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### U.S. DEPARTMENT OF ENERGY **+ + + + + CENTRAL AIR CONDITIONER REGIONAL STANDARDS**  **ENFORCEMENT WORKING GROUP**

**+ + + + + PUBLIC MEETING** 

**+ + + + + WEDNESDAY**  **AUGUST 27, 2014 + + + + +** 

**The Public Meeting met in Suite 600, National Press Building, 529 14th Street,**  **N.W., Washington, D.C., at 9:00 a.m., Neil Eisner, Meeting Facilitator, presiding.** 

**PRESENT NEIL EISNER, Meeting Facilitator**  **TIMOTHY BALLO, Earthjustice GARY CLARK, Goodman Global**  **JORDAN DORIA, Ingersoll Rand RAY ELLIS, Lincoln Electric Cooperative**  **GARY FERNSTROM, California Investor Owned Utilities**  **JOHN GIBBONS, Carrier Corporation MATTHEW LATTANZI, NORDYNE Inc.**  **CHARLES McCRUDDEN, Air Conditioning Contractors of America**  **JON MELCHI, HARDI KAREN MEYERS, Rheem Manufacturing Company**  **ELIZABETH NOLL, Natural Resources Defense Council**  **STEVE PORTER, Johnstone Supply DOUG RAWALD, DOE General Counsel** 

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### PRESENT: (cont'd) **BRYAN ROCKY, Johnson Controls HARVEY SACHS, American Council for an**  **Energy-Efficient Economy AMY SHEPHERD, Air-Conditioning, Heating and**  **Refrigeration Institute CHARLES WHITE, Plumbing-Heating-Cooling**  **Contractors - National Association DAVID WINNINGHAM, Allied Air Enterprises** 

**ALSO PRESENT ERIC CHEN, Air-Conditioning, Heating, and**  **Refrigeration Institute LAURA DEGITZ, Navigant Consulting**  **JOHN HURST, Lennox International EMILY MARCHETTI, U.S. Department of Energy**  **CRAIG MESSMER, Unico*** **ALEX KROWKA, U.S. Department of Energy CHRIS NELSON, Carrier Corporation**  **DON SURRENA, National Association of Home Builders** 

***via teleconference**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### CONTENTS

**Introduction and Welcoming Remarks Neil Eisner.................. 4** 

**Discussion of Use of DOE and AHRI Certification Database**  **Eric Chen.................... 10 Chris Nelson................. 74** 

**Distributor's Presentation Re: Role, Records Retention, Market**  **or Pressures Steve Porter................. 147** 

**General Discussion of Topic Categorization**  **Neil Eisner, Moderator....... 302**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 P-R-O-C-E-E-D-I-N-G-S**  **2 (9:18 a.m.)**  **3 MR. EISNER: If could have your**  **4 attention. As you may know, we have some**  **5 problems with people getting online and being**  **6 able to hear them when they want to talk to**  **7 us, they can follow us but they are trying to**  **8 fix that. But before we get going, a couple**  **9 of key pointers. We will start with some**  **10 basics while they are working on the phones.**  **11 We have a different kind of a**  **12 system. It is going to be a little harder for**  **13 the court reporter today. She is going to try**  **14 to do it off of a recording to create the**  **15 record. That means we really have to stop**  **16 having sidebar conversations because that is**  **17 going to be on the tape recording. She is**  **18 going to have a hard time trying to figure it**  **19 out. So, if we need to take even a five**  **20 minute break because you want to have some**  **21 side conversations, let me know. We will go**  **22 off the record and do that, take care of that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 in that way.**  **2 The other thing, Harvey wants to**  **3 give us some background about it, is where to**  **4 eat, where to go to the bathroom.**  **5 MR. SACHS: Thanks. Thanks for**  **6 coming to ACEEE. We are all delighted to have**  **7 you here. The first thing I want to do is**  **8 introduce ACEEE contact Suzanne Watson, who is**  **9 our Policy Director and our Industrial Ally**  **10 Program. A number of the manufacturing firms**  **11 is here as well as AHRI, our members of the**  **12 Ally Program. So, we are going to define this**  **13 as being an ACEEE Ally meeting that you don't**  **14 have to know about and, consequently, please**  **15 enjoy the coffee and tea in the kitchen. We**  **16 can't do that for outside groups. Suzanne**  **17 said she would cover our back.**  **18 Bathrooms: At the reception desk in**  **19 front, there are keys to the bathrooms. The**  **20 bathrooms are out the door, turn left, keep**  **21 going. When you can't go any further, you**  **22 will see the men's room and on your right is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the women's. The keys for the men's and**  **2 women's are said to differ. I have not**  **3 checked.**  **4 In case of earthquake, shelter in**  **5 place. We had one a couple years' ago. In**  **6 case of fire, there are staircases outside**  **7 that door to your left and left. And outside**  **8 the back door, which is actually through the**  **9 kitchen and keep going straight and there is**  **10 one again immediately on the left. We have**  **11 never had a fire.**  **12 In case of Wi-Fi, the password is up**  **13 there and feel free to use that.**  **14 And I am glad you all are here and**  **15 hope the room doesn't get overheated. We have**  **16 had a new fan coil put in, I think, but I am**  **17 not sure if it is in or commissioned. It is**  **18 just to cool this room. Last year, we had a**  **19 bad experience.**  **20 Thank you, Neil.**  **21 MR. EISNER: Okay, anybody have any**  **22 questions?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 (Simultaneous speaking.)**  **2 MR. RAWALD: What is the rating of**  **3 the air conditioners?**  **4 MR. SACHS: Oh, this building dates**  **5 through the 1920s. It has extensive retrofit**  **6 of the chilled water system.**  **7 MR. WINNINGHAM: It sound like a**  **8 deal.**  **9 MR. SACHS: For anyone who wants to**  **10 get geeky, there are magnetic chillers**  **11 downstairs. I believe they have been upgraded**  **12 with an ordinary change out. The building met**  **13 90.1 when we moved in seven years or so ago**  **14 but nobody told me which version.**  **15 Our fit out of this building would**  **16 meet LEED criteria. We did not apply for**  **17 certification. The only notable feature that**  **18 you might enjoy at all is you will see glass**  **19 on a lot of the interior walls to try to bring**  **20 light in to the entire space and common**  **21 facilities, such as this conference room and**  **22 the kitchen, are set interior, rather than** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 trying to showcase the view you can get from**  **2 this building.**  **3 This is the National Press Club**  **4 Building. Traditionally, all the major news**  **5 organization had their office suites here. We**  **6 still have Canadian Broadcasting, Al Jazeera**  **7 U.S. and I'm not sure what all else.**  **8 Thank you.**  **9 MR. FENSTROM: So Harvey, this is**  **10 Gary. Am I to appreciate that this building**  **11 is very efficient and it does not have that**  **12 annoying buzz that we have in the conference**  **13 room at the Forrestal Building, that the**  **14 cooling does not work very well in this**  **15 conference room?**  **16 MR. SACHS: Take off your shirt.**  **17 MR. RAWALD: Please don't.**  **18 MR. SACHS: If it gets bad, we will**  **19 bring in fans but this is an issue we have**  **20 worked on. Damn it, there is no such thing as**  **21 good comfort control. Please, let me stop.**  **22 Save me from myself.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: All right, let's check**  **2 and see how we are doing with the phones.**  **3 All right, we are going with modern**  **4 technology. We are going to use the cell**  **5 phone conference phone when somebody wants to**  **6 speak from outside this building and join us**  **7 on that.**  **8 MR. RAWALD: Well, it's the only way**  **9 they can hear us, too. So, they can't hear us**  **10 except over the phone. So, we have to be loud**  **11 ourselves, so they can hear us. That is the**  **12 only way the sound is being transmitted to the**  **13 caller as well.**  **14 COURT REPORTER: May I make a**  **15 request? If they can -- with a person who**  **16 wants to speak to us from the phone, could we**  **17 just put it between Mr. Rocky and Mr.**  **18 McCrudden? I believe my microphone should be**  **19 able to pick it up very well there. If**  **20 something else is more convenient for all of**  **21 you, let me know.**  **22 MR. RAWALD: Emily, did you hear** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that? If you could put the phone over there,**  **2 that would be great.**  **3 MS. MARCHETTI: Yes.**  **4 COURT REPORTER: Thank you very**  **5 much. I appreciate it.**  **6 MR. EISNER: Okay, we are going to,**  **7 because of the time constraints and all for**  **8 some of the people, we are going to start with**  **9 what was on the agenda for this afternoon, the**  **10 discussion of AHRI DOE certification**  **11 databases. And then, depending on time, we**  **12 will get back into the issues that we were**  **13 talking about at the end of the day yesterday.**  **14 Amy, do you mind introducing?**  **15 MS. SHEPHERD: Oh, sure. This is**  **16 Eric Chen. He is the manager of our**  **17 certification programs at AHRI. So, Eric, if**  **18 you want to just kind of just briefly say sort**  **19 of what your role is and then given an**  **20 overview of what you are going to do, that**  **21 would be great.**  **22 MR. CHEN: Yes, good morning** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 everyone and thank you for this opportunity to**  **2 discuss a little bit about our certification**  **3 program and share with you how our director**  **4 works. And we are going to run through some**  **5 sample examples.**  **6 My name is Eric Chen and I am the**  **7 Manager for the Unitary Small Equipment**  **8 Certification Program at AHRI. So, I am the**  **9 engineer responsible for auditing the**  **10 manufacturers for all their equipment listings**  **11 at AHRI.**  **12 And so with that, I guess I will**  **13 begin. So, will people on the phone be able**  **14 to hear me?**  **15 MR. EISNER: Would it be easier for**  **16 you to come up here or do you want to stay**  **17 there?**  **18 (Simultaneous speaking.)**  **19 MR. RAWALD: And if you want, we can**  **20 do the slides for you.**  **21 MS. MARCHETTI: Yes, I can do it.**  **22 I'm right here. Tell me when.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. CHEN: Okay. Yes, so today I**  **2 will just briefly discuss about our**  **3 certification program specific to Unitary**  **4 Small. We have many other programs at AHRI as**  **5 well but I think we are interested in this**  **6 today. And also I will run through a quick**  **7 download of our director and highlight a**  **8 couple key points about a director for you**  **9 guys. Next slide**  **10 All right, just some quick**  **11 statistics about our program. We have about**  **12 38 certification programs with over 400**  **13 participants. It is important to note that we**  **14 do some rigorous testing on our products and**  **15 the manufacturers' products with more than**  **16 2500 tests conducted annually for the**  **17 programs. In Unitary Small Equipment alone,**  **18 we have over 500 tests that we do every year.**  **19 One of the key features of our program is that**  **20 we have an online real-time directory that**  **21 gets updated with current listings, current**  **22 ratings from all the manufacturers and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 participants in our program. And our**  **2 equipment is specified around the world.**  **3 Our program has been a stats program**  **4 for 50 years. It signifies credibility,**  **5 reliability, and trust. And we are also**  **6 credited and audited by the SEC. Next slide.**  **7 So, here I will go into a little bit**  **8 more in-depth of the Unitary Small Program.**  **9 And I will start with the program scope for**  **10 the unitary small air conditioners. This**  **11 includes mixed-match coils from independent**  **12 coil manufacturers. And basically, it applies**  **13 to production models at 50, 60 hertz air**  **14 conditioners but the limit is 65,000 BTUs.**  **15 Anything over that is qualified under the**  **16 Unitary Large Equipment Program. And the**  **17 products list on screen are what is covered by**  **18 the Unitary Small Air Conditioner Program.**  **19 Next slide.**  **20 MR. SACHS: Eric?**  **21 MR. CHEN: Yes?**  **22 MR. SACHS: Excuse me. This is** 

