table 4 Appliance and Equipment Standards Authorized but not Required by EPACT 2005*

Appliance and Equipment Standards Authorized but not Required by EPACT 2005*

First Update Schedule Second Update Schedule

Product Note Final Rule Final Rule

Requirement

Effective Date

Requirement

Effective Date

Battery Chargers and External Power Will develop if determination

Supplies notice (due Aug. 2008) is No deadline

[Residential] positive -

Ceiling Fans (other than design standard)

Optional standard No deadline

[Residential]

Ceiling Fan Light Kits Optional standard Possible after January At least 2 years after final

[Residential] 2010 rule date

Combination Appliances Optional standard No deadline [Residential]

Furnace Fans Optional standard No deadline [Residential]

Automatic Ice Makers, Other Types

Optiional standard 5 years after optional 3 to 5 years after final rule 5 years after first 3 to 5 years after final rule

[Commercial] rulemaking takes effect date amendment takes effect date

Commercial Refrigerators, Freezers, and Optional standard No deadline

Refrigerator-Freezers, Other Types

* This table also includes the contingent rulemaking for battery chargers and external power supplies.

U.S. Department of Energy 14

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

3.2.1 Backlog and Pre-EPACT 2005

The backlog consists of past statutory requirements, where the deadline has passed, from

NAECA or EPACT 1992. The backlog may be enumerated in terms of products or standards.

As may be observed from the preceding tables, there are currently 18 products with standards in

the backlog. Since 7 of the products are 2 standards behind, there are 25 standards in the backlog

(18 plus 7). In addition to these 25 standards in the backlog, there are two products with

determination analyses in the backlog - high-intensity discharge lamps and small electric motors.

Of the 25 backlogged standards , 4 standards rulemakings are active . The four standards actively

being developed are: furnaces and boilers, small furnaces less than 45 kBtu/hr, mobile home

furnaces, and distribution transformers (MV dry-type and liquid immersed). The furnaces and

boilers standard , the small furnaces standard , and the mobile home furnaces standard have been

consolidated into a single rulemaking.

Of the 25 backlogged standards, there are 13 additional standards represented by products that

have two standards in the backlog. There are 7 products that are 2 standards cycles behind

(representing 13 additional backlogged standards instead of 14 additional backlogged standards

because mobile home furnaces are discussed above). The seven products that have two

backlogged standards cycles are direct heating equipment, pool heaters, mobile home furnaces,

fluorescent lamps, incandescent general service lamps, incandescent reflector lamps, and ranges

and ovens and microwave ovens (only gas products have two standard cycles in the backlog).

Additionally, two products - electric motors (1-200 hp) and furnaces and boilers - are

backlogged products with two required standards updates, but the second cycles for these two

products are not technically in the backlog and are therefore not included in the count of 25

backlogged standards. The second cycle for electric motors is linked to completion of the first

cycle, while the second furnace and boiler cycle is not due until January 2007.

There are 8 additional products with standards in the backlog which brings the total number of

backlogged standards to 25 (4 plus 13 plus 8): packaged terminal air conditioners and heat

pumps, residential central air conditioners and heat pumps, room air conditioners,, residential

water heaters, electric motors (1-200 hp), fluorescent lamp ballasts, residential dishwashers, and

residential clothes dryers.

In addition to the backlogged standards discussed above, there are 12 additional products for

which DOE must or may need to issue standards based upon pre-EPACT 2005 requirements,

some of which are contingent upon DOE decisions or industry actions. These standards are

not in the backlog. Three ASHRAE products in this category are: air conditioners and heat

pumps less than 65 kBtu/hr (3-phase), oil- and gas-fired packaged boilers, and tankless gas-fired

instantaneous water heaters. Currently, DOE is waiting for ASHRAE to establish new standards

for air conditioners and heat pumps less than 65 kBtu/hr (3-phase). Four other ASHRAE

products where action could be triggered in the future are single package vertical air conditioners

and heat pumps, warm air furnaces. water-cooled air conditioners and water-source heat pumps,

U.S. Department of Energy 15

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

and commercial water heaters. Residential furnaces and boilers and electric motors (1-200 hp)

were both mentioned above. There are second updates for these two products that are not

backlogged, but must be completed. Three additional standards that DOE may need to issue are

for plumbing products (contingent upon American Society of Mechanical Engineers (ASME)

/American National Standards Institute (ANSI) action), small electric motors, and high-intensity

discharge lamps. For the latter two, standards only need to be issued if the forthcoming

determinations are positive.

There are a few test procedure rulemakings and issues that need to be addressed for pre-EPACT

2005 products. The test procedure for distribution transformers (MV dry-type and liquidimmersed) needs to be completed. If the determination analysis for either high-intensity

discharge lamps or small electric motors is positive, test procedures will be necessary. The

residential central air conditioner and heat pump test procedure needs revision, while other

existing test procedures are not currently able to address rapidly changing technologies such as

embedded chipsets and smart logic circuits. Finally, there is a test cloth issue that needs

resolution with the clothes washer test procedure.

3.2.2 EPA CT 2005 '

EPACT 2005 prescribed standards for 19 products as shown in Table 3. If ceiling fans are

grouped with ceiling fan light kits, the three packaged air-conditioning products are grouped

together, and the two commercial refrigeration products for which EPACT 2005 prescribes

standards are grouped together, there are 15 prescribed standards. The Department issued a

final rule en masse for these 15 prescribed standards on October 18, 2005. 70 FR 60407

(October 18, 2005).

Additionally, as shown in Table 3, EPACT 2005 also requires DOE to develop ten standards

including initial standards for commercial refrigeration products (two initial standards). EPACT

2005 also sets up a determination analysis for battery chargers and external power supplies (due

August 8 , 2008), with a final standard to be subsequently issued if the determination is positive

(see Table 4). Table 4 also lists several optional activities that EPACT 2005 authorizes DOE to

conduct.

Although not shown in the previous tables, EPACT 2005 also prescribes I I test procedures and

requires DOE to develop three test procedures. The 1 I prescribed test procedures are for ceiling

fan light kits, dehumidifiers, compact fluorescent lamps, unit heaters, automatic commercial ice

makers, commercial pre-rinse spray valves, illuminated exit signs , traffic signal modules and

pedestrian modules, bottle or canned beverage vending machines, very large commercial

package air-conditioning and heating equipment, and various commercial refrigeration products.

EPACT 2005 requires DOE to develop test procedures for other commercial refrigeration

products, battery chargers and external power supplies, and torchieres . The torchiere test

procedure is not explicitly required by EPACT 2005, but since EPACT 2005 establishes a

standard for this product, EPACT 2005 implicitly requires DOE to develop a test procedure.

U.S. Department of Energy 16

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

3.2.3 Other Activities

In addition to the requirements for DOE to issue standards and test procedures in accordance

with NAECA, EPACT 1992, and EPACT 2005, there is an additional statutory requirement for

DOE to respond to petitions. DOE must incorporate responses to petitions and any further

actions that may be taken on petitions into its schedule of standards and test procedure

rulemakings. Current petitions include the residential refrigeration petition and a petition from

the State of California requesting an exemption from the residential clothes washers' energy

conservation standard.

Ellipsoidal reflector / bulge reflector (ER/BR lamps) are in the coverage process, which will first

require a Federal Register notice to establish a "household " definition. The Department will

complete this work to establish the "household" definition because it will be needed for any

future efforts to establish coverage for ER /BR lamps.

DOE has recently become concerned about manufacturers misapplying a test procedure or

violating the spirit of a test procedure , if not a literal reading of the test procedure . If the spirit of

a test procedure is violated on a wide scale, the benefits of an energy conservation standard could

be significantly reduced. This raises the issue of anti-circumvention of DOE test procedures and

standards. The Department plans to schedule time and resources to work on an anti

circumvention rulemaking.

One other area that requires significant attention and resources is the area of waivers and appeals.

As new technologies are developed and products become more complex, existing standards and

test procedures become more difficult to apply to those products. At an alarming rate,

manufacturers are requesting waivers from test procedure requirements or are appealing the

applicability of existing standards to their products. Handling these numerous complex

challenges represents a significant challenge to the resources of the program.

U.S. Department of Energy 17

EERE-2006-DET-0136 COMMENT 01.2
i

January 31, 2006

4 Background on the Rulemaking Process

As prescribed by EPCA, energy efficiency standards are established by a three-phase public

process: advance notice of proposed rulemaking (ANOPR), notice of proposed rulemaking

(NOPR), and final rule. Following the guidance in the Process Rule (Procedures for

Consideration of New or Revised Energy Conservation Standards for Consumer Products, 61 FR

36974 (July 15, 1996)), the Department actively encourages the participation and interaction of

all stakeholders at all stages of the process. Early and frequent interactions among stakeholders

have been useful for providing a balanced discussion of critical information required to conduct

the analysis to support any standards.

Any new or amended standard must be designed to achieve the maximum improvement in

energy efficiency that is technologically feasible and economically justified. (42 U.S.C.

6295(o)(2)(A), 42 U.S.C. 6317(a)). To determine whether economic justification exists, EPCA

(42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316) directs that the Department determine that the

benefits of the proposed standard exceed its burdens to the greatest extent practicable, weighing

the following seven criteria:

1. The economic impact of the standard on the manufacturers and on the consumers

of the products subject to such standard;

2. The savings in operating costs throughout the estimated average life of the

covered product in the type (or class) compared to any increase in the price of, or

in the initial charges for, or maintenance expenses of, the covered products which

are likely to result from the imposition of the standard;

3. The total projected amount of energy savings likely to result directly from the

imposition of the standard;

4. Any lessening of the utility or the performance of the covered products likely to

result from the imposition of the standard;

5. The impact of any lessening of competition, as determined in writing by the

Attorney General, that is likely to result from the imposition of the standard;

6. The need for national energy conservation; and

7. Other factors the Secretary considers relevant.

To fully consider those seven criteria, DOE performs numerous analyses throughout the

rulemaking process. Table 5 identifies which analyses address each of the factors named by

EPCA, and whether DOE performs each analysis during the ANOPR or NOPR stage of the

rulemaking. The sections below briefly describe each of these analyses.

U.S. Department of Energy 18

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Table 5 Seven EPCA Criteria and Associated DOE Analyses

SPCA Criteria Analysis DOE Performs to Rulemaking

Address Factor Stage

1. Economic impact of standard on Life-Cycle Cost (LCC) and Payback ANOPR

consumers and manufacturers Analysis

-

(including Markups)

LCC Subgroup Analyses NOPR

Manufacturer Impact Analysis NOPR

2. Lifetime operating cost savings Life-Cycle Cost and Payback ANOPR

resulting from standard Analysis

(including Markups)

3. Total projected energy savings National Impact Analysis (including ANOPR

resulting from standard Shipments)

4. Impact of standard on utility or Screening Analysis ANOPR

performance of products Engineering Analysis ANOPR

5. Impact of any lessening of Manufacturer Impact Analysis NOPR

competition likely to result from

standard

6. Need for national energy National Impact Analysis (including ANOPR

conservation Shipments)

7. Other factors the Secretary considers Environmental Assessment NOPR

relevant Utility Impact Analysis NOPR

Employment Impact Analysis NOPR

Regulatory Impact Analysis NOPR

The Department's analysis in support of the development of new or amended standards is

designed to identify the efficiency level that represents the maximum improvement in energy

efficiency that is technologically feasible and economically justified on the basis of the seven

statutory criteria. The Process Rule provides context to the seven criteria and helps guide the

development of standards; all recent rulemakings have followed the requirements for developing

efficiency standards, as described in the Process Rule.

In addition to ensuring that its analyses address the seven EPCA criteria and follow the Process

Rule guidelines for developing regulations, the Department must follow numerous procedural

requirements-mandated by various statutes and Executive Orders-and perform all associated

supporting analysis. These requirements are integrated into the rulemaking process, analysis,

and documents. How these requirements are carried out in the rulemaking process is further

described below. Figure 1 summarizes the analytical framework for the Appliance Standards

Program including approaches to the analysis, key inputs, major analysis sections, and outputs.

U.S. Department of Energy 19

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Figure I Appliance Standards Rulemaking Flowchart for ANOPR, NOPR, and Final Rule

Approaches Key Inputs Key Outputs

Framework Document

ndustry Revie • Identify Firms/Products

• Quantitative Analysis • Shipments Estimate Market and Technology

• Market Se mentation Assessment • Product Classesg

• Non-Regulatory Programs

• Market Structure

• Technology Options Screening Analysis Design Option Combinations • Equipment Prototypes

Design Options

Manufacturer Interviews • Materials / Construction • Manufacturer Price-Efficiency

• Design Model • Material Prices Engineering Analysis Relationship

Energy Use and Design Lines • Load Model End-Use Load

Characterization

Analyses

Manufacturer Prices

• Contractor Cost Data Analysis

• Installation Cost Analysis

Markups for

Equipment Price

Determination

Installed Price

• Wholesale Electricity Price

Analysis

• Estimate Shipments

• Models - Forecast

EIA NEMS

• Electricity Tariffs

• Marginal Energy Prices

• Maintenance Costs

• Candidate Standard Levels

Shipments

Analysis

w

0

0

H

Life-Cycle Cost and

Payback Period

Analyses

Average Prices

and Losses

4 National Impact

Analysis

• Baseline Characterization

• Life-Cycle Costs

• Payback Periods

• Energy Savings

• Net Present Values

Ad vance Notice of Proposed Rulemaking ( ANOPR)

• Stakeholder Comments Revise ANOP R

Analyses

• Demographics Life-Cycle Cost • Payback Distribution

• Lif C l C Di t ib i Sub-Group Ana lysis e- yc e ost s r ut on

• Avera P i / C t ge r ces os s

• Industry Cash Flow

Manufacturer Interviews Man ufacturer Im pact

• Sub-Group Cash-Flows

• Direct Employment Impacts

• Competitive Impacts

• GRIM Analysis • Manufacturer Financial Data 1

Analysis • Cumulative Regulatory Burden

• Peak-Demand Reduction

EIA NEMS • Utility Load Factors Utility Impact Analysis

• Utility kWh and Revenue

P ti

Di t

rojec on

IM BUILD

rec

Employment

Imphcts Emp loyment Im pact

Analysis • National Employment Impact

• EIA NEMS • Emission Rates Environmental

• E i i E ti t Assessment m ss on s ma es

• Non-regulatory Alternatives Reg ulatory Impact • Regulatory Impacts

Analysis

Notice of Proposed Rutemaking (NOPR)

• Sta keholder Comments R i A l

• Revised Results ev se na yses

Final Rule 20

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4.1.1 Advance Notice of Proposed Rulemaking and Prior Activities

Framework Document and Workshop: At the very start of a new rulemaking , the Department

convenes a public workshop to discuss and receive comments on issues it will address and the

process it will follow in considering the adoption of energy conservation standards for the

subject product. Approximately one month before the workshop, the Department makes

available a framework document to explain and discuss the process, analyses, and issues

concerning the development of such standards. For many of the issues and analyses, the

framework document sets forth approaches that the Department is considering.

The major analytical activities conducted prior to the ANOPR are: a screening analysis, an

engineering analysis, a life -cycle cost (LCC) and payback analysis, and a preliminary national

impact analysis. Table 6 briefly describes each of these analyses, their importance to the

rulemaking process, and the authority - statute, rule , and/or Executive Order (E.O.) - behind

them.

The results of the analyses are made available on the Department's website for review and the

Department considers comments on them. This review and comment process may result in

revisions to the analyses. If appropriate, DOE conducts public meetings to enhance the exchange

of information and comments . This analytical process culminates with the selection of candidate

standard levels, if any, that will be considered for the NOPR. The ANOPR, which DOE

publishes in the Federal Register , specifies the candidate standard levels that are chosen for

further analysis, but does not propose a particular standard . The ANOPR also presents the

results of the engineering analysis and the preliminary analyses of consumer life-cycle costs,

national net present value , and national energy savings. The Department also makes available a

technical support document (TSD) containing the details of all the analyses performed to this

point.

The Department bases the selection of candidate standard levels on costs and benefits of design

options or efficiency levels. It generally would not select as candidate standard levels any design

options or efficiency levels that have payback periods that exceed the average life of the product,

or that cause LCC increases relative to the base case.

As required by E.O. 12889 , Implementation of the North American Free Trade Agreement, and

as specified by the Process Rule, after publication of the ANOPR, there is a 75-day public

comment period and DOE holds at least one public meeting . On the basis of comments received,

DOE may revise the analysis or the candidate standard levels. If major changes are required,

DOE gives stakeholders and technical experts an opportunity to review the revised analyses.

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Table 6 Pre-ANOPR and ANOPR Analyses

Analysis Description Statute/ Rule/ E.0

Reference

Screening As part of its initial analytical activities, DOE identifies the product design options or efficiency levels that will be analyzed EPCA (Criterion 4) and

Analysis in detail and those that can be eliminated from further consideration. This process includes a market and technology 42 U.S.C. 6295 (o)(2)(A)

assessment, and consultations with stakeholders and independent technical experts who can assist with identifying the key

issues and design options or efficiency levels to be considered. Screening factors described in the Process Rule elaborate on Process Rule I .d, 4.1, 5.b

the statutory criteria and seek to eliminate problematic design options early in the rulemaking process. Under these

guidelines, DOE eliminates from consideration design options that present unacceptable problems with respect to:

technological feasibility; practicability to manufacture, install , and service; adverse impacts on equipment utility to

consumers or availability; and adverse impacts on health or safety.

