# Date:October 16, 2014 Case:Central Air Conditioner Regional Standards Enforcement Working Group



# 11.010

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### Central Air Conditioner Regional Standards Enforcement Working Group October 16, 2014 

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## UNITED STATES DEPARTMENT OF ENERGY CENTRAL AIR CONDITIONER REGIONAL STANDARDS

ENFORCEMENT WORKING GROUP PUBLIC MEETING THURSDAY, OCTOBER 16, 2014 FORRESTAL BUILDING, ROOM 8E-089 1000 INDEPENDENCE AVENUE, SW WASHINGTON, D.C.

Group Members/Participants Neil Eisner, Meeting Facilitator Doug Rawald, U.S. Department of Energy, Office of the General Counsel Karen Myers, Rheem Manufacturing Company John Hurst, Lennox International Keith Young, National Rural Electric Cooperative Association Gary Fernstrom, California Investor Owned Utilities Aniruddh Roy, Goodman Manufacturing Company LP Charles White, Plumbing, Heating-Cooling Contractors National Association

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## John Gibbons, Carrier Corporation 2 

## Bryan Rocky, Johnson Controls 3 

## Matthew Lattanzi, Nordyne 4 

## Harvey Sachs, American Council for an Energy 5 

## Efficient Economy 6 

## Steve Porter, Johnstone Supply 7 

## Jordan Doria, Ingersoll Rand 8 

## Amy Shepherd, Air-Conditioning, Heating, 9 

## Refrigeration Institute

10 

## Charles McCrudden, Air-Conditioning Contractors of

11 

## America 12 Elizabeth Noll, Natural Resources Defense Council

13 

## Timothy Ballo, Earth Justice

14 

## Jonathan Melchi, Heating Air Conditioning &

15 

## Refrigeration Distributors International 16 

## Laura Degitz, Navigant 17 

## Eric Stas, U.S. Department of Energy, Office of the

18 

## General Counsel 19 

## Karim Amrane -- Air Conditioning, Heating & 20 Refrigeration Institute 21 

## David Hungerford -- ASRAC/California Energy 22 Commission

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### 22 Central Air Conditioner Regional Standards Enforcement Working Group October 16, 2014 

### Page 3 PROCEEDINGS 

## MR. EISNER: So can we get started. I think we have got a number of issues to go through today, probably the first rule we can start off on is prohibited acts because that's where we left off last night. MR. RAWALD: If I could jump in, Neil. So at Karen's request I did push a lot of buttons last evening on the question of the consensus we had regarding November 30th, 2015 for implementation of distributors record retention and after much coaxing the Department will be willing to not object to that date so we consider it to be unanimous so we want to do that. MR. FERNSTROM: So Doug, this is Gary you must have not only pushed the buttons but turned the dials too. MR. EISNER: Okay that will eliminate one of the issues that was on my list. Okay Tim.

MR. BALLO: So actually I think I sort of -- we hear from Doug if there is any change in what I thought I heard yesterday.

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### MR. RAWALD: Right, so I want to make
2 

### very clear what I said yesterday because I may not 3 

### have been clear. So the Department will not propose
4 

### a prohibited act unless it's put forward as part of 5 the package here with the group. So that's 6 something we would do, we of course would listen to 7 public comment as far as the comment period. The 8 

### problem is that if you were to propose a prohibited 9 act what I think would happen is that we would have 10 to re-propose a rule with the prohibited act in it. 11 There's not going to be any -- we are 12 negotiating the package here so we are not going to 13 propose a different package than what we negotiate
14 

### here unless we fail the negotiation. I guess that's
1

### 5 kind of where we are. 16 MR. BALLO: So you won't have to re-propose a 17 prohibited act if you seek comment on the issue of 18 whether a prohibited act or additional prohibited 19 

### acts are warranted. 20 MR. RAWALD: Right, we are not going to 21 seek comment on any facts that come out of the group. 22 So we will seek comment on the things that are

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## proposed by the group unless we are dissenting from 2 

## the vote but we are not going to, unless the group 3 

## agrees to have DOE

## propose comment on a prohibited 4 

## act, we are not going to do that. 5 So we require the group to agree to 6 

## propose and receive comment on a prohibited act for 7 

## us to put in the rule. 8 

### MR. EISNER: 

## Are you saying that what if 9 

## the group here agrees today unanimously to support 10 

## language in the preamble saying something along the 11 

## lines of we have not added any prohibited acts but we 12 seek public comment on it. 1

## 3 MR. RAWALD:

## Right then we would do that. 14 

## But we need group consensus on the issue for us to 15 

## propose it. We're not going to do it in the vacuum.

16 

## MR. BALLO: But, I mean, I guess that's the 17 

## position I have to ask for then because that's the 18 

## only way we can, I think, sign on to a term sheet you 19 

## know, otherwise it puts us in the position of kind-of 20 

## essentially walking away from prohibited acts to sign 21 

## on to the term sheet. 22 MR. F'ERNSTROM: So 

## this is Gary. While

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## folks are contemplating this I would just like to 2 

## make an observation. Earlier in our meeting 3 

## somebody sort of described how motivation to comply 4 

## with rules works and as I recall the description they 5 

## said most folks would look at the likelihood of 6 

## getting caught and the severity of the penalty. 7 

## What comes to my mind is driving down the freeway 8 

## wishing I could be in the commute lane. 9 

## So I'm in a hurry and I'm stuck in 10 

## traffic. Cars are whizzing by in the commute lane 11 

## so there's a sign that says minimum penalty $271.00 12 and I think to myself well I probably won't get 13 

## caught but I see people getting caught, pulled over

14 

## to the side from time to time and if I do, $271.00 is

15 

## a lot. Now it doesn't say 2 years in jail. If it

16 

## said 2 years in jail I suspect the judge would be 17 

## reluctant to levy that penalty on me for a first 18 

## violation or maybe a second violation because it's so 19 

## severe. 20 So that's kind of the situation we are in 21 

## here. The likelihood of getting caught is pretty 22 low because it has to be someone reporting it, most

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## likely. Then DOE has to find a knowing and routine 2 

## violation and then you're caught and the penalty is 3 

## like being cut off, it's enormous so it makes it a 4 

## very, very high hurdle that anyone is actually going 5 

## to get penalized. 6 

## It seems to me to be a very untenable 7 

## outcome to result in a really good motivation for 8 

## compliance. Not that all the people in this room 9 

## aren't honest and would comply anyway but I don't 10 

## think we can assume that everybody is going to be 11 

## honorable and compliant. 12 

## R. RAWALD: This is Doug and I guess 13 

## that was offered by Dave Hungerford and repeated by 14 

## Jordan at an earlier meeting, that analysis. And 15 

## I've always thought it a little too simplistic in our 16 

## case because I think we have to also consider the 17 

## ease with which someone can actually transgress, which 18 

## we have increased the burden, or the difficulty to 19 

## transgress, to this point by a number of the things 20 

## that we have done here in the group. And also the 21 

## actual benefit of transgressing and so I'm not sure 22 

## the margin is there for the folks that would be

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## trying to put a non-compliant product in an area 2 

## that's supposed to be -- for them to go to a great 3 

## length at the risk of the possible loss of all their 4 

## business from their ultimate supplier. 5 

## So I think there are a few more variables 6 

## at play here. That being said, I'm in the 7 

## enforcement business. We bring prohibited acts 8 

## against companies every day. I can tell you that 9 

## prohibited acts do have an impact on behavior. 10 

## People do things at the risk of civil penalties that
II 

## they otherwise would not have done. I can agree 12 

## with that so companies otherwise would not have cared

13 

## about complying with DOE are more compliant today 14 

## because of the fact thatthey have either faced civil

15 

## penalty or they saw their buddy pay a civil penalty

16 

## and they don't want to pay one. 17 So there is certainly at least some 18 

## anecdotal evidence supporting the fact that a civil

19 

## penalty can help curb behavior. The question I 20 

## think that the advocates have to feel comfortable

21 

## with is, do we think there's enough here or do we not 22 and if we don't and we think a prohibited act is

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## 1 consequence of installing air conditioners that are 2 

## below an efficiency standard. 3 

## I think that's going to be a very, I don't 4 

## want to say political hot potato, but I see a lot of 5 

## reasons why it could be problematic, why there could 6 

## be repercussions for DOE to pull that trigger. And 7 

## so I think it to be understandable that the 8 

## Department be unwilling to use that authority except 9 

## in a particularly egregious case and that's why I

10 

## think we need something in between nothing and II 

## cutting off the hand of the thief. 12 So to me that is essential to an effective 13 

## enforcement regime.

14 

## MR. FERNSTROM: So Tim let me follow up,

15 

## this is Gary. I handed out to the group earlier and

16 

## have in front of me on my computer now the results of 17 

## 4 different California compliance impact valuations

18 

## that the California Energy Commission did and PG&E

19 

## summarized for them. 20 And I'm looking at the federal sector, 21 

## reading across the 2010-12 impact evaluation 22 the 2011 and the 2007 evaluations and the average

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## compliance for federal majors in California was 67%. 2 

## So yet it appears to me like DOE has entered into 3 this process with a sort of business as usual 4 

## approach and I'm happy to put this up on the screen 5 if anyone would like to see it but I came into this 6 

## process with the idea that we would reach a pretty 7 

## high level of compliance and I don't think 67% is 8 

## very good. 9 

## If you look at the energy saving impact of 10 

## moving from say 67% to 90 or 95%, there are a lot of 11 

## positive energy associated with additional savings 12 

## that could be had if compliance was better so I don't 13 

## know whether DOE has its own score card but looking 14 at 

## these 4 evaluations that the CEC did, as I recall `€ 15 from school 67% was pretty close to a failing grade 16 and I don't -- I had better expectation out of the 17 outcome of this work than what it looks like we are 18 

## going to wind up at. 19 MS. SHEPHERD: This is Amy Shepherd from 20 

## AHRI. I really don't think that we can make a 21 conclusion about this particular enforcement plan 22 based on that sample and I think there's a difference

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## in compliance among different products, in different 2 

## regions and so forth so I just have to push back on 3 

## that. I don't think that's a conclusion that's fair 4 

## to reach. 5 

## I do agree with Tim that I'm also very 6 

## troubled by the current set-up that we have which is 7 

## it's all or nothing. It's, it's you are good or if 8 

## you have any violation, if you are a routine violator 9 

## for any reason at all we will cut off all of your 10 

## product, including the very product that we want to 11 

## be installing so I do agree that there's something -- 12 

## there should be something in between. I think 13 

## that something in between and this is a little bit 14 

## of a titillator so I won't go too long on it but I 15 

## think the something in between should be that DOE has 16 

## the flexibility to either cut people off from the 13 17 

## SEER or if it is particularly bad, to cut them off for 18 

## the higher efficiency equipment but only for those 19 

## products subject to regional standards, we can talk 20 

## about that later. 21 

## But I think that something like that would 22 

## give DOE more tools in its arsenal especially given

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## the fact that there's going to be a lot of confusion 2 

## over the next couple of years as we have this 3 

## guidance period and I think that it doesn't take away 4 

## from DOE's ultimate ability to do something severe 5 

## when it's warranted, but it doesn't mandate that DOE 6 

## do that in every single case. 7 MR. FERNSTROM: Amy, I would 

## like to 8 

## follow up and agree with you that yes the results of 9 

## these 4 studies, does indeed vary by sector and in 10 

## fact it's broken out by sector so the average for 11 

## HVAC which is the federally regulated measure was 12 71%. 

## 13 MR. MCCRUDDEN: So 

## Gary, this is Charlie, 14 are you saying that people are installing illegal 15 products or are they not filing permits? 16 MR. FERNSTROM: 

## This was an appliance 17 standards study. I can't speak to the details of 18 what was deemed to be a violation but either it was 19 

## not in the data base as the law in California requires 20 

## or it was not installed in compliance with the 21 

## federal and state appliance regulations. 22 MR. MCCRUDDEN: 

## Ok, ok and that's where

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## I'll push back because there's no installation at the 2 

## federal level requirement. 3 MR. RAWALD: Right no. I think it's 4 

## looked at for a manufacturer level, the data we 5 

## looked at it because -- 6 MR. FERNSTROM: This was an appliance 7 

## standard study, not a building standard study so 8 

## whatever is required in the California Appliance 9 

## Standards is what is in question here. 10 

### MS. SHEPHERD: 

## This is Amy Shepherd, but 11 even so I still think it's a leap to say so the 12 solution to that is that you cut off supply for the 1

## 3 efficient product that you want installed in the area 14 

## in all cases. That's going to be our solution to 15 this perceived problem and I just -- I don't think 16 that that makes sense. I don't think that's 17 

## necessary for an effective enforcement plan. 18 An effective enforcement plan would stop 19 the conduct that shouldn't be happening and if it is 20 serious and you need a deterrent you would have the 21 

## ability to go above that and to restrict the supply 22 

## to this person or to this entity of the more

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## efficient equipment as well and I think certainly 2 

## given the fact that we have also talked about a look 3 

## back period, I mean let's see whether or not what we 4 

## can come up with that gives maybe DOE that 5 

## flexibility, does it work? 6 

## If it doesn't work and DOE finds that it 7 

## has a lot of these cases and there isn't a deterrent 8 

## effect then maybe we can talk about okay this isn't 9 

## addressing the issue, we need something more. But 10 to assume with no experience in this particular 11 situation with regional standards that we have got to 12 have the ultimate solution from the get-go I think is 13 not supported. 14 

## MR. FERNSTROM: Don't get me wrong, I'm 15 not advocating for the ultimate solution only, I'm 16 

## advocating for a range of solutions where the penalty 17 might be more consistent with the crime. 18 

## MS. SHEPHERD: Yeah that's fair and -- 19 

## that's a fair point so I guess I agree with the 20 general principal although I realize that we are 21 talking about something -- I've taken us on a tangent 

# ^2 

# sorry.

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## MR. EISNER: Harvey? 2 

## MR. SACHS: This is Harvey and what's 3 

## sinking in to me from weeks of these discussions is 4 

## there's a shared concern from all the different 5 

## perspectives about the -- about too much, possible 6 

## too much reliance on the nuclear option, the death 7 

## penalty. There's a shared concern for wanting 8 

## intermediates and I am just starting to think whether 9 

## we can build on that consensus to at least have the 10 

## preamble say that there is a lot of concern about the 11 all or nothing and the group wants DOE to have the 12 freedom to consider intermediates which might include 13 

## restriction of the products for which a routine

14 

## violator is prohibited from selling. 15 

## It might include additional prohibited

16 

## acts but that the remaining work does involve 17 

## thinking about intermediate steps. Now that's just 18 

## what's bubbling up in my void filled brain right now 19 

## but I think focusing on what the problem is perhaps 20 

## mentioning a couple of solutions might be a way out

21 

## of this conundrum. 22 MR. RAWALD: So Harvey if I hear you,

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## this is Doug, what you are saying is propose to the 2 

## public hey we've thought of these things and what do you folks think of the different ideas, but here's 4 

## the plan I put forward which has these binary options 5 

## but does the public have any thoughts or can they 6 

## offer any comments about -- on possible gradations 7 

## that would include a prohibited act or a narrowing of 8 

## the scope of products that would be as Amy as 9 

## discussed. 10 MR. 

## SACHS: Well Doug this is Harvey, as 11 

## usual you summarize it better than I stated and think 12 

## that's a reflection of where this group really is. 13 MR. RAWALD: Well is there any desire in 14 

## the group to try to come to a resolution as a group 15 

## as opposed to leaving it to the public or how do 16 

## people feel about that. I mean we have had some 17 

## discussion on prohibited acts and it seems like 18 

## people are possibly at a loggerhead especially with the 19 

## distributor one but I mean do we want to try to 20 

## re-approach that again or do we want -- what do we 21 

## want to do here? 22 MR. WHITE: 

## This is Chuck White and I

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## don't think it's a secret how I feel about it. So 2 

## looking at if there's a violation DOE is going to 3 

## call me up and say there's a problem with this 4 

## installation and whether we do a prohibited act or 5 

## whether we do the "death penalty" it all starts with 6 

## that in the scenario we have. 7 

## So there is a middle step. I have a 8 

## violation as a contractor I have the option of 9 

## remediating this issue at my expense and not have the 10 

## death penalty. So I have that option. So are we 11 

## saying you would like a prohibited act option that 12 

## would give me the chance to pay $200.00 let's say and 13 

## it all goes away and we leave the air conditioner as 14 it is? I don't think that's really a goal that you 15 

## want.

16 

## Are we saying you want $200.00 and I have 17 

## to remediate? I really have a hard time with that 18 

## one that I get the double duty so we do have some

19 

## intermediate things that we can do. Having said all 20 

## of that, it is not DOE's job to inspect installations. 21 

## The people that inspect installations are the AHJ's, 22 

## the Authorities Having Jurisdiction and I am really

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## uninterested in compliance rates of inspections and 2 

## permit polls and from whatever state in the union. 3 

## That's a different problem. And if your state has a 4 

## problem with that you need to work on that, but 5 

## trying to make DOE be the building inspector for the 6 

## entire country is not going to happen. I don't 7 

## think Doug has the horses for that. So we don't 8 

## have that piece of this at the table, I've maintained 9 

## that for a while. 10 And as a contractor, when I do an 11 installation the building department comes and they 12 

## look at my installation and they say yes you did a 13 

## fine job, no you didn't do a fine job and if I didn't
14 

## do a fine job I have to fix it or they are not going 15 

## to give an occupancy permit and part of that fine job 16 is things are installed to standards and comply with 17 

## codes. 18 

### MR. FERNSTROM: 

## So this is Gary. I 19 

## think we are tending to confuse the building 20 

## standards or building code requirements with the 21 

## appliance standards here. The building codes when 22 

## you do air conditioning require a lot of things that

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## go beyond whether the condensing unit, the coil, the 2 

## fan are compliant with federal compliant standard 3 

## regulations or not. 4 So we are not trying to make Doug the 5 

## building inspector for the entire country, we are 6 

## just trying to feel confident that Doug is going to 7 

## have a means available to him to assure that the 8 

## minimum appliance standards requirements are being 9 met, that's vastly short of being sure that every
10 

## building code requirement is met on every 11 installation. These are two quite different things. 12 MR. DORIA: This is Jordan and I just 13 

## want to comment on the study. Slide 25 shows which 14 

## measures were covered by the studies and the studies 15 

## did not cover central air conditioners in any case. 16 

## So they covered a lot of things, but not central air 17 

## conditioners what we are talking about here, so the 18 

## numbers the 67 -- they have no bearing here as far as 1

### 9 I'm 

## concerned. 20 MR. RAWALD: This is Doug so I'm going to 21 

## veer away from the study and back to what Chuck said. 22 

## He offered a very interesting point that I don't

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### think we have really thought about in this context, 2 

### which is we can view the remediation option as a 3 

### voluntarily payment of a small penalty. 4 

### The company is choosing to pay this little 5 

### penalty by replacing the unit and avoid the ultimate 6 consequence. That's in essence what they are doing 7 

### and actually I would argue the replacement of a unit 8 

### in a home is probably more vastly expensive than 9 

### $200.00 given the time and the money spent in the 10 

### replacement. 11 

### So it's actually possibly a more effective 12 

### stick and easier for me to enforce in that if someone 13 

### doesn't pay me $200.00 what do I have to do -- I have 14 

### to go to a local court of jurisdiction, I have to fly 1 5 

### out there, I have to bring a case against a 16 contractor for $200.00. I can tell you with all 17 

### certitude that if I have 1,000 contractors each with 18 

### $200.00 penalties it is going to be very difficult 19 for me to fly to district courts around the country 20 

### to enforce $200.00 cases and justify to the 21 

### government that I'm spending thousands of dollars to 22 

### enforce $200.00 penalties. But if I am able to

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## bring to the 2 

## government the idea of hey the company is going to 3 

## voluntarily pay this little penalty through 4 

## replacement of a non-compliant unit therefore 5 

## improving energy efficiency for the country, that's 6 

## going to be more palatable to people I think and so I 7 

## like that way of looking at this and I think it's 8 

## very helpful to look at it that way, from my point of 9 

## view as I sit here right now. 10 MR. BALLO: I 

## think flying around the 11 country, the idea that you would do that is a red 12 

## herring. I mean here it is ---- you are going to have 13 the ability to settle for something in addition to 14 remediation. Now let me respond to the point that 15 what we are doing is getting away from remediation. 16 Where I see the value to a civil penalty 17 

## is something in addition to remediation, not 18 necessarily for the first violation. The first 19 violation maybe you do just remediate. Now you come 20 

## back with a second violation. At this point this 21 contractor maybe is looking at potentially being 22 declared a routine violator.

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## If that's the option at some point for 2 

## some set of contractors, they are going to make the 3 

## determination that fine it's cheaper to print a sign 4 

## and change my name and go into business as another 5 

## entity. The civil penalty would just be another tool 6 

## for DOE to consider using, it wouldn't have to be 7 

## used in every case that it could be a fine levied in 8 

## addition to remediation, something short of the 9 

## nuclear option which is ineffective in two respects 10 which I don't think we've discussed both of them but 11 

## it is ineffective in that it can be hard to levy 12 against a large entity because of the severe 13 repercussions. 14 It can be hard to levy against a smaller 15 

## entity because of essentially no repercussion because 16 the entity can sort of just morph into something 17 

## else.

18 

### MR. FERNSTROM: So this is 

## Gary. I would

19 

## like to respond to Jordan's comment. Jordan is 20 correct, none of these studies covered residential 21 split system air conditioning. I was making the 22 observation with respect to what the norm is for DOE

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## not this particular measure specifically. 2 

## MR. DENNIS: This is Keith Dennis. We've 3 

## been briefing our legal team on the updates since the 4 

## first slides with the prohibited acts and we also 5 

## have an issue where we don't think that DOE has the 6 

## authority to add prohibited acts and you know, we 7 are prepared to look at the legal case but as far as 8 finishing today, I don't think that we can vote for 9 

## additional prohibited acts or even the implication 10 

## that DOE has authority to add prohibited acts for 11 

## entities other than manufacturers, so that's our --- 12 

## just so everyone knows. 13 MR. BALLO: So you 

## would vote against 14 

## taking comment on the issue? 15 

## MR. DENNIS: I think we can take comment 16 on the issue but we couldn't imply that that's an 17 authority that we say they have as a group because I 18 

## don't think that that's necessarily for us to decide. 19 

## You know you can't shut down comment on anything, I 20 

## think everyone has the right to comment on anything 21 

## they want. I think the comments are a great part of 22 

## the process. MR.

## RAWALD: Right but I guess

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## the line 2 

## that I said the Department is going to draw was the 3 

## Department will not put out for comment anything this 4 

## group has not asked the public to comment on. So what 5 Tim has come to the group and said hey it looks like 6 

## we are not going to be able to agree on this 7 

## prohibited act issue, can you guys give me something 8 

## to live here with which is let's put out to the 9 

## public hey the advocates think that the prohibited 10 

## acts would be helpful, what does the public think and 11 

## have the public comment on that, on the Department's 12 

## possibility of adding a prohibited act whether that 13 

## would be helpful or not. And he said, Tim I guess, he 14 

## was asking would you be able to vote for that if 15 

## that was put forward, the premise. 16 

## MR. DENNIS: I think we would also have 17 

## to have included in there that there are members of 18 

## the group who think that it is not within -- 19 

## MR. RAWALD: Yeah, absolutely we would 20 

## reflect both sides of the issue. 21 

## MR. DENNIS: If that's what it comes to I 22 

## would probably have to call someone, but --

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### MR. MCCRUDDEN:

## This is Charlie with 2 

## ACCA. Doug you did a very good job I think on the 3 

## point about the intermediate step that is remediation 4 

## and the costs to the contractor. And just let me 5 

## add something about the prohibited act comment. In 6 

## many ways the death penalty or the nuclear option is 7 

## a very severe deterrent and it's one that we haven't 8 

## as contractors sort of said let's take this out. 9 And I say that because we want some 14 

## protection because there will be routine violators t1 

## and we want to get rid of them just as much as DOE 12 

## does, just as much as I think everyone at this table 13 

## does and so I think we are almost creating this false 14 

## choice between nuclear option and nothing. 15 There is this in between and it is the 16 

## remediation and it is going to be severe. We have 17 

## pushed back at our request that nuclear option, 18 

## because if you remember at the beginning we were 19 thinking oh my God, you're there or you're not. I 20 

## think there's plenty of off-ramps to either taking 21 

## your -- removing a violation, removing yourself from 22 

## the routine violator list, I hope we can talk a

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## little bit later about sort of some other steps that 2 

## I think other folks are interested in because I think 3 that's also real important but there is an 4 

## intermediate space and so let's not overlook that. 5 

## MR. DORIA: This is Jordan I think 6 

## Charlie did a good job of characterizing that there 7 

## certainly is a middle ground. Just to offer an 8 

## opinion on what I think Tim's asking for, which is 9 

## really just the ability to put out to the public that 10 there was no agreement on this point and that there 11 should be the opportunity to comment. 12 

## I'm of the opinion that that's very 13 

## reasonable and I think to raise Keith's point excuse 14 

## me that both sides should certainly be reflected if 15 

## we are trying to capture something in the preamble 16 

## I'm fully in agreement but to me there is no reason 17 

## why this can't be something that goes out simply for 18 

## more comment. The Department's position is clear, 19 the group's position is clear. As I understand it 20 

## this is really about saying can we all agree on what 21 

## is actually happening in the room. 22 

## So I'm struggling to see why we shouldn't

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## accept that point. 2 

## MR. RAWALD: Right I guess the question 3 

## really is, is there anyone who would object, barring 4 

## Tim having some time to draft the language that we 5 

## would all agree to, the concept of putting out in our 6 

## rule will the DOE ask for comment on whether they 7 think additional prohibited acts would be helpful to 8 

## creating an effective enforcement plan and then 9 

## reflecting the kind of varied opinions that we have

10 

## here in the group, would anyone object to asking that

11 

## question? 12 

## MR. WHITE: I'd think about it. 13 MR. RAWALD: Ok, and that's Chuck White, 14 

## so you are not near a microphone there. 15 

## MR. DENNIS: And this is Keith. I'm going 16 

## to try to contact some people as well. 17 

## MR. EISNER: Do you want to do that now 18 

## or do you just want to think about it while we go 1

## 9 through other issues? 2

## 0 MR. RAWALD: Can we break and then maybe 21 Tim 

## can put together some language that the room can 22 

## see, I know he has things put together all ready so

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### we can kind of look at that and see what everyone
2 

### things about it. 3 MR. EISNER: Do you 

### have more than just we 4 

### seek comment, do you have the arguments on both
5 

### sides. 6 MR. BALLO: I 

### don't know if -- 7 

### MR. EISNER: Okay, we can take a break, do 8 

### you want to share that by making copies or putting it 9 up on the screen, okay. All right how much time I0 

### would you like, the usual 10 minutes? All right,
11 

### why don't we take 10 minutes. 12 (OFF THE RECORD AT 9:41 AM) 13 (ON THE RECORD AT 10:30 AM) 1 4 

### MR. EISNER: All right can we get back 15 

### together? Is anybody ready to report on -- does 16 

### anybody have anything to report or should we just 17 

### look at the slide and start talking about the 18 

### language? All right. 1

### 9 MR. BALLO: I 

### think we should look at the
2

### 0 

### slide. 21 MR. WHITE: 

### Well this is Chuck White,
22 

### speaking for Keith. He placed a call but did not get a

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16 17 18 19 20 21 22 

### Central Air Conditioner Regional Standards Enforcement Working Group October 16, 2014 

### Page 30 

## response yet so he is still waiting for some guidance on his end. Speaking for myself, I'm disinclined to support the position but, it is not cast in stone yet. MR. LATTANZI: Chuck on this matter, are you referring to your position on whether or not to allow comments?