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### 1 Harvey. Just as a very minor detail, does **2 this program include the three-phase 3 commercial units that are rated residential?**  **4 MR. CHEN: That is a really good 5 question and it does include the light**  **6 commercial three-phase products. 7 MR. SACHS: Thank you.**  **8 MR. CHEN: The unitary small key 9 pump scope is very similar but it is for air**  **10 source unitary heat pumps. And again, it 11 still has a cut-off point of 65,000 BTUs as**  **12 the scope of the program and the parts listed 13 there are what is certified. Next slide.**  **14 So, what do we certify in these two 15 programs? And it is basically what is listed**  **16 as certified metrics under the AHRI 210/240 17 standard. And those metrics are shown below**  **18 as cooling capacity, Energy Efficiency Ratio, 19 EER, SEER, heating capacity and Heating**  **20 Seasonal Performance Factors. Next slide. 21 Okay and I am just going to go into**  **22 a brief overview of kind of our certification**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 process with you guys. Manufacturers, when**  **2 they are planned to join or manufacturers who**  **3 are existing in our program, we organize their**  **4 models into basic model groups. Right here,**  **5 this is the way we classify a split system BMG**  **6 that consists of product with the same outdoor**  **7 unit with several indoor unit combinations.**  **8 And the same outdoor unit refers to the three**  **9 things listed on the screen. The same or**  **10 comparable compressor used with the same**  **11 outdoor surface area and the same outdoor air**  **12 quality. Now, that is for a split system BMG.**  **13 For independent coil manufacturer BMGs, they**  **14 have some additional criteria which I don't**  **15 want to go through that today but you can**  **16 refer to the operations manual in our program**  **17 to find out more details on that. Next slide.**  **18 As I mentioned before, we do annual**  **19 testing of all the participants, BMGs. The**  **20 way we conduct it is 20 percent of the BMG is**  **21 per year. It is tested at each manufacturer.**  **22 And those selections of their models consist** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of HSVTC models, for cause models and just**  **2 random samples that we decide to test. And**  **3 for cause could be anything from the 13**  **4 federal minimum level or ENERGY STAR targeted**  **5 units. Those could be acted as for cause**  **6 units.**  **7 The units for this program --**  **8 MR. RAWALD: Eric, sorry to**  **9 interrupt. So, just to be clear, so the**  **10 HSVTC, that is the highest sales volume tested**  **11 combination?**  **12 MR. CHEN: Correct. The units for**  **13 this program are tested at an ISO-17025**  **14 accredited third-party lab, which is Intertek**  **15 in Cortland, New York. And we also do some**  **16 ductless testing in Intertek Plano in Texas.**  **17 And then the rules of the program**  **18 are basically that all the ratings that the**  **19 manufacturer claims has to meet 95 percent of**  **20 their claimed ratings, when comparing the**  **21 tested results.**  **22 I also want to make a note that we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 do test active and discontinued products on**  **2 the directory and discontinued meaning that**  **3 the manufacturer no longer produces it but may**  **4 still be in the marketplace to do so. Next**  **5 slide, please.**  **6 So, after units get tested, we**  **7 review the results and if they meet the**  **8 claimed rating by the 95 percent rule, then**  **9 the test passes and no further action is**  **10 needed.**  **11 If the test fails, however, and it**  **12 comes in at less than 95 percent of the**  **13 manufacturer's claimed ratings, then AHRI**  **14 considers it a test failure and we would issue**  **15 that participant a manufacturer's decision**  **16 form. They have seven days to respond to that**  **17 decision form, otherwise, their Base Model**  **18 Group and everything that falls within there**  **19 would be re-rated proportionately to that**  **20 particular failed result.**  **21 Some of their manufacturer decision**  **22 options would include re-rating of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 product, perhaps a defective claim or testing**  **2 additional samples to try to prove that rate.**  **3 Next slide, please.**  **4 I do want to quickly touch upon the**  **5 qualification procedures. What I just spoke**  **6 to you about was for existing participants.**  **7 But for qualifying participants, we have quite**  **8 a rigorous program. Again, it is based on the**  **9 applicant's BMGs but instead of 20 percent of**  **10 testing, we do 30 percent of their testing.**  **11 And one of the biggest differences is that for**  **12 a qualification participant, all their tests**  **13 have to pass for them to be qualified into the**  **14 program. If there is a test that fails, then**  **15 they either have to re-rate all the rest of**  **16 the models or re-rate that particular model**  **17 and submit additional units for testing. Next**  **18 slide, please.**  **19 And I also want to mention that**  **20 federal agencies such as EPA, they do rely on**  **21 AHRI for some of their testing. AHRI is a**  **22 certification body to EPA. So, we do do** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 additional ENERGY STAR testing for them.**  **2 We have an annual requirement of**  **3 testing at least ten percent of their ENERGY**  **4 STAR listed BMGs. And EPA have given us some**  **5 guidelines in terms of how to respond to test**  **6 failures. For example, we have to respond --**  **7 we have to notify EPA when there is a failure**  **8 within 48 hours. And then I just have the**  **9 metrics there below.**  **10 They also do things a little bit**  **11 differently. They are more concerned with the**  **12 ENERGY STAR specifications that are shown.**  **13 So, the test results have to meet or exceed**  **14 the ENERGY STAR specifications shown there.**  **15 MR. EISNER: Eric, in order for you**  **16 to do the certification for EPA, does EPA do**  **17 any auditing or spot testing of your results?**  **18 MR. CHEN: EPA actually -- so the**  **19 ten percent of units that we have to test**  **20 every year for them, we actually give them**  **21 liberty to select up to five percent of those**  **22 units. So, we will send them a list of all** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the ENERGY STAR models, which they have**  **2 anyway. And they may get back to us and say**  **3 oh, we want to target some of these units.**  **4 And they do also audit our process. Next**  **5 slide, please.**  **6 So, that was just a brief overview**  **7 of our program. And I think really what we**  **8 are here to discuss is the AHRI directory and**  **9 how to benefit everyone. Next slide.**  **10 Again, I went over this. So, we can**  **11 jump to the one after this.**  **12 All right, so how do you verify that**  **13 a product is AHRI certified? You can go to**  **14 our AHRI directory website, which again is**  **15 showing real-time data of all the**  **16 participants' ratings and system combinations.**  **17 Anyone can access the directory. It is**  **18 completely free to use. So, homeowners,**  **19 contractors, distributors, manufacturers,**  **20 everyone can go to look at it. And it is**  **21 really the single locations to conduct**  **22 comparisons of similar models.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Again, I mentioned those real-time**  **2 but one of the key factors here on the**  **3 directory is a certified match. For split**  **4 systems, it shows both the outdoor and indoor**  **5 combinations, as well as the ducted air mover,**  **6 which is listed as a furnace on the directory.**  **7 It will show all those combinations. And you**  **8 have to have all those combinations to have it**  **9 qualified as a certified match. And then for**  **10 each combination that exists, there is an**  **11 equivalent AHRI certificate that can be**  **12 downloaded from our website. And I will go**  **13 into some examples of that in a moment.**  **14 Also recently we provide now the**  **15 Energy Guide labels as well for the Base Model**  **16 Groups, the Highest Sales Volume Tested**  **17 Combinations for each Base Model Group.**  **18 MR. SACHS: Eric?**  **19 MR. CHEN: Yes?**  **20 MR. SACHS: This is Harvey. Before**  **21 you move on, I just want to emphasize the**  **22 point from our first day that it is the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 combination of performance of the condensing**  **2 unit, which has been our major focus, the**  **3 indoor coil and the air handler, that gives**  **4 you the certified match with that SEER rating.**  **5 MR. CHEN: That is correct.**  **6 MS. MEYERS: Well, what did you say,**  **7 Harvey? Could you repeat that?**  **8 MR. SACHS: Not while I'm chewing.**  **9 It is the combination, when you flip back, the**  **10 certified match is a certification of the**  **11 compliance or ratings of the combination of**  **12 the specific condensing unit, specific indoor**  **13 coil, and specific air handling system. Did**  **14 I miss something?**  **15 MS. MEYERS: Well, outdoor unit coil**  **16 and/or indoor size. You need an or in there.**  **17 MR. SACHS: I need an or in there.**  **18 Thank you.**  **19 MR. EISNER: Okay, Bruce Helft has a**  **20 question.**  **21 MR. KROWKA: A question from Bruce**  **22 Helft. Are you stating there is a five** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 percent testing tolerance from target**  **2 certified efficiency for testing on all BMG**  **3 HVAC setups? Are the mixed-match coils**  **4 SEER/EER certificates derived from actual**  **5 testing or estimated? If an HVAC is tested**  **6 under a routine enforcement testing program as**  **7 the CEC and DOE do and the mix-matched setup**  **8 is over five percent for a unit that was**  **9 derived statistically, what is DOE's position**  **10 on enforcement action?**  **11 MR. RAWALD: So, I will answer the**  **12 last question. This is Doug Rawald. This is**  **13 pretty off the scope of what we are talking**  **14 about here. So, we said before that**  **15 compliance is compliance. There is no five**  **16 percent tolerance with compliance with Energy**  **17 Efficiency Standards. So, AHRI, in their spot**  **18 testing has a five percent tolerance built in**  **19 for the ratings. That is different than any**  **20 sort of understanding by or statement by the**  **21 Department of Energy that we would tolerate a**  **22 five percent performance below the rated value** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 required for a piece of equipment or a product**  **2 for the standard.**  **3 So, but the question is really kind**  **4 of outside the scope of what we are focused**  **5 on. We are really focused on the use of the**  **6 directory. So, perhaps Bruce can email those**  **7 questions directly to me, Doug Rawald, and we**  **8 can discuss them with AHRI offline. I think**  **9 it is a little outside the scope of what we**  **10 are doing here.**  **11 So, Dave, do you have a point you**  **12 want to make?**  **13 MR. WINNINGHAM: Yes, just to kind**  **14 of publicly, there are steps if there is a**  **15 failure at five percent, where it goes into**  **16 additional samples that ultimately if there**  **17 are continued issues, it goes into a process**  **18 that looks very much like the DOE statistical**  **19 approach.**  **20 MR. CHEN: So, here I am just**  **21 talking about some different users of the**  **22 directory. We have HVAC design firms,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufacturers, again I mentioned earlier,**  **2 federal agencies rely on our directory to list**  **3 their ENERGY STAR for EPA -- to list their**  **4 ENERGY STAR qualified models, utility**  **5 companies, contractors, technicians,**  **6 installers, architect building engineers.**  **7 There is quite an assortment of users of the**  **8 directory and they all use them for different**  **9 reasons but utility companies for rebates,**  **10 manufacturers to show their customers that**  **11 view what their ratings are. The directory is**  **12 really the one-stop shop to get all the**  **13 information that a consumer or architect or**  **14 contractor may need to design their equipment.**  **15 MR. RAWALD: Eric, if I could stop**  **16 you here. This is Doug Rawald. Chuck, I have**  **17 a question for you. He is talking about your**  **18 folks here, when it says contractors,**  **19 technicians and installers. Do you find folks**  **20 actually provide this? I mean do people do**  **21 this by and large?**  **22 MR. WHITE: Well, they do. Not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 always, but they do particularly if there are**  **2 incentive programs involved, rebates from**  **3 utilities or governmental units. Sometimes**  **4 you do it just to assure the customers that**  **5 indeed what you put in is what you put in.**  **6 But if you are putting in base model**  **7 equipment, SEER 13 equipment, it is going to**  **8 revise SEER 13.**  **9 Typically, if you are selling higher**  **10 level, you are going to give them the**  **11 certificate so they know if you told them it**  **12 is a 16, it is going to be a 16.**  **13 MR. RAWALD: Right. So, it is**  **14 really for people who are buying more**  **15 efficient equipment so they can know I am**  **16 really getting this better with all the bells**  **17 and whistles piece of equipment than the other**  **18 folks might be getting.**  **19 MR. WHITE: But again, it depends on**  **20 the contractor. Some people put together a**  **21 packet, a dossier of all the information**  **22 related to the installation. So, you give** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 them the manual and all the paperwork and**  **2 everything in one package. Others, if you are**  **3 doing an apartment complex with a thousand**  **4 apartments, you are not going to give that to**  **5 anybody.**  **6 MR. RAWALD: Right. For folks who**  **7 aren't giving it out, do you think there is a**  **8 lack of knowledge, or they just don't have**  **9 time to download a certificate, or a lack of**  **10 interest, or a mixture of all of those things**  **11 possibly?**  **12 MR. WHITE: Probably a mixture.**  **13 MR. RAWALD: So, we could possibly**  **14 get more folks to do it if we educated them on**  **15 the process?**  **16 MR. WHITE: I think there is a big**  **17 education component in really all the stuff we**  **18 are talking about to consumers particularly.**  **19 Contractors as well but like a lot of things,**  **20 I said previously, contractors are**  **21 reactionary. So, if a consumer says I want**  **22 this, contractors are going to be in the habit** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of providing that and pretty soon it is just**  **2 going to be a normal occurrence.**  **3 But if you meet with consumers and**  **4 you hand them a pile of paperwork and they say**  **5 well, that is nice and they drop it in the**  **6 circular file, you lose motivation.**  **7 MR. CLARK: This is Gary Clark from**  **8 Goodman. I can say that in my experience, and**  **9 I have only been doing it for 30 years now, in**  **10 the olden days, AHRI used to print a directory**  **11 twice a year and the common term for it was**  **12 "The Bible." It is kind of the way people**  **13 think of it. It is kind of at that level.**  **14 And then from a communications**  **15 standpoint, we have webinar training two or**  **16 three times a year on how to use the directory**  **17 because we consider it to be so important that**  **18 contractors understand how to get these**  **19 certificates and ensure that the homeowner**  **20 understands what the efficiency of the product**  **21 is that they are ultimately buying.**  **22 So, we consider it very important to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the point where we have ongoing training. You**  **2 know I could download the webinar right now**  **3 for you if you would like to see what we go**  **4 through because we consider it so important.**  **5 And I am sure the other guys do the same kind**  **6 of thing.**  **7 MR. GIBBONS: John with Carrier.**  **8 One of the other thing to add on to what Chuck**  **9 said is most of the national home builders**  **10 region by region require an AHRI certificate**  **11 per system.**  **12 MR. RAWALD: And who do they get**  **13 that from?**  **14 MR. GIBBONS: That get it from the**  **15 contractor who does the work for them, a**  **16 subcontractor usually.**  **17 MR. WINNINGHAM: This is Doug**  **18 Winningham from Allied. In many other areas**  **19 where a program gets pulled, this, in some**  **20 instances is required, or if there is a code**  **21 inspection, the inspector will look for the**  **22 certificate or ensure even at minimum** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 efficiency that there is a valid rating on the**  **2 bottom.**  **3 MR. RAWALD: And I would note that**  **4 Don Surrena, who is our code guy is nodding**  **5 his head in agreement with us.**  **6 MR. PORTER: Steve Porter, Johnstone**  **7 Supply. We get this for our number one**  **8 requested item. We kind of redo the**  **9 certification in an easier form for people to**  **10 understand and match up. That is what we get**  **11 requests on. I would say our number one**  **12 request is --**  **13 MR. RAWALD: From your customer, not**  **14 your contractors?**  **15 MR. PORTER: Not for the**  **16 contractors.**  **17 MR. RAWALD: And that was going to**  **18 be my follow-up question. Chuck, from your**  **19 point of view, would it be more useful for a**  **20 contractor or more well-used if they just got**  **21 it from distributors as a matter of course**  **22 certificate, rather than having to get it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 themselves?**  **2 MR. WHITE: This is Chuck White. I**  **3 don't know one way or the other. I suppose if**  **4 they hand it to you, what happens at the**  **5 wholesaler, if it happens at the transaction,**  **6 it is usually going to the technician or**  **7 possibly the delivery guy. And that may not**  **8 be in the right bin in the organization. And**  **9 I will say, at least in my geographic area, I**  **10 have never had a building inspector ask me for**  **11 any of this. And I have four different**  **12 jurisdictions that we have worked in over the**  **13 years.**  **14 MR. LATTANZI: This is Matt Lattanzi**  **15 at NORDYNE. And John and Steve may want to**  **16 elaborate on this further but I have seen a**  **17 lot of materials, more specifically, price**  **18 sheets to contractors from distribution. And**  **19 on the price sheet for specifically net**  **20 system, many of them reference the AHRI**  **21 certification reference number. So, you have**  **22 the reference number indoor and outdoor unit** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 for that match. So, the contractor has that**  **2 number and can easily print a certificate.**  **3 MR. EISNER: Harvey?**  **4 MR. SACHS: This is Harvey. And on**  **5 the outside as an advocate looking in, but**  **6 noting the very large financial investment**  **7 that is made in this program and the self**  **8 enforcement that comes from everyone's**  **9 interest from a level playing field, and we**  **10 have accorded great respect to the effort that**  **11 leads to this directory.**  **12 MR. EISNER: Okay, we have two**  **13 questions from John Stooks. He is online.**  **14 The first one: Is the rating really**  **15 representative of field performance?**  **16 MR. SACHS: No.**  **17 MR. RAWALD: And that was Harvey, in**  **18 case anybody was wondering.**  **19 MR. EISNER: Okay, he's got a second**  **20 question. Is that the answer? Anybody else**  **21 want to speak on that?**  **22 MR. CHEN: I mean the rating is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 based on the performance testing that is**  **2 dictated by the standard and the actual method**  **3 of test.**  **4 MR. CLARK: Well, another way of**  **5 thinking -- this is Gary Clark from Goodman.**  **6 Another way of thinking about it is it is**  **7 absolutely correct, given the parameters of**  **8 the test.**  **9 If your house happened to have the**  **10 exact same parameters as what we use in the**  **11 testing, then yes, in all likelihood, it would**  **12 be very, very, very similar. The fact of the**  **13 matter is is a house in Houston is going to**  **14 operate probably a little different than a**  **15 house in Chicago, different from a house in**  **16 California, a house in New York. And so when**  **17 you say a house, you know everybody's house is**  **18 different and that is why we have this test**  **19 standard that we test.**  **20 So the answer to the question is if**  **21 your house is operated at the same outdoor**  **22 temperature, the same indoor temperatures that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we do in our testing then, yes, it would be**  **2 the exact same.**  **3 MR. RAWALD: This is Doug and I feel**  **4 comfortable giving a Department answer because**  **5 this is important to the Department. The**  **6 ratings are obtained pursuant to the DOE test**  **7 procedure, which is meant to represent in the**  **8 best way possible what the actual performance**  **9 of the product is going to be.**  **10 So, now there are constraints**  **11 because a laboratory test, as Gary has**  **12 described, but is the best method currently**  **13 for the Department to achieve a representative**  **14 rating of the performance. And I think that**  **15 is the answer.**  **16 MR. SACHS: Well, this Harvey. I**  **17 think I should amplify my blurt to say that**  **18 the test conditions are extremely unlikely to**  **19 be representative of installation in all but**  **20 the smallest fraction of houses.**  **21 As a specific example, the very low**  **22 external static pressure assumes a ductwork** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 system. Since the conditions were set a**  **2 quarter century ago, there has been an**  **3 enormous amount of field research and actual**  **4 conditions in houses that was not available**  **5 when this test was established. We have had**  **6 extensive discussions with industry in the**  **7 process of looking at standards. And I think**  **8 at this point we have all licked our wounds**  **9 and agreed that it probably gives reasonable**  **10 comparisons of relative efficiency but it is**  **11 highly unlikely in the context of the specific**  **12 question asked to be representative of**  **13 expected performance in the field and actual**  **14 houses.**  **15 MR. RAWALD: Okay. And so, I guess**  **16 once again, we are kind of going down a rabbit**  **17 hole that is outside of the scope this because**  **18 we are really not going to deal with testing**  **19 at all, unfortunately, with this particular**  **20 negotiation. So, there are obvious concerns**  **21 people have but the Department's position is**  **22 the test procedure is how you get the ratings** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and that is what the test procedure is for,**  **2 with the caveats that everyone has their**  **3 concerns, as Harvey articulated them.**  **4 MR. EISNER: But he does have a**  **5 second question, I think is not outside the**  **6 scope. It may have been completely answer.**  **7 How were test procedure air flows and static**  **8 pressure determined? Do they represent**  **9 typical field conditions?**  **10 MR. RAWALD: Right. So, I think the**  **11 best answer to that is to refer to the test**  **12 procedure as promulgated by the Department of**  **13 Energy for the answer to those questions.**  **14 They are really not in the scope of what we**  **15 are doing here. We are just focused on how to**  **16 enforce regional standards and under the**  **17 certification directory of the AHRI, can**  **18 provide a tool for us in that enforcement**  **19 process.**  **20 MS. NOLL: This is Elizabeth, NRDC.**  **21 I have a question about the appliance are AHRI**  **22 certified. And that is on the appliance** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 sticker, label, whatever. What additional**  **2 value does the certificate provide? Is that**  **3 just an additional signal to the customer or**  **4 they one in the same?**  **5 MR. CLARK: I guess when I think**  **6 about it -- this is Gary from Goodman -- is**  **7 when you look at a split system air**  **8 conditioner for just like one basic model**  **9 group, you can literally have hundreds and**  **10 hundreds and hundreds of ratings. And so if**  **11 you are a consumer, which one is mine is very**  **12 difficult to find.**  **13 So, when you get a certificate like**  **14 this, it specifies the one that you have in**  **15 your house. And so I think it provides some**  **16 clarity and some confidence that you are going**  **17 to get this performance.**  **18 MR. RAWALD: Right. This is Doug.**  **19 It goes to the fact there is a combination of**  **20 two independent or possibly three parts and it**  **21 dictates how those perform together.**  **22 So, I think in a single package** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 instance, it would be less valuable because a**  **2 single package is what it is labeled. So,**  **3 when we are talking about the split system, it**  **4 can be valuable and not show that these**  **5 performing parts together have this value.**  **6 MS. NOLL: It is your unit.**  **7 MR. RAWALD: Great. Eric?**  **8 MR. CHEN: The last thing I want to**  **9 mention about the different users of the**  **10 directory is that we do provide subscribers**  **11 with all this information. We have currently**  **12 38 subscribers, not including manufacturers**  **13 who also subscribe to the data. And what that**  **14 basically means is that every week we send**  **15 them a link directly to download all of the**  **16 current information on the directory.**  **17 And utilities, software developers,**  **18 nonprofits, they consist of users of these**  **19 subscribers.**  **20 Okay, so at this point, I would like**  **21 to kind of go into a live demo and maybe give**  **22 some examples. And if you guys want to see** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 anything in particular, I would be happy to**  **2 show you that.**  **3 MR. GIBBONS: This is John from**  **4 Carrier. Before you do that, just on**  **5 Elizabeth's question there which I think we**  **6 already addressed, yesterday we looked at the**  **7 hang tags on the units. So, bear with me here**  **8 for a minute.**  **9 So, if you are a homeowner, you want**  **10 to know what your unit gets. You are not**  **11 going to find it out from the hang tag, the**  **12 way it is laid out, but you will from that**  **13 certificate.**  **14 MR. RAWALD: And for those on the**  **15 phone, this is Doug, John use of hang tags**  **16 means the FTC label that we discussed**  **17 yesterday.**  **18 MR. GIBBONS: With the split system**  **19 central air conditioner.**  **20 MR. CHEN: Yes, there is a note on**  **21 the directory that there is a disclaimer**  **22 saying because the label right now lists the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 rating of the HSVTC combination, but the**  **2 disclaimer on the website will say to find out**  **3 your particular system combinations rating,**  **4 you will need to refer to the certificate.**  **5 So, I will just walk through a**  **6 simple example. And again, if you guys want**  **7 to see anything specific, please let me know.**  **8 So, I will start with this is the**  **9 main page of the directory. And you can**  **10 scroll through the various product categories**  **11 that we have. In this case, I will look at**  **12 air conditioners and air conditioner coils.**  **13 So, here is the search screen. So**  **14 any user of the directory can go in here. If**  **15 you already know the AHRI reference number,**  **16 you can input that here and just go straight**  **17 to that listing and print out the certificate.**  **18 If you are trying to compare models, you can**  **19 search for a particular manufacturer's**  **20 products, type in some min and max values for**  **21 different rating metrics. There is various**  **22 categories and it is pretty robust in terms of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 letting you search for different kind of**  **2 listings.**  **3 MS. MEYERS: So, Eric, let me just**  **4 add. As Matt pointed out, lots of times price**  **5 sheets or whatever for certain combinations of**  **6 units will have a reference number on them**  **7 provided by the manufacturer. And that is**  **8 what you can put in that first box. You can**  **9 go and then just put in that reference number**  **10 and the certificates can automatically pop up**  **11 so you don't have to search. I think a lot of**  **12 OEMs use that and probably distributors, I**  **13 don't know, you could use that a lot.**  **14 So yes, we just give them what the**  **15 reference number is and then they can go and**  **16 pull it for the job.**  **17 MR. RAWALD: So, this is Doug. And**  **18 so just looking at the search page, what I**  **19 think is interesting is that an informed user**  **20 could enter into the minimum EER value they**  **21 have in the southwest or the minimum SEER**  **22 value in the southwest and the southeast and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 at least limit their returns to the legally**  **2 installable in their area.**  **3 What might be helpful would be if**  **4 there some sort of way for someone to hit a**  **5 button that says what would be legal in**  **6 Maryland.**  **7 MS. NOLL: Or it could be say zip**  **8 code sorted.**  **9 MR. RAWALD: Or something. And I'm**  **10 not asking AHRI, I am just thinking out loud**  **11 about different ideas for us to talk about in**  **12 a group.**  **13 MR. WINNINGHAM: This is Dave and**  **14 Eric can chime in. There has been discussions**  **15 around that.**  **16 MR. RAWALD: Functionality.**  **17 MS. MEYERS: Once we know what 14**  **18 SEER means --**  **19 (Laughter.)**  **20 MS. MEYERS: -- to make changes to**  **21 the AHRI database. And until you give us that**  **22 answer --** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. PORTER: So, I haven't missed**  **2 anything.**  **3 MR. CHEN: No, no problem. Just as**  **4 kind of Dave mentioned, you know AHRI has**  **5 taken some initiative in thinking about ways**  **6 that this could address regional standards,**  **7 maybe adding a search criteria for region. I**  **8 will show you the search result. And I'm just**  **9 not sure to one extent just because it was the**  **10 first one I thought about.**  **11 But also don't forget to enter this**  **12 code here because sometimes people forget to**  **13 do that and then you can't get any results.**  **14 Hopefully, people online can see**  **15 this and people here, I know it is a little**  **16 bit tiny but this kind of displays an overview**  **17 of each product's listings and the different**  **18 purported metrics and features. And what I**  **19 was just going to say is we have discussed**  **20 internally possibly adding a column that would**  **21 say regions to be sold in or something on**  **22 that, which could list the different regions.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 But again here, I will just go**  **2 through the columns real quick. Many of them**  **3 are similar to a different theory, CCMS**  **4 submissions that we submit. But we have**  **5 obviously the AHRI certificate certified**  **6 reference number. That is one of the main**  **7 criteria. And again, as Karen mentioned, most**  **8 people just enter that in if they already know**  **9 it to print out the certificate.**  **10 The directory is again real-time so,**  **11 will show whether a unit is active or**  **12 discontinued or obsolete.**  **13 So, in this particular instance,**  **14 this Lennox example, they are a system**  **15 manufacturer, so they make split system units.**  **16 And it goes over the trade name, brand name,**  **17 series names. Again, Lennox is listed as the**  **18 manufacturer. And what is important to note**  **19 here is that here is an example of split**  **20 system and it is really clearly laid out that**  **21 there is an outdoor column and then the model**  **22 there. So, that is the model number of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 outdoor unit. Then the next few columns is**  **2 for the indoor unit and it lists the indoor**  **3 model number there as well. So, this is the**  **4 system combination, the system match for that**  **5 reference number.**  **6 Going further down the line, we**  **7 recently added the air flow that was used to**  **8 determine that rating. Okay and then the next**  **9 couple items are the certified criteria that**  **10 AHRI certifies in this program. And as**  **11 mentioned earlier, for ACs, that is cooling**  **12 capacity, EER and SEER but we also IER for**  **13 water-cooled and evaporatively cooled**  **14 products.**  **15 MR. RAWALD: So, Eric, on those, you**  **16 guys are already collecting EER. Everyone has**  **17 that?**  **18 MR. CHEN: That is correct. It is a**  **19 certified metric at AHRI. We do certify EER**  **20 and again, that is a certified metric at AHRI.**  **21 So, if a participant were to fail that metric,**  **22 they would still have to answer the same way** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 they have answered any SEER failure or heating**  **2 and cooling capacity failure.**  **3 And then someone mentioned earlier**  **4 that was asking about three-phase products.**  **5 So, we do have a column that lists the phase**  **6 for that particular match. So, both single**  **7 phase and three-phase are listed in our**  **8 directory.**  **9 Next we go into the AHRI types. And**  **10 the one that would be listed there would be**  **11 like split system type, coil only,**  **12 coil/blower, single package units, space**  **13 constrained units, those kinds of things would**  **14 be listed there.**  **15 What is important to note here is**  **16 that we also display what the HSVTC model is.**  **17 So, in this particular instance, all these**  **18 listings are the Highest Sales Volume Tested**  **19 Combination.**  **20 The next column is hard to see but**  **21 it is listing if the model is exclusively for**  **22 export. So, these models here are not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 exclusively for export. And then we go into**  **2 cost estimates, whether it is eligible for tax**  **3 credits. And at the very end there, you can**  **4 double click on that icon to get the energy**  **5 guide label for that system combination.**  **6 So, let me first show you the AHRI**  **7 certificate and it is fairly simple to use.**  **8 Again, just double click on any listing and**  **9 then it will pop up a window to download it.**  **10 And here it is pulled up on the screen. A**  **11 user could print out their certificate or just**  **12 use it to get the reference number or anything**  **13 like that.**  **14 MR. RAWALD: If can ask, Steve, you**  **15 mentioned before you do a more user friendly**  **16 form of information. What do you folks do**  **17 differently with packaging this information?**  **18 MR. PORTER: Usually we set it up as**  **19 a match up with coils and units, make the**  **20 efficiency ratings so they can easily match up**  **21 the system as well as a reference number and**  **22 price sheets that customers request how they** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 want that information displayed. So, it**  **2 varies per customer and per store group. But**  **3 pretty much usually there is a standard way**  **4 each distributor would want that material**  **5 presented to their customers.**  **6 MR. RAWALD: Would that be something**  **7 you would be willing to share with the group,**  **8 an example of what that would look like?**  **9 MR. PORTER: Yes, I think so, a**  **10 typical one.**  **11 MR. ROCKY: This is Bryan Rocky.**  **12 So, what Steve ends up doing is putting**  **13 together more of a price offering book.**  **14 Because in this case, when they sell some of**  **15 our product or some of Gary's product, there**  **16 are literally 50,000 combinations and Steve**  **17 doesn't sell all those or his group doesn't**  **18 sell all those. So, they take the data from**  **19 the AHRI database in an Excel spreadsheet form**  **20 that they can manipulate to what they sell by**  **21 location to their customers and make it easier**  **22 to select a system, rather than having someone** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 go through 200 of these certificates or**  **2 listings. We can build more usable. But it**  **3 is all the AHRI data reference back to the**  **4 certificate numbers, et cetera.**  **5 MR. RAWALD: Well, as I think about**  **6 this, I am always trying to think of ways of**  **7 minimizing duplicating. So, if there are**  **8 things that are already being done,**  **9 information is already being prepared and**  **10 passed on, is there a way to take advantage of**  **11 that.**  **12 So, it would be helpful if we could**  **13 see that information is being passed so we**  **14 could say okay, there is something here we can**  **15 use possibly in this regional enforcement**  **16 effort.**  **17 MR. PORTER: This is Steve Porter.**  **18 Each distributor is going to do that maybe a**  **19 little differently and they are going to**  **20 present a little differently. And it depends**  **21 on who their primary equipment supplier is and**  **22 how they even stock for preferences in their** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 market, contractor preferences, whether the**  **2 coil, based on the height of the ceiling in**  **3 the basement or those match ups are not --**  **4 there is some regionality product types. And**  **5 so, accordingly, they will match that up**  **6 correctly and then put it in a tighter, as**  **7 Bryan was saying, that they don't have to go**  **8 through all the iterations of that particular**  **9 model.**  **10 MR. WINNINGHAM: They have covered**  **11 it. I was just going to point out for this**  **12 particular search, there are 60,349 matches.**  **13 And that is why they condense it down to**  **14 something that is more presentable.**  **15 MR. SACHS: This is Harvey.**  **16 Unstated but clearly important is the**  **17 distributor's effort to add value with the**  **18 pricing information in ways that are useful to**  **19 the contractor in, I assume, ways that lead**  **20 directly to the bid form for the customer's**  **21 sake.**  **22 MR. CHEN: So, again, as I was** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 previously saying, internal discussions among**  **2 the members in our committee meetings, we have**  **3 considered perhaps even adding regions**  **4 eligible to be sold and then just listing all**  **5 the regions that this particular combination**  **6 would be sold. That would help.**  **7 MS. MARCHETTI: To the certificate.**  **8 MR. CHEN: Yes.**  **9 MS. MARCHETTI: Yes.**  **10 MR. ROCKY: Very quickly, could you**  **11 just scroll down to the bottom of that page**  **12 where you are at? Not the certificate, the**  **13 actual --**  **14 MR. CHEN: Oh, I'm sorry.**  **15 MR. ROCKY: -- the listings. There**  **16 you go. Just scroll down on that page to the**  **17 bottom. So you can see there at the very**  **18 bottom is where Dave was talking about, now**  **19 displaying records 1 through 20 of 60,348.**  **20 MR. RAWALD: Right. This is Doug.**  **21 I can see how that number would belong both to**  **22 consumers and to installer contractors. So,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I mean knowing you have 60,000 combinations to**  **2 weed through could be somewhat onerous.**  **3 MR. ROCKY: And the other thing,**  **4 again, with this particular listing you do**  **5 have some products now with the independent**  **6 coil manufacturers listed and you can identify**  **7 that by the fact there is a different**  **8 manufacturer name in the sixth column. And if**  **9 Eric can pull that in either the certificate**  **10 for one of those coil mix-matches, again, it**  **11 will pull up the rating provided by the ICM**  **12 with that outdoor unit, which is different**  **13 than what the OEM would have -- potentially**  **14 different.**  **15 MR. RAWALD: This is Doug. And so**  **16 on a certificate, what is displayed if it is**  **17 discontinued or obsolete?**  **18 MR. CHEN: It should say the status**  **19 of the unit but it does say it on the**  **20 directory main page, going back to here. On**  **21 one of the left-most columns.**  **22 You know one of the things about the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 vast number of results is that in this example**  **2 we only just searched for Lennox. We didn't**  **3 put any additional criteria in. So, it is**  **4 going to show basically all the models that**  **5 they certify with us.**  **6 Once you start putting in some**  **7 levels like SEER minimums and maximums, then**  **8 that will whittle down a little bit.**  **9 MR. RAWALD: This is Doug. And so a**  **10 follow-up question for Steve. When you folks**  **11 see something that says discontinued or**  **12 obsolete, do you handle it differently than**  **13 you would an active model?**  **14 MR. PORTER: Do you see that it is**  **15 obsolete?**  **16 MR. RAWALD: If would be obsolete on**  **17 the database. So, would you kind of update**  **18 for me, as far as information?**  **19 MR. PORTER: Yes, if something**  **20 becomes obsolete, pretty much you have got a**  **21 figure a way that you are going to have to**  **22 move it I mean because there is a new model** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 following. And then those units become very**  **2 difficult to sell as-is.**  **3 MR. WHITE: This is Chuck White. It**  **4 may be obsolete but as long as it is**  **5 compliant, as long as it meets the required**  **6 SEER rating, it is certainly not -- there is**  **7 no problem with selling it. It just may be**  **8 last year's model.**  **9 MR. PORTER: Well, I wish that were**  **10 true. I mean there is no problem with selling**  **11 it and doing those things but immediately, it**  **12 is last year's model.**  **13 MR. WHITE: Right. Correct, that is**  **14 true. I mean from a technical operations**  **15 point of view.**  **16 MR. PORTER: No.**  **17 MR. WHITE: In your inventory chain**  **18 --**  **19 MR. PORTER: Yes, it just gets in**  **20 from the distributor's point of view, as I may**  **21 not, again, I may only sell the unit for that**  **22 particular contractor and he may go somewhere** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 else to decode that. So, I am trying to**  **2 manage inventory to make sure I can move that**  **3 unit or have the match ups to move it. So,**  **4 there is kind of a balancing act and it makes**  **5 it a little more difficult to sell something.**  **6 But that is what we live every day and every**  **7 year on every model change.**  **8 MR. MELCHI: This is Jon from HARDI.**  **9 I think that maybe to answer your question, it**  **10 is my understanding if Steve is printing up a**  **11 certificate for his customer or one of the**  **12 stores, I don't believe you would put**  **13 discontinued or obsolete on that certificate.**  **14 Does that answer your question a**  **15 little?**  **16 MR. RAWALD: It is. And the reason**  **17 why this becomes significant in the regional**  **18 context where it is not right now is the**  **19 Department says hey, manufacturer, you can't**  **20 sell this anymore if it is not compliant. But**  **21 that doesn't stop the distributor with stock**  **22 to sell it out of the warehouse because we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 have already been dealt -- been sold out. So,**  **2 we are stuck at the manufacturer level. We**  **3 are not stopping it at the distributor level.**  **4 Whereas, in this case, we are stopping at the**  **5 installation level. So, suddenly, if we, upon**  **6 testing see a 14 product, find out that it is**  **7 actually functioning at SEER 12.8, so it is**  **8 not the federal standard or the regional**  **9 standard, the manufacturer can't make it**  **10 anymore but the installer can't install it for**  **11 the buyer in the region because it wouldn't be**  **12 compliant.**  **13 So, is there a righter to this**  **14 problem that exists in the regional context**  **15 that doesn't exist in the national standard**  **16 context? Does everyone follow on with what I**  **17 am saying? I'm just picking out what I am**  **18 concerned with this information but I think it**  **19 something for us to consider as a group how do**  **20 we make sure that gets taken care of?**  **21 MR. CLARK: Yes, I think in the**  **22 example -- this is Gary. In the example that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 you described where it fell below federal**  **2 minimum efficiency standards, there is a whole**  **3 different process that we get into from an**  **4 inventory standpoint, where it is not**  **5 saleable. I think maybe the bigger issue may**  **6 be if you have a unit rated at 14 SEER and it**  **7 tests out at 13.1 SEER. So, it is still legal**  **8 to be sold in part of the country but fails in**  **9 another part of the country.**  **10 MR. RAWALD: Well, at least then, it**  **11 would be stranded because hopefully, Steve**  **12 could trade it with somebody else and a**  **13 northern vender who might could dispense of it**  **14 in some way. Whereas, it if is --**  **15 MR. CLARK: We get it back, a**  **16 manufacturer.**  **17 MS. NOLL: This is Elizabeth. Does**  **18 the directory then reflect that re-rating?**  **19 So, you would then hold different numbers.**  **20 MR. RAWALD: This is Doug. So, in**  **21 referring to Eric's screen, it defines**  **22 obsolete as something that has failed the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 program. Correct?**  **2 MR. CHEN: Let me clarify that. For**  **3 obsolete models those are models that got**  **4 tested and rerated below the federal minimums.**  **5 So, it was kind of like marking that unit as**  **6 it is below the federal minimum. And it is**  **7 displayed for a certain period of time before**  **8 it is taken out of the directory in complete.**  **9 Johanna?**  **10 MS. HARIHARAH: So, I just have a**  **11 question. So, if you do get a model that**  **12 points to the 12.8 range, what does the**  **13 distributor or the manufacturer do at that**  **14 point?**  **15 MR. CLARK: The first thing that**  **16 happens is a bunch of lawyers get together.**  **17 But I can only -- never having had the**  **18 situation, this would be speculation on my**  **19 part. But we would pull the inventory back**  **20 because it is, obviously, illegal to sell in**  **21 the United States. And at that point, we**  **22 would probably look at alternatives to try to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 sell the product in other parts of the world,**  **2 where if there aren't these type of efficiency**  **3 standards in place.**  **4 MS. HARIHARAH: Is that feasible?**  **5 Do people sell them nationally?**  **6 MR. CLARK: Yes.**  **7 MR. WINNINGHAM: The other component**  **8 of that is there is the inventory but you**  **9 would first stop production. You would stop**  **10 production and then look at what inventory you**  **11 may have.**  **12 MR. ROCKY: So, Bryan Rocky from**  **13 JCI. So, there is a defined process. We have**  **14 to follow notification from -- when AHRI has**  **15 a failure there is a process we work through**  **16 with DOE. You have opportunity for multiple**  **17 samples. But once it is defined as**  **18 noncompliant, there is a very straightforward**  **19 letter that is sent from the Department that**  **20 outlines what we as manufacturers have to do**  **21 and that includes stopping production,**  **22 inventory concerns, notifying customers and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 going forward. So, obsolete, involuntary**  **2 ratings or failures are taken very seriously**  **3 by every manufacturer.**  **4 MR. PORTER: Steve Porter, HARDI.**  **5 The strain on inventory for us is a big issue.**  **6 Re-handling any equipment, we like to handle**  **7 it once. That is, ship to a spot, track then,**  **8 somebody picked up. Because the damage in re**  **9 handling it a third time just continues to**  **10 escalate. Each time you touch that equipment,**  **11 you have more opportunity for a leaky coil,**  **12 problems with the equipment. It is damaged.**  **13 Somebody doesn't want to buy it that way**  **14 because there is a dent in it. These things**  **15 are not built to be re-handled very much, very**  **16 often.**  **17 MR. RAWALD: Okay.**  **18 MR. GIBBONS: John from Carrier. I**  **19 have one other thing to add on to what Bryan**  **20 said. It is a very rare occurrence that all**  **21 this would happen because the process and**  **22 procedures are very tight. So, again, it is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 very rare. **2 MR. RAWALD: Right but, I mean from 3 the Department's point of view I do have to**  **4 acknowledge it does happen. We do have cases 5 they are publicly advertised. So, we do**  **6 investigate and enforce these things. 7 I just want to make sure we are**  **8 thinking about all the unique variables that 9 are in play. And we need more context that**  **10 are not in play with other national standards 11 because really want to show -- eventually the**  **12 surprising thing is that we dig deeper into 13 this and eventually we got everything figured**  **14 out. 15 So, Elizabeth, did you have a**  **16 question? 17 MR. CHEN: Okay, so what I did just**  **18 now was I pulled up a random energy guide 19 label for one of those Lennox listings. So,**  **20 here we see a label. And anyone can go and 21 access it and download it. Again, it lists**  **22 the manufacturer in the upper right corner,**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the model number, mainly the rating here.**  **2 I'll just run through a quick heat**  **3 pump example.**  **4 MR. RAWALD: That's not necessary**  **5 because that is not the scope of this regional**  **6 standard.**  **7 MR. CHEN: Okay.**  **8 MR. RAWALD: So, but if you can put**  **9 a single package, that would be helpful.**  **10 MR. CHEN: Okay, sure. I will do a**  **11 single package.**  **12 Here's a single package example,**  **13 very similar to the split system but instead**  **14 of the model number, the model number listed**  **15 in the indoor is just blank and it will just**  **16 only list the outdoor model. And again, you**  **17 can tell a single package because of the code**  **18 here, the AHRI tag here, single package.**  **19 It works the same way. You can**  **20 double click the listing, pull up the AHRI**  **21 certificate or you could download the energy**  **22 guide label.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, that's really my demo. If you**  **2 guys want to see anything additional, I would**  **3 be happy to show that to you.**  **4 But I just want to go over some more**  **5 statistics briefly with you guys. So, we have**  **6 about almost two million listings total across**  **7 all of the programs on the directory. But**  **8 with specific to unitary small equipment, it**  **9 is shown on the screen here. The numbers here**  **10 don't include -- I'm sorry. The numbers here**  **11 include system manufacturers, independent coil**  **12 manufacturers, OEM and PBM counterparts but it**  **13 doesn't include the exclusively for export or**  **14 three phase listings. But as you can see, it**  **15 takes the majority of our directory listings**  **16 as unitary small coil.**  **17 And here is just some statistics on**  **18 how many visitors we get to this site. And**  **19 each of the products, ACHP and then the VSM is**  **20 Variable Speed Mini-Split/Multi-Split. Each**  **21 of those pages are separate pairs on the**  **22 directory. So, this is showing you how many** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 visitors are visiting each product type. And**  **2 this is just the number of visitors in the**  **3 last five months.**  **4 It also shows that people are**  **5 downloading the energy guide labels as well.**  **6 We have had about 21,000 downloads of energy**  **7 guide labels within the past five months.**  **8 And again, I just want to reiterate**  **9 that EPA is relying on our directory and we do**  **10 have about 35,000 listings with ENERGY STAR**  **11 and just recently added in 2014 is 1300 models**  **12 and I am still getting requests every day to**  **13 add more listings for ENERGY STAR.**  **14 Any questions?**  **15 MR. RAWALD: This is Doug. I do**  **16 want to note, I note a number of wild cards in**  **17 the model numbers. So, for users who are at**  **18 home, they won't see that star star. They**  **19 will see a number or something else in that**  **20 place. There is actually more possible model**  **21 numbers than merely the one million**  **22 combination. There is actually many more** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 because the wild cards are in that group of**  **2 models that have a similar number but that**  **3 number changed in certain instances.**  **4 MR. CHEN: That's correct. The wild**  **5 numbers -- actually I have a couple of backup**  **6 slides here on how to kind of walk through**  **7 that process because it can get kind of**  **8 confusing. But these wild card numbers really**  **9 don't reflect the performance of the unit.**  **10 They just represent maybe, I don't know, a**  **11 color change or a paint color that could be**  **12 associated with that particular specific**  **13 number.**  **14 So, to reduce the number of**  **15 redundant listings on the directory, we have**  **16 created the wild card feature. But it does**  **17 make it a little bit difficult to search. And**  **18 you know, we do have training to help guide**  **19 people to go through that process.**  **20 MR. RAWALD: Right. This is Doug.**  **21 And so what I want to know is for my own use**  **22 of the directory is that as the uninformed** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 user typing in a model number, you may get no**  **2 results because there is no -- that model**  **3 number as entered wouldn't be actually**  **4 truncated in some way, that is what people**  **5 typically do and then search for one that**  **6 might contain your wild card. So, there is**  **7 that limitation to the consumer searching for**  **8 their exact model number as it is installed in**  **9 their house. They wouldn't necessarily find**  **10 it immediately. They would have to do a**  **11 little bit of thinking about a search for it.**  **12 MR. CHEN: That is correct. And one**  **13 of the things we always try to advise people**  **14 is that the less information is better. Maybe**  **15 just start with a few characters of the indoor**  **16 and the outdoor model and then see if we can**  **17 get any results. And you want to use the**  **18 export feature of the directory, too, which**  **19 can export listings. And that could help you**  **20 narrow down your search when you are trying to**  **21 identify the specific combination you are**  **22 looking for.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. CLARK: This is Gary from**  **2 Goodman. And also, homeowners have issues.**  **3 Once again, the contractors for the most part,**  **4 many of them have experienced training, as**  **5 Eric has talked about, that wherever they have**  **6 gotten it, can usually help the homeowner kind**  **7 of through the process if they questions or**  **8 they call us. It's not unusual.**  **9 MS. MEYERS: But Eric, if you have**  **10 the exact model number already, you can type**  **11 that in there, right?**  **12 MR. CHEN: If it is the exact model**  **13 number that is listed in the directory, yes.**  **14 MR. EISNER: Any other questions?**  **15 MR. WHITE: This is Chuck. Just a**  **16 comment on the screen of visits, there were**  **17 well over 400,000 visits and 20,000**  **18 certificates printed.**  **19 MS. MEYERS: That is energy guide**  **20 labels.**  **21 MR. WHITE: Energy guide labels,**  **22 five percent. Less than five percent.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MS. MEYERS: Energy guide labels.**  **2 Do you know how many certificates were**  **3 printed?**  **4 MR. CHEN: I don't have that**  **5 statistic in front of me but we can provide**  **6 that to you guys. But that is correct. Karen**  **7 is right. That was just for the energy guide**  **8 labels.**  **9 MR. LATTANZI: And that was only in**  **10 the last five months.**  **11 MS. MEYERS: And we just added it,**  **12 what -- what did we add the energy guide?**  **13 Yes, I think in March -- May. May, that is**  **14 when it became, whenever we had to start**  **15 making that available.**  **16 MR. RAWALD: Neil, if I can jump in**  **17 here. So, I received at least one email from**  **18 someone on the phone, knowing that it is very**  **19 difficult to hear. I know the IT folks have**  **20 been working to get that fixed. So, for those**  **21 of you listening on the phone, we have been on**  **22 a cell phone, which is why it has been so** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 terrible to listen. But Eric did a great job**  **2 presenting, in my opinion, so that has been**  **3 very helpful.**  **4 Maybe we can take a break now and**  **5 see if it is all working and then get back on.**  **6 MR. EISNER: All right. Do we have**  **7 any more questions? All right, thank you,**  **8 Eric for the great job.**  **9 Why don't we take a 15-minute break,**  **10 come back at 20 of 11:00.**  **11 (Whereupon, the above-entitled**  **12 matter went off the record at 10:24**  **13 a.m. and resumed at 10:40 a.m.)**  **14 MR. EISNER: We have one last**  **15 question we were talking to Eric about that we**  **16 want to talk about and then we are going to**  **17 get off to the Carrier presentation. And that**  **18 was about how many people, how many products**  **19 they have that they put on there online and**  **20 how many companies and numbers.**  **21 So, could you explain the program**  **22 and what we were talking about?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. CHEN: Well, I don't have the**  **2 specific numbers but right now we have about**  **3 400 participants total in our directory. And**  **4 what is specific, I think to your questions,**  **5 you are asking me about the difference between**  **6 like participant and AHRI members and stuff.**  **7 Let me just go into a little bit of detail**  **8 there.**  **9 So, there is like two sides of AHRI.**  **10 There is AHRI membership and there is AHRI**  **11 certification participants. And AHRI**  **12 membership, those members would be involved**  **13 with the different committees that are being**  **14 run through AHRI. For example, these**  **15 committees would work on updating the**  **16 standards or writing new standards and**  **17 updating the program rules.**  **18 And then we have separately AHRI**  **19 certification participants who are the ones**  **20 that you see listed on our AHRI directory.**  **21 And again, you don't have to be a member to be**  **22 a participant. You don't have to be a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 participant to be a member. You can be one or**  **2 the other or both. Most of the manufacturers**  **3 here in this room I think are both members of**  **4 AHRI and certification participants. But that**  **5 is not always going to be the case.**  **6 And everything that is listed on our**  **7 directory is pretty much everything that is**  **8 sold in the -- there is about 99 percent of**  **9 all the -- for unitary equipment, all the**  **10 unitary equipment that is being sold in the**  **11 U.S. For that other one percent,**  **12 manufacturers --**  **13 COURT REPORTER: I'm sorry, Mr.**  **14 Chen. Can you pause? I'm not picking you up.**  **15 MR. CHEN: I'm sorry.**  **16 COURT REPORTER: Thank you.**  **17 MR. CHEN: Again, our directory with**  **18 regards to unitary equipment, it pretty much**  **19 houses 99 percent of all the equipment that is**  **20 being sold in the U.S. And then for that one**  **21 percent, there is many factories who are not**  **22 AHRI participants would have to go through** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 maybe DOE certification. They would have to**  **2 certify their models directly with DOE to sell**  **3 those products.**  **4 MR. EISNER: Okay, any questions on**  **5 that issue from anyone? As I understand it,**  **6 there is the issue of being able to get**  **7 representation of the information concerning**  **8 that one percent or whatever it might be, how**  **9 to do that in an effective way, rather than in**  **10 two different programs.**  **11 Okay, if there are no questions,**  **12 thank you, Eric.**  **13 MS. MEYERS: Nice job, Eric.**  **14 Thanks, Eric.**  **15 (Applause.)**  **16 MR. CHEN: Thank you.**  **17 MR. EISNER: Okay, we are now ready**  **18 to go into the presentation from Carrier.**  **19 MR. NELSON: Where is the best place**  **20 for me to stand?**  **21 COURT REPORTER: Right where Eric**  **22 was standing.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. NELSON: All right. That wasn't**  **2 random.**  **3 All right, first my name is Chris**  **4 Nelson. I am the President of the heating and**  **5 air conditioning business through United**  **6 Technologies in North America, of which**  **7 Carrier is one.**  **8 Before I started, I wanted to**  **9 provide a little bit of background and context**  **10 as to why I am here and what the comments are**  **11 regarding. And that is, is we, being Carrier**  **12 working with AHRI, we are having conversations**  **13 with the DOE, AHRI specifically, about the**  **14 necessity to keep the process moving along**  **15 rapidly with a sense of urgency to get**  **16 resolution on guidance as well as rulemaking.**  **17 They offered the opportunity for all**  **18 manufacturers to come in and give comments on**  **19 the draft guidance and points that they**  **20 thought would require some form of**  **21 clarification for help. And they recommended**  **22 that given that this process was active right** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 now, that the manufacturers do so as a part of**  **2 this committee. That is why I am here. That**  **3 is what I am setting out to do. And**  **4 hopefully, it will be brief and to the point.**  **5 So with that, first I would like to**  **6 thank everybody for allowing me this time and,**  **7 specifically, the DOE for having moved so**  **8 rapidly to provide the draft guidance that was**  **9 released I believe on August 20th.**  **10 As I noted earlier, the sense of**  **11 urgency is high, that we have some level of**  **12 clarification and guidance that allows to go**  **13 into next season with a very legitimate and**  **14 strong and clear set of rules, regulations,**  **15 and guideposts that allow us to enact the**  **16 regional standards.**  **17 We were a part or I was a part of a**  **18 similar group that sat down nearly eight**  **19 years' ago when we started this whole thing**  **20 with regional standards, not the same group,**  **21 and probably lacking a few key members as has**  **22 been pointed out. I think we can rectify it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 with this group coming together.**  **2 Our goal at that point was to put**  **3 forth standards in higher efficiency that**  **4 would allow us to achieve real energy savings**  **5 for consumers in a timely manner. That was**  **6 kind of the motivation behind everything that**  **7 we sat down to do. We arrived through hours**  **8 of conversation at a regional standard**  **9 proposal that was accepted and we knew at that**  **10 time, beyond a shadow of a doubt that all of**  **11 the issues and the complexity would come in**  **12 compliance. It was known then, it is known**  **13 now, and the time is now and it is upon us.**  **14 And it is actually to the point where we are**  **15 kind of up against a little bit of a deadline**  **16 to make sure that we have the guidelines on**  **17 the compliance and the enforcement set out.**  **18 So, I just want to say it is our**  **19 view that the guidance that was issued on**  **20 August 20th by the DOE goes a long, long way**  **21 to providing a roadmap for proper compliance**  **22 and enforcement of this rule. I think that it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 sets a path in motion that can be expounded**  **2 upon by this group for a rulemaking but the**  **3 issues that are clarified are vital. And I**  **4 would like to make sure that I highlight those**  **5 and thank the DOE for doing so. One is the**  **6 fact that we clarified that the single speed**  **7 condensing unit need to be rated with coil**  **8 only is key; clarified that the national**  **9 testing protocol is how the efficiency will be**  **10 measured for both regional and national**  **11 efficiency standards, per existing regulations**  **12 is key. Weighing the roadmap to indicate that**  **13 HSVTC or the Highest Sales Volume Tested**  **14 Combination will be determined on a regional**  **15 basis is key. I will come back to that in a**  **16 moment.**  **17 And then finally, clarifying the**  **18 rules or the guidance on individual condensing**  **19 units or coils that are installed as part of**  **20 a replacement job and how those should be**  **21 treated also very key. And it is our belief**  **22 as a side note that this portion of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 guidance has the potential to help once and**  **2 for all clarify and put a roadmap in for**  **3 universal understanding of compliance and**  **4 enforcement of the ongoing dry R-22 issue.**  **5 So, wonderful job. The timeliness**  **6 it got out was, I haven't seen anything like**  **7 it before. And now I think we are at a**  **8 crossroads that says we need to make sure and**  **9 clarify a few key things, which I will go**  **10 through, and we would then urge the DOE to**  **11 move towards, after they get the comments, the**  **12 clarification, put out and finalize this**  **13 guidance within as reasonable a time frame as**  **14 possible, hopefully by the end of September.**  **15 The reason being is that no matter what comes**  **16 out of this group, it is our opinion that with**  **17 a proposed rule, the time that it will go to**  **18 a final rule, there is going to be some gap**  **19 in-between. And finalized guidance by the**  **20 Department of Energy would certainly serve as**  **21 a very, very strong, valid, enforceable**  **22 mechanism, to make sure that the transition** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 goes smoothly and in accordance with what we**  **2 talked about eight years ago that we delivered**  **3 the energy savings that we said we were going**  **4 to deliver, when we said we were going to**  **5 deliver it. So, we think that is very**  **6 important.**  **7 Now, specifically on the things that**  **8 we would like to see clarification on,**  **9 explicit guidance that the HSVTC is to be**  **10 determined on a regional basis. It is alluded**  **11 to. It is kind of understood a little bit in**  **12 the conversation but I think in order to make**  **13 it really black and white, we have to**  **14 explicitly say that not only with the national**  **15 test protocol be what determines efficiency on**  **16 a regional basis but the HSVTC is determined**  **17 on a regional basis as well and has to be**  **18 tested that way by manufacturers.**  **19 Secondly, explicit mention that the**  **20 replacement guidance issues applies to both**  **21 charged and uncharged units. And to really**  **22 just put it on the table, say that it applies** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to the dry R-22 issue, get it out there, make**  **2 it something that is easily understandable,**  **3 readable, and I think then we have come a long**  **4 way to closing that. Because basically, as we**  **5 read it, it says it has to meet minimum**  **6 efficiencies. It has to be still subject to**  **7 the HSVTC type conversation. And regardless**  **8 of whether it is matched, what it is matched**  **9 with in the field, it has to be able to get a**  **10 coil only range that meets that minimum**  **11 efficiency.**  **12 We think that is vital and it has**  **13 been an ongoing issue we have been wrestling**  **14 with. And I commend the DOE on coming up with**  **15 that solution.**  **16 The last thing I will wrap up, I**  **17 would just once again reiterate the need to**  **18 quickly close the guidance in order to take in**  **19 the request for clarification of the comments,**  **20 get it finalized and published potentially**  **21 and, hopefully, by the end of September. I**  **22 would then, I guess, recommend or petition** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 this group sitting here to closely look at**  **2 that guidance as a roadmap towards how we**  **3 should be thinking about compliance and**  **4 enforcement and the rules that we have put in**  **5 place that then will become the actual**  **6 rulemaking. I think there has been a very**  **7 nice roadmap set forth.**  **8 And we are essentially out of time.**  **9 That is really where we are right now. We are**  **10 all making decisions and we are talking about,**  **11 and I think the comment was very astute that**  **12 says we can do a lot of things to make this a**  **13 much more useable database or a more**  **14 understandable implementation, once we decide**  **15 what we are trying to implement. And that is**  **16 of the most paramount importance for everybody**  **17 that we can change the directory to be a lot**  **18 more user friendly, once we know, as Karen**  **19 pointed out, what 14 SEER is. I think we are**  **20 very close to it, based on the draft guidance**  **21 that was published. And I just, I wanted to**  **22 make those comments, thank the DOE for the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 steps we have taken so far, encourage the**  **2 closure to be quick and that this group then**  **3 takes this as the roadmap to go forth and**  **4 implement so that we can all get on with life**  **5 and serve our consumers very well in the**  **6 future.**  **7 So, that is all I had. I don't know**  **8 what the form is. I don't know if we want**  **9 question and answer. I don't really**  **10 necessarily want to.**  **11 MR. RAWALD: This is Doug from DOE.**  **12 I need to make something very clear. The**  **13 guidance does not intimate nor have we**  **14 expounded upon the idea that the Highest Sales**  **15 Volume Tested Combination would be regionally**  **16 based. The Highest Sales Volume Tested**  **17 Combination is a factor of the sampling plan,**  **18 in combination with the test procedure, to**  **19 arrive at a rating based upon testing, which**  **20 then can be used with an ARM, if you don't**  **21 want to do further testing.**  **22 But we have not said and I will go** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 back and ask the question for you guys, as**  **2 asked, but we have not said so far anything**  **3 regarding making the Highest Sales Volume**  **4 Tested Combination a regionally-based**  **5 criteria. That would, in fact, seemingly to**  **6 me sitting here right now, be a suggestion**  **7 that we expand the testing burden by requiring**  **8 testing based upon region; whereas, we don't**  **9 currently do that because you would be varying**  **10 what the Highest Sales Volume Tested**  **11 Combination is, which is the bedrock for then**  **12 using your ARM, as I understand it from the**  **13 manufacturers. Is that correct, that everyone**  **14 has to test the Highest Sales Volume Tested**  **15 Combination?**  **16 Karen, you are shaking your head no.**  **17 MR. CLARK: This is Gary from**  **18 Goodman. What you said about the Highest**  **19 Sales Volume Tested Combination being the one**  **20 we test, that is correct. But what you said**  **21 prior to that I think is what Karen is shaking**  **22 her head about and I think there is a couple** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of us that are probably a little confused**  **2 because the guidance seems to be kind of**  **3 different from what you have just said.**  **4 MR. RAWALD: Okay, so tell me how it**  **5 is different because I definitely want to make**  **6 sure we get this clear.**  **7 MR. CLARK: Can we put it up on the**  **8 screen maybe and kind of work through that,**  **9 rather than work off of our poor memories?**  **10 MR. RAWALD: Right. And I gave my**  **11 copy to Karen yesterday, which makes me --**  **12 MS. MEYERS: Oh, I have it. I'm**  **13 sorry. I did mean to give it back.**  **14 MR. MELCHI: She already marked**  **15 suggested changes for you.**  **16 MS. MEYERS: Yes, I just about have**  **17 it all fixed.**  **18 (Simultaneous speaking.)**  **19 MR. EISNER: We have to stop having**  **20 side panel discussions for the court reporter,**  **21 please.**  **22 Did you have something you wanted** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to say while you are putting it up on the**  **2 screen?**  **3 MR. RAWALD: Dave.**  **4 MR. WINNINGHAM: This is Dave with**  **5 Allied Air.**  **6 Doug, I think, and Karen is probably**  **7 going to bring it up, the crux of the issue,**  **8 you know HSVTC is a component of it but it is**  **9 the definition of the basic model. And I**  **10 don't know that that is something that we are**  **11 going to be able tackle within this in the**  **12 time frame needed. But it is two very**  **13 different scenarios with different**  **14 ramifications. Because under the DOE**  **15 guidance, as I see it, anytime we change an**  **16 efficiency metric, it is a different basic**  **17 model. And that would force an extreme amount**  **18 of additional testing that the industry, I**  **19 don't think, could support, even if it wanted**  **20 to.**  **21 MR. RAWALD: And this is Doug. I do**  **22 want to provide some clarity here, if I can,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 without muddying the waters. If I do, then**  **2 that is a problem and Karen will tell me, I am**  **3 certain.**  **4 So, the issue is a basic model has**  **5 one rating. So, everything within a basic**  **6 model, all the models within that must have**  **7 that rating. So, an individual model can be**  **8 grouped with individual models as part of the**  **9 basic model and they perform better than other**  **10 individual models but they can only be rated**  **11 at that value of that basic model. That is**  **12 the premise.**  **13 Now, if you want to take advantage**  **14 of having a higher rating for that individual**  **15 model, then it has to be a different basic**  **16 model because basic models, by virtue of what**  **17 they are defined as, share a rating.**  **18 MR. CLARK: This is Gary Clark.**  **19 That is a much different interpretation than**  **20 what has been used for the past, since 1982 or**  **21 1983 when this process was started.**  **22 MR. RAWALD: Okay. That is what the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 guidance says, though. You understand that.**  **2 The guidance makes that clear, that their**  **3 rating for basic model, when it gives the**  **4 examples of rating, A1, B1, A2, B2, A3, B3,**  **5 they are discussing how if you are going to**  **6 make them all the same basic model, they have**  **7 to have the same rated performance value.**  **8 So, and Gary told me it is**  **9 different. So, tell me how it is different.**  **10 MR. CLARK: Well, I'll just kind of**  **11 reflect on like the FTC tag that we discussed**  **12 yesterday. And one of the things as a**  **13 discussion between industry and the Federal**  **14 Trade Commission was we wanted to show a range**  **15 of performance, which ultimately the FTC has**  **16 made those changes to them. Based on your**  **17 definition of a basic model group, you would**  **18 never have that range. It would always be one**  **19 efficiency level for a given product.**  **20 And so, I guess it is confusing to**  **21 me, maybe others have a better idea, but the**  **22 Department participated in all those** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 discussions with the Federal Trade Commission,**  **2 as did industry participants and we came to**  **3 that conclusion that that was a good idea.**  **4 And so, if basic model groups were going to be**  **5 defined the way you have described it, we**  **6 would have never had those discussions with**  **7 the FTC because if we had the Highest Sales**  **8 Volume Tested Combination at 14 SEER, that is**  **9 the only rating that would be shown on that**  **10 tag.**  **11 MR. RAWALD: I guess what I want to**  **12 push back on is the label is on the condensing**  **13 unit. The condensing unit can be paired with**  **14 many different coils and many different**  **15 blowers, as Karen reminds me every time I**  **16 mention it, to have a different rated**  **17 performance value of that combination. And**  **18 that combination is what DOE would deem to be**  **19 the basic model. And so, the condensing unit,**  **20 which has the hang tag of the range, can**  **21 perform a variety of performance values,**  **22 depending on what basic model is part of. So,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the condensing unit itself is not a basic**  **2 model. The condensing unit with the coil and**  **3 the blower is the basic model that performs**  **4 the rated value. So, the condensing unit**  **5 alone falls anywhere from 13 to 14.2 as the**  **6 FTC label shows, depending on what is paired**  **7 with it.**  **8 But there shouldn't be or can't be a**  **9 different label for potentially the same model**  **10 number.**  **11 MR. CLARK: Okay. So, once again, I**  **12 apologize for being confused. So, in the --**  **13 MR. RAWALD: You shouldn't. I**  **14 apologize if I am confusing because you have**  **15 been here longer than I have.**  **16 MR. CLARK: In the example that we**  **17 were looking at yesterday, where it listed a**  **18 product from 13.0 to 14.2, let's say that the**  **19 HSVTC model was at 13 SEER, just presumptively**  **20 in that situation. The question that I would**  **21 have is at 14.2, let's say that there is a**  **22 rating in the directory, at 14.2, could you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 use an ARM to get that 14.2 or would you have**  **2 to use a test to get -- to justify the 14.2?**  **3 MR. RAWALD: Right. My**  **4 understanding of the regulations is that you**  **5 only have to test to get the highest sales**  **6 volume tested combination and then you use the**  **7 ARM to achieve the other rating, as long as**  **8 you are in the group by DOE, to get all the**  **9 other ratings.**  **10 MR. CLARK: Okay.**  **11 MR. RAWALD: And that is what I**  **12 heard from Dave yesterday was, most people**  **13 doing a blower at all ratings are doing it**  **14 based upon the ARM not upon the highest**  **15 tested. Is that correct, Dave?**  **16 MR. WINNINGHAM: Yes, this is Dave**  **17 from Allied.**  **18 And forgive me, Doug, but I am**  **19 hearing you say is -- because we base the**  **20 Highest Sales Volume Tested model, that is our**  **21 tested model and that is the basis for our**  **22 basic model grouping. And then ARMs are used** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to generate everything from that and different**  **2 ratings will be developed associated. But**  **3 they are all associated to that basic model**  **4 outward.**  **5 But what you are saying is that**  **6 anytime you change the rating, it is a**  **7 different basic model. But you are not saying**  **8 that all basic models have to be based on test**  **9 data, they can be based upon ARMs.**  **10 MR. RAWALD: Right. So, this is a**  **11 place where the regulations on the air**  **12 condition is unique. Because the wording on**  **13 the sampling plan -- and maybe we should pull**  **14 out the CFR. I prefer to be careful with**  **15 language rather than spit balling. So, if**  **16 possible, can you pull up, Emily, 10 CFR**  **17 429.16?**  **18 MS. MARCHETTI: Yes.**  **19 MR. RAWALD: There is a reason why**  **20 Tim Ballo is so useful.**  **21 MR. BALLO: Well, the rest of us**  **22 can't read the fine print.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: And we are getting**  **2 dangerously close to where I may be speaking**  **3 outside my lane. So, I want to make sure that**  **4 I am giving you the best viewpoint but if we**  **5 need to, when I actually come back next week,**  **6 or come back in and talk about this, that we**  **7 can do that. I just want to make sure that we**  **8 are clear on what the guidance said and didn't**  **9 say. And it sounds like not everyone**  **10 understood that. And I want to make sure we**  **11 are all clear.**  **12 MR. BALLO: I think you're right**  **13 because in contrast to most CFR sections for**  **14 products, they don't talk about the sampling**  **15 plan for a basic model. It talks about just**  **16 a sampling plan for the condensing unit, for**  **17 the air conditioning unit.**  **18 MR. RAWALD: Right. So, what we are**  **19 bringing up here is 10 CFR 429.16.**  **20 MR. EISNER: Can you enlarge the**  **21 type at all?**  **22 MR. RAWALD: I want to read out** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 here. At the very bottom, (c)(ii).**  **2 So, there is an express**  **3 acknowledgment here that something different**  **4 is going on. Right? So, what we said is, for**  **5 multi split-systems, each model of condensing**  **6 unit shall be tested with -- sorry.**  **7 MS. MEYERS: They are not multi**  **8 splits.**  **9 MR. RAWALD: Yes, right. That won't**  **10 be there. You are exactly right.**  **11 (Simultaneous speaking.)**  **12 MR. RAWALD: For split-system air**  **13 conditioners and heat pumps, the condenser**  **14 evaporator coil combination for the tests of**  **15 this section shall include the evaporator coil**  **16 that is likely to have the largest volume of**  **17 retail sales with a particular model of**  **18 condensing unit.**  **19 So, that is not the word basic model**  **20 there. Right? There is a reason for that.**  **21 There has to be a reason. So, as I understood**  **22 the regulations, we understand there is one** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 model condensing unit that can operate with**  **2 many different coils. And as I explained, as**  **3 I understood it, so if you arrive at different**  **4 basic models because you are going to have all**  **5 the different combinations that you want to**  **6 rate differently.**  **7 But the model of the condensing unit**  **8 must be tested, the model, not the basic**  **9 model, but the condensing model itself must be**  **10 tested at the Highest Sales Volume Tested**  **11 Combination of the coil, as we see here.**  **12 So, you arrive at it the high**  **13 testing. And your other basic models can be**  **14 rated based upon the use of an ARM but they**  **15 are different basic models, as the Department**  **16 of Energy would define them.**  **17 MR. CLARK: That's fine. Yes,**  **18 understood.**  **19 MR. RAWALD: Okay, does that make**  **20 sense?**  **21 MR. CLARK: Understood.**  **22 MR. RAWALD: Am I adding clarity or** 