Engineering The technologically feasible design options or efficiency levels that are not eliminated in the screening process are EPCA (Criterion 4) and

Analysis considered fin-ther. The engineering analysis determines the maximum technologically feasible energy efficiency level 42 U.S.C. 6295 (o)(2)(A)

among the technology options that remain after screening, and develops cost-efficiency relationships that show the

manufacturers' cost of achieving increased efficiency. Based on the availability of data and analytical tools and public Process Rule 9.a, 9.b, 9.c

comments, DOE chooses the most appropriate means to establish the likely cost and performance improvement of each

design option and the cost-efficiency curve.

LCC and Payback Because EPCA directs DOE to consider the economic impact of potential standards on consumers, the Department must EPCA (Criteria 1,2)

Analysis determine changes in life-cycle costs to consumers that would likely result from a proposed standard. The Department

performs an LCC and payback analysis to calculate the savings in operating costs throughout the estimated average life of Process Rule 4.d.7.iii

the covered product compared to any increase in the price, initial charges, or maintenance expenses for the product likely to

result directly from the imposition of the standard. To perform this analysis, DOE must also carry out a markup analysis to

determine the markup and sales tax associated with converting the manufacturer price to a consumer price. Other necessary

inputs for this analysis include baseline manufacturer process, installation costs, equipment energy consumption, energy

prices and price trends, maintenance and repair costs, equipment lifetimes, and discount rates. DOE calculations of

consumer impacts also include sensitivity analyses using high and low discount rates and high and low energy price

forecasts.

National Impacts This analysis calculates the aggregate impacts of a standard at the national level, in terns of the net present value of total EPCA (Criteria 3,6),

Analysis consumer LCC, national energy and water savings, and direct and indirect impacts on employment by appliance

manufacturers, relevant service industries, energy suppliers, and the economy in general. To estimate the total energy Process Rule 4.d.7.vi

savings resulting from a standard, the Department must first determine the shipments of the product (shipments analysis), as

well as calculate the difference between the base case efficiency and the efficiency of each standards case, and forecast the

effects of the standard on energy consumption.

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4.1.2 Notice ofProposed Rulemaking and Prior Activities

After the ANOPR, DOE conducts further economic impact analyses of the candidate

standard levels. It refines the analyses it performed for the ANOPR, and also performs

new analyses, including an LCC subgroup analysis, a manufacturer impact analysis, a

utility impact analysis, an environmental assessment, an employment impact analysis,

and a regulatory impact analysis . Finally, DOE performs a number of reviews of the

rulemaking to comply with various Acts and Executive Orders. Table 7 briefly describes

each of these analyses and reviews, their importance to the rulemaking process, and the

authority - statute , rule, and/or executive order - behind them.

The results of all the analyses are made available on the Department's website for review,

and the Department considers comments on them . This review and comment process

may result in revisions to the analyses. If appropriate , DOE conducts public meetings to

enhance the exchange of information and comments . This analytical process.culminates

with the selection of proposed standard levels , which are presented in the NOPR.

The NOPR, published in the Federal Register, documents the evaluation and selection of

any proposed standards. For each product class, the Department also identifies the

maximum improvement in energy efficiency or maximum reduction in energy use that is

technologically feasible and, if the proposed standards would not achieve these levels, the

Department identifies the reasons for proposing different standards. The NOPR also

presents the results of all the analyses . The Department makes available a TSD

containing the details of all the analyses . The Department considers many factors in

selecting proposed standards . These factors include the selection policies established by

statute and the many benefits, costs, and impacts of the standards shown by the analyses.

Additionally, the Department encourages stakeholders to develop j oint recommendations

for standard levels ( consensus standard proposals). If the Department receives a joint

recommendation from a representative group of stakeholders, it strongly considers such a

recommendation in the decision process to select the proposed standard level (Process

Rule, 5.e.2 and 8.a).

As required by E.O. 12889 and as specified by the Process Rule, the publication of the

NOPR is followed by a 75-day public comment period that includes at least one public

meeting. On the basis of the public comments it receives, DOE reviews the proposedstandard and impact analyses and makes modifications as necessary . If major changes to

the analyses are required at this stage , DOE gives stakeholders and experts an opportunity

to review the revised analyses.

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Table 7 Pre-NOPR and NOPR Analyses

Analysis Description Reference

LCC Subgroup DOE performs an LCC Subgroup Analysis to evaluate the impact of a standard-taking into consideration variations Process Rule I.f, ILA,

Analysis in household characteristics or location (e.g., energy prices, appliance use behavior, installation costs, heating or 4.d.7.iii

cooling degree days)-on identifiable groups of consumers, such as households of different income levels, which may

be disproportionately affected by a national standard level.

Manufacturer Impact DOE qualitatively and quantitatively assesses the impact of standards on manufacturers. The analysis includes EPCA (Criteria 1, 5),

Analysis impacts on industry NPV, with sensitivity analysis based on uncertain costs, prices, and sales volumes; estimated Process Rule I O.a-c

impacts on cash flow; impacts on revenue, net income, and return on equity; impacts on small manufacturers; impacts

on manufacturers of multiple regulatory requirements: and impacts on manufacturing capacity, plant closures, and loss Process Rule 4.d.7.ii and

of capital investment. I O.f

Utility Impact DOE estimates the effects of proposed standards on electric and gas utilities, including marginal impacts on their costs EPCA (Criterion 7),

Analysis and revenues. Process Rule 4.d.7.iv

Environmental DOE estimates changes in emissions of carbon dioxide and the pollutants sulfur and nitrogen oxides. DOE establishes EPCA (42 U.S.C. 6295

Assessment the results from this analysis for a set of trial standard levels. The results from these analyses factor into DOE's (o)(2)(B)(i)(VT), NEPA (42

selection ofa proposed standard level. U.S.C. 4321), EPCA

(Criterion 7). Process Rule

4.d.7.vii

Employment Impact DOE estimates the total impact on employment in different sectors of the economy and the net impact on jobs. It EPCA (Criterion 7),

Analysis estimates the effects on employment for equipment manufacturers, relevant service industries, energy suppliers, and Process Rule 4.d.7.vi

the economy in general.

Regulatory Impact DOE assesses the effects of other regulations that will take effect within three years of the effective date, to determine Process Rule L f and 10.g.2,

Analysis the cumulative regulatory burden on manufacturers. DOE also prepares a regulatory flexibility analysis unless it can E.O. 12866

certify that the rule will not have a significant economic impact on a significant number of small entities. Regulatory Flexibility Act

(5 U.S.C. 601)

Federalism Review DOE examines each proposed rule to ensure that it does not preempt State law and does not have a substantial direct E.O. 13132

effect on the States, on the relationship between the national government and the States, or on the distribution of

power and responsibilities among the various levels of government.

Unfunded Mandates DOE assesses the effects of each rule on State, local, and Tribal governments and the private sector. If the rulemaking Unfunded Mandates Reform

Review is likely to impose expenditures of $100 million or more, DOE publishes a written statement assessing the costs, Act (Pub.L. 104-4), Title IT

benefits, and other effects of the rule on the national economy.

Family Policymaking For any rule that may affect family well-being, DOE issues a Family Policymaking Assessment. (To date, this Treasury and General Gov.

Review analysis has not been pertinent or applicable and has only required p forma consideration.) Appropriations Act of 1999

(Pub. L. 105-277), sec. 654

Energy Action Review DOE prepares a statement of Energy Effects for the Office of Management and Budget, for any rule that is a E.O. 13211

"significant energy action" (i.e., would have a significant adverse effect on the supply, distribution, or use of energy).

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4.1.3 Notice of Final Rulemaking

The final step in the rulemaking process is the publication of a final rule in the Federal

Register. The final rule promulgates standard levels based on all of the analyses; and explains

the basis for the selection of those standards. It is accompanied by the final TSD.

4.1.4 Procedural Requirements

The regulatory requirements that must be met by DOE rulemakings include laws, regulations,

and executive orders. In addition to the public comment requirements discussed in the

following section 4.1.5, the Department must now respond to the following 13 requirements:

A. Review Under Executive Order (hereafter "E.O.") 12866, "Regulatory

Planning and Review"

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act of 1995

D. Review Under the National Environmental Policy Act of 1969

E. Review Under E.O. 13132, "Federalism"

F. Review Under E.O. 12988, "Civil Justice Reform"

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Review Under the Treasury and General Government Appropriations Act of

1999

1. Review Under E.O. 12630, "Governmental Actions and Interference with

Constitutionally Protected Property Rights"

J. Review Under the Treasury and General Government Appropriations Act,

2001

K. Review Under E. O. 13211, "Actions Concerning Regulations That

Significantly Affect Energy Supply. Distribution, or Use"

L. Review Under section 32 of the Federal Energy Administration Act of 1974

M. Congressional Notification

These 13 requirements are summarized in Table 8. Table 9 details how certain requirements

are incorporated into the rulemaking process.

While a few of these requirements can be met by standardized responses, many of these

requirements greatly add to the length of time necessary to complete the rulemaking process.

Many of these requirements require preparation of additional analyses and/or review by other

entities such as the Office of Management and Budget, Small Business Administration,

Department of Justice, or Federal Trade Commission. Additional analyses or changes to the

text may be required after receipt of comment by these agencies. The impact of these

external review requirements alone (not counting the time required internally to meet these

requirements or make revisions based on comments received) adds up to one year for a

complete rulemaking from its initiation (e.g., framework document workshop) to the

publication of the final rule.

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Table 8 Summary of Regulatory Procedural Requirements

Regulatory Procedural

Requirement Requirements! To ics

A. E.O. 12866: Regulatory Planning & If determined that a rule is a "significant regulatory action," the following analyses maybe needed:

Review national economic impact analyses, including benefits and costs likely to result from the proposed regulation, especially if $100M

or greater annual effect on economy. Also consider effects on: a sector of the economy, productivity, competition, jobs,

environment, public health or safety, State, local or tribal governments or communities. Other analyses if relevant: whether

inconsistent or would interfere with an action taken or planned by another agency; whether would alter the budgetary impact of

entitlements, grants, user fees, etc.; whether raises novel legal or policy issues. "Plain language" requirement also still applies.

B. Regulatory Flexibility Act Prepare regulatory flexibility analysis if a significant regulatory action will have a significant economic impact on a substantial

number of small businesses.

C. Paperwork Reduction Act Generally applies to all collection of information or data for rulemakings. Minimize paperwork burden on the public from

collection of information for the Federal government; minimize Federal government cost of creation, collection, and use, of

information; effectively use information technology; comply with laws concerning information privacy and confidentiality,

security, and access; ensure integrity of the Federal statistical system.

D. National Environmental Policy Act of Environmental Assessment: include an analysis of environmental impacts for standards rulemakings; a categorical exclusion

1969 applies for test procedures.

E. E.O. 13132: Federalism Whether regulation would preempt State or local government regulations; need to give notice to State and local governments as

early as possible. (Applicable to new covered products rulemakings.)

F. E.O. 12988: Civil Justice Reform General rulemaking drafting requirements to avoid burdening the Federal court system, e.g., eliminate drafting errors and

ambiguity; write to minimize litigation; provide clear legal standard for requirements and promote simplification and burden

reduction. Specific requirements: identify if will have preemptive effect, state effect on existing Federal law or regulation; state a

clear legal standard; state if has retroactive effect; adequately define key terms; and follow any guidelines from the Attorney

General on clarity and draftsmanship.

G. Unfunded Mandates Reform Act of Similar to E.O. 12866. Applies if regulation may result in expenditure by State, local, and tribal governments, in the aggregate, or

1995 by the private sector of $100M or more in any one year. If applicable, follow DOE process for intergovernmental consultation.

Prepare estimates of the costs, benefits and other effects on the national economy; permit input from State, local and tribal

governments.

14. Treasury and General Government Generic requirement. Assess the impact of proposed regulation on family well-being.

Appropriations Act of 1999

1. E.O. 12630: Governmental Actions Determine whether the proposed regulation would have a "taking" of private property effect, e.g., licensing, permitting or other

and interference with Constitutionally conditions- requirements or limitations on private property use, affecting the value of private property. etc.

Protected Property Rights ("Takings")

J. Treasury and General Government Generic requirement. Follow OMB and DOE guidelines to maximize the quality, objectivity, utility, and integrity of information

Appropriations Act of 2001 (Also known (including statistical information) disseminated by Federal agencies. A regulatory action with a $500M/year impact triggers peer

as the "information Quality Acf") review and applies to information disseminated after June 15, 2005.

K. E. O. 13211: Regulations That Utility impact analysis. Assess whether regulation would have a significant adverse effect on the supply, distribution, or use of

Significantly Affect Energy Supply, energy.

Distribution or Use

L. Section 32 of the Federal Energy Applies to commercial standards and requires consultation with the Attorney General and Federal Trade Commission regarding the

Administration Act of 1974 impact on competition.

M. Congressional Notification Generic requirement. Report promulgation of final rules to Congress before effective date of rulemaking.

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Table 9 How Regulator= Procedural Requirements are Incorporated into Rulemaking

Regulatory Procedural Requirements/ Where Covered in Rule or Technical Support

Coordination : Who, When? Topics Document (TSD)

*A. E.O. 12866: Regulatory Planning & Regulatory impact analysis, goes in TSD Yes, if DOE regulatory agenda published in final rule identifies rulemaking

Review [Also relevant to DOE Regulatory as a "significant regulatory action," then draft rule goes to OMB/OTRA

Agenda]

*B. Regulatory Flexibility Act Manufacturer impact analysis, including Yes, if impact on substantial number of small businesses, send regulatory

[Also relevant to DOE Regulatory Agenda] assessment of impact on small entities, goes in flexibility analysis report to Chief Counsel for Advocacy to the Small

TSD Business Administration (SBA). Add/include summary of analysis in final

rule.

*C. Paperwork Reduction Act May apply under Methodology. Generic Coordinate with DOE Chief Information Officer and with General Counsel

regiiircment that may cnncrrn all rnllrefinn of to de+erminc if fhem are any nc- iccnrd-keeping rcgnircmrnts in proposed

information and data for the rule. rule.

D. National Environmental Policy Act of Environmental Analysis; Environmental Impacts Coordinate with DOE NEPA Compliance Officer. Environmental

1969 (NEPA) [Environmental Assessment published with TSD] Assessment is required for standards; categorical exclusion applies to test

procedures.

F. E.O. 13132: Federalism Authority section for covered products. Do Yes, notice to State and local governments as early as possible.

Federalism summary impact statement for new

covered products.

F. E.O. 12988: Civil Justice Reform N/A. (Generic requirement for drafting clarity.) No.

*G. Unfunded Mandates Reform Act of National impact analysis Yes, follow DOE process for intergovernmental consultation if rule may

1995 result in expenditure by State, local, and tribal governments, in the

aggregate, or by the private sector of $100 M in any one year.

Indicates consultation with (3C program counsel regarding this procedural requirement should occur early in development of a rule.

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4.1.5 Public Comment Requirements

The rulemaking process incorporates several opportunities for public comment which

contributes to the quality of the Department's analysis and decision-making, but substantially

adds to the time needed to develop new and amended efficiency standards.

® The Administrative Procedure Act (5 USC § 553) requires general notice of a

proposed rulemaking to be published in the Federal Register and the agency is

required to give interested persons an opportunity to participate in the rulemaking

through submission of written data, views or arguments with or without opportunity

for oral presentation. Publication of the substantive rulemaking shall be made not

less than 30 days before its effective date. Section 557 requires the public to be

afforded "a reasonable opportunity" to submit comments.

® Executive Order 12889, "Implementation of the North American Free Trade

Agreement," signed by President Clinton on December 27, 1993, requires publication

of any "proposed Federal technical regulation ...not less than 75 days before the

comment due date ," that is, a 75 -day comment period . "Technical regulation" has

been defined to include "characteristics or their related processes and production

methods for a good... set out in a document , including applicable administrative,

explanatory, and other related provisions, with which compliance is mandatory." (19

U.S.C. § 2576(b)(7))

® The Department's Process Rule specifies a 75-day public comment period with at

least one public hearing or workshop for both ANOPRs and NOPRs. Appendix A to

Subpart C of Part 430, 4.(c)(2) and (e)(2). However, in III.4.(d) of the preamble to

the Process Rule, the Department also considered the importance of timely

completion of rulemakings: "If experience demonstrates rulemakings are not being

completed within a 3-year time frame using this new process, DOE will reconsider

this process to explore how changes can be made to expedite the process."

