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## U.S. DEPARTMENT OF ENERGY

**+ + + + + CENTRAL AIR CONDITIONER REGIONAL STANDARDS**  **ENFORCEMENT WORKING GROUP**

**+ + + + +**
**PUBLIC MEETING**

**+ + + + + Wednesday**  **September 24, 2014**

**+ + + + + The Public Meeting met in Suite GH**  **019, 1000 Independence Avenue, S.W., Washington, D.C., at 9:00 a.m., Neil Eisner, Meeting**  **Facilitator, presiding.**

**PRESENT NEIL EISNER, Meeting Facilitator**  **DAN ARNOLD, NORDYNE TIMOTHY BALLO, Earthjustice**  **JORDAN DORIA, Ingersoll Rand GARY CLARK, Goodman Global**  **RAY ELLIS, Lincoln Electric Cooperative GARY FERNSTROM, California Investor Owned**  **Utilities JOHN GIBBONS, Carrier Corporation**  **STEVEN GOERING, U.S. Department of Energy, General Counsel**  **DAVID HUNGERFORD, California Energy Commission**  **JOHN HURST, Lennox International CHARLES McCRUDDEN, Air Conditioning**  **Contractors of America JON MELCHI, HARDI** 

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## PRESENT: (cont'd) **KAREN MEYERS, Rheem Manufacturing Company** **ELIZABETH NOLL*, Natural Resources Defense** **Council DOUG RAWALD, U.S. Department of Energy,**  **General Counsel BRYAN ROCKY, Johnson Controls**  **HARVEY SACHS, American Council for an Energy-Efficient Economy**  **AMY SHEPHERD, Air-Conditioning, Heating and Refrigeration Institute**  **CHARLES WHITE, Plumbing-Heating-Cooling Contractors - National Association** 

**ALSO PRESENT KARIM AMRANE, Air-Conditioning, Heating, and**  **Refrigeration Institute LAURA DEGITZ, Navigant Consulting**  **ALEX KROWKA, Department of Energy ANIRUDDH ROY, Goodman Manufacturing Company**  **ERIC STAS, American Council for an Energy- Efficient Economy**  **MEG WALTNER, Natural Resources Defense Counsel**  **VINCENT MUCCIOLA*, National Comfort Products**

***via teleconference**

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## 1 P-R-O-C-E-E-D-I-N-G-S **2 9:02 a.m. 3 MR. EISNER: All right. Why don't we**  **4 get started. An unusual morning. We don't have 5 the mics like we would have, as we would have in**  **6 the other room. So -- 7 PARTICIPANT: Should I shut this?**  **8 MR. EISNER: Yeah, that would be good, 9 I think. Part of what we've got to watch out,**  **10 again, are the side conversations, because the 11 little microphones that are spread around will**  **12 pick that up and make it very difficult for the 13 court reporter to figure out what's supposed to**  **14 be on the record and what's not. So, let's be 15 careful of that.**  **16 Doug, as you know, teaches. He taught 17 last night and he will be here this morning by**  **18 about 10 o'clock. So, I thought we were going to 19 start off --- I thought there would be a couple**  **20 other people here from DOE and we could start off 21 with one of the issues that was on the action**  **22 items that needs taken care of during the**

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## 1 meetings, but instead let's perhaps start off **2 with the first item that's on this list that 3 we've distributed.**  **4 It's AHRI and working on the FTC 5 label. So, we've got a report on that and what**  **6 happened between meetings. 7 MS. SHEPHERD: I think that would be**  **8 best to wait for Karim. He's been working on 9 that.**  **10 MR. EISNER: Okay. 11 MS. SHEPHERD: So, he should be -- he's**  **12 coming today. 13 MR. EISNER: Okay. Manufacturers,**  **14 we're also going to have some discussions between 15 meetings on --- they're going to go back and talk**  **16 to others about whether they could give more 17 details, but also I believe that they'll have**  **18 their full support for their proposal on the 19 label. Somebody want to talk on that?**  **20 MR. ROCKY: Yeah, I guess I can. This 21 is Bryan Rocky. So, there was discussions and**  **22 not -- we haven't caucused to start, but I**

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## 1 believe everybody had a chance to go back and **2 talk to the appropriate engineering and 3 manufacturing groups.**  **4 So, what was proposed and discussed, 5 I think, is very doable. It's still a situation**  **6 that each manufacturer based on their own system 7 requirements and processes, it's not the same**  **8 implementation, time frame and things that 9 everyone is looking at. I do have a couple of**  **10 samples of what I can do with our rating plates 11 showing some of the proposed terms that we had**  **12 talked about. I did not forward that by email, 13 but I do have some samples.**  **14 The discussions: turns out that we 15 came to a consensus on agreement on term. And**  **16 so, I'm going to hand a couple of these things 17 around just to --- I'll just send them in**  **18 different directions here. 19 The idea is that the term on rating**  **20 plates or an additional label that would be 21 located near or adjacent to the rating plate**  **22 would be something in the verbiage of install**

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## 1 prohibited in the southwest, or install **2 prohibited in southwest and southeast. 3 And there was discussion about adding,**  **4 if available room, text that would say something 5 about, for information, see DOE website. So,**  **6 that could be, see www.productinfo.energy.gov. 7 So, I think every manufacturer, and**  **8 you guys correct me if I'm wrong, but this is a 9 doable thing and we can proceed forward. I did**  **10 not forward as well, but I have some pictures of 11 what these rating plates would look like on a**  **12 typical York air conditioner. 13 And with the font size that I have**  **14 available, these are readable from 12 to 15 feet 15 away from the unit. Not saying that that's, you**  **16 know, we did not come with a standardized font 17 size. Again, it depends on what each**  **18 manufacturer has available for them. 19 I have the luxury of a lot more real**  **20 estate and easier to modify rating plates than I 21 think some of the other guys -- other**  **22 manufacturers have today.**

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## 1 MR. EISNER: Do you think we could **2 agree to a description that would fit all the 3 manufacturers?**  **4 MR. ROCKY: So the --- 5 MR. EISNER: You're saying different**  **6 font sizes depending on space.**
**7 MR. ROCKY: Yes. 8 MR. EISNER: So, some term like**  **9 readable from a foot away or two feet away-type 10 things?**  **11 MR. ROCKY: So, in the manufacturers' 12 discussions which included discussions with the**  **13 AHRI, URC, Unitary Regulatory Committee, that was 14 not brought up as a minimum font size or**  **15 readability. It was just brought up as 16 standardized text that all the manufacturers**  **17 could agree on. 18 Again, I think it makes a big**  **19 difference whether a manufacturer has the ability 20 to put something on the rating plate versus**  **21 having to do another label. And the bigger the 22 label, the more costly it's going to be for that** 

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## 1 manufacturer to make a change. **2 MR. EISNER: Is there a reason you 3 couldn't make the existing label bigger? Do you**  **4 have to find a different spot for the expanded 5 label?**  **6 MR. ROCKY: Yeah. So, it's a 7 combination, Neil, of size of the label, location**  **8 and then the processes that different 9 manufacturers have. In our case, the sample is**  **10 going around. This is a printed on-demand at the 11 assembly line-type label.**  **12 I happen to have the luxury that we 13 went through a standardization process about a**  **14 year ago. So, this is how much room I've got. 15 There are other manufacturers that do not have**  **16 the luxury of this much real estate or this size 17 or this type of label today. So, there are**  **18 definitely issues with space, formatting, size of 19 fonts that can be put on different products.**  **20 MR. EISNER: And, again, and I'd like 21 to open it up to other suggestions or ideas,**  **22 maybe it's simply agreeing to, as close to the**

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## 1 existing label as possible, depending on space on **2 the system, et cetera, but some text that would 3 give some idea about what is expected. Do other**  **4 people have ideas? Does anybody else have an 5 issue here?**  **6 MR. HURST: Yeah. This is John Hurst 7 from Lennox. I think it's probably reasonable**  **8 that, it is reasonable that we commit to a 9 certain size of font and that we, you know,**  **10 attempt to either put it on the label, or if it's 11 not on the label, reasonably close to where**  **12 somebody reading the nameplate would see it. We 13 don't want to hide it. It needs to be in an**  **14 easily recognizable location. That said, you 15 know, to Bryan's point, a lot of times it's just**  **16 real estate on the --- where you can affix the 17 actual nameplate.**  **18 So, I think we all have to come back 19 with what our specific proposals are, but I think**  **20 the wording in the agreement needs to say 21 something to the effect that it's going to be**  **22 near the nameplate, if not on the nameplate, a**

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## 1 certain size where you can read it. **2 MR. FERNSTROM: So, this is Gary for 3 the California IOUs. I know we're working on the**  **4 details, but this is a major, major concession, 5 for lack of a better term, on the part of the**  **6 manufacturers that's going to make it really easy 7 to identify qualifying units in the field. So,**  **8 that's very much appreciated. 9 MR. EISNER: And that's good to hear.**  **10 Now, as someone who is praising the industry for 11 doing that, is there some minimal language you**  **12 think would be fine that would be okay to the 13 manufacturers?**  **14 MR. FERNSTROM: Because of the fact 15 that the manufacturers have agreed to do this, I**  **16 want to be very open and flexible with respect to 17 how they do it.**  **18 MR. EISNER: Other comments or 19 suggestions? Harvey.**  **20 MR. SACHS: This is Harvey and I very 21 much want to support the concept of label and the**  **22 minimum font size. Years, decades ago when I was**

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## 1 thinking about doing presentations, if I recall **2 correctly, the guideline was what was readable 3 was about the height in inches equivalent to the**  **4 audience distance in feet. 5 And I think that roughly translating**  **6 that 10 to 12-foot readability is a very good 7 goal and that would translate then to something**  **8 like 72 point, or one-inch type. 9 Now, I may be remembering wrong, but**  **10 I think that goal of being able to read the label 11 at a dozen feet is the kind of visual impact that**  **12 the manufacturers have suggested as I interpret 13 it is required.**  **14 MR. FERNSTROM: So, Harvey. This is 15 Gary. I thought the font size needed to be**  **16 inversely proportional to the audience's age. 17 (Laughter.)**  **18 MR. SACHS: I'm sorry, Gary. My 19 auditory assistance is not working and I'm hard**  **20 of listening. 21 MR. EISNER: Do we want to put some**  **22 words up on the screen and see if we can agree?**

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## 1 I mean, is some feeling here that the rule would **2 simply say the manufacturers showing clear 3 language either on the existing label or another**  **4 label easily accessible by the consumer, or 5 something like that, with the following kind of**  **6 information. 7 MR. FERNSTROM: I might just note for**  **8 the amusement --- this is Gary again --- of the 9 group that the folks in California worked with**  **10 the spa manufacturers to develop a voluntary 11 label. The industry actually proposed it and put**  **12 it forward. 13 Turns out the label is installed**  **14 inside behind the access panel of the spa. So, 15 you just absolutely can't see it from the**  **16 outside. It's not very helpful. We're in the 17 process of trying to rectify that.**  **18 MR. EISNER: Other thoughts? 19 MS. NOLL: So, I think the last time**  **20 we did discuss, though, that the language would 21 go on the nameplate. And if there wasn't room,**  **22 it would go right next to it. So, that should**

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## 1 probably be part of --- **2 MR. EISNER: All right. What I'm 3 hearing is ---**  **4 MS. NOLL: -- to Gary's point. 5 MR. EISNER: What I'm hearing is that**  **6 some of the manufacturers may not have space next 7 to the label. Do you want it to say next to the**  **8 label, or as close as possible? 9 MR. SACHS: This is Harvey and I want**  **10 it to be on the outside of the condensing unit. 11 MR. EISNER: Okay. Sure.**  **12 MR. SACHS: And I think we have to 13 leave some discretion, but I think guidance such**  **14 as visible from the access panel to electric 15 components might be helpful, but I'm offering**  **16 that as a strawman for response. 17 MR. EISNER: And is that acceptable to**  **18 the manufacturers that it has to be on the 19 outside?**  **20 GROUP RESPONSE: Yes. 21 SPEAKER: That's fine.**  **22 MR. HUNGERFORD: And didn't someone use**

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## 1 the term adjacent? It seems like that is **2 appropriate. 3 THE COURT REPORTER: I'm sorry. Who is**  **4 speaking? 5 MR. EISNER: That was Dave Hungerford.**  **6 THE COURT REPORTER: Thank you. 7 MS. MEYERS: So, this is Karen with**  **8 Rheem. We're all going to try to get it on the 9 nameplate. The last thing we want is another**  **10 label, but that may take some time and take some 11 reformatting.**  **12 So, I think, you know, the intent will 13 be to get it on the nameplate, but it may not be**  **14 possible especially by January 1st. So, whether 15 it's adjacent, whether it's next to, whether it's**  **16 outside on the condensing unit, I think you guys 17 are going to have to give us a little leeway.**  **18 I don't know where ours will be going 19 on all units. Larger units it's not going to be**  **20 an issue, but, you know, I just would ask that we 21 have a little flexibility. We want it on the**  **22 outside of the unit. When you're doing a**

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## 1 manufacturing process, you don't want to have to **2 run around on the other side of the unit and put 3 on the other side.**  **4 So, you're going down this assembly 5 line. We're all going to try and get it either**  **6 on the nameplate, or as close to it as possible, 7 just for manufacturing purposes.**  **8 MR. FERNSTROM: So, this is Gary again. 9 Having expressed flexibility in this from the**  **10 California Utilities' point of view, I do think 11 it's important that it be outside somewhere, yes.**  **12 MR. SACHS: This is Harvey and I'm 13 certainly comfortable with the language that**  **14 Karen and others have suggested that it be as on 15 or as near the nameplate as possible.**  **16 MR. EISNER: Okay. Anybody object to 17 that? The DOE has flexibility to take action if**  **18 they believe it could have been closer to the 19 original label, but it seems like everybody**  **20 doesn't feel this is going to be a problem. 21 So, I'm just trying to make sure we**  **22 have agreement on the language, because this is**

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## 1 going to have to be something that we look at. **2 So, on or as near to the unit's nameplate as 3 possible.**  **4 MS. MEYERS: Correct. 5 MR. EISNER: Any objections to the**  **6 language that's up here? Again, we can come back 7 to these things as we start to package and put it**  **8 all together. All right. That's a good way to 9 start off the meeting. We can give everybody a**  **10 break. It's a quarter after 9:00. 11 (Laughter.)**  **12 MR. EISNER: Okay. The next thing I 13 have on the list is manufacturers working on**  **14 alternative penalties to fines from DOE. I think 15 someone has to report on that.**  **16 MS. MEYERS: Can you repeat that, Neil? 17 MR. EISNER: It was manufacturers**  **18 working on alternative penalties to fines from 19 DOE.**  **20 MS. NOLL: So, I think it was along the 21 lines of alternatives to civil penalties that**  **22 could be put in place that manufacturers could do**

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## 1 that would, work within the supply chain. **2 MS. MEYERS: In addition to the 3 prohibited act?**  **4 MS. SHEPHERD: Yeah, I'm not really 5 following you.**  **6 MS. MEYERS: Absent effort. 7 MS. NOLL: And we -- this is in**  **8 prohibited acts for other parties, what can 9 manufacturers do that would have influence on the**  **10 chain? 11 MR. HURST: Stop selling product.**  **12 (Laughter.) 13 MS. MEYERS: That's in the prohibited**  **14 act. 15 MR. HURST: Yes. I think we need to**  **16 caucus on that point. 17 MS. MEYERS: Yes. We -- that wasn't**  **18 something we discussed. 19 MR. SACHS: This is Harvey. Neil,**  **20 before we caucus on that, Karim has joined us. 21 MR. EISNER: Okay, Karim. Let's go**  **22 back to your issue. On the FTC label, you had**

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## 1 some take-home work to do. **2 MR. AMRANE: Okay. All right. There 3 are two proposed labels and the one on the screen**  **4 is very similar to the current FTC label, but 5 it's only for the south and the southwest.**  **6 Now, those labels were developed on 7 the premise that DOE will issue the guidance**  **8 document that we discussed in previous meetings 9 that manufacturers will have to show the label**  **10 the least efficient product combination. 11 So, that one is for the south and the**  **12 southwest. We've had SEER. It's basically the 13 same version of the FTC, the current FTC label,**  **14 except now that the range of comparability start 15 at 14 SEER because that's what is available in**  **16 the south and the southwest. And then you have 17 the EER table which shows, you know, what's**  **18 acceptable in the southwest. 19 MR. FERNSTROM: Karim, this is Gary.**  **20 This is a little off the subject, but is there 21 really 26 SEER?**  **22 MR. AMRANE: Correct.**

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## 1 MR. FERNSTROM: My goodness. That's **2 twice as efficient as the least efficient, 3 practically.**  **4 MR. AMRANE: That's what's in the --- 5 MR. FERNSTROM: Thank you.**  **6 THE COURT REPORTER: I'm sorry. I only 7 have microphones on the table, sir. So, if you**  **8 could stand a little closer to them, then I can 9 pick you up. Thank you.**  **10 MR. AMRANE: Not sure where the 11 microphones are, but ---**  **12 THE COURT REPORTER: If you stand right 13 there, actually, that will be fine.**  **14 MR. AMRANE: Okay, good. So, yes, 15 those are possible units.**  **16 MR. FERNSTROM: Thank you. 17 MR. AMRANE: And then you have the**  **18 second label, and that's --- this label would be 19 only for the north. And, again, in this case the**  **20 minimum is different, 13 SEER, but in this case, 21 for example, this condensing unit is matched with**  **22 several codes that range --- the SEER will range**

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## 1 from 13 to 14.2. **2 But even if it's --- there is one 3 combination at 14.2, those units would only be**  **4 allowed in the north, not in the south, because 5 the least efficient is 13 SEER.**  **6 MR. SACHS: What's the fine print 7 below the notice?**  **8 MS. NOLL: The map. 9 MR. SACHS: Okay, good. Thank you.**  **10 This is Harvey. Thank you, Karim. 11 MS. NOLL: This is Elizabeth. So, how**  **12 is this different or what would we need to be 13 proposing to FTC to ---**  **14 MR. AMRANE: Because FTC, so far, has 15 only one label. And for FTC, a unit comes, you**  **16 know, condensing unit would be match with 17 different codes that will give you, for example,**  **18 from 13 to 14.2. If you had one combination at 19 14 for FTC, that's a combination that is**  **20 acceptable in the south. 21 And now, what we're saying based on**  **22 the guidance that DOE will issue would say, no,**

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## 1 that's not the case, because the least efficient **2 is 13. So, would not be allowed in the south. 3 MS. MEYERS: So, it's kind of a double**  **4 check. This is Karen Meyers with Rheem. So, if 5 that minimum number right there is 13, it can't**  **6 be sold in the south. 7 Or the southwest. So, it's kind of a**  **8 double-check and it also has the map on there. 9 So, that will be helpful to homeowners. So,**  **10 which is really what the Energy Guide label is 11 intended to do, but that can be torn off. We**  **12 know that. 13 So, that's why, you know, the**  **14 manufacturers decided to, you know, add the, you 15 know, or offer the suggestion to apply the extra**  **16 label that we just went over. But if the minimum 17 on that Energy Guide is 13, then --- and that's a**  **18 big font, Harvey. So, that should help you. 19 (Laughter.)**  **20 MR. SACHS: Thank you. 21 MS. MEYERS: So, that's a really big**  **22 font right there, in bold print. So, for any**

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## 1 unit to legally be installed in the south or the **2 southwest, the minimum on that label has to be a 3 14, per the DOE guidance that we hope to be**  **4 receiving very soon. 5 MR. ROCKY: So, this is Bryan Rocky.**  **6 The other thing that we have just so 7 everyone else understands this, this has the**  **8 potential to drastically increase the number of 9 labels a manufacturer has to put on product.**  **10 Today, we don't have a range. We just 11 have one number for those loose coil systems. 13**  **12 or 14 or whatever it is. In this case, based on 13 each manufacturer's rating system match-ups, the**  **14 high end of that range will change model to 15 model, unit to unit, product family to product**  **16 family, potentially. 17 So, not to underestimate it, this is**  **18 another potential cost for manufacturers 19 especially if you're not --- if you're having to**  **20 pre-print these labels and keep inventory, which 21 is, again, what most manufacturers do today.**  **22 So, there would be in one product**

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## 1 family I have today, there is in seven basic **2 models of a 13 SEER unit, I have five different 3 labels I have to put together now.**  **4 And keeping track of those for the 5 model they go on is done through a bar code scan**  **6 system, but the opportunity to put the wrong 7 label on is greatly multiplied the more labels**  **8 you have. And that's for each family. 9 So, in my case, I go from a single 13**  **10 SEER AC label and a single 14 SEER label to 11 somewhere between nine and 11 labels at this**  **12 point. So, this is a great idea, but it doesn't 13 make it easier for manufacturers.**  **14 MR. DORIA: This is Jordan with 15 Ingersoll Rand, and I want to just build on that**  **16 is, you know, we're still supporting the 17 approach, but the deeper we dig into it, the more**  **18 complexity it seems to bring up for us, in terms 19 of both deliberation of labels and, by**  **20 extension, deliberation of models, which is 21 something that typically you strive to keep in**  **22 check.**

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## 1 So, we're still supportive, but I do **2 want to echo it is more probably of a burden than 3 we thought a couple weeks ago. Again, we're**  **4 still supportive of it, but I do think it's 5 important for everyone to realize that.**  **6 MR. EISNER: Do you have estimates that 7 you can supply on what you think would be the**  **8 extra cost or burden? Again, because of things 9 like the Paperwork Reduction Act, it's going to**  **10 have to be addressed in the rulemaking document. 11 MR. SACHS: Neil, this is Harvey and I**  **12 think I'm a little bit concerned about the 13 question. One, because they would have to get**  **14 together to discuss a kind of response that I 15 guess is each person's answer through AHRI,**  **16 presumably, but also because we're hearing 17 consensus support from the manufacturers, which I**  **18 translate as this is a pain in the butt, but it's 19 the least cost approach we can think of for the**  **20 entire system, including the downstream 21 participants. And, therefore, we're willing to**  **22 do it.**

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## 1 It's a consequence of the agreement **2 reached five years ago on consensus, it's a 3 consequence of the DOE rulemaking and it's**  **4 stepping up to the plate. So, I think that in 5 terms of a rulemaking and paperwork reduction, I**  **6 would hope that OMB would give some deference to 7 what comes out of this negotiated rulemaking.**  **8 MR. EISNER: I don't disagree with what 9 you're saying. And if I was sitting on either**  **10 side of the table on this issue, I would agree 11 that OMB should believe that and should accept**  **12 it. That's not necessarily what will happen. 13 If DOE is willing to try, that's fine,**  **14 but they are required to talk about the total 15 burden hours imposed by a regulation, whether or**  **16 not it is acceptable. That's why I'm asking now 17 if people can give estimates that they can rely**  **18 on that will help them do their job. 19 MR. SACHS: I certainly appreciate your**  **20 bringing it up now so we don't get sandbagged 21 later with some other acceptable phrase.**  **22 MR. MELCHI: Harvey, this is Jon from**

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## 1 HARDI. Just, I think to Neil's point, I forget **2 which industry it was recently the regulatory 3 body and the industry had come to an agreement on**  **4 a rule and OMB kicked it back because of the cost 5 even though there was an agreement between**  **6 industry and the regulatory entity. So, I think 7 that's probably what Neil is alluding to.**  **8 MR. EISNER: And I'm talking from the 9 same kind of experience when I was in the**  **10 government -- 11 MR. MELCHI: Yes.**  **12 MR. EISNER: -- where I actually said 13 to them, so, you think you know better than**  **14 industry whether this is going to be very costly 15 or too burdensome or not worth doing?**  **16 The other side of it is, is a 17 political matter. I think we are all sensitive**  **18 to the issue that no matter how much everybody in 19 this room may agree, somebody else is going to**  **20 say, oh, DOE just issued another $10 million 21 rule, or whatever.**  **22 Everybody seems to be in agreement.**

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## 1 That is very, very good. I'm suggesting that DOE **2 may still need those numbers. And if those 3 numbers come from industry and are acceptable to**  **4 everybody else around the table, that should make 5 it much easier to convince the powers that be.**  **6 And I hear your arguments. It's not 7 my job to tell you you've got to have it. I'm**  **8 just trying to make sure we all know what may be 9 expected, especially since Doug isn't here.**  **10 MR. SACHS: So, it involves to a 11 request --- this is Harvey again. Can the**  **12 manufacturers give us a round number as a guess 13 of what compliance would cost?**  **14 MR. EISNER: It might even be, you 15 know, several manufacturers or a handful, a few**  **16 manufacturers. If this is not information you 17 want to share publicly, giving that information**  **18 to DOE so that DOE can say one manufacturer said 19 it would add 15 percent to their cost.**  **20 MR. CLARK: This is Gary Clark from 21 Goodman. If nothing else, I think it's probably**  **22 good to try to gather that information for future**

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## 1 rulemaking, you know. If we start talking about **2 more regional standards in the future, 3 potentially, it would be good to understand all**  **4 the costs, right? 5 And this is something that I don't**  **6 think was anticipated in the original 7 discussions. And so, it would be good to capture**  **8 that, so that we have that in case we ever think 9 about regional standards in the future.**  **10 MR. EISNER: And this is not something 11 we have to resolve here today. I think it's**  **12 something people should think about we can then 13 talk to --- we can all talk to the DOE staff**  **14 about what it is they're going to need. 15 One of the reasons for one of the**  **16 advantages of using the negotiated rulemaking 17 process is it's easier for the Agency to get the**  **18 data it needs for things like its cost-benefit 19 analysis and paperwork reduction analysis.**  **20 MR. DORIA: This is Jordan with 21 Ingersoll Rand. I think it makes sense to flag**  **22 it for later, but we should make sure to fold in**

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## 1 any other costs that we as OEMs at least expect **2 to bear as a result, do it all at once, provide 3 it all to AHRI and have them aggregate it and**  **4 just do that the one time. 5 MR. EISNER: I agree. That's a good**  **6 point. Any other questions, concerns or issues 7 on the subject of the labels? Any questions**  **8 about how --- and I've heard what I think is a 9 legitimate concern that there can be more**  **10 mistakes made when you have more labels to put on 11 a unit.**  **12 So, how this is going to be addressed 13 to ensure that mistakes are not made or kept to a**  **14 minimum. 15 MR. BALLO: This is Tim at**  **16 EarthJustice. I just had one thing to flag on 17 the label. It's not something I think this group**  **18 needs to resolve. 19 I just wanted to highlight that when**  **20 FTC, their recent proposal to amend the label for 21 split system central air conditioners to remove**  **22 capacity, which I think this mock-up of the label**

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## 1 does reflect that proposed change, several of the **2 groups on the efficiency advocate side, as well 3 as several other groups not represented here,**  **4 submitted comments urging FTC to consider making 5 capacity presented on the label as a range also,**  **6 rather than eliminating it from the label. 7 It's not something I think we've**  **8 discussed with the manufacturers. So, I don't 9 think it's something we need to resolve either,**  **10 just flagging that if we agree to this label it's 11 sort of --- we haven't addressed that separate**  **12 issue and I don't think we need to address it in 13 this forum.**  **14 MR. EISNER: Other comments? 15 MS. NOLL: So, this is Elizabeth. I'd**  **16 like to go back to my original question of how 17 does this change, and does DOE's guidance impact**  **18 FTC in a way that they would revise the label, or 19 do we need to be having -- does that need to be**  **20 part of this conversation for what needs to be 21 changed?**  **22 MR. AMRANE: We presented to FTC**

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## 1 similar label before, and FTC had some -- let us **2 know they had concern about it because it was -- 3 the other label, there was concern that, you**  **4 know, 14.2 units, for example, would not be 5 allowed in the south where, in fact, it's 14.2.**  **6 So, but the guidance that DOE is proposing to 7 issue will abide by that.**  **8 MS. NOLL: Right. 9 MR. AMRANE: So, yes, it will depend on**  **10 the DOE guidance. 11 MS. NOLL: Guidance would require FTC**  **12 to make modifications. 13 MR. AMRANE: Exactly.**  **14 MS. NOLL: Okay. 15 MR. AMRANE: So, it's very important**  **16 that DOE should issue it. 17 MR. EISNER: Other questions?**  **18 Everybody comfortable with this approach then? 19 Okay. The next issue I see is for the**  **20 distributors. They're going to bring back the 21 working group's, quote, violation for**  **22 distributors.**

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## 1 MR. MELCHI: This is Jon from HARDI. **2 I think in the talk of the last 3 meeting there was a change that we made before we**  **4 left. So, if you could bring that definition up, 5 that would be helpful.**  **6 (Off record comments.) 7 MR. EISNER: Which --**  **8 MR. MELCHI: Okay. That's what we 9 ended up changing it to.**  **10 MR. EISNER: Okay. 11 MR. MELCHI: So, I met with our board**  **12 of directors last week -- this is Jon Melchi from 13 HARDI and I met with our board of directors last**  **14 week and we ended up coming up with -- I can't 15 believe we're going to do this, but really two**  **16 kind of separate violations that could occur for 17 the distributor.**  **18 We list right here it shall be a 19 violation for a distributor to knowingly sell a**  **20 product to a contractor or dealer with knowledge 21 that the entity will sell or install the product**  **22 in violation of any regional standard applicable**

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## 1 to the product, you know. **2 The feedback that I got from my 3 members was if you, you know, if you want to put**  **4 that in there, you know, they're probably not 5 going to fight too much on it, but they don't**  **6 think they're going to know it. 7 And if they think it would be better**  **8 off if it was somehow worded towards -- and this 9 relates to the contractors and if there is a --**  **10 some sort of a -- generally using the term 11 "Blacklist" or a contractor that we know is**  **12 violating the law, we would rather it read that 13 if our members somehow know that there's somebody**  **14 that they're not allowed to sell, that gives us 15 more certainty than knowingly sell a product to**  **16 a, I mean, we're just likely not to have that 17 knowledge.**  **18 So, I mean, if people want to put it 19 in there, that's fine. We're not likely to have**  **20 that knowledge. 21 We would probably feel more**  **22 comfortable with knowledge of who we can and**

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## 1 cannot sell a product to if that's where we end **2 up going. 3 The second violation that our members**  **4 thought would be under this umbrella would be 5 failure to provide the Department records upon**  **6 request to assist with the investigation of a 7 prohibited act.**  **8 MR. EISNER: Okay. Comments? 9 Questions? And what was the response on that?**  **10 MR. MELCHI: The response from our 11 members was there are certain records that we**  **12 have, and I communicated this to Doug and I know 13 he'll be here a little later, there are certain**  **14 records that we have that our members feel like 15 in order to assist the Department with an**  **16 investigation, we need to provide to the 17 Department to have them.**  **18 Now, there are certain records that we 19 don't carry maybe to the -- as specific as some**  **20 would like, but I think those records that we 21 have -- and I've laid out for Doug kind of what**  **22 we do have, our members are fine keeping and**

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## 1 making available upon request, you know, with **2 knowledge that adding additional records or 3 tweaking an ERP system is a significant cost**  **4 which of course goes into the scoring. 5 But, you know, I think our members are**  **6 aware that during the course of an investigation 7 that, quite frankly, that DOE can subpoena their**  **8 records anyways. So, you know, let's at least 9 have a boilerplate of what we need to be keeping**  **10 to aid with that investigation. 11 MR. DORIA: Jon, this is Jordan,**  **12 Ingersoll Rand. 13 I think that's good and appreciate**  **14 that you guys went back and got some clarity 15 there.**  **16 Just one thing you said that failure 17 to provide records will be a prohibited act, not**  **18 just a violation; is that right? 19 MR. MELCHI: No.**  **20 MR. DORIA: Okay. 21 MR. MELCHI: This is under the context**  **22 of violation.**