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### 1 am I adding mud? **2 MR. CLARK: No, it's fine. 3 MR. RAWALD: Well, it's fine but am**  **4 I making things clear or am I making things 5 going into a lack of clarity?**  **6 MS. MEYERS: So, this is Karen. I 7 think we understand what you are saying but I**  **8 also think that our interpretation of the 9 guidance is correct, based upon what you just**  **10 said. 11 So, I don't understand why you are**  **12 disagreeing that, with that explanation, that 13 each region's Highest Sales Volume Tested**  **14 Combination -- that you have to have regional 15 Highest Sales Volume Tested Combinations.**  **16 Because you have to meet the minimum in that 17 region with your Highest Sales Volume Tested**  **18 Combination. Just leave basic model out. I 19 think that just confuses it all together.**  **20 MR. RAWALD: Okay. 21 MS. MEYERS: That is what the**  **22 guidance says. What I am having trouble**

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### 1 understanding is why you don't think it says **2 that. 3 MR. CLARK: Why don't we go back to**  **4 that? 5 MR. LATTANZI: Go back to the**  **6 guidance and look at the very -- this is Matt 7 Lattanzi. Look at the very first sentence in**  **8 the last paragraph. 9 The last paragraph of the guidance.**  **10 Continue to scroll down, please. 11 MR. RAWALD: So, starting on page**  **12 three, Matt? 13 MR. LATTANZI: Yes, it is the bottom**  **14 of page three, that very first sentence. 15 MR. RAWALD: Right, any new**  **16 condensing unit or coil must meet the current 17 federal standards for national or region and**  **18 pair with the appropriate part to make a 19 system when tested in accordance with the DOE**  **20 test procedure and sampling plan. 21 Okay. So, in this context, to be**  **22 clear, we are not talking about systems here.**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 This it the replacement issue. This is the**  **2 issue of hey, I have something I want to sell**  **3 into the region. I want to be using an**  **4 existing system that already is out there.**  **5 What does it have to be? And we are saying**  **6 hey, that particular piece of the puzzle, as**  **7 it currently says, which we talked about**  **8 yesterday, it says currently condensing unit**  **9 or coil, that piece of the puzzle has to be a**  **10 certified combination somehow someway that is**  **11 at least 14 to be in a region where it is 14.**  **12 Now, it sounds like folks are**  **13 focusing on the word tested here to get to the**  **14 Highest Sales Volume Tested Combination. Is**  **15 that right? Because of the word tested there,**  **16 versus being a rated?**  **17 So, when applied, it couldn't be**  **18 done in accordance with an ARM. Is that what**  **19 -- if it said rated, then that would imply**  **20 that it could be used for testing or for**  **21 rating? I am trying to understand where the**  **22 idea this relates to Highest Sales Volume** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Tested Combination. So, is that where?**  **2 MR. CLARK: Yes.**  **3 MR. RAWALD: Okay. So, I will go**  **4 back and deliver because I don't have an**  **5 answer for you but I want to get technically**  **6 answered questions. I want to make sure I**  **7 understand where the source of my different**  **8 reading from your folks' reading.**  **9 I don't view the guidance as**  **10 requiring different tests for models going to**  **11 the southeast and the southwest and the north.**  **12 The guidance cannot, by implication, add more**  **13 testing burden. We can't do that through**  **14 guidance.**  **15 And so if that is what you folks are**  **16 viewing this as, I will have to go back and**  **17 talk to them because that is not guidance.**  **18 MR. CLARK: Yes, I think that --**  **19 this is Gary is from Goodman again. It is not**  **20 necessarily the Highest Sales Volume**  **21 Combination but what it implies, and just**  **22 looking for clarification here, is that it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 says in accordance with the test procedures**  **2 and sampling plans, which will tell you that**  **3 it has to be a coil-only rating.**  **4 And so maybe in our simplistic way**  **5 of thinking about it, because we task,**  **6 typically, the Highest Sales Volume Tested**  **7 Combination, that is the one we --**  **8 MS. MEYERS: Because you other**  **9 guidance said that we had to.**  **10 MR. CLARK: Yes.**  **11 MS. MEYERS: So, when you read those**  **12 together. You have to kind of read those two**  **13 documents together. Because the other**  **14 document says it has to be the highest, that**  **15 is what you have to test.**  **16 MR. RAWALD: The CFR says that.**  **17 Right?**  **18 MS. MEYERS: Yes.**  **19 MR. RAWALD: The regulation says**  **20 that as a baseline for testing all**  **21 manufacturers must test the Highest Sales**  **22 Volume Tested Combination and then you use ARM** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 for anything else.**  **2 But if you are not using the ARM,**  **3 you have to test everything. So, let's make**  **4 that clear. So, those two things that work on**  **5 concert always.**  **6 MS. MEYERS: So, how could it not be**  **7 a regional rated -- I mean when you look at**  **8 how it is actually done, what those two**  **9 documents say, you would have to have a**  **10 highest sales volume coil-only rating at 14**  **11 SEER to sell a product in the south. Because**  **12 that is what the CFR says. It has to be based**  **13 upon a coil-only rating and that coil-only**  **14 rating has to be a minimum of 14.**  **15 You almost have to look at this**  **16 backwards. I mean 14 should be your base.**  **17 That should be your national standard but 13**  **18 is the exception. Right? Because anything**  **19 you test in the south can also be in rate and**  **20 certified in the south can also be sold in the**  **21 north.**  **22 So, this really applies more to 13** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 SEER coil-only rated units.**  **2 MR. RAWALD: Okay.**  **3 MS. MEYERS: So, I don't know.**  **4 MR. CLARK: That's a great way to**  **5 look at it.**  **6 MR. RAWALD: Yes, and now I**  **7 understand the question. I understand where**  **8 the confusion and where I may be entirely**  **9 wrong. But as I have been told and I have**  **10 discussed this issue so far, we have not been**  **11 meaning to, as far as I know, state that there**  **12 is a Highest Sales Volume Tested Combination**  **13 program meeting. But I will take that as one**  **14 that seems to think that that doesn't make**  **15 sense. And I will come back with you with an**  **16 informed answer or possibly someone who is**  **17 more technically oriented who can answer the**  **18 questions better than I can.**  **19 Yes?**  **20 MR. CLARK: This is Gary again.**  **21 There seems to be a concern about testing**  **22 burden.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: And just to point out,**  **2 I think the Department -- now I am speaking as**  **3 a person sitting here before you now, I'm**  **4 saying it seems to me that you are asking to**  **5 add a testing burden because Highest Sales**  **6 Volume Tested Combination is a testing issue.**  **7 It is a testing issue. You have to test that**  **8 one thing, at least.**  **9 MR. CLARK: It is no more testing**  **10 than what we do today.**  **11 MR. RAWALD: Okay.**  **12 MR. CLARK: For a given condensing**  **13 unit, we are going to do a test to certify the**  **14 value. It just happens that this one will be**  **15 the 14 SEER test. So, it is no more burden to**  **16 us. I think we all agree on that, that is no**  **17 ore burden than what we do today.**  **18 MR. RAWALD: What would be the**  **19 advantage to manufacturers of having variable**  **20 Highest Sales Volume Tested Combinations by**  **21 region?**  **22 MR. CLARK: I'm not saying that is** 