® The Department's regulations for implementation of the National Environmental

Policy Act (NEPA) require DOE to provide "the host state and host tribe with an

opportunity to review and comment on any DOE Environmental Assessment (EA)

prior to DOE's approval of the EA. DOE may also provide any other state or

American Indian tribe with the same opportunity if, in the Department's judgment,

the state or tribe may be affected by the proposed action. At DOE discretion. this

review period shall be from 14 to 30 days. DOE shall consider all comments received

from a state or tribe during the review period before approving or modifying the EA,

as appropriate. If all states and tribes afforded this opportunity for pre-approval

review waive such opportunity, or provide a response before the end of the comment

period, DOE may proceed to approve or take other appropriate action on the EA

before the end of the review period." 10 CFR 1021.301, Agency review and public

participation. Public comment on the EA becomes problematical when DOE

promulgates a direct final rule, since a direct final rule is intended to promulgate rules

on an expedited basis and does not require a public comment period. However, the

current DOE procedures for NEPA compliance do not mesh with the direct final rule

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scenario, and so DOE may still be required to provide a NEPA public comment

period.

Many aspects of the Process Rule have improved the Department's decision-making process.

One key feature is the numerous opportunities for public consultation. The Process Rule

rationale for increasing stakeholder input and expert review was to provide for greater and

more productive interaction between the Department and interested parties throughout the

process. The process was also designed to make the analyses more robust and transparent

(e.g., fully describe the variability and uncertainty of impacts) to better inform the decisionmaking process. Finally, the Process Rule lays out policies to guide the Department's

decision-making during critical stages of the rulemaking, including screening design options,

selecting candidate standard levels, and selecting proposed and final standard levels.

4.2.1 Selection of Candidate Standard Levels

Based on the results of the engineering and cost and benefit analyses of design options, DOE

identifies the candidate standard levels for further analysis. Candidate standard levels, which

are identified in the ANOPR and on which DOE conducts impact analyses, typically include

efficiency levels representing: (a) the most energy efficient combination of design options;

(b) the combination of design options with the lowest life-cycle cost; and (c) a combination

of design options with a payback period of not more than three years. Additionally, DOE

may select candidate standard levels that incorporate noteworthy technologies or fill in large

gaps between efficiency levels of other candidate standard levels (Process Rule 5(c)(3)).

4.2.2 Factors in Selection of Proposed Standard

Based on the results of the analysis of impacts, DOE selects a standard level to be proposed

for public comment in the NOPR. This section describes the Department's policies

concerning the selection of new or amended standards. These policies provide guidance for

making the determinations required by section 325 of EPCA. These policies do not preclude

consideration of any information pertinent to the statutory criteria; the Department considers

all pertinent information in determining whether a new or amended standard is consistent

with the statutory criteria. Moreover, the Department is not guided by a policy in this section

if such a policy would lead to a result inconsistent with the criteria in section 325 of EPCA.

The factors considered by DOE in its selection of proposed standard levels are described

below.

Statutory policies. The fundamental policies concerning selection of standards are

established in SPCA, including the following:

(i) A candidate standard level will not be proposed or promulgated if the Department

determines that it is not technologically feasible and economically justified. See 42

U.S.C. 6295(o)(3)(B). A standard level is economically justified if the benefits

exceed the burdens. See 42 U.S.C. 6295(o)(2)(B)(i). A standard level is rebuttably

presumed to be economically justified if the payback period is three years or less.

See 42 U.S.C. 6295(o)(2)(B)(iii).

(ii) If the Department determines that a standard level is likely to result in the

unavailability of any covered product type with performance characteristics

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(including reliability), features, sizes, capacities, and volumes that are substantially

the same as products generally available in the U.S. at the time, that standard level

will not be proposed. See 42 U.S.C. 6295(o)(4).

(iii) If the Department determines that a standard level would not result in significant

conservation of energy, that standard level will not be proposed. See 42 U.S.C.

6295(o)(3)(B).

(iv) The Department may not prescribe an amended standard which increases the

maximum allowable energy use or decreases the minimum required energy

efficiency. See 42 U.S.C. 6295(o)(1).

Consensus stakeholder recommendations. Development of consensus proposals for new or

amended standards is an effective mechanism for balancing the economic, energy, and

environmental interests affected by standards. Thus, notwithstanding any other policy Oil

selection of proposed standards, a consensus recommendation on an updated efficiency level

submitted by a group that represents all interested' parties will be proposed by the Department

if it is determined to meet the statutory criteria. (See Process Rule 8.a)

Along with consideration of statutory policies and consensus stakeholder recommendations,

the following policies guide DOE application of the economic justification criterion in

selecting a proposed standard (see Process Rule 5.e.3.i). These policies are stated as

rebuttable presumptions. Although these presumptions reflect the great significance DOE

attaches to these factors, DOE will consider evidence that rebuts an applicable presumption

that a standard level is not economically justified.

A standard level will be presumed not to be economically justified (unless DOE determines

that specific expected benefits of the standard would outweigh this and any other expected

adverse effects) if DOE determines that a candidate standard level:

® Would result in a negative return on investment for the industry, would significantly

reduce the value of the industry, or would cause significant adverse impacts to a

significant subgroup of manufacturers (including small manufacturing businesses);

• Would be the direct cause of plant closures, significant losses in domestic

manufacturer employment, or significant losses of capital investment by domestic

manufacturers;

® Would have a significant adverse impact on the environment or energy security;

® Would not result in significant energy conservation relative to non-regulatory

approaches;

• Is not consistent with the policies relating to practicability to manufacture, consumer

utility, or safety;

• Would have payback periods that exceed the average life of the product or would

cause life-cycle cost increases relative to the base case, using typical fuel costs, usage

and discount rates: or

• Would have significant adverse impacts on a significant subgroup of consumers

(including low-income consumers).

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Finally, if the Department or the Department of Justice determines that a candidate standard

level would have significant anticompetitive effects, that standard level will be presumed not

to be economically justified unless DOE determines that specifically identified expected

benefits of the standard would outweigh this and any other expected adverse effects.

4.2.3 Selection of a Final Standard

The Department considers any new information provided in the public comments on the

NOPR, and any analysis by the Department of Justice concerning impacts on competition of

the proposed standard, to determine whether any change to the proposed standard level is

needed before proceeding to the final rule. The same policies used to select the proposed

standard level, as described in section 4.2.2 above, are used to guide the selection of the final

standard level.

As stated in the preamble to the Process Rule, the intent of a rulemaking process is to

produce standards that have sound analytical grounding and have been subject to thorough

review and comment without making the process unduly time-consuming. 61 FR 36977

(July 15, 1996). The Process Rule states that the entire rulemaking, which starts with the

issuance of DOE priorities and ends with publication of a final rule, should last no more than

three years. In addition, the time required from issuance of an ANOPR to issuance of a final

rule should be no more than 18 months. Issuing the ANOPR takes 50 percent of the

rulemaking timetable - the analysis is front-loaded and structured in this way in hopes of

encouraging joint stakeholder recommendations.

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5 Reasons for the Delays in Iss u ing Rules

The Department has accumulated a large backlog of rulemakings that failed to meet statutory

deadlines. Rulemaking delays have plagued the Appliance Standards Program since its

inception. When the Department attempted to accelerate its rulemaking pace in the early

1990s, the Department's decision-making and supporting analyses were questioned and

Congress imposed a one-year moratorium on the issuance of new or amended standards.

During that year, the Department worked with stakeholders to re-invent the standards

rulemaking process. One result of this re-invention was the establishment of an annual

priority-setting process, during which the Department determined, based on analyses of

likely impacts and input from stakeholders, which products' efficiency standards

rulemakings would receive staff and contractor resources, and which products' rulemakings

would not. Despite much-improved analysis and notable success in spurring consensus

standards and completing a number of rulemakings, the Department has been unable to

complete its priority rulemakings within the three-year time frame identified in the Process

Rule.

The Department has identified several causes for its inability to accelerate the rulemaking

pace and reduce the standards backlog. These causes are discussed in this section, while

section 6 will discuss solutions to problems outlined here. The Process Rule (which can be

credited with improved stakeholder participation, better analysis, and consensus agreements)

also had less desirable consequences. The priority-setting process from the Process Rule

placed an increased emphasis on energy savings and a reduced focus on statutory deadlines.

For instance, through priority-setting, the Department completed the second rulemaking

cycle for residential clothes washers before initiating the first cycle of rulemakings for

products with lower energy savings potential, such as pool heaters and direct heating

equipment. As discussed in section 2 of this report, the priority-setting process assigned

products with low potential energy savings a low priority. It was understood by all

stakeholders that diverting resources away from low-priority products and toward mediumand high-priority products was an intentional consequence of the Process Rule.

The open nature of the new process has also inadvertently introduced delays in the

rulemaking schedules as the Department's policy of sharing draft analysis and accepting

stakeholder comments on an ongoing basis has resulted in an inefficient and disruptive

reanalysis and decision-making process. Also, many aspects of the Process Rule which made

the rulemaking analyses more robust have also made them more voluminous, complex, and

time-consuming.

Finally, as described below, there are serious deficiencies in the review and concurrence

process. This process will be reformed to make it clearer, more certain and timely.

As previously described. NAECA, NAECA 1988 and EPACT 1992 established minimum

efficiency standards and set a timetable for one or two updates to these standards . Typically,

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DOE was charged to update each standard at three-to-eight-year intervals, depending on the

appliance.

Almost immediately, DOE was unable to meet the schedule outlined by Congress. Early

deadlines to revise standards for refrigerator-freezers and to establish entirely new standards

for small furnaces by January 1, 1989, were not met. These initial delays led to a cascade of

delays in updating later standards. By 1994, DOE had updated the standards for

refrigerators, refrigerator-freezers, freezers, clothes washers, clothes dryers and dishwashers,

and set initial standards for small gas furnaces, but continued to fall behind the rigorous

schedule set by Congress. With the addition of commercial products from EPACT 1992,

DOE's problems were only exacerbated.

Beginning to address the backlog, DOE proposed standards for eight products in late 1994

(originally due in 1992). The proposed standards were met with intense opposition from

industry, with DOE receiving over 5,000 responses during the comment period. After

evaluating the comments, DOE acknowledged that portions of the proposal were problematic

and withdrew the proposal for further review. Concerns over the process led Congress in

1995 to place a one-year moratorium on proposing or issuing energy conservation appliance

standards. During that year, the Department undertook a process improvement effort, which

led to revised policies and procedures for setting appliance energy efficiency standards.

These policies and procedures addressed the stakeholders' key concerns about the

rulemaking process:

® DOE's decision-making process was not transparent and not understandable;

® DOE failed to adequately consult with stakeholders during the standards-setting

process, especially at the beginning and during the analytic phases;

• DOE did not adequately consider alternatives to rulemaking;

® DOE's analysis relied on computer models that few people understood;

• DOE failed to consider the effects of standards on small- and medium-size

manufacturers and the cumulative effects of multiple standards on manufacturers that

produce several covered products;

• DOE emphasized "maximum technology." basing standards on prototypes and

unproven technologies with disregard to practicability; and

• DOE failed to consider plant closure and loss of jobs, the restriction of consumer

choice, the adequacy of the market forces. the impact on low-income households and

fuel switching.

These new policies were supported by stakeholders. The most important element of the

process is the level at which it involves stakeholders. In the previous paradigm, DOE

developed standards with limited consultation. As a result, DOE had to defend its decisions

and often to revisit and revise its analysis. The new process involves stakeholders from the

start, and by the time DOE publishes a notice of a proposed rule, the key issues are well

understood and considered.

Stakeholders are now active participants in the development of the analysis. Unfortunately,

while this collaboration and continuous review of the analysis with a broad array of

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stakeholders greatly improved the analysis and the Department's decision-making, it added

delays and complicated efforts to reduce the backlog of rulemakings.

Figure 2 illustrates how this backlog has accumulated over the years, distinguishing between

first revisions to statutorily prescribed standards (also including those products for which

only one DOE standards rulemaking is required) and second revisions. By 1997, the

Department had already missed 17 statutorily established deadlines. In 2005, there were 25

standards in the backlog.

Figure 2 Growing Backlog with the Appliance Standard Program

30

25

Historical Backlog

1986 1987 1988 1989 1990 1991 '1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Fiscal Year

D First revision, or single-requirement rulemakings Second revision

5.2.1 Prioritization Process

During the 1995 process improvement outreach, stakeholders expressed the desire to have

the Department prioritize rulemakings based on input from the public and clearly established

criteria. Stakeholders were concerned that the Department was critically behind schedule in

its statutory requirements and could not achieve the original rulemaking timetable set by

legislation. Prioritization of future rulemakings was emphasized as a fundamental means of

improving the efficacy of the Appliance Standards Program. Setting some products'

standards rulemakings at low priority, and diverting staff and contractor resources toward

medium- and high-priority rulemakings, were intentional consequences of the Process Rule.

Prioritization of rulemakings also offered a means to avoid prolonged debate concerning the

quantification and meaning of "significant energy savings." EPCA instructs DOE not to

issue standards for a type or class of covered product if the Secretary determines by rule that

the establishment of such standards will not result in "significant" conservation of energy.

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(42 U.S.C. 6295(o)(3)(B)) The issue of significance of energy savings was very

controversial. Many participants in the rulemaking process claimed that the savings were

becoming insignificant because of decreasing marginal benefits, while others claimed that the

savings were significant. The prioritization process for DOE's rulemaking was seen as a

means to enable the Department to focus on products that all stakeholders could agree held

the most energy-savings potential.

The Department agreed that focusing attention on the high priority rulemakings, rather than

trying to address all required rulemakings at once, would be more productive. DOE

identified the development of the Administration's Semi-Annual Regulatory Agenda, as the

appropriate time for significant stakeholder -input into priority setting. Prioritization of

rulemakings was a major element in the Department 's Process Improvement Plan. The

specific factors the Department adopted to develop priorities and establish schedules for

conducting rulemakings include:

(1) Potential energy savings;

(ii) Potential economic benefits;

(iii) Potential environmental or energy security benefits;

(iv) Applicable deadlines for rulemakings;

(v) Incremental DOE resources required to complete the rulemaking process;

(vi) Other relevant regulatory actions affecting products;

(vii) Stakeholder recommendations;

(viii) Evidence of energy efficiency gains in the market absent new or revised

standards;

(ix) Status of required changes to test procedures; and

(x) Other relevant factors. [Process Rule at 3.(d)]

Following the publication of the Process Rule, once a year , the Department prepared an

analysis of each of the factors identified above. The results of this analysis were used to

develop the rulemaking priorities and proposed schedules. The DOE analysis, priorities and

proposed rulemaking schedules were documented and distributed for review and comment.

Following public review and comment, each fall, the Department issued, simultaneously with

the issuance of the Administration's Semi-Annual Regulatory Agenda, a final set of

rulemaking priorities, the accompanying analysis, and the schedules for all priority

rulemakings that it anticipated within the following two years.

A significant consequence of the priority-setting process was an increased emphasis on

energy savings and a reduced focus on statutory deadlines. This increased emphasis was a

direct reflection of the stakeholder recommendations that the Department received during the

annual priority-setting process. Focusing resources on high-energy-saving products resulted

in postponing work on some products with low-energy-savings potential even if these

products had an earlier statutory deadline. For example, the Department, on the suggestion

of stakeholders, elected to complete a second revision of clothes washer standards before

initiating a first revision of standards for pool heaters and direct heating equipment. Such

prioritization decisions were an intentional consequence of the Process Rule. As depicted in

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Figure 2, a substantial increase in the backlog occurred during and after the process

improvement exercise, which began in 1995.

The Process Rule also contributed to statutory delays because it "unbundled" low energy

savings potential products from related appliances. The priority-setting process was

conducted on a product-by-product basis and therefore high-priority rulemakings were

established for single rather than bundled products. For example, the first revision of clothes

washer standards was conducted in a rulemaking that included clothes dryers and

dishwashers. This product grouping was referred to as the "clean three" rulemaking. In

contrast, the second revision to the clothes washer standard was conducted as a singleproduct rulemaking.

5.2.2 Stakeholder Input and Expert Review

The Process Rule established the conditions for increased stakeholder input into the

rulemaking process, and increased opportunities for expert review. These changes have had

beneficial impacts, but have also had negative, unintended consequences.

Throughout the rulemaking process, the Department provides interested parties with

opportunities to provide data, recommendations and other comments. DOE shares with the

public both detailed analytical methodologies and analyses to inform interested parties as to

the progress of standards development. The results of all analyses are distributed for review

to experts and interested parties and, when appropriate, a public meeting or webcast is

conducted to review the analytical models and results. This information from the

Department enables its stakeholders to provide informed input to DOE at each step of the

process.

Stakeholder input has contributed significantly to the quality of the Department's analyses

and improved the Department's decision-making. For instance, with input from interested

parties, potential issues are identified early as are the types of specialized expertise that may

be required to conduct the analysis. With these inputs, DOE selects appropriate approaches

and data sources to perform the engineering and economic analyses.

Engaging stakeholders early and often in the rulemaking process also has the very large

benefit of stimulating the development of joint stakeholder recommendations. The

development of joint stakeholder recommendations for new or amended standards is an

effective mechanism for balancing the economic, energy, and environmental interests

affected by standards. As stated in the Process Rule, notwithstanding any other policy on the

selection of proposed standards, a consensus recommendation by a group that represents all

interested parties will also be proposed by the Department if the Department finds that it

meets the statutory criteria. Consensus stakeholder recommendations formed the basis of the

most recent standards adopted for residential refrigerators, fluorescent lamp ballasts, and

residential clothes washers. With respect to commercial air conditioners, the Department's

analysis provided a foundation for a consensus that was included in EPACT 2005.