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## 1 MR. DORIA: Okay. That's what I wanted **2 to hear. 3 MR. MELCHI: Under the context of**  **4 violation. 5 MS. SHEPHERD: This is Amy Shepherd**  **6 from AHRI. 7 So, the point of defining a violation**  **8 is because that's what the manufacturers need to 9 know.**  **10 So, like this just struck me as you 11 were talking about the record retention, then**  **12 that's saying that the manufacturers would have a 13 prohibited act for knowing to sell to somebody**  **14 who is failing to provide their records to DOE? 15 Is that the effect?**  **16 MR. MELCHI: Yes. 17 MS. SHEPHERD: And so for the records,**  **18 then, you're not open to a prohibited act on 19 that, it would just be the violation on that one**  **20 as well. 21 MR. MELCHI: Yes.**  **22 MR. DORIA: Well, this is Jordan with**

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## 1 Ingersoll Rand. **2 Just to clarify, I think that -- the 3 failure to provide records would potentially have**  **4 to be determined to be routine, right?**
**5 MR. MELCHI: Yes. 6 MR. DORIA: Unless it was one in the**  **7 same, which could be a decision, but that hasn't 8 been made yet.**  **9 MR. MELCHI: Yeah, and I don't know 10 that -- I don't, you know, I don't know that my**  **11 members are -- I don't get the sense that my 12 members necessarily felt like somebody needed a**  **13 freebie on providing records, you know. 14 It's pretty basic. The request is**  **15 made. You either provide the records, or you 16 don't.**  **17 MS. SHEPHERD: So, this is Amy again. 18 So, what's the point of adding it as**  **19 a violation? Because if it's not a prohibited 20 act, DOE can't take any action against a**  **21 distributor for that. 22 So, that's just putting -- in my view,** 

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## 1 it seems like it's just putting another burden on **2 the manufacturer to say not only is it you can be 3 liable if you sell to someone who is doing this,**  **4 but you also can be liable if you sell to 5 somebody who's not providing records to DOE.**  **6 MR. MELCHI: Yeah, and I think that was 7 -- we were asked to come back with where we were**  **8 on this. I'm telling you where we're at on it. 9 Manufacturers have agreements with**  **10 their distributors that can include 11 record-keeping requirements, and oftentimes do.**  **12 And so, that's where we're at on this. 13 MR. DORIA: So, this is Jordan with**  **14 Ingersoll Rand again. 15 I think there's another -- potentially**  **16 another way to look at that and it gets back to 17 the issue of who determines, you know, the**  **18 violation and in what capacity and who's 19 informed?**  **20 I mean, I think as I understand it, 21 what we're saying is that for the sake of**  **22 discussion if a single failure to provide records**

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## 1 pursuant to an investigation and that were **2 determined by the Department, and we're saying 3 that one time would be effectively routine, then**  **4 that means we, as manufacturers, could not sell 5 to that party.**  **6 Presuming that DOE made that 7 determination publicly, that wouldn't mean that a**  **8 specific OEM couldn't provide it. It would mean 9 that no OEMs could sell product to that person.**  **10 So, that sounds like it's -- 11 MR. EISNER: Can I ask for a**  **12 clarification here? We're talking -- I think 13 we're talking about two different things.**  **14 The statute is talking about the 15 violation being a violation of the standard, not**  **16 a records requirement. 17 When you talk about making a failure**  **18 to provide records being a prohibited act or just 19 a violation, are you intending to bring into the**  **20 record-keeping thing a knowingly or routinely 21 violate standard that is applicable I think only**  **22 to the violation of the energy standard right now**

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## 1 under the statute? **2 Am I missing something? 3 MR. SACHS: Neil, maybe we can circle**  **4 back after we've heard from all the parties. 5 MR. EISNER: That's fine. I'm just --**  **6 I'm confused as to what was being discussed here. 7 If others all understand it, that's fine.**  **8 MR. WHITE: Well, this is Chuck White 9 with PHCC and my attempt at clarifying it, the**  **10 prohibited act pertains to routine violators. 11 So, we need to know what they did**  **12 that's a violation. So, we've created these 13 things -- or attempting to create these things,**  **14 but that doesn't mean that if you did it once, 15 you're a routine violator.**  **16 It just means you did it once and, 17 yet, we have yet to tackle that 800-pound gorilla**  **18 of what "routine" means. 19 So, if we know it's a violation, we**  **20 now know the list of things that you did that are 21 wrong. Then we have to decide is it once? Is it**  **22 twice? Is it a hundred times? Is it -- so, the**

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## 1 routine violator is only in the manufacturer **2 language. 3 It's not in the distributor and it's**  **4 not in the contractor, because it's defining the 5 second part of that routine violator. It's**  **6 defining "violation." 7 Does that help clarify kind of where**  **8 we're going? The contractor or the distributor 9 to be a routine violator, has to do these things**  **10 and has to do them however many times, yet to be 11 determined.**  **12 Does that help? 13 MR. EISNER: From my perspective, it**  **14 helps with respect to the distributor violation. 15 Now, if we're saying the distributor**  **16 -- distributors don't agree that that violation 17 should be as a result of a prohibited act, I**  **18 understand it, but I thought it was coming up in 19 the context of failure to provide the records.**  **20 MR. McCRUDDEN: This is Charlie with 21 ACCA.**  **22 I think if we go to the next slide, we**

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## 1 get to record retention and production. Now, I **2 don't -- this slide isn't broken out the same way 3 the previous one was with prohibited act or**  **4 violation, but it may be more appropriate to put 5 a similar framework, or it may not be, you know,**  **6 if we don't want to look at record retention and 7 production as a prohibited act or failure to**  **8 provide it as a prohibited act and only just a 9 violation.**  **10 I don't know if that's -- 11 MR. EISNER: Well, if record retention**  **12 -- failure to provide records upon request has 13 nothing to do with whether this happens**  **14 routinely. 15 So, the way I read this, one time you**  **16 fail to do it, it's a prohibited act. If you 17 make it a prohibited act, the Agency can take**  **18 action. 19 MR. McCRUDDEN: Right. And I think**  **20 that's what Amy was suggesting and the way Jon 21 was sort of constructing this.**  **22 Correct me if I'm wrong.**

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## 1 MS. SHEPHERD: No, I just -- yeah, I **2 was just trying to figure out what the -- kind of 3 the point of it is. Because if we -- which is,**  **4 you know, which is fine, but I think as to what 5 Jordan was saying, the only way a manufacturer is**  **6 ever going to know that a distributor did not 7 provide a request to DOE is if DOE somehow makes**  **8 that public. 9 MR. McCRUDDEN: Right.**  **10 MS. SHEPHERD: Because we will never 11 know. I mean, manufacturers will never know that**  **12 DOE made a request to anybody and they didn't 13 provide it.**  **14 So, that can't, I mean, and in that 15 case a dealer would have to just somehow make**  **16 that public to everybody so everybody would know. 17 I just don't -- otherwise I don't see**  **18 how that can be a violation that manufacturers 19 could be held responsible for.**  **20 MR. MELCHI: This is Jon from HARDI. 21 Putting on my hat receiving some**  **22 information from Doug over the week, you know, I**

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## 1 think he's -- at least what I got was **2 requirements on contractors, distributors and 3 manufacturers for a certain type of records.**  **4 My understanding was that if they're 5 going to do an investigation, it's going to go up**  **6 the entire chain. 7 And, you know, if a manufacturer were**  **8 to get a records request from DOE regarding a 9 product or something along those lines, it's**  **10 reasonable that they would have an idea of who 11 the distributor was that was dealing with that**  **12 contractor or at least in that general market 13 vicinity where they could send out a notice to**  **14 the distributors in that general market vicinity 15 and say, hey, there's an investigation ongoing.**  **16 If you get a request, comply with it. 17 MS. SHEPHERD: We're not going to know**  **18 -- the manufacturers aren't going to know whether 19 you did or not.**  **20 MR. MELCHI: Well, I -- 21 MS. SHEPHERD: I think this is probably**  **22 -- we'll probably have to defer to Doug a little**

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## 1 bit, because DOE doesn't make -- I think DOE's **2 premise when they start an investigation is they 3 keep it close hold --**  **4 MR. MELCHI: Yeah. 5 MS. SHEPHERD: -- right, for the**  **6 purposes of the investigation. It's not just 7 open to the world.**  **8 So, and in this case until DOE 9 actually -- we would have -- manufacturers**  **10 somehow have to be notified by either the 11 distributor or DOE that they had refused to**  **12 comply with the record retention before they 13 would know.**  **14 MR. MELCHI: Then I'm fine taking that 15 out, you know, if that's --**  **16 MS. SHEPHERD: I'm just saying that 17 that -- the only way I could see it would work is**  **18 if that was somehow made public so they would 19 know.**  **20 MR. BALLO: One thing I think we need 21 to remember -- this is Tim with EarthJustice --**  **22 the Department has subpoena authority.**

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## 1 So, the notion that a distributor can **2 avoid penalties for not providing information 3 just seems odd to me because if the distributor**  **4 doesn't provide information, DOE can subpoena it. 5 If they still don't provide the**  **6 information, at that point they're liable for 7 contempt of court or civil fines or some other**  **8 thing. So, there's always consequences. 9 MR. MELCHI: And Steve had -- this is**  **10 Jon from HARDI. 11 Steve had mentioned to me -- Steve**  **12 Porter had mentioned to me that, you know, the 13 last time they had a case out on one of these**  **14 that shortly thereafter he did receive a subpoena 15 notice from DOE and, you know, or a request for**  **16 information and with the threat of subpoena by 17 not providing it and, you know, did make those**  **18 records available. So, yes, to Tim's point. 19 I think our point for if we were going**  **20 to codify what records was in an attempt to help 21 DOE and give Doug what he thought he needed for**  **22 investigation, whether that's a, you know, again**

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## 1 a violation or prohibited act. Because to Tim's **2 point, they can subpoena the records. They have 3 that ability.**  **4 MS. MEYERS: So, this is Karen with 5 Rheem. I would have a clarifying question.**  **6 Often distributors carry more than one 7 brand of equipment. So, if there's an illegal**  **8 installation of brand Y and the distributor fails 9 to provide that information and it comes out,**  **10 does that mean the manufacturer of brand Z can no 11 longer sell to that company even though it had**  **12 nothing to do with my equipment? 13 MR. MELCHI: That's what it looks like.**  **14 MS. MEYERS: So, if a distributor is 15 selling Goodman and Rheem equipment, there's a**  **16 violation on an illegal Goodman installation, 17 that means Rheem can no longer sell to that**  **18 distributor even though the contract, you know, 19 that seems a little --**  **20 MR. MELCHI: Sell them what, though? 21 Noncompliant equipment or --**  **22 MS. MEYERS: No, legal. I mean**

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## 1 equipment, period. **2 MR. McCRUDDEN: This is Charlie with 3 ACCA.**  **4 I don't think we've ever answered 5 Jon's question as are you limited to being sold**  **6 noncompliant equipment? 7 I mean, basically, are you limited to**  **8 not being able to buy 13 SEER equipment? Because 9 that's the only noncompliant equipment that can**  **10 be installed somewhere. 11 Are you limited to being sold any**  **12 replacement parts? I mean, these are questions 13 that we haven't gotten --**  **14 MR. HURST: This is John Hurst with 15 Lennox, but to your point, Charlie, even beyond**  **16 that is are we talking about the distributor as a 17 full entity like, you know, Steve's not here, but**  **18 Johnstone Supply? 19 MR. McCRUDDEN: Right.**  **20 MR. HURST: Or are we talking about the 21 specific branch? We need to define those**  **22 parameters as well.**

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## 1 MR. EISNER: Other thoughts? Other **2 comments? 3 MS. MEYERS: Neil, I guess I'm just**  **4 uncomfortable with the manufacturer being held 5 responsible for a distributor failing to retain**  **6 the proper records. 7 These are independent businesses and,**  **8 you know, we can make requests, but I guess I'm 9 uncomfortable with the burden coming back to the**  **10 manufacturer should a distributor fail to 11 maintain records.**  **12 I don't know that I can support that. 13 MR. SACHS: This is Harvey and it seems**  **14 to me that the only way to eat an elephant is one 15 bite at a time.**  **16 I wonder if we can't start nibbling 17 away at some of these questions as the**  **18 consequence, the inability to sell a distributor 19 the SEER 13 product or all product similarly for**  **20 the parts versus products and see if we can't 21 chip away at what we want this to look like**  **22 within the legal constraints.**

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## 1 MS. SHEPHERD: We've asked them that **2 question and he's going to come back to us. It's 3 pending. The Department is dealing with it.**  **4 MR. McCRUDDEN: So, this is Charlie 5 with ACCA.**  **6 So, I think whoever is manning the 7 computer was about to do what I was going to**  **8 suggest that we take off the failure to 9 investigate as a violation on the distributors if**  **10 you agree -- 11 MR. MELCHI: No, that's fine. I was**  **12 just for the context of -- 13 MR. McCRUDDEN: Right. And then I**  **14 think let's go back though. Back, yeah, to the 15 screen you had on with the three there.**  **16 Are you okay with that? 17 MR. MELCHI: Yeah, and this is where we**  **18 were just -- our members just honestly did not, I 19 mean, for the purposes of getting, you know,**  **20 having minimal impact upon our members, you know, 21 to knowingly sell a product with knowledge that**  **22 the entity will sell or install the product in**

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## 1 violation is just likely not going to occur. So, **2 I mean, if we want to move with that sort of 3 language, that's fine.**  **4 It was suggested to us, though, if we 5 want enforcement to work that if a distributor is**  **6 somehow made aware of an entity that is violating 7 the law that maybe we don't know is, that it**  **8 would somehow improve enforcement. 9 But we need to know who that entity is**  **10 because my counter guy is just not going to know. 11 I mean, there's, you know, the amount of stuff**  **12 that is going on at the counter at a busy time, 13 you know, it's just going to be really tough to**  **14 keep an ear open for I'm going to run across the 15 river and install this.**  **16 If we know who it is, we can put 17 something into the computer so when they attempt**  **18 to purchase that equipment, something will come 19 up that says, hey, you can't sell to Joe's**  **20 Heating and Cooling, he's a routine violator. 21 So, I don't know what that language**  **22 would look like, but that's just what I'm**

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## 1 bringing back to the group as far as kind of the **2 guidance that our members were looking for. 3 MR. EISNER: The bottom line is the**  **4 distributors are willing to accept this language. 5 Is it add to the regulation, or is it prohibited**  **6 act? 7 MR. MELCHI: Violation.**  **8 MR. EISNER: Well, I mean, it's listed 9 under prohibited act. So, you want it to just be**  **10 a violation? 11 MR. DORIA: No, no.**  **12 MS. SHEPHERD: A violation. 13 (Simultaneous speaking.)**  **14 MR. MELCHI: So, I guess I'm asking for 15 the group's thoughts on do you guys think that**  **16 there is any tweaks that the group would be open 17 to, to maybe making that happen?**  **18 Harvey, I don't know if you have any 19 thoughts on this.**  **20 MR. SACHS: Without getting -- this is 21 Harvey.**  **22 Without getting into the larger**

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## 1 questions, in the context of the discussions **2 we've had in the past about the potential for 3 growth of internet sales and other things, I**  **4 would like to at least propose that the language 5 contractor or dealer be changed to any party.**  **6 I think I've been convinced that 7 internet sales of condensing units are not now a**  **8 big deal, but I don't know how the market is 9 going to evolve.**  **10 MR. DORIA: Harvey, this is Jordan at 11 Ingersoll Rand.**  **12 I felt like we had addressed this 13 based on how we constructed the definitions of**  **14 contractor and dealer. 15 That was my recollection of how things**  **16 changed. That essentially by installing the 17 product even if you're not a contractor by trade,**  **18 you are a -- they're by law a contractor, and 19 therefore subject to the requirements.**  **20 MS. SHEPHERD: And, Harvey, I think 21 Doug wants to tie it off of the language that's**  **22 in the current prohibited act, which talks about**

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## 1 distributors and contractors. **2 And that's when the manufacturer 3 knowingly does something vis-a-vis those parties,**  **4 which is why he felt more comfortable, I think, 5 from a DOE legal authority perspective based on**  **6 that. 7 Remember we had the conversation about**  **8 retailers? 9 MR. SACHS: All right. Well, this is**  **10 Harvey again and I'll climb back into my short 11 attention span cave.**  **12 I still feel that others like me might 13 grasp that language and say, I'm exempt. I only**  **14 sold this to Joe Sixpack who was neither a 15 contractor or dealer. It's sort of reinforcing**  **16 our intent with some plain language. 17 I'm certainly not going to be**  **18 insisting on that. It was my reaction on -- 19 MR. MELCHI: Harvey, would this be**  **20 something that if we kept that language in that 21 almost immediately after the rule is finalized we**  **22 could ask DOE for guidance on and maybe they**

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## 1 could broaden that out so that we would have that **2 ability? 3 MR. SACHS: I'm comfortable with all**  **4 sorts of resolutions. I think I've raised the 5 potential benefits of redundancy, but certainly**  **6 Amy is -- Amy and others are right in saying that 7 there are other ways we can deal with this.**  **8 If you all don't feel that the 9 Department of Redundancy Department shouldn't be**  **10 invoked here, I can live with that. 11 MS. DEGITZ: Maybe it's something**  **12 that could just be made very clear in the 13 preamble that this is a violation for contractors**  **14 and dealers, and this is how DOE defines 15 contractors and dealers so that if you do any of**  **16 these things, you are subject to this violation. 17 MR. SACHS: Well, this is Harvey and**  **18 that's okay with me if that's what the body 19 agrees, but it sure is a whole bunch more words.**  **20 So, let's move on. I'm hearing myself 21 seriously unconcensused.**  **22 (Laughter.)**

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## 1 MR. MELCHI: Neil, would it be okay if **2 tentatively we take this language and place a 3 hold on it with the thought that if we come to**  **4 some sort of an agreement on a black list or a 5 prohibited installer's list that we revisit it?**  **6 Because I think that will have an impact on what 7 this violation may actually be.**  **8 MR. EISNER: I think that's fine if 9 that's what the group would like to do. Most of**  **10 this stuff is dependent on how other terms get 11 defined and we're going to have to go back over**  **12 this after we agree to all those terms. 13 Is everybody acceptable to this**  **14 language being added to the rule as a violation 15 of the rules and not a prohibited act?**  **16 MS. NOLL: No. 17 MR. EISNER: Okay. So, we have one no**  **18 vote. 19 Do we have any other no votes?**  **20 MR. SACHS: This is Harvey. 21 I've had conversations with a bunch of**  **22 people around the table. My preference is still**

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## 1 recognizing challenges that it be a prohibited **2 act for the distributor to knowingly sell and 3 that would require interpretation and guidance if**  **4 we go that way. 5 And I think that conversation is**  **6 dependent on what Doug reports to us, but I'm not 7 yet ready without Doug's input to take prohibited**  **8 act off the table. 9 MR. EISNER: So, both of you have the**  **10 same thing. You want it to be a prohibited act. 11 MR. SACHS: I'm not speaking for --**  **12 MS. NOLL: I'm not comfortable with 13 this as is being where we settle. I think**  **14 there's a lot of things/questions still out 15 there.**  **16 MR. HUNGERFORD: And I'll add my voice 17 to that. This is Dave Hungerford. I'm not quite**  **18 ready to let go of prohibited act for 19 distributors.**  **20 MS. NOLL: And adding to John's point 21 if you -- if the distributors feel that they have**  **22 no knowledge, then it's basically moot.**

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## 1 So, you would almost argue that the **2 prohibited act is -- should be just as acceptable 3 as not if there is no knowledge there.**  **4 MR. DORIA: So, this is Jordan. 5 If I could just say, I mean, I think**  **6 this -- well, I recognize that and I think 7 there's reasons why there should be prohibited**  **8 acts along the chain. 9 It's always important to keep in mind**  **10 what the settlement said and I think that's a 11 significant point here for the distributors, I'll**  **12 let them chime in, but I think that that is, you 13 know, you can't lose sight of that.**  **14 There's a difference here with 15 different actors in terms of whether or not they**  **16 can be subject to prohibited acts. 17 MR. FERNSTROM: So, Neil, this is Gary**  **18 for the California Utilities and I agree with my 19 partners in my opinion on this.**  **20 MR. EISNER: Others? 21 MR. MELCHI: I thought I was your**  **22 partner. You're using my wifi.**

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## 1 (Laughter.) **2 MR. BALLO: This is Tim. 3 I agree as well. I don't have a**  **4 problem with this language defining a violation. 5 I just think that they do need a prohibited act**  **6 as well. 7 MR. FERNSTROM: Yeah, this is Gary**  **8 again. 9 We can't hold the distributors**  **10 responsible for something they don't know. But 11 if they were to know, it seems to me that ought**  **12 to be prohibited. 13 MR. EISNER: And so, the group then is**  **14 unanimous that Doug will have a draft of the rule 15 by tomorrow morning?**  **16 (Laughter.) 17 MR. RAWALD: Yeah, that's not a**  **18 problem. 19 MR. SACHS: And we really ought to**  **20 calculate the $5 a minute late fee for Doug. 21 MR. RAWALD: I managed to find the one**  **22 cab that does not take credit cards**

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## 1 electronically in D.C. I didn't think that was a **2 possibility. 3 MR. HURST: I think that's a violation.**  **4 (Laughter.) 5 MR. RAWALD: So, I want to say I**  **6 appreciate John bringing forward the second 7 violation, but I don't think that's what we're**  **8 looking for, for the violations. 9 But I don't think from the**  **10 Department's point of view it makes sense to have 11 the manufacturer's prohibited act be tied around**  **12 the possibility of others not producing 13 documents. That's not what that prohibited act**  **14 is really geared towards. 15 So, I appreciate that concession, but**  **16 I don't think that's what we're looking for as 17 far as that goes.**  **18 But as far as his point on the 19 violation regarding -- they're going to have a**  **20 violation regarding reputation, I agree. I think 21 we kind of need both for distributors and here's**  **22 how I look at it.**

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## 1 There's two kind of instances that **2 will take place with a distributor. One, the 3 distributor is selling to a guy who we know is**  **4 routinely violating. 5 So, it would be the identical language**  **6 we have for the manufacturer, essentially, what 7 we initially drafted, and that would be what**  **8 Jon's members are looking at. 9 And the second concept would be if in**  **10 the case of somebody had an email to the 11 distributor saying, I'm going to install in**  **12 Mississippi these 13 SEER items, can you give 13 them to me, and the manufacturer still -- or the**  **14 distributor still sold to them, then the 15 manufacturer should also know that the guy is**  **16 toxic and they shouldn't sell to that distributor 17 anymore.**  **18 So, that's what this second -- that's 19 what this one as currently drafted kind of**  **20 conjures. 21 So, I would say let's think about**  **22 having both be violations knowing that probably**

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## 1 the cases in which a distributor is aware of **2 where it's going, it's going to be very, very 3 rare. But if it happens, I don't want to have**  **4 the distributor get away with that. 5 I want the distributor to feel like if**  **6 I know about it, I should stop it. So, I think 7 that's why we want to have both those and from**  **8 the Department's point of view, if that makes 9 sense.**  **10 And this is in regard to violations. 11 So, I'm not talking about prohibited acts. I'm**  **12 talking about the violations that the 13 manufacturer will be responsible for dealing with**  **14 somebody who does these things. 15 MR. SACHS: So, this is Harvey and I'm**  **16 trying to think like Steve and that's hard. 17 MR. MELCHI: That's a dark hole you**  **18 don't want to go down. 19 (Laughter.)**  **20 MR. RAWALD: Like Steve Porter? 21 MR. SACHS: Yeah.**  **22 MR. RAWALD: Okay.**

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## 1 MR. SACHS: Let's assume I'm a **2 distributor and I've got several hundred counter 3 men/counter people --**  **4 MR. RAWALD: Right. 5 MR. SACHS: -- at various branches.**  **6 Would it suffice to post a sign next to your Fair 7 Labor Act and everything else that says, thou**  **8 shalt not sell a SEER 13 unit for installation in 9 the following states or a low EVR unit**  **10 dah-dah-dah-dah? 11 MR. RAWALD: Uh-huh.**  **12 MR. SACHS: Would that suffice to ward 13 off evil for the distributor?**  **14 MR. RAWALD: Well, I think that would 15 be -- that would go a long way, right? But if**  **16 the guy got to the counter and told the counter 17 person, I know your sign says this, but, come on,**  **18 I'm going to take these three units to 19 Mississippi, don't tell anyone, then we want the**  **20 counter person to say, you can't do that, and not 21 sell it to them. We want that counter person to**  **22 not do that, right?**

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## 1 So, because the distributor has told **2 them, if you do that, then the manufacturer is 3 going to cut us off. So, don't do that.**  **4 So, I think the incentive from the 5 government would be -- it's never going to**  **6 happen, right? This is a rarity. 7 But I think that because it could**  **8 happen, that's how we want to have this kind of 9 pitched at, okay, the distributor tells those**  **10 people, hey, we're at risk if you sell it to a 11 guy telling you he's putting it someplace bad.**  **12 Here are the bad places. Don't sell it to them 13 if they tell you these things.**  **14 So, everyone is kind of working 15 together in the chain, because they know it's**  **16 ultimately the manufacturer at risk and the 17 manufacturer will cut their contracts if they're**  **18 not cooperating. 19 MR. SACHS: But in practice -- again,**  **20 this is Harvey. 21 MR. RAWALD: Right.**  **22 MR. SACHS: That sign would suffice to**

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## 1 immunize the distributor if it were posted at **2 each branch. 3 MR. RAWALD: Unless I heard the counter**  **4 woman came in and said, yeah, the guy told me 5 that and I said, oh, it's no big deal.**  **6 And I say, okay, well, then you've 7 transgressed.**  **8 MR. BALLO: Doug, just to be clear, the 9 examples you're giving revolve around the**  **10 distributor having actual knowledge that the 11 units were being installed.**  **12 MR. RAWALD: Right. 13 MR. BALLO: Not just should have known.**  **14 MR. RAWALD: Constructive knowledge, 15 right.**  **16 MR. BALLO: So, are you suggesting that 17 it be limited for distributors to actual**  **18 knowledge or -- 19 MR. RAWALD: I think that the**  **20 constructive knowledge is worthy of discussion. 21 I think it's a lot harder, right, than just**  **22 actual knowledge.**

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## 1 So, I think the actual knowledge is **2 easier. So, I hope I'm making a clear point 3 about that.**  **4 I don't want to -- I don't want to 5 imply the duty to investigate on the distributor,**  **6 right? 7 So, the distributor, I don't -- I'm**  **8 not making -- adding people on the chain of 9 commerce investigators on behalf of DOE, you**  **10 know. 11 If they think, well, this guy could be**  **12 going back to Louisville as opposed to sitting 13 here in Cincinnati. So, I'm really concerned**  **14 about this, but I don't know. I'm not sure. 15 I don't want them to feel that they**  **16 have to then follow the guy to where the job site 17 is. That's not their job.**  **18 So, I definitely want to draw a line 19 here. So, if they have a reason to know, then**  **20 the question is what would constitute a reason to 21 know? That's what you're talking about with**  **22 this, right?**

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## 1 So, I think that goes into a more gray **2 area and we can talk about it further, but I'm 3 very comfortable with the actual knowledge**  **4 scenario. 5 I think that we should retain that if**  **6 it has importance for the purposes of the 7 Department.**  **8 MR. MELCHI: One of the examples I 9 think that was brought up to us, so, I've got a**  **10 member with a distribution center in Fort Thomas, 11 Kentucky to sell to Cincinnati. And one of their**  **12 largest customers is right in Covington. It's 13 right along the border of Kentucky, but 75**  **14 percent of that company's business is in 15 Cincinnati and they do drop off a substantial**  **16 number of units to that contractor's facility 17 within Kentucky.**  **18 And, you know, they just want to make 19 sure that, okay, well, that's what we've been --**  **20 that's how we operate. That's how the contractor 21 operates, you know.**  **22 We want to make sure that we don't**

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## 1 have a disruption of our current business **2 practices that have worked well for, you know, 50 3 years.**  **4 MR. RAWALD: Right. No, I get that and 5 I don't think --**  **6 MR. HUNGERFORD: This is David 7 Hungerford.**  **8 We've been focusing most of this 9 discussion around one particular use case. And**  **10 that is sort of the guy at the counter on the 11 border.**  **12 And I think the possibility from harm 13 for that -- from that particular scenario that**  **14 the unit gets installed on the wrong side of the 15 river is far less than the major situation of**  **16 someone shipping a large number of units into the 17 wrong region and then being sold.**  **18 I'm concerned from California with a 19 warehouse in Reno getting a whole lot of SEER 13**  **20 units and then they're available to contractors 21 in California or in Nevada that they could then**  **22 might install them incorrectly and**

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## 1 inappropriately. **2 It's preventing those SEER 13 units 3 from ever getting to Nevada that is my major**  **4 concern. And that's where I'd like to focus the 5 one-off mistakes, the, I mean, the weather is**  **6 not really different on one side of the river 7 from the other. That's not the issue.**  **8 That's where there's no efficiency 9 harm, no lost savings harm there. The harm is**  **10 moving large numbers of units into the wrong 11 region. That's where I'm --**  **12 MR. MELCHI: This is Jon Melchi from 13 HARDI.**  **14 I know if Steve were here he would 15 tell you that they have a distribution center**  **16 located in Las Vegas that services not only the 17 southwest region, but the south region and also**  **18 the north region. 19 MR. HUNGERFORD: Right.**  **20 MR. MELCHI: And that's where it 21 becomes problematic, because they are servicing**  **22 three different regions from one warehouse that**

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## 1 they invested a lot of -- a large amount of time, **2 money and have a lot of employees to service 3 those regions.**  **4 I think to Steve's point, they're not 5 going to be shipping 13 SEER from their DC to**  **6 Fresno. That's not going to happen. 7 But if you have a branch in -- that's**  **8 on the border of Oregon that services contractors 9 there, but it may be located on the California**  **10 side, you know, you would basically be limiting 11 your business opportunities if you don't at least**  **12 maybe carry some of that product to service your 13 customers over there with knowledge that this**  **14 product needs to be installed in Oregon, but you 15 would be telling your California businesses that**  **16 they couldn't compete. 17 I think at least from our members'**  **18 perspective that the large-scale shipping of 19 units into a prohibited area is probably, that's**  **20 not something that our members think is actually 21 going to happen. At least not from a legitimate**  **22 distributor or manufacturer and distribution**