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### 1 by region. Today -- **2 MR. RAWALD: That is what I heard 3 earlier that it was a regional Highest Sales**  **4 Volume Tested Combination. 5 MR. NELSON: I think, Gary, you are**  **6 saying it is not that way today. 7 MR. CLARK: Well, what I would say**  **8 today is that it is not unusual as a 9 manufacturer, let's say that we would have a**  **10 line of equipment at 13 SEER and let's just 11 hypothetically say 14 SEER, 15 SEER, 16 SEER.**  **12 At each one of those efficiency levels, 13 regardless of the minimum efficiency**  **14 requirements, but just today, when we have a 15 13 SEER minimum, we will have a Highest Sales**  **16 Volume Tested Combination for each one of 17 those product lines.**  **18 And so it just so happens that we 19 are going to insert this national or southern**  **20 standard at 14 SEER. Well, in the example 21 that I used, we would have tested those 14**  **22 SEER units anyway because that is what we do**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 today. So, it is no change in what we would**  **2 do.**  **3 MR. NELSON: Even if it is not**  **4 required at that level, currently, it has to**  **5 --**  **6 COURT REPORTER: I'm sorry, sir.**  **7 Can you repeat that?**  **8 MR. CLARK: Yes, for a single stage**  **9 air conditioner, you are.**  **10 MR. RAWALD: Just stop. Before**  **11 Chris jumps into the conversation, if you can**  **12 come to the mike.**  **13 MR. EISNER: She's not getting your**  **14 question.**  **15 While we have a second, Craig**  **16 Messmer has a question. Craig, are you still**  **17 on line?**  **18 MR. MESSMER: Yes, I'm here. Can**  **19 you hear me?**  **20 MR. EISNER: Yes, we can.**  **21 MR. MESSMER: Okay, we have a lot of**  **22 question on system manufacturers who make this** 

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### 1 model but it only seems to get lost in there **2 that there are a number of companies that 3 produce coil-only and match up to someone**  **4 else's outdoor unit. And could you tell us 5 how that fits in to this discussion on basic**  **6 models? Because all of our ratings are based 7 on an ARM and we use the data for the Highest**  **8 Sales Volume Tested Combination of each 9 outdoor unit.**  **10 If we start having basic models now 11 with the same outdoor units but different**  **12 models, basic models at different efficiency 13 levels, that is really going to be confusing**  **14 for us. 15 MR. WINNINGHAM: This is Dave at**  **16 Allied. And Gary and Karen, please chime in 17 here. But I think from the discussion**  **18 previously, the AHRI definition of a basic 19 model is different than the DOE definition of**  **20 the basic model. 21 And I don't know that we have to**  **22 bring those two together. Because from your**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 explanation, Doug, from using the Highest**  **2 Sales Volume model as the base, that is, in**  **3 effect, what AHRI calls a basic model. You**  **4 are kind of getting the same outcome.**  **5 I think where we have been a little**  **6 hung up is trying to merge those two**  **7 definitions and maybe unnecessarily.**  **8 MR. CLARK: Yes, I think maybe in my**  **9 simplistic way of thinking about it -- this is**  **10 Gary from Goodman again -- is that as a**  **11 company, what we would like to be able to do**  **12 is very quickly and easily communicate what is**  **13 okay to be sold in the south. And so, if you**  **14 can talk to a contractor or distributor and**  **15 say if the Highest Sales Volume Tested**  **16 Combination rating that is in the AHRI**  **17 directory, which once again we have spent**  **18 years and years training people to use the**  **19 directory and we denote this stuff in all of**  **20 our literature, as I am sure many of the**  **21 competitors do, that if we can just point to**  **22 that rating, if it is at or above 14 SEER, it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 simplifies a lot of the conversation.**  **2 MR. RAWALD: Right and this goes**  **3 right back to Karen's question, which has been**  **4 repeated now several times is that we need to**  **5 know from the Department the opinion on what**  **6 is 14 SEER.**  **7 MS. MEYERS: And quite frankly, we**  **8 thought the guidance was giving us that answer**  **9 until yesterday, when you said it was not.**  **10 So, you kind of -- you know.**  **11 MR. RAWALD: What I will say and**  **12 this is only because it is government**  **13 rulemaking in all its form, so we have to be**  **14 at least a little patient, the question that**  **15 I don't -- I want to make sure that everyone**  **16 understands that we have not definitively**  **17 spoken on at this point is if a condensing**  **18 unit can perform both above and below the**  **19 regional standard, depending on what coil or**  **20 blower it is matched with, we have not stated**  **21 whether or not it can be sold in the region.**  **22 Assuming that it is being sold and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 installed with that coil and blower, they**  **2 could perform above that level. Because I**  **3 think that we all agree that it couldn't be**  **4 sold if it was below the level with the coils**  **5 being installed with. We all agree with that**  **6 premise.**  **7 The question really is, if I have a**  **8 condensing unit that performs at 13.2, 13.6,**  **9 and 14.2, and I am throwing out numbers, and**  **10 I have it matched up with a coil that does**  **11 14.2, can it be installed, when we know that**  **12 condensing unit can also perform below that 14**  **13 level with a different coil.**  **14 That is the question that Karen has**  **15 been driving at, the question that we have not**  **16 spoken on and the question which I am**  **17 demanding that we give you clear guidance on.**  **18 I think it is very important.**  **19 So, that seems to wrap back around**  **20 to the question that Gary has intimated and it**  **21 seems to me to be a very central one.**  **22 MR. EISNER: Chris?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. NELSON: Chris again. The**  **2 question, Doug, you asked, what is the**  **3 advantage and I just wanted to make sure I**  **4 jumped on it.**  **5 Gary stated it. It is simple. It**  **6 is easy to communicate. It is a common set of**  **7 rules and it is something that everyone will**  **8 understand, abide by, test to, and design**  **9 around, period.**  **10 Going back to the very beginning and**  **11 saying what do we want to do? Do we want to**  **12 deliver what we said we were going to deliver**  **13 when we said we were going to deliver it?**  **14 This would do that because it is a common**  **15 language that manufacturers, contractors,**  **16 distributors speak and then what means very,**  **17 very specific things about what those designs**  **18 would be.**  **19 MR. RAWALD: John Hurst.**  **20 MR. HURST: John Hurst with Lennox.**  **21 I would just like to add what Chris said.**  **22 Chris is talking kind of hypothetical this is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 what it would be. I just want to -- we have**  **2 already designed to that standard. And I**  **3 think my competitors have already designed to**  **4 that standard. I don't know that for a fact**  **5 but I have worked for Carrier. I have a**  **6 relationship with Trane. I have worked with**  **7 the Home Depot. And we all think kind of the**  **8 same way.**  **9 So, this isn't what we are going to**  **10 do. This is what we have already done and**  **11 there have been millions of dollars invested**  **12 in design, cost optimization. I would imagine**  **13 some of us are probably already buying the**  **14 parts, compressors, the tooling, the dyes,**  **15 whatever it takes to get to the standard that**  **16 we think is about to happen. That work is**  **17 done and this is a sunk cost.**  **18 So, I just want everybody to**  **19 understand that the money is spent and this is**  **20 what we think is going to happen in January.**  **21 It is very important that we solve this**  **22 quickly.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: John, if I could --**  **2 because you used a lot of pronouns for what**  **3 that thing was. What do you think -- what is**  **4 that thing that you think it is?**  **5 MR. HURST: You mean the regulation?**  **6 MR. RAWALD: Yes.**  **7 MR. HURST: Well, I am going to go**  **8 back to what Karen said because I can't say**  **9 this eloquently but the scenario described at**  **10 14.0 and above in the south and 13.0 and above**  **11 in the north. And does that --**  **12 MR. RAWALD: Well, that is the**  **13 number. But I guess what I am hearing from**  **14 the room is everyone in accord that what base**  **15 model means is the Highest Sales Volume Tested**  **16 Combination has to be 14?**  **17 MS. MEYERS: It has to be the**  **18 minimum, yes.**  **19 MR. HURST: Yes.**  **20 MS. MEYERS: So, today for 13, we**  **21 cannot sell anything less than 13.**  **22 MR. RAWALD: Right.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. HURST: That is what we thought**  **2 we knew.**  **3 MS. MEYERS: In the south, we should**  **4 not be able to sell any unit that can get less**  **5 than a 14. That is the issue. Because if we**  **6 -- and I hold this up as my condensing unit --**  **7 this is a condensing unit. So, if the**  **8 condensing unit can get less than 14, why is**  **9 it okay to -- I mean I could design a 12 SEER**  **10 condensing unit that could get 13 when it is**  **11 paired correctly but DOE regulations say you**  **12 can't do that.**  **13 And so we all, I think, to John's**  **14 point, went down the same path of how we rated**  **15 units forever in that the minimum that that**  **16 would get --**  **17 MR. RAWALD: We have to cut the side**  **18 talk because it is going to be recorded.**  **19 MS. MEYERS: So, we shouldn't be**  **20 able to sell a condensing unit in the south if**  **21 it can get less than a 13.**  **22 MR. RAWALD: A 14.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MS. MEYERS: Less than a 14. I'm**  **2 sorry.**  **3 MR. EISNER: John?**  **4 MR. HURST: Yes, so a couple of**  **5 points. Just one is this is what we thought**  **6 we negotiated. When I say we, I am speaking**  **7 for the manufacturers, I think also the**  **8 advocates would potentially agree. I won't**  **9 speak for you but we would lose a lot of the**  **10 savings, I think, if you take the other**  **11 interpretation, meaning you match a coil and**  **12 a condenser and you get there somehow.**  **13 The other thing is we are here for**  **14 enforcement, which we have been at this for**  **15 three, almost three and a half days and we**  **16 haven't gotten to that yet. But I think from**  **17 an enforcement standpoint, it is exponentially**  **18 more simplistic to enforce a simple standard**  **19 versus one that is left open to**  **20 interpretation, meaning I can get to 14 SEER**  **21 with a coil and condenser match that just**  **22 gives me the 14.1 through some manner.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, I am driving towards simplicity**  **2 also. Not only is it what we developed for,**  **3 it is what we thought it was. It is more**  **4 simple to enforce and you get more energy**  **5 savings for the country.**  **6 MR. RAWALD: Right. This is Doug.**  **7 And as I sit here thinking about the issue**  **8 before me, a we framed it, and listing of the**  **9 directory and thinking from an enforcement**  **10 point of view, it is what you folks seem to be**  **11 saying you think it is. Now, I just look at**  **12 the label and say oh, it goes below 14. It is**  **13 in the south, it can't be sold.**  **14 Whereas, if it is allowed to be**  **15 below 14 but maximum coil it is going to be**  **16 above 14, so it is okay, I now have to go to**  **17 a directory of like AHRIs, pull the**  **18 certificate and say okay, there is the match**  **19 I have. Yes, that was okay.**  **20 So, there is another step to the**  **21 enforcement process that I would avoid**  **22 ostensibly, possibly, by regulating at the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 condenser unit level what the minimum**  **2 efficiency of that level is going to be,**  **3 which, in Karen's mind, seems to be the**  **4 minimum efficiency is going to be equal to the**  **5 Highest Sales Volume Tested Combination for**  **6 her products. I don't know if that is true**  **7 for everyone. And I don't know -- I haven't**  **8 heard that from everyone. If everyone else**  **9 believes their Highest Sales Volume Tested**  **10 Combination is their least efficient**  **11 combination as well. Is that you folks seem**  **12 to be thinking?**  **13 MS. MEYERS: Federal minimum**  **14 efficiency units, yes.**  **15 MR. HURST: I would just add in most**  **16 cases, because the least efficient in that**  **17 range is typically the most or the cheapest,**  **18 the most cost-effective for the consumer.**  **19 MR. RAWALD: So, logically, you sell**  **20 what is cheapest instead of Highest Sales**  **21 Volume.**  **22 MR. HURST: Yes.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: Okay, thank you.**  **2 MS. HARIHARAH: This is Johanna**  **3 Hariharah from DOE. So, I just want to**  **4 clarify that everybody actually wants possibly**  **5 the most efficient solution. Is that correct?**  **6 MS. MEYERS: Whoa.**  **7 MS. HARIHARAH: So you want 14 SEER**  **8 it can never go below 14 SEER no matter what**  **9 coil if you want that to be the standard for**  **10 this year.**  **11 MR. HURST: That is what we thought**  **12 we negotiated.**  **13 MS. HARIHARAH: That is what you**  **14 thought it was.**  **15 MR. HURST: Within a region.**  **16 MS. HARIHARAH: Within a region.**  **17 Okay.**  **18 MR. EISNER: Harvey.**  **19 MR. SACHS: This is Harvey and for**  **20 me, and I guess for some others in this room**  **21 that worked on comparable issues for basic**  **22 models and stiff last year, there is a bit of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 a sense of deja vu. In particular, my concern**  **2 is that I go back to people I am supposedly**  **3 representing and they want to make sure that**  **4 this is enforceable. They want to make sure**  **5 that it is not giving away a lot.**  **6 And I think it was John who said**  **7 something that was very comforting, that the**  **8 Highest Sales Volume Tested Combination is**  **9 going to be pretty close to the least**  **10 efficient, because that is where the customer**  **11 demand is.**  **12 It would be very reassuring to me to**  **13 have some way of establishing that, of showing**  **14 that, of representing that because I am always**  **15 subject to this question from other people who**  **16 interrogate me when I come back. How do I**  **17 know that this combo really is representative**  **18 of the ones that are going to be out there in**  **19 the market as low efficiency, even when that**  **20 tested combo is rated at 14.0, 14.1?**  **21 And that is plausible that I hadn't**  **22 thought about it that way but I need some** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 reassurance.**  **2 MR. HURST: I'm not sure what you**  **3 are asking. Maybe restate it, maybe. I'm**  **4 sorry. Can you restate the question? I'm not**  **5 sure I can reassure when I'm not clear what**  **6 you are talking about.**  **7 MR. SACHS: Sure. If I think**  **8 conceptually it is some sort of a bell that**  **9 might be strongly skewed with a long tale of**  **10 very few products sold that are way above 14**  **11 but part of the same basic model or basic**  **12 model or whatever we are calling it. The**  **13 assertion that is being made is that almost**  **14 all of the product is at or above the**  **15 efficiency of the Highest Sales Volume Tested**  **16 Combination. That that distribution, we**  **17 already have almost all the sales, we are**  **18 close to that. Very few of them are below**  **19 that. And it is that that I would like to be**  **20 able to graphically show or otherwise simply**  **21 explain as justification. I'm sure it is a**  **22 common understanding from the data you guys** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 seek every week that they sort of the logical**  **2 basis is not something goes for outside this**  **3 room in my community or utility communities**  **4 are likely to be familiar with.**  **5 Does that help?**  **6 MR. HURST: Yes.**  **7 MR. WINNINGHAM: I think what Karen**  **8 and others are proposing is that DOE give us**  **9 guidance that basically sets the bottom of the**  **10 scale at 14 and that we don't have matches of**  **11 the southern products that fell below. We**  **12 just don't have or offer that product match.**  **13 MR. SACHS: That is what I need to**  **14 have the ability to explain in elevator**  **15 speech.**  **16 MS. NOLL: And this is Elizabeth,**  **17 NRDC. If there is something that falls below**  **18 it that is not the Highest Sales Volume Tested**  **19 Combination, are you ensuring that it is that?**  **20 MR. WINNINGHAM: Again, this is Dave**  **21 with Allied. I think we could have that same**  **22 unit but under our kind of rules through AHRI** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we would call that a different unit.**  **2 MR. CLARK: It would be listed**  **3 differently.**  **4 MR. SACHS: There is an awful lot of**  **5 culture and experience. And what I am hearing**  **6 is almost unwritten practices that are**  **7 embedded here. And I certainly don't think**  **8 that at this late date in the game DOE can**  **9 codify all of that stuff. But I am looking**  **10 for something that helps me carry the message**  **11 back that says ain't nothing less than 14 that**  **12 is going to go south.**  **13 MR. CLARK: I guess what we are**  **14 trying to do, I guess in my head, is we have**  **15 had the 10 SEER minimum efficiency standard,**  **16 the 13 SEER efficiency standard and we are**  **17 trying to treat the 14 SEER in the south**  **18 standard the same way that we have treated**  **19 those standards.**  **20 MR. SACHS: All right, I would like**  **21 to try to form a -- that's very helpful, Gary.**  **22 And I would like to just try before tomorrow** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 morning to formulate a little bit of what I**  **2 think I am hearing in lay terms because it**  **3 will help me and it might help you.**  **4 MR. RAWALD: Harvey, I find**  **5 everything you do to be helpful to me. So,**  **6 yes, I think that would be helpful.**  **7 So, again, Harvey is volunteering to**  **8 think about this tonight, come back tomorrow**  **9 and say here is what I hear you guys saying**  **10 and have your own report.**  **11 What I guess I want to make sure is**  **12 is there any dissenting opinion? I am hearing**  **13 from only half the manufacturers. Is there**  **14 any manufacturer saying heck no, Doug, we are**  **15 operating under the belief that if I have this**  **16 model that has been performing in combination**  **17 at 13.8 and 14.2, that it should be able to go**  **18 to the south? And the solution I have been**  **19 hearing from manufacturers, we will just give**  **20 you the model number. So, it might be the**  **21 same actual working parts but a different**  **22 model number, so it would be a different** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 thing.**  **2 Is that the same -- are all**  **3 manufacturers on the same page that they do**  **4 want the minimum to be the 14 and that that**  **5 particular component couldn't have an FTC**  **6 label that would stretch both above and below**  **7 14 and be sold in the south, as an example?**  **8 MR. DORIA: This is Jordan with**  **9 Ingersoll Rand. Yes, that is exactly what we**  **10 want.**  **11 MR. RAWALD: Yes, Dave, we haven't**  **12 heard from you at all on this.**  **13 MR. ROCKY: Bryan Rocky from Johnson**  **14 Controls. So, again, the discussions focus on**  **15 what you can easily explain to our customers**  **16 in the southern states and having a 14 SEER**  **17 minimum rating for that provides that easiest**  **18 explanation. It does not prevent us from**  **19 listing or rating units that would go to the**  **20 south under ARM for sale in the northern**  **21 states, under the same model numbers.**  **22 It is not an HSVTC anymore. Right?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 We are not talking loose coil. We are talking**  **2 blower/coil applications or something.**  **3 Smaller coil sizes, other things.**  **4 MS. MEYERS: Under the same model**  **5 number?**  **6 MR. ROCKY: A basic model group, a**  **7 14 SEER unit has the ability to be rated one**  **8 way for an HSVTC. Right? So, it is a 14 SEER**  **9 now and it is still going to be a 14 loose**  **10 coil rating. Okay?**  **11 Is there anybody with an ICM or a**  **12 smaller coil that you can still have a rating**  **13 that is legitimate for a 13 SEER? I just**  **14 looked one up. I have got in the York**  **15 listings right now, I have 45 listings with a**  **16 14.5 SEER model number that are listed at 13**  **17 SEER with a separate ICM. That is still legal**  **18 in the northern states.**  **19 MS. MEYERS: In the northern, yes.**  **20 MR. ROCKY: Not in the southern,**  **21 right?**  **22 MS. MEYERS: Right.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. ROCKY: We are not talking about**  **2 them. So, the ICM is going to have to change**  **3 their specification of a coil to get a**  **4 legitimate 14 SEER rating for the south. It**  **5 is a different coil.**  **6 I think I am fine with this. It**  **7 doesn't prevent it from selling this coil**  **8 combination with that 14 SEER unit in the**  **9 north but a 14 SEER minimum on the tag as a**  **10 system matched eliminates these 45 models from**  **11 being sold in the southern states, which is**  **12 what I want to do. I don't want to sell**  **13 these. So, I'm good with this.**  **14 It doesn't prevent me from doing**  **15 something. None of these ratings are my**  **16 ratings. They are the ICMs.**  **17 MR. RAWALD: This is Doug. So, I**  **18 want to understand the parameters here. So,**  **19 because I understand the independent coil**  **20 manufacturers who rightly points out, we don't**  **21 want to forget these folks.**  **22 So, is an independent coil** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufacturer's performance with the condensing**  **2 unit reflected on the FTC label? Or does the**  **3 FTC label only reflect those things that are**  **4 offered by the manufacturer as a system that**  **5 they are building? I see everyone nodding**  **6 their head yes to the second point.**  **7 So, the consumer will get on a label**  **8 the advice or the information on performance**  **9 range as currently designed, based upon what**  **10 the manufacturer would issue as a system. But**  **11 what the performance of the condensing unit**  **12 would be with independent coil is not counted**  **13 for on the label and the manufacturer, of**  **14 course, probably feel they shouldn't be**  **15 responsible because they are not making that**  **16 combination.**  **17 And so the question becomes from a**  **18 system level, what we will say is we want to**  **19 be able to say the minimum thing on that FTC**  **20 label would be 14 and it wouldn't go below**  **21 that. But we understand that there may be an**  **22 independent coil that when matched to that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 same model could make it below 14 but it**  **2 couldn't be sold in the south to go in that**  **3 system. But we understand the condensing unit**  **4 could perform below 14 when matched for that**  **5 coil but we are not taking responsibility for**  **6 it. What we are saying is the 14 will be the**  **7 minimum performance of the combination that we**  **8 would be willing to offer.**  **9 Am I covering all the bases or am I**  **10 missing a nuance? I really want to be sure,**  **11 being an uneducated lawyer in the room, that**  **12 I understand exactly what you guys are saying.**  **13 I see some nods, some smiles.**  **14 MS. MEYERS: So, you know the FTC**  **15 label has the model number on it.**  **16 MR. RAWALD: Oh, okay. So now, I**  **17 understand exactly what you folks are saying,**  **18 I think. And I will deliver that mail back**  **19 and I will come back with an answer,**  **20 hopefully, soon, as we had done in the past.**  **21 I think it is very clear what we are saying.**  **22 From an enforcement point of view, I have to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 say that it seems to be easier but it doesn't**  **2 eliminate all of my problems because I still**  **3 have the question of the ICM, which is now**  **4 implied with this section. So, I have to make**  **5 sure that the ICMs are matched with the**  **6 condenser is going to perform at that level.**  **7 MR. SACHS: Doug, we have -- this is**  **8 Harvey and I just want to point out that in my**  **9 opinion we have two different things, quite**  **10 different, lumped in with the ICMs in this**  **11 discussion. One of them is third-party**  **12 manufacturers who make a substitutable coil**  **13 for conventional forced air systems. Craig**  **14 represents a specialized niche called small**  **15 diameter and high velocity products, which**  **16 make a specialized blower coil unit that has**  **17 very high external static pressure and blows**  **18 air through very small insulated ducts. So,**  **19 it lines up working with waivers or a special**  **20 class in this very complex regulatory history**  **21 here.**  **22 And I don't know how Craig's units** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 are labeled but they buy condensing units off **2 the street, some arrangements and there are 3 several of these manufacturers, but it is not**  **4 a substitutable ICM product. 5 MR. RAWALD: Okay.**  **6 MR. SACHS: Somebody who has worked 7 with them much more than I have probably has**  **8 an understanding of where they get their 9 labels from.**  **10 MR. RAWALD: Did you have a second 11 issue?**  **12 MR. SACHS: No. It is just that I 13 wanted to make sure we had on the record that**  **14 they are, the genus ICM has at least two 15 species that don't have common interests.**  **16 MR. EISNER: Craig Messmer online, 17 do you have a question or a comment?**  **18 MR. MESSMER: Okay, well, I feel a 19 little bit like that guy on Saturday Night**  **20 Live who is always ten minutes' behind the 21 conversation.**  **22 But on the testing requirements for**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 this, you know if the basic model, if you have**  **2 a unit that is rated at 14 with a coil and you**  **3 rated it 14.5 or 15 with a blower coil, does**  **4 that mean you have got two base models and you**  **5 have to do two tests?**  **6 That is the basic question I had**  **7 there because I think that would really**  **8 increase testing requirements.**  **9 MR. EISNER: Dave?**  **10 MR. WINNINGHAM: And Doug, I am**  **11 looking to you. And Craig, I am looking at**  **12 Doug. I think this goes back to the AHRI**  **13 definition of a basic model, which if we**  **14 declare a different basic model within AHRI,**  **15 we have to have the data to support that. I**  **16 mean, that is what we do. I mean, that is**  **17 what our process has been, where really the**  **18 DOE process is to test that Highest Sales**  **19 Volume model with a particular condenser.**  **20 So, even though there is a different**  **21 definition of basic model by DOE versus AHRI,**  **22 I don't believe, as it has been explained** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 today, that that would increase the testing**  **2 that we do.**  **3 MR. RAWALD: That's correct, Dave.**  **4 Nothing about this should be increasing test**  **5 burden. The testing that is required for --**  **6 as long as you are using an approved ARM, I**  **7 always have to make sure of that caveat,**  **8 because if you are not using ARM, you have to**  **9 test every basic model. But if you have the**  **10 ARM, then the model of the condensing unit**  **11 must be tested with the coil that it is most**  **12 likely going to be sold for and that is going**  **13 to be the rating and then the ARM could be**  **14 used off of that.**  **15 So, how that works in the**  **16 independent coil manufacturer context, I don't**  **17 understand enough about that piece to offer a**  **18 technical explanation about what you folks do**  **19 next. So, I want to be careful about what**  **20 advice I give you, Craig. And perhaps you**  **21 could send an email to us offline kind of**  **22 explaining your concerns and make sure I can** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 address them appropriately. I think I can**  **2 handle now the folks that are doing all**  **3 things. I want to be sure that I am not**  **4 leaving out the ICMs is what I am saying.**  **5 Dave.**  **6 MR. WINNINGHAM: Again, this is Dave**  **7 with Allied. And all third-party ratings are**  **8 generated with an ARM. And I believe the**  **9 requirements --**  **10 MR. RAWALD: Assuming they have an**  **11 approved ARM.**  **12 MR. WINNINGHAM: Yes.**  **13 MR. RAWALD: So, it could actually**  **14 be an independent coil manufacturer without an**  **15 ARM. And so they would not be able to rate**  **16 using an ARM.**  **17 MR. WINNINGHAM: Correct.**  **18 MR. EISNER: John.**  **19 MR. HURST: John Hurst from Lennox.**  **20 We also own an independent coil manufacturer,**  **21 ADP, so full disclosure, but we are**  **22 comfortable with the approach that has been** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 adopted.**  **2 MR. RAWALD: Okay.**  **3 MR. DORIA: This is Jordan with**  **4 Ingersoll Rand. I want to maybe circle back**  **5 with the discussion on regionality and what**  **6 exactly it is that might need to be clarified**  **7 by the Department.**  **8 I think what we are saying, if I**  **9 understand it correctly, is that really, we**  **10 end up effectively having classes of**  **11 condensing units that are effectively regional**  **12 in nature. Right? Isn't that actually what**  **13 we are saying, that 13 SEER condensing**  **14 products are effectively northern condensing**  **15 units and 14 SEER and above are effectively**  **16 southern condensing units?**  **17 MR. HURST: No.**  **18 MR. DORIA: No?**  **19 MR. HURST: Well, with the caveat**  **20 that if there is a utility rebate in the north**  **21 at 14, that we would sell a 14 SEER product in**  **22 the north.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. DORIA: Yes.**  **2 MR. HURST: But I generally**  **3 understand your concept.**  **4 MR. DORIA: I guess really what I am**  **5 trying to drive at you say you need clarity**  **6 from the Department on this. I am not sure**  **7 there is sufficient understanding in the room**  **8 or the Department necessarily, to know what it**  **9 is they need to clarify. What is it we are**  **10 really asking? They are like can we point to**  **11 the specific change in the guidance that needs**  **12 to be made?**  **13 MR. LATTANZI: This is Matt**  **14 Lattanzi. I think I can help with that. I**  **15 spent a lot of time with the guidance. As I**  **16 read it, I agree with a lot of what you said,**  **17 Doug, as to what it says. I feel it is a bit**  **18 contradictory. And there is two places in the**  **19 guidance document where I can point to that I**  **20 would recommend the DOE take a look at.**  **21 Could I ask if you just scroll up**  **22 slightly and I will illustrate what I am** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 talking about.**  **2 MR. RAWALD: And this is Doug, I**  **3 need to interrupt you real quick. I do want**  **4 to hear what you want to say. But I do want**  **5 to say also capturing this in the written**  **6 comments will be the most way -- the best way**  **7 to help us. Because as much as I will deliver**  **8 information, telephone is a bad thing to do.**  **9 And the transcript will come out eventually,**  **10 having that will make it very helpful for us**  **11 in trying to figure out what is going on.**  **12 MR. EISNER: I think what Matt is**  **13 suggesting is look at this. I think you want**  **14 to suggest some wording changes. If everybody**  **15 in the room agrees to some wording changes, I**  **16 would assume that would be helpful for you.**  **17 MR. RAWALD: It will be but I need**  **18 in the written comments the content.**  **19 MR. LATTANZI: We will work together**  **20 AHRI to put together the written comments.**  **21 There is two places -- and I have some**  **22 additional comments on a question you asked** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 earlier, as well. I'm sorry but if I could**  **2 get you to scroll up again. There at the very**  **3 top. Okay, then please scroll down. Yes, the**  **4 other up.**  **5 MS. MARCHETTI: What page are you**  **6 on?**  **7 MR. LATTANZI: I am on page three,**  **8 the section under basic model and**  **9 certification. Okay, right there.**  **10 I think the difference in our**  **11 interpretation of the definition of basic**  **12 model group is part of what is causing what I**  **13 feel is contradictory. And it is the sentence**  **14 where it is all combinations, i.e., all models**  **15 within the basic model must share the same**  **16 certified rating and that rating must be**  **17 representative of the least efficient**  **18 combination in the basic model. I think that**  **19 right there is driven by the difference**  **20 between what we feel is the definition and**  **21 that needs to be looked at.**  **22 MR. EISNER: And then going to page** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 two, can we have some quick discussions? Does**  **2 everybody agree that this is one of the**  **3 problems, that this language is what is**  **4 causing your problem?**  **5 MR. LATTANZI: We are talking about**  **6 this sentence here.**  **7 MR. RAWALD: All combinations, i.e.,**  **8 individual models within a basic model must**  **9 share the same certified rating and that**  **10 rating must be representative of the least**  **11 efficient combination in the basic model.**  **12 I will say, this is a statement we**  **13 have said before. It comes directly from the**  **14 Federal Register notice is how we treat basic**  **15 models across all products.**  **16 And so the basic model concept, you**  **17 must understand, is not just unique to air**  **18 conditioning or split systems, it is used in**  **19 every product we currently rate. So, we want**  **20 to think just to ourselves about regulation**  **21 how we deal with it. And I can't explain how**  **22 they AHRI definition are different from the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 definition we have but I think David has**  **2 pointed out the fact that they are different.**  **3 So, this is what we have said. This**  **4 is exactly what we have said the position the**  **5 Department takes. I don't think we would**  **6 change that but if we had to make clarity for**  **7 you in some way, I would like to about how we**  **8 can make that more clear. But this has been**  **9 the Department's consistent position across**  **10 all products.**  **11 MR. EISNER: So, are you saying that**  **12 as long as thing stays the same, you could add**  **13 a second sentence that says this means in the**  **14 context of regional standard and then put**  **15 something into there?**  **16 MR. RAWALD: I don't want to say**  **17 that we could or that we will. I want to say**  **18 the Department will consider any**  **19 recommendation to make the guidance more**  **20 clear. But this is a statement that we have**  **21 said over time in which we have steadfastly**  **22 believed in.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, if that needs to be clarified in**  **2 some way to make it fit this situation here,**  **3 we can do that or we can at least discuss that**  **4 internally, based upon your comments. But I**  **5 want to make sure that everyone understands**  **6 that that is what we have always said about**  **7 this.**  **8 MR. EISNER: Let's give Craig a**  **9 chance to get in early this time. Craig, you**  **10 have got a comment?**  **11 MR. MESSMER: Yes. I know what we**  **12 do and I think we do the same as everybody**  **13 else. It is my understanding that all the**  **14 ICMs use an ARM based on data from the Highest**  **15 Sales Volume Tested Combination and the issue**  **16 is somebody just clarified or just pointed out**  **17 that in the clarification the issues that**  **18 everything within a basic model group has to**  **19 have the same rating. And that would apply to**  **20 -- would that apply to the ICMs? Because when**  **21 we rate a product, it is either the same,**  **22 higher, or lower. And so, what is allowed?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And in some cases with the 13/14, it**  **2 may be optimal, I'm not saying we can do it**  **3 with our small ducts, but I think other people**  **4 can, where they can take a 13 SEER unit and**  **5 put either a larger coil or a blower coil on**  **6 there and gain a 14 SEER. Is that allowed to**  **7 be sold in the south? Anyway, that is the**  **8 brunt of it.**  **9 MR. RAWALD: And Craig, this is Doug**  **10 and I want to get back to Matt. I think Matt**  **11 had more to say.**  **12 So, the second question seems to be**  **13 the one that Karen was driving at immediately,**  **14 which is if the condensing unit performed**  **15 below the 14, it shouldn't be installed in the**  **16 south, even if you could take an independent**  **17 coil and bump it up to the 14. The**  **18 manufacturer of the condensing units don't**  **19 want that to be out there as a possibility.**  **20 They want the condensing to have a minimum**  **21 floor of 14. And the independent coil**  **22 manufacturer would then be obligated to make** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 sure that his coil that goes with that thing**  **2 is going to make it so it is still plumbed to**  **3 14. So, understanding that that is going on**  **4 the ICM to make sure therefore it does that.**  **5 Everyone is kind of nodding their**  **6 head in their room so, it seems there is**  **7 general agreement with that premise.**  **8 And the first question you asked was**  **9 regarding the basic model grouping. I want to**  **10 make sure everyone is clear is the basic model**  **11 for the Department has to be rated with one**  **12 rating. So, that is not particularly in the**  **13 basic model group as filed by AHRI. And so,**  **14 if your business model is based on something**  **15 that is from the AHRI, that is how you do your**  **16 business model. But understand that for**  **17 rating your coil is performance in combination**  **18 with the condensing unit. If it is going to**  **19 be rated with different values, that is a**  **20 different basic model. But we would**  **21 ostensibly allow it to be achieved through an**  **22 ARM, as long as it is based on the Highest** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Sales Volume Tested Combination, which sounds**  **2 like you are doing.**  **3 So, speaking off the cuff and I want**  **4 to make sure we entertain this exactly the way**  **5 it is being, I want to have a technical person**  **6 answer your question, Craig, the right way, it**  **7 sounds to me that we are all on the same page**  **8 but I just want to verify that with the other**  **9 folks that are smarter than me.**  **10 MS. MEYERS: That's exactly right.**  **11 So, in the HVAC world, the basic model is your**  **12 Highest Sales Volume Combination. The range**  **13 is achieved, and the DOE wants to call those**  **14 new basic models, you know a basic model group**  **15 is how we group them and that is the range of**  **16 ratings that that condensing unit can get.**  **17 So, an HVAC --**  **18 MR. LATTANZI: And the ARM is the**  **19 ratings -- I'm sorry -- is the ratings after**  **20 that.**  **21 MS. MEYERS: Right.**  **22 MR. LATTANZI: It is used for those** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 other ratings.**  **2 MS. MEYERS: Right.**  **3 MR. RAWALD: This is Doug.**  **4 Something that Harvey said, there is some deja**  **5 vu here. I think this in some way goes back**  **6 to last summer with the discussion of a base**  **7 model versus basic model with a base or the**  **8 platform --**  **9 MS. MEYERS: Correct.**  **10 MR. RAWALD: -- would be the product**  **11 which you build. And the base being the least**  **12 efficient, no bells and whistles thing. That**  **13 is going to be your Highest Sales Volume**  **14 Tested Combination for most people, it sounds**  **15 like, and that building upon that would be**  **16 more efficient. But it will still be part of**  **17 the same basic model grouping for purposes of**  **18 AHRI. But from DOE perspective, that will be**  **19 a different basic model, which is going to be**  **20 issued ratings by ARM.**  **21 MR. LATTANZI: Right. And that is**  **22 what that sentence essentially says. That is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the DOE interpretation, saying it is a**  **2 different basic model.**  **3 MR. RAWALD: Absolutely correct.**  **4 MR. LATTANZI: And I had two other**  **5 points. Is that okay?**  **6 MR. RAWALD: The floor is yours.**  **7 MR. LATTANZI: If you go to page two**  **8 now, it is essentially saying the same thing**  **9 in the third paragraph from the bottom, right**  **10 here. That's perfect. All right, the**  **11 sentence is in this case, since the company**  **12 intends to claim the ratings for each**  **13 combination and distribute all possible model**  **14 combinations as separate basic models. I**  **15 think that sentence right there is basically**  **16 saying the same thing. And that is that**  **17 difference in interpretation of basic models,**  **18 in my mind, that is creating some of the**  **19 conflict that we are all struggling with here.**  **20 MR. RAWALD: All right but**  **21 understanding that we are not going to change**  **22 the basic model definition for DOE because it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 is what it is and we haven't for a lot of**  **2 other reasons besides air conditioning. That**  **3 is what we mean. That is what we mean by**  **4 that. And I think hopefully, the Department**  **5 will be clear on the meaning. Gary gave me a**  **6 lot of thumbs up, saying you are belaboring**  **7 the point, which is good.**  **8 MR. LATTANZI: One other thing and**  **9 this is a little difficult. You asked a**  **10 moment ago were there any dissenting opinions**  **11 in the room. And I know everybody is all of**  **12 a sudden real nervous.**  **13 Let me say that for lack of a better**  **14 word, I am going to use the word abstention.**  **15 But I will further comment that my company**  **16 does see pros and cons both ways. And at the**  **17 same time, I understand where everybody's head**  **18 is and I don't see us as getting in the way of**  **19 what we are discussing here. I just want to**  **20 get it on the record that as you described it,**  **21 I mean I think we do see certain benefit for**  **22 that as well.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: And so I am clear,**  **2 Matt, so you are saying that from NORDYNE's**  **3 point of view, there are some benefits to**  **4 having the ability to sell in the south a**  **5 condensing unit that could be rated both above**  **6 and below 14 SEER, depending on what coil and**  **7 blower it is matched with.**  **8 MR. LATTANZI: Yes. Yes, and in the**  **9 interest of time I am not going to -- I could**  **10 spend some time elaborating on it but I think**  **11 we have had all those discussions in the past.**  **12 I think many people in the room have heard our**  **13 position so I won't bog the meeting down with**  **14 that commentary.**  **15 MR. RAWALD: Okay.**  **16 MR. LATTANZI: But again, I think**  **17 since you asked the question, the best word I**  **18 can come up with right now is abstention.**  **19 MR. RAWALD: No, it's good to know.**  **20 MR. LATTANZI: Okay.**  **21 MR. MELCHI: Jim Melchi with HARDI.**  **22 I would just like to go on the record as well** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that we would be supportive, as distributors,**  **2 of the approach discussed by the manufacturers**  **3 as well. We think the more simple the**  **4 approach is for them, the easier it is going**  **5 to make the distributor to communicate the**  **6 changes that are coming towards their**  **7 customers.**  **8 MR. EISNER: Craig Messmer says**  **9 okay, I'm good with limiting 13 SEER outdoor**  **10 units to be sold just in the north.**  **11 MR. RAWALD: Okay.**  **12 MS. HARIHARAH: I wanted to say one**  **13 thing before -- this is Johanna Hariharah for**  **14 DOE. I know this is a very belabored point**  **15 but I just want to get this on the record.**  **16 You know your Highest Tested Sales**  **17 Volume Combination is 14.2 and your ARM goes**  **18 down to 14. You are saying that you are going**  **19 to be okay with that. That's it. You can't**  **20 sell anything that your Highest Tested Sales**  **21 Volume Combination, if it is 14 but the ARM**  **22 can go down to 13.8, you are okay with that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 