However, the open nature of the process has also inadvertently introduced delays in the

rulernaking schedules. Such delays have been an unintended consequence of the Process

Rule. The Department's policy of sharing draft analyses and accepting stakeholder

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comments on an ongoing basis has resulted in an inefficient and disruptive reanalysis and

decision-making process. For example, the Department has shared analytical results and held

public meetings on an engineering analysis and a life-cycle cost analysis well before the

remainder of the ANOPR analysis was completed. As a result, stakeholders have frequently

insisted on immediate changes to the analysis, although these could have been addressed

more efficiently after the ANOPR. Open decision-making also creates the opportunity for

stakeholder intervention in the policy process which can result in decisions being delayed or

overturned. In Appendix A, the Department explains the causes for the delays in issuing the

three highest-priority standards which were announced in the December 2004 regulatory

agenda. As described, the experience with the Furnace and Boiler and Commercial Unitary

Air Conditioner Rulemakings emphasizes the need to better integrate stakeholder input and

expert review within the scope of the structured notice and comment rulemaking process.

5.2.3 Complexity ofAnalvsis

The development of energy efficiency standards requires complex, time-consuming, and

detailed analyses. These analyses are needed to address the criteria laid out by EPCA and

other statutory and regulatory procedures. Section 4 of this report described the seven EPCA

criteria that must be considered in standards rulemakings and the additional regulatory

procedural requirements. For example, Environmental Assessments are required on all

standards rulemakings. Furthermore, even in consensus rulemakings in which stakeholders

come together and negotiate a standard acceptable to all, DOE must still perform extensive

analyses to establish that the jointly recommended standard meets the EPCA criteria for

technological feasibility and economic justification. as well as all regulatory procedural

requirements.

The Process Rule has unintentionally increased the complexity of the analysis conducted in

support of energy efficiency standards rulemakings. Many aspects of the Process Rule,

which made the rulemaking analyses more robust, have also made it more voluminous,

complex, and time-consuming. In addition to characterizing the aggregate costs and benefits

of standards as had been the practice before process improvement, the Department now seeks

to understand the distribution of those costs and benefits among consumers, manufacturers

and other groups. Additionally, the Process Rule requires that the analysis describe the

uncertainty associated with these analyses of costs and benefits, so that any adverse impacts,

including those on significant subgroups, will be fully considered in selecting a standard.

Greater complexity and more exhaustive analysis can consume considerable analytical

resources without improving the standards-setting process and can contribute to rulemaking

delays in several ways. Performing an engineering analysis on 13 basic product models is

more time consuming than performing a single engineering analysis. Similarly, performing a

regional life-cycle cost analysis for eight climate zones will be more difficult than calculating

national average impacts. Thus, structuring the analytical blueprint for a rulemaking's

analysis consists of carefully considering what information will improve decision-making,

knowing what data exist to support this analysis and informing all stakeholders of the relative

merits of alternative approaches to conducting the analysis. In order to avoid unnecessary

analysis, the Department needs to engage stakeholders in a dialogue that might reduce the

analytical burden without sacrificing the quality of the analysis.

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Complexity also contributes to increasing internal and external review times. As the analysis

has gotten more complex, the economic models and Technical Support Documents have

become larger and more difficult to review. The review function is repeated many times,

first by the analysis team, then by program management, other DOE offices and finally by

the public. A key goal of the Process Rule was to make the analysis transparent and

accessible for all to understand and participate in the rulemaking process. Unnecessary

complexity runs counter to this goal and has been an unintended consequence of the Process

Rule. In Appendix A, the Department explains how analytical complexity was a major cause

for the delays in issuing the standards for distribution transformers.

As presented in section 4, the rulemaking process is both complex and rigid in its structure

and requirements. The many overlapping requirements from EPCA, executive orders and the

Process Rule pose a complex analytical and procedural challenge. The process is sequential,

incorporates internal and external reviews, and consists of an analytical body that builds on

preceding analysis. Any delay in performing a rulemaking task is likely to cascade into a

delay on the entire rulemaking schedule.

The overall rulemaking process is made up of required sequential stages of rulemakings

which control the basic rulemaking timeline. Standards rulemakings progress from

publication of ANOPRs and NOPRs to final rules. Of the approximately three years needed

to conduct a rulemaking there are multiple requirements for inter-agency review periods and

public comment periods which together add up to approximately one year. This one-year

period does not include review times within DOE.

While DOE has tried to meld the various statutory and regulatory requirements into the

analysis steps, many analytical tasks are sequential, (i.e., some analyses are derived from

other analyses that must be completed first). Most tasks cannot be done concurrently, since

progress on the timeline is constrained by completion of many sequential tasks and review

and comment stages. This sequence-dependent nature of the analyses makes it vulnerable to

un-recoverable delays.

The rulemaking schedule includes multiple internal review, edit, and revision requirements.

These internal reviews are performed by various levels of management within the following

offices: the Building Technologies Program, the Office of the Assistant Secretary for Energy

Efficiency and Renewable Energy, the Office of Policy and International Affairs (PI), the

Office of General Counsel (GC), and the Secretary. The time consumed for these reviews,

the resulting revisions and the final concurrence (clearance) process represent a significant

portion of the rulemaking schedule. A coordinated and timely completion of reviews is

essential. While there are also reviews by external entities such as OMB, DOJ, SBA, and

other stakeholders, the past delays have occurred internally within the Department.

Records of past and current rulemakings provide insight into areas of the concurrence

process that demand improvement. While many topic areas and process steps can be

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identified as part of the problem, the following areas relate directly to the improvements in

inter-office coordination and the review/concurrence process that are presented in section 6.

5.4.1 Document Qual its

The Appliance Standards Program staff and support contractors have not consistently

submitted high-quality documents into the review process. The layout, structure, content,

writing styles and terminology have been inconsistent from rulemaking to rulemaking, and

sometimes within the same rulemaking. Documents circulated for review, especially early in

the process, have sometimes not been written clearly and have contained numerous

grammatical and typographical errors. These document quality problems have complicated

and delayed the review process in many different ways. They have made document review

more time-consuming and difficult, and blurred the responsibilities of different reviewers. In

addition, unsynchronized and often delayed responses from reviewers, conflicting edits

among reviewers, and even sequential edits from single reviewers have contributed to major

delays and frustrations.

In summary, the Appliance Standards Program needs to improve its document quality to such

a level that other reviewing offices can focus on the issues for which they are primarily

responsible during review and concurrence. Reviewers need to focus their reviews on the

issues for which they are responsible so that they can provide comments expeditiously.

5.4.2 Issue Resolution

The early identification and resolution of a broad range of technical, legal, and policy issues

is necessary for the required analyses to be undertaken and completed expeditiously and for

rulemaking documents to be drafted. Persons knowledgeable of product-specific issues,

stakeholder views and concerns, legal requirements and constraints, other related

rulemakings, and relevant policy guidance are all essential participants in this process. When

this process has not been managed effectively, it has led to multiple changes in the content of

key analyses and the framework of rulemaking processes and documents, and major delays in

the issuance of required efficiency standards.

Currently, there is an informal process in place for the program, GC, and PI to follow to

resolve key rulemaking issues. Staff from each of the program offices participates in

individual product rulemaking team meetings on an ad hoc basis, addressing crosscutting

issues as they arise. This informal process is driven by the individual standards development

product teams and is not uniformly applied across all rulemaking teams. Additionally, GC

and PI involvement is infrequently solicited at the program level. Issues bearing on analysis

have not surfaced as soon as might occur under a more formal process of inter-office

interaction. Consequently, the program has not consistently received the benefit of GC's and

PI's guidance in the early rulemaking stages. Conversely, GC and PI have not consistently

been made aware of issues that might contribute to a better understanding of the rulemaking

analysis. Analysis efforts could be reduced or redirected earlier if GC and P1 involvement,

input, and guidance were to be received on a formal, regular basis for each rulemaking.

Similarly, regular GC and PI guidance is needed at the program level on issues spanning

multiple rulemakings.

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5.4.3 Senior Review and Clearance Process

The difficulty of obtaining timely review and feedback from senior reviewers (i.e., EE-l,

GC-1, PI-1, and S-3 and their immediate staffs) has also contributed to past delays. The key

DOE staff involved with appliance standards rulemakings report through different reporting

channels. As a result, staff in different offices often has different knowledge of past

decisions and events, different perspectives, and different priorities in mind during document

reviews. It has become difficult for the program to efficiently consider and respond to

feedback from the various offices when it is provided in an unsynchronized fashion. Ideally,

through regular communication, most issues should be resolved long before the final

clearance process. In cases where policy or legal issues remain at the start of mandatory

concurrence, there must be a mechanism for quickly elevating and resolving them.

The clearance process involves multiple management levels within multiple offices (GC, P1,

and EE). As a result of sequential document reviews flowing up and down multiple review

channels, there are literally dozens of potential points of communication failure. Presently

there exists no structured process to facilitate communication across concurrence levels and

program offices. Final review and clearance by the senior concurrence group needs to be a

coordinated event to more effectively manage the sequential nature of mandatory

concurrence.

As described above, deficiencies in the review and concurrence process are significant and

the process must be reformed.

The Conference Report accompanying the Fiscal Year 2006 Energy and Water Development

Appropriations Act includes a requirement for an Appliance Standards Program report. The

conference report calls for an explanation for the additional delays announced in December

2004 for issuing the three highest-priority standards. This section provides an overview of

the scheduling changes and their causes. A more detailed explanation is presented in

Appendix A.

In December 2003, the Department published a regulatory agenda (68 FR 72467 (December

22, 2003)) giving publication dates for the ANOPR, NOPR. and final rule for each of the

three priority products (i.e., distribution transformers, commercial unitary air conditioning

and residential furnaces and boilers). In December 2004, the Department revised the

publication dates in the regulatory agenda, reporting the ANOPR publication date of July 29,

2004, for each of the three priority rules and revised the publication dates for the NOPRs and

final rules for the reasons described below. 69 FR 72712 (December 13, 2004).

Between publication of the December 2003 and 2004 regulatory agendas the time period

between the ANOPR and NOPR increased from 12 months to between 23 and 26 months for

the three rules. Similarly, the time between the NOPR and the final rule increased from

between six and eight months to 12 months. The earlier schedules were consistent with the

Process Rule's stated goal of 18 months from ANOPR to final rule. These earlier schedules

had allocated three to four weeks for program review and six weeks for mandatory

concurrence prior to the publication of rulemaking notices. When preparing the December

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2004 Semi-Annual Regulatory Agenda, DOE realized that the time required for review and

concurrence was approximately sixteen months.

The December 2004 schedules allowed for more time for reviews and planned for the OMBrequired peer review. Appendix A of this report further explains the reasons for the delays

announced in the December 2004 Regulatory Agenda and provides an illustration of how

analytical complexity, stakeholder input, and internal review requirements can extend the

rulemaking timetable.

The Department will issue proposed rules for residential furnaces and electric distribution

transformers in fiscal year 2006. Furthermore, by implementing the recent and forthcoming

process improvements, the Department expects to publish the final rules for these products

months ahead of the September 2007 date announced in the December 2004 Semi -Annual

Regulatory Agenda.

As to the commercial unitary air conditioner rulemaking , the Department was preparing

publication of a direct final rule when EPACT 2005 was enacted obviating the need for a

rule.

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6 Pla n to Exped ite Rulemaking

The previous section of this report identified the root causes of the rulemaking delays

experienced by the Appliance Standards Program. This section describes the Department's

recent and forthcoming process improvements which will address the problems previously

identified. These process improvements will increase the program's rulemaking output by

increasing the number of products in the active rulemaking process and by shortening the

time to complete successive rulemakings.

Priority setting has been the Department's methodology for addressing the statutory

requirements for the Department's energy efficiency standards rulemakings. However, those

requirements have for some time outrun the means available to the Department to achieve

them. In order to address the current backlog of rulemakings and the new requirements of

EPACT 2005, the Department must improve the process by which rulemakings are

conducted.

A lesson learned from the past is that starting multiple major projects at the same time leads

to unmanageable simultaneous resource requirements. Similar to measures taken by electric

utility companies, the Appliance Standards Program must reduce "peak load" levels and

"valley fill" times of reduced demand in order to gain efficiency and reduce risk. This is

especially important in the quality-control-review of items such as the technical support

documents that typically include several hundreds of pages of highly technical narrative,

tables and charts. Staggered rulemakings and valley-filling techniques are key components

of the Department's plan to improve rulemaking efficiency.

Another method to increase the number of standards developed concurrently is "bundling"

related products into a single rulemaking. Product bundling offers economies of scale that

will allow the Department to address the backlog of products without neglecting those

products with the greatest energy savings potential.

6.1.1 Staggered Rulemakings

The rulemaking process is by necessity highly sequential, with alternating periods of

analysis, internal and external review, and public comment periods. It can be difficult to

effectively manage human resources, particularly when rulemakings are in near-sync. This

means that contractor resource requirements alternate between periods of high and reduced

activity. Similarly, technical reviews by DOE management of multiple l 000-page

documents can occur simultaneously. The Department will stagger rulernakings whenever

possible so that analysis and reviews of different rules do not occur concurrently.

6.1.2 "Valley Filling" Management Techniques

Valley-filling is a management technique to ensure that when a rulemaking team faces a

break in the analysis on one rule (Rule A) that it can re-focus its efforts to another rule (Rule

B). For purposes of the ensuing discussion. Rule A is started first and Rule B is an "earlystart valley-filling" rule because it begins prior to the date that it would begin if the

rulemakings were still conducted sequentially. Breaks in the analysis include

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internal/external reviews, mandatory concurrence, and comment periods. DOE will take the

valley-filling opportunities so that rulemaking teams can get an early start on Rule B in

preparation for its ANOPR. The net effect of this early start will be that only 27 months will

elapse between publication of final rules A and B, for a given rulemaking team.

Valley-filling will contribute to accelerating the standards process. For example, the first

formal step in the rulemaking process is the preparation and publication of the framework

document for stakeholder review and comment. The framework document essentially lays

out the preliminary analytic plans for the rulemaking (e.g., what analytic tools DOE plans to

use for the rulemaking, such as reverse engineering analysis or tear-downs). An outcome of

Rule B's early start will be to hold the framework workshop for Rule B during the comment

period following Rule A's ANOPR. Another outcome of Rule B's early start will be that

once the NOPR for Rule A goes into mandatory concurrence, the analysis in support of Rule

B's ANOPR will begin. The overall result of valley-filling will be to issue Rule B's ANOPR

within nine months of Rule A's final rule, and then maintain the 18-month timetable between

Rule B's ANOPR and final rule. As indicated above, this means that only 27 months will

elapse between publication of final rules A and B, for a given rulemaking team.

Valley-filling combines a 36-month rulemaking, Rule A, with an overlapping rulemaking,

Rule B. Because of the overlap, the total time to complete both rules is reduced to 63 months

compared to the 72 months that would be needed to complete the two rules sequentially.

This overlap means that a rulemaking team utilizing valley-filling techniques could issue a

final rule (on average) every 31.5 months.

The Department also notes that valley-filling is a risk management strategy, where each team

is working on a portfolio of rulemakings. Since the Department believes that there is no

slack to be removed from the 36-month rulemaking timetable, valley-filling will be used to,

in effect, parallel a team's rulemaking activities. As unforeseen circumstances arise, the

team can switch seamlessly back and forth between work on Rules A and B. This enhances

team utilization and efficiency and will result in a higher number of final rules per year.

6.1.3 Bundled Product Rulemakings

Initially, in carrying out the appliance standards rulemaking requirements of the Energy

Policy and Conservation Act, the Department conducted rulemakings in which a number of

products were included in a single rulemaking. For example, the initial rulemaking included

nine different products. Later rulemakings dealt with a single product category. For

example, the three recent priority rulemakings each deal with a single product. In both

instances (i.e., multiple products and single product rulemakings), a DOE staff member was

assigned the responsibility to manage a single rulemaking. However, experience has shown

the level of DOE activity is not proportional to the number of products in a given

rulemaking. That is, managing a rulemaking with two products is not twice the work of a

rulemaking with a single product.

There are potentially significant economies of scale with bundling rulemakings, but care

must be given as to how the rulemakings are bundled. For example, in the "clean-three"

(clothes washers, clothes dryers and dishwashers) rulemaking, the manufacturers, for the

most part, were the same for each of the three products. DOE was able to efficiently and

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effectively coordinate contractor activities and the contacts with the affected industries.

Often, DOE staff and contractors would work with the same manufacturer representatives for

each of the "clean-three" manufacturers. This resulted in significant rulemaking economies

that contributed to an accelerated analysis process. Similarly, DOE staff was able to

efficiently bundle the Federal Register drafting and reviewing activities for these "bundled"

rulemakings.

However, there have been some rulemakings where bundling has not contributed to

contractor and staff effectiveness. For example, in the mid-1990s, DOE bundled a number of

unrelated products into a single rulemaking, e.g., fluorescent lamp ballasts, television sets

and furnaces, where the rulemaking was delayed and drawn out.