MR. WHITE: Yes. MR. EISNER: Is there anything you would like to have addressed with respect to your concerns? Do you have questions?

MR. WHITE: No. MR. PORTER: This is Steve Porter, can we see the language that was submitted is that it right there? Is it printed into this document? Oh okay.

MR. EISNER: No it is not, this document is a copy of what was circulated last night.

MR. PORTER: Okay, thank you. n PARTICIPANT: Is that any better? MR. EISNER: Let's everybody read the screen. PARTICIPANT: Can I ask you to scroll

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### down. 2 

### MR. DORIA: This is Jordan, I think one 3 

### thing that I think might need to be added potentially 4 

### at the end of the -- I guess basically the second
5 

### paragraph that begins regarding -- could be something 6 

### to the effect of not only do certain parties not
7 

### agree that DOE needs this to implement an effective 8 

### enforcement regime, or even just that DOE committed 9 

### not to take enforcement against distributors. 10 I understood that some believe it's a 11 

### question as to whether or not DOE has the authority 12 

### to do so, so sort of it can be counterbalanced to the 13 

### earlier statement that the advocates are stating that
14 

### the Department does, others don't hold that opinion. 15 

### MR. DENNIS: And I would like to add this, 16 

### this is Keith, we would probably want to add a
17 

### paragraph about why this rule has been very effective 18 as a manufacturer based standard at point of

19 

### manufacture and why this goes down a path that we 20 think is not only counterproductive for this effort 21 

### but also for the broader rule. 22 MR. DORIA: 

### Keith, this is Jordan. I have a

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## real problem with that and I heard you say that early 2 

## in the process and I guess I would say I agree with 3 

## you that we liked a date of sale, data of manufacture 4 

## national standard right but you simply cannot have 5 

## any other approach to this when you move away from a 6 

## date of a manufacturer based prohibition to a 7 

## prohibition on install, so I will not support language 8 

## to that effect. 9 MR. BALLO: 

## This is Tim, I apologize. I 10 

## had initially drafted this as presenting the legal 11 

## authority argument on both sides and it was so long. 12 

### I 

## meant to take it out on both sides and I only took 13 

## it out on the opposing parties side, sorry about 14 that. So if you want we could take it out of both 15 or put it in both, it doesn't matter to me. 16 MR. EISNER: Is 

## there comments? 17 MR. PORTER: Not 

## to, not that I support 18 

## this yet. I'm kind of with Chuck on where we're at on 19 that and I want to think about it some more but there 20 

## isn't any language in that I saw 21 

## the lets the public know that also that if they buy 22 

## one they would be caught in there, the installer they

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### in effect become a contractor and would be subject to 2 

### this -- all these penalties as well. 3 MR. DORIA: So this is Jordan I think the 4 

### comment on that -- I think that as I understood from
5 

### our discussion yesterday, I think that belongs in the 6 

### portion of the preamble that gets to what our 7 

### definitions actually mean and to whom do they apply 8 

### and sort of talking through those different actors 9 

### and just making clear sort of in -- for the general 10 

### public language that's used to not just sort of this
11 

### legal piece, so if we would include that, there at 1 2 

### least that would make sense to me. 13 

### MR. DENNIS: And this is a question for 14 

### Doug from Keith. Have there been prohibited acts on 15 

### anyone other than manufacturers historically on -- 16 

### MR. RAWALD: Right so I think I 17 

### addressed this several times -- so there's -- under
18 

### 430 I'm sorry 429102 we have all of our prohibited acts. 19 I laid them out for you guys in the second meeting. 20 

### There is one prohibited act the DOE has that 21 

### involves distributors and retailers regarding the use 22 

### of a light bulb or type attachment.

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## 1 There's another statutory prohibited act 2 

## that goes to the FTC that also involves distributors 3 

## and retailers. The rest of the prohibited acts are 4 

## targeted at manufacturers and private labelers so 5 

## there aren't any -- that squarely address dealers 6 

## or contractors as we would have them laid out here. 7 

## 1 think the argument Gary Fernstrom put 8 

## forward earlier on in this group is that some people 9 would view installers and dealers to meet the EPCA 10 definition of manufacturer based upon the fact that 11 EPCA defines manufacturer to be produce, assemble, 12 

## manufacture or import but that is highly debatable 13 obviously for the group.

14 

## So to squarely answer your question

15 

## there's only one prohibited act under DOE's

16 

## regulations that name a party that's not a 17 

## manufacturer or private labeler. 18 MR. DENNIS: 

## And we just had an Office of 19 

## Hearing Appeals decision from the other day that says 20 

## that Steffes Corporation who assembles water heater 21 is not a manufacturer so that argument is that you 22 

## are saying is contrary to what the Office of Hearing

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## and Appeals -- 2 MR. RAWALD: 

## Yeah, I don't know that 3 

## opinion that you are talking about so I would have to 4 

## take a look at it so I appreciate your bringing it to 5 

## my attention now, maybe you can give me a copy of 6 

## that so I can read it and I'll be smart enough to 7 

## answer it. 8 MR. SACHS: Keith, this is Harvey. That 9 

## decision is being appealed by Steffes -- I have their 10 appeal. 11 

## MR. DENNIS: They were denied the appeal 12



## -- they were told they weren't able to appeal because 13 they don't have standing because they are not a 14 

## manufacturer in the response letter from Office of 15 

## Hearing and Appeals. They are as a courtesy taking 16 

## a re-hearing, we'll know in a couple of days how that 12 

## goes, but they had basically said they are not a
18 

## manufacturer, they don't have the right to appeal, 1

## 9 they don't have standing and I can show you 20 documents, they sent it certified. 21 MR. SACHS: Thank you. I'm glad to know 22 

## that catch 22 is alive.

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## MR. DENNIS: Not only that they can't 2 

## appeal it because they didn't do an Order because 3 

## they dismissed it because they are not a 4 

## manufacturer, so ditto. And this just goes to why 5 

## this is the most important issue for is, this has 6 

## broader implications for other parts of the work that 7 

## occurs in standards and saying that we are going to 8 

## have prohibited acts on completely new classes 9 because this group decides that it is absolutely 10 

## necessary to do enforcement throughout I really 11 

## actually think we all agree on is going down a path 12 

## that we just don't need to go, it's increasing the 13 

## scope at a cost that is not understood for you know, 1 4 

## we have other solutions, other tools here, we have i5 

## subpoena power, we have the ability for the nuclear 16 

## option, we have the ability to dial back the nuclear 17 

## option, we've had a lot of concessions but expanding 18 

## the scope of authority which I you know, I'm not sure 19 exactly what the purpose of that is but I don't think 20 

## it's necessary in order to get what we need for 21 

## enforcement. 22 

## MR. BALLO: So what you just said. I think

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## would make a great you know, cut and paste for your 2 

## comments, but I don't see how the taking -- agreeing 3 

## to take comment on the issue forecloses you from 4 

## raising any of those arguments later. 5 

## MR. DENNIS: Right and I would agree that 6 this language is also a great cut and paste for your 7 

## comments. It looks like comments that you would 8 

## submit on something so I think this would be a great 9 

## comment document and we can submit our comments as 10 well. 11 

## MR. BALLO: This is deciding whether or not 12 

## there is going to be comment. 13 

## MR. DENNIS: I think that we could address 14 

## whether this is going to be -- whether or not there 15 

## is going to be comments with this simple sentence it 16 

## says there will be comments. 17 

## MR. RAWALD: I guess the position of the 18 

## Department, and this is Doug, is that we are not going 19 

## to ask for comment on the issue unless this group 20 

## says that we should ask for comment on the issue so 21 

## Tim is trying to craft language that would be 22 

## acceptable to the group that would allow the Department

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## to ask for comment and then tee up the issue for 2 

## NRECA or others to say DOE we think you are off 3 

## your gourd you don't have authority for this you 4 

## can't do it and for the advocates to come back and 5 

## say as they did in the initial round of comments 6 

## here, DOE has authority, here's why they do and 7 

## here's why we think you should do it. 8 

## So he wants to be able to open the door 9 

## and I think there's a concern that if we don't ask 10 for comments there will be no comments given, because 11 

## there won't be any actual ask for them and so he 12 wants to say, hey Department ask for commenting in 13 

## your rule-making. 14 MR. BALLO: I also think this language is

15 

## important to provide ASRAC some clarification of why 16 we are asking for comment because just simply saying 17 

## that we ask the DOE to seek comment on this issue I 18 don't think either way explains to ASRAC because I 19 

## think we are obligated to, why we would have that 20 

## unusual outcome of asking the DOE to seek comment on 21 

## it. 22 MR. DENNIS: Right but you have laid out

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## here a lot more than just asking for comments, you 2 

## have 4 recommendations that are your you know, that 3 

## would be your comments. So it seems like you are 4 

## not asking for comment, it seems like you are putting 5 

## comments into the preamble. 6 MR. BALLO: Well I think that's maybe a 7 

## fair point and if it would be helpful to eliminate 8 

## the before example prohibited acts and just have some 9 other language that solely deals with the public 10 

## comment issue I would be open to that. 11 MR. WHITE: Doug this is Chuck White, so 12 

## just for my simple contractor mind clarify for me. 13 

## If someone voluntarily submitted comments regarding 14 this, even if you didn't ask for them, would you pay 15 attention to them or would you drop them in the 16 circular file? 17 

## MR. RAWALD: That's an interesting 18 

## question and I'm not the right person to answer that 19 

## so I will have to talk to Laurie about the way that 20 

## we officially do that because we do get non-sequitur 21 

## comments. The concern is that from a rule-making 22 

## point of view you want the public all to have an

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## ability to respond equitably to the issue from both 2 

## sides, or all 4, 5 sides of the issue and so by 3 

## putting it out for comment, you are allowing to have 4 

## kind of dueling commentary and if I had just one 5 

## non-sequitur comment that has no response I can't 6 

## really weigh it verses the other opinion. 7 

## So the value in asking for comment is that 8 

## I then get the solicitation of the differing opinions 9 

## and allows me really to weigh that fruitfully and come 10 

## to an appropriate analytical conclusion. But I can 11 

## get you an answer of how we treat regular comments or 12 

## not secular but I can't -- that's the kind of thought 13 

## process behind it. 14 

## MR. EISNER: I can try to elaborate a 15 

## little bit on that. There is a concept in 16 

## administrative law with respect to rule-making as to 17 

## whether you have adequately apprised the public of 18 the scope of the notice, that is will comments be 19 

## accepted on other issues and to what extent. 20 So if the public, and the court if somebody 21 

## challenges this, says I did not think you were 22 

## looking for comments on whether or not there should

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## be other prohibited acts and didn't provide comments, 2 

## the agency might have to do an additional rule-making 3 

## to include this requirement. 4 

## If it makes it clear in the preamble that 5 

## it is willing to consider comments on this then there 6 

## should not be any dispute, they should not have to go 7 

## to another supplemental notice of proposed 8 

## rule-making or a new proposed rule in order to add 9 

## that to the final. Does everybody understand that? 1

## 0 It's a difficult issue for agencies in rule-making 11 

## and they try to make sure they do it in the most 12 

## efficient way possible so if they are considering 13 

## other possibilities or want to hear about other 14 possibilities they often times try to make it clear 15 

## in the document that they are doing that. 16 MR. RAWALD: And Eric is luckily our 17 

## rulemaking attorney for us all here and he pointed out 1$ 

## to me that the use of my term non-sequitur is probably 19 not the most appropriate so he would prefer to look 20 

## at it as whether the question is germane or not and 21 

## if the comment is germane then we would typically 22 address it, if it is not germane to the comment, to

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## the actual substance of the notice then we would not 2 

## necessarily address it, though we may on occasion. 3 

## I'm not certain of our past practice. 4 MR. PORTER: So this is Steve Porter. 5 

## Neil, did I understand you correctly so if we ask for 6 

## comments on additional prohibited acts that then 7 

## based on the comments that the Department of Energy 8 

## could put in a prohibited act without an additional 9 rule-making hearing? 10 

## MR. EISNER: If you make it clear that 11 

## that is one of the things that you want to consider 12 you should not have a problem adding it to the final 13 

## rule in terms of whether you adequately apprised 14 that, that doesn't mean that you have a basis for 15 

## doing it but at least you've given an adequate notice 16 

## that you are considering that, so the court would not 17 

## rule that was clearly not in the scope of the notice. 18 

## People could not have anticipated that. 19 That doesn't mean that they then have a 20 basis for doing it, it also doesn't mean that you 21 

## can't say that we want to review this before it is 22 put into a final rule, you view the subgroup. So in

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## other words in case you are worried that all of a 2 

## sudden there will be a final rule on this where you 3 

## didn't expect it, you have a right to say in the 4 

## document we would like to be asked if any significant 5 

## changes are made at the final rule stage. 6 MR. PORTER: 

## Thank you. 7 MR. EISNER: 

## And again you can avoid some 8 

## of the concerns in the room by making this more 9 general and just simply saying this nuclear option 10 

## concerns some of the members of the group, all of the 11 

## members of the group -- 12 MR. RAWALD: 

## Neil, if I could interrupt you 13 real quick, people keep using the nuclear option. I 14 don't believe it's the nuclear option, please don't 15 use the language. I know some of the folks here are

16 

## trying to use it pejoratively but hopefully, as a 17 facilitator, you would not use that language. 18 MR. EISNER: 

## Message received, I'm just 19 

## trying to use the summary statement rather than 20 

## repeating it. If you want to make it clearthat you 21 would like to hear comment on whether other proposals 22 

## are out there for how you can have something in

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## between the options that you have now on the table, 2 

## the public we would like to receive comment on that. 3 

## You could give examples of what you are 4 

## talking about, you could just ask for something in 5 

## general. You could say and I'm not saying whether 6 

## you even get into the question of do you have the 7 

## authority, you can talk about whether or not assuming 8 

## or if they have the authority or whether they should 9 

## seek the authority to impose other prohibitive acts. 10 Again, you have a range, you don't have to 11 think of yourself as being limited if you want to 12 

## work something out here you can do more, you can do 13 less. 14 MR. DENNIS: 

## This is Keith, I have two

15 

## comments. First, I mean I think the preferred 16 

## method would be to do something along what Amy's 17 saying and fix whatever problem we see with the 18 

## nuclear option and get to a place where we are not 19 

## adding prohibited acts and new classes of -- new 20 classes of businesses in order to meet a very short 21 

## term and specific goal with, with frankly fairly 22 

## limited potential impacts to harm, given the

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## incremental cost over where we are in terms of energy 2 

## savings. 3 

## Especially for a program that's worked so 4 

## well as a point of manufacture standard for years. 5 

## I think Harvey said one time you know -- I think 6 

## Harvey has a fish tank that's a water heater or he at 7 

## least put an axe in one, we don't want to make him a 8 

## criminal for doing that because once a water heater 9 

## or a product is manufactured, like a light bulb, 10 

## that's where it becomes legal or illegal and if you 11 

## start saying things like this, like if I screw in a 12 light bulb at my house, I'm breaking the law, it's 13 

## just a huge expansion of a story that we are not at 14 

## all comfortable with. 15 

## And I understand it's just in this 16 

## particular spot, it's an air conditioner but it 17 

## complicates, I mean I've been working on this stuff 18 

## for two years and it just complicates things on so 19 

## many aspects when we start going down this road of 20 

## away from the manufacturer. So we would like to 21 

## reign it in -- we think the prohibited act 22 specifically talks about the manufacturer.

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## Expanding it is beyond what we believe 2 

## Congress contemplated. They said we want to stop 3 

## people from installing incorrectly and the way to do 4 

## that is to look at the manufacturer, like we always 5 

## look at the manufacturer. 6 

## It's a mistake to go down the 7 

## other road. I think we would have to talk about that 8 

## mistake if we are going to talk about the benefits in 9 

## order to balance it out. There's a lot of detail up 1

## 0 there that I don't think we need to negotiate what 11 

## needs to be in this preamble. If we want to ask for 12 comments, we can talk about quickly asking for 13 comments, quickly putting you know a sentence on both 14 sides, I think even that's kind of a mistake. 15 But putting up 4 prohibited acts that you 16 know were complicit and you know I just don't see -- 17 

## I know that you have offered something else. 18 MR. SACHS: Keith if you are done, this is 19 

## Harvey and first of all since I'm accused of fish 20 bowl even though I live in one, the graphic in 21 question was a picture of an axe planted in the side 22 of an obsolete atmospheric gas water heater. I have

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## used that to draw attention to that one issue. 2 

## The more substantive thing is trying to 3 clarify some things. In my opinion Tim's slide was 4 

## helpful in clarifying our thoughts among ourselves as 5 

## advocates. Since it's preparation there have been 6 

## some discussions in the back room and elsewhere and I 7 

## think what we are asking for now as advocates, and I 8 

## think others in the room are quite sympathetic, is a 9 

## preamble that says something in effect you know we 10 

## need to learn more by comments on issues. 11 There are probably two of them, one of 12 

## which is prohibited acts. I do not accept the 13 relevance that prohibitions on manufacturers so long 14 as demonstrated their advocacy because we have never 15 

## before had something that had to be enforced on 16 parameters other than date of manufacture. It's a 17 different class of things and we are all stumbling to 18 

## try to figure out what the right response is but I 19 

## rather emphatically reject the assertion that the 20 

## experience in the past when date of manufacture has 21 been the only relevant parameter is applicable to 22 

## this situation.

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## MR. DENNIS: Thanks Harvey and I would 2 

## concur that we are trying to figure out a solution. 3 

## I tend to think that there is a solution that we can 4 

## work with that we have been working on without this. 5 

## We've all come to that conclusion and whether or not 6 we ask for comments, you know it's good to know the 7 

## history of how this was drafted so. And I 8 

## appreciate what you are saying. 9 

## The past is not a good indicator of the 10 future but I think expansion of authority is a very 11 tenuous thing that we should do very, very cautiously 12 if at all when we have other options that we have 13 been talking about which is the manufacturer can cut 14 

## off sales to people, we can do all kinds of things, 15 

## but I think expanding authority beyond what was 16 explicitly told by Congress is a mistake. 17 

## MR. SACHS: This is Harvey. My focus has 18 

## been on the question of whether the cost of 19 

## potentially expanding might be off-set by increasing 20 

## the pallet and the progressive nature of the 21 

## sanctions. I don't have an answer. I don't think 22 

## we are going to resolve it but this is why it is

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### pretty important to me to have place holder language
2 

### that seeks public comment on this issue as DOE does 3 

### its rule-making, so we have that as a place holder
4 

### that allows DOE to warn all parties that might be 5 

### interested that this is something that we have 6 

### wrestled with. 7 

### MR. DORIA: So I was just going to say if 8 we can maybe, just a suggestion to try to move this 9 

### ahead. If we were simply to eliminate the 4 10 

### enumerated points and, I mean, because I think that the
11 

### first sentence basically restates in sort of general
12 

### terms what the first 4 go into detail on. So I think
13 

### the spirit of it is there and I think that therefore 14 

### public comment on should there be other prohibited 15 

### acts or other parties and at the end of that, the 16 

### beginning regarding, just add in that final sentence
17 

### something stating that other parties question whether
18 

### or not DOE has the authority to create prohibited 19 acts for other parties. 20 

### MR. DENNIS: I think that there's a lot of
21



### -- I 

### mean we are defining little groups among us, we 22 

### are doing a lot of stuff in this. I mean I don't

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## see and there's things that you know, do we explain 2 

## to people the difference between a violation you know 3 

## and a prohibited act? 4 They are not going to have all the 5 

## background so is there a way to just simply do this 6 

## in like a sentence or two? Just the group, not 7 

## advocates and other people, the groups had a lot of 8 

## discussion on what are prohibitive acts. They 9 

## disagreed whether there was authority and whether 10 

## there was value and DOE solicits comment on it. I 11 mean, why do we have to have all this other stuff 12 

## that's kind of not as important or you know, 13 characterizes the whole thing in certain ways. 14 Defines who advocates are and 15 non-advocates, some people might just say oh I'm an 16 advocate, I'm an efficiency -- I'm an efficiency 17 advocate you know, why am I not included. I don't

18 

## believe that, so that's not fair.

19 

## MR. RAWALD: Right I think you point is 20 

## fair, Keith. Perhaps the best way to go because 21 

## there seems to be at least some language issue would 22 

## be for us to -- for a couple of the advocates that

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## are not you, to work with you over the course of 2 

## lunch to come up with some language that would be 3 

## acceptable on both sides, because you seem to be more 4 

## than polarly opposed and then possibly bring it back 5 

## to the group. 6 What I do want to note is that it is not 7 

## typical that our Department asks people to comment on 8 

## our legal authority, we certainly could note in the 9 

## comment that people are disagreeing about the extent 10 of having authority, but we don't typically say to 11 the world do we have legal authority to do this. We 12 

## assert it or we don't and people comment on our legal 13 authority quite often and I'm sure they will in this 14 case, but we don't solicit, usually, in our proposal