### not being sold in the south. **2** 

### MS. MEYERS: You got it. **3** 

### MR. RAWALD: Is this a good time to **4** 

### take lunch? **5** 

### MR. MELCHI: It's always a good time **6** 

### to eat. **7** 

### MR. EISNER: All right, let's take **8** 

### lunch and be back at one o'clock. **9** 

### (Whereupon, the above-entitled **10** 

### matter went off the record at 11:54 **11** 

### a.m. and resumed at 1:04 p.m.) **12** 

### MR. EISNER: Why don't we get **13** 

### started again? We were supposed to have a **14** 

### panel discussion this morning on the **15** 

### distributor's records retention, market **16** 

### pressures, that sort of thing. So, we put **17** 

### them off and it is time for that. **18** 

### Who is going to start this off? **19** 

### MR. PORTER: You want me to start it **20** 

### off? **21** 

### Steve Porter Johnstone Supply. **22** 

### MR. RAWALD: Let me just check,

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 everybody online okay with this?**  **2 MR. PORTER: Are we good, Doug?**  **3 MR. RAWALD: Yes.**  **4 MR. PORTER: I wasn't here**  **5 yesterday. I apologize I don't know if you**  **6 touched on some things or didn't touch on them**  **7 although, I did get a brief update.**  **8 Excuse me if I am a little**  **9 confusing, too, at times. I have been up for**  **10 36 hours, probably but I have been drinking**  **11 coffee to overcome.**  **12 I really like the direction we are**  **13 going in the last conversation, just if I can**  **14 make that statement as well is that it makes**  **15 it very clear for us if that hanger tag is 14.**  **16 It just cleans everything up for us. And so**  **17 as Jon stated, that is HARDI's position would**  **18 be to support that.**  **19 I will speak only for independent**  **20 distribution. I cannot really speak to issues**  **21 related to manufacturers and their**  **22 distribution. So, I'll kind of keep this** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 focused on independent distribution.**  **2 And right now, obviously, we do**  **3 warranty for new equipment that we have that**  **4 we sell or even if we don't sell that**  **5 equipment and somebody comes in and needs us**  **6 to handle that warranty, if we haven't sold**  **7 the same brand, we would process, or some**  **8 distributors do and some distributors don't**  **9 process that warranty. So, I think it is**  **10 different for each distributor.**  **11 And to speak to the different kinds**  **12 of distributors that handle equipment, too.**  **13 Those that are focused in more of a commercial**  **14 distribution, light commercial, and then you**  **15 sell some residential, there are distributors**  **16 that are focused on refrigeration but may also**  **17 sell residential equipment. There are**  **18 distributors that are focused strictly on**  **19 residential distribution and supporting**  **20 supplies. There are distributors that focused**  **21 on parts and also sell equipment. So, there**  **22 is a range of different types of distributors** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 with a little different kind of profiles that**  **2 are out there.**  **3 My company has four different types**  **4 in its own organization that sell those or**  **5 that manage in that same way. Within those**  **6 organizations, warranty can be handled and**  **7 even within my company are handled in all**  **8 kinds of different ways. So, record keeping**  **9 processes could have a number of touches**  **10 within that organization and people that**  **11 handle warranty or keep track of the equipment**  **12 sales either in a myriad of different ways on**  **13 a number of different ERP systems.**  **14 And then typically what happens,**  **15 there will be one person, I won't say this is**  **16 for all, but usually there is one person**  **17 within that distributor that is kind of a**  **18 warranty guru and basically they become ad hoc**  **19 guru because nobody wants to do warranty. It**  **20 is something that you wish you wouldn't have**  **21 to do but it is the cost of doing business.**  **22 But it is one of those things that typically** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 can build up with an organization. It takes**  **2 a lot of management and time and there is a**  **3 lot of paperwork to it and processes. And**  **4 typically, whoever wants to do it will get it**  **5 or the newest person in the organization will**  **6 be given that job to do when they come in**  **7 because nobody wants to manage that particular**  **8 issue.**  **9 So, the record keeping on that could**  **10 vary from independent to independent because**  **11 nobody is going to -- nobody wants to get**  **12 involved in it because once you get involved**  **13 in it, then you are going to end up doing it.**  **14 So, if you have a process. So, it can vary at**  **15 different ones. I have seen all different**  **16 kinds of processes with independent**  **17 distributors on how they handle their warranty**  **18 and their record keeping and how much is paper**  **19 and how much is put into the computer and**  **20 process or whether they have redundant backup**  **21 systems for that process or they don't.**  **22 MR. FENSTROM: So this is Gary for** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 the California IOUs. Why is it nobody likes **2 this job just because it is a tedious 3 paperwork job or is there other reasons?**  **4 MR. PORTER: No, I mean doing 5 warranty involves a return and the paperwork**  **6 process and the filing back to the 7 manufacturer and a touch of the equipment and**  **8 then a return. It is usually a problem is 9 involved and sometimes an unhappy customer or**  **10 whatever. But as far as on the process side, 11 yes, it is heavily involved in a lot of**  **12 paperwork and backup and return and proving 13 back to the manufacturer that it is done**  **14 correctly and that the serial numbers match 15 and they sold it and it was registered as**  **16 under warranty as well by the homeowner. 17 And I can't speak to all the**  **18 different manufacturers' warranty processes 19 either.**  **20 MR. CLARK: This is Gary from 21 Goodman. The other thing is is this person**  **22 typically does warranty for all the products**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that a distributor sells.**  **2 MR. PORTER: Right.**  **3 MR. CLARK: And everybody's process**  **4 is a little bit different. And so it is**  **5 tedious enough when it is just one warranty.**  **6 But when you have 60 different --**  **7 MR. PORTER: Four hundred.**  **8 MR. CLARK: -- yes, 400 okay, 400**  **9 different lines of equipment, it can be --**  **10 MR. PORTER: And suppliers.**  **11 MS. MEYERS: Yes, it is not just**  **12 equipment.**  **13 MR. PORTER: It is not just**  **14 equipment. So you have a thermostat, you**  **15 handle every product.**  **16 MR. LATTANZI: This is Matt Lattanzi**  **17 again. I have a little bit of experience with**  **18 this. One of the other hats I wear is**  **19 warranty. And I think Gary hit it right on**  **20 the head. It is a very complex job, due to**  **21 the magnitude of the OEMs the distributor has**  **22 to deal with when doing factory warranty. I** 

### Page 153

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 hear that all the time.**  **2 MR. SACHS: This is Harvey. And I**  **3 really want to test what I keep hearing from**  **4 folks in the industry that part of the issue**  **5 of warranty at the distributor level is you**  **6 are caught between the manufacturer is**  **7 skeptical that equipment is dead on arrival or**  **8 fails soon after and the contractor who is**  **9 sure it wasn't his fault. It is a really hard**  **10 place to be with consumers or the end user is**  **11 really unhappy and feels that everybody in**  **12 that process is pointing fingers at each other**  **13 instead of trying to fix his problem.**  **14 MR. PORTER: Yes, I mean, again, DOE**  **15 is an exception to the rule, I would say. I**  **16 mean, that is --**  **17 MR. SACHS: DOA.**  **18 MR. PORTER: DOA. I'm sorry, DOE.**  **19 No offense, Doug. I think you are doing a**  **20 great job.**  **21 (Laughter.)**  **22 MR. RAWALD: Glad to hear I'm not** 