As part of the multi-year schedule-setting, DOE has identified bundling opportunities that

will result in efficiency gains (section 7). A number of factors were considered as part of the

bundling, such as the industry affected or the technologies to be considered. As discussed

above, DOE considered bundling where there is significant overlap in the manufacturers that

produce the given products as was the case with the "clean-three" rulemaking. In addition,

the Department considered bundling where the technologies and issues are related. For

example, water heaters, pool heaters, and direct heating equipment are good candidates for

bundling since many of the technical issues are similar. Similarly, a number of lighting

technologies can be treated together in a single future rulemaking. In this fashion, the

analysis will be simplified by virtue of analyzing a single market, with a team of lighting

experts who routinely consider multiple lighting technologies. A single trade association

may cover all the products, and many of the same manufacturers can review the analysis and

attend a single public meeting. From the perspective of DOE resources, a single project

manager can oversee the rulemaking activities. From a review perspective, there are

significant time-savings in treating many products in a single document.

6.2.1 Lock-Down of Analysis Following the Close of Formal Comment Periods

In order to maintain the benefits of stakeholder participation without introducing delays to

the rulemaking schedule, the Department needs to adopt a new approach for incorporating

stakeholder comments and supporting consensus efforts. The Department needs to maintain

greater discipline in "locking down" the analysis following the close of formal comment

periods. Comments received past these dates will be considered during the next scheduled

reanalysis.

6.3.1 Analytical Plans for Each Rulemaking

As described in section 4, the analysis needed to develop new or amended standards is very

comprehensive and complex. In the past, individual rulemaking project teams worked

independently and primarily communicated through deliverable documents. It was not

unusual for management to review a document and direct the team to take a different

approach and redo the document. The analytical plans were developed to raise issues and

decision points before actions were taken and analysis was performed. One particular

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challenge of the past was the tendency to investigate in detail any issue that was raised by

stakeholders or of interest to the expert doing the analysis. The Department will now

investigate only issues that may significantly impact the standards level.

After the framework workshop 's comment period closes for a given rulemaking, the

rulemaking team prepares an analytical plan. The analytical plan incorporates stakeholder

comments and reflects DOE decisions about key questions concerning analytical scope.

Such DOE decisions are made in concert by the Appliance Standards Program, Office of

General Counsel, and the Office of Policy and International Affairs. Examples of such

decisions would include the approach for estimating the cost -efficiency curve or the number

of sensitivity cases to be run in the life-cycle cost analysis. The analytical plan then becomes

the roadmap for the rulemaking team, placing bounds on the scope of analysis and setting a

timeline for intermediate milestones. The analytical plan addresses all analysis components

(e.g., market and technology, engineering, life-cycle costs, national impact analysis, etc.) and

therefore corresponds to the chapters of the eventual ANOPR Technical Support Document.

Moreover, after the comment periods close for the ANOPR and NOPR stages, the analytical

plans are updated based upon comments received and subsequent internal meetings among

the Appliance Standards Program, Office of General Counsel, and Office of Policy and

International Affairs. The ANOPR and NOPR comment periods may redirect the analysis, or

even expand it, but the analytical scope is constrained during each rulemaking stage by the

version of the analytical plan cast at the beginning of that stage . Updating these plans after

the ANOPR and NOPR comment periods ensures that the analysis is adapted to address

stakeholder concerns, but also prevents the analysis from becoming unmanageable in scope.

6.3.2 "Streamlined Rulemaking" Analysis for Some Products

To date, DOE has performed an exhaustive analysis for each of the standards rulemakings.

For some products, it may be possible to reduce the amount of analytical effort if there is

general sentiment among involved parties that the usual detailed analysis will not add

significant value to the information considered in the decision making criteria . For example,

in some circumstances, the key issues may be clearly understood and the ultimate decision

may depend on only one key issue that should be the focus of the analysis. In other cases,

the lack of potential energy savings may not justify extensive analysis.

In the past, the Department 's analyses have tended toward greater complexity and detail. For

every new rulemaking. the Department will strive to make the analysis as simple as possible.

To meet the schedule proposed in section 7, each and every analytical decision, beginning

with those made at the framework document stage , will be made with the objective of

simplifi cation, while still meeting statutory requirements.

Using greater aggregation in establishing product classes is one of the most effective

strategies to limit analytical complexity. In general, when evaluating and establishing

energy-efficiency standards, the Department divides covered products into classes according

to: (a) the type of energy used, or (b) capacity, or other performance-related features, such as

those that affect both consumer utility and efficiency. The analysis may demonstrate that

different energy-efficiency standards should apply to the different product classes. For

instance the three highest priority rules in 2005 consisted of: two product classes for

Commercial Unitary Air Conditioners; six for Residential Furnaces and Boilers; and thirteen

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EERE-2006-DET-0136 COMMENT 01.2
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for Distribution Transformers. Determining the need and defining product classes is often

difficult. In general, classes are defined using information obtained in discussions with

manufacturers, trade associations, and other interested parties. Since the number of product

classes selected determines the number of cost-efficiency curves that must be developed in

the engineering analysis, and these in turn influence the number of LCC analyses performed,

the Department will seek stakeholder input on ways to structure the analysis with the

minimum acceptable number of product classes.

Properly structuring the engineering analysis can also streamline the analysis. The

Department has used four general methods to develop manufacturing cost-versus-efficiency

curves for the engineering analysis: manufacturer cost surveys at discreet efficiency levels,

retail price surveys, design-option modeling (combined with engineering calculations or

computer simulations), and physical product teardowns and cost modeling. Since surveys are

the least time-consuming and costly, these approaches will be favored and other approaches

used only as supplemental validation if needed. Exceptions to this approach will occur

where stakeholders clearly demonstrate that teardowns or more in-depth engineering analyses

are required.

Life-cycle-cost analyses also exhibit varying levels of complexity. One area of increasing

complexity is consumer subgroup analysis. Prior to the Process Rule, the analysis of

consumer impacts estimated impacts on consumers based on national average energy prices

and energy usage. The Process Rule increased the scope of the LCC analysis to include

assessments of impacts on subgroups of consumers based on major regional differences in

usage or energy prices and significant variations in installation costs or performance. The

definition of a subgroup has been applied at many levels: consumer demographics (e.g., low

income), building type (e.g., hotel), ownership, and even individual households in the

Residential Energy Consumption Survey (RECS) database. In the future, the Department

will perform preliminary analyses and consider stakeholder comments to reduce the number

of subgroups for which a complete analysis is performed.

Other significant analyses include the Shipments Forecasts, National Impacts Analysis, and

the Manufacturer hnpact Analysis. Together with stakeholders, DOE will work diligently to

ensure that these and the previously described analyses are simple. transparent, and sufficient

to meet statutory criteria.

The complexities of both the required analysis and the overall standards-development

process were described in sections 4 and 5 of this report. Resource planning becomes

extremely important as the number of simultaneous activities increases and the time to

deliver a final product is shortened. The Department will implement broad-reaching process

changes to ensure full compliance with rulemaking requirements, reduce errors and

associated rework, and better define and coordinate rulemaking tasks to maintain the

rulemaking timetable.

6.4.1 Regulatory Procedures Guidelines and Training

In addition to the public comment requirements specified by the Administrative Procedure

Act, the Department must now respond to 13 other procedural requirements. The Appliance

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EERE-2006-DET-0136 COMMENT 01.2
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Standards Program must stay informed and in compliance with all government-wide

directives. All appropriate forms, instructions, and directives were compiled into a

centralized reference library. The Appliance Standards Program staff and support contractor

personnel were brought together in February 2005 for a review and update on those

government-wide requirements. This was a preemptive action taken to avoid possible

mistakes and delays. Similar training sessions for staff and support contractor personnel will

be held in the future as needed.

6.4.2 Project Management Assistance from the National Energy Technology Project

Management Center

The progression of rulemaking tasks is monitored using project management software

maintained until recently by the standards analysis group at a national laboratory. These

schedules include both analysis and procedural tasks performed by the contractors, within

DOE and with organizations outside DOE. A typical rulemaking schedule includes no fewer

than 19 interrelated tasks.

Carefully monitoring the schedule is particularly important in the case of inadvertent,

unavoidable, or unanticipated delays. Despite diligent efforts by staff and contractors,

sometimes errors are made or an additional analysis becomes necessary due to some variable

that was not anticipated . Frequently, feedback from and coordination with other agencies or

from stakeholders makes it necessary to revisit an issue and make substantial revisions to the

analysis. Without a proper understanding and restructuring of the project schedule,

unplanned tasks can derail the rulemaking schedule.

In the past, major activities and timelines for rulemaking projects were entered into project

management software as a record of what was accomplished. In order to benefit from true

project management, these functions have recently been assigned to the National Energy

Technology Laboratory (NETL) Project Management Center. NETL has expertise in using

software to actively manage projects and produce reports that raise important performance

issues to DOE management. This capability is now being utilized.

6.4.3 Fiscal Management

Resource planning includes all resources, including funding. It is reasonable to expect costs

to escalate with time and economic indexes. Being fiscally responsible requires reviewing

processes and providers for alternate, more cost-effective ways of accomplishing more with

available funding. Mindful that there are differences between price, cost and value, a

periodic review of alternatives is good business practice.

One area with potential for fiscal efficiency improvements is the matching of level of needs

with level of expertise. Some tasks require the expertise of scientists with the associated

price factor. Other tasks only require the skills of a technician or clerical worker. The

Department will disaggregate projects where possible into tasks needing various skill levels,

thereby opening the possibility for cost reductions.

6.4.4 "Expedited Rulemaking" Process

The Department will use an "Expedited Rulemaking" Process when stakeholders submit an

acceptable joint-proposal recommendation to the Department for standards levels for specific

covered products or technologies. In the past, manufacturers. trade associations, energy

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EERE-2006-DET-0136 COMMENT 01.2
i

January 31, 2006

efficiency advocacy organizations and other stakeholders have used DOE-developed analysis

to focus on key issues and come to agreement on beneficial energy-efficiency-standards

levels. This was the case with fluorescent ballasts and commercial unitary air conditioners.

The Department must review any such joint-proposal recommendations for satisfaction of

legislative requirements, but will encourage stakeholders to develop these kinds of

recommendations. An accelerated or expedited rulemaking process can sometimes be

applied that combines a notice of proposed rulemaking along with a direct final rule. If there

are no substantial adverse comments received during the comment period, the direct final

rule can take effect.

One measure that the Department is taking to encourage joint stakeholder recommendations

is that it plans to conduct a preliminary manufacturer impact analysis (MIA) during the

ANOPR phase of the rulemaking. By discussing preliminary manufacturer impacts (e.g.,

capital expenditures, lost jobs, etc.) at the ANOPR stage, it is hoped that stakeholders can

negotiate joint recommendations earlier and more often. Consistent with this change, it is

noted that the addition of a cursory MIA to the ANOPR stage makes it nearly impossible to

shorten the ANOPR stage below 18 months.

Historic deficiencies in inter-office coordination and the review process are detailed in

section 5 of this report. If the rulemaking process is to be significantly streamlined, the

internal review process must be reformed. Multiple offices and/or programs within the

Department collectively own the problem. The solution must involve all of these entities.

6.5.] Product Quality

Comments received through the formal public comment process, as well as comments made

by visitors to the Department, have noted the high quality of the rulemakings and support

documents. Such documents include ANOPR, NOPR, and final rule notices, and also TSDs.

While the increase in quality is good news, the time required for the preparation, and number

of iterations of the final draft must be reduced. A major element of the resource planning

process is catching errors early and preventing substandard work from progressing through

the concurrence chain. The Appliance Standards Program will emphasize improved

document quality, which will expedite the concurrence process. With improved document

quality. concurrence reviewers will be able to focus their efforts on legal and policy issues.

While product quality improvement is primarily an issue having to do with individual

documents, the program also plans to conduct thorough reviews of its analytical tools across

all pending rulemakings. The context for such reviews will be the Analytical Plans, as

discussed in section 6.3.1.

6.5.2 Document Consistency

The Appliance Standards Program actively works on many standards rulemakings. In the

past, approaches, styles and even formatting were unique to each of the teams and

documents. While some uniqueness was required because the standards were for entirely

different products, the uniqueness made it very difficult for those reviewing all the

documents. That same difficulty would exist for external reviewers such as DOJ and OMB.

U.S. Department of Energy 48

EERE-2006-DET-0136 COMMENT 01.2
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as well as various stakeholders including trade associations , manufacturers andenergyefficiency advocacy organizations.

In order to streamline the process and to make it more user friendly, several unifying tools

and procedures were recently developed. These recent improvements include:

I . Style Guide - Writing guide developed by the Appliance Standards Program with

reviews and additions from GC and PI. This guide includes formatting, punctuation,

active-versus-passive-voice examples and other writing-quality-control guidelines.

This was introduced to eliminate the review iterations that were almost exclusively

style issues. Those iterations caused delays and often became differences of opinion.

2. Rulemaking Boiler Plate Template - From an accuracy perspective, there were

inconsistencies between rulemaking document sections and updated language that

impacted almost all rulemaking publications. Different terms were used for the same

procedure and different guidance was given to stakeholders wishing to submit

comments during an official comment period . Now the Department relies on boiler

plate modules that were pre-approved and carefully crafted.

6.5.3 Crosscutting Review Team

A solution to problems of the past is to speed up the rulemaking process by the establishment

and empowerment of a "Crosscutting Review Team." While members of this team will

primarily be the current DOE staff participants in rulemaking activities, the way they will

operate will be substantially different from the current process. Recognizing the current role,

responsibility, reporting channel and authority issues, a process will be used that adds clarity,

certainty and timeliness.

Approach: There will essentially be three functions that this team will provide:

• Day-to-day decisions and direction for all but the most challenging issues;

• Coordination through the Office of the Assistant Secretary for Energy Efficiency and

Renewable Energy (EE) to the Office of the Under Secretary for Energy, Science, and

Environment; and

® Present and expedite concurrence to a panel consisting of EE-1, GC-l and PI-1, and

S-3 (i.e., the senior concurrence panel).

EE-1, GC-I and P1- l have responsibility for their respective areas and need to sign off on

concurrence packages. BT/GC/Pl staff and management need to review work in process,

make decisions and give guidance to the individual project teams working on specific

rulemakings.

The Crosscutting Review Team will meet one afternoon per week. if necessary, to review all

appliance standards projects. individual project teams working on rulemakings will be given

time to give an update and raise issues requiring guidance. The Crosscutting Review Team

will be assembled to review issues that are of importance to GC and PI, and the Appliance

Standards Program will provide an advanced agenda before each meeting of the Crosscutting

Review Team. For all but the most challenging issues, the learn will make decisions and give

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EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

guidance to each of the rulemaking teams. The Crosscutting Review Team will generate a

weekly status update raising issues that should be of interest to management.

EE-1 or S-3 will meet with the learn on a regular basis to discuss progress and concerns

pertaining to the rulemakings. EE-l will give guidance and S-3 will convene the panel of

EE-1, GC-1 and PI-1 for concurrences and issues requiring special attention.

6.5.4 Concurrence as an Event

The regular meetings of the Crosscutting Review Team will set the stage for "concurrence as

an event. " By monitoring and reviewing issues of interest and importance to their element

(i.e.. GC, PI, BT) within the Department , members of the Crosscutting Review Team will

work through issues and concerns before rulemakings enter mandatory concurrence. When a

document is approaching the mandatory concurrence stage, a meeting of the senior

management concurrence group (EE-l, GC-1. PI-I) will be scheduled . S-3 may take part in

these meetings. The mandatory concurrence document will be distributed to this senior

management group one week before the concurrence meeting. Members of the Crosscutting

Review Team will be responsible for briefing their senior management before the scheduled

meeting.

Senior management will discuss the document in concurrence at this meeting. If the

rulemaking document has successfully satisfied all requirements, the senior management

group could sign off on the concurrence package at the meeting. If any issues or concerns

remain after the Crosscutting Review Team's actions and edits, the senior management group

would identify any necessary actions and commit to concurrence upon receiving the specified

revision or action.

The cornerstone of the Department's multi-year plan is the proper execution of a 36-month

rulernaking timetable. However, since the Process Rule was published in 1996, the

Department's rulemakings have, with a single exception, always taken considerably more

than three years to complete. Table 10 provides a summary of the rulemaking timelines for

the three product rulemakings completed under the guidelines of the Process Rule. All three

rules were initiated with the issuance of an ANOPR long before the publication of the

Process Rule in July 1996. The rulemakings were reinitiated in 1997/1998 with the

publication of a framework document and a public meeting to review this document. In

truth, considerable information gathering and analytical work had already been conducted

prior to the framework workshops. For example, the Department published a Design Option

Report for Clothes Washers in October 1 996 and hosted a Screening Analysis Workshop in

November of that year.