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## 1 perspective. **2 MR. EISNER: You raise a good point. 3 You say a legitimate distributor.**  **4 Would there be benefits to a 5 legitimate distributor vis-a-vis or who's not**  **6 legitimate if this were a prohibited act? 7 MR. MELCHI: No. I think we've seen it**  **8 in certain instances that adding prohibited acts 9 or adding regulation doesn't always level the**  **10 playing field as much as we like to think it 11 will.**  **12 MR. McCRUDDEN: This is Charlie with 13 ACCA.**  **14 I mean, is a suggestion that shipping 15 a product is a prohibited act or a violation?**  **16 MR. RAWALD: Are you asking Dave? 17 MR. McCRUDDEN: I guess, yeah.**  **18 MR. RAWALD: So, I guess what Charlie 19 is getting at, Dave --**  **20 MR. HUNGERFORD: Well, if you know it's 21 going to be installed in, I mean, if you're**  **22 shipping it -- if you're shipping a SEER 13 unit**

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## 1 to California or to Reno, you're pretty sure that **2 it's going to be installed in the wrong area. 3 So, that's --**  **4 MS. McCRUDDEN: No. 5 MS. MEYERS: No.**  **6 MR. HURST: No. 7 MS. MEYERS: I don't agree.**  **8 MR. HURST: We serve out of our 9 distribution center in Ontario, California the**  **10 states of Oregon and Washington. 11 So, now, if a dealer comes to our**  **12 warehouse and purchases a truckload quantity of 13 13 SEER products and we know that they are based**  **14 in the LA basin, that's -- absolutely. But we 15 will ship copious amounts of 13 SEER product into**  **16 the South to be redistributed north out of our 17 distribution centers and into our branches, and**  **18 then to dealers. 19 And it would be a massive undertaking**  **20 if that was a prohibited act. 21 MR. HUNGERFORD: I'm afraid I don't**  **22 understand the difference why it would be a**

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## 1 massive undertaking for if it were a prohibited **2 act versus a violation -- 3 MR. HURST: Where am I going to put my** 
**4 -- 5 MR. HUNGERFORD: -- unless you're**  **6 assuming that they're going -- that you're going 7 to treat the products differently, that is, not**  **8 sell it in California versus shipping it to 9 Oregon from your warehouse in Ontario.**  **10 I don't understand the difference in 11 compliance between the definition of it as a**  **12 prohibited act versus a violation. 13 MR. HURST: Right.**  **14 MR. HUNGERFORD: You're still going to 15 act in the same way, that is you're not going to**  **16 sell them in California, right? 17 I don't understand why --**  **18 MR. HURST: Correct, but -- 19 (Simultaneous speaking.)**  **20 MR. RAWALD: I don't think that John is 21 pointing at this as a violation to prohibited act**  **22 issue.**

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## 1 What he's saying is that there **2 shouldn't be anything with the shipping or 3 storing of the product, because they do the**  **4 practical matter just store things in the south**
**5 to -- 6 MR. HUNGERFORD: I completely agree.**  **7 MR. RAWALD: So, and that's the 8 question. So, you can --**  **9 MR. HUNGERFORD: Well, you can ship it 10 through a different region. That seems**  **11 reasonable. 12 MR. RAWALD: And so, then you posed the**  **13 question of, hey, well, we have things warehoused 14 in a place and then they --- is that being**  **15 indicative of where they're going to end up? 16 But how do we unravel that? How do we**  **17 as an effective enforcement regime us that 18 information?**  **19 Because what we're hearing from John 20 and we've heard from Gary, what we'd heard from**  **21 Jon and Steve all the time is there are always 22 hubs that are in the South. And so, we can't** 

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## 1 draw a linear conclusion from them being stored **2 there to that being actually installed in that 3 area.**  **4 So, how do we use that effectively to 5 bolster our enforcement plan? How do we use that**  **6 information and what can we do about that? 7 And it seems like that most people are**  **8 saying, absent some knowledge from the dealer 9 about where they're bringing the item and where**  **10 they're going to install it, we can't do a whole 11 lot with that information, is what I hear people**  **12 say from the industry point of view. 13 And I see Charlie shaking his head in**  **14 agreement. So, I don't know, Dave. I mean, I'm 15 open. I don't know. I'm giving you ideas, but I**  **16 think it's -- it's a question that I think is a 17 logical one. Gary has asked it several times as**  **18 well. 19 I don't think there's a solution that**  **20 we can get to that everyone agrees to that this 21 is how we could use the information effectively.**  **22 MR. HURST: But I do think, to an**

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## 1 extent. So, all product goes to Ontario, and **2 then it goes to some branch near the border of 3 California or -- the folks that work at the**  **4 counter assuming that they didn't start last week 5 that have gotten to know their customers, and I**  **6 think I can speak for any one of the distributors 7 -- distributors are a relationship-based**  **8 business. 9 So, at some point you kind of know who**  **10 your customers are, you kind of know where they 11 operate, you kind of know where they go.**  **12 And I think it's reasonable that the 13 counter person that all of a sudden sells a**  **14 truckload quantity of condensing units to 15 somebody that usually installs in California,**  **16 something is up with that. 17 And I think it's incumbent upon the**  **18 distributor at that point, we're a distributor as 19 well, to say, this doesn't seem right.**  **20 Conversely, if you have your regular 21 customers that serve the Oregon side of the**  **22 border, you're going to know that as well.**

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## 1 You're going to see different **2 patterns. Most people, I think, are going to 3 behave and do the right thing, but I think to**  **4 your earlier point you will know if you know 5 anything about your own business and your own**  **6 customers, you'll begin to see things that are 7 either adhering to the law or not adhering to the**  **8 law. 9 And then you have to decide what the,**  **10 you know, the terms that we've kind of batted 11 around which routinely isn't branch-specific, you**  **12 know. 13 I'm having a hard time getting to what**  **14 you do until we define those pieces of it. 15 MR. RAWALD: Right. And I think --**  **16 this is Doug. 17 So, part of what you're getting back**  **18 to is what Tim raised with me as to constructive 19 knowledge, right?**  **20 So, you kind of know the pattern of a 21 person you're buying from and they're typically**  **22 installing in the south and suddenly they're**

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## 1 buying a bunch of things that you know aren't **2 good in the south. So, what do you do then, you 3 know?**  **4 So, the question is, we probably want 5 the distributor to not sell those, right? But**  **6 the distributor wants to make money. And so, 7 they want to do business and they don't want to**  **8 assume the worst of their customer. 9 So, how do we parse it out and how do**  **10 we develop effective regulations around 11 encouraging the right conduct and discouraging**  **12 the bad conduct? 13 So, I guess I don't know. I'm open**  **14 for that -- Harvey had his hand up. 15 MR. SACHS: This is Harvey and I'm**  **16 trying to pick up on this. And it seems to me 17 the critical element is that we've established**  **18 that distribution is often regional, and regions 19 can take on the full north-south gradient.**  **20 The other thing, it's my sense that 21 the dealer-contractor side of this is rarely more**  **22 than metropolitan. In some cases, it can be half**

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## 1 a state, Rhode Island, but it's generally sort of **2 the scale of a metropolitan operation. 3 So, in that sense, accountability**  **4 would seem to me to require that routine 5 violations or violations in any sense include**  **6 knowingly shipping a whole bunch of SEER 13s to 7 the dealer in Mississippi regardless of where the**  **8 distribution point is. 9 The harder issue is shipping to a**  **10 dealer in Covington, but -- Covington, Kentucky, 11 but I think the existence proof, as it were, is**  **12 this dealer in Mississippi, that it is a bad 13 thing to do regardless of where distribution is,**  **14 to knowingly ship a bunch of SEER 13s to Biloxi. 15 MR. CLARK: This is Gary Clark and I**  **16 agree in the preponderance of cases, you know, 17 Harvey is right, but there are contractors --**  **18 just throwing one out there, J.R. Hobbs in 19 Atlanta, Georgia, they're one of the largest**  **20 multi-family contractors in the United States. 21 They build -- they go everywhere in**  **22 the United States and they take almost all their**

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## 1 shipments into Atlanta certainly for the eastern **2 part of the U.S. 3 So, we will ship them truckloads of 13**  **4 SEER equipment, I guarantee it, that's headed for 5 someplace appropriate.**  **6 And then, you know, so, there are 7 those contractors out there. There's not many of**  **8 them. I agree with you the vast majority of them 9 are metropolitan. They're not going to go more**  **10 than, you know, a hundred miles. 11 I mean, that would be, you know, in**  **12 rural areas they might go a hundred miles from 13 Houston, Texas, they might go 10 miles, you know.**  **14 (Laughter.) 15 MR. CLARK: But there are these few**  **16 guys out there that are giants that take big 17 shipments of stuff. And then because of the way**  **18 that their jobs go, they redistribute it 19 themselves to manage the job.**  **20 So, it's, you know, it's this 21 incredible diversity of contractors we have out**  **22 there.**

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## 1 MR. SACHS: This is Harvey. **2 Gary, thank you. That's very helpful 3 to think about the exceptions and not think about**  **4 the roving ground source installers as -- 5 MR. CLARK: Yeah, there you go.**  **6 MR. SACHS: -- a few nationals who 7 drive their trucks anywhere for the right size**  **8 job. 9 MR. CLARK: They do.**  **10 MR. SACHS: But it seems to me that 11 that's an argument for DOE understanding that in**  **12 that case they have to go to that dealer to find 13 out where the installs were, not a reason to not**  **14 try to get a rule that is appropriate, but has 15 that flexibility of when you don't beat up, when**  **16 you look at the dealer records understanding that 17 this distributor is sending to that kind of a few**  **18 jobs. 19 MR. CLARK: Right. And I understand**  **20 what you're saying. I guess the concern I have 21 from your earlier comments, my concern was is**  **22 that a prohibited act, the direction we were**

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## 1 headed was a prohibited event would be to send a **2 truckload of 13 SEER units to a contractor in 3 Atlanta.**  **4 MR. SACHS: Who is a known -- knowing 5 that he will be a violator.**  **6 MR. CLARK: Well, I worried that we 7 wouldn't have that last part on the sentence.**  **8 MR. SACHS: I absolutely agree to that 9 last part of the sentence.**  **10 MR. CLARK: Okay. I was worried that 11 we wouldn't have that last part.**  **12 MR. SACHS: All right. I think that's 13 entirely appropriate.**  **14 MR. DORIA: So, this is Jordan for 15 Ingersoll Rand.**  **16 We can go back to the example that we 17 had in this issue of constructive knowledge.**  **18 There had been discussion I think at one point 19 about this idea of some kind of safe harbor**  **20 potentially if you were to report on something 21 like that.**  **22 So, just to use the example again, a**

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## 1 distributor does see something, they know that **2 this contractor is serving the south and they're 3 just all of a sudden taking a lot of 13 SEER**  **4 product. 5 I think one approach to solving this,**  **6 to addressing this issue, what do you do with 7 information like that that supports enforcement**  **8 would be to say that you upon some sort of 9 positive notification to the Department that you**  **10 can continue to sell to that person up until the 11 time that, you know, they are determined to be a**  **12 routine violator by DOE. 13 I think the reason that's so important**  **14 is if you didn't do that, if you just said that 15 you as the distributor now cannot sell to that**  **16 person, what that actually would do is because 17 the broader industry wouldn't know, that**  **18 distributor -- or I mean that contractor would 19 just go to somebody else. You're actually**  **20 punishing good actors and rewarding bad ones. 21 So, I think the idea of some kind of**  **22 safe harbor where you can continue to sell so**

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## 1 long as you report it, and report in a timely **2 manner, right, not maybe, you know, well, I knew 3 two years ago and I kept doing it.**  **4 There has to be some kind of time 5 period, but I think that could be a way that**  **6 could address this sort of constructive knowledge 7 issue, but not punish the good actors who are**  **8 trying to do the right thing. 9 MR. RAWALD: This is Doug.**  **10 So, I'm generally receptive to some 11 sort of concept like that. There is some**  **12 considerations, because the length of an 13 investigation can be a while.**  **14 And so, what I don't want to create is 15 an incentive for other people because we're going**  **16 to be asking for records, people that kind of 17 drag their feet along because they know they can**  **18 draw it out and keep making sales during that 19 time because we're not going to go make our**  **20 determination because the investigation is 21 ongoing.**  **22 So, I don't want the distributor or**

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## 1 the manufacturer to be in a situation where they **2 say, well, I told DOE and now I'm just going to 3 keep selling to this guy until they tell me**  **4 something else. 5 So, what we do in our current context**  **6 is when we tell someone that something is -- that 7 we're investigating for noncompliance, typically**  **8 they stop making it because they know eventually 9 they have to pay for it because they made it**  **10 noncompliant. 11 So, it's a question of is there a way**  **12 that we can come to a different kind of a ground 13 where the manufacturer tells us about -- or the**  **14 distributor tells us about a complaint and then 15 we either make some sort of initial Notice of**  **16 Concern, or we say to the industry, hey, we're 17 looking into this particular matter, or what do**  **18 we do to kind of level the playing field as 19 you're concerned about here and get their**  **20 incentive, but also not allow people to continue 21 to sell until the investigation is over if the**  **22 investigation may take a while.**

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## 1 I don't want to do that. I don't want **2 to keep selling noncompliant things to someone 3 that we think might be doing the wrong thing.**  **4 MS. NOLL: And this is Elizabeth. 5 I actually think of it slightly**  **6 different that I would rather put in place 7 something that if the person at the counter, if**  **8 somebody comes in and asks for a truckload to 9 Atlanta, that they are at least aware of a**  **10 potential violation or whatever, you know, 11 recourse when we come down that they would say,**  **12 hey, can you tell me where these are going and 13 why you need them to go to Atlanta?**  **14 And if that person has a reason, you 15 know, an explanation that is not unlawful, then**  **16 that person is covered. 17 If they don't ask and we haven't put**  **18 into place any mechanism that is going to trigger 19 them to ask the question, then we haven't done**  **20 our job. We haven't put in place an effective 21 enforcement plan.**  **22 MR. DORIA: But, Elizabeth, I think**

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## 1 that -- I understand your point. But going back **2 to something Doug said before, we don't want 3 industry to be the investigators.**  **4 I know exactly what that suggestion 5 would do. It puts us in the position of being**  **6 investigators because it's fine to say, all 7 right, he asked the question. They say, I'm**  **8 going to do with it whatever I damn well please, 9 right?**  **10 What do you do then, right? Are you 11 required to say, well, now he didn't answer so I**  **12 think he's hiding something? 13 I mean, I don't -- I understand the**  **14 concept behind asking, but I just don't know what 15 that necessarily --**  **16 MS. NOLL: I'm suggesting asking in the 17 sense of if there is some sort of consequence**  **18 tied to an action, then people are going to think 19 twice before just wholesale I'm just going to**  **20 keep -- there's nothing stopping me from 21 continuing to do business as usual.**  **22 MR. CLARK: For what the practical --**

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## 1 this is Gary from Goodman. **2 The practical question that we'd be 3 asked would be using the JR Hobbs people is that**  **4 we will ship you this if you in some way 5 recognize the fact that it is unlawful to sell**  **6 these units in the south. 7 Do you still want us to ship you these**  **8 units? Check "yes." They check "yes" and we 9 ship it to them.**  **10 MR. SACHS: Can you do that? 11 MR. CLARK: What?**  **12 MR. SACHS: Can you do that? 13 MR. CLARK: Well, I'm sure that, you**  **14 know, this is in a hypothetical, but, you know, I 15 don't think that what I just described is out of**  **16 the realm of possibility. 17 But from a practical standpoint, the**  **18 person who is a known violator will check that 19 box every single time. And so, how that protects**  **20 us, I don't really know, you know. 21 If somebody is going to lie to you,**  **22 they're going to lie to you, all right?**

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## 1 MS. NOLL: But they're the ones that -- **2 - 3 MR. CLARK: The guy on the receiving**  **4 end is going to say, okay. 5 MS. NOLL: But they're the ones --**  **6 MR. CLARK: It didn't change anything. 7 MS. NOLL: The repercussions are going**  **8 to come down on them, not you. But at least 9 you're put in a position of at least feeling like**  **10 I've done the right thing, I've asked the 11 question, I've put in place a mechanism that's**  **12 going to protect me. 13 And so, I think you might deter a**  **14 portion of the bad actors, but not all of them. 15 MR. CLARK: If what I describe protects**  **16 me as a company, then I'm -- hey I think that's 17 great.**  **18 I don't think the Department might 19 feel the same way --**  **20 (Laughter.) 21 MR. CLARK: I mean, that's my concern.**  **22 We go through all these steps and in fact it does**

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## 1 nothing to protect us from, you know, further **2 inquiries, let's say -- 3 MR. RAWALD: Right.**  **4 MR. CLARK: -- from the Department. 5 (Laughter.)**  **6 MR. RAWALD: This is Doug. I'm 7 laughing with Gary, I think.**  **8 So, I think that we're working on the 9 idea of what you don't want, because it's got**  **10 some possible areas to discuss more on. 11 MR. EISNER: Why don't we take a break**  **12 and see if we can come back and narrow this down? 13 I think we should go on to another issue. Come**  **14 back in about 10 minutes. 15 (Whereupon, the proceedings went off**  **16 the record at 10:29 a.m. and went back on the 17 record at 10:46 a.m.)**  **18 MR. EISNER: Okay. We have someone 19 online, Vincent, who's got a comment he wants to**  **20 make. 21 Vincent, are you still there?**  **22 MR. MUCCIOLA: Can you hear me?**

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## 1 MR. EISNER: Yes. **2 MR. MUCCIOLA: My question that I had 3 was we do have a distributor that does sell his**  **4 product to a prefab home builder. And, again, we 5 have one idea where those prefab homes are going**  **6 to end up at. 7 So, you know, in that case I hear, you**  **8 know, you want to add a letter or some knowledge 9 about where they're going to finally install**  **10 these properties, but I'm just throwing that out 11 that there's another chain of events that happens**  **12 in the real world there. 13 And the prefab builder can ship those**  **14 homes anywhere over the United States. 15 MR. EISNER: And I assume that they can**  **16 legally be moved from a northern site to a 17 southern site after they've been used?**  **18 MR. MUCCIOLA: Well, they could, but 19 most of his projects are prefab modulars that,**  **20 you know, are stacked into multifamily housing. 21 MS. MEYERS: Do they ship the outdoor**  **22 unit with the --**

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## 1 MR. MUCCIOLA: Yes, they do. **2 MR. ROCKY: Then they're going to have 3 some fun adjusting.**  **4 MR. EISNER: Would it be a violation if 5 it were legal when installed, the housing unit**  **6 when it was installed, and then when it was 7 moved? Would that be legal or would that be a**  **8 HUD issue? 9 MR. RAWALD: Right. This is Doug.**  **10 So, the issue you're presenting is -- 11 so, you're saying if the installation was going**  **12 to be a condensing unit attached to the indoor 13 unit, right?**  **14 So, that's going to be when the home 15 is in place and the condensing unit is going to**  **16 be installed. 17 So, they're not traveling installed**  **18 because the condensing unit is not in place to be 19 installed.**  **20 So, and what you're presenting the 21 idea of is it's installed in the north, and then**  **22 they uproot the condensing unit and the home and**

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## 1 they move it all to the south, which I think is **2 not likely to happen, but then we also have a new 3 product issue and there's a lot of legal**  **4 questions with that. 5 MR. EISNER: I'm also, I mean, we were**  **6 talking about when is it, quote, installed or 7 when is it a violation of the statute.**  **8 And maybe this is a question for you, 9 Vincent, you know, what happens to them? Are**  **10 they charged? Are they ever plugged in? Are 11 they ever run before they are put in their**  **12 permanent location? 13 MR. MUCCIOLA: They are charged and**  **14 they are installed. 15 MR. EISNER: Before they're moved to**  **16 wherever the person is going to install the home. 17 MR. MUCCIOLA: Yes.**  **18 MR. RAWALD: Well, Vincent, this is 19 Doug.**  **20 So, when we've talked about installed 21 here, I think Bryan Rocky had a good way of**  **22 putting it, which is when the condensing unit is**

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## 1 actually attached to the indoor unit, everything **2 is turn on and run through its first shift. 3 So, that's done before the prefab unit**  **4 is shipped to its final destination? The 5 condensing unit is actually attached to the**  **6 indoor unit and run and everything is running on 7 the prefab unit before it's shipped to the final**  **8 location? 9 MR. MUCCIOLA: Yes.**  **10 MR. RAWALD: Why would that be? 11 This is very odd to me. So, okay,**  **12 we'll look into that more because it's an 13 interesting hypothetical. So, everyone here is**  **14 shaking their head like they haven't heard it 15 before. So, we'll look into that.**  **16 MR. EISNER: All right. We were in a 17 position where we asked what everybody thought if**  **18 what's up on the screen is a violation. We had a 19 number of negative votes.**  **20 Anybody want to speak further to the 21 concerns? Anybody have ideas on how to address**  **22 the concerns of those who want to vote**

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## 1 negatively? **2 MR. RAWALD: This is Doug. 3 So, what I heard the concerns were not**  **4 that these things would constitute violations, 5 but that they'd only be violations.**  **6 The folks who had concern were saying, 7 no, no, no, we also want to have prohibited acts**  **8 in addition to the violations. 9 So, I think separating those two out**  **10 -- I didn't hear any concern that the violation 11 has traction except for John's, which is, hey,**  **12 this knowing violation for selling to people is 13 not the actual case that we're going to encounter**  **14 with distributors. What we really want is to be 15 the violation similar to the manufacturer that**  **16 Amy Shepherd first proposed, which is the, hey, 17 selling to someone that we know is a routine**  **18 violator. 19 That's the one that's more applicable**  **20 to the case of distributors. That's why her job 21 is suddenly -- is everyone -- is that fair? But I**  **22 think that's where the real issue seems to be.**

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## 1 MS. NOLL: Well, I also think, I mean, **2 this is in the context of just a 3 manufacturer-prohibited act.**  **4 MR. RAWALD: Right. 5 MS. NOLL: A little bit of concern, and**  **6 I don't want to speak for anyone, that then 7 everything is going -- the burden is completely**  **8 being placed on the manufacturer. 9 So, absent anything else, yes, maybe**  **10 there is a little bit of concern of piling on 11 violations to this one prohibited act.**  **12 MR. RAWALD: Right. So, this is Doug. 13 So, I don't think that we're piling**  **14 on. So, not we're adding things like the record 15 retention, which I think that's too far.**  **16 MS. NOLL: Right. 17 MR. RAWALD: So, I think there was a**  **18 concession Jon was trying to give us, which I 19 appreciate. I think that's too far. I don't**  **20 think we're asking for that. 21 What we're trying to really define is**  **22 the scope of what would be a violation here as in**

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## 1 the statute we know we have that. **2 And I think this pretty much frames it 3 with the understanding that the distributors,**  **4 they also have kind of the second violation as 5 Amy had initially framed.**  **6 And I think from the point of view 7 we've got to have both be the violation. Both**  **8 the selling to the guy who is reputed to be a bad 9 person, and also the selling to someone that you**  **10 know is going to put it in the wrong place. The 11 guy that comes to your counter or orders from you**  **12 for tract housing and says, yes, I'm going to 13 install all these in Mississippi, and I**  **14 shouldn't. 15 So, as everyone says, it won't ever**  **16 happen, but we want to make sure that we cover 17 both those activities.**  **18 So, I think it's actually from the 19 Department's point of view, that would be the**  **20 best way of approaching the violation. 21 So, I think it's a little bit more**  **22 broad than what we have here, but that will be a**

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## 1 violation. **2 And I didn't hear anyone saying, no, 3 no, we don't think those should be a violation.**  **4 What we're saying is we think this should also be 5 used for prohibited acts to lessen the burden on**  **6 the manufacturers, possibly, but also hold us a 7 little accountable in the chain.**  **8 So, that's really the real fight that 9 I see that we're having for both reflecting**  **10 those. 11 This kind of belief by some that there**  **12 should be prohibited acts added, and the belief 13 by those that we should not add prohibited acts.**  **14 Is that -- 15 MS. NOLL: I will agree with that.**  **16 MR. RAWALD: Okay. 17 MR. EISNER: So, with that, any further**  **18 discussion? I assume we still have the negative 19 votes or is somebody willing to change?**  **20 MR. BALLO: Well, if you change the 21 question. If you just say, does everyone agree**  **22 with this being a violation leaving aside the**

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## 1 issue whether it should also be a prohibited act, **2 I could vote for it as a violation, but I can't 3 vote to agree that it should not be a prohibited**  **4 act. 5 MR. EISNER: Is there any reason we**  **6 should treat them separately? If we want this to 7 be a prohibited act, there are going to be**  **8 negative votes unless it is made a prohibited 9 act.**  **10 MR. RAWALD: Right. So, this is Doug. 11 So, I think academically we have to**  **12 treat them separately, because they're separate 13 questions.**  **14 I mean, there's a question of we have 15 to define the term, and the separate question**  **16 entirely is, should we add additional prohibited 17 acts to what we already have from statute to meet**  **18 other people's needs? 19 So, and the question has been asked to**  **20 me several times, and what I'll say again today 21 after two weeks of discussions, is that we're**  **22 still open to what the group wants to do.**

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## 1 We want the group to look at this so **2 we don't -- we're not pushing for a particular 3 concept of adding prohibited acts.**  **4 MR. FERNSTROM: So, this is Gary. 5 If I understand it right, adding**  **6 prohibited act to a violation simply facilitates 7 or improves DOE's enforcement or compliance**  **8 action. 9 We're all in agreement that either way**  **10 these things we're talking about are violations. 11 The question is do we want to give DOE**  **12 the additional leverage associated with what 13 turning it a prohibited act offers?**  **14 And in my mind, we do. It isn't that 15 much additional trouble, difficulty, risk on the**  **16 part of those responsible for enforcement to 17 accept the additional burden of prohibited act.**  **18 Doug, would you please respond to 19 that? Am I perceiving this --**  **20 MR. RAWALD: Right. The underlying 21 facts would be the same for me whether I'm**  **22 investigating for a violation for assessing**

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## 1 whether a manufacturer has committed a prohibited **2 act by dealing with them, or deciding whether 3 it's a prohibited act so I'm going to charge**  **4 money to the shipper or the dealer. 5 So, from my point of view from**  **6 working, it's not going to change how much work I 7 have to do.**  **8 What making it a prohibited act does, 9 it allows the Department to charge money to other**  **10 people in the chain besides the manufacturer. 11 That's the only difference that we're professing.**  **12 MR. FERNSTROM: One more thing in 13 response. Other people in the chain are probably**  **14 going to be those large, mostly -- or largely 15 responsible.**  **16 So, it seems to me to be able to 17 charge money to those principally responsibility**  **18 -- principally responsible is a good thing. 19 MR. RAWALD: I understand that's your**  **20 point. I do. I do. And Harvey had a point, 21 too.**  **22 MR. SACHS: No, I -- this is Harvey and**

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## 1 I have a question. **2 I have thought that the prohibited 3 acts are to extend to each party in the commerce**  **4 chain since they independently act. And that's a 5 philosophical point.**  **6 And I think it's time for me to ask 7 the pragmatic question which you've alluded to if**  **8 I don't have prohibited act for the distributor 9 which seems to be the sticky point right now, how**  **10 does this affect your ability to do your work? 11 Does it affect it significantly, or is**  **12 it more a matter of sort of philosophical that 13 I'm phrasing?**  **14 MR. RAWALD: This is Doug. 15 I mean, a lot of this is based upon**  **16 intuition and gut, right, not based upon any 17 empirical evidence, which is the unfortunate**  **18 reality because we haven't done this before. We 19 haven't enforced this from the public energy's**  **20 point of view. 21 So, I don't have data to compare to**  **22 the other agencies that would be comparable to**

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## 1 kind of give an explanation. **2 What I think is that if we're not 3 going to be able to charge money to distributors**  **4 or contractors and dealers for doing some things, 5 we need to have something else to hang over their**  **6 heads. 7 Now, John Hurst brought up the fact**  **8 that manufacturers would think of some other 9 ideas that would be sticks or carrots to help out**  **10 at the last meeting. So, if I could hear those - 11 - but from my point of view the only thing that**  **12 we've offered that's even a possible -- another 13 stick would be is this finding of being a routine**  **14 violator which may have to put a market based 15 result on the individual that's even more**  **16 damaging than the $200 they get fined. 17 So, that's the only comparable kind of**  **18 thing that I can do to enforce that would be 19 available.**  **20 So, I think I could use that tool if 21 folks -- if we build a robust regime of, hey, the**  **22 Department has found someone to be a routine**

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## 1 violator. So, therefore, the distributors are **2 actually no longer being sold anything from the 3 premier manufacturer, but I don't know where we**  **4 are on that. 5 So, I guess that's my response.**  **6 You're looking at me for more. 7 MR. SACHS: This is Harvey again and**  **8 that's helpful looking at that linkage. In terms 9 of the practicalities, the obvious violation that**  **10 remains whether it's a prohibited act or not is 11 the failure of these records that you have**  **12 subpoenaed. 13 MR. RAWALD: Right. And so for the**  **14 failure to produce records if we don't have a 15 $200 violation, what do we have to encourage**  **16 people to produce records? 17 So, in Steve Porter's point before he**  **18 -- when he was here was we're so concerned with 19 the cost of filing a subpoena in court, that**  **20 we're going to comply. 21 So, that's one of the responses. So,**  **22 from the Department's point of view, we have**

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## 1 found that people typically give us records. **2 I don't know if it's because they're 3 afraid of subpoenas or because of the monetary**  **4 figure. I can't ascribe what the difference, 5 because everyone that we ask records for**  **6 currently face both consequences. 7 So, merely to be offering an opinion,**  **8 and I'm not prepared to do that. I would be 9 guessing. I don't think it's fair to this group**  **10 for me to guess what would be the most likely 11 thing to encourage behavior to producing**  **12 documents. 13 I guess the contractors and dealers**  **14 could possibly opine what I think from their 15 point of view, from their folks. Steve has told**  **16 us, and I think that Jon is in line with him, 17 that the distributors view it to be enough of a**  **18 financial risk to litigate the subpoena. They 19 would give the documents because of that rather**  **20 than any concern over a financial penalty from 21 DOE.**  **22 So, I don't know how contractors and**

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## 1 dealers feel about that. **2 MR. McCRUDDEN: Is that a question? 3 MR. RAWALD: Yes, I guess.**  **4 (Laughter.) 5 MR. McCRUDDEN: So, this is Charlie,**  **6 ACCA. 7 I think the contractors, and I'll let**  **8 Chuck say his part, too, would view the request 9 for information with the follow-up possibility of**  **10 a subpoena to be enough to comply with that 11 request for information.**  **12 MR. EISNER: Neil, we've been 13 approaching this from an enforcement perspective.**  **14 What will make it easier for Doug to find out 15 who's violated the statutory standards.**  **16 What about from the compliant side? 17 Would making this a prohibited act or not making**  **18 it a prohibited act be more beneficial in terms 19 of getting people to comply, or less beneficial?**  **20 Do you see it as a good tool for 21 compliance and not worrying about getting to the**  **22 enforcement stage, or don't you think it will**

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## 1 make a difference? **2 And I recognize this is kind of a new 3 area. But based on your experience with these**  **4 kinds of things, would it help, or would it not 5 help?**  **6 And I don't mean about production of 7 documents themselves. I mean about compliance**  **8 with the standard for the unit that's being sold. 9 MR. McCRUDDEN: Right. So, this is**  **10 Charlie with ACCA again. 11 I don't want to answer that**  **12 specifically yet, because I think when we look at 13 what is a routine violation, when we define**  **14 routine violation if there's a threshold and if 15 we define how that routine violation is made**  **16 public or noticed, I would like to have that 17 information sort of -- and I know that that's**  **18 where we're sort of -- we're leading to. 19 And I say that because if there is**  **20 this sort of hammer that could come down from 21 manufacturers, that we aren't going to touch a**  **22 contractor who is either a routine violator or is**