### Page 154

202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 DOA.**  **2 MR. PORTER: The DOE is not DOA.**  **3 The DOA issue is not a -- I mean**  **4 yes, it happens and those are complicated**  **5 situations and get done but usually it is**  **6 negotiated through and most wholesalers try to**  **7 do a pretty good job of keeping track of**  **8 contractors that are repeatedly returning the**  **9 same type of issue. You know, they keep**  **10 bringing in motors that are bad. We identify**  **11 them as maybe more parts changers. I will say**  **12 that most of what comes back in, there is not**  **13 anything wrong with it, a high percentage.**  **14 And that is just poor practices or maybe they**  **15 weren't trained correctly or they are in a**  **16 hurry or whatever happens. But that does**  **17 occur.**  **18 MR. WHITE: This is Chuck White from**  **19 PHCC. I have a couple things to add. First,**  **20 the first day of contractor school they teach**  **21 you it is never your fault. But I agree, I am**  **22 involved with the NATE program, which is a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 technician certification program and one of**  **2 the impetus for creating NATE was just the**  **3 parts come back that there is nothing wrong**  **4 with and really all up and down the chain we**  **5 are not happy with it. The manufacturer is**  **6 not happy; he gets good parts back. The**  **7 wholesaler has to deal with it. And frankly,**  **8 as a contractor, I am really not happy with it**  **9 either because all up and down the chain there**  **10 is no compensation going on for this,**  **11 basically. It is a problem that has happened**  **12 related to the sale. I have to make the**  **13 customer happy. And I am your customer, so**  **14 Steve doesn't make me happy and Jon here has**  **15 to make him happy. But none of us are getting**  **16 paid for this happiness, essentially.**  **17 Yes, so there is no way around it.**  **18 MR. PORTER: Different manufacturers**  **19 track a run rate of warranty and it is with an**  **20 acceptable region and whether we have gotten**  **21 -- there are problems that come up, too, that**  **22 are legitimate on parts that fail in a series** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 or there is a recall on a product. I mean but**  **2 it is somewhat monitored. It just the cost of**  **3 doing business. It is an expensive cost of**  **4 doing business, which is why we were concerned**  **5 about our record keeping side of this issue**  **6 when it first came up on the enforcement side**  **7 was because what basically we would be doing**  **8 would be similar kind of paperwork for every**  **9 piece of equipment you sold. And right now,**  **10 the cost of warranty takes up a lot of the**  **11 organization's times. And to now have it done**  **12 on every single piece of equipment would be**  **13 really, really expensive.**  **14 MR. MELCHI: This is Jon Melchi from**  **15 HARDI. And to add to Steve's point and the**  **16 burden he is talking about the distributors**  **17 currently face is only for those warranties**  **18 that are brought back by the contractor. And**  **19 there is a significant portion or significant**  **20 amount of times where Steve's organization may**  **21 not even see that warranty information or**  **22 anything to do with it. The contractor would** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 deliver it, you know, send it in directly or**  **2 if at all.**  **3 MR. PORTER: And also we may be**  **4 warranty for another. The equipment may have**  **5 been sold at a different distributor but**  **6 because the contractor is a good customer of**  **7 ours, we are going to facilitate processing**  **8 the warranty and vice-versa with other**  **9 independent distributors. They may take it to**  **10 the one that they know is going to get it done**  **11 faster.**  **12 MR. WHITE: Well and this is Chuck**  **13 White again. Warranty is not on every piece**  **14 of equipment that you sold. It is only on**  **15 some percentage. Probably a small percentage**  **16 and I don't know what that is but speaking**  **17 from the business that I own, it is pretty**  **18 low.**  **19 MR. RAWALD: This is Doug. So, I**  **20 want to explore the relationship between**  **21 contractors and dealers, that has been**  **22 mentioned a couple of times.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, talk to me from a distributor**  **2 point of view. What is the relationship with**  **3 the contractors and how do you view that? How**  **4 do you cultivate that?**  **5 MR. PORTER: Well, hopefully we**  **6 cultivate it with good customer service;**  **7 having the inventory at the time that they**  **8 need the inventory; training and that training**  **9 could be on business training, as well as or**  **10 flat rate pricing classes that are held at the**  **11 facilities, training on the product, hands-on**  **12 training on product done at the facility as**  **13 well, as well as online training that is**  **14 provided.**  **15 So, we cultivate a relationship**  **16 based on great customer service, providing**  **17 access to financing companies and putting that**  **18 marriage together between them; dispatch**  **19 software, software programs; inventory**  **20 planning and tools that may help them reduce**  **21 how much inventory they carry or however they**  **22 want to do it, actually is how we want to do** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it.**  **2 So, if you want the product**  **3 delivered in a cab, picked up at the store,**  **4 dropped on a roof, you tell us how you want us**  **5 to get it there and that is what we will try**  **6 to figure out how to do for you.**  **7 MR. RAWALD: And I guess what is**  **8 kind of swirling around in my mind is the idea**  **9 from the contractor point of view of education**  **10 costs or overhead. You are not making money**  **11 on people learning. And so, is there some**  **12 sort of juxtaposition with the distributor**  **13 role in educating the contractor that can**  **14 somehow assist in this ability for**  **15 distributors to ensure that people downstream**  **16 are doing the right thing and not installing**  **17 the wrong product?**  **18 So, we have the question of do you**  **19 guys proposed two weeks' ago about hey, we**  **20 don't like to get it in the hands of the guys**  **21 in the first place but if it does, give them**  **22 the education so they know to return it back** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 or to not use it. So, just some sort of way**  **2 to cultivate that.**  **3 MR. PORTER: I think we do that now.**  **4 I mean we have the education when you want**  **5 from 10 to 13 and when we are going from --**  **6 you know, as we go to 14 in these regions.**  **7 That is why it is so critical to have the**  **8 hanger tag correct. And it is easy to**  **9 communicate. That is an easy thing to**  **10 communicate. And for the most part, I would**  **11 say 99 percent of the time, people are going**  **12 to do the right thing. I don't want to create**  **13 rules around the exceptions because that is**  **14 very expensive to do, very costly for**  **15 everybody to do and not really that**  **16 enforceable. Those that are going to do that**  **17 are going to do that. But if we have an easy**  **18 enforceable hanger tag that we can communicate**  **19 to the marketplace posted in our stores, let**  **20 them know that this is what is -- and the**  **21 match ups are certified so when we print out**  **22 our price sheets and we match up the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 certifications to the models of the coils,**  **2 they go out to the contractor, they can see**  **3 what they can buy and what matches up. It is**  **4 no different than what we have been doing all**  **5 along with all the other changes in the**  **6 industry over the years. It is just getting**  **7 clarity around this would take it light-years**  **8 forward on making sure that people do the**  **9 right thing. And for the most part, I think**  **10 everybody wants to do the right thing.**  **11 You know our burden is when we get**  **12 the different -- and for ourselves, when we go**  **13 and pick that product out of those**  **14 distribution centers, we have to have a clear**  **15 way to send somebody that doesn't install**  **16 equipment, doesn't think about it that way but**  **17 is just working in a warehouse to go out and**  **18 pull that product and ship it because they may**  **19 be on a border state region. And I have a**  **20 Vegas warehouse. Johnstone Supply has a Vegas**  **21 warehouse that ships to three other regions.**  **22 So, we have to be able to have that clarity in** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the labeling would go a long ways to make it**  **2 easier for everybody to understand. And I**  **3 think that takes care of 99 percent of what we**  **4 are trying to do here.**  **5 MR. McCRUDDEN: So, this is Charlie**  **6 McCrudden with the Air Conditioning Contractor**  **7 of America. Speaking on behalf of my**  **8 contractors, I will say that there is, as**  **9 Steve described it, the relationship is very**  **10 much a customer service style relationship.**  **11 They have a limited number of customers, only**  **12 HVAC contractors. You are not going to reach**  **13 out to homeowners as a distributor. So, they**  **14 will do everything they can to keep them**  **15 happy.**  **16 And I say that because I grew up in**  **17 a distributor household. My grandfather**  **18 started McCrudden Heating Supply in Ohio and**  **19 I worked there in the summertime for years.**  **20 I used to work the counter. We had, at my**  **21 dad's warehouse, this room devoted to**  **22 training. And manufacturers, some of them** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that are sitting next to me, would send reps**  **2 to come in and train the contractors on the**  **3 new product, new models, things like that.**  **4 Financing was a big thing.**  **5 Now, my father's company was small**  **6 in the scheme of distributors but he did a lot**  **7 of banking, so to speak, with contractors. He**  **8 was their bank in many ways. And that is**  **9 another service. And that is not really sort**  **10 of DOE and what we are talking about today but**  **11 this is about their relationship.**  **12 But anyway, my dad's company and I**  **13 think others are like this, he had, and he**  **14 sold two years' ago so I have to say he had,**  **15 he had two engineers on staff, so to speak,**  **16 who helped contractors with difficult jobs,**  **17 helping them with the designing and the**  **18 selection of equipment. So, if it is a unique**  **19 situation, you know not your typical**  **20 installation, they had someone they could go**  **21 to because they were small, if they weren't a**  **22 large contracting company.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, now I will take my McCrudden**  **2 Supply hat off again and I will go back to**  **3 being an ACCA person.**  **4 MR. RAWALD: Well, so you mentioned,**  **5 I am curious about that, the training**  **6 sponsored by the manufacturers at the**  **7 distributor's warehouse attended by folks from**  **8 the contractor. So, where was the cost?**  **9 MR. McCRUDDEN: Well, obviously, the**  **10 training facility --**  **11 MR. RAWALD: Who bore it, I guess is**  **12 my question.**  **13 MR. McCRUDDEN: The training**  **14 facility is borne by the manufacturer -- I'm**  **15 sorry, the distributor because that is floor**  **16 space that is not being used to hold**  **17 inventory.**  **18 MR. WHITE: Again, it varies,**  **19 depending on the program and depending on what**  **20 is being taught. There are some places that**  **21 will charge $50, some kind of fee. There are**  **22 classes that --** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: To the contractor.**  **2 MR. WHITE: -- are charged to the**  **3 contractor. There are other classes that may**  **4 be shorter in duration, an hour or two-hour**  **5 class that is free. And you know, they may**  **6 serve hotdogs or something. There is a**  **7 variety of these methods.**  **8 Really any in-depth that has**  **9 significant training materials or has any kind**  **10 of testing with it, most contractors are going**  **11 to be expecting there is going to be some fee**  **12 attached to that.**  **13 MR. PORTER: This is Steve Porter**  **14 with Johnstone Supply. So, we have NATE**  **15 training that is hosted at stores. You have**  **16 the business ones and they may have an**  **17 independent instructor. So, there may be a**  **18 fee associated with to bring that up and then**  **19 you sign those folks up, they would come in**  **20 and get trained. Manufacturers and**  **21 distributors bear the cost, typically, when it**  **22 comes in and we are going to teach the class** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 on the equipment, the installation of the**  **2 equipment, sometimes there is a fee put on**  **3 that just because sometimes a fee makes people**  **4 show up and free doesn't always work so well**  **5 as much. As it sounds like a great deal, the**  **6 motivation gets lost to show up for a meeting.**  **7 So, sometimes a fee is put on there.**  **8 But we do incur the cost, as was**  **9 mentioned, for the facilities that we have and**  **10 the hosting of the food and all the things**  **11 that go along with it, and employees that stay**  **12 after hours because this is typically done in**  **13 the evening or maybe Saturday. Once and a**  **14 while it will be lunch and learn but this is**  **15 all done sometimes during business hours that**  **16 we do it and usually in shoulder seasons but**  **17 we can't get that done during the peak of the**  **18 year.**  **19 MR. WHITE: And this is Chuck White**  **20 again. Additionally, with respect to**  **21 training, and now ACCA, PHCC both have**  **22 training programs for our members. And in** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 some localities, our organizations may have**  **2 some facilities where we do train at our**  **3 offices but many times it is in conjunction**  **4 with one of the wholesalers who has a big room**  **5 and said oh, sure, on Friday afternoon, sure,**  **6 you can have the room.**  **7 So, we will either maybe a local**  **8 PHCC or ACCA person who has some training**  **9 ability or you get someone in nationally. It**  **10 might be a business operation. It might be**  **11 changes in rules. It could be a number of**  **12 training opportunities. But our associations**  **13 provide training as well to our members or to**  **14 non-members, sometimes free, sometimes for a**  **15 fee but those kind of programs also kind of**  **16 helps the association recognition and helps**  **17 drive the membership for the association. So,**  **18 that is another avenue for training for folks.**  **19 MR. RAWALD: And I find this all to**  **20 be of interest for the public outreach point**  **21 that we are talking about that we will talk**  **22 more about tomorrow. But I think it is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 interesting to kind of see that I want to**  **2 think about a little bit if there is some**  **3 opportunity here we can build upon.**  **4 But I also, I was really interested**  **5 you folks in the warranty and the records**  **6 there, but how about sales records? And Gary**  **7 has hopped on this a couple of times that**  **8 sales seem to at least indicate something**  **9 about where things are going, possibly.**  **10 Right? So, can we tell anything from that and**  **11 what kind of records do distributors keep on**  **12 sales, on the sale side?**  **13 MR. PORTER: Again, it will be very**  **14 similar, depending on their ERP system on how**  **15 they track those. Each one is different. We**  **16 aren't that many years' removed from getting**  **17 some consolidated sales records, even ones in**  **18 our own organization because of all the**  **19 different ERP systems that they have.**  **20 So, it will be manual to get them**  **21 but, obviously, they keep sales records on**  **22 customers when they sell them a piece of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 equipment that goes out on a particular sale.**  **2 But they could be they can also sell**  **3 between wholesalers. They can sell -- you**  **4 know whoever has the equipment and may buy**  **5 back from a contractor, vice-versa. Depending**  **6 on how it goes, the sales can go out to a**  **7 contractor in North Dakota may want to keep a**  **8 certain number on hand. So, you wouldn't know**  **9 when those particular units are actually**  **10 installed.**  **11 MR. RAWALD: What would that record**  **12 of sale, as a general rule, consist of? What**  **13 information would we have from that, as far as**  **14 about the product? How much detail would we**  **15 have on the product that is going out? Model**  **16 number, serial number, SEER value, what would**  **17 we have, do you think, in the numbers?**  **18 MR. PORTER: You usually have the**  **19 associated part number and model number, as a**  **20 minimum.**  **21 MR. RAWALD: Okay.**  **22 MR. PORTER: But again, I can't** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 speak to everybody's ERP system. I don't know**  **2 them all. So, we cleaned up over double digit**  **3 in our organization. We have that many.**  **4 MR. RAWALD: Well, besides if DOE**  **5 were to say hey, retain your records of sale**  **6 for some purpose, is there a business purpose**  **7 that is already being served on retaining**  **8 records, so distributors have a reason why**  **9 they want to retain these records?**  **10 MR. PORTER: I mean, obviously, to**  **11 service that customer and to prove that they**  **12 have a purchase record, just like any other**  **13 business would.**  **14 MR. CLARK: This is Gary from**  **15 Goodman. How long do you think that the DOE**  **16 would request that the distributor hold on to**  **17 the information?**  **18 MR. RAWALD: That is an interesting**  **19 question -- this is Doug -- and one I**  **20 certainly haven't thought of. So, in our**  **21 current practice for models that are**  **22 manufactured and sold by a manufacturer, we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 require the manufacturer to keep those records**  **2 for two years post-discontinuance. So, if the**  **3 model is in circulation for 10 years, that is**  **4 12 years total. So, that is what we do.**  **5 I would be interested to hear from**  **6 the distributors what they think longevity of**  **7 record would be reasonable for them.**  **8 MR. MELCHI: To circle back to a**  **9 point earlier, our distributors are selling**  **10 hundreds of products. And you would**  **11 essentially be telling them to keep one set of**  **12 processes for one product that they are**  **13 selling and another set of systems for**  **14 everything else, you know, the way they have**  **15 continued to do it.**  **16 MR. PORTER: This is Steve Porter, I**  **17 just want to interrupt. So, hundreds of**  **18 products means hundreds of suppliers. We**  **19 price ourselves over a million products. So,**  **20 just to give you a scope.**  **21 MR. RAWALD: Right.**  **22 MR. EISNER: At the distributor** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 level, are the records all digital or are some**  **2 of them hard copy?**  **3 MR. PORTER: Some are hard copy.**  **4 Some are digital. Go ahead.**  **5 MR. WINNINGHAM: This is Dave with**  **6 Allied. Also, at the distributor level, not**  **7 all these products line up as a system. You**  **8 will sell condensers, evaporators, air**  **9 handlers, furnaces and they are not all lined**  **10 up one for one because a system --**  **11 MR. RAWALD: This is Doug, but if we**  **12 are ostensibly operating under the assumption**  **13 the condenser has to be at least 14 to be in**  **14 the region, regardless of what it is paired up**  **15 with, that would be simpler for us from an**  **16 enforcement point of view because we could see**  **17 the condensing unit shouldn't have gotten**  **18 there in the first place. So, that is**  **19 something, at least.**  **20 And so you mentioned that the things**  **21 you sold. So, I remember Chuck saying a lot**  **22 of contractors have them delivered to their** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 address, as opposed to the installation**  **2 address, from his point of view. Is that a**  **3 practice you folks see a lot in the**  **4 distribution world?**  **5 MR. MELCHI: I would say that and**  **6 Chuck, you correct me if I am wrong, at least**  **7 from the distributors that I have talked to,**  **8 it is very, very rare in a residential setting**  **9 that a distributor would deliver a product to**  **10 a home. I think that is probably something**  **11 you see more in the commercial industry.**  **12 Steve would have more knowledge.**  **13 MR. PORTER: Well, I think it isn't**  **14 a common practice but it happens and it is**  **15 done by the relationship. If that is the**  **16 service agreement that they enter in with the**  **17 contractor, drop it off at this address, I**  **18 need it dropped off by noon. It is going to**  **19 be there. So, it is done. I wouldn't say it**  **20 is common, necessarily, but it happens**  **21 frequently.**  **22 MR. WHITE: This is Chuck White with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 PHCC.**  **2 A lot of it is a scheduling issue**  **3 because this is a valuable thing, both in**  **4 terms of a brand new product and it is also**  **5 valuable in the scrap market for the guy who**  **6 sees it sitting there and carries to off. And**  **7 you can smile but it happens a lot.**  **8 MR. RAWALD: And Chuck, I was**  **9 smiling in disbelief.**  **10 MR. WHITE: No, it's true. A chunk**  **11 of business these days is somebody calls up**  **12 and says my air conditioning is not working,**  **13 you go out and there is a hacksaw mark. And**  **14 I mean it is business but it is sad because a**  **15 very expensive piece of equipment got sold for**  **16 $18 in scrap metal.**  **17 But controlling that and controlling**  **18 your schedule, no offense to wholesalers love**  **19 them a lot but I can't always predict when**  **20 they are going to arrive. And I can't have a**  **21 technician go to somebody's house and stand**  **22 around twiddling their thumbs, gee, I wonder** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 when that unit is going to get here.**  **2 So, most people arrange it so it**  **3 gets delivered to your shop, unless you have**  **4 track housing or you have got an apartment**  **5 complex or you have got people there all the**  **6 time in a secure location, you can unload**  **7 them.**  **8 Sometimes, the driver is not**  **9 physically able to handle the thing by**  **10 himself. If it is big enough, he may need**  **11 additional equipment to be able to handle**  **12 that.**  **13 So, I am sure there are occasions**  **14 where I have an arrangement with my ABC**  **15 wholesaler. I am going to call you and you**  **16 promise me that you will have it out there**  **17 within 20 minutes or a half an hour. I am**  **18 sure there are arrangements like that but I**  **19 don't think they are very common because that**  **20 presents a different burden to Mr. Wholesaler.**  **21 Most of the time they are going to either get**  **22 delivered to the shop or the contractor is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 going to physically come pick it up. I am on**  **2 the way to the house and your place is, I am**  **3 driving right by it, I stop, throw it in the**  **4 truck and keep going.**  **5 MR. PORTER: Steve Porter from**  **6 Johnstone Supply. He is correct. In the**  **7 morning typically you are going to load up or**  **8 they have their orders and then the truck will**  **9 go out and drop those off to the various**  **10 contractors.**  **11 MR. WHITE: Well, we like coming to**  **12 your place because you got all those donuts.**  **13 MR. PORTER: But there is more of a**  **14 trending, especially with larger groups that**  **15 represent a large part of the industry to not**  **16 come into the shop. They don't want their**  **17 technicians in. They want them out working.**  **18 So, like I said earlier, anyway they**  **19 want us to deliver it, is typically how we get**  **20 it there. In the rural areas, sometimes where**  **21 you can drop it off, more secure, not as much**  **22 crime that exists in different regions of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 country. Some it would be impossible to do.**  **2 You would never do it.**  **3 MR. RAWALD: This is Doug, I have**  **4 seen a lot more uncertainty on the ones that**  **5 are picked up versus those that are delivered,**  **6 just as a pure logistical matter. Right?**  **7 So, what is the percentage of things**  **8 that are picked up from the supplier as**  **9 opposed to delivered to the contractor or the**  **10 place where they are going to be installed?**  **11 Just a ballpark figure. If you have no idea,**  **12 you have no idea but I am just kind of curious**  **13 if we are talking about most things are**  **14 delivered or most things are picked up or you**  **15 kind have no idea at all.**  **16 MR. PORTER: Steve Porter, Johnstone**  **17 Supply. That can range dramatically from the**  **18 type of wholesaler that they are and the**  **19 services they provide and the particular**  **20 contractors that they service. So, I mean it**  **21 could be 30 percent, walk up traffic, as we**  **22 call it, counter traffic could be 30 percent** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of your business. It could be 70 or 80**  **2 percent of your business if the wholesaler**  **3 doesn't even provide delivery or do some of**  **4 those things, which can still exist today**  **5 where they don't even do delivery or even have**  **6 an outside sales force, they may be closer to**  **7 100 percent.**  **8 So, it is a pretty big range.**  **9 MR. CLARK: This is Gary from**  **10 Goodman. We have branches. So, we have a**  **11 fair bit of business in this area also. And**  **12 it really varies, depending on the time of the**  **13 year. You know if it is in the spring and**  **14 dealers aren't that busy yet, you will see a**  **15 lot more of them coming to see you.**  **16 When it gets real busy in the**  **17 summertime, as Chuck mentioned, dealers have**  **18 long backlogs. You want them on the job. You**  **19 don't want them away from the job. And so**  **20 delivery becomes a bigger part of the**  **21 equation, at least for us. So it really**  **22 varies depending on the time of year.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: So, are there records**  **2 kept of deliveries that are from sales**  **3 records?**  **4 MR. PORTER: I can tell you that we**  **5 know if we delivered it or not.**  **6 MR. RAWALD: And you know where it**  **7 was delivered and you keep track of that?**  **8 MR. PORTER: Yes, in most cases.**  **9 MR. RAWALD: I guess what I am**  **10 driving at is, so in order to investigate**  **11 things properly, I need to be able to know**  **12 what I can find out. So, I am just kind of**  **13 curious of what is out there already from the**  **14 distributor point of view that if I were to go**  **15 to the distributor and say I need something**  **16 from you, you would be able to say oh, I can**  **17 help you in this way.**  **18 So, if there are some things that we**  **19 might have already, then it is already out**  **20 there at some point or another. Whether they**  **21 are helpful or not, it is debatable. I mean,**  **22 some things are more helpful than others, at** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 least something that we can grab on to. It is**  **2 a question of whether we want to create new**  **3 burdens or whether the existing burdens that**  **4 or listing things that are already being done**  **5 that can be taken advantage of.**  **6 MR. GIBBONS: This is John from**  **7 Carrier and I spent 12 years working in**  **8 distribution. All of our invoices, all three**  **9 of the branches I worked in had bill to and**  **10 ship to identifiers on it. And if it was pick**  **11 up, in the ship to box, it said pick up. And**  **12 I assume that just about everybody is in the**  **13 same boat. Part of that is a transportation**  **14 tracker.**  **15 MR. RAWALD: Well, for all the folks**  **16 that have raised their hand so far, how long**  **17 are those records typically kept?**  **18 MR. CLARK: I'll be honest. I don't**  **19 know. This is Gary from Goodman. I don't**  **20 know how long records are kept.**  **21 MR. HURST. My guess is if the**  **22 records were retained we would be able to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 actually find them. I have walked through**  **2 enough branches and seen file cabinets. I**  **3 think the change would have to be if there was**  **4 a retention policy, then you would have to**  **5 file it in a manner that you could put your**  **6 hands on it in a relatively short amount of**  **7 time. But my guess is a lot of those records**  **8 are out there but it probably varies from**  **9 location to location.**  **10 MR. GIBBONS: Just for example, we**  **11 had three-part invoices and four-part**  **12 invoices. The original you had a copy filed**  **13 by date, by number, and by customer. So, that**  **14 was 12 years ago, 18 years ago. And to John's**  **15 point, it depended on how long you kept them**  **16 at each branch. Some was a year, some was six**  **17 months, some was until they paid their**  **18 statement. So, it is all over the place.**  **19 Now, it is probably a little bit more clear.**  **20 Assuming it is electronic, there may be some**  **21 that are -- I don't think anybody is in the**  **22 same boat.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. MELCHI: This is Jon from HARDI.**  **2 I think that at least from my experience,**  **3 there is two -- what you are talking about are**  **4 two distinctly different sets of records. In**  **5 one hand, we are talking about stuff that may**  **6 be accessible in an EERP system but there**  **7 would be nothing really, depending on your**  **8 EERP, it would have to be pretty sophisticated**  **9 to be able to tell you where a delivery would**  **10 have occurred. Most of our guys will have, if**  **11 they do have trucks, a driver will show up in**  **12 the morning with the truck may already be**  **13 loaded, oftentimes. And here is what you are**  **14 dropping off to this address, this address,**  **15 and this address. And that may not be,**  **16 oftentimes likely not any sort of hard or**  **17 electronic records of the route that those**  **18 guys took that particular day.**  **19 I don't know that you would be able**  **20 to pull up Charlie on X day did this route.**  **21 Some sophisticated guys may have it but my**  **22 experience is you are probably not going to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 get anything like that.**  **2 MR. PORTER: This is Steve Porter**  **3 from Johnstone Supply. I think that yes, to**  **4 speak to how every one of them do it and each**  **5 EERP system is out there, some could pull up**  **6 and search on a serial number, some can't.**  **7 Some would have to go by you would only be**  **8 able to pull up records based on the name of**  **9 the contracting company and then you may have**  **10 to go in as a manual process to look and see**  **11 what they actually bought which would be**  **12 really laborious to do.**  **13 So, I mean it depends on that EERP**  **14 system, if they have one, on how you get to**  **15 that, access that information and then I could**  **16 speak to all the variations.**  **17 MR. MELCHI: And I would say that**  **18 one of the things that most commonly -- this**  **19 is Jon from HARDI. Distributors hate and**  **20 detest EERP changes and changes to that**  **21 system. It is one of the most time-intensive**  **22 and expenses processes that a distributor can** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 undertake.**  **2 And as Steve described doing it, I**  **3 am sure that they caught a lot of flak for all**  **4 of those changes.**  **5 MR. PORTER: Yes.**  **6 MR. LATTANZI: It's no fun for**  **7 manufacturers either.**  **8 MR. HURST: John from Lennox. I**  **9 just want to point out, this is probably**  **10 obvious, but the distributors represented are**  **11 the folks that have spoken on behalf of**  **12 distributors, with the exception of Charlie,**  **13 most of them are big distributors. Some**  **14 distributors have hundreds of branches. Some**  **15 have one or two. And so, some don't even have**  **16 really ERP systems, so that needs to be taken**  **17 into consideration. I think the other point**  **18 is you mentioned going back to the time that**  **19 I think the term 12 years was discussed. Is**  **20 there a statute of limitations on civil**  **21 penalties? And would that guide the amount of**  **22 time you needed to retain the records or if** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 you could comment on that from a legal**  **2 perspective.**  **3 MR. RAWALD: Right. So, the general**  **4 statute of limitations that may not apply, I**  **5 need to talk to the lawyer folks here and make**  **6 sure we are all on the same page before I give**  **7 an answer off the top. So, generally, we**  **8 outbreak kind of on a five-year rule, I think**  **9 by and large. But I don't want to say that**  **10 that is the bar here.**  **11 So, I could see some technicality in**  **12 limiting it in how long you will keep records.**  **13 The reason why we have record retention so**  **14 long in the manufacturer context is because**  **15 what we are typically looking for is test**  **16 data, which may be from the time you built the**  **17 unit the first time. And so, if you built it**  **18 15 years ago, I still want to be able to get**  **19 that test data now and look at it.**  **20 So, from a sales and investigation**  **21 point of view, I can see why there would be a**  **22 totally different tap list as far as how long** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 back I would want to go if I were**  **2 investigating this. I probably wouldn't want**  **3 to know about a sale or a delivery ten years'**  **4 ago. I would want to know about the sales in**  **5 the last three or four years and kind of look**  **6 at the pattern and what is going on, I think,**  **7 thinking just as I am talking to you.**  **8 So, I think there is a lot of belief**  **9 or at least inertia towards having a shorter**  **10 window but I would think a window of some sort**  **11 of years would be probably the most likely, if**  **12 we were to adopt to a record retention policy.**  **13 MR. HURST: And I was referring to**  **14 sales-based, so thank you.**  **15 MR. RAWALD: Yes. And just as an**  **16 aside, John, when we typically ask for sales**  **17 data, we typically only go back five years.**  **18 So, we don't typically go beyond that.**  **19 The program is still relatively new.**  **20 So, I don't know if they are going to do it 15**  **21 years from now but that is where we kind of**  **22 keep ourselves standard.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. CLARK: This is Gary from**  **2 Goodman. I'm just trying to link up things.**  **3 I mean because of sales data, you know are**  **4 there any IRS rules that are in place already?**  **5 I mean it is just something to look at.**  **6 MR. RAWALD: No. I only laugh**  **7 because I have no idea.**  **8 MR. CLARK: No, I don't either.**  **9 MR. RAWALD: And I don't practice**  **10 tax law, so I really would be just opining.**  **11 And I guess we could go back in the Department**  **12 and talk about that.**  **13 MR. CLARK: It is just a suggestion.**  **14 If it is equivalent to what the IRS already**  **15 requires, it is probably not an undue burden**  **16 at that point, is my only point.**  **17 MR. RAWALD: Right. If the IRS is**  **18 already requiring the company to keep those**  **19 records, us asking you to keep it would be no**  **20 duplicative with you simply saying we already**  **21 do it. I am very hip to that. So, if you are**  **22 already keeping it, I think we should support** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that.**  **2 MR. WHITE: This is Chuck White with**  **3 a personal note. They have a three-year look**  **4 back when they come to your business.**  **5 MR. MELCHI: This is Jon with HARDI.**  **6 Another trend that I think we have seen, at**  **7 least since we have reached new standards when**  **8 it first exploded, we have just seen a lot of**  **9 consolidation in our industry in distribution,**  **10 small distributors may be closing doors or**  **11 being purchased. New distributors moving in,**  **12 maybe a plumbing house moving into some sort**  **13 of HVAC. But just thinking off the top of my**  **14 head of what happens to the challenges of**  **15 trying to ascertain records for companies that**  **16 are no longer in existence.**  **17 MR. RAWALD: Well that is their own**  **18 challenges in who is taking all the records**  **19 and do they exist.**  **20 Can you give me a ballpark estimate**  **21 of how many HVAC distributors are out there?**  **22 We have heard a number of contractors,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 anywhere from 40 to 200,000.**  **2 MR. PORTER: How many independent**  **3 distributors?**  **4 MR. RAWALD: That focus on central**  **5 air conditioning or have that as one of their**  **6 characteristics.**  **7 MR. PORTER: That would be -- I mean**  **8 we can talk about membership.**  **9 MR. MELCHI: We have just under 500M**  **10 wholesale members, but that is also inclusive**  **11 of Canada, I would have to strike out our fine**  **12 friends north of the border. But that is not**  **13 inclusive of factory and distribution and --**  **14 MR. PORTER: It is also not**  **15 inclusive of some major wholesalers. Even in**  **16 the U.S., there is a lot more and there is --**  **17 there may be a hardware store out there that**  **18 sells an air conditioner.**  **19 MR. McCRUDDEN: And this is Karen.**  **20 That number should not mean locations.**  **21 MR. MELCHI: Yes, right. And**  **22 probably upwards of tens of thousands.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: I am just trying to**  **2 assess how many companies we are talking**  **3 about. Not how many locations but how many**  **4 companies we would affecting with this kind of**  **5 thing. And my first impression would be also**  **6 would we want to develop rules that would be**  **7 different for those companies that are**  **8 operating in the region, as opposed to outside**  **9 the region. I mean, so if you are in the**  **10 north and you only operate in the north, would**  **11 you have a record retention requirement under**  **12 the regional standards if you never sell in**  **13 the region.**  **14 MR. PORTER: So, Doug, right now you**  **15 enforce. Right? So, why would you need**  **16 distributor sales records to enforce? Or are**  **17 you just seeing what you would need? I am**  **18 confused about --**  **19 MR. RAWALD: I'm thinking about**  **20 investigations. So, from the point of view of**  **21 -- well, you missed the discussion yesterday**  **22 of the routine violator. We are trying to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 figure out who is doing what and is the**  **2 contractor who is doing the wrong thing. I**  **3 have a downstream commerce issue now. I have**  **4 to see where things went and where they are**  **5 installed I don't have in the current context.**  **6 So, now all I care about is**  **7 something is built by a manufacturer and sold.**  **8 So, I want to hear from the manufacturer what**  **9 they sold and I want to hear from the**  **10 distributor what they bought. And that is**  **11 pretty much the end of the story as far as**  **12 what the transaction is from there, when I**  **13 investigate records.**  **14 But I could see having a need for**  **15 not only what the distributor buys but who**  **16 they sold it to so see well, what is going to**  **17 that guy downstream so I can kind of build a**  **18 better picture of what is going on here.**  **19 MR. FENSTROM: So, Doug, this is**  **20 Gary from the California IOUs. It sounds like**  **21 at distribution there is a wide variety of the**  **22 type of records kept and the way they are** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 kept, depending upon the particular**  **2 distributor location, et cetera.**  **3 I realize it is a burden but I**  **4 suggested yesterday that there might be an**  **5 opportunity for a tag to go along with the**  **6 unit that somebody would throw out and send**  **7 in. And it probably takes a couple of minutes**  **8 to fill out a tag and send it in.**  **9 It might have to be done**  **10 repetitively by different individuals. The**  **11 manufacturer might need to send in a tag, the**  **12 distributor, the contractor.**  **13 MR. HURST: Can you conventionalize**  **14 further what the tag does, who it goes to, how**  **15 the information is captured, and where it is**  **16 going?**  **17 MR. FENSTROM: In my mind, since**  **18 this information is probably, to some extent,**  **19 confidential, this tag would need to go an**  **20 independent administrator who would keep track**  **21 of it for the Department of Energy and**  **22 maintain its confidentiality. But it would** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 form a database from which some small amount**  **2 of auditing might be done to satisfy the**  **3 Department of Energy that a high level of**  **4 compliance has been achieved.**  **5 MR. PORTER: So, Gary, this is Steve**  **6 Porter, Johnstone Supply. So, much like the**  **7 homeowner fills out today when they fill out**  **8 warranty?**  **9 MR. FENSTROM: Except that the**  **10 contractor would be obligated to fill it out,**  **11 not the homeowner. The contractor would have**  **12 to show the address at which a certain serial**  **13 numbered unit was installed.**  **14 MR. RAWALD: And Steve, you weren't**  **15 here yesterday when Gary floated the idea but**  **16 he actually envisioned three tags, right, one**  **17 of the manufacturer, one for the distributor,**  **18 and one for the -- each kind of pull away on**  **19 the label on the box. So, track the packaged**  **20 progress.**  **21 Though, he did admittedly say it is**  **22 probably one of the most onerous and most** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 draconian measure he can imagine, but it was**  **2 something he would forward as an idea for**  **3 tracking.**  **4 MR. FENSTROM: So, I would follow up**  **5 by saying I did say it was probably the most**  **6 onerous and dreadful outcome. On the other**  **7 hand, it is uniform, consistent, I might**  **8 suggest easily done and least time consuming,**  **9 given the variety of the way things are done**  **10 in the business.**  **11 MR. RAWALD: Yes, this is --**  **12 MR. PORTER: This is Steve Porter**  **13 from Johnstone Supply. I would just, my**  **14 caution there is let's not burden people that**  **15 do it right for the people that do it wrong,**  **16 for the small percentage.**  **17 I agree with your comment of onerous**  **18 to keep three tracks of pieces of paper on a**  **19 transaction but more to get a contractor to**  **20 ask for confidential homeowner information and**  **21 have them do that, versus the homeowner that**  **22 is buying the equipment to fill out** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 necessarily warranty and provide the**  **2 information, should they choose, under their**  **3 willingness to give up that information, I**  **4 guess. That is their right.**  **5 I mean not build processes and**  **6 create burdens in this already difficult**  **7 situation that has more costs to consumers and**  **8 more costs in the process.**  **9 MR. FENSTROM: This is Gary again.**  **10 The homeowner is not responsible for buying a**  **11 compliant unit. Whoever sells that product to**  **12 the homeowner and probably also installs it is**  **13 responsible for making sure the unit is**  **14 compliant.**  **15 And we talk about the burden and the**  **16 cost. And I would submit to all of you that**  **17 the burden and cost of filling out a postcard**  **18 with a serial number and address is not that**  **19 great.**  **20 MR. MELCHI: This is Jon with HARDI.**  **21 Any such request, though, would undoubtedly**  **22 have to go through an additional rulemaking** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 process. And the cost would have to be scoped**  **2 out by the Office of Management and Budget and**  **3 would likely take, my guess today, upwards of**  **4 two or three years to even come to completion.**  **5 MR. FENSTROM: Well, I don't know**  **6 that I would agree with that. I think we**  **7 would have to ask the Department of Energy for**  **8 its opinion about how this may or may not**  **9 work. But right at this early point in our**  **10 discussion and negotiation, I am failing to**  **11 see an alternative that would be as easy and**  **12 that we would have a high level of confidence**  **13 in.**  **14 MR. MELCHI: This is Jon Melchi with**  **15 HARDI. I think we are running -- the**  **16 Department's goal, as I understand it and Doug**  **17 correct me if I am wrong, is to improve an**  **18 enforcement scheme deemed effective by you**  **19 guys. Correct?**  **20 That does not -- I think my**  **21 definition of effective may differ from yours.**  **22 And I think that there is things that the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 industry will be able to do within itself and**  **2 with the Department's help through public**  **3 outreach. I thought we made significant**  **4 progress this morning on the hang tag label**  **5 that will, in our mind, ensure effective**  **6 compliance with very minimal changes to what**  **7 we are currently doing. That alternative**  **8 described by Gary is a complete change of**  **9 practice throughout the entire industry; would**  **10 add significant cost throughout the supply**  **11 chain; would undoubtedly burden, first and**  **12 foremost, small businesses across the country**  **13 and it would not have our support.**  **14 MR. FENSTROM: Well, this is Gary**  **15 again. Let me respond to that. The hang tag**  **16 that we discussed this morning, I feel very**  **17 good about because it would, indeed, give us**  **18 a definitive measure of what is complying and**  **19 what is not. And that is a significant great**  **20 step forward for our group.**  **21 However, it gives us no guarantee of**  **22 compliance or enforcement whatsoever. The** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 unit goes out with this tag on it that allows**  **2 you to determine whether it is compliant. But**  **3 who then is making that determination and**  **4 assuring that compliance has been achieved?**  **5 MR. HURST: This is John Hurst from**  **6 Lennox. I will represent the cheater. I just**  **7 ripped off my tag. I go on Google. I look**  **8 for an address in Minnesota and mail it in.**  **9 And it is not a big burden for me to fill that**  **10 out. It took me about a minute. And it goes**  **11 in the database. And there are, if the**  **12 manufacturer does a card, the distributor does**  **13 a card, and the dealer does a card with the**  **14 contractor, somebody at the DOE then has to**  **15 scan in or type in 18 to 21 million records.**  **16 So, it is a burden on somebody to do that.**  **17 And if I am a cheater, it is pretty easy.**  **18 So, I don't like the approach**  **19 because I can see an easy way to beat it.**  **20 MR. FENSTROM: This is Gary again.**  **21 Let me ask two questions. How did we get to**  **22 18 or 20 million?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. HURST: So there is three times**  **2 each condensing unit and our industry, I**  **3 believe, sells --**  **4 MR. PORTER: Seven million.**  **5 MR. HURST: -- seven million**  **6 condensing units.**  **7 MR. FENSTROM: Okay.**  **8 MR. CLARK: You have to align each**  **9 component. So, that is more than that.**  **10 MR. FENSTROM: And I understand**  **11 that, indeed, there could and probably would**  **12 be cheaters that would put in false**  **13 information but when the DOE then audits this**  **14 on a limited basis to the extent that there is**  **15 erroneous information, they would find it**  **16 through audit and could take the appropriate**  **17 remedial action.**  **18 MR. PORTER: This is Steve Porter**  **19 from Johnstone Supply. That record could be**  **20 as easily audited as the one that the**  **21 homeowner fills out as a warranty.**  **22 MR. FENSTROM: That again, it is not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the homeowner's obligation.**  **2 MR. PORTER: Steve Porter, Johnstone**  **3 Supply. I realize that it is not the**  **4 homeowner's responsibility but the records can**  **5 be checked to see if there is any cheating**  **6 going on. I'm not saying it is the**  **7 homeowner's responsibility. I am saying those**  **8 are records available today that exist that**  **9 you can see what particular piece of equipment**  **10 they may have purchased. And that is**  **11 confidential, the homeowner's information, not**  **12 mine. That is not the contractor's**  **13 information either.**  **14 And I think I encourage you to go**  **15 work for somebody that we have a fair amount**  **16 of paper. I can tell you you can look at what**  **17 it costs to just handle a PO. You can**  **18 probably Google that and see that it is not a**  **19 cheap venture every time you touch a piece of**  **20 paper. There is storage costs. There is**  **21 hammering through the system. It doesn't**  **22 touch just one person dropping it in the mail.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 It is a lot more difficult than that.**  **2 I mean if it is was so inexpensive,**  **3 I know we would be a lot more profitable.**  **4 MR. RAWALD: If I could jump in real**  **5 quick with that. I don't want to get into a**  **6 full tilt spat over a possible concept and get**  **7 delayed because it seems like Gary reported an**  **8 idea that he admits is somewhat on the end**  **9 spectrum but may have some benefits. And he**  **10 is correct it may have some benefits and all**  **11 us folks have a lot of costs.**  **12 I guess from the Department point of**  **13 view that I really have to think about what**  **14 other reason that we can even effectively**  **15 manage or execute given the amount of**  **16 information it would be. There is always an**  **17 opinion that too much information can be**  **18 immobilizing for us. And I want to make sure**  **19 that we are being smart and directed.**  **20 So, I think that from the**  **21 Department's point of view -- well, we will**  **22 come back to that. But I think that we have** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 heard, kind of everyone is silent. So, I**  **2 don't think we need to debate the value or the**  **3 efficacy of the tag or the downside of what it**  **4 would be. So, I certainly think that would be**  **5 an idea.**  **6 And Neil had a question about**  **7 warranties and how often warranties are**  **8 returned. So, I think that is always**  **9 eliminating to know if that information could**  **10 give us some insight into how often things are**  **11 turned that are required or should be**  **12 returned. I don't know if you folks have a**  **13 number on that or --**  **14 MR. LATTANZI: I don't have a number**  **15 but I can comment. I think from a warranty**  **16 perspective, we would have a difficult time**  **17 discussing our warranty registration rates.**  **18 I don't know if that is antitrust but it feels**  **19 borderline.**  **20 MR. CLARK: It is specifically**  **21 spelled out in the anti-trust.**  **22 MR. LATTANZI: Okay, thank you,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Gary. This is an anti-trust issue. We would**  **2 have difficulties doing that.**  **3 MR. RAWALD: No, that is a fair**  **4 point. I don't want anyone to do anything**  **5 illegal.**  **6 MR. CLARK: I figured it was.**  **7 MR. DORIA: But like a lot of other**  **8 things that you couldn't share individually,**  **9 if this is a particularly important piece of**  **10 information, it might be possible for AHRI to**  **11 collect it and aggregating a non-hot sale.**  **12 MR. RAWALD: Right. And I don't**  **13 mean how many items are returned by warranty.**  **14 I meant how many warranty cards are put in the**  **15 mail and returned you folks.**  **16 MR. LATTANZI: This is Matt. That is**  **17 what I understood the question to be. You**  **18 were intimating what is our registration rate.**  **19 MR. EISNER: You have to understand**  **20 that just as you are preparing your**  **21 regulations, you need to have numbers. Let's**  **22 just throw out a number. Ten percent or** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 twenty percent fill out a warranty card. That**  **2 means you don't have eighty percent of the**  **3 information.**  **4 So, is it a good, effective system**  **5 and is it worth, as a lot of you pointed out,**  **6 getting the good actors to submit the warranty**  **7 and not getting the bad guys to submit the**  **8 warranties.**  **9 I think you get valuable**  **10 information. You said 21 million transactions**  **11 a year. What is the postage alone to send**  **12 that in? This is something, as somebody has**  **13 pointed out, you have got paperwork burdens**  **14 you are going to have explain to the Office of**  **15 Management and Budget why it is worth the**  **16 postage alone to get this. Is it going to be**  **17 an effective tool?**  **18 So, this kind of data is what is**  **19 necessary, I think, for you guys to determine**  **20 whether or not this is an effective program.**  **21 MR. RAWALD: I think it also kind**  **22 of, this question really focuses on where to** 