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EERE-2006-DET-0136 COMMENT 01.2
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Table 10 Historical Schedules under Process Improvement (Time Counted After Process Improvement)

ANOPR 11/1 4/94 9/28/90 9/8/93

Framework Workshop 7/23/97 0 6/24/97 0 6/30/98 0

ANOPR/Supplemental 11/19/98 16 11 /24/99 17 ANOPR

NOPR 10/5/00 38.5 4/28/00 34 10/5/00 28

Final Rule 1 /12/01 42 1/17/01 43 1/22/01 33

With an elapsed time of 33 months between framework workshop and final rule, the central

air conditioner rulemaking is the only rulemaking to have been conducted within the 36

months specified by the Process Rule. A number of events surrounding this rulemaking

highlight the potential risks of shortening the rulemaking timetable. For example, the 13

SEER final rule left unaddressed the appropriate standard levels for several classes of nicheapplication central air-conditioning products. This resulted in manufacturer uncertainty

pertaining to both standard coverage and level and initiated a flurry of requests for exception

to the Department's Office of Hearings and Appeals.

Despite the history of rulemaking delays, the Department believes that the process

improvements described in this section will allow it to complete rulemakings within 36

months. Figure 3 displays the major elements of a standards rulemaking and the allocated

length of lime to complete each element. As shown, the 36-month timeline will include

approximately 16 months of analysis, six months of public review and comment, and six

months of review time for OMB. Internal DOE reviews will add another eight months to the

timeline. As previously described. of this 36-month timeline, l 1 months are mandatory

allowance limes for comment and review that are set by external requirements and are not

controlled by the Department.

U.S. Department of Energy 51

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Figure 3 Thirty-Six Month Rulemaking Timetable

01 Q2 03 04 ; 0 03 Qd 2 I 03 j 04

Frarneworkworkshopx U

Comment Period' 1

Analysis, TSD 11

Program Review & Notice

ct• 3Mandatory Concurrence

Publish ANOPR 18

Secretary's Review 1

Comment Period 2.5

TT

Revise A.NOPR Analysis 1

Additional Analysis

a Program Review & Notice 1

D MandatorrConcurrence 1 z

Secretary's Review 1

• OMB Review 3

PrbIshNOPR 1 185 r i

• Comment Period 2E

W (DOJ NOPF Period)

• Revise NOPR Analysis 1

• Program Review & Notice''.. 1

• Mandatory Concurrence 1

Secretary's. Review 1

• 0MB Review 3

• Publish Final Rule 7.5

TOTAL 36

'NM a Statutory Requirement , but DOE Piurtice Rulemiakinos may be initiated by framework workshops, or some initiations maytake another form

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January 31, 2006

7 Implementation Plan and Schedules

As the Department implements the process improvements needed to address the backlog

of rulemakings and meet the new requirements of EPACT 2005, it recognizes that work

cannot begin on all required rulemakings simultaneously. Rulemakings must be

scheduled with consideration of statutory requirements and other factors. To assist the

Department in this effort, conservation groups, manufacturers, trade associations, State

agencies, utilities and other stakeholders were asked to provide their thoughts and input

to be considered in structuring the multi-year schedule of rulemakings.

Scheduling principles were the focus of a public meeting held by the Department on

November 15, 2005. During the meeting, the Department described possible scheduling

approaches and solicited public feedback and input on any additional scheduling

principles or approaches. Feedback obtained during this meeting and in subsequent

written comments was considered in preparing the schedule presented in section 7.3 of

this document.

The full-compliance schedule isfirm and achievable and employs all the new and

recently implemented process improvements. It expeditiously completes the currently

active rulemakings and meets all deadlines for the newly covered EPACT 2005 products.

With regard to the standards backlog, the Department has scheduled one standard for all

products in the backlog by June of 2011 (the scheduled backlogged standard may be a

first- or second-cycle revision).

7.1.1 Public Meeting Format

The Appliance Standards Program held a stakeholder public meeting on November 15,

2005. The objective of the meeting was to address how the Department should develop

and implement a full compliance scheduling plan for appliance standards rulemaking

activities. In the Federal Register notice announcing the meeting, the Department stated

that it "will finalize its standards scheduling plan after consideration of comments

received during and following the public meeting." 70 FR 61395 (October 24, 2005).

Prior to the November 15, 2005, public meeting on schedule setting, the Department

posted the following materials on its website at http://www.eere.energy. gov/buildings/

appliance-standards/2006_schedul e_setting.html:

® A comprehensive list of appliance standards rulemaking activities, including

specified statutory deadlines where applicable;

® Data sheets for most of the products in the rulemaking activities list;

® Excel spreadsheets showing energy savings analysis for many of the products;

and

® A report that was prepared in response to a petition to DOE for new, amended

standards for refrigerators. refrigerator-freezers. & freezers: "DRAFT

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TECHNICAL REPORT: Analysis of Amended Energy Conservation Standards

for Residential Refrigerator -Freezers," October, 2005.

The public meeting consisted of five main parts:

DOE Charge and Challenges - In this session, DOE reviewed a handout summarizing its

charge and challenges. The summary was broken down according to backlogged

standards, pre-EPACT but non-backlog standards requirements, EPACT 2005 standards

requirements (both congressionally prescribed and standards that DOE needs to develop),

test procedures, and miscellaneous items such as petitions and waivers.

Stakeholder Opening Comments - Each stakeholder that wished to provide opening

comments was afforded time to do so.

Recent and Forthcoming Process Improvements - DOE reviewed its recent process

improvements (which are primarily administrative) and also described forthcoming

management-level process improvements such as bundling and valley-filling.

Stakeholder Feedback on Process Improvements - Stakeholders commented on the

process-improvement ideas put forth by DOE, relying on historical experiences where

relevant.

Scheduling Principles - DOE sought input on the principles that should be considered in

developing its full compliance scheduling plan. Alternative approaches for developing

the schedule were suggested by DOE. These approaches included scheduling by criteria,

such as potential energy savings, statutory order (first in/first out), and maximizing the

number of standards in a given time period. Stakeholders recommended additional

principles that DOE should follow in developing its schedule.

7.1.2 Stakeholder Comments

Rulemaking Process Improvements: The Department received some stakeholder

comments related to the rulemaking process. These recommendations. which can also

aid in the creation of a new schedule. include the bundling of related products to increase

the rate at which standards are issued, limiting the length of future rulemakings,

staggering rulemakings, streamlining certain analyses, issuing expedited rulemakings,

and allowing technical updates.

I . Product Bundling : The Edison Electric Institute (EEI) commented that the

bundling process works well in some situations , particular]v when products

have similar manufacturers or are competing products ( e.g.. electric, gas and

oil water heaters). (EEI. No. 23 at p. 4; Public Meeting Transcript, No. 6 at

pp. 83-84)' The National Rural Electric Cooperative Association (NRECA)

commented that product bundling works well for its association because it can

The November 15. 2005 public meeting on schedule setting has been assigned docket number DOE-EEPS-2006-001. Comment references have the form: organization name, docket number at page number. If

the comment is an oral comment, the words "public meeting transcript" replace the organization name.

U.S. Department of Energy 54

EERE-2006-DET-0136 COMMENT 01.2
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reduce the number of member review requests by sending out two or three

products in each announcement. (Public Meeting Transcript, No. 6 at p. 93)

The Association of Home Appliance Manufacturers (AHAM) commented that

although industry is not opposed to the process, product bundling ignores the

critical issue of cumulative regulatory burden because it allows multiple

standards to be imposed on manufacturers at one time. (Public Meeting

Transcript, No. 6 at pp. 81-83) Conversely, the Appliance Standards

Awareness Project (ASAP) commented that product bundling can identify and

spread out regulatory burden on manufacturers. (Public Meeting Transcript,

No. 6 at pp. 86-88) The National Electrical Manufacturers Association

(NEMA) commented that bundling similar products is a worthwhile

conceptual approach to accelerate rulemakings, but discussion needs to occur

to determine the truest alignment of similar rulemakings. (NEMA, No. 19 at

p.2) A group of organizations, including the Alliance to Save Energy (ASE),

the American Council for an Energy-Efficient Economy (ACEEE), ASAP, the

Consumer Federation of America (CFA), the Northeast Energy Efficiency

Partnerships (NEEP), and the Northwest Power Planning and Conservation

Council ( referred to as "joint commenters " in this subsection), issued a joint

comment to the Department. The joint commenters favor the bundling of

related products as it may expedite the rulemaking process and facilitate

negotiated agreements ; however they fear that bundling unrelated products

could slow the rulemaking process. (ASE-ACEEE-ASAP-CFA-NEEPNPPCC. No. 16 at p. 2) The Gas Appliance Manufacturers Association

(GAMA) commented that product bundling still requires separate analyses,

which may or may not be similar, for each product. GAMA also maintains

that peaks and valleys will still pose a problem under the bundling process.

(Public Meeting Transcript, No. 6 at pp. 92-93) AHAM, ASAP and Alliance

Laundry Systems, LLC commented that product bundling should not be used

to raise the apparent energy savings of several smaller products, thus moving

that bundle higher on the schedule. (Public Meeting Transcript, No. 6 at pp.

198-199; Alliance Laundry Systems LLC. No. 10 at p.3)

2. Length of Rulemakings: The joint commenters and the New York State

Energy Research and Development Authority (NYSERDA) maintain that

future rulemakings should be limited to 30 months. (ASE-ACEEE-ASAPCFA-NEED-NPPCC, No. 16 at p. 8: NYSERDA, No. 27 at pp. 1-2) At the

public meeting, the New York State Attorney General's office indicated that

Congress believed it would be possible to. in some cases, issue final rules

within 18 months after issuing a test procedure. (Public Meeting Transcript,

No. 6 at pp. 167-168) In its written comments, the New York State Attorney

General's office did not focus on individual rulemaking length, but indicated

that each product in the backlog should have a standard issued by December

31, 2008 (suggesting a three-year maximum rulemaking timeline). (New

York State Attorney General's office, No. 25 at p. 10)

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Rulemaking Staggering: AHAM commented that product staggering may

allow DOE to better manage its staff resources. (Public Meeting Transcript,

No. 6 at pp. 82-83) ASAP also commented that staggering makes sense.

(Public Meeting Transcript, No. 6 at p. 89) Alliance Laundry Systems

commented that staggered rulemakings may not aid in realignment of the

program, as it seems that all backlogged products need to be started at the

same time. (Alliance Laundry Systems LLC, No. 10 at p.3) The joint

commenters offered support for a "phased-in" approach. (ASE-ACEEEASAP-CFA-NEEP-NPPCC, No. 16 at p. 9) The New York State Attorney

General's office supported the idea of staggered final rule dates in its written

comments. (New York State Attorney General's office. No. 25 at p. 10)

4. Streamlined Analysis: ARAM, ACEEE, and Southern Company commented

that streamlining works on a product-to-product basis, as some rulemakings

are more complicated than others. (Public Meeting Transcript, No. 6 at pp.

107-108; Public Meeting Transcript, No. 6 at pp. 106-107; Southern Company

Services, No. 12 at p. 2) The joint commenters maintain that greater

streamlining opportunities likely exist with products offering relatively small

amounts of energy savings, thus allowing DOE to use its resources for rules

offering the greatest potential benefit. (ASE-ACEEE-ASAP-CFA-NEEPNPPCC, No. 16 at p. 2) Alliance Laundry Systems LLC commented that

streamlined analysis is appropriate if it does not reduce the quality of the

rulemaking or allow the introduction of questionable data. (Alliance Laundry

Systems LLC, No. l0 at p.3)

5. Expedited Rulemakings: The Natural Resources Defense Council (NRDC)

and ASE support expedited rulemakings resulting from joint stakeholder

recommendations. (Public Meeting Transcript, No. 6 at pp. 94-96; Public

Meeting Transcript, No. 6 at pp. I 10-112) EE1 commented that DOE should

work with manufacturers and stakeholders in a public process to expedite

rulemakings for specific products. (EEI, No. 23 at p. 5) Alliance Laundry

Systems commented that expedited rulemakings are appropriate when

stakeholders agree that a low manufacturer impact and significant energy

savings exist. (Alliance Laundry Systems, No. 10 at p. 3) At the public

meeting, General Electric also expressed support for expedited rulemakings.

(Public Meeting Transcript, No. 6 at pp. 177 - 179) The joint commenters

supported expedited rulemakings and believe that the best way for DOE to

expedite rulemakings is to complete and publish ANOPRs, but warn that

moving analyses (such as the M1A) to the ANOPR phase would delay the

ANOPR publication. (ASE-ACEEE-ASAP-CFA-NEEP-NPPCC. No. 16 at p.

2) Similarly, ACEEE commented that expedited rulemakings have

advantages over drawn-out rulemakings when they work, but the Department

has the responsibility to get data out quickly so all stakeholders can have

access to the analysis. (Public Meeting Transcript, No. 6 at pp. 91-92)

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6. Technical Correction Updates: Whirlpool commented that the program may

be well served to institute a process where technical corrections and/or

updates can be made to a standard or test procedure without opening a new

rulemaking. (Whirlpool Corporation- No. 13 at p. 3)

Schedule-Setting Principles:

I. Active Rulemakings: The joint commenters and NYSERDA maintain that

DOE should complete the active rulemakings first. (ASE-ACEEE-ASAPCFA-NEEP-NPPCC, No. 16 at p. 8: NYSERDA, No. 27 at pp. 1-2) ) The

New York Slate Attorney General's office commented that it is appropriate to

expedite the completion of rules that are underway, suggesting that all

rulemakings currently underway be completed within six months or by no

later than July 31, 2006. (New York State Attorney General 's office, No. 25

at pp. 9-11) GAMA, speaking mainly in reference to residential furnaces and

boilers, commented that in cases where DOE has an active, high-priority

rulemaking underway with substantial completed analysis, the Department

should complete the rulemaking . (GAMA, No. 17 at p. 2)

2. EPACT 2005: The joint commenters and NYSERDA commented that DOE

should complete the active rulemakings first, and then simultaneously work

on the backlog and EPACT 2005 standards requirements. (ASE-ACEEEASAP-CFA-NEEP-NPPCC, No. I b at p. 8; NYSERDA, No. 27 at pp. 1-2) At

the public meeting , ASAP added that DOE should not plan to miss any

EPACT 2005 requirements. (Public Meeting Transcript, No. 6 at pp. 193-

194) The ASAP recommendation to work on the backlog and EPACT 2005

requirements simultaneously was similar to the view expressed by the New

York State Attorney General's office and NRDC. (New York State Attorney

General's office, No. 25 at pp. 12-14: Public Meeting Transcript, No. 6 at pp.

28-29)

3. Energy Savings Potential: NEMA commented that the Department should

refocus its resources in areas of greater energy cost savings. (NEMA, No. 19

at p. 3) GAMA commented that the most important factor to consider is the

potential national energy savings that can be realized through a new standard.

GAMA continued, stating that the Department should not waste resources on

revising standards for a product that consumes relatively little energy on a

national scale, even though DOE is behind the statutory schedule for that

product. (GAMA. No. 17 at p. 1) In its written comments, The New York

State Attorney General's office stated that of the remaining overdue

rulemakings, rules expected to yield the most substantial energy savings

should be completed first. (New York State Attorney General's office, No. 25

at p. 10) The joint commenters express their view that energy savings

potential should be used to schedule rulemakings within the constraints of

other scheduling principles such as completing the active rulemakings and

U.S. Department of Energy 57

EERE-2006-DET-0136 COMMENT 01.2
anuary 31, 2006

meeting all EPACT 2005 mandatory deadlines. (ASE-ACEEE-ASAP-CFANEEP-NPPCC, No. 16 at p. 2) At the public meeting, ASE commented that

the law from which a mandate comes is irrelevant for scheduling - the

Department should schedule product rulemakings in a manner that sets larger

energy savings standards in the near-term. (Public Meeting Transcript, No. 6

at pp. 191-192) The majority of stakeholders also favor addressing products

with high potential national energy savings, but not all agree that saving

energy is the most important scheduling principle. EEI and GAMA indicated

that energy savings, if used for scheduling, should mean realistic rather than

potential energy savings because the use of potential energy savings assumes

that the standard would push to the maximum technology. (Public Meeting

Transcript, No. 6 at pp. 180-181; Public Meeting Transcript, No. 6 at p. 166)

General Electric suggested limiting the use of potential energy savings to

those products with statutorily required rulemakings. (Public Meeting

Transcript, No. 6 at p. 175)

4. Statutory Date: Maytag commented that statutory order should be the most

important scheduling principle. (Public Meeting Transcript, No. 6 at pp. 1 83-

185) General Electric commented that DOE should focus on the statutorily

required rulemakings first, sorting these rules by potential energy savings and

those that use energy directly. (Public Meeting Transcript, No. 6 at p. 175)

AHAM emphasized that those products with the most overdue standards

should be subject to rulemakings first, while also considering the number of

past rulemakings for a given product and whether or not the statutorily

required number of rulemakings has been conducted. (Public Meeting

Transcript, No. 6 at pp. 118-120; AHAM, No. 29 at p. 1) Additionally,

Alliance Laundry Systems and Whirlpool stated that the Department should

not engage in rulemakings where statutory requirements have already been

met. (Alliance Laundry Systems, No. 10 at p. 1; Whirlpool, No. 13 at p. 2)

Alliance Laundry Systems suggests that the Department conduct the most

overdue standards rulemakings first. (Alliance Laundry Systems, No. 10 at p.