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## 1 showing up on this on these public notices **2 whether or not it's just notice we've begun an 3 investigation or we've concluded an**  **4 investigation. And I don't think we've got that 5 all the way out. That potentially could be**  **6 enough. 7 And also what I'll throw in, too, is**  **8 what specifically does that limit that contractor 9 or that distributor, I guess, also from engaging**  **10 -- what practices are they prohibited from. Is it 11 just the noncompliance, or is it all products?**  **12 And as Amy, I think you weren't here 13 yet, but I think Amy -- or, no, I think Karen**  **14 posed a question about you've got dealers that 15 are multiple or contractors that are multiple**  **16 dealers. 17 MR. RAWALD: Right. So, I can answer**  **18 that one question, because I promised I would. 19 And I did email Amy as I was driving in. I have**  **20 answered that question. 21 (Laughter.)**  **22 MR. RAWALD: So, we have talked**

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## 1 internally in the Department and I think this is **2 an important question that really needs to be 3 answered as of Neil's question how we define that**  **4 in that particular phrase. 5 And so, the way that we would define**  **6 it would be is to simplify this, and I like to 7 simplify things as much as possible, is that if**  **8 someone was a routine violator, it would be 9 unlawful to sell that routine violator any**  **10 central air conditioner. Anything under the 11 Department's rubric of central air conditioner,**  **12 because this is how we define the term "product." 13 MR. McCRUDDEN: So, it covered product.**  **14 MR. RAWALD: Right. So, we have to 15 cover product level with that word "product."**  **16 So, that means that if somebody is a routine 17 violator installing 13 SEER in a region that**  **18 requires 14 SEER, you can't sell them 15 SEER, 19 you can't sell them heat pumps, you can't sell**  **20 anything under the rubric of a central air 21 conditioner.**  **22 Now, you can sell them filters. You**

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## 1 can sell them compressors. That's the John Hurst **2 nuclear option I think that he asked about last 3 meeting, but you can't sell them anything that**  **4 falls under the term "central air conditioner" as 5 a product defined by Congress and that we've**  **6 dealt with it that way. 7 MR. McCRUDDEN: Any product, or that**  **8 specific covered product under subject to 9 regional standards?**  **10 So, in other words -- 11 MR. RAWALD: Such as --**  **12 MR. McCRUDDEN: Just central air 13 conditioners.**  **14 MR. RAWALD: Central air. 15 MR. HURST: Central air conditioners is**  **16 defined by condensing units, heat pumps, 17 residential package units.**  **18 MR. RAWALD: Right. Right. Central 19 air conditioner as defined. So, everything would**  **20 be under 430.16. So -- or 430.32(c), I think, or 21 429.16.**  **22 MR. HURST: That's limited nuclear. I**

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## 1 mean, that's -- **2 MR. RAWALD: It is. It is. I 3 understand that. And this is not -- this is an**  **4 interpretation of the statute based upon our 5 current practice.**  **6 MR. WHITE: So, this is Chuck White. 7 So, does that mean Karen can't do it,**  **8 but John could, or does that mean all 9 manufacturers cannot?**  **10 MR. RAWALD: Right. So, this is Doug. 11 And the question I heard from Karen**  **12 was if they're violating by selling, you know, 13 Bryan Rocky's products, can I still sell them my**  **14 products? And the question is no. 15 If we know that person is a routine**  **16 violator because they're installing 13s and the 17 region requires 14, that person cannot be sold**  **18 central air conditioners or you will be in 19 violation.**  **20 If you're selling -- if someone is a 21 routine violator and you're selling to them**  **22 whether they're buying your products or someone**

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## 1 else's products, you can no longer sell them **2 products. 3 That's how we interpret the breadth of**  **4 the product in the statutory prohibited act. 5 MR. WHITE: You can forget about your**  **6 $200. 7 MR. RAWALD: It seems to me that this**  **8 is a very effective tool that can countermand the 9 loss of a possible prohibited act.**  **10 So, that's why I'm saying to you in 11 response to Harvey's question, I think that this**  **12 particular item can actually have more teeth and 13 more effectiveness from a market point of view**  **14 than the Department will have from following up 15 with $200 fines to individual contractors.**  **16 So, from a programmatic point of view 17 it's going to be very difficult for us. I mean,**  **18 look at the orders of magnitude. I'm dealing 19 with seven manufacturers, 50 to 200 or 300**  **20 distributors and a hundred thousand contractors. 21 So, you know, the fines seem to -- they**  **22 become a little bit more difficult for those**

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## 1 orders of magnitude. **2 MS. MEYERS: So, this is Karen with 3 Rheem.**  **4 That's very helpful. But, again, from 5 my company's perspective, I don't sell to any**  **6 contractors. 7 So, then, again, how am I held liable**  **8 at all for any contractor installing an illegal 9 product?**  **10 MR. RAWALD: Right. So, this is Doug. 11 So, the only way you'd be held**  **12 responsible would be if a distributor that you're 13 dealing with is routinely -- the second violation**  **14 I discussed that's not on the board currently, 15 the one where the distributor keeps on dealing**  **16 with people that they know are bad people. You 17 can't deal with that distributor.**  **18 I mean, if we said Distributor X is a 19 violator, you can't sell to that distributor.**  **20 MS. MEYERS: But the distributor can 21 sell to them because they don't have a prohibited**  **22 act.**

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## 1 So, does that -- **2 MR. HURST: Well, sometimes the 3 distributor --**  **4 MS. MEYERS: Does that mean no OEM can 5 sell to that distributor?**  **6 MULTIPLE RESPONSES: Yes. 7 MS. SHEPHERD: Well, an OEM that knew**  **8 that they were a violator. 9 MR. SACHS: Once it's been noticed.**  **10 MS. SHEPHERD: Right. 11 MR. DORIA: Well, no, I think that**  **12 assumes too much. Yes, it is all OEMs -- this is 13 Jordan.**  **14 It is all OEMs assuming there is a 15 notice. We haven't actually resolved that,**  **16 right? 17 MR. McCRUDDEN: So, this is Charlie**  **18 with ACCA. 19 Let me ask Karen especially again.**  **20 Karen doesn't sell to any contractors, but a 21 contractor has been found -- well, we haven't**  **22 gotten to --**

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## 1 MR. DORIA: So, we totally violate **2 whatever the definition -- 3 MR. McCRUDDEN: The contractor is a**  **4 routine violator. Karen had the knowledge of 5 this contractor as the bad actor.**  **6 Is there no connection? 7 MR. RAWALD: Right. So, Karen is not**  **8 selling to a dealer. So, she -- 9 MR. McCRUDDEN: Right.**  **10 MR. RAWALD: -- cannot assume the 11 liability for what the contractor's actions are.**  **12 I think it would be very difficult for 13 me to say otherwise. I mean, I think it's very**  **14 logical what she said. 15 MR. McCRUDDEN: Right. Okay.**  **16 MR. RAWALD: So, what seems to me is 17 that Karen has to make sure the distributors**  **18 she's dealing with aren't the bad distributors. 19 That's her concern. It's from her**  **20 business mind. 21 MR. McCRUDDEN: Yes.**  **22 MR. MELCHI: And this is Jon from**

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## 1 HARDI. **2 Just to walk me through this, so 3 Charlie is my contractor. He's knowingly**  **4 violating the law. It's noticed throughout the 5 channel.**  **6 And in the course of your 7 investigation of Charlie's company you find that,**  **8 hey, my, you know, Jon's distribution company was 9 colluding with him and knew this was going on.**  **10 MR. RAWALD: Right. 11 MR. MELCHI: Charlie has got emails**  **12 that say, hey, can I get this in 10 SEER? 13 At that point, there would be a notice**  **14 to the public, really, but specifically to the 15 OEMs that say, you got -- everybody has to cut**  **16 off Jon's distribution company because we have 17 found that they have been knowingly and routinely**  **18 violated. 19 MR. RAWALD: Correct. Correct. And**  **20 that will be Karen's concern then, because she 21 would say, oh, I've been dealing with Jon, but**  **22 Jon's been selling to Charlie and Charlie's a bad**

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## 1 guy and Jon's a bad guy. So, I can't sell to Jon **2 either. 3 But I keep selling to Jon even if he's**  **4 selling it ultimately to Bryan Rocky or to 5 Harvey. It doesn't matter who Jon is selling to,**  **6 because Jon is now toxic. I have to stay away 7 from Jon.**  **8 MR. MELCHI: This is Jon from HARDI. 9 Just walking down this path, a**  **10 distributor would not necessarily be cut off if 11 they were unaware that Charlie's Heating and**  **12 Cooling was installing it in the wrong place. 13 You know that as we've talked about**  **14 that. But, you know, if there is a legitimate -- 15 MR. RAWALD: Has to be a knowing**  **16 violation with the contractor. 17 MR. MELCHI: Yes, okay. Okay.**  **18 MS. MEYERS: So, here's my question. 19 You said I have to make sure I'm working with**  **20 good distributors. 21 So, you're saying it's my requirement**  **22 to make sure that the distributor is --**

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## 1 independent wholesale distributor, which I have **2 absolutely no, you know, I do not own, have no 3 physical -- I'm responsible for making sure that**  **4 they are operating their business -- 5 MR. RAWALD: I'm shaking my head no as**  **6 you're talking. 7 MS. MEYERS: You said I have to make**  **8 sure that my distributors are abiding by -- so, 9 I'm suddenly -- you made me the police.**  **10 MR. RAWALD: No, that's not what I'm 11 saying.**  **12 MR. HURST: I think I got it. 13 MR. RAWALD: Okay.**  **14 (Laughter.) 15 MR. HURST: Charlie is a bad dealer**  **16 and he gets caught somehow. The Department 17 recognizes Charlie is bad. We all now know**  **18 Charlie is bad. 19 Jon can't and should not sell to**  **20 Charlie, but Jon's a bad distributor. He decides 21 to continue to sell to Charlie who's been**  **22 recognized as a bad dealer. Now, Jon's in**

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## 1 trouble. **2 Now, we all know that Jon is bad. 3 Karen shouldn't sell to Jon, because he has sold**  **4 to Charlie and we all recognize those two as bad. 5 If you continue to sell to Jon, and**  **6 Jon continues to sell to Charlie, I gain market 7 share.**  **8 (Laughter.) 9 MR. RAWALD: It doesn't matter if Jon**  **10 is still selling to Charlie. We know Jon is bad. 11 So, Karen can't sell to Jon anymore. But if she**  **12 does, then Karen is going to get a fine. She has 13 to know who the bad people are to be bad.**  **14 MR. SACHS: Right. This is Harvey and 15 I think the key concern is the look back --**  **16 MR. RAWALD: Right. 17 MR. SACHS: -- that I would assume**  **18 Karen would want to keep some kinds of records 19 which she keeps, but she would not be fined for**  **20 having sold stuff to bad guys, to Jon in 21 particular as a bad guy, before DOE had noticed**  **22 that Jon is a bad guy or his picture is in the**

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## 1 post office. **2 MR. RAWALD: Right. So, this gets to 3 the exact question that Jordan and I have**  **4 discussed like four or five times which is, is 5 knowledge going to be only limited to a**  **6 DOE-official proclamation that someone is a bad 7 person, or is there something else too?**  **8 So, if the manufacturer gets an email 9 from Jon saying, yes, I'm dealing with Charlie, I**  **10 don't care, you guys have to figure it out, then 11 the manufacturer is on notice.**  **12 So, from the Department's point of 13 view, there should also be at least an actual**  **14 knowledge requirement. 15 If there's actual knowledge on the**  **16 part of the manufacturer that the person they're 17 dealing with is a violator routinely, then that**  **18 also should be sufficient in comparison to the 19 notice on our part.**  **20 I think the notice is -- everyone 21 agrees if we put out a notice, that's a baseline.**  **22 But if you had actual knowledge independent of**

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## 1 any notice, you shouldn't be allowed to keep **2 dealing with that person because DOE hasn't 3 caught on yet. So, that's not okay.**  **4 MR. SACHS: But that's where you get 5 -- this is Harvey again.**  **6 That's where you get that -- the first 7 incentive --**  **8 MR. RAWALD: Right. 9 MR. SACHS: -- that now Karen knows**  **10 that Jon is a bad guy and she better quit 11 selling, but it's an opportunity for Jon.**  **12 MS. MEYERS: Right. 13 MR. RAWALD: And I hear that. So, the**  **14 question is, how do we incentivize manufacturers 15 to then give us that information.**  **16 It seems like the best way to do it is 17 Jordan's safe harbor like to say, hey, tell us**  **18 what's going on and we won't fine you for what 19 happened in the past.**  **20 Something like that, that seems to be 21 the solution the group has been coming to or at**  **22 least around that.**

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## 1 MS. MEYERS: Do you think distributors **2 should have actual knowledge if a violation is 3 taking place?**  **4 So, I'm supposed to turn in my 5 customer essentially if I have actual knowledge**  **6 and DOE does not, that they're doing something 7 wrong.**  **8 So, then I'm supposed to then tell my 9 customer who buys $100 million worth of equipment**  **10 with me and if you cut him off, I'm going to be 11 closing all my factories that, you know.**  **12 So, I guess I don't want to be put in 13 the position where I got to go say -- that's kind**  **14 of why I like the prohibited act, because I think 15 it helps to -- to Neil's question, it makes**  **16 compliance easier. 17 If everyone has a prohibited act, you**  **18 have one choice. It actually helps in 19 compliance.**  **20 Regardless of what happens on the 21 enforcement side, I think it makes it easier to**  **22 comply. Because then you as that entity have to**

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## 1 do things to -- in your business to prevent an **2 illegal installation. 3 I don't want to be the very first**  **4 person in the chain responsible for those other 5 entities not putting in the business practices**  **6 that are required to prevent the illegal 7 installation, because I don't want to play the**  **8 cop. 9 And I don't want Jon to pick up market**  **10 share because I notice something and it's three 11 years before the Department makes a rule. So, I**  **12 lose all this market share because the -- so, 13 that's why I think it's a good thing.**  **14 MR. MELCHI: This is Jon Melchi from 15 HARDI.**  **16 So, you currently have a distribution 17 agreement with your customers already requiring**  **18 them to do certain things. 19 So, I mean --**  **20 MR. SACHS: Including acting wrongly. 21 MR. MELCHI: Including acting**  **22 wrongfully. So, I mean --**

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## 1 MR. SHEPHERD: But -- this is Amy **2 Shepherd. 3 How is the manufacturer going to know**  **4 who the distributors own? I mean, that's the -- 5 if this is what this all is going to hinge off**  **6 of, how are they going to know? 7 MR. McCRUDDEN: This is Charlie.**  **8 I think the triggers here are 9 essentially the notification that you --**  **10 MS. SHEPHERD: But I'm hearing from 11 DOE that they don't want notification. So, how**  **12 else are we going to -- how else are 13 manufacturers going to know?**  **14 MR. McCRUDDEN: And this is the due 15 process part that concerns me as a contractor. I**  **16 mean, if someone says, hey, I think the 17 contractor is doing the wrong thing, what**  **18 recourse do they have, somebody might be put on 19 this list and may not even know it. And so, how**  **20 do they -- was there due process and -- how do 21 they prove or get themselves off this list at**  **22 some point?**

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## 1 MR. DORIA: So, this is Jordan. **2 If I could maybe just try and put -- 3 I think these are all obviously important**  **4 questions, but I was trying to think, well, what 5 are -- we're talking about knowledge and we have**  **6 some guidance on what constitutes knowledge 7 knowingly.**  **8 But I think as we're talking about it, 9 we're sort of talking around these different**  **10 things. And I think they could each be different 11 triggers and treated a little differently at**  **12 least potentially. 13 And the way I understand it, there's**  **14 maybe three ways that we can think of knowledge 15 here.**  **16 The first is actual, right? You are 17 told someone has violated, is violating, will**  **18 violate, right? 19 Constructive which is that sort of fit**  **20 to Jon's point. You know what that individual 21 contractor business looks like and you think**  **22 something is amiss. And then a DOE**

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## 1 determination, an actual -- or a DOE notice or **2 determination. 3 Are there other forms of knowledge?**  **4 PARTICIPANT: Warranty database. 5 MS. MEYERS: Warranty.**  **6 PARTICIPANT: If you see something 7 show up in your --**  **8 MS. MEYERS: Yes. So, if I was a 9 manufacturer and my warranty database shows that**  **10 Distributor A has sold five illegal units because 11 they've been registered in my warranty database,**  **12 what am I supposed to do? 13 I had no knowledge when I was making**  **14 the sale. I changed my distributor agreement. I 15 made, you know, my distributor agreement. Harvey**  **16 says he must lawfully do all this stuff and, you 17 know, but I now have knowledge.**  **18 What the heck do I do? 19 MR. EISNER: And you had asked the**  **20 question earlier about actual knowledge or 21 violation.**  **22 In this case, you know it's been**

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## 1 installed in the wrong place. You don't know **2 whose done it. 3 If Karen sent that information to you**  **4 and said, I have this information that the unit 5 has been installed in the wrong place, I don't**  **6 know who did this act, so I don't know if have 7 to stop dealing with someone, what do you advise**  **8 me to do in the future, that's her hold harmless. 9 She's now asked you. Whatever you**  **10 tell her will be available to everybody. So, 11 they'd be subject to the same requirement and**  **12 wouldn't do business with them. 13 MS. MEYERS: But, Neil, then I've**  **14 turned in my customer. I don't want to turn in 15 my customer, because I don't know by serial**  **16 number who I sold that unit to. 17 MR. EISNER: No, I understand, but I'm**  **18 thinking in the chain. You don't know if your 19 customer, the distributor or the dealer did**  **20 anything wrong. The contractor may have 21 purchased it and moved it to another state to**  **22 install it.**

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## 1 So, you're asking basically the **2 Department of Energy to investigate and let you 3 know whether you need to stop dealing.**  **4 MS. MEYERS: Well, then they're going 5 to go call my customer and say --**  **6 MR. EISNER: What's wrong with that if 7 your customer didn't violate the standard?**  **8 MS. MEYERS: I don't want to play the 9 cop here. I mean, I don't want to -- I don't**  **10 want to be the one going to the Department of 11 Energy and saying, you know, I sold five units to**  **12 Distributor A and they've all been registered in 13 my database and because they -- I can tell that**  **14 they were installed in an illegal area 15 MR. DORIA: So, Karen, this is Jordan.**  **16 I think we could potentially, I mean, 17 I don't know if everyone agrees, but we could**  **18 separate that out, because I think that that is a 19 different approach.**  **20 Like you said, it turns us into 21 investigators. With the --**  **22 MS. MEYERS: Well, you're talking about**

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## 1 knowledge and -- **2 MR. DORIA: Yes, but the three other 3 forms -- actual means somebody has provided you**  **4 with something, actual knowledge, not that you 5 went out and obtained it.**  **6 And I think the same is true for the 7 constructive. It's just that you're not quite as**  **8 sure. And DOE determination, again, it's a 9 matter of public record.**  **10 In my mind, these are all things that 11 effectively come to -- let's say using us as an**  **12 OEM. These are things that come to us that we 13 are provided with, not that we have to go out and**  **14 find. 15 I think that's an important**  **16 distinction, because one is we're simply 17 responding to things that come to us in the**  **18 course of doing business, and the other is we're 19 investigating it.**  **20 MS. MEYERS: So, if it comes to us in 21 the normal process of doing business, then we're**  **22 not responsible?**

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## 1 MR. DORIA: No, I think if it comes to **2 us in the course of doing business, there could 3 be obligations. I think that's what we're sort**  **4 of circling around. 5 MS. SHEPHERD: See, and I think that's**  **6 Karen's question, though. She's sitting 7 constructively on this knowledge. She's got the**  **8 warranty information, she's got the serial 9 number.**  **10 So, constructively if you look at this 11 extra definition of knowing, would a reasonable**  **12 person put those two together and instead you ask 13 DOE what do I do, I think her situation is**  **14 falling within a knowledge bucket. 15 MS. MEYERS: I'd like us to find a way**  **16 to protect the distributor in this as much as 17 possible, believe it or not.**  **18 I know it doesn't sound like that, but 19 I want my customer protected.**  **20 MR. McCRUDDEN: And this is Charlie 21 with ACCA.**  **22 I'm going to throw in one more fly in**

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## 1 this ointment. As I said before, there are **2 contractors who file warranty cards with the 3 wrong address deliberately, because their concern**  **4 is about what the manufacturer may do with that 5 information.**  **6 So, it could be a situation on a 7 border state where the contractor is putting in**  **8 his personal -- his business address with the 9 warranty cards on a product that he installed**  **10 legally in the other states. 11 And so, the data you have shows these**  **12 products -- and the warranty information that I 13 have shows these are installed illegally, that**  **14 may not be the case. 15 MS. MEYERS: Okay. Well, scenario**  **16 Number 2. We have a bunch of TXV valves out in 17 our marketplace that are very bad, massive**  **18 industry failure -- Gary is shaking his head. 19 So, we all go and find those units,**  **20 because we have to do a lot of, you know, you got 21 to do a field fix because they're failing**  **22 prematurely. Well, through that process you find**

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## 1 these illegal installations. **2 I've got my service technicians out 3 there. I mean, it's a -- so, what do you do?**  **4 (Off the record comments.) 5 MS. MEYERS: I mean, I typically go**  **6 right down to where the rubber hits the road. 7 So, that's why I'm wanting processes in place for**  **8 all of parts of the chain so it makes it almost 9 impossible for that to happen.**  **10 I know that there's always going to be 11 the bad actors. But if you have processes that**  **12 said this person has to do this, this person has 13 to do this, you're kind of protecting and you're**  **14 following the rules laid out in the enforcement 15 rule. I don't know how you can ever get a**  **16 violation unless you're, you know, a really good, 17 you know, the one person that's always going to**  **18 do it. 19 MR. CLARK: Well, Karen, I guess the**  **20 way I'm thinking about this a little bit is there 21 is the routinely, right, part of this. It's**  **22 knowingly and routinely.**

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## 1 And so, to your point about the, you **2 know, all of a sudden you get a bad, you know, a 3 13 SEER unit being registered in the south, okay.**  **4 So, you know, let's say it's one time 5 that shows up and you track it down and you know**  **6 it went to -- you shipped the unit to a 7 distributor in Chicago, but somehow it got**  **8 installed in Florida. 9 At that point, I don't think that your**  **10 distributor has violated the law because it, one, 11 is, to me, not routinely. But to notify that**  **12 distributor that this has occurred, I think, 13 would be appropriate, right?**  **14 MS. MEYERS: I think that's what the 15 enforcement rule needs to outline is what are the**  **16 requirements for each party in the chain. 17 And that way you follow those, you**  **18 check those boxes and I think Doug's out of work. 19 He doesn't have anything to do.**  **20 MR. RAWALD: I don't do air 21 conditioning cases anyway.**  **22 (Laughter.)**

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## 1 MS. MEYERS: So, I mean, I'm trying to **2 make it that simple if each party in the chain 3 does A, B, and C, then we have met the**  **4 requirements of the Department and you cannot be 5 in violation.**  **6 So, I don't care if the civil penalty 7 is $500,000 a unit. I checked A, B and C. You**  **8 can't get me. 9 So, you know, that's, I guess, what**  **10 I'm trying to -- 11 MR. SACHS: This is Harvey and the**  **12 thing that woke me up more rudely than anything 13 else in this morning's conversation was the**  **14 discussion of nuclear and limited nuclear 15 options, things that destroy the business at**  **16 whatever level that is. 17 The problem of nuclear options is it**  **18 takes a long time before one can invoke them. 19 There's a lot of due process that's got to be**  **20 done. 21 And I guess -- I think that's a --**  **22 potentially unproductive route and we really need**

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## 1 to pay some attention as it relates to what **2 Karen's been looking at. 3 What are the things we can do that**  **4 speed up and make compliance work better and 5 perhaps have graduated noncompliance warnings or**  **6 whatever else it is, can we de-escalate this and 7 again time, is what I'm asking.**  **8 Karen's road maps or checklists may be 9 one avenue that everybody's got skin in the game,**  **10 but it doesn't feel like it's philosophically 11 objectionable because it's a path to compliance**  **12 rather than a gotcha. 13 MR. EISNER: Well, you know, addressing**  **14 what I think was a legitimate concern Karen had 15 that she doesn't want to go in and get her**  **16 customer in trouble, but if everybody has 17 responsibility, would it be the kind of thing**  **18 where Karen can call a distributor instead of 19 Doug and say, we all have responsibility in this**  **20 chain, I just got information, it's warranty 21 information or something that's even clearer and**  **22 I'm passing in on to you so you can shut down the**

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## 1 chain to find out where the violation is. **2 I mean, are there other ways? Because 3 I think she's got a legitimate concern. People**  **4 are not going to want to get their longtime big 5 customers in trouble especially if they think**  **6 they have good operators, they don't know what 7 happened, but maybe that's the way each one has**  **8 to go down the chain and at some point it may 9 have to get sent to DOE to resolve.**  **10 MR. ARNOLD: Yes, this is Dan Arnold 11 with NORDYNE. That's kind of what I'm struggling**  **12 with is, you know, in the scenario that's been 13 presented here, you know, Jon sells to Charlie,**  **14 we think Charlie is the bad guy. 15 But when Charlie is accused of selling**  **16 13 SEER units to the south, what do most people 17 do when they're accused of something? They deny**  **18 it at first, right? 19 Well, no, wait a minute, I'm selling**  **20 these to my brother-in-law. I get a good price 21 from Jon. So, he ships them back up north. I'm**  **22 really not a bad guy, but we still think he's a**

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## 1 good guy. **2 And then when we cross the threshold 3 of, you know, okay, Karen thinks he's a bad guy,**  **4 Jon thinks he's a bad guy, we can't prove it, how 5 long is the DOE investigation? And then somebody**  **6 says, okay, well, DOE may think he's a bad guy, 7 but we're not the police.**  **8 Is the threshold then would everybody 9 stops selling when we start the investigation, or**  **10 if it takes a long time, we're going to finish it 11 because Charlie said, wait a minute, I should be**  **12 innocent until proven guilty, you guys come catch 13 me, you know.**  **14 He's a bad guy, but he's denying he's 15 a bad guy. And until you have the goods, you**  **16 know, again, there's other explanations for, you 17 know, reasons he could be purchasing the**  **18 equipment that are legitimate. 19 They're probably fairly far-fetched,**  **20 but I could think of some scenarios. So, where's 21 the smoking gun? When does the manufacturer --**  **22 when do we say, okay, we've now crossed the**

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## 1 threshold and we have the smoking gun, he's the **2 bad guy, we're all going to do what's right? 3 I mean, if that can be defined, then**  **4 I think we're all for it. 5 MR. AMRANE: Could be when do you**  **6 publish the information or make it public? 7 MR. SACHS: Karim, this is Harvey and**  **8 that's what concerns me that that is the nuclear. 9 And I sure would prefer something**  **10 that's self-reinforcing that Karen notices a set 11 of events. And I'm going to call that a single**  **12 thing that she checks her database once a month 13 or once every three months.**  **14 At that point, I sure would like to 15 see something, I think, that says, okay, at that**  **16 point my job is to share that with my 17 distributors, say we've got a suspicious pattern,**  **18 we have to make sure that that doesn't become a - 19 - damn, that term always escapes me -- a routine**  **20 violation and that's just sort of an internal 21 notice.**  **22 I'm not sure that Doug has to be**

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## 1 notified at that point, but that's letting the -- **2 getting the distributor into the team rather than 3 playing gotcha.**  **4 I don't know if that's realistic. I 5 just don't want to spend three years**  **6 investigating somebody who's selling 500 7 multifamily jobs illegally before we can do**  **8 anything that will go bankrupt instead of 9 replacing those units.**  **10 MR. BALLO: I just want to spin out 11 this possibility of Karen finding in her warranty**  **12 database that there are -- there's the appearance 13 of some potentially noncompliant installations.**  **14 Because at that point, arguably the 15 manufacturer begins to have some constructive**  **16 knowledge that there may be a problem with their 17 distributor.**  **18 If those noncompliant installations 19 are discovered through some other process,**  **20 someone notices the tag and it comes back to DOE 21 through that route, DOE is going to go to**  **22 presumably eventually the manufacturer and say,**

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## 1 well, when did you know? **2 And at that point if the manufacturer 3 has warranty information that's suggesting a**  **4 problem, if they've had that information for a 5 while, at some point it crosses that threshold**  **6 that the manufacturer should have known there was 7 a problem with their distributor.**  **8 So, by not turning in your customer, 9 you're essentially opening up that possibility**  **10 then that it becomes your problem down the line 11 if it's discovered that there is a noncompliante**  **12 installation by somebody else. 13 MR. DORIA: Tim, this is Jordan.**  **14 The problem with that is the product 15 that's installed is by a dealer contractor. That**  **16 provides no indication, I mean, the warranty 17 database will provide no indication on what**  **18 distributor was even involved in that 19 transaction, I don't think, on any sort of**  **20 routine basis. 21 PARTICIPANT: You'd have to look at the**  **22 serial number.**

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## 1 MR. DORIA: Well, yes, I mean, yes, you **2 could figure it out, but -- 3 MR. HURST: You'd have to research it.**  **4 MR. DORIA: Correct, yes. 5 MR. ROCKY: Yes. So, this is Bryan**  **6 from JC. 7 So, what I see as the unintended**  **8 consequence of this direction of line of thought 9 is if I'm as a manufacturer become known that**  **10 we're searching our database for violations and 11 illegal installations and that passes through to**  **12 our distribution chain or our factory branches to 13 contractors, contractors are going to stop**  **14 registering warranties, because that's going to 15 be the thing that triggers all of this activity.**  **16 Even in good faith I go to one of our 17 HARDI members and they go to Charlie and they**  **18 say, how did this happen, Charlie? And he says, 19 well, God, they must have tracked the damn**  **20 warranty number, the serial number. 21 MS. MEYERS: At this point I'm going to**  **22 say I don't want you to register anymore, because**

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## 1 I don't want to be put in a position -- **2 MR. ROCKY: So, we lose god benefits 3 for our customers and we lose good benefits for**  **4 us as manufacturers, as Karen brought up, if 5 there is a field problem that is related to a**  **6 component or a manufacturing defect or whatever. 7 Now, we can't go find those units,**  **8 because our customers through the contractors 9 have learned not to register warranties. So, I -**  **10 - 11 MR. EISNER: Isn't that assuming that**  **12 that is the only way that Karen can -- for 13 example, we have a unit built by Company X in**  **14 your yard. You read an article that it's 15 supposed to be 14 SEER. Yours was just**  **16 installed. It's 13 SEER. 17 So, you don't have anybody else to**  **18 call. Maybe the person who installed it has gone 19 out of business. So, you call the manufacturer.**  **20 MR. ROCKY: So, Neil, to answer that, 21 it's not a responsibility of a contractor to**  **22 register the warranty. It's the responsibility**