15 

## do we have the authority to do such. 16 

## That being said I think it might be more 17 

## productive for us to interact that way rather than 18 

## trying to wordsmith here with Laura on the board 19 because this seems to be -- it never seems to get to 20 

## where we want to get to when we do that. 21 

## MR. WHITE: Doug, Chuck White, can I ask 22 

## kind of a clarification or a follow through? So we

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### asked for comments and DOE receives comments and 2 

### decides, gee we think from the comments it is a good 3 

### idea, we'll have a prohibited act. What's our recourse
4 

### after that? Do we have in this negotiated setting 5 

### we can talk about that but once we get out of this 6 

### and you are past the comment period, I guess I'm
7 

### asking do we have the ability to come back and say 8 

### that's not what we want or if you decide to do it 9 

### after this fact, it's just going to happen. 10 MR. RAWALD: Right 

### this is Doug 

### and this

11 

### gets back to 

### the question I raised yesterday which is
12 

### you know, we are all -- some people here are going to
13 

### agree to a package because this doesn't include the 14 

### prohibited acts and so you wouldn't agree to the 15 

### package if suddenly we added prohibited acts to it, so 16 would we be negotiating in good faith if we suddenly 17 

### threw that in there at the end of the day and that's 18 

### a tricky question and I can be sympathetic with that. 19 

### So in our typical practice when we add 20 

### regulatory language that hadn't been proposed before 21 

### we usually had a supplemental notice to get further 22 

### comment on that but I don't know if that's an

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## administrative law requirement or not and so I would 2 

## need Neil or Eric to opine about the legal 3 

## requirements of that. 4 

## As a standing rule once a rule has been 5 promulgated the folks that are affected have 30 days 6 

## to challenge that rule in court. There's always a 7 

## recourse of some sort, but I understand why that 8 

## would be less than ideal for a contractor who may 9 

## have no knowledge of the rule-making process so, but
10 

## I will defer to the lawyers to talk about what would 11 actually be legally required if we were to take such 12 

## comment and what can we do with it. 1

## 3 MR. WHITE: Before you do that, let me 14 

## follow up with a comment. If it's apparent that we 15 

## don't want this but then we open the door and then we 16 end up getting it anyway that's unpalatable to all 17 those people standing behind me, behind this chair. 18 

## MR. RAWALD: No, I completely understand 19 

## that position. 20 

## MR. EISNER: Let me speak to that briefly 21 

## again. If they had given adequate notice to apprise 22 

## the public that they might put a prohibited act in

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### Page 54 

## the final rule, they don't have a problem with what 2 

## is referred to as scope of the notice issues. That 3 

## doesn't mean they have the authority to do it. That 4 

## doesn't mean that it was a reason-decision to do it 5 

## but and I have to look at the ground rules a little 6 

### bit more closely, 

## there may be some provision in here 7 

## about what happens after the comment period closes 8 and the Department starts to review the comments. 9 

## And one of the things that may have been 10 

## an earlier regulatory negotiation was a statement 11 from the working group that if significant changes 12 

## are made at the final stage, the group will be asked 13 to consider those either informally over the phone or 14 

## at a meeting like this. So that again is something 15 

## if you think it is important you can ask for 16 

## specifically on this issue or just in general. 17 

## That doesn't necessarily mean again that

18 

## the Department or ASRAC may agree with that. If 1

### 9 that is 

## something you consider and I think my 20 

## recollection is there is something in the working 21 group 

## ground rules that we developed at the beginning 22 

## of these 

## sessions that spoke to that particular

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## matter, whether you have the right before the final 2 

## rule is issued to be consulted. 3 

## Yeah, I'm sorry Doug ass pointed it out 4 

## and I'll read it to you because I don't know if you 5 

## all have it. The working group members request DOE 6 

## to provide a comment summary of the comments received 7 

## in response to the published notice of proposed 8 

## rule-making to the working group so that the working 9 group may provide its recommendations on what, if 10 any, changes to the proposed rule are warranted based 11 on these comments to the ASRAC prior to issuance of a 12 final rule. 13 So you basically reserve the right to do 14 

## that. And again my experience with negotiated 15 

## rule-making both here as a facilitator and what 16 happened after the one I worked on and I think an 17 

## earlier one the DOE did as well as my work at DOT and 18 

## experience with other agencies is there rarely are 1

## 9 significant changes made at the final stage if the 20 group works as effectively as this one has. 21 

## This is a remaining issue that you may 22 

## want to run by everybody what they are going to do,

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## at least on this issue. 2 

## MR. PORTER: Yeah until I --- Steve Porter, 3 

## until I saw, would see the final language of what Tim 4 

## may come up with I wouldn't be comfortable with 5 

## anything that allows a prohibited act to be added 6 

## without an additional rule-making hearing. 7 

## MR. EISNER: And under this paragraph I 8 

## think you would get the opportunity to look at that. 9 MR. PORTER: You 

## think? 10 MR. EISNER: Well again. I1 

## MR. PORTER: That's my -- it's seems 12 

## MR. EISNER: Let me put it to you this way 13 in terms of what I think. Whether or not anything is 14 put in the preamble along these lines, the public may 15 

## comment on it. DOE may make a decision that it has 16 

## both noted the problem with the process as well as 17 

## their authority to do this and then they decide at 18 the final rule stage. They want to do it based on 19 

## the comments they received. 20 

## So you are not necessarily changing the 21 

## balance of power here, you are just putting something 22 

## in the preamble. Again there is this statement here

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## that they are supposed to come back, that this 2 

## working group members request that DOE provide this. 3 

## MR. RAWALD: But I think that what we are 4 

## hearing is that we are creating uncertainty for these 5 

## guys because they are negotiating something here and 6 

## it's going to be settled and that somewhere there 7 

## could be this other thing added which could have a 8 

## large impact and which they wouldn't have a 9 

## sufficient role in because nothing is being guaranteed 10 

## to them that they would have a sufficient role in 11 

## saying well I withdraw from the entire negotiation at 12 

## that point. 13 

## And so I don't think that they want to be 14 

## put in that position. I hear that concern, Steve. 15 

## MR. PORTER: I mean it's just you know 16 

## that changes all the things that we have talked 17 

## about, everything that we have talked about over all 18 

## these days. 19 

## MR. DENNIS: I highly doubt that I'm going 20 

## to be able to sign off on something that would allow 21 

## for prohibited acts without a supplemental notice of 22 

## proposed rule-making.

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## MR. BALLO: That is in my view the purpose 2 

## of putting an additional slide in the deck on this 3 

## issue so if we don't have that ability I'm not sure 4 

## that we can sign the term sheet either. 5 

## MR. RAWALD: Right so Tim what you are 6 

## saying is the goal of soliciting comment would be to 7 

## allow the Department to add a prohibited act absent 8 

## the negotiation to the actual final package once it 9 

## went out. 10 MR. BALLO: Exactly. 11 

## MR. EISNER: Let me stress something here. 12 

## The Department by law is required to consider 13 

## comments it receives. It is a given that they have 14 the authority within limits to make changes to the 15 final rule. The Department has committed to the 16 

## working group rules and they have said we will send 17 around a summary of the comments and we can discuss 18 

## the comments, we can have meetings. 19 All I'm saying is I may not be here, you 20 may not be here. None of the people from DOE that 21 

## are here right now may be here when they get to that 22 

## final rules change. That doesn't mean that the new

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## people should not comply with this and do what they 2 

## said they would do, just no one in the room, just 3 

## like you can't make commitment to what you agree to 4 

## at the final rule stage, they may not even be here to 5 

## raise the issues that's all I'm trying to advise you 6 

## of not that it wouldn't happen. 7 It's hard to imagine that DOE wouldn't say,

a 

## well we committed to do a summary and submit and 9 

## circulate that summary. 10 MR. DENNIS: I 

## think the stated purpose of 11 

## putting in something here so that the rule could 12 potentially be changed without a supplemental 13 

## rule-making based on a couple of people's position is 14 

## not fair to the process. I think that if we want to I5 solicit -- there needs to be comments on this and we 16 

## need to discuss this and we want prohibited acts, we 17 

## can discuss it now if we wanted. 18 

## If we get tons of comments there needs to 19 

## be prohibited acts, we can get the summaries and 20 

## discuss it and put out a supplemental notice of 21 

## proposed rule-making but I'll tell you when you put 22 

## out the ability to skirt a supplemental notice of

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## proposed rule-making, you never know what will happen 2 

## with the Department, whether or not Doug wants it to 3 

## or not. 4 

## Somebody might say this is the end of the 5 

## administration we can expand authority to 6 

## contractors, we will do it. Doug, sorry your 7 

## opinion doesn't matter. I've been there so I think 8 

## that we are trying to skirt the process or trying to 9 

## you know -- the process here is not to skip a step

10 

## based on putting in an extra couple sentences here. 11 

## We either think we should have them or we don't. 12 MR. EISNER: I 

## think it's time to take a 13 break and caucus a little bit and talk about some of 14 

## these issues because I think some of you are 15 

## misunderstanding what can happen and what cannot

16 

## happen and what may be done, so I would like to take a 17 

## break and I'd like to talk to you, I'd like to talk

18 

## to Keith, I'd like to talk to Tim, maybe together to

19 

## make sure everybody understands everything. You 20 

## guys make the decisions. I just want to make sure 21 

## you understand what's going on here. 22 

## Anybody is welcome to join us if they want

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## but I would like 

## to have some informal back and forth 2 

### so if we 

## can take the usual 10 minutes? 3 (OFF THE RECORD AT 11:07 AM) 4 (ON THE RECORD AT 1:08 PM) 5 

## MR. EISNER: All right can we get started? 6 

## See if any of the multiple caucuses resulted in 7 

## anything we should talk about. 8 MR. BALLO: So this is Tim. Let me give 9 

## a report of where we are at and if I get anything 10 wrong please correct me. I think we are willing to 11 look at language that does not specifically call for 12 

## comment on the issue, that only recognizes the 13 disagreement on this issue. So with that said, that 14 

## does not apply to all of us so we potentially could 15 

## lose a vote or two against the term sheet going in 1 6 

## that direction. 17 

## But to the extent that it's important for
18 

## you all and for the distributors to not specifically
19 

## seek comment on that issue, that's what most of the 20 

## members of the efficiency caucus would do. 21 MR. DENNIS: This is Keith. We had an ad 22 

## hoc discussion at lunch. I don't think that we are

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## necessarily a caucus. We had three pieces of 2 

## language that we put together, two pieces of language 3 

## I think, because I don't want to speak for anyone 4 

## that at least one party -- '.E 5 

## MR. PORTER: Read -- 6 

## MR. DENNIS: Right, okay should I just 7 

## read this -- 8 

## MR. PORTER: Yeah read -- 9 

## MR. DENNIS: Sure so we had --- I'll read 10 

## all three because I think that only stay silent is 11 

## what I think Chuck's position is. Then we had the 12 

## working group could not come to consensus on whether 13 

## to include prohibited acts which I think is what you 14 

## are saying. 15 

## And we had -- the working group had 16 

## significant discussion on whether to include 17 

## additional prohibited acts, ultimately the group did 18 

## not recommend including additional prohibitive acts. 19 

## So that's -- those are the three that we had 20 

## discussed. I don't know where everyone stands but I 21 

## think at least we are in the -- we are fragmented on 22 

## where we would sit with all three of those. So I

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## don't know if you want to put those up. It's basically --

MS. DEGITZ: The first one was stay silent? MR. DENNIS: The first one is stay silent. Second one is could not come to a consensus, and the third is that we had a discussion and ultimately did not recommend including -- stay silent is put nothing in the document.

MR. EISNER: So the second one is what you are saying is similar to what --

MR. DENNIS: It sounds similar, I mean they -- MR. EISNER: Okay, are there comments or thoughts? PARTICIPANT: Can you restate those?

MR. DENNIS: Sure, I'll just read them. So nothing is one, the working group could not come to a consensus on whether to include additional prohibited acts is two. The working group had significant discussion on whether to include additional prohibited acts. Ultimately the group

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## did not recommend including additional prohibited 2 

## acts and ultimately did not recommend including 3 

## additional -- yep. 4 

### MR. EISNER: 

## Any comments, reactions? 5 

## MS. MEYERS: Where does this go, where is 6 

## this information? 7 MR. EISNER: 

## It will go in the preamble I 8 

## believe. 9 MS. MEYERS: 

## Preamble? 10 MR.

## MCCRUDDEN: Yes, so the question then 11 

## this is I think a good question because I don't know 12 

## if this goes on a slide that we would then strangely 13 

## vote whether or not we could find consensus or 14 

## whether we couldn't find consensus or this is part of 15 

## the cover letter to the ASRAC full committee but I

16 

## don't know if it's something that would go in the 17 

## preamble because I don't know if that's sort of too 18 

## late. 19 

### MR. RAWALD: 

## So just so you have an idea 20 

## of how we do these when we get this working group 21 

## recommendations is when we write the rule, it will say 22 

## the working group recommended the following and we'll

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## I describe it. So if the group wanted to as a 2 

## consensus have it say, we could have the working 3 

## group could not come to a consensus on whether 4 

## including -- that could be a sentence in the 5 

## preamble, we could have that. 6 

## So if that's what you guys wanted to have it say. 7 MS. NOLL: This is Elizabeth. My concern 8 

## with number one and if others disagree with this I 9 

## would love to hear feedback, is that staying silent 10 on the issue would then mean that I am agreeing to a 11 

## complete enforcement plan that I believe to be 12 incomplete. Is that a fair -- but yeah, so I believe 13 it to be incomplete -- staying silent means that I am 14 

## agreeing that this is complete and in fact is not. 15 So number two, the working group could not 16 come to a consensus to me at least leaves that on the

17 

## table for future opportunity of comment to make a

18 

## case for why we believed we couldn't come to

19 

## consensus and we believed it was incomplete. 20 And then number three, a slight concern 21 with the language ultimately did not recommend 22 because again I don't think we want to recommend

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## anything or the absence of -- we are not making a 2 

## recommendation, because we are not, we can't agree on 3 what the issue would be. 4 

## MR. RAWALD: This is Doug, it's almost 5 like from Elizabeth's point of view you want to 6 

## combine number two with the first half of number 7 

## three and the working group had significant 8 

## discussion on whether or not to include additional 9 

## prohibitive acts and ultimately could not come to a 10 

## consensus on whether to add additional prohibitive 11 

## acts. 12 MR. 

## EISNER: So the way Doug suggested 13 combining the two of them, would anybody object to 14 that and if so why? 15 

## MR. HUNGERFORD: This is David. Is the 16 implication that this language would substitute for 17 anything in the paragraphs above that were originally 18 proposed? 19 PARTICIPANT: Yes, all of it. 20 MR. EISNER: I think it is being suggested 21 that it would replace the language that Tim put up 22 

## this morning.

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## MR. HUNGERFORD: I'm a little troubled by 2 

## the lack of representation of the substance of the 3 

## issue. 4 

## MR. EISNER: I'm sorry can you say that 5 

## over again? 6 

## MR. HUNGERFORD: I said I'm troubled by 7 

## the fact that this sparks language that does not 8 

## characterize the nature of the disagreement in a 9 

## substantive way. It just says couldn't reach 10 

## agreement but people decided to not hold up consensus 11 

## which by definition is achieving consensus and I 12 

## think it sort of mischaracterizes the place where the 13 

## group is right now. I think the group right now is 14 

## that there is a significant number of people who 15 

## strongly disagree with the conclusion that there 16 

## should be no prohibited acts on other parties other 17 

## than the manufacturers, and there may be others in 18 

## the group who would -- would go along with that to 19 

## achieve consensus and so I'm troubled to push it all 20 

## the way to the margin like that. 21 

## I think it needs to be represented to 22 

## ASRAC and to the public at large as strongly as the

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## group actually feels about it. I think that's 2 

## appropriate to characterize the nature of this 3 

## dispute to ASRAC rather than leave it sort of 4 

## varying. 5 

## MR. EISNER: So you would for example 6 

## suggest adding a phrase in the middle of the sentence 7 

## about strong disagreements on both sides and 8 

## ultimately could not come to a consensus? 9 MR. RAWALD: I think actually what he 10 

## would like -- 11 

## MR. HtJNGERFORD : No. 12 

## MR. RAWALD: I'm sorry, substantive 13 

## discussion of what this disagreement is based on. 14 

## MR. EISNER: But how much? 15 

## MR. HUNGERFORD: That's correct, 16 

## substantive discussion. 17 

## MR. FERNSTROM: This is Gary. So if we are 18 

## looking for folk's opinions or a position on this 19 

## I'll weigh in and I agree with David that the 20 

## situation ought to be characterized in the term sheet 21 

## for ASRAC and I could go along with number two if I 22 

## were confident that California had enforcement

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### authority. If I thought California's appliance 2 

### standard enforcement capability were pre-empted by 3 

### the Department of Energy, then I would be reluctant
4 

### to agree with number two. 5 

### MS. MEYERS: Gary, this is Karen so you are 6 

### going to have to walk me through that again. 7 

### MR. FERNSTROM: All right, so David might 8 speak to this better than me but from what I know the 9 

### California Energy Commission has an appliance 10 

### standards enforcement rule-making underway. The
11 

### maximum penalty for which allowed by the legislature 12 

### is $2,500.00 per violation. And violations can
1

### 3 consist of failure to report to the CEC data base 14 where 

### reporting is required or by failing to meet the 15 

### terms and conditions of the appliance regulations in 16 

### California. 17 

### The way this connects to the federal 18 regulations is Title 20 restates the federal
19 

### regulations so it has the section on federally 20 

### regulated appliances where it simply restates the 21 

### federal regulation and adds on state regulated 22 

### appliances for where it states the regulations for those

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## I things independently regulated by California. 2 The enforcement rule-making is being 3 

## conducted to try and help the Energy Commission 4 

## determine how they will conduct enforcement and 5 

## utilize this authority granted by the legislature and 6 

## the question here is whether in the case of federally 7 

## regulated appliances California, by virtue of the 8 

## fact that it restates those regulations in its Title 9 20 regulations, can exercise its enforcement 10 authority or whether that authority would be 11 

## pre-empted by the DOE

## enforcement regulation. 12 MS. SHEPHERD: I 

## don't want to get too 13 

## sidetracked, but that issue is already in the 14 

# California rules because, if they don't, it

15 

## specifically says that the federal 

# rules are adopted 16 

## as California rules only if the federal rules are 17 

## found invalid or if there is a waiver granted, so 18 that issue is already there and that is how it is 19 

## structured, so I think we do need to talk about state 20 enforcement and that might be a better place to talk 21 

## about it there but I just wanted to 

# clarify that 22 point.

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# I 1 

## MR. FERNSTROM: Amy I'm not sure I 2 

## understood your clarification. 3 

## MS. SHEPHERD: So in Title 20 where it 4 

## sets -- it talks about federal standards it says, 5 this is what it says in the rule -- the federal 6 

## standards are adopted as California standards if the 7 

## federal standards are found to be invalid or there is 8 

## a waiver granted and that's because they can't 9 

## directly adopt the current regime of federal 10 

## standards into the California law.

11 

## So they are using -- they are saying they 12 

## have to be there but then they are carved out. Again 1

## 3 this goes down a rabbit hole but I think we can 14 

## discuss it when we discuss, I don't want to sidetrack 15 

## this discussion too much but I just wanted to clarify 16 exactly the current state. I know it's confusing 17 but that's the way they are structured. is MR. RAWALD: I want to make sure I 19 

## understand what Gary's point is because I think I'm 20



## -- so look I think what I am hearing Gary saying is 21 

## California has its own civil penalty authority and we 22 

## want to make sure that if this group doesn't put

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## forward a civil penalty authority over these 2 

## violations but we find in the state of California 3 

## that someone commits a violation of these regional 4 

## standards, we can still assess our own civil penalty 5 

## against them because we have our own structure there 6 

## and that this group's activity wouldn't pre-empt us 7 

## from doing that. 8 MR. FERNSTROM: That's the exact question 9 

## but I think Amy brings an interesting point to the 10 table about the relationship in general and that is 11 

## the specific manner in which the federal regulations 12 are covered by California. I was not aware of that. 13 It sounds to me like a good discussion for the 14 

## attorneys to have. 15 

## MR. DORIA: So this is Jordan, if I can do 16 

## this as a clarifying question on the language on the 17 

## screen. It was my understanding that the language 18 here, the intent was to include it in the preamble, 19 

## is that correct? 20 MR. EISNER: It is my understanding if the 21 group recommends that it be included in the preamble, 22 it would be included in the Preamble. In doing the

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## preamble, it is a question about whether DOE would do 2 

## it on its own to say something about this issue 3 

## because it was such a significant issue in the 4 

## proceedings and that I don't know. 5 

## MR. RAWALD: Well I think Jordan is asking 6 

## the authors of the language if they meant it to be in 7 

## the preamble or simply just to be communicated to 8 

## ASRAC. 9 MR. DENNIS: You know from our group, we
10 

## didn't discuss it. I think that we were just II 

## throwing out ideas. Again we don't have any 12 

## specific alignment together, so this was just for 13 

## discussion. 14 

### MR. EISNER: 

## Yes, and would you still 15 

## expect something to be in the preamble or not? 16 MR. BALLO: I think that would be our 17 preference, yes. 18 MR. WHITE: Those of us that advocate 19 staying silent could go anywhere. 20 MR. PORTER: 

## Yeah, this is Steve Porter. 21 I'm ok with it in the preamble. 22 MR. DORIS: So, this is Jordan again. So

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## if that's the case, just putting it out there that's 2 

## the case and if it's the language as written in four 3 

## could the issue of additional -- I mean it seems to 4 

## me that the cover letter that goes to ASRAC is the 5 

## place for that additional context, not the preamble. 6 

## MR. DENNIS: You know I think that 7 

## additional context gets into a situation where we are 8 

## all looking at how much detail does each party get, 9 

## what different views do we get, how do we 10 

## characterize each other and I think the appropriate 11 

## place for that is probably in everyone's individual 12 

## comments because we could go on for a long time about 13 

## how we think federal authority could be a slippery 14 slope to DOE eventually saying who can screw in a 15 light bulb and whether that was really intended by 16 Congress who should install their expansion of 17 

## authority. 18 I know what they are trying to do. They 19 

## are trying to get people not to install it and they 20 

## are in the wrong spot. And I think we are tasked 21 here to work within the confines of what they said -- 22 what their traditional role is and we can talk about

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## whether there's a way to do that or not until we turn 2 

## blue. I don't think that you know, creating that 3 

## language here is going to be productive. 4 That's just saying we disagreed there was 5 

## a hearty debate, we couldn't agree on it. And leave 6 

## it to everyone to discuss what their position is and 7 

## not characterize other people's positions. 8 MS. NOLL: So I guess I have a question in 9 

## terms of how it's framed. The working group has had 10 a number of meetings, we have agreed on a number of 11 

## items. These are the items that we agreed on there 12 

## was a hearty debate on prohibitive acts, that was an 13 item that was not agreed on. So kind of going back 14 to the complete versus incomplete, it's clear that we 15 are presenting to you what we believe there is 16 unanimous consent around and what we believe should 17 

## be included in the enforcement. 18 MR. DENNIS: Yeah and I think everyone 19 

## else's opinion will be in the transcript and 20 everything like that. I think that's a good -- that 21 

## characterizes what I think is kind of going on. 22 

## MR. FERNSTROM: This is Gary but then if

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## we don't have the opportunity to comment, we will 2 

## never be able to express our position or why we 3 weren't able to reach agreement on this issue. 4 

## MR. BALLO: So, so just to be clear we'll 5 -- any party will have the opportunity to comment on 6 

## the issue. The restriction I think, relative to 7 

## what we were talking about earlier is that DOE would 8 

## not in the preamble specifically seek comment on this 9 

## issue. 10 

### MR. FERNSTROM:

## Thank you. And this is 11 

## Gary and I might carry that thought one step further. 12 

## So if DOE is not specifically seeking comment on 13 

## this issue they might be very well inclined to just 14 

## ignore any comments. 15 MR. BALLO: Doug should answer this one. 16 

## DOE has an obligation to respond but they don't 17 

## necessarily have an obligation to. Let me leave that 18 

## to Doug. 19 MR. RAWALD: We consider all comment as 20 

## long as they are germane, there's no other word to 21 

## put out there. So if I received a comment that was 22 

## completely not related to the rule in any way, shape

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## or form but merely about say my appearance, we would 2 