1)

5. Time Since Last Standard: Several commenters feel that the time elapsed

since the last standard issuance should be a key principle for scheduling

rulemakings. They believe that the Department should schedule rulemakings

for those products with recent standards effective dates after the rulemakings

for products that have not been regulated for many years or never before.

(LAMA, No. 17 at p. 2; EEl, No. 23 at p. 4; Southern Company, No. 12 at p.

3; AHAM, No. 26 at pp. 1-2; Public Meeting Transcript, No. 6 at pp. 197-198)

Comments indicated that this would separate standards affecting certain

related products, helping to alleviate the cumulative regulatory burden

reported by some manufacturers, while also allowing the Department to focus

on products that do not have regulations (or on those with outdated standards).

(Public Meeting Transcript. No. 6 at pp. 122-132: Alliance Laundry Systems

LLC. No. 10 at p. 3; Whirlpool Corporation, No. 13 at p.2: Maytag

U.S. Department of Energy 58

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

Corporation, No. 22 at p. 2; ARAM. No. 29 at pp. 4-5) Conversely, ACEEE

commented that that number of previous rulemaking cycles should not be a

factor in prioritization, as the amount and cost of energy saved are the

overwhelming criteria. (Public Meeting Transcript, No. 6 at pp. 136-137)

6. All at Once: The New York State Attorney General 's office asserted that no

evidence was presented to indicate why all rulernakings cannot be conducted

at once. (New York State Attorney General's office, No. 25 at pp. 12-14)

Conversely, GAMA commented that it is clear that DOE cannot all at once

institute rulemakings for all of the products for which it has fallen behind

statutory schedules. (GAMA, No. 17 at p. 1)

7. Reduce Regulatory Burden: Several commenters advised that DOE should be

conscious of the cumulative regulatory burden placed on industry. (Alliance

Laundry Systems LLC, No. 10 at p. 3; Whirlpool Corporation, No. 13 at p.2;

Maytag Corporation, No. 22 at p. 2; AHAM, No. 26 at p. 2)

8. Other Considerations : Southern Company and EEI recommended selecting

products in a manner to create equitable standards between competing types

of equipment. Both groups also stated that the Department should consider

products with national security and resource scarcity implications. (Southern

Company, No. 12 at pp. 1-2; EEI, No. 23 at pp. 2-4) EEI also recommended

creating a balance in the fuel types used by regulated products. (EEI, No. 23

at pp. 2-3) Whirlpool commented that the Department's efforts would be the

most effective in the future by the removal of old, "energy bog" appliances

from the grid. (Whirlpool, No. 13 at p. 4) In its written comment, NEMA

suggested that the Department work with states and encourage participation in

the open federal rulemaking process instead of pursuing independent agendas.

(NEMA, No. 19 at p. 2) GAMA commented that DOE should not overlook

what is being accomplished by market forces, and perhaps turn its attention to

a product with a greater need for mandatory standards in order to achieve

energy savings. (GAMA, No. 17 at p. 2) Similarly, Whirlpool and General

Electric commented that DOE should not forget the importance of market

transformation programs including ENERGY STAR, tax credits, and

consumer education. (Whirlpool, No. 13 at p. 2; Public Meeting Transcript,

No. 6 at pp. 175-177)

Scheduling Hierarchy: While most stakeholders commented that DOE should use some

combination of the aforementioned principles as a basis for setting a schedule, there was

no clear endorsement or ranking of the relative importance of each principle. In the view

of most energy-efficiency advocates, all rulemakings should be expeditiously completed

while maintaining high quality analysis. The energy-efficiency advocates also tend to

place more emphasis on energy savings in creating the schedule. Appliance

manufacturers generally support completing rulemakings for the most overdue products

first (i.e., statutory order), while maximizing energy savings and diminishing cumulative

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EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

regulatory burden as secondary scheduling principles. Trade organizations are generally

aligned with the views of their members.

In their written submission, the joint commenters explained the principles of scheduling

that they feel DOE should use in developing its full-compliance scheduling plan. The

principles set forth in the joint commenters' memo are summarized as follows:

1. Expeditiously complete all currently active rulemakings.

2. Meet all deadlines for EPACT 2005 products.

3. Limit future rulemakings ( i.e., those not yet initiated ) to 30 months.

4. Complete all backlog rulemakings as quickly as possible (recommended

within next three years).

5. If the three-year time frame for backlog clearance cannot be met, DOE should

catch up on its legal obligations using phased -in approach within five years

(i.e., by the end of 2010). Such a phased-in approach should utilize the

following sub-principles within the constraints of principles 1-4:

a. Use potential energy savings to order the schedule.

b. Group products with similar technologies and/or by manufacturing

industry.

c. Those products with standards going into effect in 2004 -2007 should

be scheduled later. (ASE-ACEEE-ASAP-CFA-NEEP-NPPCC, No. 16

at pp. 8-9)

NYSERDA agreed with these scheduling principles presented by the joint commenters.

(NYSERDA, No. 27 at pp. 1-2)

NRDC urged the Department to complete all statutory requirements quickly, including

both the backlog and EPACT 2005 requirements. NRDC also stated that petitions must

be addressed simultaneously with the backlog and EPACT 2005 requirements. (Public

Meeting Transcript, No. 6 at pp. 28-29)

Several manufacturers proposed a different hierarchy for scheduling principles. While

manufacturers recognize the importance of energy savings to the program, the Nation,

and to scheduling the rulemakings, manufacturers generally support scheduling principles

related to time (i.e., statutory dates/order, time since last standard) or scheduling products

with the fewest number of rulemaking cycles first. (Alliance Laundry Systems LLC, No.

10 at p. 1; Public Meeting Transcript, No. 6 at p. 175) Manufacturers also supported

finishing the active rulemakings. Manufacturers suggest that products with the most

recent rulemakings should be moved to the end of the schedule. as this will ease the

cumulative regulatory burden felt by manufacturers in some industries. (Alliance

Laundry Systems LLC, No. 10 at p. 3; Whirlpool Corporation, No. 13 at p.2; Maytag

Corporation, No. 22 at p. 2) In addition, several manufacturers presented views about

specific products, indicating whether they favored rulemaking, and if so, when the

rulemaking should be scheduled.

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EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

The views of the represented trade associations are generally aligned with those of their

members. Some trade associations also highlight the excessive regulation of certain

industries over others. (ARAM, No. 29 at pp. 4-5) The Association of Home Appliance

Manufacturers made the offer that that they would like to work with the Department and

with other stakeholders in the near-term to develop new efficiency standards on

dishwashers and ranges and ovens, perhaps in an expedited process. (Public Meeting

Transcript, No. 6 at pp. 120-121)

The Department constructed its full-compliance scheduling plan, taking into

consideration the oral and written comments received from stakeholders. The

Department began with a few fundamental views about the schedule:

1. The schedule should be comprehensive , covering all backlog rulemakings and

EPACT 2005 products. The schedule should also address statutory requirements

in existence before EPACT 2005 that are not yet in the backlog.

2. In addition to being comprehensive , the schedule should be ,firm and achievable.

3. All available resources are needed to accomplish this aggressive schedule.

Limited resources will be available to address waivers and to update test

procedures. Test procedure updates will only be done when linked to a new

standards rulemaking and deemed essential.

4. In an effort to expeditiously clear the backlog . the Department's schedule has no

provision until after fiscal year 2011 for optional rulemakings or rulemakings

initiated in response to future petitions . Prior to fiscal year 2012, the Department

shall neither consider rulemakings in response to stakeholder petitions, nor will it

be conducting rulemakings on products where it is authorized but not statutorily

required to do so. As examples, the Department will not consider starting

rulemakings for residential refrigerators or residential furnace fans until fiscal

year 2012.

Stakeholder comments strongly supported that EPACT 2005 dates be met and that active

rulemakings (e.g., MV dry-type and liquid-immersed distribution transformers, and

furnaces and boilers) be completed without delay. Therefore, these two constraints

anchored the development of the Department's schedule. For the two major active

rulemakings, distribution transformers and furnaces and boilers, the Department plans to

issue final rules months prior to the dates specified in the current regulatory agenda.

The Department's schedule is presented in a structure that allows similar products and

technologies to be addressed as a group by dedicated teams. The seven groups

(corresponding to teams) are:

1. Heating.

2. Transformers and Motors,

3. Lighting.

4. Home Appliances.

5. Space Cooling,

U.S. Department of Energy 61

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

6. Commercial Refrigeration, and

7. Battery Chargers and External Power Supplies.

The schedule presented below also incorporates the process improvement concepts

discussed in section 6. The Department's schedule bundles backlog products into the

basic team-oriented framework presented above. Making use of product bundling and

valley-filling techniques, the multi-year schedule presents activities in a modular fashion

comprised of rulemaking teams; each team supports the development of two or three

distinct rulemakings. The Department's bundling methodology groups together products

with technology similarity and/or matching trade association coverage. This logic

employed for bundling also facilitated grouping of products within the backlog. In order

to create these bundles and to place the backlog products into the schedule, the

Department made the following three assumptions:

I . The length of a rulemaking is 36 months. When a team begins an "earlystart" rule in an effort to valley-fill its activities. that team will typically

issue a second final rule 27 months after the first final rule.

2. The NAECA-specified time interval between rulemaking cycles for each

product is preserved in the schedule going forward (more important for

products with two backlogged standards - note that if two standards are in

backlog, only the first standard is shown on the schedule). The

Department notes that the schedule proposed by the New York State

Attorney General's office (including 14 other States and other signatories)

also takes into account the NAECA-specified time intervals.

3. Sufficient resources will be available to initiate the proposed schedule in

fiscal year 2006 and to implement this schedule in subsequent years until

the backlog of rulemakings is addressed.

After DOE bundled backlog products around the basic team-oriented framework, it had

few scheduling choices left. The Department's schedule presented in the next subsection

shows that DOE will issue one standard for all products in the backlog by June of 2011

(the scheduled backlogged standard may be a first- or second-cycle revision).

Furthermore, the Department's schedule meets all mandatory deadlines specified in

EPACT 2005.

The Department considered a variety of other scheduling approaches. While the

Department heard from stakeholders that energy savings should be an important principle

in scheduling the rulemakings, the DOE scheduling approach (which heavily incorporates

stakeholder input) allows for few product scheduling choices. In addition, as noted by

stakeholders at the workshop, the criterion "energy savings" is not a straightforward

concept to implement for scheduling. Prior to conducting a rulemaking and setting a

standard, it is unclear how much energy a standard would save for a given product (the

savings are bounded between zero and the savings that would be achieved by maximum

technology). Therefore, the Department considers this criterion worthy of consideration,

but complex and difficult to implement in practice. Energy savings considerations are

reviewed in making small adjustments to the schedule after the other scheduling criteria

U.S. Department of Energy 62

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

are implemented. Finally, the Department notes that the proposed schedule is aggressive

and will therefore rapidly capture valuable energy savings for the nation.

The Department also heard that it should try to start and finish all backlogged standards

rulemakings simultaneously and immediately. In the Department's judgment, this

scheduling approach is not sound for the following reasons:

1 Some products have two standards cycles that are backlogged. Therefore,

the NAECA time interval should elapse between final rule issuances.

2. If all rulemakings for products in the backlog were run on a concurrent

schedule, efficiency improvements would be lost because of comment

periods and review times (l 1 months per rule). Teams dedicated to single

rulemakings would result in idle time for many team members. It is

instead prudent to employ a team-oriented, valley-filling approach.

3. Senior EE management would face an impossible task if all products in

the backlog were to have standards rulemakings conducted concurrently.

Their time would be used inefficiently, as would that of stakeholders.

Reviewing dozens of large, complex documents simultaneously would be

a huge problem and would be counter to DOE quality control efforts.

The Department also received comments that a 30-month timetable should be the

maximum for a single rulemaking. However, as explained in section 6, the Department

believes that 36 months is the shortest timeline that it can commit to on a repeatable basis

(some rulemakings may move faster). Moreover, the Department notes that valley-filling

results in each rulemaking team being able to issue a two-rule pair with an average 31.5-

nmonth duration. which is not significantly longer than the 30-month target suggested by

the joint commenters. Finally, the Department has scheduled "early-start valley-filling"

rules that conclude 27 months after a team's previous rule, but have calendar times

between framework workshop and final rule in excess of 36 months - the Department is

transparent about this approach and believes that the start/stop nature of the "early-start

valley-filling" rule is intrinsic to valley-filling, but will accelerate the Department's

program-wide rulemaking rate.

Table 11 presents DOE's multi-year schedule. This schedule results in the issuance of

one standard for each product with a backlogged standard (i.e.. 18 products), plus one

standard for each product for which DOE must develop a standard as required by EPACT

2005. This schedule also addresses determination analyses. the distribution transformer

test procedure. the residential central air-conditioning test procedure, two test procedures

that EPACT 2005 requires DOE to develop, and the test procedure rulemaking which will

be conducted en masse in response to EPACT 2005.

This schedule does not address second-cycle standards for products that have two

standards in the backlog. nor does it address more than one standard for any EPACT

2005 product. This schedule does not address the standards or test procedures that would

be necessitated by positive determinations for either high-intensity discharge (HID)

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EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

lamps or small electric motors. The Department fully recognizes that all backlogged

standards will need to be scheduled and issued (maintaining the relevant NAECA interval

between final rules), and it also plans to stay on-schedule for all EPACT 2005 statutory

requirements. Moreover, if positive determinations are made for HID lamps or small

electric motors, the Department will schedule test procedure and energy conservation

standard rulemakings at the necessary time. Finally, after fiscal year 2011, the

Department will again consider scheduling optional rulemakings. No optional

rulemakings are reflected in this schedule.

U.S. Department of Energy 64

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Table 11 Multi-Year Schedule to Issue One Standard for Each Product in Backlog , and to Develop One Standard for Each Product per EPACT 2005

Rulemaking Rule Type EPACT 2005, Approx.

Rule Final Action

' Team Product(s) Backlog, Initiation Date

Other

Date

Heating Team Standards e Furnaces and Boilers (Residential) [Backlog Cycle I including Mobile Backlog NA September 2007

TTnmc Fmrnaces. Packing Cycle 2 for Small Fnrnaccs]

o Water Heaters (Residential) [Backlog Cycle 21 Backlog FY2006, Q4 March 2010

• Direct Heating Equipment [Backlog Cycle 1] Backlog

• Pool Heaters [Backlog Cycle 1 ] Backlog

Tranc1 rmc <' hcicrminn+inn ® CmpH Flrr+rir T\MnfnT Rarrci g TvTA Jnne inn(

and Motors Analysis

Team Standards • Distribution Transformers, MV Dry-Type and Liquid-Immersed Backlog NA September 2007

• Electric Motors, 1-200 HP [Backlog Cycle 1 ] Backlog FY2008, Q1 June 2011

Test Procedure • Distribution Transformers Backlog NA April 2006

Lighting Team Determination • High-Intensity Discharge Lamps Backlog NA June 2010

Analysis

Standards • Ceiling Fan Light Kits (other than those with prescribed standards) EPACT 2005 NA January 2007

• Incandescent Reflector Lamps [Backlog Cycle 1 ] Backlog FY2006. Q3 June 2009

• Fluorescent Lamps [Backlog Cycle I] Backlog

• incandescent General Service Lamps [Backlog Cycle I] Backlog

• Fluorescent Lamp Ballasts [Backlog Cycle 2] Backlog FY2008, Ql June 2011

Home Standards • Dishwashers (Residential) [Backlog Cycle 2] Backlog FY2006, Q2 March 2009

Appliance e Ranges and Ovens (Electric and Gas) and Microwave Ovens [Backlog Backlog

Team Cycle I for Gas, Backlog Cycle 2 for Electric]

• Dehumidifiers (Residential) [Revision] EPACT 2005

• Clothes Washers (Commercial) [Revision 1] EPACT 2005

• Clothes Dryers (Residential) [Backlog Cycle 2] Backlog FY2008, Qi June 2011

• Room Air Conditioners [Backlog Cycle 2] Backlog

Space Cooling Standards • Packaged Terminal Air Conditioners and Heat Pumps Backlog FY2006, Q4 September 2008

Team • Central Air Conditioners and Heat Pumps (Residential) [Backlog Cycle 2] Backlog FY2008, Q2 June 2011

Test Procedure • Central Air Conditioners and Heat Pumps (Residential) Other NA September 2007

U.S. Department of Energy 65

EERE-2006-DET-0136 COMMENT 01.2
January 31, 2006

EPACT 2005, Approx.