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## 1 of the homeowner if they want the benefits. **2 MR. EISNER: I'm not talking about 3 that. I'm talking about a situation where they**  **4 merely all the company to say, I've got a product 5 manufactured by you, the contractor who installed**  **6 it is no longer around, I want to know if I'm in 7 violation of the law. I just realized it doesn't**  **8 meet the standard. What do I do? Do you know 9 how I can fix this?**  **10 She now has information that it was 11 illegally installed.**  **12 MR. ROCKY: But it will be for units 13 built on or after January 1, 2015 --**  **14 MR. EISNER: I'm assuming -- 15 MR. ROCKY: After July 1st, of 2015 or**  **16 '16, whatever our sell-through period is. I 17 understand.**  **18 MR. EISNER: Okay. And I'm saying 19 there could be other ways. There could be other**  **20 ways that information can get out. 21 MR. DORIA: Yes, this is Jordan again.**  **22 I think we, I mean, the warranty**

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## 1 discussion is a good one, but what we're really **2 again talking about is what are the different 3 mechanisms by which various parties come into**  **4 knowledge and what form is that knowledge, right? 5 I mean, we could say as a group that**  **6 we don't think warranty information should be a 7 tool relied upon for enforcement. I think that's**  **8 something we can talk about doing and saying 9 there are other forms of knowledge.**  **10 We've talked about a number of other 11 examples. We just said that there is potentially**  **12 a very significant downside not only for us, but 13 more importantly for our customers with this with**  **14 the warranty agreements. 15 So, we could say that's off the table**  **16 and focus on the others. 17 MR. McCRUDDEN: This is Charlie.**  **18 I think warranty information is 19 completely unreliable for this purpose. And I**  **20 think it should not be relied on. 21 I don't know if we should say it**  **22 shouldn't be relied on, but I also think that**

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## 1 maybe we just stay silent on it as a group. I **2 don't know how to work that out. 3 I think the critical thing here is not**  **4 so much how did you get the information, because 5 the information doesn't just become available,**  **6 but it's the old Washington axiom, what did you 7 know and when did you know it, okay?**  **8 So you as a manufacturer suspect 9 something is bad. Is that the point at which a**  **10 clock starts, so that if any time after that 11 clock starts it comes back that there was a**  **12 violation, is that enough to bring you in? Or is 13 it a point in which DOE makes a notice of some**  **14 information that there is a suspicion, or does 15 DOE wait for the threshold that it's more than a**  **16 suspicion, it's a found violation, then that 17 becomes a constructive piece of information.**  **18 I think, Jordan, when you were trying 19 to break out ---- we have three pieces of**  **20 information, I think, where you said constructive 21 ---- you said actual, constructive and DOE**  **22 notice. I think a DOE notice is actual.**

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## 1 MR. DORIA: I think it is a form of **2 actual. 3 MR. McCRUDDEN: I think it's a form of**  **4 actual. So, I think we're stuck with two. The 5 actual ---- how you work it out, that I don't**  **6 know. It's this gray area of constructive or 7 what do you do with this and what responsibility**  **8 -- 9 MR. DORIA: The responsibility of to**  **10 provide information to someone. 11 MR. McCRUDDEN: Anybody. Any one of**  **12 us, including the homeowner that we all are, or 13 the resident, needs to survive out there. What**  **14 do we do with that information? What are we 15 responsible for?**  **16 The problem or the trick is if we 17 start -- prohibited acts, to me, are things you**  **18 can't do, not things you should do. 19 Should you inform? How do you**  **20 regulate that? Should you make a call? I just 21 don't know how to do that.**  **22 I think we're stuck with things you**

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## 1 can't do. And I think that, as Doug put it, it's **2 easier for him to deal with the few than the 3 hundreds of thousands.**  **4 MR. FERNSTROM: This is Gary. 5 It seems to me that serial number**  **6 tracking is too burdensome, you know. We've 7 talked about that.**  **8 It would probably be, in the end, as 9 close to foolproof as we can get, but it's**  **10 probably too burdensome and expensive for the 11 benefit we'd get.**  **12 MR. RAWALD: And, Gary, this is Doug 13 Rawald.**  **14 So, serial number tracking in what 15 way? At the DOE level, or finding individual**  **16 actors in record retention? 17 MR. FERNSTROM: Either way.**  **18 MR. RAWALD: Okay. 19 MR. FERNSTROM: I think that the notice**  **20 of -- or the notion of recording violators is not 21 a very practical solution either. Because**  **22 whoever is doing the calculating, is probably**

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## 1 disinclined to notify anyone. **2 So, to hold distributors, 3 manufacturers responsible for selling to**  **4 violators, well, sure, if they know. But they're 5 not likely to know because whoever is doing it is**  **6 going to be very disinclined to tell. 7 Same thing with reporting. If we rely**  **8 on a warranty system, especially if the violator 9 is the one mailing in the warranty card, they're**  **10 probably not going to put the correct information 11 on it.**  **12 So, if we really wanted to do bottom 13 sweep, so to speak, we can go out to the field**  **14 and survey some customers we think may have had 15 this equipment installed.**  **16 I pointed that out as an option 17 before. That's kind of a threat that no matter**  **18 what you do, what you don't do, what you say, 19 what you don't say, in the end there's some,**  **20 perhaps small, risk you're going to get caught. 21 MR. RAWALD: And I think what I hear**  **22 you saying, Gary, as to what you said before is,**

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## 1 if caught, you need to face some sort of **2 consequence or else getting caught won't matter. 3 MR. FERNSTROM: That's correct.**  **4 MR. RAWALD: Okay. 5 MR. FERNSTROM: And I think the**  **6 efficiency group here, you know, wants to see 7 some penalty albeit small, associated with that.**  **8 MR. RAWALD: For the contractors. 9 MR. FERNSTROM: Yeah. Not just the**  **10 violation, but -- what is the other term? 11 MR. RAWALD: You want to actually see**  **12 a prohibited act by which the Department can 13 charge money.**  **14 MR. FERNSTROM: Yes. Prohibited act. 15 MR. RAWALD: Right. I get that.**  **16 MR. FERNSTROM: And all this stuff in 17 the middle, we can talk about it, but it's really**  **18 not actionable. 19 MR. DORIA: So, this is Jordan.**  **20 I mean, going back to the one 21 prohibited act, which we have in statute, which**  **22 is the one prohibited act for private labeler,**

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## 1 you know, the problem that we have -- and unless **2 we identify what are the violations, what 3 constitutes the team, or the distributors in**  **4 particular, I don't know how this act can be 5 enforced. And I certainly don't know what I can**  **6 tell my business to do or not to. 7 So, I understand from your perspective**  **8 saying that, you know, ultimately this is about 9 what's installed where. I don't intuitively**  **10 disagree with that. 11 But to try and fulfill the obligation**  **12 that we have here, I think we still need to be 13 focused on answering those questions on**  **14 definitions. 15 MR. FERNSTROM: And Jordan, to respond,**  **16 I think it's very unlikely the distributor is 17 going to knowingly sell a product. Because**  **18 whoever is buying it with the intention of 19 violating is certainly not going to tell the**  **20 distributor. 21 So, would one contractor report on**  **22 another? Maybe, but I think that's unlikely.**

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## 1 MR. DORIA: Well, I bet the -- this is **2 Jordan. 3 I bet the contractor's way in that, if**  **4 you think that somebody is consistently 5 undercutting you by doing something illegal,**  **6 right, I think that would be potentially a pretty 7 strong competitive motivation to do that.**  **8 MR. McCRUDDEN: And this is Charlie 9 with ACCA.**  **10 I'll weigh in for the contractors in 11 that we had a board meeting two weeks ago and we**  **12 talked about some of the stuff. And there was 13 earnest interest in the whistleblower type of**  **14 situation. 15 I know that's not the word we're**  **16 supposed to use, but the ability to report 17 violations, potential violations, suspected**  **18 violations. 19 MR. FERNSTROM: So, this is Gary again.**  **20 Whistleblower is a good term because 21 it's reasonably descriptive of what we're talking**  **22 about here.**

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## 1 My experience comes from the pool pump **2 situation in California where a good number of 3 pool pumps, I believe, are installed, which are**  **4 not in compliance with the California Energy 5 Commission's regulations.**  **6 Now, one pool pump contractor may have 7 suspicion that another is undercutting, but they**  **8 don't necessarily have direct knowledge. 9 And in order to allege a complaint,**  **10 you pretty much have to have direct knowledge. 11 So the whistleblower system doesn't work very**  **12 well in that regard. 13 By direct knowledge, I needn't know**  **14 where your competing contractor installed the 15 noncompliant unit.**  **16 MR. DORIA: So, Gary, this is Jordan. 17 I can see why that approach would be**  **18 hard when you set the burden so high, but I don't 19 know -- there's certainly nothing that mandates**  **20 we would need to do that. Not that I'm aware of 21 anyway.**  **22 MR. McCRUDDEN: And this is Charlie**

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## 1 with ACCA. **2 I mean, we had a similar situation as 3 I mentioned before with Section 608 Clean Air Act**  **4 compliance rules with HCSCs. 5 And contractors have tried and have**  **6 made calls to the EPA hotline on this. In fact, 7 part of our board meeting, we had EPA folks in --**  **8 - and we're going to follow up with some meetings 9 with the enforcement folks on this.**  **10 The problem with compliance with 608 11 is you're talking about a gas that's been vented.**  **12 It's gone. 13 The situation here is you've got a**  **14 product in the basement. It's still there, okay. 15 And so, there's a way to sort of**  **16 figure out, how did this get here, you know, this 17 shouldn't be here.**  **18 And then I essentially leave it up to 19 DOE to figure that, and how to aggressively**  **20 attack that, but I think that --- I think that 21 the contractors will see violations and be able**  **22 to report violations based on how much they**

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## 1 already tried to report on essentially what is an **2 unenforceable rule dealing with gas, but knowing 3 what they told me, too, two weeks ago.**  **4 MR. FERNSTROM: Well, let me follow up 5 with some questions on that. So, suppose I have**  **6 an ethical contractor being undercut by one who 7 is installing noncompliant equipment.**  **8 I have a suspicion that this is going 9 on. I don't have names and addresses, the**  **10 concrete evidence that I was previously deferring 11 to.**  **12 So, I call up Doug and I say, hey, 13 Doug, I think this contractor is cheating. Well,**  **14 Doug is faced then with the opportunity to 15 investigate this or not.**  **16 He's most likely going to say, well, 17 what evidence do you have? Well, I just think**  **18 so. 19 Well, you know, that's not going to be**  **20 very compelling for Doug to launch an 21 investigation.**  **22 So I still believe that unless you**

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## 1 have compelling evidence of cheating --- **2 MR. HURST: This is John Hurst for 3 Lennox.**  **4 Gary, I think you would have 5 compelling evidence in the form --- two forms**  **6 that I would see. To Charlie's point, the gas is 7 vented and you have to know what you're looking**  **8 at. It's odorless and colorless and you don't 9 really see it.**  **10 A condensing unit will sit on the side 11 of the house for 12, 15, sometimes 20 years.**  **12 So, you have a unit, you have a serial 13 number, you know when it was made -- or even**  **14 before that, if I'm a dealer, if I'm Chuck and I 15 go in and I look at -- you know, sometimes a**  **16 consumer will say, here's the other two bids that 17 I got.**  **18 And you look at them -- and I get 19 these all the time because my friends fax them to**  **20 me or email. And they say, I'm confused, what am 21 I looking at?**  **22 Well, you're looking at two bids for**

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## 1 a 14 SEER system and a 95 percent furnace and **2 you're looking at a noncompliant, against the 3 law, illegal 13 SEER condensing unit that, by**  **4 law, cannot be installed in your state. 5 Well, that's a pretty good body of**  **6 evidence. So, I wouldn't call --- if I'm a 7 contractor out there, I'm not going to call Doug**  **8 with a feeling. I'm going to call him with a PDF 9 of a work ticket that says they just bid on a**  **10 job, and it's at this customer's location in this 11 state that's in the south.**  **12 Or when I go in on my first repair 13 call, I've got the condensing unit sitting right**  **14 there with a serial number that says, this was 15 made in 2015 or 2016, and that's your body of**  **16 evidence. 17 Then if everybody is retaining records**  **18 ---- and I do think it's reasonable for people to 19 retain records of what they sold to whom, because**  **20 we do it today -- they do their investigation and 21 say, hey, distributor, who did you sell this to?**  **22 Or manufacturer, which distributor did you sell**

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## 1 this to? **2 And I think there's a pretty good 3 chain of custody of where that piece of equipment**  **4 came from and where it went to, specifically if 5 you have it installed at the side of the house in**  **6 the wrong state. 7 MR. FERNSTROM: So, this is Gary.**  **8 Where do you get copies of competing 9 bids? Who would you be, the competing contractor**  **10 that gets copies, or the distributor, or --- 11 MR. HURST: Yeah -- I think all of the**  **12 above, because I think, you know, who in this 13 room that works in the HVAC industry has not**  **14 gotten bids from neighbors or friends or 15 relatives to say, hey, check this out, what am I**  **16 looking at? 17 Anybody not ever gotten that?**  **18 (Laughter.) 19 MR. FERNSTROM: Well, neighbors,**  **20 relatives, friends, sure, because --- 21 MR. HURST: Everybody's got a guy**  **22 though. That's how this business works. You**

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## 1 call --- you phone a friend and, you know, I'll **2 talk to friends of friends, people that I've 3 never met before, but I've got a friend that's**  **4 getting a new ---- and, you know, there's a lot 5 of us in this industry.**  **6 I think a lot of people --- consumers 7 do as much research as they can on the internet**  **8 and they phone a friend. 9 MR. FERNSTROM: Okay. So ---**  **10 MR. HURST: You did it to me a couple 11 weeks ago. I'm pointing at Elizabeth Noll from**  **12 NRDC. 13 (Laughter.)**  **14 MR. FERNSTROM: So, that's an excellent 15 point. And I've, in this sense, been a friend to**  **16 people. 17 MR. HURST: And I'm going to ask you**  **18 about my pool pump because I don't know if I'm 19 compliant.**  **20 MR. FERNSTROM: And I've seen a lot of 21 cases of noncompliance, but I don't phone up**  **22 David and say, hey, this contractor installed a**

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## 1 noncompliant pool pump at this location. I don't **2 feel comfortable doing that. 3 MR. DORIA: Well, this is Jordan again.**  **4 I mean, I think going back to thinking 5 about how this may compare to the current state -**  **6 --- and Doug, please chime in if this is 7 incorrect. I believe when you talked about how**  **8 DOE investigations against manufacturers are 9 triggered today -- I don't know if you said it**  **10 was a majority of the time, but you said that 11 it's a very common occurrence that it's one**  **12 person in industry suggesting that DOE 13 investigate someone else.**  **14 MR. RAWALD: That happens often. 15 MR. DORIA: It happens often. So, I**  **16 don't know why we wouldn't assume that would 17 continue to be true here. It's competitive**  **18 pressures that drive it. 19 So again, I mean, the point here of**  **20 what we're saying is there a cost to compliance. 21 The inverse of that is that there is**  **22 a cost savings for noncompliance and somebody is**

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## 1 losing out as a result of somebody else doing **2 that. 3 Just like we, as manufacturers today,**  **4 can report on somebody not meeting a requirement 5 for the manufacturer, I think you can see the**  **6 same thing, you know. 7 MR. HURST: Yeah, I would say also ---**  **8 this is John Hurst for Lennox, you know, we use 9 the example of permitting in California.**  **10 There is a financial disincentive for 11 the contractor to do the right thing today and we**  **12 all know why it's not working well. 13 To Jordan's point, there is a**  **14 financial incentive for Charlie's good 15 contractors, guys like Chuck, to ensure that**  **16 there is an even playing field and that there 17 aren't rogue actors.**  **18 And so, you know, professional 19 organizations police themselves. You might call**  **20 it ratting each other out, but attorneys and 21 doctors ---- and even HVAC professionals who are**  **22 the professionals in the industry, have an**

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## 1 incentive, a financial incentive, an economic **2 incentive to do the right thing or to out those 3 who are not complying with the statute.**  **4 MR. WHITE: But --- this is Chuck 5 White.**  **6 If I'm not a good actor, I also have 7 an incentive to call up and say, I think**  **8 Charlie's Heating and Air Conditioning isn't 9 working right, and get Doug to come over to his**  **10 place and start going through all his records and 11 taking up his time with unfounded claims, which**  **12 drives up his overhead and gives me a better edge 13 because I've taken his time away from doing work.**  **14 MR. BALLO: That's sinister. 15 MR. WHITE: To have unfounded**  **16 accusations against people is not fair. 17 MR. CLARK: I thought --- this is Gary**  **18 Clark from --- 19 MR. WHITE: One more thing to finish.**  **20 Karen doesn't want to be the policeman. We don't 21 want to be the policeman either. Distributors**  **22 don't want to be the policeman.**

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## 1 I'm just telling it like it is. We **2 don't want to rat out our friends. We might want 3 to rat out our enemies, but ---**  **4 MR. HURST: I don't want to rat out 5 friends or enemies. I want to rat out people**  **6 that aren't abiding by the law. 7 And, you know ---- we've all seen, you**  **8 know, TV reports of, you know, some loon calling 9 911 because McDonald's ran out of chicken**  **10 nuggets. And then there's a penalty against 11 people that call 911 for stupid reasons, but I**  **12 don't know if the DOE could do something similar 13 when you call 1-800-BAD-SEER, but there's got to**  **14 be some sort of way to parse through that. 15 MR. CLARK: This is Gary Clark with**  **16 Goodman and I guess I'm a little bit confused by 17 the conversation, yet to Charlie's point, you got**  **18 a unit sitting up there. 19 I thought we were putting on the unit**  **20 --- we said we would put on the unit if the unit 21 was compliant or not. It's going to sit outside**  **22 somebody's house for 15 or 20 years, hopefully,**

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## 1 right, if it's been put in appropriately. **2 And this idea of diverting attention 3 and stuff, I think Doug would say, well, what's**  **4 your proof? 5 It's like, if you've got six pictures**  **6 of rating plates that show that it's 7 noncompliant, then Doug's probably likely more --**  **8 - is more likely to act than if you say, well, I 9 think this guy is, you know, he's undercutting on**  **10 my bids and so I think he's cheating. 11 MR. HURST: Yeah, I'm not going to give**  **12 you the name, but I think he's cheating. Click. 13 MR. CLARK: But I thought we were**  **14 trying to --- if putting this information on the 15 rating plate is not of benefit, then I don't want**  **16 to do it. 17 If it is, then let's, you know ----**  **18 but I thought that's why we were doing that, so 19 that there could be some policing available so**  **20 that if Chuck or Charlie's HVAC goes out and 21 services a unit and it's like, holy smokes, every**  **22 time I, you know, go out on a call, I find these**

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## 1 noncompliant units. Gee, what's going? **2 MR. FERNSTROM: This is Gary for the 3 California IOUs.**  **4 Let me make a position statement. I 5 don't think that whistleblowing is going to work**  **6 very well. 7 That does not mean that it should not**  **8 be an option, because obviously in some cases 9 Doug finds out about these situations.**  **10 MR. CLARK: I'm not interested in 11 adding cost to my equipment if it's not something**  **12 important. 13 MR. FERNSTROM: It is important.**  **14 MR. CLARK: You just said it wasn't. 15 MR. FERNSTROM: I didn't ---**  **16 MR. CLARK: You just said it wasn't. 17 MR. FERNSTROM: I didn't say it wasn't**  **18 important. Whether the report of noncompliance 19 comes in by competitor through a whistleblowing**  **20 process or whether it's observed by a building 21 inspector through an official approval process,**  **22 having a label is important. I never said it**

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## 1 wasn't important. **2 I don't think the whistleblowing 3 process as a matter of compliance is going to**  **4 work very well. However, that doesn't mean we 5 shouldn't leave that avenue open. Of course we**  **6 should. 7 I just think some additional process**  **8 is needed to follow up on a broad-based basis to 9 catch those potential violations that don't come**  **10 in through a whistleblowing process. 11 MR. RAWALD: So, I want to interject,**  **12 Gary and --- both Garys, and say that from the 13 Department's point of view, the concession by the**  **14 manufacturers -- the voluntary decision to put on 15 the products ---- that they should not be**  **16 somewhere, is probably the best thing to come out 17 of this eight days we've had so far.**  **18 So, I think that's --- that's the 19 thing I've gone back to the Department with the**  **20 most pride from this group's progress. So I 21 think it's really important from the Department's**  **22 point of view.**

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## 1 I think it adds a lot of value. I **2 think it helps deter contractors from putting in 3 bids because they're easier to be caught. I**  **4 think it makes it easier for violations to be 5 reported. I think it makes it easier for**  **6 violations to be found. I think it's very 7 important.**  **8 So, I do want to stress that fact. I 9 think it's really important. I appreciate that.**  **10 MR. WHITE: This is Chuck White. 11 I'd like to clarify ---- I think the**  **12 label is important, too, and I think it's going 13 to help up and down the chain.**  **14 I'm all for product that's installed 15 in front of your face, obviously this is wrong,**  **16 but suspicions, accusations, unfounded, baseless 17 things -- if it's tangible, obvious, here it is**  **18 right in front of you, that's obviously a 19 violation.**  **20 But making accusations against people 21 because you have this gut feeling or even though**  **22 you have an estimate in front of you, there's a**

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## 1 lot of bait and switch going on. **2 Oh, yeah, that's right. I forgot. 3 That's my form I use somewhere else. I can still**  **4 do the job, but it's going to cost a little more. 5 I don't buy into that, but there are**  **6 certainly errors that get made in paperwork. 7 MR. RAWALD: This is Doug.**  **8 Well, I'm very sensitive to the idea 9 of folks feeling like they're being turned in**  **10 merely to waste their time. We get that already. 11 So, in the very real world scenario**  **12 where someone will complain about a 13 manufacturer's product, and then I go to the**  **14 manufacturer and have them produce records, 15 manufacturers who --- on many occasions have come**  **16 back and said, why are you bothering me with 17 this? This person --- somebody just ratted me**  **18 out, didn't they, they're just trying to waste 19 your time. Oh, you heard from Jon who hates me.**  **20 That's who called you, isn't it? 21 So, we have to be very judicious in**  **22 how we use our time and resources, because I have**

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## 1 a lot of things to follow up on in my plate, **2 right? 3 So, the complaints that are more**  **4 verifiable, like with the name plate, or with the 5 bid, are things that are more likely followed up**  **6 on than the John Hurst, worst-case ---- he's a 7 bad actor, hang up, you know. I'm probably not**  **8 going to follow up on those. 9 So if it will make the contractors**  **10 feel better, perhaps we can establish, as part of 11 an investigative-type rule, a threshold of what**  **12 minimum evidence should be provided to the DOE to 13 then trigger an investigation. That may be**  **14 something that we can consider. 15 John, you support that?**  **16 MR. HURST: Strongly support that. 17 MR. RAWALD: Okay. So I mean, we can**  **18 do that. We can say, in order to initiate an 19 investigation on a contractor, dealer or**  **20 distributor, you should provide DOE with the 21 following information. And that could be ---**  **22 once again, when we have the webpage submission.**

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## 1 And when you have the voice mailbox, you can say, **2 please provide the following information if you 3 want DOE to follow up on it.**  **4 Those are things that we can consider 5 having out there and I'm interested in them.**  **6 I don't want to waste people's time 7 and I certainly don't want to be used as a tool**  **8 for competitive advantage, right? 9 I don't go using us in order to get**  **10 ahead. So that's not the point of the 11 government's time or resources here. So, I get**  **12 that. 13 So, I don't mind working on that if**  **14 that's something that you folks are interested 15 in.**  **16 MR. CLARK: Thank you. 17 MR. RAWALD: Okay.**  **18 MR. EISNER: All right. This is 19 probably a good time to take a break for lunch.**  **20 MR. RAWALD: If I could --- so, a 21 couple of record keeping things. So people may**  **22 have noticed that Scott Harris has not been back**

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## 1 since the first meeting. **2 We heard today that he's withdrawn 3 from the group. So, Dave Hungerford is carrying**  **4 all the water for ASRAC for this group at this 5 point.**  **6 MR. SACHS: We're in trouble. 7 MR. RAWALD: What's that?**  **8 MR. SACHS: We're in trouble. 9 MR. RAWALD: I know. The group keeps**  **10 getting smaller and smaller. It's like we're 11 Survivor. We're throwing people off the island.**  **12 They're winning instead. 13 (Laughter.)**  **14 MR. RAWALD: I do have copies of a 15 very, very draft version of the circular that we**  **16 would want to have for the Department, to inform 17 people of what we are doing.**  **18 So I'm going to give it to you folks 19 to comment on liberally. Understand that this is**  **20 a very early stage meant to help us get a 21 discussion, because I know people want to look at**  **22 it, especially Harvey, and give me their**

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## 1 comments. **2 So, I want to give it to you to look 3 at now. Want to look at it at lunch? Want to**  **4 look at it tonight? We can talk about it 5 whenever you folks want, but I want you to have**  **6 it so you can look at it and give us ideas, okay, 7 and give us your thoughts.**  **8 I think it's pretty nice. I think 9 it's a good start, but I want to at least start a**  **10 discussion on that. 11 MS. NOLL: This is Elizabeth.**  **12 I have a question along those lines 13 going back to the very first topic of the day --**  **14 on the manufacturer label. 15 Is there a PDF that could be shared**  **16 with the groups so we can share it with our 17 people?**  **18 MR. ROCKY: Sorry. Are you referring 19 specifically to the one that I sent out or passed**  **20 out? 21 MS. NOLL: Any example that**  **22 demonstrates what we're talking about here.**

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## 1 MR. ROCKY: So, I have no problem **2 sending --- I have it. 3 MR. RAWALD: Of the intended label?**  **4 MR. ROCKY: Yeah, which we sent --- I 5 gave a couple copies that are circulating --**  **6 MS. NOLL: He didn't see the copy. 7 MR. ROCKY: Oh.**  **8 MS. NOLL: He wasn't here. 9 MR. ROCKY: He wasn't here. You're**  **10 right. 11 I had sent copies around, Doug. I'm**  **12 assuming that people have put them in their 13 pockets, because I didn't get them back. I**  **14 figured Gary was taking that one. 15 So, ahead of discussion, this is what**  **16 I can do today. 17 MR. RAWALD: Okay.**  **18 MR. ROCKY: And as far as the text and 19 everything else we had the discussion of should**  **20 there be a specific font size and text size and 21 everything else. And it's all based on real**  **22 estate that's available, right?**

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## 1 So Doug, you can have those, but I'll **2 send the PDF to you or to Laura or whoever and we 3 can send this out. It's nothing unique to this.**  **4 I will point out there is one error on 5 this format that was pointed out to me**  **6 afterwards. 7 The actual data shown is for a**  **8 three-phase unit, not a single-phase unit. So it 9 was not specifically applied, but that's because**  **10 I pulled up the wrong model from my set to look 11 at.**  **12 MR. RAWALD: I'm sure one of your 13 fellow manufacturers pointed it out to you.**  **14 MR. ROCKY: No, but actually I had Jeff 15 Nichols, in our engineering group, pointed out**  **16 that I was using an invalid model number. 17 MR. RAWALD: Okay. Thank you, Bryan.**  **18 MR. ROCKY: But anyway, I'll send that 19 to you and we can just distribute it. There's**  **20 nothing there --- this is actual size. It's what 21 I can do today. It's not what everybody else can**  **22 do, as we talked about, but it's from a format**

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## 1 that matches what the AHRI Unitary, Regulatory **2 and Compliance Committee has talked about as far 3 as verbiage in it being presented. So, this is**  **4 an example of how this could look. 5 The other thing in particular, the one**  **6 that's prohibited in southwest and southeast ---- 7 I'll add a picture, but taken about eight feet**  **8 away from the unit and it's legible at that 9 distance.**  **10 MR. RAWALD: Okay. 11 MR. ROCKY: As we lead into discussion,**  **12 it said there was no intent to make this legible 13 from 20 feet or 10 feet or whatever, but it's,**  **14 again this is real size. This is what I can do. 15 Actually, I sent the picture to Laura.**  **16 So if you zoom out, Laura, that picture is taken 17 roughly seven feet away from the unit with my**  **18 iPhone. And you can see the text right there in 19 the middle. It's pretty straightforward of what**  **20 it shows. 21 MR. RAWALD: Okay.**  **22 MR. ROCKY: So ---**

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## 1 MR. FERNSTROM: So this is Gary. **2 I'd just like to observe there's a 3 whole piece of the side of the unit there that**  **4 doesn't have any label at all on it. 5 (Laughter.)**  **6 MR. EISNER: So, do you want an 7 additional label or ---**  **8 MR. ROCKY: So, I will point out that 9 below that I have a service panel with this nice,**  **10 big, pink label and another label below that. 11 And that some manufacturers do not put that label**  **12 in that location because of the opportunity to 13 have it burned by the service torch from the guys**  **14 installing his line sets, that the space of the 15 sheet metal that's available is not consistent**  **16 between manufacturers. 17 It just happens that this model for**  **18 me, I have lots of room whereas other 19 manufacturers don't.**  **20 And we also, as I think I've already 21 stated, we took an opportunity a year ago to**  **22 standardize a font and a format to my rating**

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## 1 plate that consolidated two other labels into one **2 label. 3 Because every time you put a label on**  **4 and it's costing, we all are about having cost 5 competitive solutions for our homeowners.**  **6 MR. FERNSTROM: Okay. So, I was just 7 kidding.**  **8 (Simultaneous speaking.) 9 MR. EISNER: It's time to break for**  **10 lunch. Let's come back after 1:00. 11 (Whereupon, the proceedings went off**  **12 the record at 12:04 p.m. for a lunch recess and 13 went back on the record at 1:05 p.m.)**  **14 A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N 15 1:05 p.m.**  **16 MR. EISNER: All set? Okay. Let's get 17 started. I would suggest that we take a break**  **18 from distributors and go through the list of 19 things that DOE was supposed to look at between**  **20 meetings. 21 The first one I think you've already**  **22 talked about. Product definition.**

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## 1 MR. RAWALD: So, I'm not looking at the **2 ---- if Laura can bring up the list of do-outs. 3 MS. DEGITZ: This?**  **4 MR. RAWALD: No, this one we're looking 5 at -- action items.**  **6 MR. EISNER: The second one for 7 everybody's information is the Department's**  **8 opinion on definitions. 9 MR. RAWALD: So the terms we defined to**  **10 date are dealer, contractor and installer. So, 11 we all had a general feeling about -- that they**  **12 are sufficient. 13 The Department has some ---- just some**  **14 wordsmithing they want to do to make sure it's - 15 --- that these are the best definitions.**  **16 I'll bring those to you guys tomorrow. 17 We can look at them, but it seems like for the**  **18 most part they're very comfortable with what you 19 guys proposed. So, I don't think that's an**  **20 issue. 21 MR. EISNER: All right. The next one**  **22 is bringing back violations for**

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## 1 dealers/contractors and distributors. **2 MR. RAWALD: Right. And that's what we 3 were talking about at length this morning were**  **4 the violations as proposed. 5 And so, what we're comfortable with is**  **6 as Laura has these three violations of types that 7 we have here.**  **8 So, the two types in the distributor 9 world, both the selling to someone that you know**  **10 is going to do something bad, and also selling to 11 someone that you know is reputed to be a bad**  **12 person, and then the contractor installing or 13 selling in a place that shouldn't be. So, we're**  **14 comfortable with that. 15 Once again, there's some possible**  **16 wordsmithing they want to do with the, it shall 17 be a violation, term. Which ---- when we get**  **18 around to actually hammering out how to write it 19 as a regulation, we would do, but the substance**  **20 is very --- we're comfortable with here. I think 21 we're all comfortable with that.**  **22 MR. EISNER: Okay. The next one is**