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### 1 attack the apple, like where to start biting **2 because it is the point of view of do we want 3 to focus in on the 13 SEER units and where**  **4 they are being sold because the 14 SEER units 5 can be sold anywhere? So, that now is a**  **6 scope. And so we don't care about sales in 7 the north because frankly, they are okay in**  **8 the north. So, we are going to keep looking 9 at these things from that point of view.**  **10 I guess Elizabeth has had that point 11 for a while.**  **12 MS. NOLL: I have a clarifying 13 question. Earlier in the warranty**  **14 conversation, I think it was stated that not 15 all units require warranties. Did I**  **16 misunderstand? 17 MR. ROCKY: Yes.**  **18 MS. NOLL: So, all condensing units 19 require a warranty.**  **20 MR. ROCKY: So, the discussion ends 21 up being that all manufacturers provide**  **22 standard warranties that do not require**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 registrations to take effect. Basically,**  **2 almost all manufacturers have extended**  **3 warranties to try to help sell policies and**  **4 things to homeowners that usually require**  **5 registration to have extended terms or**  **6 benefits to the consumer so we pay for**  **7 collecting that information that we keep and**  **8 use for our own purposes. But there are**  **9 certain states and locales that do not require**  **10 or do not, even the extended warranties, you**  **11 do not have to have registration. So, all**  **12 manufacturers have, basically, the same thing,**  **13 a standard warranty as a legal contract does**  **14 not require registration as a product.**  **15 MS. NOLL: Thank you.**  **16 MR. WHITE: Could I? This is Chuck**  **17 White. And this is kind of stepping aside**  **18 here, a little bit of a philosophical moment.**  **19 To come here, I went to Chicago to**  **20 get here. I got in my car and I drove to**  **21 Chicago. A long the way, the speed limit was**  **22 60 miles an hour, it is 55 miles an hour, it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 was 70 miles an hour, and I chose to go at or**  **2 near that speed. I didn't have a little booth**  **3 along the way that I had to validate how much**  **4 time it took me to give five miles. And if**  **5 the Indiana State Police or the Illinois State**  **6 Police chose to audit me and give or not give**  **7 me a ticket, that is their issue. We have**  **8 sort of the same thing here. We are trying to**  **9 help with an enforcement of a rule and we seem**  **10 to be all caught up with trying to determine**  **11 what it is we are looking for by making lists**  **12 of what we are not looking for. And I find**  **13 that frustrating.**  **14 We are not looking for all the**  **15 contractors that are working or all the**  **16 distributors that are working and performing**  **17 and doing the right thing. What we are**  **18 looking for is the wrong thing. And I think**  **19 the discussion needs, philosophically to me,**  **20 how do we find the wrong thing and finding the**  **21 wrong thing isn't by sorting out everything**  **22 that is right. Because even if I make a list** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of everything that is right, I still don't**  **2 know who is wrong because I didn't put him on**  **3 the list.**  **4 MR. FENSTROM: So Chuck raised --**  **5 this is Gary. Chuck raises an excellent**  **6 point. To follow on with his highway**  **7 ideology, all the cars on the highway are**  **8 observable. And to the extent that the**  **9 highway patrol may or may not be looking or**  **10 may or may not catch everybody, that is an**  **11 open question. But these air conditioning**  **12 units, many of them, unless we can find a way**  **13 in this room, many of them will not be**  **14 observable, period.**  **15 MR. DORIA: This is Jordan, if I**  **16 could jump in. I mean I disagree that it is**  **17 not questionable. We know the majority of**  **18 stealers don't get caught. That is actually**  **19 a reality. So, that would be the first point.**  **20 But more generally, I mean I think that the**  **21 notion is what information streams do we need**  **22 to have access to to provide some level of due** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 diligence that could support an investigation**  **2 and on what basis. I think investigating a**  **3 number of people where there is no sort of**  **4 indication of wrong-doing in an audit approach**  **5 that is not well targeted, potentially,**  **6 through information streams that are very**  **7 difficult to sift through without being**  **8 particularly effective.**  **9 As Doug mentioned yesterday, the IRS**  **10 has a very sophisticated approach and I am**  **11 sure all kinds of algorithms that they use to**  **12 flag returns that they think they should**  **13 investigate further.**  **14 One of the things that we talked**  **15 about yesterday was various industry actors,**  **16 at a minimum, perhaps others, but certainly**  **17 industry actors, providing some kind of**  **18 notification about some perceived potential**  **19 wrong-doing, perceived potential violation**  **20 that could, in turn, go to some party likely**  **21 the Department to further investigation. To**  **22 me, that seems like some way to bridge the gap** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 here, where there is some sort of indication**  **2 by parties acknowledging that there may be**  **3 something going on and an indication to the**  **4 parties that are actually capable of doing**  **5 investigation that an investigation is, in**  **6 fact, warranted. And I think that is less**  **7 likely to catch a lot of good actors in the**  **8 net, than an approach that is far less**  **9 targeted.**  **10 MR. MELCHI: This is Jon Melchi with**  **11 HARDI. And I know I wore you out yesterday,**  **12 Doug, but for me, we continue to talk about**  **13 providing new tools to or providing DOE tools**  **14 to verify a bad actor in the field but we have**  **15 not heard from DOE how you would even do so.**  **16 The violation here is an illegal installation**  **17 of a non-compliant product. And we have not**  **18 heard from DOE exactly what authority they**  **19 have to verify that that has been done, who**  **20 does the verification, and until we know those**  **21 things, this is a really challenging -- you**  **22 are asking us to decide what information to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 provide you when we are not exactly sure how**  **2 you are going to be verifying these things in**  **3 the first place and can, thus, relate what**  **4 information would be most helpful to you.**  **5 I mean, and this goes to you know**  **6 reporting bad actors but if Charlie illegally**  **7 installs a 13 SEER product in Virginia, how is**  **8 that verified by DOE? Who does that?**  **9 MS. NOLL: I think that is what we**  **10 are all here to work on.**  **11 MR. MELCHI: Well, I get that,**  **12 except I asked it yesterday and we still don't**  **13 know.**  **14 MR. BALLO: This is Tim with**  **15 Earthjustice. I guess I have been thinking**  **16 about this and there seems to be three**  **17 possibilities. One is a code official. That**  **18 seems like a pretty remote possibility because**  **19 the value solutions aren't going help on this**  **20 and no one is ever going to know about it.**  **21 The second possibility is a**  **22 subsequent contractor or subcontractor comes** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 into that building and sees that there is a**  **2 unit installed there that doesn't belong**  **3 there. That seems like a high likelihood that**  **4 if the person takes a look at it, they are**  **5 going to know what to look for and they are**  **6 going to find out about it. The third**  **7 possibility -- but there is a small universe**  **8 of people where that is going to happen**  **9 because you may not get another contractor.**  **10 The third possibility is the**  **11 homeowner looks at their information at some**  **12 point and says wait a minute, this isn't what**  **13 I thought I got. Now, that seems to me to be**  **14 the one that we have really got to maximize**  **15 because that is the one where there is a whole**  **16 lot of room for improvement. And that is, I**  **17 think, where this process starts. From there,**  **18 it has got to go, though, to the installers**  **19 act is very clear. Did you install the right**  **20 product or not? But for everyone up the**  **21 chain, it is what did you know, just a totally**  **22 different question. I think that is where** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 this information has to come from.**  **2 MR. MELCHI: This is Jon with HARDI.**  **3 Okay, so your first two scenarios,**  **4 building code or another contractor. Does the**  **5 DOE have the authority? So, Contractor B**  **6 reports and says there is an illegal**  **7 installation by XYZ and Sons and I want to**  **8 report it. Does the Department of Energy have**  **9 the authority to go to that person's house and**  **10 verify that that is an illegal installation?**  **11 And I would argue that you would have a tough**  **12 time saying it does.**  **13 And if you cannot do that, then we**  **14 have got a problem. It is just a question.**  **15 Do you have that authority?**  **16 MR. RAWALD: I'm having a hard time**  **17 envisioning what you are saying in that you**  **18 seem like you are asking me whether the**  **19 Department has some sort of criminal search**  **20 and seizure authority to go in someone's house**  **21 and examine their air conditioning unit.**  **22 MR. MELCHI: Right. How do you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 prove it?**  **2 MR. RAWALD: Right. And I think you**  **3 are coming from the position of an unwilling**  **4 homeowner that won't let me in. That is what**  **5 you are presuming here. You are presuming**  **6 that the person will not want to cooperate**  **7 with somebody --**  **8 MR. MELCHI: Well, I --**  **9 MR. RAWALD: Jon, let me talk,**  **10 please. Okay? I've been very respectful.**  **11 So, I think that what we need to**  **12 look at here is the fact that we are not going**  **13 to presume that the homeowner is now**  **14 cooperative. I am going to presume that if I**  **15 go to someone and say hey, we have suspicion**  **16 that you may have an air conditioner that is**  **17 not compliant, can I take a look at it, they**  **18 are going to say yes, I want to know if I got**  **19 taken advantage by a contractor, please let me**  **20 in. That is how I approach this matter.**  **21 So, I understand your repeated**  **22 question. I gave you the answer yesterday** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 which is I don't know the answer but I think**  **2 as Elizabeth pointed out, this group is**  **3 working very hard to come up with a way for us**  **4 to approach the thing and I want to be**  **5 constructive in that manner.**  **6 MR. PORTER: Doug, Steve Porter from**  **7 Johnstone Supply. I appreciate that. I think**  **8 we also want to come from a perspective that**  **9 if we get the right information out there,**  **10 that we are going to get 99 percent of the way**  **11 there. I think you need to only look to the**  **12 R-22 units that nobody wanted to do as an**  **13 industry anyway on the dry side. And we**  **14 really didn't want -- and that is getting in**  **15 the single digit on sales for the nation now.**  **16 And it is probably done in large part in**  **17 coastal areas still. And you know everybody**  **18 wants to do the right thing in this.**  **19 And I think the give on even the**  **20 hang tag discussions we have had really shows**  **21 that. It is really making a communication**  **22 correctly. And I think we take care of 99** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 percent of our issues here.**  **2 There is no way you are going to**  **3 just bill everything for the exception and**  **4 then not have something yes, that is somebody**  **5 going to cheat out there and how big is really**  **6 the problem. Right? And I think you see**  **7 where the shipping and the manufacturing**  **8 numbers are now. I don't see where it is any**  **9 different than what you had today when you**  **10 went from 10 or 13 SEER that you were able to**  **11 see that people are doing 13 SEER units.**  **12 MR. EISNER: Would everybody around**  **13 the table agree that this problem area is**  **14 relatively small, a limited number of**  **15 products, as you pointed out, in a limited**  **16 area of the country?**  **17 If it is, is that an area to focus**  **18 on? Does anybody disagree with that?**  **19 MR. FENSTROM: This is Gary for the**  **20 California IOUs. It is a limited part of the**  **21 country and the problem, provided we all do**  **22 the good things that we have talked about to** 

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### 1 assure easy identification, is probably going **2 to be small. But that doesn't relieve the 3 Department of Energy of its obligation to do**  **4 something to determine compliance and take 5 enforcement action where it sees**  **6 noncompliance. 7 So, for other products that the**  **8 Department regulates, water heaters, you know 9 you can go down to Sears, Home Depot, the**  **10 plumbing supply wholesaler and you can see 11 whether or not a product sitting there is**  **12 compliant. You go to the manufacturer's 13 facility and see whether what they are**  **14 building is compliant or not. 15 But with this regional standards**  **16 residential air conditioning issue, you can't 17 do it that simply. You have to go to the**  **18 house and find out whether the house in 19 California or Georgia has the compliant**  **20 equipment. 21 It isn't sufficient to go to the**  **22 distributor or the manufacturer because for a**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 lot of reasons the manufacturer doesn't know**  **2 where the product is going. The distributor**  **3 may or may not keep records, probably largely**  **4 in all different ways. I don't believe we can**  **5 do it definitively and with confidence.**  **6 MR. SURRENA: I guess what I am**  **7 going to tell you is that is the far end of**  **8 all we are talking about. If the homeowner**  **9 says I don't want to let you in, would you be**  **10 able to get a search warrant to get into their**  **11 house? That is the only way you can get in is**  **12 with a search warrant.**  **13 I have had search warrants issued**  **14 for me, not against me. I am the one who had**  **15 to go to a judge and explain why I needed a**  **16 search warrant to go into someone's house who**  **17 wouldn't let me in. And the last thing the**  **18 Department of Energy needs is PR on the six**  **19 o'clock news that they have gotten search**  **20 warrants to go into Mr. Smith's house to look**  **21 at his air conditioning unit.**  **22 I understand that it is at the end** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of the spectrum but if the homeowner is the**  **2 one who sends you a complaint, he is glad to**  **3 see you. If it is the contractor turning in**  **4 his fellow contractor, somebody who was at the**  **5 sales counter and did that, they are probably**  **6 afraid of that homeowner and they don't want**  **7 you in their house.**  **8 We are chasing the tail of the dog**  **9 here for something for one thing and it is not**  **10 very many in the scheme of things that would**  **11 be a violation. Their general compliance**  **12 would be able to give them to you from the**  **13 distributors and the manufacturers on well**  **14 over 90 percent of the products that are**  **15 installed.**  **16 But you keep going to this**  **17 infinitesimal thing to the point where you are**  **18 going to have to go into someone's house?**  **19 Where are you going? I'd being retiring at**  **20 that point because I wouldn't want to be the**  **21 first one to have to knock on your door or go**  **22 tell a judge why I want a search warrant.** 

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### 1 MR. HURST: So, commenting on that, **2 I would like us to develop an approach that 3 doesn't require us to ever have to go to a**  **4 judge to get a search warrant. 5 MR. SURRENA: Here, here.**  **6 MR. HURST: That is sort of, you 7 know I want to comment on what Gary said**  **8 because Gary, I don't think you have a bad 9 idea. I just don't think that the non**  **10 compliers are going to comply. I think we 11 could use the repository of information from**  **12 the people that did the right thing. And 13 maybe the gaps in that are where you go**  **14 fishing for your problem children. 15 I also want to comment on what Tim**  **16 said because there are a couple of other 17 opportunities to identify cheating. I think**  **18 as a manufacturer and as a distributor as 19 well, we will start to see things. And if we**  **20 see anomalies, then we have to figure out, do 21 we report those or what is our process for**  **22 dealing with those? And I think as a**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufacturer and as a distributor, we are**  **2 willing to help enforce the policy because we**  **3 think that is the right thing to do. It is**  **4 the law of the land.**  **5 There are a couple of other**  **6 opportunities to spot malfeasance and that is**  **7 at the dining room table when you are looking**  **8 at the quote that the dealer just gave you or**  **9 the contractor and the homeowner slides across**  **10 two competing offers. And one of those**  **11 doesn't look like the others because it is**  **12 cheaper and it is the wrong equipment. So, I**  **13 think that is an opportunity.**  **14 And also, having moved a number of**  **15 times in my lifetime, I think you will also**  **16 see it through home inspections. And if the**  **17 home inspector, which they are paid to look**  **18 for issues, if a home inspector comes in and**  **19 I am trying to transact the sale of my house**  **20 and I have equipment that was put in six**  **21 months' ago because I am getting ready to sell**  **22 the house and it is not compliant with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 regional standard, I think it is another**  **2 opportunity where the homeowner would be**  **3 informed of having noncompliant product.**  **4 MR. EISNER: Is your hand up, Karen?**  **5 MS. MEYERS: Yes. This is Karen**  **6 with Rheem. And I think we should maybe kind**  **7 of shift the conversation a little bit. And**  **8 I think an effective enforcement plan is going**  **9 to be a plan where it is going to be fairly**  **10 easy for someone to report someone suspected**  **11 of installing illegal systems.**  **12 So, the only people who are really**  **13 going to know that is the contractor in the**  **14 area. If he is losing business to Joe's**  **15 Heating and Air constantly, he is probably**  **16 going to figure out that you know I have lost**  **17 this bid three times in a row to this guy. I**  **18 suspect that this guy. And then he goes and**  **19 you know, because contractors want to know**  **20 whether they are going to win the bid or not.**  **21 So, I think we develop a system and**  **22 I don't think serial numbers are the answer.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I think you say if DOE, if you get two reports**  **2 on Joe's Heating and Air in Birmingham,**  **3 Alabama, two reports on him perhaps installing**  **4 illegal systems, then you can pick up the**  **5 phone and call the guy and say hey, I have**  **6 gotten a couple of reports that you are**  **7 selling illegal systems or installing illegal**  **8 systems in that area. And that is when you**  **9 start the conversation and that is when you**  **10 start he has either got to produce documents,**  **11 he has got to do that, he has got to send in**  **12 the model numbers and serial numbers of what**  **13 he installed in that location or in his last**  **14 15 locations. And then you can decide whether**  **15 that was, you know, is there cause to take**  **16 action against this guy or not.**  **17 But the marketplace is going to**  **18 enforce this. I mean a contractor in the**  **19 south is not going to let somebody start**  **20 taking all his business.**  **21 So, I mean that is how manufacturers**  **22 do it. If I have got a fellow manufacturer** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 who is constantly undercutting my price and I**  **2 bring his equipment in. I test my**  **3 competitor's equipment all the time. Now,**  **4 they are all pretty good actors, but in other**  **5 industries that Rheem is involved in other**  **6 than HVAC, it is not always that case. So,**  **7 there is an area, whether it is an AHRI**  **8 program or not, sometimes it is not an AHRI**  **9 program, then we would take action to inform**  **10 the DOE, if it is a regulated product, that we**  **11 suspect that this person is selling**  **12 noncompliant equipment.**  **13 So, I think if we get this issue so**  **14 only the right equipment can get sold in the**  **15 area and then we make it easy for Bob's**  **16 Heating and Air to call and say Joe's Heating**  **17 and Air is not playing by the rules and there**  **18 is a form they fill out, it is not even model**  **19 number and serial number specific. It is you**  **20 know I have got undercut four times on this**  **21 guy. I have been by his jobs. I have looked**  **22 at the hang tag. I think there is a problem.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 DOE, you need to give this guy a call and ask**  **2 for his records for the last three months.**  **3 MR. FENSTROM: So, Doug, this is**  **4 Gary for the California IOUs again. We have**  **5 had a number of approaches suggested by**  **6 different parties. And I think it would help**  **7 us in a process sense to kind of write down**  **8 what these approaches are.**  **9 One suggested approach is basically**  **10 let's make it real, real clear what qualifies**  **11 and what doesn't through a hang tag. And**  **12 largely, contractors are going to be compliant**  **13 and there won't be a problem and self**  **14 reporting or peer reporting is one avenue to**  **15 assure a degree of compliance, ranging all the**  **16 way to my suggestion, which others have**  **17 pointed out is taking out a sledge hammer to**  **18 kill the ant. And it might helpful for the**  **19 group to write down this range of approaches,**  **20 what may or may not be done at the**  **21 manufacturer level that may or may not be done**  **22 at the distributor level, what may or may not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 be done at the contractor level, all the way**  **2 down to what may or may not be done at the**  **3 homeowner's residence or by the homeowner.**  **4 MR. RAWALD: I agree that is a sound**  **5 idea.**  **6 MR. SACHS: This is Harvey and I**  **7 would like to test that with one slight**  **8 modification. I think I have heard consensus**  **9 in our sense, there might be abstention or**  **10 two, but general acceptance on how to identify**  **11 SEER 14 and what labeling requirements we need**  **12 for that.**  **13 So the question really evolves down**  **14 to what additional requirements we have to**  **15 give everyone assurance that the field is**  **16 level and largely effective.**  **17 MR. DORIA: This is Jordan Doria,**  **18 Ingersoll Rand. To build on that point, I**  **19 think that is a fair characterization of the**  **20 90 percent. Maybe the counsel that our**  **21 thinking, at least as a company, and I will**  **22 let the other OEMs chime in, the 14 SEER is at** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the low end of the hang tag, supports a**  **2 particular compliance approach that we think**  **3 could be enhanced with some of these other**  **4 methods that we have talked about.**  **5 The method Gary described, you don't**  **6 need to have 14 SEER at the low end of the**  **7 hang tag. If you have that granular**  **8 information, you would not need that.**  **9 So, I would say for us, as a**  **10 company, at least, our willingness to go down**  **11 that road is definitely predicated on the**  **12 overall burden associated with the compliance**  **13 regime we are talking about.**  **14 So, the low end of the hang tag**  **15 approach I think really only fits in with a**  **16 certain set of enforcement frameworks that we**  **17 are talking about but does not fit in with the**  **18 one that Gary had described.**  **19 MR. FENSTROM: I'm not sure I**  **20 completely agree but I really want to get**  **21 myself out of the whir by standing on whatever**  **22 foundation, whatever rocks are in there. And** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I certainly feel agreement, with abstentions**  **2 as noted, that this could be the labeling**  **3 approach could be important and that we all**  **4 have work to do to get FTC onboard with that.**  **5 MR. RAWALD: This is Doug. I just**  **6 want to back to this hang tag issue and with**  **7 FTC. It seems to me that if the Department**  **8 announces, which is has not, that the low end**  **9 of the label is the 14 SEER and that should be**  **10 the low end of the spectrum, the hang tag, as**  **11 currently designed, would still be effective**  **12 because it was the rating was at 14. So,**  **13 people would still be able to look at it and**  **14 say it is wrong. So, we could deal with what**  **15 we have now.**  **16 Now, we could ask FTC to change it**  **17 but it wouldn't be necessary to change it for**  **18 us to rely upon the evidence of the label as**  **19 drafted. Because we would all know if the**  **20 label has below 14 on it, it shouldn't be in**  **21 the south.**  **22 MR. EISNER: Harvey.** 

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### 1 MR. SACHS: I, personally, would be **2 uncomfortable having associates who deal with 3 labels and human factors and things, and**  **4 recognizing how little we know, as opposed to 5 marketers in the industry. I would not be**  **6 comfortable, unless that were coupled with a 7 commitment to seek early change to clarify**  **8 that. 9 MR. RAWALD: I don't think anyone**  **10 here disagrees that they would like the label 11 changed. I don't think it would need to be**  **12 changed for the effectiveness of the 13 enforcement program to kick in.**  **14 MR. SACHS: I think it is trying to 15 sharpen the knife.**  **16 MR. RAWALD: I agree. 17 MR. LATTANZI: Can I comment on**  **18 that, Doug? This is Matt from NORDYNE. 19 I understand exactly what Harvey is**  **20 saying and I do agree that the label can be 21 used as is and be effective, pending DOE**  **22 clarification of the guidance. But I would**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 point out FTC is going to have to go into a**  **2 rulemaking anyway and adjust what they have**  **3 that is out there because it is incorrect on**  **4 the furnaces. So, anything that we come up**  **5 with, if we have a recommendation for them to**  **6 change it, that may not happen as fast as we**  **7 like but it is going to happen because they**  **8 have to adjust it anyway.**  **9 MR. EISNER: I think there was a**  **10 suggestion, I think, from Gary that we talk**  **11 about the range of things people have been**  **12 talking about. And there is another way we**  **13 can use a range of things like this and it**  **14 doesn't have to be all of them. It can be**  **15 just some of them. And that is for DOE to say**  **16 here is what we are going to do to increase**  **17 compliance. Not so much to take more**  **18 enforcement action but to increase compliance.**  **19 One would be if we found out that we could**  **20 improve the label in a way that would make it**  **21 less likely that some people would put their**  **22 own equipment in.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Another thing might be, and I was**  **2 impressed with this idea from Tim about people**  **3 going, government officials, local government**  **4 officials going into a house because of a**  **5 permit issue, whatever it might be. I know in**  **6 Fairfax County I have been told that if they**  **7 go into your house to inspect an installation**  **8 of a gas furnace, they might also note that**  **9 you don't have smoke detectors where you**  **10 should have smoke detectors under new code**  **11 requirements and they will strongly suggest**  **12 you put them in. If the limited states that**  **13 you are worried about that the people who do**  **14 this would be willing to have some kind of**  **15 communication with DOE on the extent that the**  **16 problem you are noticing, you get two things.**  **17 One, you get some data that may or may not be**  **18 useable by DOE in terms of going into the**  **19 house but it will start to tell you whether or**  **20 not the problem is there in the first place.**  **21 All right, so some county in LA says**  **22 we did 500 permit inspections this year where** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 new furnaces that have been put in and we**  **2 found two that were incorrect. And the owner**  **3 didn't know about it and is willing to work**  **4 with you to address the person that put it in.**  **5 They can then say whether over a period of**  **6 time the situation is improving. And if it is**  **7 improving, they need not do anything else.**  **8 But if it is not and they don't comply with**  **9 the statute, it would be agreed in the rule**  **10 that they would have to start upping the ante.**  **11 They would have to start tightening some of**  **12 the requirements. And that is when they can**  **13 go to a second stage. It may be, as some of**  **14 you suggest that there is almost no problem**  **15 here. It may be that the problem is so bad**  **16 DOE wouldn't have the resources to enforce it**  **17 anyway. They wouldn't be able to go knock on**  **18 all the homeowners' doors. They would only be**  **19 able to go to a percentage of them.**  **20 Part of an effective enforcement**  **21 program is that when you do find the violator,**  **22 you do go into the house and you find that it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 was wrong, and you do get the person who put**  **2 it in there knowingly, you get a lot of**  **3 publicity for the action taken against that**  **4 person. That, itself, can be more effective**  **5 than taking another 50 enforcement actions,**  **6 getting the word out that they mean it and you**  **7 are going to be penalized.**  **8 So, it is time for a break. Let's**  **9 come back and talk about different approaches**  **10 and what we want to start putting up on the**  **11 board.**  **12 MR. FENSTROM: So Neil, this is**  **13 Gary. Before the break, I would just like to**  **14 add one thing. My concern is that DOE have**  **15 the capacity to determine whether compliance**  **16 and any individual inspiration has been**  **17 achieved or not.**  **18 I am not addressing what may or may**  **19 not be done with penalties or enforcement or**  **20 otherwise. I don't think the objective here**  **21 is to be highly punitive. The objective is to**  **22 assure compliance and take corrective action.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 But at a minimum, there has to be the capacity**  **2 to determine whether or not compliance has**  **3 been achieved.**  **4 MR. EISNER: But that is, number**  **5 one, there may be no way to ever do that**  **6 perfectly. And it may be that the most**  **7 effective way, for example, is to have a**  **8 variety of techniques that get people to**  **9 report what they know.**  **10 A report from a government official**  **11 who has the authority to grant or deny**  **12 completion of a permit requirement that there**  **13 is an illegal air conditioning unit in the**  **14 house is probably more valuable than getting**  **15 an anonymous letter saying I think John Jones**  **16 installed an illegal air conditioning system.**  **17 MR. SACHS: The problem with that is**  **18 the area of concern is the southeast, which**  **19 for many people, I grew up in Georgia, would**  **20 be regarded as the area of the country for**  **21 which building codes are least likely to be**  **22 enforced. This is the attraction for the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 mechanism of house inspectors and things like**  **2 that. I don't think anyone in this room would**  **3 be prepared to jump up and say that building**  **4 inspectors for that region are going to be in**  **5 significant compliance.**  **6 MR. EISNER: And that is a very**  **7 important point by building inspectors, you**  **8 mean the person who is going out to check on**  **9 the permit.**  **10 MR. SACHS: Yes.**  **11 MR. EISNER: Okay, that is an**  **12 important point then. If the area where the**  **13 problem we think is the greatest, it is not**  **14 going to work, then we have got to think of**  **15 other ideas.**  **16 MR. SURRENA: Code enforcement, if**  **17 the codes official is in the house for another**  **18 reason, he needs probable cause to go and look**  **19 for serial numbers on an air conditioning**  **20 unit. If it is something that the smoke**  **21 alarm is missing, whether we do, a huge**  **22 building specifically open up and take the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 cover off of the air conditioning unit, that**  **2 is against the law. That is information he**  **3 will not directly be able to see. He is going**  **4 to not record it.**  **5 But the main thing is that if**  **6 someone is getting a permit to put in this air**  **7 conditioning system, the plan had to be**  **8 reviewed before they put it in. The codes**  **9 official is aware, which we all are, now that**  **10 the 2009, 2012, 2015 ECC of what the**  **11 requirements are, they are going to look at**  **12 that plan review and you can't put that coil**  **13 with that unit. You have got to come back**  **14 with something better until it complies.**  **15 Once it gets compliance when he goes**  **16 into inspect it, if it is not what was on the**  **17 drawings, he is going to make them change it**  **18 right then and there.**  **19 So, those are the people who are**  **20 trying to do it right who get the permits. It**  **21 is the ones who on Saturday afternoon, they**  **22 are the ones that you are going to try and** 