## not consider it. But anything germane to the rule 3 

## we will consider and certainly a comment about the 4 

## prohibited acts would be germane, given the fact 5 

## that we have had a lengthy discussion. 6 

## Anyone reviewing the record would see the 7 

## amount of time that we have had on this so we would 8 

## consider it. 9 MR. FERNSTROM:

## Okay thank you. 10 MR. 

## SACHS: This is Harvey. Gary, your tt comments could be submitted on the first day the 12 comment period is open and call for comments. 13 

## MR. FERNSTROM: Okay well it seems to me 14 

## that having the capability to provide comments is 15 

## just about as good as DOE requesting them. 16 MR. EISNER: Any other comments? 17 

## Thoughts? 18 MR. RAWALD: Well I know Dave had a, Dave 19 Hungerford, not Dave Winningham, I know he's looking 20 at me like not me -- so Dave Hungerford talked about 21 

## substantive ideas I don't know if Dave has had some 22 

## time to think about substantive language he would

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## like to add, having heard Keith's concerns with that 2 

## possible endeavor? 3 MR. HUNGERFORD: I have and I guess can 4 

## you guys hear me okay? 5 

## MR. EISNER: Yes. 6 

## MR. HUNGERFORD: Okay, something 7 

## relatively simple that says that --- and I don't know 8 

## how you would write this but one from group -- some 9 

## of the members believe that a lack of a prohibitive 10 

## act for parties other than the manufacturers will not 11 constitute an effective enforcement regime whereas 12 

## others believe that the regime as presented will be 13 

## effective at achieving compliance, something to that 14 effect, the critical words being effective or not 15 effective. 16 MR. DENNIS: This is Keith are we going to 17 

## start adding to this? Because I would also add lack 18 of prohibitive acts other than the manufacturers 19 

## would not -- I would add that a creation of 20 prohibitive acts on parties other than manufacturers 21 would be outside the scope of DOE's legal authority, 22 

## would be beyond their traditional role in under EPCA

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## and would be I don't know, we'd have to go -- we'd 2 

## have to continue to work on it in another work group 3 

## but I have some stuff to add to that. 4 

## MR. MCCRUDDEN: So this is Charlie with 5 

## ACCA, before we get going on this I don't think we 6 

## want to start to write this anything more than the 7 

## facts of the situation which are we had significant 8 

## discussion on whether to include additional 9 

## prohibitive acts and we did not come to a consensus. 10 11 If we start to sort of put in our own 12 

## ideas about why then we are just starting the 13 rule-making process on this page and I think let's 14 take care of that in the comments. 15 

## MR. PORTER: This is Steve Porter, I agree 16 T mean that will take forever and that's what the 17 

## comments are for. Everybody gets to comment as we 18 just discussed and you can write all that in and have 19 everybody write in what we want to have written in. 20 

## Let's put the facts in and then let the comment 21 

## period take care of it. I'm fine with that. 22 

## MR. EISNER: Would it satisfy --

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## MR. PORTER: And I'm fine with it in the 2 

## preamble. 3 

## MR. EISNER: Would it satisfy to have a 4 

## very brief statement with a reference to the 5 

## transcripts of those discussions that are referred to 6 

## in the docket? Just simply say see the docket for 7 

## expansion? 8 

## MR. RAWALD: So what we traditionally do, 9 

## we just cite to a particular page of the docket so if 10 

## that would suffice it would be a lot of work on our 11 

## part to narrow down those pages, but we could in the
12 

## preamble say see these relevant pages for the
13 

## discussion.
14 

## MS. DEGITZ: For the commercial 15 

## certification working group we also specify look at 16 these days for conversation so that would be another 17 

## option. We could say for additional discussions by 18 

## the working group look at this meeting. 19 MR. EISNER:

## Again what we are talking 20 

## about is picking. The working group had significant 21 

## discussions on whether to include additional acts, 22 

## ultimately did not recommend including those acts. See

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## I X in the transcript for further elaboration. 2 MR. BALLO: 

## Personally I like the idea of 3 

## just citing to today's transcript because I think we 4 

## have gotten all the arguments on both sides out there 5 

## so 6 MR. EISNER: 

## Would that satisfy? 7 MR. RAWALD: It's easier for me and Laura. 8 MR. EISNER: 

## But that is in fact. 9 MR. HUNGERFORD: Okay I could go with that 10 but I would prefer the language say did not reach
>> consensus rather than ultimately decided not to 12 

## include that or whatever what was just stated. 13 MR. EISNER: 

## Did not come to consensus on 14 

## whether to include. 15 MR. RAWALD:

## Right so David would you 16 prefer number 2 or number 4? And this is Doug, I 17 

## like number 4 because it signals the hint that there 18 

## is something to look at in the transcript whereas 19 

## number 2 doesn't really tell you there's something to 20 look at, so that's why I like number 4. It says 21 hey if you go to the transcript you are going to see 22 

## some real vigorous debate about this, so that's why I

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## like it. 2 MR. HUNGERFORD: 4 would be the best from 3 

## my perspective if we included the reference which you 4 

## suggest. 5 MR. EISNER: Does anybody object to 4 with 6 

## a new sentence being added referring to today's 7 

## transcript in the docket? Objections? 8 MR. WHITE: Tentatively I'm going to 9 reserve for a little bit.
10 

## MR. EISNER: How much is a little bit? II Will we know before we do this? 12 MR. WHITE: At 

## our next break I'll make 13 a phone call. 14 MS. MEYERS: Let's break. 15 PARTICIPANT: Yeah, let's break, let's get 16 this baby -- 17 

## MR. RAWALD: Well are there any other 18 objections to this? I mean is there anybody else 19 objecting to it besides Chuck possibly? 20 MR. PORTER: This is Steve Porter. We 21 had a well you can't call it a caucus so we'll call 22 

## it a really good lunch.

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## MR. RAWALD: You were at the DOE 2 

## cafeteria. 3 

## MR. PORTER: Absolutely. 4 

## MR. RAWALD: That's a limited notion. 5 

## MR. PORTER: That was awesome it took me 6 

## back to my Navy days. The you know, everybody's 7 

## concern on our side is just about that slippery slope 8 

## of you know, regulatory action and where DOE'S 9 

## authority is and you know I don't think this changes 10 

## any of that and the fact that this is a public 11 

## transcript anyway Chuck and they can look at it any 12 

## time anyway so I mean just pointing them at it lets 13 

## everybody know we all did our jobs I guess and that's 14 

## part of this too and doesn't defer any debate and 15 

## people should be allowed to make comments on it. 16 

## But we all know where we stand and if this 17 

## ends up what actions we have to take so I'm fine with 18 

## this and I'm fine with it in the preamble. 19 

## MR. RAWALD: Is that number 4, Steve? 20 

## MR. PORTER: Yes. 21 

## MR. RAWALD: Okay. 22 

## MS. NOLL: So I'm going to make the plea

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## I that Karen made yesterday. This is incredibly 2 

## important to the advocates I think. None of us at 3 

## this table actually know the outcome of this 4 

## enforcement plan and how effective it will be and we 5 

## are all here trying to pull together what we think is 6 

## going to be as effective as possible but there is, 7 

## you know, a lot of if, ands or buts that are included 8 

## in that. 9 I think with respect to the mechanisms 10 that we've considered, we've all done it with a 11 

## perspective that we don't want to put any undue 12 

## burden on those that are good actors, so we really 13 have focused on what can we do and what can we put in 14 place that only penalizes the bad actors and not the 15 good actors. 16 And I think that is where I continue to 17 

## come from and that if we find this important plan to 18 

## be ineffective then a prohibitive act might actually 19 

## get at that point, but would concede to the fact that 20 

## we can't agree to it today and we don't know where 21 this is going to end up so to preserve that right and 22 

## to preserve the right to comment on that is important

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## 1 to a complete and effective enforcement plan. 2 

## MR. EISNER: Anybody else want to say 3 

## anything before we break? Okay, we are ready to give 4 

## you some time, the usual 10 minutes. 5 

## (OFF THE RECORD AT 1:38 PM) 6 

## (ON THE RECORD AT 2:00 PM) 7 

## MR. EISNER: Can we reconvene? 8 

## MR. WHITE: So this is Chuck White. 9 

## After some consideration and some consultation I am 10 

## still going to vote no on this. That -- I don't 11 

## think anybody else is going to join me but that's 12 

## okay, I don't mind being the lone wolf. We have some 13 

## concerns about what will happen should prohibited 14 

## acts come back that we would not necessarily have 15 

## input or I know we would have a comment period. I 16 

## know we have some concerns about that and for the 17 

## record I would like to say we don't support that. 18 MR. EISNER: Any other comments any 19 

## thoughts? 20 MR. SACHS: Just a question, this is 21 

## Harvey. I very much appreciate where you are coming 22 from Chuck, the question is whether we actually will

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### Page 86 1 

## be voting on preamble language as opposed to things 2 

## in the term sheet? 3 

## MR. EISNER: My understanding, clarify me 4 

## if I'm wrong, this would be preamble language, 5 

## referring people to the docket. 6 

## MR. SACHS: I'm sorry? 7 MR. EISNER: This would be preamble 8 

## language, that's my understanding. 9 MR. SACHS: The question is whether it's a 10 preamble language that's voted by this group or just 11 

## sort of acquiesced? Do we vote on the preamble? 12 

### MR. 

## EISNER: You are voting on a 13 

## recommendation that this sentence be added to the 14 

## Preamble. 15 MR. RAWALD: I 

## guess the way I understand 16 

## this is the term on the term sheet would be included 17 

## in the Preamble in this language in simple terms. 18 MR. EISNER: We had talked about that, I 19 

## don't think we necessarily voted specifically it 20 might be a bullet here and there on a slide with the 21 

## same thing. 22 Okay does anybody else have anything they want to say

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## on this? So we are talking about this language, 2 

## other than Chuck's noted objection does anybody else 3 

## object to this language? 4 All right so we show 1 negative vote which 5 

## means this language is going to go to ASRAC with a 6 

## recommendation that it be added to the preamble. 7 MR. BALLO: This is too much -- I just 8 wanted to make the point I mentioned earlier that I 9 

## don't object to this language. I do not yet know 10 how everyone in my caucus is going to vote on the 11 

## whole term sheet, partially as a result of this 12 

## language so I just wanted to flag that. 13 MR. EISNER: 

## All right according to -- all 14 right according to my notes I would think now is the 15 time to go through a few slides to make sure we've 16 made final decisions on them and the first one we 17 

## should probably look at the plain copy, I believe is 18 Slide 24, Routine Violator. We have had extensive 19 

## discussions, I think changes have been made, does 20 anybody want to raise any issues or should we take a 21 vote? Slide 24 Routine Violator and by the way the 22 

## prior language tell me if people want to handle it

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## differently. 2 

## I think we would put it in the back that's 3 

## you know the easiest thing for you Doug, put it in 4 

## the back the language there that we agreed should be 5 

## in the preamble. We could add it to the slide on 6 

## violators, it might be clearer if it is just a 7 

## separate one. 8 

### MR. RAWALD: 

## The vote we just had? Amy 9



## -- Laura teed up its own slide, so it's its own 10 

## slide. ii 

### MR. EISNER: 

## Okay everybody is comfortable 12 

## with that. All right, Routine Violator does anybody 13 

## object to this recommendation? 14 

### MR. RAWALD: Yeah, I'm a 

## little confused

15 

## because we had this, well it says unanimous the slide 16 

## before I don't know what this suddenly has no vote on 17 it. I8 MR. EISNER: I 

## think we added or discussed 19 something yesterday, it doesn't say it now. 20 

## MS. DEGITZ: It goes to the next slide. 21 MR. RAWALD: 

## Okay, right so nothing has 22 changed on this slide, it is a question of whether or

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## not we are adding the language on the slide. 2 MR. EISNER: I'm sorry yeah, it's the 3 

## continued page, but it is the routine violation so 4 

## it's the in determining language that's new. 5 MR. RAWALD: Right and so I went back to 6 

## the Department last night I said that I would and 7 

## this is the Department's proffer of a different 8 

## version than we would be comfortable with which gives 9 

## flexibility to the Department to look at the various 1

## 0 business entities or not the business entities but 11 

## the various parts of the business. 12 MR. PORTER: So you took out the word 13 shall and put in may? I can't see the language you 14 struck out, oh it's there I'm sorry. 15 MR. RAWALD: Right so it was take out 16 "shall", add "may", take out "accordingly shall", and 17 

## then "if so would", take out "business entities", and 18 take out "shall", and add "would". So this is meant 19 

## to give DOE flexibility to look at each case based on 20 

## the facts of the case. 21 MS. SHEPHERD: This is Amy Shepherd and so 22 why would this -- do we not want this to be something

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## that they are always required to do, just to 2 

## consider? 3 MR. RAWALD: So we want to maximize 4 

## flexibility at the Department on this situation. 5 MR. PORTER: Doug, what about changing 6 

## "may" to "would". 7 MR. RAWALD: 

## Yeah, I can ask the question, 8 

## I just have to ask several people on this so give me 9 

## all of your thoughts so I can ask them all at once. 10 MS. MEYERS: So the way I read this, you 11 may or may not have to consider whether it was 12 

## limited in scope or location which is a lot different 13 

## than changing that "shall" to "may" puts a whole new 14 

## context on this for me. 1

## 5 MR. PORTER: Karen if he changed "may" to 16 "would" consider does that help? Is that a middle 17 

## ground there or not? 18 

### MS. SHEPHERD: 

## Okay so I think we've had 19 

## some conversations that relate to this issue but 20 specifically to manufacturer-owned distributions, 21 that's why we are having this flurry of like side 22 conversations to figure out how they relate to each

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## other. 2 

## So I think that we can go through this 3 issue now but one thing that we just discussed is 4 

## that we have sort of identified the issues that we 5 

## have outstanding and there are these issues, there's 6 

## this issue, there's also I think what was open was 7 

## the response, the initial response period time. We S 

## have the product definition issue that we wanted to 9 

## discuss and we have the state issue.
10 

## Another issue that we 

## have thought about 11 and talked about is for manufacturers. Whether or 12 

## not we need to clarify the extent of manufacturer 1

## 3 liability with regards to factory-owned distribution 14 and whether it should be covered as an additional 15 

## manufacturer's own distribution prohibited act. 16 

## So in terms of that we would also want to 17 

## address something I think that's very similar to this 18 

## in the scope. But those are big issues and I think 19 we want to be thoughtful about them so we sort of 20 

### came 

## to the conclusion that that seems to be what's 21 

## still on the table that we should recognize that and 22 have 

## another meeting as much as I hate to say it,

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### maybe ask for a two—week extension as to that period
2 

### or just schedule another meeting in two weeks to make } 3 

### sure that we have time to think about these issues
4 

### and hopefully resolve them all at that point. 5 

### And so I bring it up now because I think 6 

### this is going to -- this will relate I think a little
7 

### bit to that issue we discussed of the manufacturer 8 

### distribution. 9 MR. EISNER: Maybe. David Hungerford do you JO 

### have any idea on whether ASRAC would accept a two

II 

### week request for extension? 12 MR. RAWALD: I 

### think I have no idea, I 13 

### would presume yes if we tell them that we are making
14 

### progress, that's been pretty much the practice but 15 

### David 

### can comment. 16 MR. HUNGERFORD: I think -- I'm not sure
17 

### whether ASRAC would have a say about that, that's 18 

### more of a DOE issue. 19 MR. RAWALD: Well

### ASRAC gave us the 20 deadline to be October, so we would have to go and
21 

### tell ASRAC we

### want more time for the allocation that
22 

### they gave us.

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## MR. HUNGERFORD: Well I guess I'm thinking 2 

## of the practical matter that it would take two weeks 3 

## to get an ASRAC meeting together in order to consider 4 

## it. 5 

## MR. RAWALD: Yeah, but I think they can 6 

## decide through emailing, the manufactured housing 7 

## which is going on the same at this date they asked 8 

## for an extra month and got it without much 9 

## difficulty. I don't think that would be a problem so 10 

## I think we should schedule the meeting. 11 

## MR. HUNGERFORD: Okay yeah. 12 

## MR. RAWALD: And I'll ask the question. 13 

## MR. HUNGERFORD: Honestly if this group 14 

## needs that extra time to hammer out those extra I5 

## details I can't imagine that ASRAC would say no. 16 

## They want a document to come out of this. We want a 17 

## result to come out of this sub-committee I'm sorry, 18 

## this working group and so if that requires extra time 19 

## and we have been diligent in pursuing an outcome and 20 

## we are close, I can't imagine that ASRAC would say 21 

## no. 22 

## MR. EISNER: Is everybody comfortable with

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## asking for an extension because I had understood at the beginning of this process we were worried about the January 1st date I think it is for the rules taking effect.

MR. WHITE: Does it mean we have to have another meeting?

MR. EISNER: So everybody wants to check their calendar?

MR. HUNGERF'ORD: Do we have a date in mind? MR. EISNER: Well if we were talking two weeks from today it would be the 29th and 30th of October. MR. ROCKY: So this is Bryan from Johnson Controls. I think at this point the request is for an extension of either 15 or 30 days, it can be decided what we want to do so that this committee can get together one more time after having a few days to provide -- get significant information on some of these points from our management teams and customers and other people so we come back one more time for one day or two days and finish this out with these

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## three or four things that are left hanging. 2 

## So I'm not worrying about setting what 3 

## date we do this, just we agree that we need to ask 4 

## for an extension or do we think we are going to get 5 

## done in the next two hours. 6 

## MR. RAWALD: Right so I think that we 7 

## should assume the extension will be granted and let's 8 

## schedule the meeting and then because I think it's 9 

## going to be granted. 10 MS. NOLL: Could we develop a scope of

11 

## what we want to ask the extension for to limit our

12 

## conversation to the remaining items? 13 MS. SHEPHERD: 

## Oh right now -- yeah it was 14 what I just mentioned. So okay, I see what you are 15 saying, okay. 16 MS. NOLL: Draw the boundaries. 17 MS. SHEPHERD: 

## Yeah before we have to act 18 that makes sense. Okay I think we have that we were 19 just on the Routine Violator Slide. I'm not sure 20 

## what slide the 3 day, 5 day -- I was not in the room 21 

## the last time we discussed this but the response 22 

## period -- the initial -- manufacturer liability. So

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## I don't know what you want to call that the 3 or 2 

## whatever day window or 5 day window. 3 

## Well it's not so much the right to appeal 4 

## but it's that response time. 5 

## MS. MEYERS: It's for that 3 business 6 

## days. 7 

## MS.SHEPHERD: Before you have to act. 8 

## It's actually on the manufacturer liability slide 9 

## sorry. I have an old one, okay I'm sorry. I must 10 

## have the oldest version. I have it right here -- oh 11 well then there you go hence the confusion. 12 

## The product definition is what do you call 13 it state enforcement? And then under for 14 manufacturer liability for manufacturer's own 15 distribution and I guess it would be prohibited act? 16 I'm just trying to make it really short. 17 

### MS. MEYERS:

## And then a final review of i8 

## all the slides so that we really understand what we
19 

## have in the term sheet. 20 

## MR. ROCKY: This is Bryan, I'm sorry to 21 

## bring this one up at this point but if we are going 22 

## to have another discussion which I think we're headed

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## toward, there's one more item which is on Slide 33,
2 

## the Product Determined Non-Compliant. I've been
3 

## informed in an email just in the late few minutes
4 

## that the first bullet and I don't know if you can get
5 

## to that point Laura Slide 33. Product Determined
6 

## Non-Compliant. 7 Okay if you go to the first bullet on that 8 Slide 33 it talks about -- yes exactly so that bullet 9 talks about a model that fails a regional state

-
10 

## standard. The issue is the "in all certified
11 

## combinations". The process today for a
12 

## non-compliance to the national standard is that 13 particular system rating is generated or is
14 

## determined to be non-compliant, does not remove all 15 

## of the other certified combinations of that basic

16 

## model.
17 

## MR. RAWALD: Right SEER 14, and this is
18 

## Doug, so I acknowledge that difference because it is 19 different. The reason for it is because we have
20 

## established this threshold as SEER 14 being the least 21 

## efficient combination and now suddenly you have the 22 least efficient combination that's below 14 so that

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## condensing unit in any combination should not have 2 

## been installed in the South based upon that 3 

## assessment of what SEER 14 is. 4 

## MR. ROCKY: If the failure Doug of that 5 

## base unit is the issue that the unit fails, right. 6 

## So we are saying the same thing. If the loose coil 7 

## rating fails the 14 SEER now all combinations of that 8 

## unit are not going to be allowed in that region. My 9 

## question is that doesn't say that it is the base
10 

## highest sales volume tested combination. 11 

## If I have a combination of an outdoor unit 12 

## that fails, the interpretation from my engineering 13 

## person is that means every model in that family is 14 

## now a failure. 15 

## MR. RAWALD: Right--John Hurst-- 14 SEER 16 

## MR. ROCKY: Not just -- it's the 17 

## difference if it is the base unit or just any model 18 

## failure is the question. 19 MR. RAWALD: Right and if you go back to 20 

## our 14 SEER slide. We haven't said that's the 21 

## highest sales volume -- that's the least efficient 22 

## combination so there are possibilities that

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## manufacturer's may have a combination that is less 2 

## efficient than the highest sales volume combination. 3 

## Now John Hurst has told me before that in his 4 

## opinion the least efficient should be the highest 5 

## sales volume because that's the one you are going to 6 

## see the most of because it's the least efficient 7 

## combination but what we would determine, is if through 8 

## testing we have a combination with your condensing 9 

## unit that is now below 14, that's going to be the 10 

## least efficient combination hopefully, or all the 11 

## other ones are really problematic, right folks? 12 

## So -- but that's going to now transgress 13 the line that we have created here so that's based 14 upon how we defined 14 Seer we are seeing all those
15 

## combinations knocked out. Now we can talk about
16 

## whether we feel that's okay but that seems to be the 17 

## way to stay true to our admonition that the least 18 

## efficient combination is the 14 SEER.
19 

## 1 heard the word caucus from Karen so --- 2

## 0 MR. SACHS: This is Harvey and rather than 21 caucus now since we are going to have an interlude of 22 

## a couple weeks, could we just add this to the list of

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### Page 100 1 

## things that need to be resolved? Would that be okay 2 

## Bryan? 3 MR. ROCKY: 

## It is with me I mean we are 4 

## going to have a discussion about it and it may come 5 

## back that it's a non-issue but the verbiage as stated 6 

## is an issue and I need to have some discussion on it 7 

## so and I'm just concerned about it. 8 MR. SACHS: I'm 

## just -- 9 MR. ROCKY: 

## Harvey I'm 

## absolutely fine 10 

## that we put that on the meeting extension issue list 11 

## and hopefully well before then we can have some 12 

## clarification that takes care of it and we don't have 13 

## to discuss it. 14 

### MR. DORIA: 

## This is Jordan, just a minor 15 

## point I think for bullet for the Manufacturer i

## 6 Liability. I think what we are saying is the one other 17 

## piece we want to add is the question of whether or 18 

## not there will be a prohibitive act for manufacturer 19 

## owned distribution. 20 Again just to be clear when it goes to 21 

### ASRAC 

## that's the only reason. 1 22 

### MR. EISNER: 

## Okay anybody got anything

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### else? 2 

### MR. SACHS: 

## If we have the complete list I 3 have one little two minute item that doesn't need to 4 

## be postponed because I think it's just a misprint. 5 

## MR. RAWALD: Before we get to that is 6 

## everybody happy with this list? Does anybody want 7 

## me to add sub-issues so it's clear or all you all 8 

## clear on what's going to be talked about at the next 9 

## meeting? 10 Okay so meeting date can everybody meet 11 

## two weeks from today, the 29th and the 30th of 12 

## October? 13 You are going to send someone else who can
14 

## adequately represent you?

15 

### MR. ROY: 

## The 29th does not work for me, 16 

## there's a DOE public meeting on PTACs and PTHPs, 17 yeah those dates work. 18 MR. DORIA: Do we -- 

## this is Jordan do we 19 

## think it is going to be a two day meeting? 20 MR. EISNER: I 

## thought this week's meeting 21 

## was going to be a one day meeting. 22 MR. RAWALD: With 7 issues it seems as if

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### it is going to be two days, we have to plan for two 2 