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## 1 split opinions on prohibited acts. **2 MR. RAWALD: Right. And I think I 3 mentioned earlier this morning the Department**  **4 still is not taking a position on whether we 5 should or should not adopt prohibited acts.**  **6 We're really hoping for the group to 7 come to a consensus on the issue and come to us**  **8 with that. I think that's where we are. 9 MR. DORIA: Doug, this is Jordan.**  **10 I'm sorry, if I can just ask a 11 question on the 2 distributors -- what is the**  **12 difference between the two? 13 MR. RAWALD: So, the first is a person**  **14 walks into the distributor and says I'm going to 15 go to Mississippi with this thing, and you sell**  **16 it to them anyway. So, that's a violation for 17 the distributor to do that.**  **18 The second is the distributor sells to 19 a guy who's on the list that Jon was talking**  **20 about. They're on the list and the distributor 21 still sells to them anyway. So, that's basically**  **22 the two differences.**

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## 1 MR. DORIA: Okay, thank you. **2 MR. EISNER: Okay. Then does DOE have 3 the legal authority to require contractors to fix**  **4 installations? 5 MR. RAWALD: Okay. So, when I talked**  **6 to Tim Ballo about this last week ---- just to 7 give them where we were because I want to give**  **8 the advocates a chance to look at some of this a 9 little bit further, because they presented it.**  **10 So the Department's very conservative 11 legal opinion is that we do not have the**  **12 authority to require this, but we're open ---- if 13 there's any sort of other research out there, any**  **14 sort of things for us to look at, but we have not 15 found in our own research, in our own**  **16 understanding of EPCA -- the authority to require 17 our installers to replace a noncompliant unit**  **18 with a compliant unit. 19 Cell phone is going off there.**  **20 And so, absent any sort of further 21 information from the advocate folks, we're going**  **22 to take that pretty conservative position on**

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## 1 that. **2 What we do feel we have the authority 3 to require is a contractor to notify his customer**  **4 that they received that noncompliant unit, which 5 will then give the customer the ability to sue**  **6 the contractor or take whatever action that may 7 be appropriate to resolve it on their own,**  **8 consistent with what we do from the manufacturing 9 of noncompliant products currently, which is**  **10 where the manufacturer notifies those who are 11 downstream who then can then take their own**  **12 individual actions against the manufacturer. 13 So that's the Department's**  **14 conservative legal position, but I do want to 15 open it up to see if any of the advocates have**  **16 any more information after I've talked to him and 17 want more time to look at the issue possibly.**  **18 MR. BALLO: This is Tim and we did 19 discuss the sum of the email over the last few**  **20 days. 21 And I think the fact that it's in the**  **22 DOE civil penalty guidance that remediation gets**

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## 1 weighed on the calculation of the civil penalty **2 is helpful. 3 One of the ideas that I think, maybe**  **4 Charlie Harak, threw out is there possibly an FTC 5 role here in that -- is the installation of a**  **6 product outside the region, could that 7 potentially raise to the level of an unfair,**  **8 deceptive act or practice in trade such that FTC 9 could enforce and require remediation for the**  **10 consumer. 11 So, Charlie's suggestion was maybe**  **12 some kind of MOU or understanding where DOE will 13 advise FTC of bad actors who have engaged in a**  **14 pattern or practice of misleading customers and 15 installing, or assisting in the installation, of**  **16 noncompliant equipment within FTC taking 17 enforcement action as appropriate on getting**  **18 these referrals from DOE to the extent that they 19 may raise to the level of an unfair and deceptive**  **20 act or practice. 21 So I don't know if that's something**  **22 that needs to be bounced off of FTC, whether they**

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## 1 think there's anything that --- a role for them **2 in reinforcing this. 3 MR. RAWALD: So, I can ask Hampton the**  **4 question -- Hampton being the FTC gentleman that 5 came in the second week of the meeting.**  **6 I would guess what he would say is, it 7 depends, because he's a lawyer. That's a very**  **8 lawyerly answer. 9 So he'll say, the facts could rise and**  **10 that would give him a possible action, but he 11 couldn't say offhand with a hypothetical. So --**  **12 but I think they would at least be willing to 13 entertain the notion.**  **14 But the idea of us advising them of 15 bad actors -- I think that's what we're talking**  **16 about anyway with the whole routine violator 17 thing.**  **18 So, I think adding FTC to the list of 19 who we would advise, in addition to OEMs, would**  **20 make sense and I don't see why I wouldn't do 21 that. So, or at least give Hampton advice to**  **22 keep an eye on that for his own purposes.**

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## 1 So we could do that and then of course **2 the advocacy groups can then call Hampton and 3 say, look, did you see this on here and, you**  **4 know, make sure you go after this person or at 5 least look at it. So to possibly help him because**  **6 he may not know it or he may have a lot of other 7 things on his mind and could use some nudging.**  **8 So ---- but I'll talk to him about the 9 general question that you've asked.**  **10 MR. EISNER: I think --- 11 MR. RAWALD: I'm sorry. So, Tim, also**  **12 brought up the point of -- that in our penalty 13 guidance, we do say that's subsequent remedial**  **14 actions. 15 So, things that people do to make up**  **16 for the bad thing they made, will be considered 17 in assessing what will be the ultimate civil**  **18 penalty. 19 So, that would be of note if we ever**  **20 wanted to actually charge contractors money than 21 for doing the thing that it would be less money**  **22 to be charged because they're replacing the item.**

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## 1 If we're having no prohibited act **2 against the contractor and there's no money being 3 charged, that wouldn't play into it, but it might**  **4 be a way of getting off the bad actor list or 5 never getting on in the first place.**  **6 So, if we may say, well, this person 7 did something bad five times, but they replaced**  **8 all of them. Don't put them on the routine 9 violator list, because they've actually proven to**  **10 be --- they've fixed all the errors. 11 Some reason that we could consider ---**  **12 - I guess that would be analogous or at least 13 somewhat like that.**  **14 MR. EISNER: Any other comments on 15 this? Any questions?**  **16 (No response.) 17 MR. EISNER: Okay. The next issue is**  **18 length of time records must be kept. 19 MR. RAWALD: Right. So, the**  **20 Department's opinion is five years. So our 21 statute of limitations is five years for us. And**  **22 that goes from -- according to a Supreme Court**

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## 1 case in 2013, from the date the act is completed **2 by the manufacturer. 3 So, even if we were able to find**  **4 something eight years later in the scenario 5 Harvey and I were discussing last meeting, we**  **6 wouldn't be able to do anything about it at that 7 point because it would already be too far past**  **8 the time when the action was completed. 9 So, there's no reason to keep --- make**  **10 people keep records if we can't do anything with 11 it.**  **12 So, our statute being five years, our 13 preference would be to have a five-year record**  **14 retention scheme. 15 Yes, John.**  **16 JOHN HURST: For clarification, you 17 said manufacturer --- the act actually occurs at**  **18 installation -- 19 MR. RAWALD: Right.**  **20 JOHN HURST: ---- would it be five 21 years from installation or ---**  **22 MR. RAWALD: You're correct. It would**

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## 1 be five years from installation. **2 JOHN HURST: Okay. 3 MR. RAWALD: So, we would consider the**  **4 action to be complete the date it was installed 5 in noncompliance.**  **6 JOHN HURST: Okay. 7 MR. RAWALD: So, if it took us eight**  **8 years to figure out that it was a noncompliant 9 unit, we would be past the point of being able to**  **10 take an action upon it. 11 MR. EISNER: Any other questions or**  **12 comments on that? 13 MR. MELCHI: Doug, you said five years,**  **14 would that --- for my members, that would be five 15 years from the date it leaves their store as**  **16 well? 17 MR. RAWALD: That's not --- so, I**  **18 passed around record retention language with 19 Charlie and Chuck and Jon and also Steve Porter,**  **20 and I think we've gotten pretty close to 21 something workable and I really appreciate the**  **22 help they've given me.**

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## 1 I think that the way I phrased it was **2 ---- it will be five years when it leaves your 3 hands.**  **4 MR. MELCHI: Okay. I just wanted to 5 make sure in case, you know, some guy holds onto**  **6 a piece of equipment for --- 7 MR. RAWALD: Right. You can't know**  **8 when it's going to be installed -- 9 MR. MELCHI: Yes.**  **10 MR. RAWALD: It's from when it leaves 11 your shop. So, that way you can keep your own**  **12 record retention practice. 13 You can say, hey, you know, I know**  **14 five years from today I can throw this away. So, 15 whatever practice you obtain for doing that.**  **16 MR. McCRUDDEN: So, this is Charlie 17 with ACCA.**  **18 So, five years from the point when it 19 leaves your hands ---- for the contractor, that's**  **20 technically being installed. 21 MR. RAWALD: Right.**  **22 MR. McCRUDDEN: Okay.**

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## 1 MR. EISNER: Any other comments? **2 (No response.) 3 MR. EISNER: Okay. The next one is**  **4 skeleton of rulemaking. 5 MR. RAWALD: So, Laura has been ably**  **6 working on something, but we're not going to 7 share ---- we're getting ahead of the eight ball.**  **8 So, I mean, our whole point here is to 9 make things move as soon as this is over so we**  **10 can get things going. 11 So, like I say, we're already working**  **12 on things. So, I think that we're making 13 progress where it should be.**  **14 So, folks should feel comfortable that 15 we're going to do what we need to do to get this**  **16 in place as soon as possible when we finish up -- 17 -- hopefully next week.**  **18 MR. EISNER: Any comments? Questions? 19 (No response.)**  **20 MR. EISNER: Okay. That brings us up 21 to the tri-fold ideas for group to review, and**  **22 you passed that out at lunchtime.**

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## 1 MR. RAWALD: Right. So, I passed it **2 around. So, this is our basic idea of what will 3 be a helpful item.**  **4 What we will want to do is we have a 5 webpage. This will be downloadable from the**  **6 webpage. You can link to our webpage or to the 7 actual docket of folks who download it.**  **8 The contractor goes into a form ---- 9 make sure to slide that across the table ---- to**  **10 a customer so they're aware of what's going on. 11 So, that's the kind of basic thing.**  **12 We have not worked with a mock-up of 13 something the distributors could hang up or**  **14 anything like that, but we've talked about that 15 idea as well.**  **16 So this is the basic information 17 pamphlet. This is completely in the working**  **18 stages. 19 So, any ideas you have, any input you**  **20 have we are very receptive to. We want to make 21 sure it's both effective and also understandable.**  **22 So, you know, if you want to look at**

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## 1 it tonight, come back with any ideas or thoughts, **2 that would really help us move this along to be a 3 constructive document.**  **4 MR. HUNGERFORD: I have one off the 5 top.**  **6 MR. RAWALD: Okay. 7 MR. HUNGERFORD: Under the heading,**  **8 "Why Should I Follow the Rules and Buy Central 9 Air Conditions that Meet Standards," the text**  **10 relating to that is all about how much you can 11 get in trouble.**  **12 MR. RAWALD: Yes. 13 MR. HUNGERFORD: And it seems like**  **14 you'd probably want to lead with --- 15 MR. RAWALD: The benefits?**  **16 MR. HUNGERFORD: -- the benefits, 17 right.**  **18 MR. RAWALD: Yeah, I noticed that as 19 well. I was thinking about it last night. So,**  **20 okay. 21 MR. HUNGERFORD: And I'd also want you**  **22 --- I also want, rather than wrapping**

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## 1 southwestern into southern to call out the **2 southwestern region as well. 3 MR. RAWALD: Okay.**  **4 MR. HUNGERFORD: It happens in a couple 5 -- three different places.**  **6 MR. RAWALD: How about having a 7 different one for the southwest versus the**  **8 southeastern? 9 Would that be helpful? Would that**  **10 make it easier, or more complicated? 11 MR. HUNGERFORD: Only if it --- the**  **12 purpose of it was to explain EER versus SEER. 13 MR. RAWALD: Right. Here's what I'm**  **14 getting at is, more people are living in the 15 southeast than the southwest because there's more**  **16 states. 17 So -- but I mean California is a large**  **18 state. So, that means there's more people in the 19 southwest possibly, but it seems to me that they**  **20 don't even know some of the stuff that 21 southwestern folks might.**  **22 So, I guess just offhand ---- do**

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## 1 people think there's maybe more value in having a **2 separate southwestern one and a separate 3 southeastern one for purposes of dealing with**  **4 southeastern clients. 5 MR. HUNGERFORD: Oh, you mean an entire**  **6 different brochure. 7 MR. RAWALD: Yes, exactly.**  **8 MR. ROCKY: Actually --- this is Bryan. 9 Doug, I'd rather see one for heat**  **10 pumps and one for AC. 11 MR. RAWALD: Okay.**  **12 MR. ROCKY: And, I mean, I know we're 13 talking about regional, but the intent of this is**  **14 to explain the regional impacts on central air 15 conditioners, not the national standard for heat**  **16 pumps. 17 MR. RAWALD: Okay.**  **18 MR. ROCKY: So, I think referencing 19 heat pumps in this document is ---**  **20 MR. RAWALD: Confusing? 21 MR. ROCKY: Yeah, it's confusing -- not**  **22 redundant, but it's a good idea to have one for**

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## 1 heat pumps on 14 SEER as a change just for **2 communication, but this document to me is really 3 trying to explain the regional AC standards.**  **4 MR. RAWALD: No, I'm with you. 5 MR. DORIA: This is Jordan.**  **6 I'm not, I mean, I guess we can't put 7 down all the information, but, I mean, with heat**  **8 pumps it's date of manufacture, it's business as 9 usual, it's what we've been doing forever.**  **10 I guess I'm not sure I see tremendous 11 value in having it.**  **12 MR. RAWALD: So, Jordan, do you think 13 he should at least take out heat pumps that are**  **14 referred to there? 15 MR. DORIA: Yes, I agree with that.**  **16 MR. ROCKY: So, yeah, Jordan. So, my 17 point is if we talk about heat pumps in this,**  **18 then you put some text in there that references 19 that. I think to me it's easier to have a**  **20 separate document for heat pumps if the 21 Department thinks that has value.**  **22 MR. RAWALD: Right. So, there's**

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## 1 several places where we refer to heat pump. So, **2 I guess what you're recommending is, take out the 3 reference to the heat pump wherever we have it at**  **4 the very least because it's unduly confusing 5 because they're not subject to the 13.**  **6 MR. ROCKY: It gives you a little more 7 space to talk about air conditioners or the --**  **8 MR. RAWALD: Sure. 9 MR. ROCKY: -- the ERR requirement for**  **10 the southwest or something else. 11 MR. RAWALD: Okay.**  **12 MR. SACHS: Doug, I'm confused. This 13 is Harvey.**  **14 I realize that's not uncommon, but I 15 heard this given out as an assignment to be**  **16 discussed tomorrow, and then I hear us discussing 17 it.**  **18 MR. RAWALD: I said people can discuss 19 it tomorrow, but people had ideas and wanted to**  **20 volunteer today. So, I didn't stop them --- 21 MR. SACHS: No point in having one**  **22 discussion if we can have two.**

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## 1 MR. RAWALD: Right. **2 (Laughter.) 3 MR. RAWALD: We've can have four or**  **4 five. 5 (Laughter.)**  **6 MR. ROCKY: Two won't be enough. 7 MR. RAWALD: We're going to be talking**  **8 about this for three or four meetings. 9 MR. SACHS: Thank you very much. I'm**  **10 suitably reprimanded. 11 MR. DORIA: This is Jordan.**  **12 The one thing I would say, I mean, I 13 think most of it is fine, but I think it might be**  **14 worth just sort of pointing out to people, you 15 know, that if you don't get a product that's**  **16 compliant, you didn't get what you were paying 17 for. You didn't get what you were supposed to**  **18 get, because that is a kind of message that 19 really cuts across different people's viewpoints,**  **20 right? I mean, some people care about energy and 21 CO2 emissions, and some will not.**  **22 The idea of not getting what you paid**

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## 1 for is pretty universally disliked. So, I would **2 recommend some language to that effect. 3 MR. RAWALD: Okay. I'd also like to**  **4 add something about the manufacturer label, you 5 know, look for this thing. So, if there's some**  **6 sort of way of pitching that. 7 So, I don't know if the folks who are**  **8 working on the uniform label could think of 9 possibly a way of phrasing that would be uniform**  **10 across all manufacturers ---- to be fair to you 11 so that, okay, we're looking at the same thing,**  **12 we're looking at this condensing unit to make 13 sure it's compliant.**  **14 MR. EISNER: Any other comments? 15 MR. SACHS: This is Harvey. I don't**  **16 know if DOE has its own spin doctors, but in the 17 context of the get what you pay for, it has to**  **18 have some preparatory language that lets them 19 know that manufacturers, distributors and**  **20 contractors are doing their best. If you don't 21 get this, you've got a problem. You have been**  **22 shortchanged.**

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## 1 MR. RAWALD: Yes, I hear --- I **2 understand what you're saying and we do have 3 people who spend a lot of time thinking of these**  **4 things. More time than I do. So, I'll ask them 5 to look at that then.**  **6 MS. SHEPHERD: This is Amy Shepherd. 7 But I think that we do need to make**  **8 sure that we're clear as to -- what this can 9 address is that you didn't get what you should**  **10 have gotten based on where you live, sort of. 11 It's not necessarily you didn't get what you paid**  **12 for. 13 MR. RAWALD: Okay.**  **14 MS. SHEPHERD: Does that make sense? 15 MR. RAWALD: Yeah, absolutely.**  **16 MS. SHEPHERD: Okay. 17 MR. RAWALD: And I think also, Amy, you**  **18 made the point earlier that some people did get 19 what they paid for. They actually colluded to**  **20 get --- 21 (Simultaneous speaking.)**  **22 MR. RAWALD: So, I don't want to**

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## 1 oversell that point, but I am sensitive to your **2 comment on that. 3 (Simultaneous speaking.)**  **4 MR. GIBBONS: This is John with Carrier 5 and I see this as a good piece. I can see that**  **6 contractors would see it as a good piece more 7 proactive so that if I'm a law-abiding**  **8 contractor, I could show a homeowner why Mr. 9 Arnold's Heating/Air shouldn't be selling 13**  **10 SEER. 11 The thing they might get confused on**  **12 is that I was good until this last page I guess 13 it will be as where, you know, we have the grace**  **14 period. 15 They may get very confused on that**  **16 because I could still sell 2014-built compliant 17 unit, you know. Now, they're trying to compare**  **18 pineapples and apples and might get confused. 19 MR. RAWALD: Yeah, I think I mentioned**  **20 to you I think you or Steve brought up initially 21 was I don't know the best way to message this**  **22 particular topic. And I think the people doing**

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## 1 this don't either. **2 So, any thoughts people have on how to 3 effectively message the sell-through to a**  **4 consumer, I'm open to ideas on that. 5 MR. ARNOLD: This is Dan Arnold.**  **6 You mentioned label. I was going to 7 mention the Energy Guide label is still sort of**  **8 in flux, but, I mean, maybe you could put 9 something in there, look for the label.**  **10 Because if it's reached after December 11 31st, it should have that label on it and they**  **12 would be able to look at the label and say, yes, 13 this is the right product or not irrespective of**  **14 when it was manufactured. 15 MR. RAWALD: Right.**  **16 MR. ARNOLD: So, maybe on the side of 17 the Energy Guide label and that --**  **18 MR. DORIA: Was that the Energy Guide 19 label, or the label --**  **20 MR. ARNOLD: Well, I threw out both. 21 MR. DORIA: Okay.**  **22 MR. ARNOLD: They're both kind of in**

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## 1 flux, but --- so, I don't know if you can **2 finalize it. 3 MR. DORIA: But the outdoor unit that**  **4 we're talking about would be easiest, right? I 5 mean, if you have those, you know it shouldn't be**  **6 there, period, right? Because then the date of 7 manufacture is not an issue anymore.**  **8 MR. RAWALD: Right. I think that's a 9 really easy thing to message. I just don't know**  **10 how uniform you folks decide to make the message 11 on the label.**  **12 I see what Bryan is suggesting. I 13 just don't know how if everyone is on the same**  **14 accord with him. 15 So, I guess picking a way that you**  **16 guys would all say the same thing so somebody 17 would be able to identify it no matter what words**  **18 you use, would be nice to know. 19 MR. ARNOLD: This is Dan Arnold again.**  **20 I mean, again, could we say, look for 21 the Energy Guide label and not necessarily since**  **22 we haven't decided our label, but look for the**

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## 1 label on the end of it. Do I have an Energy **2 Guide label which will define, you know, if it's 3 legal for your area.**  **4 MR. RAWALD: Right. I don't mind 5 explaining the Energy Guide label. I think it**  **6 will be helpful. 7 MR. ROCKY: Doug, this is Bryan.**  **8 Just to clarify, I think the verbiage 9 that was on the proposed label is what came out**  **10 of our AHRI Unitary Regulatory Committee --- 11 Compliance Committee discussion as verbiage that**  **12 we can all accept as manufacturers. 13 The actual placement, font size,**  **14 etcetera, is what we were leaving up to the 15 manufacturers.**  **16 MR. RAWALD: Okay. 17 MR. ROCKY: But the verbiage, I think,**  **18 is something we had all agreed to. 19 MR. RAWALD: Okay.**  **20 MR. ROCKY: I think that was right. 21 MR. RAWALD: Okay. And I know Harvey**  **22 wanted to place hold that to bring back his**

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## 1 labeling aficionados to talk to them about it. **2 MR. SACHS: I don't --- this is Harvey. 3 I don't --- I can't think of a problem now, but I**  **4 do want to just let them know what's happening. 5 I also just would have a suggestion**  **6 that the warm fuzzies of air conditioners may or 7 may not be as useful as actually a small version**  **8 of the Energy Guide label. 9 MR. RAWALD: Okay.**  **10 MR. SACHS: Whether or not we need the 11 manufacturer name plate label and all that, I**  **12 don't have any opinion on, but I do think giving 13 them guidance to what to look for --- giving the**  **14 consumers guidance would be helpful. 15 MS. MEYERS: The first bullet under if**  **16 you live in the south --- 17 MR. RAWALD: Uh-huh.**  **18 MS. MEYERS: -- should have July 1st, 19 2016, instead of July 2016.**  **20 MR. RAWALD: Sure. 21 MR. WHITE: So, in the paragraph about**  **22 the 369,100,000 metric tons, are those estimated**

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## 1 to be avoided? And at the end it says, "as a **2 result of the last standards". I don't think 3 that reads right.**  **4 MR. RAWALD: Okay. And I'm sure this 5 came directly from some language that was in the**  **6 standards rule. So, I'll have them go back and 7 look at it.**  **8 MR. McCRUDDEN: This is Charlie at 9 ACCA.**  **10 In the middle of what I guess would be 11 the page with the map, it says, if you live in**  **12 the north, the amended standards that impact the 13 northern region are based on the product's date**  **14 of manufacture. Therefore, units manufactured 15 before January 1st have to meet the standard that**  **16 was in effect before. And then after, have to 17 meet the amended standard, but it's the same**  **18 standard in the north. 19 MR. MELCHI: I think that was probably**  **20 in reference to heat pumps. 21 MR. McCRUDDEN: Yeah, I think that's**  **22 the reference for heat pumps.**

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## 1 MR. HURST: I just put on the table **2 that has the sell-through whether it's unlimited 3 sell-through 18-month grace period, that might**  **4 clear a lot of it up, if only for dealers. 5 MR. McCRUDDEN: I'm sorry.**  **6 MR. HURST: Just put a table in and you 7 can say, okay, if I'm in this region, here's what**  **8 I can sell through. 18 months for unlimited sell 9 through or ---**  **10 MR. McCRUDDEN: Right. I guess what 11 I'm saying is since the standard in the north**  **12 doesn't change --- 13 MR. HURST: It does for heat pumps.**  **14 MR. McCRUDDEN: If we're taking out 15 heat pumps ---**  **16 MR. HURST: And we should have package, 17 because package unit is different too.**  **18 I would suggest just a table, but I 19 can give you an example that I think would work.**  **20 MR. RAWALD: That would be helpful. 21 MR. McCRUDDEN: So, my question is,**  **22 what's the intended audience for this?**

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## 1 MR. RAWALD: I think it's **2 consumer-oriented. 3 MR. McCRUDDEN: Okay.**  **4 MR. RAWALD: This is meant to go to the 5 person who is going to be buying the product.**  **6 MR. McCRUDDEN: And that's what I want. 7 And how are we going to say --- because I think**  **8 there's many ways to dumb this down, the language 9 that we don't use because we're better than ---**  **10 we use a different language. 11 MR. RAWALD: That's fine. I mean, I**  **12 don't sit in the living rooms of the people 13 selling them air conditioning. I let you folks**  **14 do it. 15 MR. McCRUDDEN: Okay.**  **16 MR. RAWALD: Okay. So, we'll have 17 another discussion of this tomorrow it looks**  **18 like. 19 (Laughter.)**  **20 MR. EISNER: Any other questions? 21 (No response.)**  **22 MR. EISNER: All right. That brings us**

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## 1 down to the last big bullet, record retention. **2 MR. RAWALD: And I put this in a 3 sub-bullet before. So, I passed around draft**  **4 record retention language with the distributors 5 and the contractors to look at.**  **6 We also included in that some ideas 7 for manufacturers to help manufacturers**  **8 understand what we think would be helpful. 9 Understand that manufacturers already**  **10 are keeping these records, but I thought it might 11 be helpful to have that in there as well. So,**  **12 and then help them understand how it all works 13 together to investigate.**  **14 So, this language is meant to once 15 again discuss what you are required to retain,**  **16 not produce. So, what are the things you should 17 keep. And then so if I ask for certain things,**  **18 you could have them on hand. 19 We did have some discussion on**  **20 searchability, other concerns. And there's 21 really no requirement of the Department that**  **22 records be electronic versus paper or be**

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## 1 searchable as long as when we ask for them, you **2 can figure them out and give them to us when we 3 need them.**  **4 So, we're not going to impose a 5 requirement on how they're kept beyond the**  **6 ability of you have to be able to look through 7 them and figure out what's there and give us what**  **8 we need when we ask for it. 9 So, and if you think things are**  **10 confidential, then you of course can tell us it's 11 confidential and declare that to the appropriate**  **12 process that we could explain as well. 13 And we do explain whenever we ask for**  **14 -- we always explain what the confidentiality 15 process will be.**  **16 So, I do want to sit down with the 17 contractors and distributors and work on a couple**  **18 of details before I give the bigger group what 19 we're working on.**  **20 So, hopefully by tomorrow I can throw 21 something up on the bulletin board and we can go**  **22 look at our ideas, but I think we're very, very**

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## 1 close. I feel pretty good about it. **2 MR. HURST: Can I be included in that 3 distributor ---**  **4 MR. RAWALD: Yeah, of course. That 5 makes sense, John. I'm sorry I didn't think of**  **6 that before. 7 MR. DORIA: Yeah, I would like to as**  **8 well. 9 MR. RAWALD: Okay, Jordon.**  **10 MR. EISNER: Any comments or questions? 11 (Off record comments.)**  **12 MR. EISNER: All right. Guess that 13 takes us back then to the distributor issue.**  **14 MR. RAWALD: Well, I don't know if the 15 distributor issue so much as the prohibited act**  **16 issue, right? 17 So, I think -- that to me seems to be**  **18 the --- 19 MR. MELCHI: Would it be helpful if I**  **20 talk for a minute? 21 MR. RAWALD: Yeah, okay.**  **22 MR. MELCHI: So, this is Jon from**

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## 1 HARDI. **2 So, in all honesty, here's where we're 3 at. I've talked to some of you about this**  **4 already. 5 Had a meeting with our board of**  **6 directors last week and the orders I got were 7 less than six months ago all the parties in this**  **8 room with the exception of Ray, Gary and Chuck 9 White agreed to a settlement agreement which**  **10 included language saying that DOE would not 11 assess --- or agrees to not assess civil penalty**  **12 upon distributors. 13 Now, for our membership, that was the**  **14 only reason that there was a settlement. Had 15 that not been included, there would have been no**  **16 settlement. 17 I don't know if this needs to go on**  **18 the record or off the record. We had legal 19 strategies prepared to kick this thing for**  **20 another two years if we needed to and were 21 prepared to do so.**  **22 We did not initiate settlement talks.**

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## 1 So, we were asked, what would it take to settle **2 this case? 3 We said what it would take to settle**  **4 this case, and that included a non-penalty upon 5 distributors.**  **6 For our members, this is the only 7 reason that we settled the case and I do not have**  **8 authority to agree to a prohibited act which 9 would subject my members to civil penalties.**  **10 I, you know, I don't know how I can be 11 more clear. Those are the orders that I had.**  **12 We've talked about it. We talked through every 13 scenario with my board and that's what they voted**  **14 and that's what they told me to bring to the 15 table.**  **16 In our folks' minds, they're not --- 17 this isn't something that they do every day, not**  **18 typically really regulated by DOE. The products 19 we sell are, and there was --- there was simply**  **20 no interest in walking back from something that 21 we signed six months ago that was the cornerstone**  **22 of a lawsuit settlement.**

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## 1 And that's where we're at today -- at **2 least from the HARDI perspective. Those are my - 3 -- that's what I --- those are my orders, if you**  **4 will. 5 MR. FERNSTROM: So, this is Gary.**  **6 Let me make sure I understand the 7 lawsuit settlement. A suit was initiated against**  **8 this rule-making. And in order to settle that 9 suit and allow this rule-making to move forward**  **10 as it has, your terms were that civil penalties 11 could not and would not be applied to**  **12 distributors; is that correct? 13 MR. MELCHI: Yes.**  **14 MR. FERNSTROM: Okay. Well, so far as 15 I'm concerned, that's a precedent that I think**  **16 we're just going to have to live with and I guess 17 I'm prepared to give up my interest in civil**  **18 penalties against distributors because the only 19 way I could find them culpable is if they**  **20 knowingly sold to contractors who were installing 21 out of compliance, and I don't think they would**  **22 know. So, it's kind of a moot issue.**

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## 1 MR. MELCHI: This is Jon from HARDI. **2 Thank you, Gary. And, you know, I 3 think that's why leaving that meeting, Doug, I**  **4 was, you know, as far as the records and --- we 5 understand that we have a role to help you, give**  **6 you tools for an investigative process. And, you 7 know, that's why our members have said, tell them**  **8 what we have and they can use whatever we have, 9 you know. That's what we want to do.**  **10 But it would be extremely challenging 11 for us to go back to membership who said you can**  **12 settle, but only under terms X, Y, Z and say, 13 well, we're going to strike X from what we've**  **14 been telling you was the terms of the settlement 15 not less than six months later, and that's just**  **16 the fact today. 17 MR. RAWALD: Right. And I appreciate**  **18 your honesty. I do. I appreciate --- so, as I 19 said before, from the Department's point of view,**  **20 in order to go and change this policy that we 21 have, it would really create --- it would really**  **22 need some sort of consensus of the room here for**