Rulemaking Rule Type P roduct(s) Backlog Rule I, inal Action

Team ,

Other Initiation Date

Date

Commercial Standards • Refrigerated Bottle or Canned Beverage Vending Machines EPACT 2005 FY2006, Q3 August 2009

Refrigeration

Team • Ice-Cream Freezers. Self-Contained Commercial Refrigerators, Freezers, FPACT 2005 FY2006. Q2 January 2009

and Refrigerator-Freezers without Doors, and Remote-Condensing

Commercial Refrigerators, Freezers and Refrigerator-Freezers ( initial)

• Automatic Ice Makers (Commercial) [Revision 1 ] EPACT 2005 FY201 1, Q3 January 2015

Test Procedure • ice-Cream Freezers, Self-Contained Commercial Refrigerators, Freezers, EPACT 2005 NA January 2008

and Refrigerator-Freezers without Doors, and Remote-Condensing

Commercial Refrigerators, Freezers and Refrigerator-Freezers

Battery Determination • Battery Chargers and External Power Supplies EPACT 2005 NA August 2008

Charger", and Analysis

External Standards • Battery Chargers and External Power Supplies (Contingent on EPACT 2005 FY2008, Q4 August 2011

Power Determination)

Supplies Team Test Procedure • Battery Chargers and External Power Supplies EPACT 2005 NA February 2007

Other EPACT Test Procedure • 1 I Test Procedures Prescribed by EPACT 2005 EPACT 2005 NA November 2006

2005

U.S. Department of Energy 66

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January 31, 2006

The DOE program staff will operate in seven rulemaking teams as follows:

Team I (Heating): Team I is currently completing the residential furnaces and boilers

standards rulemaking. In fiscal year 2006 a rulemaking will be initiated that includes

standards for residential water heaters, direct heating equipment, and pool heaters.

Team 2 (Transformers and Motors): Team 2 will complete the small electric motors

determination analysis (and the test procedure and standards rulemaking will follow if

there is a positive determination). In parallel with this work on small electric motors, the

team will complete the distribution transformers standards rulemaking for MV dry-type

and liquid-immersed transformers. The other two standards rulemakings to be carried

about by Team 2 are the two cycles of electric motors (1-200 hp) rulemakings. Note that

the second cycle is not in the backlog.

Team 3 (Lighting): Per EPACT 2005, Team 3 will complete a standards rulemaking for

ceiling fan light kits (for light kits other than those with prescribed standards) by January

1, 2007. There is insufficient time to conduct a rulemaking that meets all required

reviews and comment periods. Since the product class to be regulated is a relatively

small portion of the market, DOE hopes to issue a direct final rule for this product to

codify the standards prescribed in EPACT 2005 in order to meet the statutory schedule.

During the second half of fiscal year 2006, DOE will initiate the first of two cycles of

lamp standards rulemakings. In between these cycles, DOE will concentrate efforts on a

fluorescent lamp ballast standards rulemaking and completion of the HID determination

analysis, taking into consideration the impact of the mercury vapor lamp ballast

requirements in EPACT 2005. If the HID determination is positive, the HID standards

rulemaking will be bundled with the second round of lamp standards rulemaking (and a

test procedure rulemaking for HID lamps will be conducted).

Team 4 (Home Appliances): Team 4 will be analyzing home appliances. Dishwashers

and ranges and ovens ( gas and electric ) and microwave ovens will be bundled with two

EPACT 2005 products (dehumidifiers and commercial clothes washers). Clothes dryers

and room air conditioners will be bundled as an "early-start valley-filling" rulemaking to

the four-product bundle. In turn, the second revisions for standards for both commercial

clothes washers and gas ranges and ovens will valley-fill the clothes-dryers and room-AC

rule.

Team 5 (Space Cooling): Team 5 will complete the residential-central-air conditioner

and heat-pump test procedure rulemaking. The rulemaking for packaged terminal air

conditioners and heat pumps will begin in the second half of fiscal year 2006. The

standards rulemaking for residential central AC will be an "early-start valley-filling" rule

with the packaged terminal air conditioner and heat pump rule.

Team 6 (Commercial Refrigeration): Team 6 will be dedicated to issuing all of the test

procedures and standards required by EPACT 2005 for commercial refrigeration

products. This effort will be complex and will involve parallel effort on separate

U.S. Department of Energy 67

EERE-2006-DET-0136 COMMENT 01.2
i

January 31, 2006

standards rulemakings and test procedures . The Department plans to meet all EPACT

2005 statutory dates.

Team 7 (Battery Chargers and External Power Supplies): Team 7 will be dedicated to the

battery-chargers and external-power-supplies rulemaking effort. This effort entails

issuing test procedures, holding a scoping workshop, issuing determinations, and

potentially issuing standards (dependent upon determinations).

In an effort to quickly clear the backlog and to meet all EPACT 2005 deadlines, the

current schedule emphasizes the rate at which standards will be issued. While the

Department does not intend to sacrifice analysis quality, it will necessarily have to

actively manage analysis complexity (see section 6.3). In many cases, stakeholders will

welcome this change, but reducing complexity could be perceived as reducing quality

and does present the risk of challenges to the Department's regulations that might slow

the implementation of the standards.

If the schedule were to be accelerated beyond that proposed by the Department, the

Department believes that the risks of overly contentious and potentially flawed

rulemakings would be increased to levels not justified by the incremental reductions in

the time scheduled to address the backlog. As explained in section 6, for a rulemaking

that is not streamlined or expedited, the Department believes that it would be

irresponsible to commit to a single rulemaking timetable shorter than 36 months in

duration on a repeatable basis. In some cases. the Department may issue Final Rules in

advance of the scheduled dates. The Department cannot in good faith commit to a

schedule that requires issuance of one standard for each product in the backlog prior to

June of 2011.

This report documents substantial enhancements to productivity in rulemaking activities

that should allow the Department to accomplish more rulemaking activities per dollar of

appropriations. The Department's proposed activities represent finn and achievable

schedules for very important and complex rulemaking activities that will have significant

energy savings benefits for the Nation. The necessary fiscal year 2006 rulemaking

activities are covered by already appropriated resources. The Department will formulate

its future budget requests to provide the necessary resources to implement the schedule

and remain at a high level of output until the backlog of rulemaking activities is

addressed.

In addition to financial resources, the Department is identifying and obtaining the human

resource needs for expanded rulemaking activity. This will necessarily involve

examining critical needs among the Federal workforce in the Office of Energy Efficiency

and Renewable Energy. the Office of General Counsel_ and the Office of Policy and

International Affairs. It will also involve assessing the needs for expert technical

assistance from other Federal agencies, such as the National Institute of Standards and

Technologies, national laboratories, and other technical contractors. The Department is

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EERE-2006-DET-0136 COMMENT 01.2
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already working in fiscal year 2006 to obtain the needed human resources for expanded

rulemaking activities identified in this report.

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EERE-2006-DET-0136 COMMENT 01.2
January 37, 2006

APPENDIX A. Explanation of Delays to Priority Rules

nno :-.ed ° 2004

The Conference Report accompanying the Fiscal Year 2006 Energy and Water

Development Appropriations Act includes a requirement for an Appliance Standards

Program report (Energy and Water Development Appropriations Bill, 2006, Report 109-

275) as follows:

Report Requirement. The appliance efficiency standards program, funded

within the equipment standards and analysis subaceount, may be the most

successful of all federal efficiency programs. The Committee understands that the

Department is delayed in meeting legal deadlines for issuing approximately

twenty new and updated programs, and that its three highest priority rulemakings

will be delayed at least two years. The Committee notes that while the

Department is behind in meeting legal deadlines for the issuance of certain

rulemakings, its budget request reflects a reduction in resources needed to process

such rulemakings. The goal of the Department's own "Process Improvement" rule

(61 FR 36974 (July 15, 1996)) is to complete rulemakings within three years,

including 18 months from Advanced Notice of Proposed Rulemaking to issuance

of a final rule. The Committee strongly urges the Secretary to expedite the

process, and requests that the Secretary report to the Committee by December 1,

2005 on plans to accelerate standards rulemakings, including:

• A timeline for work on issuing the three highest priority standards. with an

explanation for the additional delays announced in December 2004:

® A plan for addressing the backlog of standards rulemakings that have

missed legal or internal deadlines. including a list of the affected products

and deadlines, timelines for action on each product, and funding

requirements to complete each rulemaking; and

® A description of how the Department will meet the time frame goals of the

"Process Improvement" rule, or of how the process should be changed so

that the Department can meet the goals.

Although this report to Congress was prepared in response to section 141 of the Energy

Policy Act of 2005 (EPACT 2005), Pub. L. 109-58, its contents include the information

requested in the Conference Report accompanying the Fiscal Year 2006 Energy and

Water Development Appropriations Act.

Section 3 of the report summarizes all of the Department's rulemaking responsibilities

and the Department's progress towards meeting its goals. The list of affected products

includes all standards mandated by EPCA, as amended, including the provisions in

EPACT 2005. The original standards dates (for standards prescribed by statute) and the

dates set by law for all updates and revisions arc identified. In cases where DOE has

completed a rulemaking, the actual dates are shown.

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Section 6 describes the Department 's plan for addressing the backlog of standards

rulemakings. Recent and forthcoming process improvements will increase the program's

rulemaking output by increasing the number of products in the active rulemaking process

and by shortening the time required to complete rulemakings. The process improvements

will enable the Department to meet the time frame goals of the Process Rule.

Furthermore, rather than waiting until a rulemaking is completed before initiating another

rulemaking for similar products, the Department will initiate an "early-start valleyfilling" rule during the ANOPR comment period. These "early-start valley-filling" rules

will take advantage of valley-filling techniques to reduce the time between final rules to

27 months. for a given rulemaking team.

The timeline for work on issuing all standards rulemakings is described in section 7.3.

The full-compliance schedule employs all the new and recently ]implemented process

improvements to expeditiously complete the currently active rulemakings and meet all

deadlines for the newly covered EPACT 2005 products. In regard to the standards

backlog. the Department's schedule will issue one standard for all products in the backlog

by June of 201 1 (the scheduled backlogged standard may be a first- or second-cycle

revision).

Finally, an explanation for the additional delays announced in December 2004 for issuing

the standards for the three priority rules is provided in the following subsections.

In December 2003, the Department published a regulatory agenda (68 FR 72467

(December 22, 2003)) giving publication dates for the ANOPR, NOPR, and final rule for

each of the three priority products (i.e.. distribution transformers, commercial unitary airconditioning and residential furnaces and boilers). In December 2004, the Department

revised the publication dates in the regulatory agenda (69 FR 72712 (December 13,

2004)) reporting the ANOPR publication date of July 29, 2004, for each of the three

priority rules and revising the publication dates for the NOPRs and final rules.

As the December 2003 and 2004 regulatory agendas show, the time period between

ANOPR and NOPR increased from 12 months to between 23 and 26 months for the three

rules. Similarly, the time between NOPR and final rule increased from between six and

eight months to 12 months. The December 2003 schedules had allocated three to four

weeks for BT review and six weeks for mandatory concurrence and Assistant Secretary

approval. In reality. as experienced in the ANOPR stage of these three priority rules, the

time required by the BT/EE program offices for edits and revisions was approximately

eight months and the review time required for General Counsel concurrence was

approximately an additional eight months.

Based on this experience. the December 2004 regulatory agenda schedules allowed for

more time for reviews. edits. and revisions and incorporated a new OMB requirement for

a peer review. EE also required a peer review of all programs including the Appliance

Standards Program. The following subsections provide greater insight into the causes of

delays for the individual rulemakings.

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A.2.1 Distribution Transformers

Prior to publishing the Distribution Transformers ANOPR, the amount of time required

for BT office edits and revisions, mandatory concurrence, and Secretarial approval

amounted to 17 months. The major ANOPR analyses and complete draft of the Federal

Register notice were complete in February 2003; however, it was not until October 2003

that the document was formally entered into mandatory concurrence (approximately eight

months) and then a further nine months lapsed between that date and publication in the

Federal Re i^ on July 29, 2004.

The eight months required for BT/EE edits and revisions was driven by the complexity of

the analysis and the corresponding length of time needed to review the analyses and the

changes requested as a consequence.

Several factors have contributed to this complexity, which, in turn, significantly

lengthens the technical review conducted by the DOE program office.

® Transformers are not presently subject to minimum efficiency standards and there

are no available baseline statistics for product efficiency performance;

® There is no DOE test procedure for distribution transformers, and transformer

efficiency varies with the loading it is subjected to in the field;

® Distribution transformers consist of three distinct technology types, each requiring

separate technical analysis: low-voltage dry, medium-voltage dry, and liquidimmersed types;

• Within these technology types, distribution transformers span a very large range

of sizes (i.e., electrical capacities);

• Before EPACT 2005 established a standard for low-voltage dry-type distribution

transformers, the Department had developed 1] 5 separate efficiency standard

levels for the different transformer types and capacities; and

® Transformers are used by many different customer types which, in accordance

with the process rule, require separate economic analysis.

The technical and economic analysis needed to support the development of transformer

standards can be appreciated by considering that the analysis consisted of thirteen entirely

separate engineering cost-efficiency curves and LCC models. In comparison, the

commercial unitary air-conditioning rulemaking included only two distinct analyses and

the furnace and boiler rule has six engineering curves and LCC models. Furthermore,

these other products have been regulated before so that the underlying market and

technology attributes were much more readily available.

A.2.2 Commercial Unitary Air Conditioners and Heat Pumps

Prior to publishing the commercial air-conditioning ANOPR. the amount of time required

for BT office edits and revisions, mandatory concurrence, and Secretarial approval

amounted to 17 months. The major ANOPR analyses and draft of the Federal Register

notice were complete in February 2003 and delivered to the BT project manager for

review. The BT project manager provided comments to the CUAC Team over a fourmonth period. Then. in June 2003, the ANOPR analysis was submitted to the BT

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program manager, and it continued to move up the EE chain over the next three months.

The document entered mandatory concurrence in September, approximately seven

months after it was entered into review. The notice then required a further ten months in

concurrence and Secretarial review before it was published in the Federal Register on

July 29, 2004.

During the BT/EE Review, stakeholder review actions and a stakeholder-requested

independent review were undertaken which caused modifications and delays in the

schedule.

® In early 200;. in anticipation of publishing the ANOPR, the Department released

draft analysis for public review. In response, the Air-Conditioning and

Refrigeration Institute (ART) and Lennox Industries wrote a comment which

raised several significant analytical issues . The Department decided these issues

should be the object of a peer review which should be conducted by a team of

experts not previously associated with the rulemaking.

In August 2003 . after considering the stakeholder comments about the technical

analysis, DOE contracted for an independent review team to prepare an

independent assessment of significant comments received, and the overall

methodolog\ . assumptions, and data used in the Technical Support Document for

the proposed ANOPR.

This independent review extended the BT/EE concurrence to seven months, but the

stakeholder and independent review process that BT engaged in likely enabled the

consensus agreement that followed. Mandatory concurrence added ten months to the

review process for a total of 17 months of review prior to publication of the ANOPR.

A.2.3 Residential Furnaces and Boilers

The BT edits and revisions on this rulemaking took 13 months. Mandatory concurrence

added seven months to the review for a total of 20 months. The delays to the BT reviews

can be attributed to numerous rounds of public consultations and to revisiting prior

decisions that impacted the rulemaking analysis and associated documents. Many of

these consultations were related to the concerns expressed by manufacturers about the

costs and safety of venting systems for non-weatherized gas furnaces above 80 percent

AFUE. Another area of significant interest involved the Department's authority to

regulate the electricity consumption of furnaces. Specific examples of stakeholder

consultations Include:

® The Department held a public workshop on May 8, 2002, to receive comments on

venting installation, other venting issues, and to discuss the Department's research

concerning venting systems.

® In August 2002, GAMA convened a meeting to discuss approaches for analyzing

electricity use in furnaces. The Department. GAMA, and the American Council

for an Energy-Efficient Economy (ACEEE) presented its ideas on how to address

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this issue. Following this meeting, DOE reconsidered its authority to impose a

standard that limits electricity consumption in residential furnaces and boilers.

The major ANOPR analyses were completed in November 2002 and delivered to the

DOE project manager for review, while the analysis team completed work drafting the

Federal Register notice and TSD. Over the course of the following 13-month review, a

number of BT/EE-l /GC/PI decisions were made that impacted the rulemaking schedule.

This included decisions about the rule's priority, the regulation of electricity

consumption, regional standards and the need for additional analysis on the cost and

safety of venting systems. Some of the key decisions made which impacted the analysis

include:

® In December 2002, the Department reconsidered its legal authority to regulate

electricity consumption in residential furnaces and boilers, based on NAECA.

® In February 2002, DOE decided to revise the analysis of venting costs and

initiated the development of a venting cost-model based on the RS Means

installation-cost manuals.

® As the preliminary analysis indicated that no candidate standard level was likely

to meet the criteria specified in law, in early 2003 DOE initiated the drafting of a

notice of reprioritization. The purpose of the notice of reprioritization was to

inform the public that the Department intended to suspend the rulemaking

activities for residential furnaces and boilers, and to provide interested persons

and entities with an opportunity to comment.

® The May 2003 semiannual regulatory agenda announced that the Department was

reclassifying this rulemaking action as low priority, pending further review.

® In July 2003, DOE decided to rescind efforts for the reprioritization notice and

decided to solicit additional comments on issues regarding the feasibility and

safety of 81 percent modulating furnaces and of other product classes as needed.

After completing the review and necessary revisions, the notice entered mandatory

concurrence in December 2003. Thus, prior to publication of the furnaces and boilers

ANOPR. the time needed for the BT office revisions and mandatory concurrence totaled

20 months.

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