### days at this point. 3 MR. DORIA: I can tell. you I cannot do the 4 

### 31st but maybe I can -- 5 

### MR. MELCHI: This is John with HARDI. Would 6 

### the first week of November be more palatable?
7 

### MR. FERNSTROM: So this is Gary, I can't 8 

### make it in October either. But I could in November. 9 

### MS. MEYERS: November 3rd and 4th? Oh 10 

### you can't do that one. 11 

### MR. PORTER: Don't forget I mean we need 12 

### to have something now for people because it's January 13 okay. I'm not saying that I'm saying could we keep
14 

### it as close to this date as possible so that we can 15 

### this done. 16 

### PARTICIPANT: We can't even get to a 17 

### meeting in two hours. 18 

### Mr. PORTER: I'm not saying that. I know 19 

### exactly this is January. 20 

### MR. NOLL: What about October 23rd and 21 

### 24th, that's one week? 22 

### PARTICIPANTS SPEAKING WITHOUT MICS: Next

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## week? 2 Next week -- no. 3 

## What about the 30th? 4 

## Doug? 5 

## We could do tomorrow. 6 

## I can't do it tomorrow. 7 I have a condo and a mattress. There are 8 

## a lot of people that live here we can always buddy 9 

## up. 10 

## MS. MEYERS: So a lot of these issues I'm 11 

## going to have to go back for the meeting extension, I 12 

## really -- tomorrow won't work for me because I need a 13 

## lot of input. 1 4 

## MR. EISNER: More than a 10 minute caucus? 1

## 5 MS. MEYERS: Well I was going to caucus on 16 

## bullet 5 or 6 but... 1

## 7 MR. EISNER: Either we -- I don't know are 1S 

## we going to have trouble getting to consensus? 19 MR. PORTER: I think the fact that we 20 

## delayed here in the next two weeks we need to figure 21 

## out a meeting date one way or the other in the next 22 two weeks so we can get this thing out by January.

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## We get assurance to the industry on inventory issues 2 

## that are out there for the distributor's inventory 3 

## issues are still an issue. 4 

## MR. FERNSTROM: This is Gary. It sounds 5 

## like there are a lot of complicated conflicts so 6 

## maybe we could take it a week at a time and have a 7 

## show of hands of those that can't make it and that 8 

## way we would be pretty quickly able to identify which 9 

## is the most favorable week. 10 MR. RAWALD: Yeah and if there's a Tuesday 11 

## that works for everyone I can call in and I won't be 12 

## here so and I can have someone else from DOE here so 13 

## don't let me stop you from using a Tuesday if Tuesday 14 works for everyone. 15 MR. NOLL: So let's start with the 23rd 16 

## and 24th next week. How many can come? Thursday - 17 Friday next week. 18 MR. EISNER: I have a problem on the 23rd. 19 MR. NOLL: Who cannot come the 23rd and 20 

## 24th? 21 MR. HUNGERFORD: Well the 23rd and 24th 22 

## are a Thursday and Friday.

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## Yeah. So if you were talking about Wednesday and 2 

## Thursday I can't come on the 22nd. 3 MR. NOLL: No I'm 

## actually talking about 4 

## the 23rd and 24th Thursday and Friday. S MR. HUNGERFORD: Well I can't come to any 6 

## of them but I can call in on Thursday and Friday. 7 MR. NOLL: So 1, 

## 2, 3, 4. The 29th is the 8 

## DOE meeting, the PTAC meeting. The 30th and 31st? 9 

## A show of hands who cannot come? 4. Just the 31st? 10 

## MR. ROY: How about the 27th and 28th 11 

## early in the week? Monday and Tuesday? 12 

## MR. HUNGERFORD: I can't participate the 13 27th. 14 

## MR. NOLL: 

## Raise hands for the 27th and 15 28th of those who cannot participate? Post-dated. 16 The 3rd and the 4th? Oh that's a bad one. I cannot. 17 There's a lot that can't do that day

- that's a 18 Thursday and Friday. 19 MR. BALLO: The 6th and 7th I think you 20 

## lose all the efficiency group so you might want to 21 consider that many manufacturers -- 22 MS. MEYERS: I really think we can get

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### this done in one day and I think that we are having a
2 

### lot of problem because I think we are trying to set a 3 two day meeting so you know I think we commit to one
4 

### day, we may be in here at 10 o'clock at night but if we
5 

### could commit to a one-day meeting I mean would 6 

### everyone agree to that? I really think we are going
7 

### to be able to get it done in one day. 

## 8 MR. BALLO: If there's a possibility of 9 

### running long then we might not want to have it at DOE 

## 10 because I think don't you all have to get us at -- 

## 11 MS. MEYERS: 6:00 P.M. I will get a 

## 12 conference room, Rheem will be happy to pay for a 13 

### conference room at a hotel. 

## 14 PARTICIPANT: What if we started earlier 15 

### in the morning? 16 

## MS. MEYERS: If that's allowed. So are
17 

### you suggesting October 30th? Does that seem to

18 

### be--

19 

## PARTICIPANT: What was the day? 

## 20 PARTICIPANT: 30th. 21 

### MS. MEYERS: For a one day meeting? 

## 22 PARTICIPANT: I can do that.

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## PARTICIPANT: I'm sorry how many cannot 2 

## come on -- 3 

## MR. NOLL: October 30th? 4 

## PARTICIPANT: Perfect. 5 

## MR. NOLL: The 23rd? 29th? PTAC 6 

## meeting. The 23rd a week from today raise your hand 7 

## if you cannot attend? One week from today? The 8 

## 23rd a show of hands, it's the best so far. 9 MR. HUNGERFORD: And I will affirm that I 10 

## can attend the 23rd. f,.. 11 

## MR. NOLL: That's 3 cannot. 12 

## PARTICIPANT: What about the 22nd? 13 

## PARTICIPANT: Yeah how about the 22nd DOE 14 meeting 21st? That's the --- 15 MR. FERNSTROM: Let me put in a request 16 for the 23rd since it looked like it had the fewest 17 

## number of people that can't make it. 18 PARTICIPANT: 21st. 19 MR. FERNSTROM: Is Neil a must be here? 20 

## Okay. 21st? I can do the 21st. 21 MS. SHEPHERD: I would prefer not to do it 22 that early because I think the one thing that we can

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## do is maybe draft up some sample language and maybe 2 

## have you know run it past folks that we think might 3 

## have a particular issue to get it prepared for a 4 

## meeting which would make the meeting go a lot faster 5 

## and that doesn't give much turn-around time for that. 6 MR. EISNER: Well, if we think it is one 7 

## day how many people would consider a weekend? We 8 

## might have no conflicts then other than family? 9 MR. FERNSTROM: Let's go back to Steve's 10 question, how many people cannot make it on the 24th? 11 

## Okay I'm seeing one hand raised. 12 

## MR. SACHS: I cannot make it the 24th. 13 MR. FERNSTROM: Harvey so two hands cannot 14 make it on the 24th. Can you send delegates? 15 MR. LATTANZI: Yeah I could possibly send 16 an alternative or actually I might be able to call in 17 that day but it is unlikely I would be here. 18 

## MR. FERNSTROM: I can't make it on the 19 27th. The 24th folks is my birthday. 20 PARTICIPANT: You are turning 75 that day? 21 MR. FERNSTROM: I'll be turning 70 but if 22 

## we don't get this done I'll get older quicker.

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## MS. MEYERS: How about November 5th? 2 MR. FERNSTROM: I can do the 5th. 3 PARTICIPANT: I can't do the 5th either. 4 

## PARTICIPANT: How about the 7th? 5 MR. FERNSTROM: Let's go back to the 24th. 6 

## MR. LATTANZI: I think it's just me and you 7 

## pal so we ought to -- 8 MR. SACHS: Get our act together? 9 MR. LATTANZI: We need to acquiesce. 10 MR. SACHS: I'll be in Dublin on my way to 11 

## Paris. 12 

## MR. FERNSTROM: So Harvey I think we -- 13 MR. SACHS: I'm going to have to get a 14 

## proxy any time between the 23rd and November 10th.

15 

## MR. FERNSTROM: But I think we know pretty 16 well where you stand on this and I think we can 17 

## probably adequately represent you. 18 MR. SACH: You need another dummy to 19 

## vote. 20 

## MR. FERNSTROM: Exactly. 21 

## MR. NOLL: I would like to say Harvey -- 22 MR. SACHS: The 6th and 7th I have got all

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### my meetings so I'm not really available until the
2 

### 10th of November. Don't worry about me. 3 

### MR. FERNSTROM: This is Gary, the 24th is
41 

### going once, it's going twice, it is sold starting at
5 

### 8:00. 6 

### PARTICIPANT: Starting at 8:00. 7 

### MR. RAWALD: 8:00 8 

### MR. FERNSTROM: Well that would -- 9 

### MR. HUNGERFORD: That's 4 AM my time. 10 MR. FERNSTROM: I was going to say that 11 

### would be okay with me, Steve, if you supply the 12 

### coffee. 13 

### MR. EISNER: So October 24th, 8 AM, maybe 7.
14 

### Okay, 8 AM. 15 

### MR. LATTANZI: I'll be on the phone which 16 is fine or I'll have a proxy but that's a Friday good
17 

### luck with you folks booking flights, you are going 18 

### home Saturday morning. 19 

### MR. RAWALD: Is there anything else to
20 

### discuss today? 21 MR. 

### EISNER: I think there is. Harvey 22 

### can you go on your mic, you said you had an issue?

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## Harvey? You said you had an issue you thought you 2 

## could discuss. 3 MR. SACHS: 

## Quickly Doug, this is Harvey 4 

## and this is real easy. The assumption is line 22 5 all residential equipment is installed in residences 6 

## and if we could just change a couple of words it 7 would acknowledge that there is a lot of single faced S 

## small split systems and other in buildings that are 9 

## not residential. 10 So on line 2 just remove the word "home" 11 from "homeowner" and in the third major bullet the
12 

## first line where it says "residence" just change it
13 

### to 

## "building". 14 

### MR. RAWALD: So 

## the word building is 15 

## tricky because we have a concern about multi-unit 16 buildings and so we arrived on residence because we 17 

## wanted it to be one residence. 18 MR. SACHS: I'm prepared for you I have a 19 

## plan B which was location. But that may also assume 20 

## multi-family. 21 MR. RAWALD:

## What we don't want is a guy 22 

## who has installed 25 in a building or a location.

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## MR. SACHS: Location can be read as 2 

## apartment number. 3 MS. MEYERS: 

## Can we take out the words in 4 

## one residence? 5 

### MR. RAWALD:

## And do what? 6 

### MS. MEYERS: 

## If non-compliant installation 7 

## is remediated before DOE makes a finding. I don't 8 

## know why we have the words in -- 9 MR. RAWARDS:

## Because it's a reward, it's 10 a reward for the guy who makes a mistake. So the 11 person makes a one-time mistake, gets no finding of a 1 2 

## violation at all, it's completely non-existent. So 13 

## if the person makes one mistaken, they are able to go 14 

## in there and fix that mistake and there's no finding 15 

## about them and when we close the case there's no 16 

## public record at all. 17 A 

## guy who has installed it in multiple 18 places but fixes it, there's a finding of violation 19 but then the person went out and fixed it. 20 MS. MEYERS: 

## Okay so here's my second. 21 If a singular non-compliant installation is 22 

## remediated before DOE makes a finding?

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## PARTICIPANT: Sold! 2 

## MR. MCCRUDDEN: Well actually on that one 3 

## I think we kept it this way because what if you have 4 

## two systems on one house. 5 

## MR. RAWALD: Yeah, because the question 6 

## came up for the McMansion as John Hurst called them 7 

## so we have 2 or 3 zones and they are all 8 

## non-compliant. 9 MS. MEYERS: Sorry. 10 MR. EISNER: Residence or similar 11 

## structure or? 12 

## MS. SHEPHERD: Harvey can you restate what 13 your concern was? 14 MR. SACHS: This is Harvey. My concern 15 is that a non-trivial number of residential air 16 conditioners are installed in locations that are 17 

## non-residential.

18 

## MS. SHEPHERD: Okay I have a third, how 19 

## about if a non-compliant installation in one 20 installation is remediated, it's not very pretty 21 English but does it get to22 MR. RAWALD: How about one residence or a

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## parenthetical or equivalent? 2 

## MR. SACHS: That's cool. I'm really 3 trying to be easy but I just don't want to exclude. 4 

## MR. RAWALD: That's why we want you here 5 

## Harvey, we don't want you to send an alternate, we 6 like you. And just for the above, we changed 7 "homeowner" to "owner" that's a term we used with the S 

## contractor was end user can we just make it say "end 9 user" here, okay. 10 MR. EISNER: Does anybody object to any of 11 

## these changes? 12 MR. FERNSTROM:

## Thank you Harvey that's a 13 

## really important point. 14 

### MR. 

## EISNER: Okay, Harvey amendment passed 15 

## unanimously. We'll go on, that's all Harvey had it 16 is only 20 to 3 do we want to spend time on some of 17 

## these other issues to make sure we finish this in one 18 day? All right where is the issue slide? Okay 19 which ones should we start with? 20 

## PARTICIPANTS: Yes. 21 Mr. 

## EISNER: All right where's the issue's 22 

## slide.

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## MS. SHEPHERD: I was -- so I think we can 2 

## go back to the slide to get started with on Routine 3 

## Violation. I don't know that we would want to 4 

## necessarily because as I mentioned it is I think 5 

## related to the issue we want to discuss with 6 

## manufacturer owned distribution which I don't think 7 

## we will get to today so I don't know that we 8 

## necessarily would want to vote on it but I think we 9 

## can talk about it and see where we are. 10 So I guess my concern or my question with 11 

## the change that was made is that I don't really see 12 what the burden is for saying that DOE it has to just 13 

## consider it. They can consider it and determine that 14 it doesn't warrant any further action and so they are 15 

## not going to narrow the scope at all or they can 16 

## consider it and decide that it is but I guess that's 17 

## the question that I have as to what the reason would 18 

## be that there would be no reason -- that's not going 19 

## to be clear. 20 

## What the basis would be that DOE would not 21 

## want to consider these factors. 22 MR. RAWALD: Right, so I've given you the

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## DOE response so what you are asking about is centered 2 

## on this first replacement of "shall" with "may" and 3 

## you want me to go back to the Department and say 4 

## listen shall consider basically says that you have 5 

## discretion so why are we trying to make it even more 6 

## seemingly amorphous? 7 

### MS. SHEPHERD: Well 

## no, yes and I think 8 

## it's a valid this that you should consider. I mean 9 

## to say may consider because we don't want to say 1

## 0 shall is saying we don't want to have to consider 11 

## whether or not this is discrete in its location, that 12 just doesn't make sense to me. 13 MR. RAWALD: 

## Okay right and I understand 14 your point so I will bring that back, any other 15 comments on the DOE

## proposed responsive language 16 besides that one word change? 17 MR. EISNER: 

## If we add to the list who is 18 going to do what, Doug is going to check on this on l9 

## this word for example, is that easy for you to do so 20 everybody knows that they have got. 21 MS. SHEPHERD:

## And just for clarification 22 the deletion of business entities, was there a reason

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## of particular concern for that?

MR. RAWALD: Yeah so in my discussions with people the last very short bit that we have had was there was a complete understanding of the idea of the location issue and how that works, the business entity there was less sympathy because it's all the same mother ship and there was less traction for the Department to understand why that would be different.

You gave the example I think that Jordan had provided Ingersoll Rand residential versus commercial which would-be I think what we were getting at here with that as opposed to Ingersoll Rand, St. Louis or Ingersoll Rand, Wyoming so that was easier for me to sell to people that makes a difference so if that was the reaction of the folks I talked to. MS. SHEPHERD: I 

## don't have any other concerns but again I don't necessarily want to vote on this until we have the other discussion but I think barring anything else -- so I think if we could just not leave it open unless anybody has any comment

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## but can kind of consider it done, I think that works. 2 MR. RAWALD: Okay so the request that I am 3 

## taking to the Department is can you turn "may" to 4 

## "shall" or "would" if that is palatable as Steve 5 

## Porter offered as an alternative the Department would 6 

## consider so or shall consider, I don't think it 7 

## matters really but I want to make sure I get it all 8 

## clear. 9 MR. EISNER: Okay nothing else on this 10 slide back to the issue slide. 11 

## MS. NOLL: So I have a quick question. 12 On Slide 23 we added additional language. A party 13 may remediate by replacement of non-compliant or 14 demonstrate to the Department's satisfaction 15 attempted replacement of non-compliant units and this 16 was in an effort to add -- 17 MR. RAWALD: It's to give the Department 18 

## flexibility in a case where somebody has tried their 19 

## best to get something replaced but just can't due to 20 

## the fact that the homeowner or the end user is not 21 allowing them to enter the property and won't allow 22 someone else they are paying to enter the property

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## and just don't want to have anything to do with 2 

## changing the system at this point. 3 

## They are content with what they have and 4 

## the company has tried their hardest and the 5 

## Department could say hey you've done everything you 6 

## could, we are going to go ahead and give you a pass 7 

## here because you did everything else that you needed 8 

## to do. 9 MS. NOLL: Right and then Slide 25 we are I0 adding additional flexibility to consider for the 11 Department to consider the location specific. 12 

## MR. RAWALD: So specific to that company 13 so once again if Ingersoll Rand, St. Louis, I had to f4 

## use Jordan as an example because he put it forward is 15 the one transgressing should Ingersoll Rand, Atlanta 16 be the one dealing with the problem or could we just 17 

## say Ingersoll Rand, St. Louis is the routine
18 

## violator. 19 

## MS. SHEPHERD: So we are adding additional 20 

## flexibility to the routine violator definition in 21 doing so under both of those additions. 22 

## MR. RAWALD: To the scope or the finding

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## of the routine violator and once again it's not a 2 

## requirement, the Department can of course say 3 

## Ingersoll Rand at large but what the manufacturer 4 

## asked was would we consider narrowing that if we 5 

## think it's appropriate given that all the 6 

## transgressions are in one place. 7 

## MS. SHEPHERD: Okay, thank you. Actually 8 

## I had a follow-up question on that slide. I think 9 

## that one thing that we have discussed is that there

10 

## isn't -- as this is drafted right now there won't be 11 any available product to remediate with. I think i® 12 that that's something that we could address through 13 

## the product definition but if not then I would ask 14 

## Doug whether he could perhaps include some language 15 

## or guidance as to what that would look like? 16 We briefly mentioned it yesterday that it 17 

## would be some sort of communication to a manufacturer 18 

## or whoever to tell them that it's okay to sell to 19 

## somebody who is trying to remediate. 20 MR. EISNER: You were going to ask for 21 

## information to match the serial numbers as I recall. 22 

## PARTICIPANT: No, that's different.

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## MR. RAWALD: That's post remediation we 2 

## are going to collect the serial number and go back to 3 

## the manufacturer and say make sure there was no 4 

## actual warranty claim on the one that we replaced so 5 

## the manufacturer feels good that they weren't duped 6 

## into paying further remediation of somebody that 7 

## should be paying for it themselves so Amy's question 8 

## is we don't have it described here the process by 9 

## which someone trying to remediate would get to the 10 

## unit to remediate with. ii 

## And so how would they get to that and so 12 

## that's a very fair question and so what I had 13 described is well they can come to the Department and 14 

## say that hey we are trying to obtain a 14 SEER 15 

## product to go ahead and remediate and then we would 16 facilitate that contact with the manufacturer. We 17 

## haven't described that at all here and how to do that 18 so Amy is asking if we can do that if I understand 19 

## correctly. 20 MS. SHEPHERD: 

## But Chuck just pointed out 21 

## we are on the wrong slide, it would actually be on 22 the Routine Violator slide, but yeah.

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## I MR. EISNER: Could it be handled through 2 

## language that they would simply come to DOE and DOE 3 

## would establish the process by which they were going 4 

## to insure the product was being replaced? You would 5 

## tell the individual what he or she had to do. Is 6 

## that possible? 7 MR. RAWALD: You're asking me? 8 MR. EISNER: Yeah. 9 MR. RAWALD: I thought you said the 10 question was Amy. ii MR. EISNER: No, no I was saying when you 12 have found them to be a violator and they say they 13 want to remediate you need verification that they 14 have in fact used the SEER 14 you are going to let i5 them get to install in lieu of the one they put in
16 

## illegally so can the rule just be written so that as

17 

## part of your action as the enforcer, you tell them
18 

## what they have to do to prove to you that they have 19 

## replaced it. 20 

## MS. SHEPHERD: I didn't hear the question. 21 

## MR. RAWALD: The question is not proof of 22 

## replacement it is how to obtain a unit for

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### replacement. 2 MR. EISNER: Well you give them permission 3 to sell the product. 4 MS. SHEPHERD: I think he's got a point is 5 that it's on both ends right so you are saying ok, 6 somewhere you have to get the product and so they get 7 the product and then are you going to ask them also 9 to say okay, did you actually install it where you 9 said you were as opposed to just getting it I don't 10 know selling it to them. 11 MR. RAWALD: Rights that makes sense. So the 12 question is it sounds like you want me to put 13 

### together some language there to add to this. 14 MS. SHEPHERD: Yes, as I said I think that 15 if we had a different definition of product this 16 could take care of itself because that equipment
17 

### would be out there we wouldn't have to go through all 18 this right, Doug? But in lieu of that then we need
19 

### to have something else. 20 MR. RAWALD: Right so I can work on that 21 for the next meeting. 22 MR. EISNER: All right.