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## 1 us to do that, the driving need to change. **2 Otherwise, we have established the status quo. 3 So, I'm hearing from Gary that he**  **4 feels that given what we know and what we're 5 aware of at the moment, that he's comfortable at**  **6 least asking the distributors from any sort of 7 prohibited acts that would have financial**  **8 penalties. 9 How does everyone else feel?**  **10 MR. FERNSTROM: This is Gary again. 11 I'd add, frankly, I feel the same way**  **12 about the manufacturers because, you know, 13 they're not ---**  **14 (Speaking off mic.) 15 MR. RAWALD: So, let's focus on**  **16 distributors then because we have that on the 17 plate and we have it kind of discussed.**  **18 Does anyone feel --- anyone else want 19 to support what Gary and what Jon has asked for**  **20 and how do folks feel generally? 21 MR. HURST: I was part of the**  **22 negotiation and Jon and I have spoken and whether**

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## 1 we like it or not, that's what was agreed to in **2 the settlement agreement. 3 So, you know, I have no dog in the**  **4 hunt, because I don't count as a distributor as 5 it was defined. But the way I feel about it is**  **6 fair is fair and we have to find a way to still 7 find --- we still have to find a way to enforce**  **8 with this, this situation. It's what we all 9 collectively agreed to.**  **10 And I would feel as a manufacturer if 11 we didn't abide by that settlement, we would be**  **12 going back against the lawsuit. 13 So, I know we all may not like that,**  **14 but it is what it is. 15 MR. EISNER: Others? Any comments?**  **16 (No response.) 17 MR. EISNER: Anybody object to not**  **18 making it a prohibited act? 19 MR. SACHS: As much as I try to live by**  **20 a commitment to integrity, I still want to 21 understand what we lose, if anything, if the**  **22 distributor cannot be held liable when, in fact,**

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## 1 the distributor's obligation is to make data **2 available and that's already enforceable through 3 the subpoena.**  **4 So, if we walk away from my 5 philosophical bent that everybody ought to have**  **6 skin in the game except me, what have I lost? 7 (Laughter.)**  **8 MR. HURST: I'm also a little confused 9 as we've talked about the nuclear option, the**  **10 semi-nuclear option or the limited nuclear 11 option.**  **12 If I'm a distributor and I've done 13 something wrong and I can't sell product, that's**  **14 not their decision to make. 15 It's the manufacturer precluding the**  **16 distributor from selling product because they 17 violated.**  **18 So, technically I guess it's not a 19 prohibited act for a distributor. But if they**  **20 can't get product, it's kind of like having a 21 weapon and not having any bullets.**  **22 I guess you've got to, you know, swing**

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## 1 it around and hope to hit something. But if I **2 don't give you bullets, you can't commit any 3 violations because you don't have any condensing**  **4 units to sell. 5 That's a pretty ---**  **6 MR. MELCHI: So, Harvey --- 7 MR. HURST: -- heavy act.**  **8 MR. MELCHI: -- this is Jon from HARDI. 9 As we talked to the board about this**  **10 and distributors around the country, we made some 11 --- there are some pretty big carrots, I think**  **12 you will --- or carrots or sticks depending on 13 which perspective, but the distributor's**  **14 agreement with their manufacturer is something 15 that is --- that is always a concern.**  **16 And quite frankly although it's not 17 the purview of this agency, we have consistently**  **18 told our members that they are --- if they are 19 collaborating with a contractor who is knowingly**  **20 installing a product where they shouldn't be 21 installing it particularly in multifamily homes**  **22 in that scenario, that you could be liable for an**

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## 1 FTC violation of defrauding a consumer who thinks **2 they're purchasing compliant equipment when 3 they're not.**  **4 And there are a lot of big threats out 5 there that we've kind of told our members about.**  **6 I would be happy to work with, you know, with you 7 on an MOU or anything that we can do to satisfy**  **8 your needs outside of the purview of DOE. 9 MR. SACHS: So, this is Harvey and I've**  **10 now heard from Jon and from John that in a 11 practical world, in a practical sense we are not**  **12 at serious risk of losing anything in terms of 13 the ability to assure compliance and do**  **14 enforcement. 15 I'm looking at Amy, who might be**  **16 thinking about ways that that's not true, but 17 others might agree.**  **18 So, if I can recast the question, is 19 that the consensus I'm hearing in the room?**  **20 MR. HURST: I'd like to ask one 21 question before I answer that question. Are the**  **22 distributors willing to maintain records?**

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## 1 MR. MELCHI: Yes. **2 MS. MEYERS: Is there anything else 3 they're willing to do to ensure compliance with**  **4 the regional standards? 5 MR. EISNER: Can you speak up?**  **6 MS. MEYERS: My question is there any 7 other things that the distributors would be**  **8 willing to do to ensure compliance? 9 I agree that we don't need to go back**  **10 on the settlement agreement. 11 MR. MELCHI: Yeah, I think that we**  **12 would be open to --- I haven't heard anything 13 else to suggest it to a site from record keeping**  **14 and reporting violators that we would do, but I'm 15 certainly open to listening to those things which**  **16 would not constitute a prohibited act and just 17 would be willing to listen to that.**  **18 MS. NOLL: So, I have one comment to 19 make. On the record retention, though, you're**  **20 saying that they are willing to, but what happens 21 when they don't and you subpoena them and they**  **22 don't?**

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## 1 MR. RAWALD: Right. So, if someone **2 does not comply with the subpoena, then we go to 3 the court and we get a court order.**  **4 And if they don't comply with the 5 court order, then they're held in contempt by the**  **6 court to which federal courts have the ability to 7 then begin fines and all the things that fall**  **8 under the court. 9 So, those wouldn't be DOE enforceable.**  **10 They would be enforced by the Department of 11 Justice on behalf of the Department of Energy.**  **12 But that's the process that we would go through. 13 And so, what I heard from Steve Porter**  **14 and I think Jon would agree with this, is that 15 most distributors view the expense of going**  **16 through litigation over the subpoena and then the 17 public outrage of what they were doing could be**  **18 not worth the effort of not giving us the 19 information we requested.**  **20 MR. MELCHI: And, quite frankly, if 21 they are --- this is Jon from HARDI, you know.**  **22 If somebody is doing something where they know**

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## 1 it's bad and they know they're going to get **2 caught, then, you know, they deserve to get 3 caught, you know.**  **4 Or if they're not providing those 5 records, then they deserve to, you know, face**  **6 whatever injunction comes down from justice on 7 that, because they should be doing it as a**  **8 participant. 9 MR. HURST: Speaking on behalf of a**  **10 manufacturer, we would start to get a little 11 nervous about dealing with a distributor that was**  **12 being subpoenaed and was potentially obstructing 13 justice. There's another layer for that.**  **14 MR. ROCKY: So, John, how do you know 15 that?**  **16 MR. HURST: This industry is 17 exceptionally poor at keeping any secrets.**  **18 (Laughter.) 19 MR. RAWALD: And so we in the**  **20 Department ---We can publicize that. 21 MR. MELCHI: Yeah, that's a matter of**  **22 public record. I just filed with the court.**

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## 1 MR. HURST: I think the second somebody **2 gets a subpoena, it flies through the industry 3 faster than the speed of light. That's my --- if**  **4 anybody disagrees --- 5 MR. MELCHI: And this is Jon from HARDI**  **6 and this is only speaking as an association, but 7 we've, for instance, had distributor-member**  **8 companies found guilty or pled to charges with 9 the EPA for violations and they have been**  **10 excommunicated from membership. 11 I mean, there are things that the**  **12 industry --- that our channel has done to shine a 13 spotlight on bad actors and this would fall under**  **14 that purview. 15 MR. DORIA: So, this is Jordan.**  **16 Sounds like what we're really saying 17 is whether record retention is a prohibited act**  **18 or not, the net effect is the same. You don't do 19 it, you get fined.**  **20 So, to me, I, you know, it wouldn't be 21 for the distributors. I don't know why we need**  **22 that.**

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## 1 MR. RAWALD: Well, I mean, it's more **2 complicated, right? So, for DOE to fine someone 3 is very simple. I just initiate an action, but**  **4 if DOE goes through the court and getting a court 5 order and getting a contempt to that and the**  **6 Department of Justice --- those are longer term 7 things. They take longer. It's a longer process**  **8 and outside the Department of Energy's control. 9 So, that's the one caveat.**  **10 The other one is I would agree with 11 you it's essentially the same consequence**  **12 ultimately. 13 MR. McCRUDDEN: This is Charlie with**  **14 ACCA. 15 I think if we fold to this violation**  **16 issue, okay, there are still consequences for 17 knowingly selling whether you're a distributor or**  **18 a contractor that comes from the manufacturers or 19 that comes down to the manufacturers.**  **20 So, I don't think anybody who is on 21 that page without a prohibited act is getting off**  **22 Scott-free in any way.**

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## 1 And the other point I'll make is that **2 I know we talked about training or outreach 3 efforts by everyone in the chain. And I think --**  **4 I know that we're going to do it, you know. 5 We're going to help train the contractors about**  **6 these rules and how they work. 7 It's highly likely our relationship**  **8 with the distributor is in that we're probably 9 going to be doing that at the distributor's**  **10 location, because it's the easiest way to get 11 contractors together.**  **12 And so, I suspect that -- I don't know 13 if that satisfies what you're looking for as what**  **14 other ways or means that we can help promote that 15 compliance.**  **16 MS. MEYERS: Yeah, I think it goes back 17 to what I was saying earlier this morning.**  **18 I think it would be helpful if instead 19 of focusing on is it a violation or prohibited**  **20 act, what is each entity in the selling chain 21 willing to do to, you know, what are the**  **22 procedures to ensure that everyone has knowledge**

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## 1 of the legal requirements of the law? **2 So, for manufacturers, you may ask for 3 the guidance on the --- on how you rate your**  **4 product. So, the FTC guide label or putting a 5 label on the units. We're going to sort the AHRI**  **6 directory based upon, I think, the zip code. I 7 think that's what we decided on.**  **8 So, those are some actual things that 9 we're doing to help distributors and contractors**  **10 and homeowners have knowledge of the legal 11 requirements involved.**  **12 So, it's not how you can enforce it, 13 necessarily, but how are you going to comply?**  **14 What are those steps that you are going to do? 15 So, it's not --- it doesn't have to**  **16 get to a court, you know. I think we need to 17 kind of shift the conversation a little bit.**  **18 So, are you as a distributor going to 19 ensure that every person that you sell to --- I'm**  **20 making this up, you know --- signs a terms and 21 conditions or goes through a training course and**  **22 you're going to keep a record on file for, you**

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## 1 know, five years that they have been and **2 understand the training, whatever. 3 Are contractors going to have to, you**  **4 know, do -- I can't think of it here. I'm 5 drawing a blank here.**  **6 So, what are those steps that will 7 ensure that every person understands the legal**  **8 requirements of the law? 9 MR. MELCHI: Yes.**  **10 MS. MEYERS: Records retention is a 11 great first step. I'm just asking is there**  **12 anything else we want to put in there? 13 MR. SACHS: Karen, I think --- this is**  **14 Harvey. I think it's very helpful. And I can 15 give an example on the contractor side of the**  **16 kind of things that would possibly be helpful 17 which is that on an ACCA and PHHC prepared**  **18 standard proposal forms which have a check box. 19 This is in the south or the southwest.**  **20 I've disclosed. I've given the 21 customer of the DOE flyer.**  **22 MR. EISNER: Can you speak up, Harvey?**

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## 1 MR. SACHS: If this is the standard bid **2 form template that some of the contractor 3 organizations might provide without a check box,**  **4 if this is in an affected region, I've provided 5 the customer with the DOE flyer, that would be**  **6 the kind of thing. 7 And I think that what I'm hearing is**  **8 that Karen has offered to work with her peers on 9 a list of things that they will be doing, which**  **10 we've heard part of. 11 And I'm almost hearing a request of**  **12 Jon and Charlie and Chuck to bring in sort of a 13 here's what we're giving at the office.**  **14 MR. WHITE: This is Chuck White with 15 PHCC and in case you haven't noticed, I like**  **16 parallels. 17 So, three years ago, four years ago**  **18 EPA, there's changes to the Safe Drinking Water 19 Act.**  **20 As a result of change to the Safe 21 Drinking Water Act, brass fittings in potable**  **22 water as we now it changed dramatically.**

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## 1 Going to be problems for the plumbing **2 industry. Going to be installation issues. 3 We started along with several**  **4 manufacturers and some other groups about two 5 years ahead of the implementation, they gathered**  **6 information assembling training materials, 7 putting together pamphlets through the**  **8 distribution chain of supply houses, lots of 9 people around the table put together a great**  **10 program. 11 Went out to conferences, conventions**  **12 whether it's inspectors, engineers, installation 13 people.**  **14 We did it hundreds of times around the 15 country. Personally, I did it a bunch of times**  **16 and we went and talked to groups. Here's what's 17 happening. Here's what's going to change and**  **18 you're going to poison some person. This is a 19 health and safety issue with water. Someone**  **20 could get sick. That's what we did for that. 21 We didn't have to have a check box.**  **22 We didn't have to have record keeping, but all**

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## 1 kinds of things on health and safety issue and **2 we're doing it. 3 We're making sure that we get our**  **4 product out. We --- I see we will do very 5 similar things. We will get together. I haven't**  **6 talked directly with Charlie on any kind of 7 formal basis, but a high probability we will**  **8 collaborate. Probably HARDI as well and 9 manufacturers who are probably going to get**  **10 together and try to put a uniform message 11 together.**  **12 We're going to go to conferences, 13 conventions and I have chapter meetings of 10**  **14 people and they're always looking for speakers. 15 So, we're going to have this**  **16 educational component and we're going to try our 17 best --- I know I'm going to try my best to get**  **18 the word out to everybody I know, because the 19 bottom line, the interpretation he gave us**  **20 earlier today, you do this wrong, you're going to 21 be out of business. And that's going to**  **22 resonate.**

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## 1 MR. SACHS: Much appreciate that, **2 Chuck, but sort of like Jon, but less formally 3 the advocate is going to have to go back and sell**  **4 it to our community as well. 5 MR. WHITE: Well, absolutely.**  **6 MR. SACHS: And I don't know if this 7 should be involved or shouldn't. That's your**  **8 professional judgment for your members and other 9 contractors.**  **10 But having a couple of pieces of paper 11 that talk about the commitments that have been**  **12 made -- 13 MR. WHITE: I love this.**  **14 MR. SACHS: -- again, I don't want to 15 make that judgment. Here's what contractors are**  **16 pledging to do in November. There are no 17 penalties, but they regard this as important for**  **18 their above-board business and this is why they 19 are doing it and here's what we are doing as**  **20 distributors like what the manufacturers have 21 done.**  **22 Having that kind of information to**

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## 1 show that this thing is --- has got a lot of **2 incentives for compliance, a lot of things 3 leaning toward compliant that would be very**  **4 helpful to us as we take it to the skeptics in 5 our community.**  **6 MR. MELCHI: This is Jon from HARDI. 7 I'm happy to do that. The one good thing I can**  **8 say about at least all the manufacturers in this 9 room that I've dealt with is that all ---**  **10 especially those who work with distribution 11 training for their customers, dealer meetings,**  **12 that sort of thing on a regular basis that our 13 members are a part of and, you know, that's a**  **14 great opportunity for outreach to those people. 15 And a lot of them have already been**  **16 doing it for years now especially even prior to 17 the dismissed furnace standard. And I think**  **18 those are going to be great opportunities. 19 I've had some folks suggest some**  **20 pretty inventive things about those that have the 21 ability to put something on a receipt or a billet**  **22 and making sure that that's on their, you know,**

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## 1 flyers to the counter. **2 There are a lot of different things 3 that I can bring those back to you.**  **4 MR. SACHS: It would be easier for me 5 if I have a bullet list of things that people are**  **6 "pledging".**
**7 MR. MELCHI: Yes. 8 MR. SACHS: And that's in air quotes.**  **9 MR. McCRUDDEN: This is Charlie with 10 ACCA. I am amazed the manufacturers have come**  **11 together the way they have to do --- to make the 12 changes to the label. I mean, it's tremendous**  **13 and it's something I never thought would happen, 14 but there's fewer of you. Distributors, there's**  **15 more. And contractors, there's way more. 16 And so, the pledges that we can make**  **17 and the efforts that we can offer is harder to 18 sort of police in a very loose term or police**  **19 facts and how it works. 20 Remember, the FTC rules require the**  **21 contractor to show the label itself, the label 22 that we'll get for the manufacturers, because the** 

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## 1 manufacturers are required to place that label, **2 not just the information of that label, that 3 label on their websites and on all materials they**  **4 have, and that's what they do. 5 So, the training that we've talked**  **6 about that we're putting together, I mean, I'll 7 be frank. There is a very good business**  **8 opportunity for an association on this training 9 aspect and how these new rules work and we're**  **10 going to take advantage of all that. 11 It's just the trust for the folks who**  **12 are hopeful that this shows effort in terms of 13 how we're going to show what we're giving for**  **14 compliance is going to have to be greater just 15 because there's way more of us that are out**  **16 there. 17 MR. DORIA: So, this is Jordan. I**  **18 think, you know, and, Harvey, jump in if this is 19 not correct, but I think there's maybe sort of**  **20 two different levels of things that people can do 21 that would support the clients.**  **22 The pretty firm line for me is that we**

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## 1 as manufacturers aren't going to be able to **2 label, which is something that I think supports 3 actually both compliance and enforcement, is**  **4 something we're saying will be in the rule, 5 right?**  **6 I think when Harvey was talking about 7 "pledges in air quotes", I didn't take that to**  **8 mean something in the rule, right? 9 MR. SACHS: Absolutely not.**  **10 MR. DORIA: Right. 11 MR. SACHS: What I can carry back and**  **12 the converse example because it hasn't come to 13 fruition yet was EER by bin and the 210 240s**  **14 would get disclosed. We haven't gotten there 15 yet. We're still working on it.**  **16 (Comments off mic.) 17 MR. SACHS: The point is that we all**  **18 have our disappointments in life, but I need to 19 be able to present this to my community as what**  **20 people are trying to do. 21 We recognize that you don't represent**  **22 every contractor. There are some you don't want**

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## 1 to represent. And we've tried to help out with **2 QI and stuff like that, will continue to try, but 3 you all are setting the bar, you're setting the**  **4 example and we just will be helped in our fight 5 to be able to say what you all are giving it a**  **6 try to help with that. 7 MR. WHITE: This is Chuck White again.**  **8 I would really like to find a way this is going 9 to work and we can make it happen, but it's kind**  **10 of hard to pledge too many things to the giant 11 moving target we've had.**  **12 We keep trying to narrow in the 13 circle. But I think as we get closer, it's going**  **14 to be much easier for us to say for this, we can 15 do this, this and this to achieve this thing,**  **16 this component of it. 17 And until we've kind of narrowed down**  **18 your skeleton a little better, it's hard to be 19 specific about everything we can and can't do.**  **20 I know we can put together great 21 PowerPoints and reach out to our conventions.**  **22 But exactly what I'm going to put on those**

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## 1 PowerPoints, I can't say because I don't know. **2 MR. DORIA: Chuck, this is Jordan. 3 Just when you talk about the moving target, I**  **4 think we all feel the same way. 5 Is there a particular area that is the**  **6 most important one? Is it the subject of routine? 7 I guess what I'm asking is, what is**  **8 that thing where if we got greater certainty, you 9 would start to be able to have that greater level**  **10 of focus. 11 And it seems true I think for future**  **12 reference as well, but --- 13 MR. WHITE: Certainly the routine**  **14 becomes --- we've been kicking that can down the 15 road for several weeks now.**  **16 I think that will help --- probably 17 help you guys as well to know this is how we're**  **18 going to direct this. And if somebody dos this X 19 many times or however that comes to be defined, I**  **20 think that's important that we have a piece with 21 the interpretation today, but exactly how we**  **22 think that should be implemented or how that's**

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## 1 going to come together, we have things that **2 obviously we are not in agreement on that we've 3 got to find that common ground and find our way**  **4 to say, okay, here's how it's going to be and 5 then here's what we can do.**  **6 MR. DORIA: This is Jordan. I'm just 7 going to say we are, I think, past the point**  **8 where we can continue to kick some of the 9 thorniest issues down the road. We are, right?**  **10 We have including today, I think six 11 days scheduled left, right, including the middle**  **12 of October meetings which we were actually saying 13 maybe we wouldn't have to have, right?**  **14 So, I'm not necessarily saying we need 15 to do it today, but very soon, tomorrow, I don't**  **16 know, we need to really talk about that, I think. 17 MR. HURST: So, as we look at this ---**  **18 this is John Hurst with Lennox. As we look at 19 the issue of routine, Doug, it would be helpful**  **20 if --- if you have an opinion or if you don't, it 21 would be helpful to know, but is there a way to**  **22 do kind of a graduated scale of violations?**

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## 1 First violation, slap on the wrist. **2 Second violation, something else. Stern warning, 3 you get your car keys taken away. I don't know.**  **4 I've got teenagers. So, these are the penalties 5 I'm familiar with.**  **6 MR. WHITE: They have extra keys. 7 MR. HURST: They don't have an extra**  **8 iPhone. But then the third violation and I'm not 9 saying that this is the right way, but the idea**  **10 of a graduated punishment scale and also the 11 egregiousness of the event.**  **12 So, if it's a one trucker who makes a 13 mistake or maybe doesn't make a mistake versus**  **14 kind of a Smokey and the Bandit guy that's, you 15 know, buying truckload quantities and shipping**  **16 south, if we could get to kind of definitions of, 17 okay, one-offs I don't think it's really going to**  **18 change massively the energy savings or lack of 19 energy savings versus routine, habitual violators**  **20 who just kind of wave their hand at the law. 21 So, maybe that's a starting point, but**  **22 I offer that as a point of discussion and maybe**

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## 1 your commentary to see if we can kind of kick **2 that part off. 3 MR. RAWALD: So, for the routine point**  **4 of view, I think what I am most comfortable with 5 is what Neil has proposed from the beginning**  **6 which is kind of to factorize the approach. 7 These are the factors to consider when**  **8 assessing the routine and that we think about 9 what factors make sense for us to put into**  **10 consideration. So, there can be some sort of 11 scaling.**  **12 Now, as far as what you're talking 13 about with different reactions, I think that's a**  **14 --- that I would almost approach as how do we 15 investigate cases.**  **16 So, if we find you have one violation, 17 it's not going to be a routine violation, but**  **18 we're going to issue a warning notice and let 19 people know, hey, this guy already had one**  **20 violation, possibly, if we agree to do that. 21 And then we could help that kind of**  **22 cement --- that builds the case for the routine**

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## 1 violators. That kind of helps us build a house. **2 So, I think it has a place in that 3 context, because we're not elevating the**  **4 consequences because all the consequences to us 5 are either you're a routine violator or you're**  **6 not. 7 But if we had these kind of lower**  **8 activities we could initiate that put people 9 notice in the community that, hey, this person is**  **10 someone to at least be wary of or to encourage 11 them to comply since they're, you know, the**  **12 manufacturer can call the distributor or the 13 distributor can call the dealer and say, hey, by**  **14 the way, I know you did this one time, but don't 15 do it again or else I'm going to stop selling to**  **16 you, that might be helpful. 17 So, another idea that was floated**  **18 inside the Department that I wanted to bring up 19 was that in the SEC, what they do is when they**  **20 start an investigation they issue I guess what's 21 called a Notice of Concern or some sort of thing.**  **22 They let people know, hey, this is**

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## 1 something we're looking into. So, there may be **2 some sort of desire for us to put them on notice 3 when we start investigating a contractor, dealer**  **4 or distributor, see what they did and that may do 5 a couple things.**  **6 It may encourage a contractor and 7 dealer to give us the records faster because they**  **8 want to get their name off that list. They want 9 to be, oh, yeah, no, I gave you everything you**  **10 wanted, and now I'm in the clear, everything is 11 fine.**  **12 And it may also give everyone kind of 13 the notice of, okay, we should probably be weary**  **14 of this person or at least be encouraging them to 15 play along in the market chain appropriately.**  **16 So, I think that may serve that 17 purpose. So, there's at least that kind of**  **18 concept that we can kick around as well. 19 MR. EISNER: When I was working on drug**  **20 testing and alcohol testing in the Department, I 21 learned a very interesting statistic that when**  **22 picked up for drunken driving, the average person**

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## 1 has already driven while drunk five times before. **2 So, my question for you is in your 3 area, your industry when you find a violation,**  **4 what is the likelihood the person is already a 5 routine violator however we define it?**  **6 Two times, three times or all these 7 other factors, is it usually the first time they**  **8 violated when you find out about it? 9 MR. RAWALD: Are you asking me this**  **10 question? 11 MR. EISNER: Yes.**  **12 MR. RAWALD: Okay. So, I mean, I would 13 really be using gut intuition because we haven't**  **14 had this before. So, I don't have good, 15 empirically-based information to give that.**  **16 So, if we analogize to the 17 manufacturer consequence, there are plenty of**  **18 manufacturers that make one noncompliant product. 19 They don't make all their products noncompliant.**  **20 There's plenty of reasons why one product may 21 slip through the efficiency or the quality**  **22 assurance process and become noncompliant and**

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## 1 it's not the manufacturer's modus operandi to **2 cheat always. 3 So, that could very well be the case**  **4 with an installer or dealer. So, I don't know. 5 So, I can't opine more to say that**  **6 there are probably guys who are going to be 7 cheaters, and there are probably people who will**  **8 be cheat when the opportunity is presented 9 because it's going to be the right thing to do**  **10 for them at the time with their money and their 11 economics and what they're looking at.**  **12 So, I don't know what the case we're 13 going to be dealing with on a regular basis will**  **14 be. 15 MR. HUNGERFORD: This is David. Just**  **16 on probabilities, though, it's like speeding. 17 The person who drives the speed limit all the**  **18 time and occasionally go over the speed limit is 19 -- the probability of getting caught is far lower**  **20 than someone who speeds all the time and may 21 occasionally get caught.**  **22 So, who's going to get caught in the**

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## 1 net is the probabilities are heavily weighted **2 towards the folks that are violating on a regular 3 basis.**  **4 Even discounting the idea that someone 5 who gets turned in or caught is someone has drawn**  **6 somebody else's attention and is recorded or some 7 other way attention is brought to them.**  **8 MR. RAWALD: Right. I think that's a 9 fair assessment of human behavior. I would agree**  **10 with that. 11 MR. HURST: So, another question on if**  **12 you retain records, and you somehow find out that 13 somebody is allegedly violating and you subpoena**  **14 the records, you get the records and you start 15 thumbing through 30, 60, 90 days worth of work**  **16 tickets and there's one. Wow, there's another 17 one, too.**  **18 Do those count as individual 19 violations as well, or can you only investigate**  **20 the one violation? 21 MR. RAWALD: No, it's an open book to**  **22 me. So, that's what I'm doing. If I'm looking**

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## 1 at your records, I'm looking at your records, you **2 know, and anything I see that's of concern is 3 going to be added to the complaint.**  **4 So, if I, you know, let's take the 5 scenario of Charlie installs the unit and that**  **6 shouldn't be there. Chuck goes to service it and 7 Chuck calls me and says, I'm sitting in the back**  **8 of Mrs. Smith's yard. Charlie McCrudden 9 installed a bad unit here. Here's a picture of**  **10 the unit with the data, with the name plate from 11 Gary's company, let's look at it.**  **12 So, then I will ask Charlie for his 13 records. And if Charlie gives me his records and**  **14 I look at them and I start seeing, oh, Charlie 15 did this in Mr. Jones' yard, did this in Mr.**  **16 Arnold's yard, then I'm going to say, okay, these 17 are all different things and now I begin to see a**  **18 pattern that I might consider to be routine based 19 upon, you know, if this is 90 percent of**  **20 Charlie's business and is doing this, then he's 21 clearly a routine violator.**  **22 MR. HURST: So, yeah, you can get to**

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## 1 that threshold fairly quickly. **2 MR. RAWALD: I think so, yeah. That's 3 how we would approach it.**  **4 MR. CLARK: So, it's a little different 5 than the speeder, right?**  **6 MR. HURST: Uh-huh, right. 7 MR. CLARK: Because those five times**  **8 that he didn't get caught -- 9 (Simultaneous speaking.)**  **10 MR. WHITE: This is Chuck White. You 11 further have some scale questions. If Charlie**  **12 works by himself and you did it five times, 13 that's one thing. But if I have a business with**  **14 25 guys and I did it five times, is there a 15 difference there?**  **16 MR. EISNER: And that's where I think 17 I was coming from when I suggested -- and where**  **18 Doug is coming from, I think, from an enforcement 19 perspective they want to give the enforcer some**  **20 discretion to react to that. 21 Maybe you're finding three violations**  **22 right away, but maybe it was because the person**

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## 1 misunderstood the requirement and you come in and **2 they say, no, I didn't know that, I will stop 3 doing it that way.**  **4 It's the first time you caught them, 5 but it's also maybe the first time they**  **6 understood they were doing something wrong. 7 So, that's why sometimes it's better**  **8 to have factors than to have absolute numbers. 9 Three violations and you're done. But from the**  **10 manufacturer's perspective, that's definitive. 11 I know they did it three times. I got**  **12 to stop dealing with them as opposed to 13 weighting.**  **14 It's not an easy choice, but it's 15 something I think you as a group have to decide.**  **16 Which way do you want to go? And then 17 if it's factors, what other kinds of factors you**  **18 want them to be able to weigh. 19 You don't have to necessarily say this**  **20 will be given so much weight and this will be 21 given very little weight, but you've got to**  **22 figure out what those factors are going to be and**

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## 1 that will help you at least have something a **2 little bit more definitive. 3 MR. RAWALD: I mean, if you wanted to**  **4 make my job easier to do, then factors is the way 5 to go because it gives me the ability to build**  **6 cases that are tailored to the situation we're 7 dealing with.**  **8 If we use rigid criteria, then we're 9 going to -- it's going to be a lot more difficult**  **10 for me to effectively enforce because how I treat 11 a big company and a small company is going to be**  **12 the same, but it's not going to be fairly 13 evident.**  **14 So, there's a lot of things that need 15 to be -- a factorized approach allows me to kind**  **16 of really focus in on the facts that are unique 17 to each case. I think that's the best reinforced**  **18 point of view to do that. 19 MR. HURST: Can we ask if anybody is**  **20 opposed to the factor approach? 21 MR. EISNER: Anybody opposed to the**  **22 factor approach -- do you want to speak first?**

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## 1 MR. McCRUDDEN: This is Charlie. **2 Reserving the right to oppose, I'd like to ask a 3 follow-up on that.**  **4 So, if you're looking at the 5 factor-based approach --**  **6 MR. RAWALD: Right. 7 MR. McCRUDDEN: -- how does**  **8 essentially the notification occur? Because the 9 thing that concerns me the most is in the**  **10 information that, as John says, flows very 11 quickly and freely with the industry and the**  **12 suspicion that you may be on a list is an issue. 13 So, how would a factor -- can you walk**  **14 me through essentially a violation, but using a 15 factor-based approach?**  **16 MR. RAWALD: Right. So, and there's a 17 couple layers here. So, the process that we**  **18 would get to making a finding -- 19 MR. McCRUDDEN: Right.**  **20 MR. RAWALD: -- versus what would 21 constitute the finding. So, the factors are what**  **22 would be, okay, I see now that Charlie over the**