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### PARTICIPANT: You're an optimist. 2 MR. PORTER: Did we agree or do we need to 3 put the language in there about we are going to
4 

### follow the recall process on that, it would be our 5 guideline for whether somebody did the right thing or 6 not? Or had gone through enough processes which is 7 I mailed, I've called, I mean when do you stop. I 8 don't understand the stop on it. 9 MS. SHEPHERD: It's a different issue 10 right? I think he is used to be talking about when 11 you are trying to remediate you are talking about 12 that right? 13 MR. RAWALD: Right, we haven't described
14 

### fulsomely what it would be and I don't mind this 15 group saying well what do we think is required to 16 show the DOE satisfaction that you have done that?
17 

### We have simply given DOE discretion to decide if 18 that's something that ---- and I like having discretion -- 19 but if the group wants to take away my discretion
2

### 0 then the group is at the discretion to do so. 21 MR. EISNER: Okay anything else on this
22 

### issue? I'm going to go back to the Issue Slide.

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## What else -- what would be appropriate to talk about 2 

## next? Should we go to product definition now? 3 MS. DEGITZ: You a -- or 3 day? 4 

## MS. SHEPHERD: Okay so I think we can 5 

## start with the product definition question. So as 6 you all know, we don't agree with the view the 7 

## Department has about the scope of the product 8 

## definition and whether it includes products subject 9 

## to a national standard. I don't think we have to 10 

## get into that because one thing that Doug said is 11 that the Department can determine the scope of its 12 enforcement plan within what it believes its 1

## 3 authority is so I think that's really what we are 14 talking about here. 15 

## And I think that as I have said in other
16 

## meetings you know our view is that the ultimate 17 

## purpose of this rule is to stop the installation of 18 

## non-compliant equipment and promote the installation 19 

## of high-efficiency equipment and we have a concern 20 

## that the way we are drafting this and the way that we 21 

## are going for I guess I'll call it the "ultimate" 22 

## option even though I would view it in its nuclear

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## sense. 2 

## But we will call it the ultimate option. 3 

## So the ultimate option is its' kind of perverse to me 4 

## because its restricting the availability of the very 5 

## equipment that we want to install so we were thinking 6 

## of something to address and issue that Tim and I had 7 

## briefly discussed as well which is this idea that you 8 

## have something in between that ultimate option and 9 

## nothing. . 10 

## And so what we were going to consider was 1 1 

## whether or not there would be a way to say okay if 12 

## you have a routine violation we are going to start 13 

## with a 13 -- a ban on 13 SEER units and if the 14 

## Department found that there was a particulars problem 15 

## or that it was egregious or there was more deterrent 16 

## needed that they could go then to the higher 17 

## efficiency equipment. 18 

## I've not really had much thought about 19 

## exactly what the threshold for that would be but just 20 

## the idea that if you can just fix it, you just fix it 21 

## and if you can't just fix it, then you go to something 22 

## more, so that's the basic premise and then as part of

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## that we also very strongly feel that it should be 2 

## limited to the product that was set forth in our 3 

## ground rules for this negotiation which is the 4 

## products that are subject to the regional standards. 5 

## It's not going to be -- it wouldn't be 6 

## applicable to the national products and I think that 7 

## if you had that two tier system inclusive of all the 8 

## other things that we have in this package, including 9 

## the labeling that the manufacturers are doing, 10 including the 14 SEER guidance, that that is an 11 

## effective plan and I think that we also feel that if 12 

## you know we have talked a little bit about prohibited 13 acts and having a look back. You know we don't have 14 to start with the ultimate option when we don't know 15 

## exactly what we are dealing with. 16 

## If we instituted this, DOE would have the 17 

## flexibility to do that where it thought necessary but 18 it wouldn't have to do that in every single case and 19 

## the key thing here for manufacturers is for a 20 

## distributor that has been found to be a routine 21 violator, they may be a routine violator but if you 22 

## have the ultimate action imposed on them on every

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## time and every case you are impacting the sales of 2 

## the manufacturer to that distributor. 3 The manufacturer did nothing wrong and 4 

## that's the primary concern, so we are trying to -- 5 

## instead of having such a broad scope of the 6 

## enforcement, we are trying to tailor it more so that 7 

## you minimize that impact to parties that have no 8 

## culpability in this but you still are able to enforce 9 

## the rule. 10 MR. EISNER: Any reactions? 11 

## MS. MEYERS: A successful term sheet is 12 

## predicated on the Department's answer. 13 

## MS. NOLL: This is Elizabeth. Just 14 reacting to what Amy said, I think I agree with 15 everything that you said but I would also argue that 16 that's already baked in to some of the language that 17 

## we provided in granting the Department flexibility to 18 consider the scope and flexibility which they 19 

## determine routine violation and -- 20 MS. SHEPHERD: I would actually just say 21 yes let's have them use those same factors for this 22 decision right so, I absolutely agree. So they go

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## through this whole process and they gauge the scope 2 

## and the severity of what has happened and they get to 3 

## the end of the it and they have -- they may be able 4 

## to through the language that we proposed, limit to 5 

## the location but they have one choice. They have 6 

## one choice. 7 

## Regardless of whether they were on the 8 

## fence about it or we should do this or whether it was 9 

## so egregious. You are going to treat that person 10 that was at the lower end of the severity the exact 11 same way as you are going to treat the completely 12 

## willful, knowledgeable, culpable, evil bad actor and 13 

## so that's the problem is they will still have that 14 ability to use the ultimate solution for that bad 15 person but they would have flexibility to adjust for 16 everything in between. 17 And they could rely on the factors that 18 they have already looked at, they already know so it 19 shouldn`t be a significant burden to the Department 20 to make that flexible decision based on the facts 21 

## they already have. 22 

## MR. RAWALD: I do want to clarify

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## something you said that we still have the ability of 2 

## the ultimate solution but you don't want us to have 3 

## the ultimate solution as talked about this morning. 4 

## The ultimate solution in your mind would be no sales 5 

## of split systems or single package. That would be the 6 

## ultimate, so it would be quite the ultimate that we 7 

## have right now is that right? 8 

## MS. MEYERS: That is correct. 9 

## MR. RAWALD: Go ahead Karen. 10 MS. MEYERS: 

## That's probably 75% of the

11 

## market. 12 

### MR. RAWALD:

## No, I'm not -- I'm just 13 

## making sure because we have been using terms here I 14 

## just want to make sure we are being -- everyone 15 

## understands what we are saying. So what I hear in 16 

## Amy's proposal and she mentioned this to me yesterday 17 

## and I thought this through and I want to make sure 18 

## that's how I see it. 19 

## Rather than binary outcome which is now 20 

## either there are violations, or you have now reached 21 

## the threshold of routine violator we can now say 22 

## routine violator who is not egregious versus routine

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## violator, who is a really bad routine violator. 2 

## So adding some more process here in some 3 

## way because now the Department is going to have to 4 

## parcel out how bad the routine violator really is. 5 

## Will that make it easier for us to find routine 6 

## violations in the first place? Maybe or maybe not 7 

## but it does add some more process here so we have the 8 

## routine violator and then we have the really bad 9 

## routine violator, however we want to term that so 10 

## there's two tracks here of routine violation. 11 

## So that's something to consider it's not 12 

## really what the prohibited act as described had, 13 right, the prohibited act says the manufacturer can't 14 sell product to a contractor, dealer or distributor 15 who routinely violates the thing so now I'm adding 16 

## into that through some more level of gradation which 17 

## hasn't been discussed from a legal point of view on

18 

## our part, whether we can do such. Nor has it been 19 

## discussed from a policy point of view whether it's a 20 

## very good idea but I will take the idea back and 21 

## discuss it over the week until next week. 22 The other piece of that is the kind of

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## layer of how do we want to look at product. As I 2 

## mentioned before we can narrow the scope of our 3 

## enforcement authority such that we could say well we 4 

## are going to charge manufacturers for selling our 5 

## products that are actually in these two product 6 

## classes as opposed to the entire seven classes of 7 

## products that I laid out in 430.32(c), so Amy's three 8 

## options as I see them or the three options the two 9 

## that Amy has offered and the third that we have 10 

## offered would be: narrowing the class or product to It 

## just those two product classes that don't meet the 12 

## standard. 13 

## Anything in those two product classes, the 14 

## product classes being split central air conditioner 15 

## and single package and anything under the big heading 16 of product under 430.32(c) so what I could tell you is 17 

## the Department has already told me there is no 18 interest, no interest in the first option. So I 19 

## could possibly go back to the Department with the 20 

## second option and I told this to Amy yesterday which 21 

## is okay let's limit what we are going to charge to 22 

## sell products and manufacturers to is selling those

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## splits in the single package regardless of SEER value 2 

## or EER value to those people that we know are known 3 

## violators. 4 I can go back to the Department with that. 5 

## I can go back to the Department with the first but I 6 

## can tell you what the reaction will be. I have 7 

## already had this conversation twice but I will go -- 8 

## but the second one if the group came to a consensus 9 saying this is what we think makes sense then I could

10 

## bring that back and say this is a very powerful 11 

## incentive and I can do my best to coax people as I 12 

## have done before, make a difference here. 13 If the group comes to a consensus and they 14 

## all think that it should be the first one that's fine 15 

## too, it's going to be a lot harder for me to get the 16 

## traction I think I need but I am kind of just letting 17 

## you read the tea leaves about what I am dealing with 18 

## here. So that's where we are, so I think two 19 

## issues. One, do we as a group want to create two 20 

## tracks of routine violators? And two, where do we 21 

## want to fall out with the term product with those 22 three options as I have described them.

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## MS. SHEPHERD: I actually, Doug I have to 2 

## push back a little bit on this two track idea -- 3 MR. RAWALD: So this is Doug, okay. 4 MS. SHEPHERD: Because you have 5 

## enforcement guidelines right now and you go through 6 

## all of your enforcement guidelines and the bevy of 7 

## things that can happen and you judge the severity of 8 

## it but you don't classify violators now as severe and 9 non-severe or some gradation in between. You are 10 using your discretion to determine the appropriate 11 scope of the enforcement action. I really don't see 12 how this is any different, especially because I would 13 

## suggest that you use the exact same seven, however 14 

## many factors we have, you are going to be sitting on 15 that information anyway. 16 I don't really see how you are going to 17 

## have to go out and get additional information. You 18 will already have it and all we are saying is that 19 

## you address the scope to fit that, particularly given 20 here what you are talking about is restricting 21 

## compliant, efficient equipment in every single case. 22 And then the other thing that I would say

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## is I just want to remind everybody this is not a 2 

## radical departure in terms of the product class 3 

## because when we started this process we had ground 4 

## rules and these are the specific products that we 5 

## said in the ground rule document we were talking 6 

## about. 7 

## And we started this process and we started 8 

## the manufacturer labeling suggestion and idea and we 9 

## started the 14 SEER Guidance all under that

10 

## understanding. And I understand that we got

11 

## additional clarification from the Department as we 12 

## moved through the process that altered that in some 13 

## ways. I'm not saying completely, but I'm just 14 

## saying that I really think that we should stick to 15 

## that original scope when we are talking about the 16 consequences of violations of regional standards. 17 MR. RAWALD: So this is Doug and I do want 18 to tease out this idea on the routine violator. The 19 reason why I see this as creating two different 20 

## tracks is because the manufacturer is going to face 21 two different consequences right so in the 22 non-egregious routine violator they are going to be

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### allowed to sell over 14 SEER Product to the person. 2 

### In the case of the egregious violator they 3 

### are not going to be allowed to sell any of the split
4 

### systems or the single packages as you have presented the 5 

### idea. I have to in my notice to make sure the 6 

### manufacturer knows what they can and can't sell, say 7 

### whether this is going to be an egregious violator or 8 

### not egregious violator so they know what they can and 9 

### can't sell and what they would be facing consequences 10 

### for selling to the person. 11 

### So we are going to have to make an 12 

### election to say they are a routine violator or an 13 egregious routine violator or whatever term we have, 14 

### there's going to be a different track. Now I agree 15 

### that I will have all the information before me but it 16 

### is a different process. I mean, I am going to have to 17 

### make a decision and right now what we are saying is 18 

### we are deciding between violator and routine
1

### 9 violator. 20 Everyone should be aware that there's 21 

### going to be a third bucket. There's going to be 22 

### non-routine violator, a routine violator and an

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## egregious routine violator so there will be another 2 

## track to this and that's of note I think to be aware 3 

## of where we are systematically in order for us to 4 

## accomplish that. 5 

## Because a manufacturer had to be put on 6 

## notice what kind of violator this person is so they 7 

## know what range of products they can sell that 8 

## person. In my opinion, I'm trying to help you guys 9 

## out here to understand what you are dealing with. 10 MS. SHEPHERD: I think that's true, but I 11 

## think that's reality. There aren't just 12 

## non-violators or particularly egregious violators, 13 

## that's why I think this is appropriate because there 14 

## is going to be a range of activity and so that's why 15 I think that's appropriate but I take your point. 16 MR. RAWALD: Right and I'm dealing with a 17 

## statute which told me manufacturers can't sell to 18 

## routine violators so I have to look at the legality 19 

## of that too with my legal folks, we haven't looked at 20 the issue from that way. 21 MR. BALLO: This is Tim, just to give the 22 

## efficiency advocates perspective on this I think we

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1 

## generally agree in principal with AHRI that we would

2 

## like to have some more flexibility built into the

3 

## system to recognize that some routine violators are

4 

## worse than others.

5 

## 1 don't think we necessarily agree that

6 

## DOE's authority encompasses the fines for the sales

7 

## of products that reach the full extent of the 430.32(c)

8 

## definition of central AC. The other thing I just 9 wanted to flag is I don't know we are united on this

10 

## because I think David Hungerford expressed some

11 

## concerns about this approach when we were caucusing 12 

## earlier so I don't know if David wants to speak up

13 

## about this now or just see where it goes and we can 14 

## see next meeting. 15 

## MR. EISNER: David, did you hear Tim's

16 

## question essentially? 17 

## MR. HUNGERFORD: Can you repeat it please? 18 MR. BALLO: David, I was just flagging for

19 

## the group that you had expressed some concerns

20 

## earlier today about the possibility of changing the 21 

## scope of the products for which a manufacturer could Z

22 

## be penalized from selling to a routine violator to

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## something less than everything that is encompassed } 2 

## within the term central air conditioner in the term 3 

## in the CFR. 4 

## Now I didn't know if you, having heard 5 

## AHRI's proposal, if you still had concerns about 6 

## restricting the scope of what DOE would be penalizing 7 

## in at least some circumstances. 8 MR. HUNGERFORD: I think the current 9 

## language that I am seeing on the screen looks okay. 10 I mean the punishment is for the action not the 11 

## product itself and the action is violating a standard 12 and so the punishment should be to the organization 13 and it should -- the violation should be identified 14 

## as such for potential punishment. I'm inclined to 15 

## say that the action has a big consequence and that's 16 where I prefer to land in order to prevent the 17 violator to make it serious enough to make it 18 everyone, including the good actors -- including the 19 

## bad actors rather -- make sure that they don't 20 

## violate it but I guess I'm willing to sit back on 21 

## that a little bit and say because we are talking 22 about central air conditioner standards that we can

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## keep it there and not include heat pumps and water 2 

## heaters or whatever. 3 MR. RAWALD: 

## Right, and it would only be 4 

## heat pumps the thing that we are talking about and if 5 

## we are carving out the heat pumps then I think the 6 

## space constrained was the other option there 430.32(c) 7 

## so Tim, what's that? 8 PARTICIPANT: 

## High velocity. 9 MR. RAWALD: High velocity. 10 

## MS. MEYERS: And rooftop units. 11 

## MR. RAWALD: Okay so -- 12 MR. RAWALD: Okay so Tim what I want to 13 

## hear from the advocates perspective is do you think 14 

## it would be enough of a stick if it were just option 15 A as I described. You can't sell them anything that 16 would be a non-compliant unit in the region or do you 17 want it to be all space constrained or not all, 18 

## excuse me, single packaged and split systems? 19 MR. BALLO: My view is in some 20 

## circumstances it may be the case that prohibiting 21 only the sale of 13 SEER units is an adequate penalty 22 

## for the degree of evil that has been exhibited by the

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## routine violator and in some circumstances there may 2 

## be some you know, nasty conspiracy schemes out there 3 

## that in my wanton disregard for the regulations that 4 

## make it equitable for that entity not to receive any 5 

## product, whether it's a heat pump, space constrained, 6 

## small duct, high velocity, whatever it is encompassed 7 

## with a central air conditioner. 8 I'd want DOE to have that flexibility to 9 

## go from the least painful to you know -- we don't use 10 the term nuclear anymore but the most severe 11 consequences. 12 MR. RAWALD: So Tim would you be 13 describing three different options? 1 4 

## MR. BALLO: I don't necessarily view this 15 

## as you get one then you get to the other then you get 16 

## to the third, it's I think the punishment needs to 17 

## fit the crime and -- 18 

## MR. RAWALD: Right but do you only have 19 

## three different levels of responses? You can't sell 20 

## them below 14, you can't sell them splits and single 21 

## package or you can't sell them anything that would be 22 

## a central air conditioner under 430.32(c)?

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## 1 MR. BALLO: I would support all three. 2 MR. RAWALD: Okay. 3 MR. PORTER: Steve Porter. You are going 4 

## to check for the legality of this, right? They have 5 

## and do you feel that -- Doug have you checked out I 6 

## mean you can literally if they don't the violation -- 7 

## the product that is in violation or doesn't meet code 8 

## to be the only product you cut off you think that 9 

## legally you can stop selling them every HVAC piece of 10 

## equipment? 11 MR. RAWALD: So let's -- what we have 12 

## discussed and this is so it is understood. So the 13 context is what does the term product mean in as far 14 as what can a manufacturer pay civil penalties for 15 

## selling to somebody who is a routine violator and 16 

## looking at that question the term product as used in 17 the statute we have determined to be -- the way we 1

## 8 view the term product across the board in all of our 19



## -- consistent with how we do it to be the product as 20 

## defined in the statute the CFR which includes all the 21 product classes of a central air conditioner and heat 22 pump as defined in 430.32(c) which are 7 product

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## classes. 2 

## So it goes beyond just the two product 3 

## classes we are discussing here, which are split system 4 

## central air conditioners and single package central 5 

## air conditioners, so we do feel comfortable with that 6 

## legal interpretation. Now as I have described, I can 7 

## go back to the Department and push them to try and 8 

## narrow the discretion which we would actually enforce 9 

## the penalties for folks who are selling products that 10 we otherwise would deem to be part of that category
11 

## to just the narrow categories as Amy has described
12 

## them or the most narrow category and so I will try to
13 

## do that based upon the feedback of this group. 14 MR. BALLO: To 

## me, it doesn't seem that 15 

## different from you know, your normal civil penalty 16 authority is $200.00 you don't charge every violator 17 

## $200.00. You might do $100.00 for some you might do 18 

## $50.00 for others. 19 MR. RAWALD: Right, no I 

## do get that so 20 

## the difference here is not in what civil penalties we

21 

## are going to charge the manufacturer because I think 22 

## there will be difference cases where we charge the

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## manufacturer different amounts based on a lot of 2 

## factual scenarios. The question is making sure the 3 

## manufacturer is adequately put on notice as to what 4 

## kind of person they are dealing with so they would 5 

## know in a situation as Amy described what products 6 

## they could sell to the person without fear of having 7 DOE assess any civil penalties against them. 8 MS. MEYERS: This is Karen with Rheem and 9 to pull my opinion is that to pull products into the 10 scope of the enforcement of air conditioning products tl subject to regional standards that are not part of 12 

## that scope doesn't make any sense to me. The 13 manufacturers have given a lot during this 14 

## negotiation. We have got the 14 SEER definition -- 15 

## that makes it almost impossible. We are putting a 16 

## label on the unit and now to penalize us because 17 

## somebody was a routine violator and we can't sell 18 

## them products that meet a national standard and it's 19 

## part of this enforcement of regional standards, I'm 20 sorry that is way beyond what was my understanding of 21 

## the intent of this negotiated rule-making. 22 

## We are now talking about heat pumps and

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## split and packaged heat pumps and gas electric units 2 

## and small duct high velocity units, you are going to penalize the sale of those units and they are not 4 

## even included, they don't even have a regional 5 

## standard applicable to them. That is you know, that 6 

## is just insane, that is absolutely -- what? MR. MCCRUDDEN: 

## It's ridiculous. 8 MS. MEYERS: 

## It's ridiculous, it is, it is 9 

## ridiculous because it should not even be included in 10 the scope of these discussions, they are beyond what 11 

## we are trying to enforce and you know that I think if 12 

## we had understood that from day 1, you know, to me if 13 that is the way that it is going to be then 14 everything is going to be back on the table. 15 MR. GIBBONS:

## And this is John from 16 Carrier, we agree with Karen. 17 MR. FERNSTROM: So this is Gary. You

18 

## know we talked this morning about the structure of

19 

## penalties as it relates to encouraging compliant 20 

## behavior and the penalties that we are talking about 21 

## here are for bad behavior are not against the 22 

## equipment, they are against the entity that exercised

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## the bad behavior. 2 

## So we can't charge $200.00 because we 3 

## don't want this to be a prohibited act. It sounds 4 

## like Monopoly to me you can pass Go you 

## don't have to 5 pay $200.00 and we don't want a penalty so severe as 6 

## to put this business 

## out of business either. You 7 

## know what are we left with? It's going to be hard 8 

## to find these violators in the first place because 9 it's 

## kind of all based on reports from the field of 10 

## violation which I don't have a lot of confidence in. 11 

## When we find them we've got to show that 12 

## they are routine violators and they were knowing 13 violators 

## and then there's a whole bunch of 14 

## limitations on what can be done. I don't agree with 15 

## your interpretation of this severe penalty is 16 penalizing the equipment or energy efficiency at all. 17 

### I 

## see it as a penalty against the entity that has 18 been a routine and knowing violator. 1

## 9 MS. MEYERS: So Gary, this is Karen. To 20 respond to that it does penalize me because no I have 21 

## lost sales on 

## products that are not part of this 22 

## enforcement. So not only me, but every manufacturer

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## in the room can no longer sell to that entity that 2 

## might have put in 3 13 SEER units incorrectly. We 3 

## can't sell them any residential HVAC units. 4 MR. FERNSTROM: 

## Okay, Karen. 5 

### MS. MEYERS: So 

## that hurts me, 6 

## particularly if it happens to be a distributor that 7 

## is found to be routine or a really large 8 

## dealer/contractor. 9 MR. FERNSTROM: 

## Okay Karen, so I don't

10 

## disagree that the manufacturer ought not to be 11 

## penalized for the bad behavior of distributors. I 12 agree with you on that point but my presumption is if

13 

## you lose this bad behaving distributor, you just as 14 well be rid of them and find yourself another 15 distributor so in the long-run your sales aren't 16 going to be damaged, they might in fact be improved 17 

## by somebody that's behaving better. 18 In the short-run, yeah I agree with you, 19 

## your sales will be affected but that's not an entity 20 

## that you ought to want to be doing business with 21 

## anyway, regardless of what the products are. 22 MR. GIBBONS: 

## Gary this is John, these

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## distributors, I'm trying to be polite here, they just 2 

## don't grow on trees. They are not prevalent as much 3 

## as people may think you can say well it might lend 4 

## itself for an opportunity for somebody else but they 5 

## are pretty much all contractually obligated to buy 6 

## from an individual manufacturer so it kind of limits 7 

## our ability to continue to sell in there if we have 8 

## to shut somebody down substantially in some cases. 9 

## So it's just a very, very punitive act. 10 MR. FERNSTROM: 

## Okay, John so I understand 11 that. You know you have contractual arrangements 12 with distributors in certain areas and if you lose a 13 distributor you are not just going to go to another 14 distributor because they have got a contractual 4' 15 arrangement with somebody else. But you know, I 16 would like to suggest that if Carrier lost their 17 distributor in the San Francisco Bay area, probably 18 

## someone else would step in to fill the gap. 19 MR. RAWALD: So the concern is, let's just 20 

## look at this from a very basic level. The option 21 

## that's been offered, the most basic easy option is 22 

## you can't sell the person who is only a routine

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## violator products by which their installation would 2 

## be a violation. Well if I'm a contractor operating 3 

## in California and I'm only supposed to be installing 4 

## things that are compliant and I manage to install 5 

## stuff that is non-compliant and now I'm told all I'm 6 

## going to get is compliant product, what really have I 7 

## risked? I risked nothing. 8 

## And the punishment is I get to keep doing 9 

## what I am supposed to be doing in the first place so 10 

## I stuck my neck out, I profited and now I'm told by 11 

## DOE all you can buy in the future is compliant 12 

## product. How is that a sanction at all? There is no 13 sanction there and there's no incentive to remediate 14 

## because why would I fix the bad ones because I'm 15 

## still going to be able to get good ones and sell them 16 to my customers. 17 

## So you have got to look at it from that 18 

## point of view. What is the actual penalty at all if 19 

## that's the solution? 20 

## MR. SHEPHERD: Doug, there's no limitation 21 

## on DOE not to say there's something more. Yeah I 22 mean we are not saying DOE is prohibited and only can

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## offer 13 that's just an option you have so I mean and 2 

## yes I think that there are -- there is sort of the 3 

## issue of the gradation and then there's the question 4 

## of whether that the top ultimate solution has the 5 

## non-regional standard product in it. 6 But in terms of just an option, if you 7 

## look at that person and you think they are like yeah 8 whatever I'm not troubled by your enforcement action 9 

## then you have some leverage there still with the 10 tiered or a judgmental option. Nothing is being 11 taken away. 12 MR. BALLO: This is Tim and I think where 13 I vision the prohibition on 13's being effective 14 

## would be for that distributor or contractor, who 15 

## operates in the border region essentially take away 16 half his business. 17 

## MR. RAWALD: I'm really curious to hear 18 

## from Chuck and Charlie. 1

## 9 MR. MCCRUDDEN: This is Charlie. And Tim 20 

## said one thing I would say and again what you said 21 

## before you've got to find a violation to get to a 22 

## routine violation so the contractor you described

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## there has committed a violation and you know either 2 

## takes the violator status by not remediating and if 3 

## it's the lone one well I guess that's one situation. 4 

## But again we go back to the point where 5 

## they are going to rise to, and this is for the 6 

## contractors, they are going to rise to that routine 7 

## violator situation right away. Then they have got 8 

## the other off-ramps that they have. They could 9 

## remediate to give them something off that routine 10 violator list and then there is all that I -- I did a 11 little flow chart last night and there's all the 12 

## permutation with the 3 day and what they can sell. 13 

## Their other option is to not get 14 

## themselves off the routine violator list and now

15 

## nobody can sell to them and that is the ultimate 16 

## solution case that I want to see, you know. So again 17 

## T keep stressing, I still think there are 18 

## intermediate sort of penalties that, you know, on 19 

## remediation and potentially on not being able to be 20 

## sold to as being deemed a routine violator. 21 

## MR. RAWALD: So it sounds to me like you 22 

## would not support the premise that the product be

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## I limited only to non-compliant product because -- 2 MR. MCCRUDDEN: No, I'm not foreclosing on 3 