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## 1 course of the past six months has installed 25 **2 percent of the time noncompliant units. That out 3 of his operation of installing, you know, other**  **4 installers that work for him, his 10 techs, they 5 all are doing it. It's very clear that he's**  **6 regularly doing this. I'm going to say based upon 7 all the factors and, you know, his company given**  **8 the size and everything, it seems like it's a 9 very routine thing that they're doing all the**  **10 time no matter who's involved, no installers, in 11 particular it's all the contractors' modus**  **12 operandi, I'm going to say, okay, Charlie's a 13 routine violator.**  **14 That's how I look at the factors kind 15 of I look at the whole pot, everything in there,**  **16 you know, the size of the company, how these 17 things are selling, how often you're selling**  **18 them, how many are bad ones versus good ones. 19 That would all kind of measure in to me being**  **20 important. 21 But then I would say, okay, now,**  **22 what's the process? So, the first step of the**

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## 1 process would be the complaint. Then it would be **2 investigation. 3 During the investigation I would ask**  **4 Charlie for your records. And then I would also 5 ask your distributors for the records, too,**  **6 because I want to make sure they correspond that 7 you're not hiding things from me that I can track**  **8 kind of how this thing happened. 9 And if necessary, I would ask the**  **10 manufacturer for records to kind of track these 11 up the tree. Though, I would probably not start**  **12 there. I would probably end there later on. 13 And then as I'm building my case, the**  **14 question becomes at what point do people want me 15 to let the people know that I'm looking at**  **16 Charlie? Is it when I've reached the decision, 17 or is it when I'm looking at Charlie initially**  **18 like when will be the right point. I think the 19 group has to talk about that.**  **20 So, once I announce the finding, then 21 the question becomes, now, what is your ability**  **22 to contest that? So, do you have an opportunity**

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## 1 to do that? **2 And I think that we would want that. 3 We want there to be a process in place to do**  **4 that. 5 And so we have at the Department is we**  **6 have one office that hears appeals of certain 7 issues.**  **8 And so, I haven't talked to them yet, 9 but I'm going to at least ask them if they're**  **10 interested and possibly a group that's interested 11 in me doing that, ask them if they put in place**  **12 for the contractor to be able to appeal that body 13 and say, hey, look, Doug got all his evidence,**  **14 but here's what those things really were about. 15 Now, I'm probably going to have**  **16 already asked you about the individual 17 transactions before I ever make a finding. I**  **18 think it's good to be thorough. 19 But if you decide you want to play**  **20 fast and loose with me and not give me 21 information, I'm going to make my finding. And**  **22 then you can of course appeal to this body if you**

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## 1 want to. **2 I think it's probably the best way to 3 ensure this is where a process is involved so you**  **4 have at least this level to appeal. 5 And then after that, you know, you**  **6 always have the right to sue an agency for an 7 action it takes. So, that will be the next**  **8 action you can bring to court and say, well, it's 9 not fair what's happening to me.**  **10 But I think that's the process as I 11 would envision in a very basic, bare bones level**  **12 as I'm sitting here talking to you folks. 13 MR. McCRUDDEN: This is Charlie at**  **14 ACCA. So, I guess -- so, I'm not -- I think I 15 would prefer a factor-based approach. I think**  **16 you believe it's better. And my guess is when we 17 get beyond a certain point, there's probably a**  **18 way that if the contractor does remediate, then 19 you would --**  **20 MR. RAWALD: That would be a factor. 21 MR. McCRUDDEN: That would be a factor**  **22 and then perhaps they can say -- it's what I'm**

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## 1 most concerned about is just the vagueness of the **2 fact that the manufacturers are the only ones 3 with any hammer coming down on them. And they're**  **4 just going to transfer it down to the**
**5 contractors. 6 That's the gray part which is when**  **7 does a contractor end up on their internal list, 8 which is this guy has shown up once or twice, or**  **9 this guy -- we've had inquiries from DOE looking 10 for records on this contractor twice now.**  **11 MR. RAWALD: From the distributor. 12 MR. McCRUDDEN: Or just it's Doug has**  **13 come up the chain and he's going to -- nothing 14 has happened, but --**  **15 MR. HURST: But I would presume that -- 16 John Hurst with Lennox. I would presume that**  **17 through your investigation you would very easily 18 be able to determine who the manufacturer of that**  **19 equipment is. 20 MR. RAWALD: I would hope so, yeah.**  **21 MR. HURST: So, I think there's a chain 22 of custody once again of where the equipment came** 

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## 1 from. **2 MR. RAWALD: But I think Charlie's 3 concern is if I investigate Charlie once, is Jon**  **4 going to stop dealing with Charlie? 5 MR. McCRUDDEN: I mean, because Doug is**  **6 going to make a threshold upon what is routine. 7 And it's whether it's a whole bunch at once or**  **8 whether it's one at a time, but you all probably 9 have yours.**  **10 MR. HURST: Would you go back to 11 factors for distributors and manufacturers?**  **12 MS. SHEPHERD: Well, I think -- this is 13 Amy Shepherd from AHRI, and I think that's the**  **14 point is I understand that Doug has a lot of 15 benefits, flexibility in his factors, but we**  **16 don't unless manufacturer end liability is only 17 tied to some sort of publication or notice**  **18 officially with DOE. 19 The manufacturers have to make that**  **20 same judgment before you guys do looking at the 21 factors.**  **22 And if the factors are so vague that**

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## 1 we can't tell what DOE is going to do, then it's **2 going to lead onto the conservative side where 3 just one or two things, well, we don't know how**  **4 DOE defines this and what they're going to think 5 is routine. So, they're going to have to take**  **6 action at that point. 7 So, I just think that's a balance we**  **8 have to consider as we're talking about this, 9 because I think what helps the industry is the**  **10 certainty. 11 And what helps your ability to enforce**  **12 it is the flexibility. So, it's kind of figuring 13 out how to best balance those.**  **14 MR. EISNER: But even if it's just 15 something simple like numbers if he finds one and**  **16 starts investigating to see if there's a second 17 and a third because it requires three violations,**  **18 the company is going to know you're 19 investigating.**  **20 They don't know where you're going to 21 find three violations, because it may not be one**  **22 you sold. It could be something that another**

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## 1 distributor sold or another manufacturer sold. **2 So, isn't there still some uncertainty 3 no matter what you do until they come out and**  **4 say, we found three, or we found enough factors 5 to say they violated it three times.**  **6 MR. CLARK: This is Gary Clark with 7 Goodman. To that point I agree with what you**  **8 just said. 9 We would probably prefer not to know**  **10 who you are investigating until there is action 11 going forward.**  **12 We can provide information, you know, 13 as Karen has mentioned, we don't sell to**  **14 contractors for the most part. 15 And so, in those kind of situations we**  **16 can tell you where we've shipped things, right, 17 but we don't have to know that you're**  **18 investigating Charlie if you just want to know 19 where these serial numbers were shipped, you**  **20 know. 21 We can say, oh, we shipped those units**  **22 to this distributor. Well, that distributor can**

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## 1 sell it to, you know, thousands of different **2 contractors, you know. 3 It would get our antenna up, but it**  **4 certainly wouldn't get us into a situation where 5 we're trying to make business decisions, I don't**  **6 think. 7 MR. McCRUDDEN: Just a quick**  **8 clarification. When you talk about factors, are 9 you talking about factors in essentially the**  **10 penalty, or factors in determination of a routine 11 violation?**  **12 MR. RAWALD: The second. 13 MR. McCRUDDEN: Okay. Then I have to**  **14 rethink everything I just said, because I was 15 thinking --**  **16 MR. RAWALD: Because we're not talking 17 about quality of the contractor.**  **18 MR. McCRUDDEN: Yeah, okay. That makes 19 it even -- okay.**  **20 MR. RAWALD: Yes. 21 MR. McCRUDDEN: And that --**  **22 MR. RAWALD: We're talking about**

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## 1 factors to determine whether someone is routinely **2 violating. 3 So, and I think there are, you know,**  **4 one violation every six months? If we want to 5 put numbers on, it's hard.**  **6 So, if it's a small business and 7 they've done five jobs and the five jobs have all**  **8 been bad, then it seems that they're a routine 9 violator.**  **10 MR. McCRUDDEN: Okay. I think I still 11 support factors. I just had to think that**  **12 through. 13 MR. RAWALD: So, if folks like, what I**  **14 can do tonight, I can lay out a thumbnail sketch 15 of a process with some language for some factors**  **16 and bring that back in the morning for some kind 17 of talk about it.**  **18 MR. EISNER: Do you want us to use the 19 usual process? Just start naming some factors**  **20 that you put up on a list that you can try to put 21 together.**  **22 You can probably as a group think of**

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## 1 50 or 60 factors. It won't do that much good **2 probably for the enforcement attorney to have to 3 consider that many factors.**  **4 It's, you know, did they mitigate, for 5 example, might be important to you. How many,**  **6 you know, compared to the size of the company, 7 how many violations have they had? Were they**  **8 clearly intentional, or were they mistakes? That 9 kind of thing.**  **10 You guys should determine how 11 important you think they are, especially the**  **12 people who, you know, might be in danger of 13 violating the rule.**  **14 And then maybe give a rough sketch. 15 You don't have to agree to what goes on the list,**  **16 but something for Doug to start with as an 17 enforcement attorney to come back and say here's**  **18 what would be helpful to me, here's how I put it 19 together.**  **20 And I think that might save you a 21 little time if there's some up front input into**  **22 it.**

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## 1 So, anybody want to start off with it? **2 MR. HUNGERFORD: I'd like to -- this is 3 David. I'd like to think through a little bit**  **4 about -- 5 THE COURT REPORTER: I'm sorry. Who is**  **6 speaking? 7 MR. HUNGERFORD: David Hungerford. I'd**  **8 like to think a little bit about the intent idea 9 and I guess that goes back to how the installer**  **10 obtained the incorrect unit or the noncompliant 11 unit.**  **12 Was it something that they actively 13 sought as in going out of their way to get it**  **14 like driving to Chicago from Florida or some 15 similar -- or always trying to buy units from the**  **16 north in order to bring them and importing them 17 in the south.**  **18 Is it something that he just stumbled 19 across it or it happened to be in a warehouse and**  **20 he ended up installing it because he had it? 21 Or was there a distributor involved**  **22 that because they can't be penalized, a bad**

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## 1 distributor might choose to bring a few pallet **2 loads of SEER 13 units to the south or to the 3 west and try to sell them at a discount.**  **4 And, you know, those are all sort of 5 different circumstances. In one of them, the**  **6 contractor is actually a victim and makes you -- 7 so, I guess -- I don't want all the bricks to**  **8 fall on contractors. It doesn't seem fair if 9 they're just trying to survive in a market where**  **10 they're being provided these -- the wrong units. 11 And so, I guess I was just sort of**  **12 brainstorming on the idea of intent. 13 MR. RAWALD: Okay.**  **14 MR. HUNGERFORD: How much effort 15 they're putting in to try and put in that**  **16 noncompliant unit. 17 MR. ROCKY: So, I'm sorry, David. This**  **18 is Bryan. I'm really -- I heard what you said 19 and I'm trying to just knee jerk reaction, but a**  **20 violation is the act of installing a noncompliant 21 unit that is done by a contractor or an**  **22 installer.**

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## 1 So, how is that contractor or **2 installer a victim of installing a unit against 3 the regulation?**  **4 They're the one conducting the act. 5 How are they the victim?**  **6 MR. HUNGERFORD: Because it's made 7 available to them and they're surviving because**  **8 they're trying to compete against the other guys 9 in the same neighborhood with access to the same**  **10 supplier. 11 It may be an extreme and unusual and**  **12 unlikely case. But when we're taking about 13 setting up these kinds of rules and these kinds**  **14 of criteria, we do have to consider the unlikely 15 and extreme cases and possibilities.**  **16 MR. ROCKY: And at this point, the only 17 prohibited act is one against the manufacturer to**  **18 make sure that that doesn't happen. 19 So, again, if the manufacturer is the**  **20 one being held responsible as a prohibited act, 21 but the actual violating act is installing**  **22 noncompliant equipment, what you're suggesting is**

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## 1 leads us back to the distributor bringing product **2 into an area with the intent to sell noncompliant 3 units.**  **4 MR. HUNGERFORD: Yes, exactly. 5 MR. McCRUDDEN: This is Charlie with**  **6 ACCA. I think, you know, when we look at the 7 violations, there is a knowing standard for the**  **8 contractor to make an illegal installation. So, 9 as a contractor, I don't know if I can defend a**  **10 contractor knowingly violated. 11 So, and if it's going the other way,**  **12 there's no way I can defend a contractor who goes 13 the other way that causes a violation.**  **14 The only way I can see a contractor 15 being sort of like an innocent bystander in a**  **16 sense is the case where manufacturers have tested 17 and rated the product at 14 and ends up when one**  **18 of them drops a dime on the other at 13. 19 Now, the contractors install the 13**  **20 product, but we know that DOE doesn't go after 21 the contractor in that situation. They don't go**  **22 after the homeowner. They never have in those**

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## 1 situations. So, you know, I don't know the remedy **2 there. 3 MR. RAWALD: Well, I think we discussed**  **4 before I think when I came up with the scenario.**
**5 MR. HUNGERFORD: Yes. 6 MR. RAWALD: So, because we have this**  **7 knowledge requirement for the contractor, they 8 wouldn't have knowledge because they would assume**  **9 that's a 14 product. 10 MR. HUNGERFORD: Right.**  **11 MR. RAWALD: And so, it would be on the 12 manufacturer. So, that's how we --**  **13 MR. HUNGERFORD: Today that's how it 14 goes.**  **15 MR. RAWALD: Right. 16 MR. WHITE: This is Chuck White and I**  **17 think there is an opportunity for legitimate 18 errors that I put my hand up, I've put the wrong**  **19 voltage on a unit at a time in my life. 20 It's right on the name plate. I know**  **21 what the switch was. I opened it up and turned 22 it on.** 

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## 1 The wrong product came out of the **2 warehouse and I didn't look. I hooked it up and 3 I never looked.**  **4 I mean, you could be on an apartment 5 project with 500 units you're putting in. After**  **6 about the fifth one, you're going to quit looking 7 at every tag because you're in production mode.**  **8 You're slapping them in. 9 So, there are going to be some**  **10 opportunities where it was an honest area. A 11 border area where you're loading trucks as you're**  **12 going to Louisville, a guy's going to 13 Clarksville, and you got the wrong unit on the**  **14 wrong truck. 15 There's going to be some opportunity**  **16 for error, but they should be checking, but there 17 are going to be some occasions.**  **18 It's really hard, because like Doug 19 said, this doesn't exist. And it's going to be a**  **20 while before we really have significant units to 21 have any kind of statistical basis for what is**  **22 the error rate going forward particularly with**

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## 1 the sell-through division. **2 So, I think you have to have in your 3 method, it was a legitimate mistake. It was an**  **4 error. 5 And a company that makes an error**  **6 shouldn't have ten of them a week unless they 7 gotten units from the distributor because they**  **8 were mislabeled or whatever that you didn't 9 check, but there will be some mistakes.**  **10 A guy that is taking his truck and 11 making a run for the border and not for Taco**  **12 Bell, that's pretty obvious. He's cheating. 13 MR. BALLO: It seems like we're**  **14 circling around the concept of having as a factor 15 sort of the degree of bad faith exhibited by a**  **16 party. 17 Driving to Chicago to get units to**  **18 install in Florida just seems a whole lot more -- 19 MR. WHITE: That seems pretty obvious.**  **20 Mr. RAWALD: But it's also not very 21 smart, right? There's no cost savings there.**  **22 That's a lot of money wasted.**

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## 1 MR. HURST: Well, that's my earlier **2 point on is there a graduated scale because, you 3 know, you used the example of speeding.**  **4 There's five over and you can get 5 pulled over for that, and then there's doing 90**  **6 in a school zone. 7 And both are speeding, but I think**  **8 there's a very different intent in both 9 violations.**  **10 And so, that's why I was advocating if 11 you can establish intent, you know, sure you can**  **12 make a mistake, but there are things that we're 13 putting in place to avoid mistakes.**  **14 The consumer has to receive the label, 15 the FTC label. We're putting the label on the**  **16 equipment. 17 For most of my life I've always known**  **18 what state I'm in. So, I'm not too confused by 19 that.**  **20 I think, you know, dealers that are 21 going to be operating on, you know, the line, I**  **22 think they're going to be a little more**

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## 1 hypersensitive to it than maybe somebody that, **2 you know, gets the wrong piece of equipment 3 shipped to them by accident.**  **4 But I agree with you, Chuck. Mistakes 5 will happen, but I think you have to establish**  **6 what the intent was. 7 MR. WHITE: Yeah, you can't make 10**  **8 mistakes a week. That looks pretty bad. 9 MR. RAWALD: Okay. So, what I've heard**  **10 Chuck mention is number of times over a length of 11 time are also a factors.**  **12 MR. McCRUDDEN: Yeah, I think -- this 13 is Charlie at ACCA. Number, absolute number,**  **14 term? Is it a ratio? 15 Well, and it could be effort to**  **16 remediate. Do you foresee a situation where you 17 make -- inform a contractor, hey, we're looking**  **18 at these. And then within three days he comes 19 back and says, you're right and I've already**  **20 changed those out. 21 So, is that possible how you conduct**  **22 an investigation?**

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## 1 MR. RAWALD: I think it's what we went **2 back to with what Tim was talking about. 3 MR. McCRUDDEN: Right.**  **4 MR. RAWALD: So, that would be 5 something that would kind of meet their consumer**  **6 advocacy need and also give some incentive in 7 doing --**  **8 MR. MELCHI: That was a question that 9 one of my guys had that said their customer finds**  **10 out that one of their techs is installing air 11 conditioners illegally and that company takes a**  **12 step terminating that employee and making that 13 end.**  **14 Would that factor into DOE's -- 15 MR. RAWALD: I think that should be a**  **16 factor actually by the contractor eliminating 17 that installer who's a bad installer.**  **18 That's what went into when I was 19 talking about the point of every one of the techs**  **20 are doing it versus one tech is doing it. I 21 think it's important.**  **22 So, we didn't have this in the record**

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## 1 retention, but it might be good to keep from a **2 contractor view who did the installation? Who on 3 your staff was doing the install?**  **4 That might be important to keep. Was 5 that Tech 71 versus Tech 54, you know? However**  **6 which way you keep track of your people on your 7 timecards.**  **8 MR. HURST: Conversely, the dealer that 9 starts shredding documents the second you make**  **10 your phone call -- 11 MR. RAWALD: Right.**  **12 MR. HURST: That might be a factor as 13 well.**  **14 MR. RAWALD: But I think cooperation, 15 level of cooperation, that could be a factor.**  **16 (Laughter.) 17 MR. EISNER: Other suggestions?**  **18 MR. RAWALD: It's almost resolved. 19 MR. HURST: I would change degree of**  **20 bad faith, bad/good, because there's going to be 21 good faith as well and acknowledge the good actor**  **22 as well.**

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## 1 If remediation is going to be a **2 factor, then certainly good faith should be a 3 part of that or if the public knows.**  **4 MR. HUNGERFORD: I don't know where 5 this fits. This is Dave Hungerford again. I am**  **6 a little concerned with, Doug, when you're 7 talking about how the process works.**  **8 I start getting a little worried about 9 a small contractor who faces a bureaucratic**  **10 process that they just can't handle, that they 11 don't have the resources to cope with.**  **12 And I'm wondering how -- I don't know 13 how that fits into this particular part of it,**  **14 but how does DOE handle an individual contractor 15 or small contractor who is making some errors or**  **16 how do they determine without ruining his life. 17 MR. RAWALD: Right.**  **18 MR. HUNGERFORD: I mean, look, you 19 know, somebody with 20 trucks has some resources.**  **20 MR. RAWALD: Right. 21 MR. HUNGERFORD: Someone with one**  **22 truck, doesn't.**

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## 1 MR. RAWALD: Valid question and I will **2 say is the level of size does not indicate the 3 level of sophistication. So, some very large**  **4 companies are still not very sophisticated as far 5 as their record keeping and what they're prepared**  **6 to deal with from the government. 7 So, and this is something we deal with**  **8 today. Because when we deal with from a 9 manufacturing point of view, there are**  **10 manufacturers who are large like a lot of people 11 here, and there are manufacturers who aren't who**  **12 are regulated by DOE and we're bringing actions 13 against them.**  **14 And so, we take every case that comes. 15 And so, we deal with the individuals we're**  **16 dealing with and we understand a particular 17 situation.**  **18 Now, the problem is there's nothing in 19 the regulation saying, you know, if you're size,**  **20 we're going to be this long, if you're this size, 21 we're going to be that long.**  **22 We use our discretion, which people**

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## 1 have to trust we're going to be reasonable with, **2 to make sure that we give people what they need 3 in order to respond to us adequately and we help**  **4 people along. 5 I mean, I spend as much time educating**  **6 people I regulate as I do, you know, actually 7 charging them money.**  **8 So, a lot of my time is spent helping 9 people to become compliant. And so, I think that**  **10 would be the same way we would approach this is 11 we would spend a lot of time talking to the**  **12 contractor, educating them on the concerns and 13 trying to help them figure out what we need and**  **14 why we need it and then help them work through 15 how to show it to me.**  **16 And then if worse came to worse, you 17 know, I could envision possibly be flying out**  **18 there to say, okay, let's sit down and go through 19 your records. Let's see what we can figure out**  **20 here. 21 So, that would be a worst case**  **22 scenario for a lot of reasons, but I can see that**

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## 1 kind of thing happening if necessary. **2 MR. McCRUDDEN: I can see a lot of 3 contractors in Hawaii suddenly having Doug show**  **4 up. 5 MR. RAWALD: Unfortunately, I don't do**  **6 air conditioners. So, I won't be there. 7 MR. EISNER: Let me just point out,**  **8 too, and tell me if I'm wrong, but there are 9 statutory requirements that the agency has to go**  **10 through. 11 So, if they send an enforcement**  **12 investigator in to look at records or something 13 like that, they have to advise the party**  **14 especially meant for small entities that you have 15 a right to complain about the way Doug treated**  **16 you during this investigation. You have a right 17 to go to an independent ombudsman who can look**  **18 into this matter and get an answer. 19 Doug, that's applicable to what you**  **20 do, isn't it? And that helps the little guy. 21 MR. RAWALD: I never tell anyone to**  **22 complain about me. I usually give them a comment**

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## 1 card and say, please fill out favorably. **2 So, that's true. I mean, people have 3 all these abilities. We do advise people of all**  **4 the things they can do. 5 MR. McCRUDDEN: So, this is Charlie**  **6 with ACCA. I don't know if this falls under 7 intent, but essentially the type of error or the**  **8 type of -- let's say it's an error based on a no 9 match as you're walking your way through.**  **10 You've got a no match because of a fat 11 finger error somewhere. So, you're showing up**  **12 somewhere and you're saying, okay, I'm looking 13 for this because apparently you have this.**  **14 And I don't know if you informed 15 anybody but that contractor. And maybe it turns**  **16 out to be nothing, maybe it does turn out to be 17 something. I don't know if that's a factor. I**  **18 don't know if record keeping compliance could be 19 a factor.**  **20 I mean, if we want record keeping 21 compliance, you have to comply, but there are**  **22 probably easier ways to comply or better ways to**

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## 1 comply. **2 I mean, everybody knows this is coming 3 down the pike. So, even if that contractor**  **4 doesn't even have a sophisticated system, they 5 still know they have to keep certain records.**  **6 Those who comply and those who can 7 sort of demonstrate compliance, to me, has an**  **8 understanding of the rules that should be a 9 factor for you.**  **10 And then finally, perhaps there is 11 something that you can consider which is evidence**  **12 of training or education of the technicians. 13 So, let's say ACCA has put together**  **14 this training module and we make it, you know, we 15 voluntarily sort of make it a downloadable form**  **16 that you can stick -- and each service tech has 17 watched this webinar, a certificate that says,**  **18 I've watched this webinar, it's in my file. 19 You show up and they say, well, this**  **20 was an honest mistake and here's how we can prove 21 it was an honest mistake. We've trained all our**  **22 folks. They all understand how it's written,**

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## 1 perhaps. **2 MR. RAWALD: Yeah, I think it's worth 3 taking into consideration. So, and Harvey**  **4 actually made this point I think several meetings 5 ago that he thought that that would certainly be**  **6 helpful in that way. I think that's a valid 7 consideration.**  **8 MR. EISNER: Any other suggestions? 9 (No response.)**  **10 MR. EISNER: All right. So, we give 11 Doug the assignment of visiting with his kid for**  **12 the first time today and then coming back 13 tomorrow anyway with a response on this.**  **14 MR. RAWALD: Okay. So, we have routine 15 kind of fleshed out. So, now that Jordan left**  **16 and he doesn't have to worry about it. 17 We have violation kind of fleshed out.**  **18 So, really the question is going to be what 19 process it would be for assessing or finding**  **20 someone to be a routine violator and then come up 21 with a better robust idea for you folks tomorrow**  **22 on that how I see it.**

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## 1 And then we had the open question that **2 we kind of diverged from which was the prohibited 3 acts which at least some of the room was saying,**  **4 hey, we're willing to at least exempt 5 distributors from having a prohibited act or not**  **6 pursue that any further in light of the 7 settlement and everything else, but we have to**  **8 resolve that. 9 Do we want to resolve that today, or**  **10 do we want to think about it and come back 11 tomorrow and talk about that?**  **12 I don't know if some folks need to go 13 home and talk to people that they represent**  **14 possibly before -- 15 MR. HUNGERFORD: We need to talk to**  **16 someone. 17 MR. RAWALD: Okay. So, we'll come back**  **18 tomorrow. And then we hadn't really talked about 19 the reasons for having a prohibited act for**  **20 contractor and dealers. 21 You guys brought up some ideas, but we**  **22 were really focused on distributors. And**

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## 1 obviously you're different, because you don't **2 have a settlement agreement that binds you. 3 MR. McCRUDDEN: Right. Yeah, this is**  **4 Charlie and I made a point that -- because I 5 think you asked that at one point, but for me it**  **6 was I'd like more information about what's a 7 violation -- not what's a violation, but what's a**  **8 routine violation and how we're going to -- and I 9 think we're closer.**  **10 I'd still like some more certainty 11 about what -- how this is all going to fit**  **12 together. 13 When you're talking about now, I just** 
**14 -- 15 MR. RAWALD: Maybe we should do it**  **16 tomorrow then once we have the process figured 17 out.**  **18 MR. McCRUDDEN: Okay. 19 MR. RAWALD: And then maybe we can use**  **20 the rest of the day today and I can meet with the 21 contractors and distributors, talk about record**  **22 retention and we have discussion with the group**

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## 1 tomorrow if people are amenable to that idea. **2 MR. MELCHI: I mean, would it be wise 3 that any manufacturers have distribution**  **4 interests should probably be in that as well? 5 MR. RAWALD: Yeah, actually I think**  **6 both John and Jordan asked that very question. 7 So, yeah.**  **8 (Simultaneous speaking.) 9 MR. RAWALD: Hold on. Hold on. Jordan**  **10 is trying to make a point. 11 MR. DORIA: So, I just had a question.**  **12 On the definition of routine, I don't see 13 anything there on the -- who makes a**  **14 determination on those again back to the -- if 15 that wasn't discussed, I'm just saying is that**  **16 something we'll discuss tomorrow or -- 17 MR. RAWALD: Right. So, we haven't**  **18 discussed that. I think we're still at the 19 Jordan versus Doug kind of dichotomy here.**  **20 And so, I'll come back tomorrow and 21 kind of paint the ideas out.**  **22 MR. DORIA: Okay. All right. Sounds**

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## 1 good. **2 MR. SACHS: Just this is Harvey and 3 just foreshadowing tomorrow's discussion on**  **4 prohibited acts, I think we've come a long way on 5 the distributors.**  **6 From listening as carefully as I can 7 today and thinking about it otherwise, I'm not**  **8 ready to agree that contractors are incapable of 9 doing prohibited acts.**  **10 And part of it is the demographics of 11 the industry is -- Charlie in particular has**  **12 reminded us and I think it's true for you as 13 well, Chuck, that there may be gradations, but we**  **14 can divide that industry into real businesses and 15 much smaller operations that are thought to be**  **16 more likely to try to cut corners. 17 And I think for reasons of**  **18 installation quality and many training and many 19 others, I would hate to give up the prohibited**  **20 act for contractors as being one of the 21 mechanisms to encourage proper installation of**  **22 compliant equipment.**

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## 1 So, that's just announcing a stake in **2 the ground. I'm not saying that I'm going to 3 live or die by it, but here we go.**  **4 MR. McCRUDDEN: I heard you. 5 MR. SACHS: Okay.**  **6 MR. BALLO: This is Tim and I have one 7 other criteria or factor I think that's making it**  **8 a little difficult for me to accept the lack of a 9 prohibited act for contractor than it is for**  **10 distributor not that I think waiving it for 11 distributors is a good idea.**  **12 If I am dinged and I'm a contractor, 13 I imagine, and maybe I'm wrong on this, but it's**  **14 much easier for a contractor to go print up a new 15 shingle and come back as some other entity with a**  **16 clean slate than it is for a distributor to do 17 that if you want to avoid becoming a routine**  **18 violator. 19 So, maybe I'm wrong on that. But if**  **20 that's true, I would suggest that civil penalties 21 have a more important role to play in penalizing**  **22 the contractors maybe than they do for**

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## 1 distributors. **2 MR. FERNSTROM: Well, Tim, this is 3 Gary. I'd like to add that I think we've come to**  **4 general agreement that the contractors know where 5 these products were installed.**  **6 (Laughter.) 7 MR. FERNSTROM: And the distributors**  **8 may likely not. So, I'm much more interested in 9 penalties for contractors than we have for**  **10 distributors. 11 MR. RAWALD: Just as a point of just**  **12 sheer analysis. So, we run into this problem 13 currently where small manufacturers who are**  **14 facing civil penalties declare bankruptcy and 15 then we can't touch that or it becomes more**  **16 difficult. 17 So, I don't even with these little**  **18 penalties, the bankruptcy and reincorporation 19 problem would still possibly exist for the**  **20 Department just for your purposes. 21 So, I don't think this will solve**  **22 that, but it certainly -- we could certainly try**

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## 1 to get money from them before they declare **2 bankruptcy and disappear, but it is a problem 3 that exists currently.**  **4 MR. SACHS: Your point is well taken. 5 Again, I'd like to sort of trial balloon my**  **6 thinking which is the contractor who does decide 7 to disappear and reappear in a community in a**  **8 metro area is still going to have the problems of 9 the grapevine and difficulties with getting**  **10 credit the next time, all these other things. 11 So, I still think it's a piece of the**  **12 compliance puzzle. 13 MR. RAWALD: Understood. So, is**  **14 everyone comfortable with us adjourning and me 15 focusing on the record retention folks for the**  **16 rest of the evening and -- 17 MR. SACHS: Delighted.**  **18 MR. RAWALD: Okay. 19 MR. EISNER: All right. See everybody**  **20 tomorrow at 9:00. 21 (Whereupon, at 2:42 p.m. the meeting**  **22 was adjourned.)**

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### NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### C E R T I F I C A T E

This is to certify that the foregoing transcript

In the matter of:

Before:

Date:

Place:

was duly recorded and accurately transcribed under my direction; further, that said transcript is a true and accurate record of the proceedings.

----------------------- Court Reporter 316

Central Air Conditioner Regional Standards Enforcement Working Group

US DOE

09-24-14

Washington, DC