## that because I get this gradation argument which is 4 

## you know you have authority to consider or look at 5 

## financial penalties right now and you do. I mean, 6 

## I've seen your enforcement actions, some people you 7 

## charge this, some people you charge that, and it just $ seems to me that that should be open to you now and 9 

## it's the ultimate fairness of you know, being not 10 allowed to buy the 7 products just is arbitrary and 11 

## really ridiculous. 12 

## MR. RAWALD: Listen you guys, it's not 13 arbitrary. It's consistent to what we have done 14 across the board. I understand why everyone is 15 upset about it, I do and I mentioned it two weeks ago 16 now so everyone could know where we are. I 17 

## understand that. It's not ridiculous and I'm afraid 18 if we went to court they would say it's a reasonable
19 

## interpretation under Chevron. 20 So I understand why it's offensive to you 21 in a lot of ways and you can use whatever terms you 22 

## like, but it is the Department's reasonable

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### 16, 2014 Page 153 1 

## interpretation of legal authority from Congress and 2 

## the words come from Congress so I'm going to -- but I 3 

## don't want to dwell on that. What I really want to 4 

## focus on is what is the actual effect if I tell a 5 

## manufacturer you are a routine violator or dealer or 6 

## a contractor, you are a routine violator and so you 7 

## can't buy any more non-compliant product? 8 What is their incentive to remediate? 9 

## Why would they remediate? Why would they ever 10 

## remediate if the fact of the matter is the only

11 

## outcome is I can no longer buy non-compliant product. 12 MS. 

## SHEPHERD: That's not why the only 13 outcome, why do you keep saying that? You have the i4 

## option if you look at that, if you choose to -- if 15 

## you are like -- you see these violations and you are 16 like none of them are just kind of a mistake or 17 

## whatever if they missed Charlie's off-ramps whatever, 18 

## if you don't want to use this you don't have to. 19 You can do it so I don't understand why you keep 20 

## going back to that argument that like nothing is 21 

## going to happen. 22 

## If that's the way you feel and if you

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## start this and you find that okay well we'll see by 2 

## starting with 13 just banning 13 and nobody cares and 3 

## you have a bunch of violations you can ramp it up or 4 

## you can start with it ramped up, so that's I guess 5 

## what is to me I just don't see the Department's issue 6 

## with having more flexibility or taking nothing off 7 

## the top end but kind of we have to leave that other 8 

## piece aside but if --- assuming that we are just 9 

## talking about this product, just having this JO flexibility I just don't understand how that takes 11 away from what you have. 12 MS. MEYERS: And here's another 13 perspective and I have to admit I'm mainly looking at 14 

## it as if an independent or a factory-owned 15 

## distributor is found to be a violator then that means
16 

## that that distributor can no longer even buy. 17 

## Manufacturers can no longer sell him heat pumps, why? I8 

## Why can't we sell him heat pumps? It wasn't even 19 

## you know, they can't be in violation so you know I 20 

## mean -- I think it's different when you kind of look 21 

## at it from a much broader level. 22 

## So if I have a branch in St. Louis and I'm

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## the one that's going to get the fine so you know, so 2 

## why can't Rheem or Carrier or Lennox whoever, sell 3 

## this distributor heat pumps? 4 

### MR. LATTANZI: 

## I'd like to chime in real 5 

## quick, okay. Well I wanted to address Doug's comment 6 

## about a lack of incentive to remediate. I believe 7 

## if you are a distributor on a border state and you 8 

## take away 13 SEER for example, you could be taking 9 away a significant portion of a distributor's
10 

## business. 11 

## And I think there is an incentive to 12 

## remediate. Same thing for a contractor -- if we 13 

## believe the likelihood of violations is on the 14 

## border-states, which I do to a large degree they are 15 

## going to want that equipment and taking it away puts 16 them at a significant competitive disadvantage in the 17 

## marketplace. 18 MR. HURST: I would also add, John Hurst 19 from Lennox, I would also add that we discussed the 20 

## distribution networks where we have 13 SEER Product 21 

## going into the South to be redistributed. I would 22 

## presume that if this happens we would no longer be

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## able to ship that product to that location and we 2 

## would have to rewire our distribution network if that 3 

## particular distribution facility shut off. 4 Now to your earlier point on the rogue 5 

## dealer in California, you do have other things you 6 

## can do. 7 

## MR. ROCKY: This is Bryan. Thank you for 8 

## the opportunity to finally say something. So I 9 

## think Doug as we are going back on this, the
10 

## difference on the non-complying verses complying 11 

## product was really about the border-states and I 12 

## think it's well defined. Someone who can sell both 13 sells the 13 where they shouldn't, you cut them off 14 

## that is going to be a significant penalty. 15 If you are talking about someone who is 16 

## only selling 14 SEER and above we are not saying you 17 

## know that you can't sell them 13 because you are not 18 

## going to sell them 13 but maybe then there's a 19 

## definition point that says you can't sell them 14 20 

## SEER Product in Texas because they are a violator 21 

## under these rules and they have been importing 22 

## product so maybe there's a definition that says all

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## right we can only sell you 16 SEER Product until you 2 

## remediate and get yourself off the violation 3 

## whatever. 4 

## The point I started -- want to make 5 

## initially was I'm going to come back to the analogy 6 

## of speeding tickets. It's against the law to speed. 7 

## Whatever enforcement agency is going to give you 8 

## that ticket, they have the opportunity to do several 9 

## different things, up to and including taking away 10 

## your license and throwing your butt in jail. 11 

## I just want to make sure that you have 12 

## that same ability and flexibility to write a warning 13 

## ticket, give a fine, take a license, or throw 14 

## somebody in jail. So I think that's the discussion 15 

## of the graduated penalty or progressive penalty 16 

## discussion. It doesn't mean you can't do the worst 17 

## to all but you have the ability to do something in 18 

## between, I think that's where we are headed with the 19 

## discussion on prohibiting a sale of certain product 20 

## categories or materials to a contractor or 21 

## distributor. 22 

## MR. RAWALD: Bryan, I think that you may

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## I want to go and talk to Tim because I think he was 2 

## trying to achieve that by adding prohibited acts to 3 

## the situation. 4 MR. FERNSTROM: Yeah, this is Gary, that's 5 

## the very thing we were after was a progression. 6 PARTICIPANT: Nice job, Doug. 7 MR. FERNSTROM: More severe consequences 8 

## but somehow the prohibited act, the $200 penalty is 9 off the table as one of those steps. So that being 10 

## the case, I'm not inclined to want to lessen my 11 

## support for the most severe penalty which is putting 12 

## the distributor out of business. If the offense is 13 so routine and so knowing and so egregious that that 14 penalty is deemed to be merited by DOE. 15 PARTICIPANT: The state of California. 16 MR. HURST: What's that? Go ahead Steve, 17 Bryan, I'm sorry I didn't see it earlier if I stepped 18 

## on you. 19 PARTICIPANT: So why not have the penalty 20 

## put him out of business, why not it just be that if 21 

## that what effectively it does and then you don't 22 

## have the delineation of product, just put them out of

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## business. 2 

## MR. FERNSTROM: If we re-termed it such 3 

## that that was the consequence, the harm to the 4 

## manufacturer that Karen was concerned about still 5 

## occurs. You know, right? 6 

## MS. MEYERS: I'm going to go back to the 7 

## point that we should not be the enforcement plan 8 

## should only apply to products subject to regional 9 

## standards. I am open to whether it's just 13 or all 10 split systems and packaged AC whatever the efficiency 11 

## level. I think that's cutting off your nose to 12 

## spite your face type of action because I don't know 13 

## why we wouldn't want to sell somebody who routinely 14 violates and has been found to be a routine violator 15 16 SEER equipment, to me that seems to be in 16 everyone's best interest. 17 

## We are getting a higher efficiency. It's 18 

## the only thing they can buy so it's the only thing 19 they are going to sell that seems to be part of the 20 

## goals that we want to achieve, you know, but if that 21 

## is what it takes to get an agreement, I mean I'll 22 

## consider it. I don't think it's very smart. And

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## it seems to be counter-productive to what you know we 2 

## all do through the DOE rule-making process but I you 3 

## know, to not be able to sell somebody a 5 ton rooftop 4 

## that is not subject to regional standards because he 5 

## installed a 13 SEER split system unit you know, 6 

## should not be part of the scope of these discussions 7 

## and that was in our ground rules and that's what we 8 

## agreed on and that's why distributors came up with 9 

## the label and why we insisted on the 14 SEER 10 

## definition that's going to make it very difficult to 11 

## even have any violations in this rule because it's 12 

## going to be so tightly controlled. 13 But at this point you know you are telling 14 me that I can't sell my distributor that may buy 5 15 million dollars-worth of equipment from me, anything. 16 I am going to lose 5 million dollars-worth of sales 17 

## to this distributor because he routinely violated on 18 

## 3 or 4 13 SEER installations. This is going beyond 19 

## I think what I thought we were going to be getting 20 

## into in these negotiations. 21 MR. RAWALD: Harvey, real quick if I could 22 

## point out two things, one is that I don't know enough

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## about this equipment to say what a five ton rooftop 2 

## is -- is that a 430.32(c) residential central air 3 

## conditioner because that's not a term I'm 4 

## familiar with. 5 

## So the second, you could always say to 6 

## your distributor, hey I don't want to cut you off can 7 

## you fix those three units and replace them with 8 

## product that is compliant please and they do it and 9 

## then you can sell to them again, so why is that not 10 

## the option you guys would want? Wouldn't you want 11 

## to have your company that you deal with and you love 12 

## so much and you want to keep selling do the right 13 

## thing by the customer, replace the product they put 14 

## in wrong and everyone is happy and energy efficiency 15 

## is achieved and the world is a better place, why is 16 that a problem? 17 

## MS. SHEPHERD: Because you can't force 18 

## them to do it, it's another partner with their own 1

## 9 independent will and sorry this is Amy Shepherd and 20 

## this is the fundamental problem I think is that you 21 

## are talking about good -- you are talking about 22 

## people who did not do anything culpable, the

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## manufacturers and then you are saying well you know 2 

## you just go force them to be good people and then you 3 

## won't lose your sales and that's I think the 4 

## fundamental unfairness. 5 

## I mean yeah you could encourage them but 6 

## if they are not going to do it then because the way 7 

## the rule would be structured that's it. 8 MR. RAWALD: Listen guys we can't have it 9 

## all ways. Congress put the prohibited act on the 10 manufacturers. I heard from Steve Porter before 11 

## earlier in these meetings that he wants the 12 

## manufacturers to control compliance, now I hear the 13 manufacturers say through Aniruddh Roy we don't want 14 

## to be responsible for insuring compliance. Hold on 15 a second, Amy I want to finish this point because to 16 me and my mind is blown right now. 17 

## I'm sitting here thinking the way to make 18 sure the folks are doing the right thing is by the 19 

## manufacturer saying do the right thing or we won't 20 sell to you, how is that bad for the environment? 21 

## For the energy efficiency that we are trying to 22 

## achieve -- I am confused by that notion.

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## S. SHEPHERD: Because you are not talking 2 

## about the equipment that violates the standard. You 3 

## are talking about one equipment that is highly 4 

## efficient so it has nothing to do with any violation 5 

## they had. If they were selling that highly 6 

## efficient equipment they wouldn't have had a 7 

## violation so you are not talking about the problem 8 

## equipment and secondly you are talking about 9 

## something that is subject to a national scope. 10 And manufacturers do have liability if 11 they know that they are violating and they sell and 12 

## they have their penalties and they will be cut off 13 

## from that equipment. But what I guess also I don't 14 

## understand is the whole purpose of these rules, the 15 

## whole purpose of higher standards is to get higher
16 

## efficiency equipment out in the market and have 17 

## people install it and we are creating an enforcement 18 

## rule that does the opposite of that and is hoping 19 

## that maybe if we have huge bad examples, then 20 everyone will stop selling the 13 but just the way it 21 

## is drafted now, there's no scope for any adjustment. 22 MR. SACHS: Let me jump in. Hearing the

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## passion, this is Harvey -- on all parties and I of 2 

## course never showed passion about anything so I can 3 

## recognize it. I want to go back to an early point 4 

## that Karen made and that is I'm not at all sure that 5 

# there is round the table a very full understanding of 6 

## product in the sense the DOE feels that it's encoded 7 

## as opposed to the subset of these regional products. 8 And the reason I want to come back to that 9 

## sort of heuristically or pedagogically or whatever it 10 is to think about it from a contractor's perspective 11 

## of substitutability that if I can't sell any split 12 system or packaged air conditioner, what is it I can 13 push on my customer so I'm still making money instead 14 

## of losing the sale? 15 

## MR. PORTER: Keep the old unit alive 16 longer. 17 MR. SACHS: Okay. Keep the old unit 18 alive. I certainly am going to have a hard time 19 

## pushing that customer over to a small diameter high 20 

## velocity unit. If he's got a duct system in his 21 

## basement or in his attic, I'm going to have a hard 22 

## time pushing him over to a package system that wants

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## to be installed on the roof. It's possible to put 2 

## in the side yard and look ugly but what I'm trying to 3 

## get at is if I really only control the regional, what 4 

## are the potential loopholes that a contractor in this 5 

## case could still use to make the sale and continue on 6 

## his merry way. 7 Because I can think about some of the 8 

## things he couldn't push that customer to but let's 9 

## really think about it in terms of contractor 10 

## economics. 11 

## MR. PORTER: This is Steve Porter. So if 12 I'm a distributor in the North border region or not 13 on a border region and I have 13 SEER Equipment and 14 

## you cut me off on the 13 SEER Equipment, that's a 15 

## really huge hit, right? I mean because in that 16 market I can sell that all legally so if you decide 17 

## because I've sold it illegally a number of times or 18 supported a bad actor for a number of times 19 

## routinely, I get just cut off on that, that's 20 devastating since that's a lion's share of the 21 

## market. 22 If I'm in the South and I'm selling 13

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## SEER Equipment illegally down into the South, I would 2 

## be cut off on that equipment, and I might not be able 3 

## to purchase that equipment so I would no longer be 4 

## able to perform that act and especially if I had sold 5 

## into the North and I was in a border region I could 6 

## be impacted greatly so either way you get the result 7 

## that you want by just cutting them off on the illegal 8 

## product. 9 MR. RAWALD: 

## Well in the second scenario 1

## 0 what is the incentive of the Southern contractor to 11 

## remediate the bad installs? 12 

## MR. PORTER: What is that for the 13 

## contractor remediate if he is on the list right? 14 MR. RAWALD: 

## If he's down South? 15 MR. PORTER: Right. 16 MR. 

## RAWALD: And he's installed product 17 

## non-compliant and he no longer can -- 18 MR. PORTER: And he's on the list and so 19 

## nobody else can sell him right? 20 MR. RAWALD:

## Assuming this scenario is you 21 can't sell him non-compliant product anymore, what is 22 

## his incentive to remediate the non-complying

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## installations? 2 

## MR. PORTER: That he would still be on the 3 

## list as a bad actor that can mean it's against him in 4 

## the marketplace by every other contractor. 5 

## MR. RAWALD: The consequence is he can't 6 

## get non-complaint product, he can still get compliant 7 

## product with the region. Why would he care that S 

## he's on the list? 9 

## MR. PORTER: And going down Harvey's road
10 

## which is what do you want him out there doing then? 11 

## Do you want him to continue to figure out a way 12 

## around that problem or do you want him to continue to 13 

## service equipment that is old that should be replaced 14 

## but he can't access legal high-efficiency product to
15 

## install and he keeps older units alive longer and the 16 

## homeowner gets what kind of benefit out of that? 17 

## MR. RAWALD: Right, you've answered my 18 

## question with a question but what I have heard from 19 the advocates is the big issue for them is 20 remediation and I agree from the Department's point 21 

## of view remediation is actually good because it helps 22 

## with the quads of energy savings which is the goal of

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## the rule and if the stick that I'm wielding against 2 

## the contractor down South is you no longer will. get 3 

## the product that you shouldn't have been getting in 4 

## the first place, what is their incentive to go back 5 

## and fix the installations that were bad? Is there 6 

## any incentive at all or are they going to say well 7 

## that's a wash. I made some money so now I'm going 8 

## to do the right thing. 9 

## PARTICIANT: I think that Doug, that 10 incentive if I've sold as a distributor right I'm 11 going to get my 13 SEER cut off as well right? 12 

## MR. RAWALD: That's not necessarily true, 13 

## to get to the distributor is harder right, so the 2 14 

## distributor has to either be shown to actually been 15 

## knowingly involved with the contractor so they have 16 to be part of this in some way or they have to have 17 

## been told, hey that person is routinely someone they 18 

## shouldn't sell to and they keep selling to these 19 

## people that are routine violators. 20 PARTICIPANT: Doesn't that build up the 21 routine for both the distributor and the manufacturer 22 

## should it happen again so I think you are missing the

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## point which I think where Karen's at -- you will 2 

## figure a way to remediate that issue for those 3 

## home-owners. I mean we wouldn't wait around because 4 

## doesn't that just build into your bank of issues? 5 

## MR. RAWALD: I don't see it as the 6 

## distributor's issue and I don't see why the 7 

## distributor would put money on the line for the 8 

## contractor who they are not going to deal with 9 

## anymore if that's the option. Why would you go out 10 and fix the contractor's installs if you weren't 11 

## responsible for them? 12 

## So my question really is for the down 13 South contractor who the penalty is you can no longer 14 get what you shouldn't have been getting in the first 15 place, what is his incentive to remediate and I'm not 16 

## hearing your response. Is there incentive for him 17 

## to remediate? 18 MS. NOLL: This is Elizabeth. I guess I 19 

## would like to just reiterate a point that Tim made 20 earlier I think that you know it sounds to me like 21 

## some of the examples that we have discussed here 22 flexibility is important because it actually sounds

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## like in the border states where you sell both to 2 

## North and South, being able to acquire 13 is 3 

## important so you would be more incentivized in that 4 

## area to remediate to get to be able to sell 13 again 5 

## but I do think on the other end of it where to John's 6 given point that you know -- we are talking about 7 

## wanton disregard for the law and somebody that 8 

## actually putting -- restricting them so severely is 9 

## the best course that that actually is still -- needs 10 to be a path the Department could pursue. 11 And I think that you know the task that we 12 have all been tasked with is to develop an effective 13 

## enforcement plan for enforcing central air
14 

## conditioning package systems and if that means 15 

## cutting them off from all product is the only way to
16 

## effectively enforce this rule, then that is how you 17 

## get at cutting them off from all product from that 18 

## product class. 19 

## It's not that it's not subject to regional 20 

## standard, it's an effective enforcement plan, it is 21 

## necessary to be able to wield that tool should it 22 ever become required and let's hope that that never

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## is the case. Because that's what I've heard from 2 

## everybody here in all of our conversation is that 3 

## will never be the case because we are all good actors 4 

## and we are all going to do the right thing. 5 

## MR. WHITE: This is Chuck White. So what 6 

## do you get when you put lipstick on a pig? You get 7 

## a pig. There's no real good solution but I would S 

## suggest considering a contractor has done the wrong 9 

## thing. He's been found out he's got to do 10 

## something. I want to remediate because I want to 11 

## stay in business so could the DOE say your penalty 12 

## for 30 days, 60 days, 15 minutes, whatever you want 13 you could only buy SEER 14 equipment that solves this 14 

## I got to go get permission, I'm allowing you to buy 15 

## the 14 equipment for X amount of time provided you
16 

## make this remediation and you, you know, get on 17 

## board, swear an oath, keep doing the right thing, 18 

## we're good. 19 

## If you don't remediate then we step up. 20 

## Now you can't buy split systems and I know there are 21 

## areas in the country where they don't sell a lot of 22 

## split systems but I don't think there's many and most

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## contractors if you take away split systems, that's a 2 

## crippling portion of their business. 3 

## And then we still won't go with it, now 4 

## you cut them off from everything. So I don't know I 5 

## have some other thoughts but I am not really gelled 6 

## on them completely. Are there loopholes? Sure, 7 

## probably but the easiest thing for a contractor to 8 

## do, there's two scenarios. They come out we have a 9 

## problem I'm going to fix your unit. I can't buy

10 

## equipment I can fix your unit for X. Well Mr. or 11 

## Mrs. Homeowner is going to get on the phone and call 12 the next phone number on the list and get a price

13 

## from them on a new system compared to what you are 14 

## doing. is So I might sell the fix but most likely if 16 I can't buy the equipment, the next guy in the 17 

## phonebook is going to sell the equipment and maybe I 18 was buying Karen's equipment and the next guy on the 19 

## phonebook is buying John's, I don't know but it is a 20 possible solution as we are going to do this appeal 21 

## process, we are going to allow mediation, we can step 22 in this enforcement knowing that you could still say

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## you are a really bad guy, you have been thumbing your 2 

## nose at this whole process all along its obvious, 3 

## we're cutting you off right off the bat. 4 

## I mean I think you still have that sledgehammer you can put in your pocket and I don't 6 

## know how you craft the words to that, maybe I have 7 

## created more trouble for everybody.

MR. RAWALD: No, Chuck, I hear that. I 9 

## feel like we've already got that because the one-time 10 

## violator is not a routine violator. The two-time
11 

## violator is probably not a routine violator. We are
12 

## talking about someone who is routinely violating, fi 13 

## that word has a dictionary definition that is going
14 

## to require often and it is going to require you know,
15 

## a pattern of conduct.
16 

## It's not going to be a one or two time 17 

## thing or it's going to be one guy who did a hundred 18 

## units and that's clearly a routine violator. So the 19 question is to me so if I have a routine violator 20 now, what is his incentive going to be to rernediate 21 

## that point because he's gone past the point of being 22 

## a violator. The violator may want to remediate because

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## they don't want to be a routine violator, I get that, but the routine violator if the only thing that they now I'm focusing in on this least extreme option because that's the one I have to be able to explain to the Department who is going to put me to the rack here over the next week to explain to them why we would ever want to adopt this and so I'm really pressing you guys for an answer because you guys are killing me but it's important because I'm going to be killed later on. So it's good for me to go through this twice, I like that, its very good for my karma.

So the point is as I'm sitting here I need to be able to explain to them what is going to be the incentive for a routine violator to ever remediate if the consequences of a routine violation is simply you can't get non-compliant product.

A non-border state person, a down South person. PARTICIPANT: Let me just say something real quick. MR. MCCRUDDEN: Doug, this is Charlie with ACCA. I recognize the gap that you have seen here

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## and I think that part of it is -- part of it is that 2 

## the sort of lack of precision or the fact that we 3 

## don't have a perfect system creates distributors and 4 

## contractors differently and I think that's where this 5 

## may land and it sounds like we want to caucus on this 6 

## so I don't have the answer to your question which was 7 

## what is the incentive because I have to think about 8 

## it so. 9 

## MR. RAWALD: We'll see you all on the 10 

## 23rd. I1 

## MR. EISNER: Take 10 minutes. I 12 

## (OFF THE RECORD AT 3:49 PM)

13 

## (ON THE RECORD AT 4:15 PM) 14 

## MR. HURST: So Doug, John Hurst from 15 

## Lennox. We came to the conclusion in there that we 16 

## were all tired. We were all hearing and saying 17 

## different things and the conversation kind of 18 

## wandered so I think what we want to do is come back 19 

## in two weeks, is that when we are coming back -- 20 

## whenever, whenever we are back here. 21 

## We clearly understand your concern with a 22 

## down-state contractor. We collectively believe we

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## can resolve that issue. We don't want to give 2 

## specific examples right now. We don't want you to 3 

## go back and ask and take your beating because we 4 

## think we can resolve this issue but we want to put it 5 

## on paper and come back with a solution. Amy, would you 6 

## add anything to that? 7 

### MS. SHEPHERD: 

## The only thing that I would S 

## add is that you know we will definitely try and do 9 

## that so you would have some time before the meeting, 10 we are not going to try and do it before. And again 11 

## what we are driving at which I think we did get lost 12 

## because we are tired is that you know, I think you 13 

## can put these in kind of two different categories. 14 

## One should the Department have discretion 15 

## or is it a kind of on and off thing and two, the 16 inclusion of the other products which I think that we 17 

## can -- I think we need to sit down as John said and 18 

## map it out in clarity. But those are kind of our 19 

## driving concerns. 20 

## MR. SACHS: Amy and John, this is Harvey. 21 

## You are all able to work up this language I would 22 

## turn into a pumpkin on the 23rd and would love to

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## have a chance to feed it back to whoever could be the 2 

## other delegate for ACEEE. 3 

## MR. HURST: Amy, should we say what we are 4 

## not saying? Well I mean the example, if we want to 5 

## use the example of what we are not advocating, what 6 

## we thought we were advocating. 7 

## MS. NOLL: I think everyone wants to go 8 

## home, John. I actually think this has helped because 9 

## you are putting us in a very awkward position because 10 

## I think that on the one hand I am incredibly open to 11 

## the idea of the Department having flexibility and 12 

## discretion. As to the severity of the punishment, I 13 

## don't think that we are as open to removing 14 

## discretion from the Department's tool box. 15 

## MR. HURST: And that's not what we are 16 

## saying. 17 

## MS. SHEPHERD: No, no, no, no, no. I 18 

## mean well -- 19 

## MS. NOLL: The definition of product, so I 20 

## think there are two issues. We will need to decide 21 

## the definition of product right, so that's something 22 

## that we will need to decide. But once, let's assume

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## -- assuming whatever that definition may be there's 2 

## also I think a very separate question of whether the 3 

## Department, okay we have the product, do they have 4 

## discretion or is it all that product, or 13 SEER or 5 

## something less, does that make sense? 6 

### MS. SHEPHERD: I 

## mean so I think there are 7 

## two there's the question of whether it's the ultimate 8 

## solution or nothing and I think there's a related but 9 

## I think you can look at it somewhat separately as 10 like okay so what's the ultimate solution going to 11 

## encompass and so I think that that's what we are 12 

## trying to -- but we are not -- I don't think that 13 

## they are inextricably linked I think that there is 14 still room within -- I think we view it as even with 15 the definition of product that we have in the ground 16 rules that if that is all given the nature of the 17 

## sales in the South, Southwest that that still would 18 be effective, so. 19 MS. MEYERS: And the solution that we are 20 looking for is the solution that we have all agreed 21 

## that we want and that is for problem installations to 22 be remediated, that's what we want. That's what we

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## want. The ultimate solution is not to put people out 2 

## of jobs, it's to get those bad installations out and 3 

## I think we can get there but we --- there's a lot. 4 

## MR. RAWALD: We'll let you guys have the 5 

## time to work, that's fine. 6 

## Then we will wait to hear more, is there 7 

## anything else that you want to engage in then today or are we done with today because everyone seems 9 

## mentally tapped out? 10 MR. HURST: How about those Cowboys! 11 MR. SACHS: Chairman I move -- 12 

## MS. NOLL: Before we wrap up here though I 13 guess the one -- can we have some -- can somebody be 14 

## tasked with developing some stuff around the state 15 

## enforcements so that the people have an opportunity 16 to understand what the issue is and reflect on it? 17 

## Because I, quite honestly, we haven't discussed this 18 

## and I'm not as familiar and it might take up an 19 

## entire day's worth of conversation. 20 

## And we have people in our offices that 21 

## work on state stuff. 22 

## MS. SHEPHERD: Sure I can submit something

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## now if that would be helpful. So the issue that we 2 

## have is in the section that added regional standards, 3 

## there's two specific provisions that talk about 4 

## incorporation by states of regional standards and 5 

## then it says the states can enforce them in federal 6 

## court. 7 

## And so the issue that we have is when that 8 

## says regional standards, what is it that states can 9 

## incorporate? And our view would be that whatever we 10 

## come out of this meeting with is what states can

11 

## incorporation. We are seeking some clarity about 12 

## that because if for example a state were to say no 13 the only thing that standard refers to is just the 14 

## efficiency level but we could have different 15 definitions of product, we could have different 16 definitions of violation, we can have different, all 17 

## these things that are not in the -- in the 18 enforcement plan for the federal standards then I 19 

## think that's what we want to have a discussion around 20 because we don't think that that's what this language 21 

## meant and all of this language is within the Section 22 of EPCA that deals with the standard itself, so

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## that's the issue. 2 

## And I'm happy to have some other 3 

## conversations with -- yeah sure. 4 

## MR. RAWALD: Yeah and the citation that 5 

## Amy is referring to is 42 USC 6295(o)(6)(G)(ii) and then 6 it would be so 42 USC 6295(o) (6) (G) (ii) and then (4) (V) 7 

## PARTICIPANT: Incorporation by states and ( S 

## localities and state enforcement. 9 MR. RAWALD: Right and those provisions 10 

## read the following: A state or locality may 11 

## incorporate any federal or regional standard in the 12 

## state or local building codes or state appliance 13 

## standards and then five is state enforcement. A 14 

## state agency may seek enforcement of a federal 15 

## regional standard in a federal court of competent 16 

## jurisdiction, which I think is the more concerning one 17 

## to Amy at this point. 18 MR. WINNINGHAM: Doug, this is Dave 19 

## Winningham, one final request, can we get the updated 20 

## slide pack emailed out? 21 

## MR. SACHS: Amy, this is Harvey and I guess 22 

## what I hope you all would do on federal standards is

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### respond. My 

## sense is that we have some unique 2 

## situations which starts with the CA and has 10% of 3 

## the population but I am not aware of much state 4 

## enforcement activity that would potentially diverge 5 

## other than California. 6 

## So my sense has been and sort of a null 7 

## hypothesis that so far what we've done in state 8 

## enforcement has been working and I really want to 9 

## understand why or if it should change. 10 

### MR. RAWALD: I 

## don't think she's aware of how we would change it. She's aware that the states 12 

## have the ability to do their own thing by the statute 13 

## and so we want to make sure the states, if they are 14 

## going to do something, they are bound by what we have 15 

## decided here or else they can go and create their own 16 

## body of law absent our whole effort here for the last 17 

## 14 days, that's Amy's concern. f8 

### MR. FERNSTROM: Well 

## and this is Gary and 19 my concern is that what we've done here is going to 20 

## wind up being a giant abyss and barring the states 21 from finding a more effective method might not be 22 

## good.

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202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509Central Air Conditioner Regional Standards Enforcement Working Group October 16, 2014 Page 184 A $100.00 143:17 $2,500.00 69:12 $200 158:8 $200.00 18:12,16 21:9,13,16,18,20 21:22 143:16,17 146:2,5 $271.00 6:11,14 $50.00 143:18 ability 9:4 13:4 14:21 22:13 27:9 36:15,16 40:1 52:7 58:3 59:22 129:14 130:1 148:7 157:12,17 182:12 able 21:22 25:6,14 35:12 38:8 57:20 76:2,3 104:8 106:7 108:16 112:13 128:8 129:3 149:15 151:19 156:1 160:3 166:2,4 170:2,4,21 174:4 174:13 176:21 absence 66:1 absent 58:7 182:16 absolutely 25:19 36:9 83:3 100:9 128:22 145:6 abyss 182:20 AC 138:8 159:10 ACCA 26:2 79:5 174:22 accept 28:1 47:12 92:10 acceptable 37:22 51:3 accepted 40:19 access 167:14 accomplish 137:4 accord9:4 accused 46:19 ACEEE 177:2 achieve 67:19 158:2 159:20 162:22 achieved 161:15 achieving 67:11 78:13 acknowledge 97:18 111:7 acquiesce 109:9 acquiesced 86:11 acquire 170:2 act 4:4,9,10,17,18 5:4,6 8:22 17:7 18:4,11 25:7,12 26:5 33:20 34:1 34:15 42:8 45:21 50:3 52:3 53:22 56:5 58:7 78:10 84:18 91:15 95:I7 96:7,15 100:18 109:8 131:12,13 146:3 148:9 158:8 162:9 166:4 action 83:8 115:14 122:17 127:22 134:11 139:10,11 139:15 150:8 159:12 actions 83:17 152:6 activity 72:6 137:14 182:4 actor 129:12 165:18 167:3 actors 33:8 84:12 84:14,15 139:18 139:19 171:3 acts 3:5 4:19 5:11 5:20 8:7,9 16:16 17:17 24:4,6,9,10 25:10 28:7 33:14 33:18 34:3 36:8 39:8 41:1 42:6 44:9,19 46:15 47:12 49:15,19 50:8 52:14,15 57:21 59:16,19 62:13,17,18 63:20 63:22 64:2 66:9 66:11 67:16 75:12 77:4 78:I8,20 79:9 80:21,22 85:14 127:13 158:2 actual 7:21 38:11 42:1 58:8 121:4 149:18 153:4 ad 61:21 add 24:6,10 26:5 31:15,16 41:8 49:16 52:19 58:7 66:10 78:1,17,19 79:3 88:5 89:16 89:18 99:22 100:17 101:7 116:17 118:16 123:13 131:7 155:18,19 176:6,8 added 5:11 31:3 52:15 56:5 57:7 82:6 86:13 87:6 88:18 118:12 180:2 adding 25:12 42:12 44:19 68:6 78:17 89:1 119:10,19 131:2,15 158:2 addition 22:13,17 23:8 additional 4:18 11:11 16:15 24:9 28:7 41:2 42:6,8 56:6 58:2 62:17 62:18 63:19,22 64:1,3 66:8,10 74:3,5,7 79:8 80:17,21 91:14 118:12 119:10,19 I34:17 135:11 additions 119:21 address34:5 37:13 41:22 42:2 91:17 120:12 126:6 134:19 155:5 addressed30:10 33:17 addressing 15:9 adds69:21 adequate42:15 53:21 140:21 adequately 40:17 42:13 101:14 109:17 144:3 adjourn 183:3 adjust 129:15 adjustment 163:21 administration 60:5 administrative 40:16 53:1 admit 154:13 admonition 99:17 adopt 71:9 174:7 adopted 70:15 71:6 advise59:5 advocacy 47:14 advocate50:16,17 73:18 advocates 8:20 25:9 31:13 38:447:5,7 50:7,14,22 84:2 137:22 140:13 167:19 advocating 15:15 15:16 177:5,6 affirm 107:9 afraid 152:17 agencies 41:10 55:18 agency 41:2 157:7 181:14 ago I52:15 agree 5:5 8:11 9:7 12:5,11 13:8 15:19 25:6 27:20 28:531:732:2 36:11 37:5 52:13 52:14 54:18 59:3 66:2 68:19 69:4 75:5 79:15 84:20 95:3 106:6 124:2 125:6 128:14,22 136:14 138:1,5 145:16 146:14 147:12,18 167:20 agreed 75:10,11,13 88:4 160:8 178:20 agreeing 37:2 65:10 65:14 agreement 27:10,16 67:10 76:3 159:21 agrees5:3,9 ahead49:9 119:6 121:15 130:9 158:16 AHJ's 18:21 AHRI 11:20 138:1 AHRI's 139:5 air 1:2 2:14,19 10:1 18:13 19:22 20:15 20:16 23:21 45:16 113:15 132:14 139:2,22 141:7,22 142:21 143:4,5 144:10 161:2 164:12 170:13 Air

-Conditioning 2:8,10 alignment 73:12 alive 35:22 164:15 164:18 167:15 allocation 92:21 allow 30:7 37:22 57:20 58:7 118:21 172:21 allowed 69:11 83:15 98:8 106:16 136:1,3 152:10 allowing 40:3 118:21 171:14 allows 40:9 49:4

56:5 altered 135:12 alternate 114:5 alternative 108:16 118:5 amendment 114:14 America 2:11 American2:4 amorphous 116:6 amount77:7 171:15 amounts 144:1 Amrane 2:19 Amy2:8 11:19 13:7 14:10 17:8 71:1 72:9 88:8 89:21 121:18 122:10 128:14 132:9,20 143:11 144:5 161:19 162:15 176:5,20 177:3 181:5,17,21 Amy's 44:16 121:7 130:16 132:7 182:17 analogy 157:5 analysis 7:14 analytical 40:10 ands 84:7 anecdotal 8:18 Aniruddh 1:20 162:13 answer 34:14 35:7 39:1840:11 48:21 76:15 128:12 174:8 175:6 answered 167:17 anticipated 42:18 anybody 29:15,16 60:22 66:13 82:5 82:18 85:2,11 86:22 87:2,20 88:12 100:22 101:6 114:10 117:22 anymore 141:10 166:21 169:9 anyway 7:9 53:16 83:11,12 134:15 147:21 apartment 112:2 apologize 32:9 apparent 53:14 appeal 35:10,11,12 35:18 36:2 96:3 202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509Central Air Conditioner Regional Standards Enforcement Working Group October 16, 2014 Page 185 172:20 appealed 35:9 Appeals 34:19 35:1 35:15 appearance 77:1 appears 11:2 appliance 13:16,21 14:6,8 19:21 20:8 69:1,9,15 181:12 appliances 69:20,22 70:7 applicable47:21 127:6 145:5 apply 33:7 61:14 159:8 appreciate35:4 48:8 85:21 apprise53:21 apprised40:17 42:13 approach 11:4 32:5 138:11 appropriate 40:10 41:19 68:2 74:10 120:5 125:1 134:10 137:13,15 arbitrary 152:10,13 area 8:1 14:13 148:17 170:4 areas 148:12 171:21 argue 21:7 128:15 argument 32:11 34:7,21 152:3 153:20 arguments 29:4 37:4 81:4 arrangement 148:15 arrangements 148:11 arrived 111:16 arsenal 12:22 aside 154:8 asked 25:4 43:4 52:1 54:12 93:7 120:4 asking 25:14 27:8 28:10 38:16,20 39:1,4 40:7 46:12 47:7 52:7 73:5 94:1 116:1 121:18 122:7 asks 51:7 aspects 45:19 ASRAC38:15,18 54:18 55:11 64:15 67:22 68:3,21 73:8 74:4 87:5 92:10,17,19,21 93:3,15,20 100:21 ASRAC/California 2:21 ass 55:3 assemble 34:11 assembles 34:20 assert 51:12 assertion 47:19 assess72:4 144:7 assessment 98:3 associated 11:11 Association 1: 18,22 assume7:10 15:10 95:7 111:19 177:22 assuming44:7 154:8 166:20 178:1 assumption 111:4 assurance 104:1 assure20:7 Atlanta 119:15 atmospheric46:22 attachment 33:22 attempted 118:15 attend 107:7,10 attention 35:5 39:15 47:1 attic 164:21 attorney 41:17 attorneys72:14 Authorities 18:22 authority 10:8 24:6 24:10,17 31:11 32:11 36:18 38:3 38:6 44:7,8,9 48:10,15 49:18 50:9 51:8,10,11 51:I3,15 54:3 56:17 58:14 60:5 69:1 70:5,10,10 71:21 72:1 74:13 74:17 78:21 83:9 125:13 132:3 138:6 143:I6 152:4 153:1 authors 73:6 availability 126:4 available 20:7 110:1 120:11 AVENUE 1:7 average 10:22 13:10 avoid21:5 43:7 aware 72:12 136:20 137:2 182:3,10,11 awesome 83:5 awkward 177:9 axe 45:7 46:21

B B 111:19 baby 82:16 back 12:2 14:1 15:3 20:21 22:20 26:17 29:14 36:16 38:4 47:6 51:4 52:7,11 57:1 61:1 75:13 83:6 85:14 88:2,4 89:5 94:21 98:19 100:5 103:11 108:9 109:5 115:2 116:3,14 118:10 121:2 124:22 127:13 131:20 132:19 133:4,5,10 134:2 139:20 143:7 145:14 151:4 153:20 156:9 157:5 159:6 164:3,8 168:4 175:18,19,20 176:3,5 177:1 background 50:5 bad 12:17 84:14 105:16 129:12,14 131:1,4,8 139:19 145:21 146:1 147:11,13 149:14 162:20 163:19 I65:18 166:11 167:3 168:5 173:1 179:2 baked 128:16 balance46:9 56:21 Salto 2:13 3:20 4:16 5:16 9:11 22:10 24:13 29:6 29:19 32:9 36:22 37:11 38:14 39:6 58:1,10 61:8 73:16 76:4,15 81:2 87:7 105:19 106:8 137:21 138:18 140:19 141:14 142:1 143:14 150:12 ban 126:13 bank 169:4 banning 154:2 barring 28:3 117:21 182:20 base 13:19 69:13 98:5,9,17 based 11:22 31:18 32:6 34:10 42:7 55:10 56:18 59:13 60:10 68:13 89:19 98:2 99:13 129:20 143:13 144:1 146:9 basement 164:21 basic 97:15 126:22 148:20,21 basically 31:4 35:17 49:11 55:13 63:2 116:4 basis 42:14,20 115:20 bat 173:3 Bay 148:17 bearing 20:18 beating 176:3 beginning 26:18 49:16 54:21 94:2 begins 31:5 behaving 147:13,17 behavior 8:9,19 145:20,21 146:1 147:11 believe 31:10 43:14 46:1 50:18 64:8 65:11,12 75:15,16 78:9,12 87:17 155:6,13 175:22 believed 65:18,19 believes 125:12 belongs 33:5 benefit7:21 167:16 benefits 46:8 best50:20 82:2 107:8 118:19 133:11 159:16 170:9 better 11:12,16 17:11 30:19 69:8 70:20 147:17 161:15 bevy 134:6 beyond 20:1 46:1 48:15 78:22 143:2 144:20 145:10 160:18 big 91:18 132:15 139:15 167:19

binary 17:4 130:19 birthday 108:19 bit 12:13 27:1 40:15 54:6 60:13 82:9 82:10 92:7 117:3 127:12 134:2 139:21 blown 162:16 blue75:2 board 51:18 142:18 152:14 171:17 body 182:16 booking 110:17 border 150:15 155:7 165:12,13 166:5 170:1 border-states 155:14 156:11 bound 182:14 boundaries95:16 bowl 46:20 box 177:14 brain 16:18 branch 154:22 break 28:20 29:7 60:13,17 82:12,14 82:15 85:3 breaking45:12 brief 80:4 briefing24:3 briefly 53:20 120:16 126:7 bring 8:7 21:15 22:1 51:4 92:5 96:21 116:14 133:10 bringing 35:4 brings72:9 broad 128:5 broader 31:21 36:6 154:21 broken 13:10 Bryan 2:2 94:14 96:20 100:2 156:7 157:22 158:17 bubbling 16:18 bucket 136:21 buddy 8:15 103:8 build 16:9 168:20 169:4 building 1:6 14:7 19:5,11,19,20,21 20:5,10 111.13,14 111:22 181:12 buildings 111:8,16 202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509Central Air Conditioner Regional Standards Enforcement Working Group October 16, 2014

built 138:2 bulb 33:22 45:9,12 74:15 bullet 86:20 97:4,7 97:8 100:15 103:16 111:I1 bunch 146:13 154:3 burden 7:18 84:12 115:12 129:19 business 8:4,7 11:3 23:4 89:10,10,11 89:17 96:5 116:22 117:5 146:6,6 147:20 150:16 155:10 158:12,20 159:1 171:11 172:2 businesses 44:20 buts 84:7 buttI57:10 buttons 3:8,16 buy 32:21 148:5 149:11 152:10 153:7,11 154:16 159:18 160:14 171:13,14,20 172:9,16 buying 172:18,19 C 3:1 CA 182:2 cafeteria 83:2 calendar94:8 California 1:19 10:17,18 11:1 13:19 14:8 68:22 69:9,16 70:1,7,14 70:16 71:6,10,21 72:2,12 149:3 156:5 158:15 182:5 California's 69:1 call 18:3 25:22 29:22 61:11 77:12 82:13,21,21 96:1 96:12 104:11 105:6 108:16 125:21 126:2 172:11 called 113:6 124:7 capability 69:2 77:14 capture 27:15 card 11:13 care 79:14,21 100:12 123:16 167:7 cared 8:12 cares 154:2 Carrier 2:1 145:16 148:16 155:2 carry 76:11 Cars 6:10 carved 71:12 carving 140:5 case 7:16 10:9 13:6 20:15 21:15 23:7 24:7 43:1 51:14 65:18 70:6 74:1,2 89:19,20 112:15 118:18 127:18 128:1 134:21 136:2 140:20 151:16 158:10 165:5 171:1,3 cases 14:I4 15:7 21:20 143:22 148:8 cast 30:3 catch 35:22 categories 143:11 157:20 176:13 category 143:10,12 caucus 60:13 61:20 62:1 82:21 87:10 99:19,2I 103:14 103:15 175:5 caucuses 61:6 caucusing 138:11 caught6:6,13,13,21 7:2 32:22 cautiously48:11 CEC 11:14 69:13 centered 116:1 central 1:2 20:15 20:16 132:14 138:8 139:2,22 141:7,22 142:21 143:4,4 161:2 170:13 certain 31:6 42:3 50:13 148:12 157:19 certainly 8:I7 15:1 27:7,14 51:8 77:3 164:18 certification 80:15 certified35:20 97:10,15 certitude 21:17 CFR 139:3 142:20 chair 53:17 Chairman 179:11 challenge 53:6 challenges 40:21 chance 18:12 177:1 change 3:21 23:4 58:22 111:6,12 115:11 116:16 182:9,11 changed 59:12 88:22 90:15 114:6 changes 43:5 54:11 55:10,19 57:16 58:14 83:9 87:19 114:11 changing 56:20 90:5,13 119:2 138:20 characterize 67:8 68:2 74:10 75:7 characterized 68:20 characterizes 50:13 75:21 characterizing 27:6 charge 132:4,21 143:16,21,22 146:2 152:7,7 Charles 1:21 2:10 Charlie 13:13 26:1 27:6 79:4 150:18 150:19 174:21 Charlie's 153:17 chart 151:11 cheaper23:3 check94:7 116:18 142:4 checked 142:5 Chevron 152:19 chime 155:4 choice26:14 129:5 129:6 choose 153:14 choosing 21:4 Chuck 17:22 20:21 28:13 29:21 30:5 32:18 39:11 51:21 82:19 83:11 85:8 85:22 121:20 150:18 171:5 173:8 Chuck's 62:11 87:2 circular39:16 circulate59:9 circulated 30:17 circumstances 139:7 140:20 141:1 citation 181:4 cite 80:9 citing 81:3 civil 8:10,14,15,18 22:16 23:5 71:21 72:1,4 142:14 143:I5,20 144:7 claim 121:4 clarification 38:15 51:22 71:2 100:12 116:21 135:11 clarify 39:12 47:3 70:21 71:15 86:3 91:12 129:22 clarifying 47:4 72:16 clarity 176:18 180:11 class 47:17 132:10 135:2 170:18 classes 36:8 44:19 44:20 132:6,6,11 132:13,14 142:21 143:1,3 classify 134:8 clear 4:2,3 27:18,19 33:9 41:4,14 42:10 43:20 75:14 76:4 100:20 101:7 101:8 115:19 118:8 clearer 88:6 clearly 42:17 173:18 175:21 close 11:15 93:20 102:14 112:15 closely 54:6 closes54:7 coax 133:11 coaxing 3:11 code 19:20 20:10 142:7 codes 19:17,21 181:12 coffee 110:12 coil 20:1 98:6 collect 121:2 collectively 175:22 combination 97:21 97:22 98:1,10,11 98:22 99:1,2,7,8 99:10,18 combinations 97:11 97:15 98:7 99:15 combine 66:6

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138:17 repeated7:13 repeating 43:20 repercussion23:15 repercussions 10:6 23:13 replace 66:21 161:7 161:13 replaced 118:19 121:4 122:4,19 167:13 replacement21:7 21:10 22:4 116:2 118:13,15 122:22 123:1 replacing 21:5 report 29:15,16 61:9 69:13 reporting6:22 69:14 reports 146:9 represent 101:14 109:17 202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509Central Air Conditioner Regional Standards Enforcement Working Group October 16, 2014 representation 67:2 represented 67:21 request3:8 26:17 55:5 57:2 92:11 94:15 107:15 118:2 181:19 requesting77:15 require 5:5 19:22 173:14,14 required 14:8 53:11 58:12 69:14 90:1 124:15 170:22 requirement 14:2 20:10 41:3 53:1 120:2 requirements 19:20 20:8 53:3 requires 13:19 93:18 reserve55:13 82:9 residence I11:12,16 111:17 112:4 113:10,22 residences 111:5 residential23:20 111:5,9 113:15 117:11 147:3 161:2 resolution 17:14 resolve 48:22 92:4 176:1,4 resolved 100:1 Resources2:12 respect 23:22 30:10 40:16 84:9 respects 23:9 respond9:7 22:14 23:19 40:1 76:16 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## 206 TRANCRIPTION CERTIFICATE As a professional transcriber, I certify that the attached document(s) are, to the best of my abilities, an accurate transcription of tape recordings provided to the company, given the quality of the provided tape recording(s), and that I have no financial or other interest in the proceedings to which they pertain.

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## 206 TRANCRIPTION CERTIFICATE
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