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### 1 find. You won't get them through a permit **2 process or through a visual walkthrough 3 inspection in the house. We have property**  **4 maintenance inspections. I could look at 5 general things for life safety but I couldn't**  **6 go beyond that. And air conditioning, it is 7 questionable. It is not considered a life**  **8 safety issue at this point. 9 MR. EISNER: Okay and if it doesn't**  **10 work, it doesn't work. I'm not saying -- 11 MR. SURRENA: But the health**  **12 inspector who does it before a sale or a 13 transaction, they can look at anything and**  **14 everything they want. 15 MR. EISNER: But what I am saying**  **16 then is what will work, starting with the 17 easiest and the hardest.**  **18 MR. SURRENA: I agree with that. 19 MR. EISNER: And if that doesn't**  **20 work, we have to maintain equipment. That 21 doesn't mean you have to hire a technical**  **22 contractor to do it. But if a credible**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 contractor walks in there and knows,**  **2 especially if he knows he can be penalized for**  **3 working on an illegal system, that may be a**  **4 source of information. Again, they may have**  **5 to be anonymous. They may not want to have**  **6 problems with customers. This is what we**  **7 ought to start talking about, which will work,**  **8 which won't work, which is easy, which is**  **9 hard.**  **10 MR. LATTANZI: Neil, Mat Lattanzi**  **11 with NORDYNE. Just to expand on your comment**  **12 relative to when a violation is found and**  **13 going public with it and it is a big message,**  **14 this is the August 11th, this month's copy of**  **15 the news. I will show you guys the headline,**  **16 "Naming and Shaming." There is a prime**  **17 example of what can happen. And you have got**  **18 to wonder how big of a deterrent is something**  **19 like that in the news?**  **20 MR. SACHS: Well, I would have to**  **21 inquire of AHRI.**  **22 MR. EISNER: All right, let's get** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 back to it. Thanks, Matt.**  **2 (Whereupon, the above-entitled**  **3 matter went off the record at 2:37**  **4 a.m. and resumed at 2:57 a.m.)**  **5 MR. EISNER: Doug has got something**  **6 to talk about.**  **7 MR. RAWALD: Pending issuance of an**  **8 official guidance document of some sort, what**  **9 I can say is that DOE interprets the regional**  **10 standard to require the least efficient rating**  **11 combination for a specified model of**  **12 condensing unit must be 14 in the regions**  **13 where those minimum standard is 14. Any model**  **14 that has a certified combination of below the**  **15 regional standard cannot be installed in the**  **16 region.**  **17 MR. BALLO: John, I have a question.**  **18 What about EDR? Does the same go for ER?**  **19 MR. RAWALD: Right, so the**  **20 translated would be the ER standard is the**  **21 same story. But the question really was, I**  **22 asked only about CR but the analysis would be** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the same.**  **2 MS. MEYERS: So, are you going to**  **3 put that in writing, just so that I can share**  **4 it with my sales team?**  **5 MR. RAWALD: We will put something**  **6 out in writing and it will be in draft and we**  **7 will comment on it. But what I said was DOE**  **8 interprets the regional standard to require**  **9 that the least efficient rating combination**  **10 for a specific specified model condensing unit**  **11 must be 14 in the regions where the 14 SEER**  **12 minimum applies. Any model that has a**  **13 certified combination that is below the**  **14 regional standard cannot be installed in the**  **15 region.**  **16 Does that answer your question?**  **17 MR. PORTER: This a good time to**  **18 drink.**  **19 (Simultaneous speaking.)**  **20 MR. EISNER: Okay, we have a list**  **21 here that some of NYLAND's people put up on**  **22 the screen, Laura and Doug were doing this, of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 all the different ideas they have heard, even**  **2 one that I mumbled through about putting chips**  **3 in the computer that be read by roadside car,**  **4 like gas meters. And it would automatically**  **5 tell you as you drove down the street this**  **6 house has an illegal system in it.**  **7 Is it doable?**  **8 MR. MELCHI: Say what?**  **9 (Simultaneous speaking.)**  **10 MR. RAWALD: Less side talk. She is**  **11 not getting any of this.**  **12 MR. SACHS: I hope you will have**  **13 better luck with that than I had in just**  **14 trying to get a standard protocol for**  **15 interactive water heaters.**  **16 MR. EISNER: But we can get to that**  **17 in time. I want to start at the top and just**  **18 go through the list slowly. And raise your**  **19 hand if you see something that you think --**  **20 why don't you go through it once slowly, and**  **21 then let's talk about if anything is missing.**  **22 Okay, anybody saw -- are there** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 things that should added or things that are**  **2 absolutely impossible to work that should be**  **3 taken off?**  **4 MR. SACHS: Now, these are not**  **5 exclusive alternatives.**  **6 MR. EISNER: No, and again, you**  **7 could suggest that the enforcement rules say**  **8 that you can use all of these and any others**  **9 they find appropriate, or something like that,**  **10 if you wanted.**  **11 MR. RAWALD: Yes, I guess -- this is**  **12 Doug. Just from my point of view, having the**  **13 list on the board, it is not exclusive nor**  **14 exhaustive. I mean we can certainly add more.**  **15 This is just kind of the front poll of things**  **16 that Laura and I heard banded about in**  **17 different context of the last four and a half**  **18 days.**  **19 MR. EISNER: And let's say you can**  **20 do different things with these. Let's assume**  **21 all of these are good. You can say let's take**  **22 what we think are the five best. And if they** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 don't lower the numbers, then we keep**  **2 ratcheting it up and more and more**  **3 requirements get imposed on the process.**  **4 MR. HURST: Just, and Karen is going**  **5 to kill me for even saying this, but in the**  **6 spirit of crazy ideas, during the break I made**  **7 a joke and I said why don't we just put a**  **8 luminescent 14 on the condensing unit.**  **9 However, the DOE label could potentially be**  **10 luminescent for a 14 SEER product or a 13 SEER**  **11 product so you can physically drive down the**  **12 street, shine a flashlight on it at night and**  **13 tell whether a unit is compliant or not. The**  **14 FTC label, I'm sorry.**  **15 MS. MEYERS: Just make it a**  **16 different color.**  **17 MR. MELCHI: This is Jon with HARDI.**  **18 I get where you are going with that but what**  **19 if I had the unit installed December 31st of**  **20 this year and it didn't have the label on it?**  **21 MR. HURST: It's compliant.**  **22 MR. MELCHI: Okay, so only 13s** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufactured after --**  **2 MR. HURST: I haven't thought it**  **3 through. I know it is a crazy idea but if**  **4 there is a way to identify the unit easily out**  **5 of the box, it could be a relatively easy**  **6 solution.**  **7 MR. RAWALD: And this is Doug. Just**  **8 thinking from a criminal background, there are**  **9 some issues about whether we would actually be**  **10 searching someone's house by doing something**  **11 like that, if it were a homeowner.**  **12 MR. CLARK: I find it difficult,**  **13 from my experience, of crawling out of my**  **14 bedroom window when I was a kid and stepping**  **15 on the air conditioner. It was in the back of**  **16 the house.**  **17 MR. HURST: You're not going to**  **18 catch everybody.**  **19 (Simultaneous speaking.)**  **20 MR. EISNER: Any others?**  **21 MR. ELLIS: This is Ray from Lincoln**  **22 Electric. On the bottom -- sorry Neil, the** 

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### 1 tracking chip on the units. I don't know if **2 you mean that they give off RF or not but you 3 can ask the colleague from California,**  **4 anything treated with RF is really sensitive 5 and people will fight that like crazy. You**  **6 will have lawsuits that will not quit. If we 7 had anything like that that you could read**  **8 from a mobile device. 9 MR. EISNER: That obviously is a**  **10 problem. 11 MR. ELLIS: It is a problem.**  **12 MR. EISNER: And I will point out 13 that car owners have console units have a**  **14 device in their engine that can do not 15 necessarily remotely but you can have an**  **16 accident, somebody could pull it and read it. 17 MR. FENSTROM: So, this is Gary for**  **18 the California IOUs. These chips we are 19 talking about are RFID chips. So, they**  **20 respond to a radio transmitter such as to 21 provide some feedback but they are not**  **22 continuously transmitting like a smart meter**

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### 1 might be and those other kinds of products **2 that often raise consumer concerns. 3 MR. EISNER: So, you are saying**  **4 there might not be a problem in California if 5 you were reading them with a piece of**  **6 equipment. 7 MR. FENSTROM: If people thoroughly**  **8 understood how RFID chips work, they respond. 9 They don't transmit all the time.**  **10 We have FasTrak in our cars. They 11 are RFID response devices. And they are not**  **12 continuously transmitting. They respond when 13 they go underneath the sensor on the highway.**  **14 MR. EISNER: And does anybody have 15 the kind of chip that you could put in? Does**  **16 anybody have any idea of what the cost would 17 be?**  **18 MR. SACHS: Fifty cents. 19 MR. EISNER: Fifty cents?**  **20 MR. FENSTROM: Well, that might be 21 the manufacturing cost of the product of the**  **22 chip but by the time it got into an air**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 conditioner, I would have to believe that it**  **2 would be more expensive than that.**  **3 MR. CLARK: Well, this is Gary from**  **4 Goodman Global.**  **5 Having worked with these chips a**  **6 little bit, one of the issues that you run**  **7 into is you have to put it outside the unit.**  **8 You can't put it inside the unit because a**  **9 sheet metal box would certainly block the**  **10 interrogation. Once you start having to put**  **11 it on the outside of the box, then it has to**  **12 be waterproof and it is not fifty cents. And**  **13 if you want it to last for any period of time,**  **14 that is going to be significantly more than**  **15 fifty cents.**  **16 MR. SACHS: This is Harvey. I**  **17 certainly didn't mean to endorse the idea of**  **18 RFID chips. I think they are coming up on a**  **19 lot of other ways that people will find useful**  **20 for identifying their products, less**  **21 expensive.**  **22 MR. CLARK: This Gary again. Back** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to John Hurst's idea of a different color**  **2 label. Is that something that we want to not**  **3 think about at all?**  **4 MR. McCRUDDEN: This is Charlie.**  **5 Can you change the color of the energy guide**  **6 label?**  **7 MR. CLARK: There would be a**  **8 rulemaking and all that.**  **9 MR. BALLO: In general, FTC has been**  **10 nervous, I would say about making the labels**  **11 different from each other because they want**  **12 that sort of grand identity to the energy**  **13 guide label. So, I think they would have**  **14 something to say about that.**  **15 MR. RAWALD: This is Doug, to**  **16 follow-up on Tim's point. Colors cost money.**  **17 So, there is that. So, I think part of**  **18 concern with the current label is that it does**  **19 have varying shades of color on a map to**  **20 indicate what regions. And that is going to**  **21 end up being more expensive than a label**  **22 without a map. And so that is another** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 consideration and another reason why I think**  **2 FTC would probably be more willing to remove**  **3 the map if we were to come back and say just**  **4 to have the possibility that it winds up**  **5 saving them some cost. But I do know that**  **6 color costs money.**  **7 MR. MELCHI: Jon with HRDI. As**  **8 Matt, at the end of the last session held up**  **9 his copy of "Enquirer," as Harvey called it,**  **10 what it does show is that EPA has had some**  **11 success with stings of purchasing a still pre**  **12 charged R-22 equipment. That is not supposed**  **13 to be sold into commerce. This is something**  **14 that the DOE hypothetically could set up shop**  **15 and use to conduct a sting to see if somebody**  **16 would, indeed, if you have gotten reports via**  **17 the contractor line if that is implemented.**  **18 Is that something DOE can even do is set up a**  **19 sting to find a violator?**  **20 MR. RAWALD: No, Jon. I think that**  **21 we could do it and I think that is something**  **22 that we would want to consider doing. Whether** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 or not it could be purchased and installed, I**  **2 think that is something that we could consider**  **3 doing.**  **4 MR. EISNER: And --**  **5 MS. NOLL: So, this is Elizabeth --**  **6 I'm sorry.**  **7 MR. EISNER: I was going to say, it**  **8 probably doesn't have to be as complicated as**  **9 a lot of people think a sting operation would**  **10 be. I think Doug sees frequently we will**  **11 call, for example, a supplier of some sort to**  **12 say I live at such and such an address. I**  **13 would like to buy this unit from you. Let's**  **14 see whether they say sure.**  **15 MR. RAWALD: From my point of view,**  **16 I don't think we need regulation authorizing**  **17 us to do that. We would just go out and do**  **18 it. And then if we got it, we would have some**  **19 proof in our hand. That is proof. Because we**  **20 are allowed to buy things as consumers.**  **21 MR. McCRUDDEN: But buying is not**  **22 the illegal act.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: No, that's right.**  **2 MR. McCRUDDEN: I mean the sting**  **3 would have to be from a job site. You have to**  **4 get someone to purchase and then install the**  **5 piece of equipment. That would be harder.**  **6 MS. SHEPHERD: Well, I mean you**  **7 don't have probable cause. I mean like if you**  **8 had complaints from a consumer or others and**  **9 then you call and that person said sure, I can**  **10 sell you that. I mean, you have the authority**  **11 to seek records from that company.**  **12 MR. RAWALD: Right. I think that**  **13 Amy's hypothetical -- this is Doug -- is**  **14 actually really helpful. Because what I will**  **15 get is complaints when they actually have**  **16 installed something than help me prove that**  **17 they are the kind of person that would install**  **18 it. If I could sort of buy it from somebody**  **19 who will want to do it, so we have that actual**  **20 piece of tape that I could bring before the**  **21 judge and say by the way we tried to buy it**  **22 from this guy. Now understanding that this is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 a civil action. So, civil actions are**  **2 preponderance of the evidence that are**  **3 typically somewhat of a higher standard.**  **4 MS. NOLL: So, this is Elizabeth**  **5 with NRDC. A couple of things that are not on**  **6 the list but along those lines that I think we**  **7 have discussed, one, requirements either on**  **8 the manufacturer to sell to certain regions or**  **9 certain distributors in certain states,**  **10 distributors to selling to certain areas,**  **11 again, just things that I heard also maybe**  **12 requirements on distributors to disclose**  **13 information to contractors upon sale and then**  **14 warranties are not up there either as a means**  **15 of tracking. So, just to joining it up on the**  **16 list to try to be more exhaustive, before I**  **17 get browbeaten for having --**  **18 MR. MELCHI: This is Jon with HARDI.**  **19 Per the FTC labeling requirement, distributors**  **20 are required to inform contractors after the**  **21 first of the year of the energy efficiency of**  **22 a product. That is already an FTC** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 requirement.**  **2 MR. EISNER: Other suggestions?**  **3 MR. WHITE: So, just a thought and I**  **4 am not a manufacturer, so sorry. Is it**  **5 possible that if a SEER 13 piece of equipment**  **6 is installed in the wrong area, its warranty**  **7 could be void? Just a question.**  **8 MR. DORIA: I think it is really**  **9 limited. What I have been told internally is**  **10 that those laws more tend to vary state by**  **11 state. But because of that, there are**  **12 absolutely states where you could not do that,**  **13 which makes it, effectively, a nonstarter**  **14 here.**  **15 MR. HURST: John Hurst from Lennox.**  **16 I think the challenge with that you are now**  **17 punishing the consumer.**  **18 MR. EISNER: Other thoughts or**  **19 ideas?**  **20 MR. CLARK: The question about**  **21 warranty information, this is Gary, is kind of**  **22 falls back into the privacy concerns of a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 homeowner.**  **2 MR. EISNER: What was the purpose?**  **3 MR. CLARK: They filled out a**  **4 warranty card not because they thought they**  **5 were supplying information to the Department**  **6 of Energy. Right? And so for Goodman**  **7 manufacturing, we require that the homeowner**  **8 register their products online. And as part**  **9 of that, we have a privacy statement that goes**  **10 along with that. And right now, that privacy**  **11 statement, to the best of my recollection, I**  **12 haven't memorized it, would say basically that**  **13 we are not going to share that information**  **14 with anybody else. And so I am not sure what**  **15 we would have to do to make that full caddy.**  **16 MR. HURST: Doug, we spoke earlier**  **17 -- John Hurst from Lennox. We spoke earlier**  **18 today about do you have instances where**  **19 product is found to be noncompliant. What do**  **20 you do? And manufacturers, I think all said**  **21 that we go out and we rectify the situation.**  **22 Is there something in the law that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 says that if a noncompliant piece of equipment**  **2 is installed that the contractor has to**  **3 rectify that and bring that up to the**  **4 standard? I think that would be a very**  **5 effective stake, if you will, that not only do**  **6 they have to take a $200 penalty but they had**  **7 to eat the cost of the new installation as**  **8 well.**  **9 MR. RAWALD: And John, so there is**  **10 nothing currently like that. There is not**  **11 even a requirement on the manufacturers to**  **12 have to go out and make good to the consumer**  **13 that got the product that was not compliant.**  **14 So, consumers can complain and I guess they**  **15 could sue the company but there is no**  **16 regulatory requirement that the manufacturer**  **17 go out and replace or refit --**  **18 MR. HURST: I'm not advocating the**  **19 manufacturer --**  **20 (Simultaneous speaking.)**  **21 MR. RAWALD: I'm saying that what we**  **22 currently have is totally unique. So, I mean** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 people keep their noncompliant product. They**  **2 keep using the noncompliant product. They**  **3 just suffer the consequences of it costing**  **4 them more money and wasting more emissions.**  **5 So, we don't have anything that**  **6 currently -- we can certainly discuss the idea**  **7 and the lawyers and I can go back and discuss**  **8 about whether we have the authority to make**  **9 such an idea happen, if we thought it was an**  **10 effective idea.**  **11 MS. SHEPHERD: This is Amy Shepherd**  **12 from AHRI. The other way that you can think**  **13 about that is like for example the SEC has**  **14 guidance on remedial actions that a company**  **15 can take once it is found to be in violation**  **16 of a law. They take that into consideration**  **17 when they are doing their enforcement**  **18 analysis.**  **19 So, you could have something that**  **20 said okay, well if you self-identify and take**  **21 these remedial actions, then DOE may consider**  **22 that in the severity of the punishment or its** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 enforcement action.**  **2 MR. RAWALD: Right. This is Doug,**  **3 following up on Amy. So we do, as an**  **4 enforcement matter and policy matter, consider**  **5 remedial actions in deciding what would be the**  **6 appropriate penalty for a transaction.**  **7 MR. EISNER: Craig, you had a**  **8 question online? Craig Mesmer?**  **9 MR. KROWKA: Just open the line.**  **10 MR. MESSMER: I just wanted to point**  **11 out that it gets more complicated when you**  **12 have the ICM. There is no separate database**  **13 anywhere. And coming up with all these ideas**  **14 is all well and good and kind of burdensome.**  **15 But I am just throwing it out there. I don't**  **16 have a solution.**  **17 MR. RAWALD: Craig, could you**  **18 elaborate some more on that point?**  **19 MR. MESSMER: Okay. Well, we know**  **20 that if you have an ICM, that means that the**  **21 indoor unit and the outdoor unit are**  **22 manufactured by different manufacturers,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 sometimes sold by different distributors.**  **2 We are talking about databases and**  **3 restrictions on selling and distributors and**  **4 things like that. Who is going to -- how can**  **5 you police something made by two different**  **6 people? There is no one company that is**  **7 responsible for that.**  **8 MR. SACHS: Craig, this is Harvey**  **9 and I would like to ask a question. Did you**  **10 all ever get your separated class or are you**  **11 still operating under waivers?**  **12 MR. MESSMER: No, no, no. We don't**  **13 have a waiver anymore, Harvey. It is a**  **14 separate product class.**  **15 MR. SACHS: So you are not even**  **16 subject to this thing. And as long as the**  **17 condensing unit you are matched with is SEER**  **18 14 if it is sold in the south, it may not even**  **19 apply, even that may not apply.**  **20 MR. MESSMER: Well, I am actually**  **21 thinking more for all the ICMs, not just Unico**  **22 units.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. SACHS: Did you catch Doug's**  **2 announcement just after our break?**  **3 MR. MESSMER: No, I guess I didn't.**  **4 I missed that one. It is hard to hear**  **5 everything on the computer here.**  **6 MR. SACHS: Sure. I think Karen's**  **7 interpretation might be that you are off the**  **8 hook.**  **9 MR. RAWALD: This is Doug. I'm**  **10 going to say that is not the message I am**  **11 trying to convey. That is definitely not the**  **12 --**  **13 MR. MESSMER: I'll take Harvey's**  **14 take on it.**  **15 (Simultaneous speaking.)**  **16 MR. RAWALD: So, as we discussed,**  **17 any unit, the coil has to be capable of**  **18 performing at the 14 SEER level made current**  **19 in the current guidance. The current guidance**  **20 as written, that was raised by Bryan Rocky**  **21 yesterday, the guidance that you got yesterday**  **22 was that the coil sold as a component to put** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 into a system must be able to, when paired,**  **2 achieve that 14 SEER level.**  **3 MR. MESSMER: Yes, that is a given.**  **4 We all agree on that. It is the enforcement**  **5 that I am kind of concerned about.**  **6 MR. RAWALD: I understand.**  **7 MR. WINNINGHAM: And this is Dave**  **8 with Allied. It is not just the replacement**  **9 situation that Bryan was referring to**  **10 yesterday. You could have a new system and**  **11 have those components come in from different**  **12 distributors from different manufacturers.**  **13 MR. RAWALD: This is Doug. And I**  **14 get that. I guess I consider to be the**  **15 matching of two separate parts sort of similar**  **16 in analysis to a system that exists where you**  **17 are adding that component into it.**  **18 MR. PORTER: This is Steve Porter,**  **19 Johnstone Supply. I like Karen's idea on the**  **20 hotline to call in and letting contractors**  **21 police themselves. I think that moves**  **22 everything forward quite a bit. I think our** 

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### 1 labeling, which she just announced coming out **2 of the break, moves it that much further o. 3 Our communication with contractors**  **4 about the law that we have to communicate and 5 if we can communicate a hotline number and in**  **6 the fact a homeowner reach out program which 7 they don't have much understanding of this**  **8 existence of regional standards at all and 9 won't by the DOE. I mean we have done more**  **10 there communicating than we did on the 10 to 11 13, in a way.**  **12 So, I think that is quite a bit to 13 get done, even and get it done quickly. But**  **14 that allows us the best opportunity without 15 thinking about all these other processes that**  **16 could take months or years to implement. To 17 me, that seems like a pretty doable plan that**  **18 could be accomplished within go live of 19 January. And it would be effective for the**  **20 DOE to show enforcement and everybody kind of 21 has a piece in that.**  **22 MR. WHITE: This is Chuck White.**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 That ties in with what Neil said earlier that**  **2 as we go forward, things can be added. If we**  **3 think compliance is lacking, you could enhance**  **4 the program. Is that correct?**  **5 I mean Neil posed the question**  **6 earlier how many do we think are problems and**  **7 that is a difficult question because it is not**  **8 in effect. So, we don't have problems because**  **9 it is not illegal at the moment.**  **10 And I have one other separate, which**  **11 is just kind of a clarification question to**  **12 you, Doug, related to what Gary said earlier.**  **13 By the mandate for the reason that we are**  **14 here, this overall process, is DOE's mandate**  **15 to determine compliance or is it to enforce**  **16 compliance, or do you think there is not a**  **17 difference or do you think it is both?**  **18 MR. RAWALD: So, this is Doug. So,**  **19 the statute requires us to develop an**  **20 effective enforcement plan. That is the work**  **21 of the statute. So, I think as part of**  **22 enforcement, what we do currently is we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 determine compliance as part of what we do for**  **2 enforcement. So, in the context of we do**  **3 testing and we determine of the product is**  **4 compliant with the standard, then if it is not**  **5 compliant, then we take further enforcement**  **6 action. Though I would contribute or tell a**  **7 group that the actual determination of**  **8 compliance is considered an enforcement action**  **9 as well because we are doing things in an**  **10 enforcement context.**  **11 So, I think it is all wrapped up**  **12 together in some way there.**  **13 MR. WHITE: There is kind of a fine**  **14 point there, too. If you have a problem**  **15 situation, obviously, you would have to**  **16 determine compliance of that problem**  **17 situation. But would that expand out to you**  **18 have to determine compliance in the industry**  **19 coast to coast? Do you see how that can be**  **20 different? I mean, are you determining**  **21 compliance of the problem that you have before**  **22 you so you can pass enforcement or are we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 trying to determine the major --**  **2 MR. RAWALD: Well, I think what I**  **3 see as the Department's desire, and what I**  **4 have to bring back to those that I work for**  **5 for them to be satisfied with our**  **6 contributions of process and to adopt a rule**  **7 would be a framework by which most people are**  **8 going to be assured to be compliant, which we**  **9 presume most people will be, but also a way**  **10 that when a violation is reported, we can**  **11 investigate and deal with it so that the**  **12 playing field is kept level. Because I think**  **13 those people who are playing along are going**  **14 to be upset that we are not investigating and**  **15 dealing with those guys who are violating.**  **16 So, that is all part of what I think**  **17 we have to do.**  **18 Now, we take every case as a case.**  **19 So, if there is a complaint against one**  **20 individual, I am going to investigate that**  **21 individual and I am going to look at that**  **22 individual. I am not going to look the entire** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 industry unless it -- there has to be a reason**  **2 to do so.**  **3 MR. EISNER: Okay.**  **4 MR. SACHS: John, do you want to --**  **5 MR. MELCHI: No, go first, please.**  **6 MR. SACHS: If I could try to**  **7 summarize and build on this, we have got three**  **8 components that look like they can be bundled**  **9 that are pretty acceptable: the label, the**  **10 outreach, the hobnob reporting. Some of us**  **11 might want nuances like reward.**  **12 We then have another question which**  **13 goes to back to the suggestion from Elizabeth**  **14 and that is that we reconvene in a year and**  **15 evaluate how it is going and whether**  **16 additional measures need to be added. That**  **17 would satisfy or helpful to your mandate for**  **18 an effective enforcement program because it is**  **19 a formal way of getting the feedback on**  **20 whether it has bene effective.**  **21 MR. EISNER: And how would you**  **22 measure whether it has been a factor, based on** 

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### 1 what you put into the rule? **2 MR. SACHS: We would measure that by 3 what has been reported in these three**  **4 mechanisms and what the stakeholders herein 5 assembled have also learned on their own from**  **6 their years on the ground listening to the 7 rumbling of the elephants.**  **8 MR. RAWALD: I think -- Harvey, this 9 is Doug -- a couple things. One, if you are**  **10 going to run the risk then I am going to fill 11 the gap. Because when a reported violation**  **12 occurs, I am going to do something. 13 And so unless this group comes up**  **14 with a method by which we think is the 15 appropriate way to follow-up on those**  **16 complaints, there is going to be that gap. 17 MR. SACHS: I'm sorry. You are**  **18 right and my nuance was certainly wrong. I 19 should have said in addition to whatever**  **20 stumbling through the jungle DOE would 21 ordinarily do, we would have -- I am teasing**  **22 you -- we would have the label, the outreach,**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and the hobnobbing and see how that is doing**  **2 before we commit to something that is -- Lord**  **3 knows I am throwing this out as an idea. I**  **4 haven't vetted it with our management, much**  **5 less my attorney.**  **6 MR. EISNER: Elizabeth.**  **7 MS. NOLL: So, what we were**  **8 commiserating at the break and one of the ways**  **9 we have been visualizing this was because**  **10 there is varying degrees of hard and easy and**  **11 varying degrees of effective and non**  **12 effective. And you could visualize it in a**  **13 chart that goes up and down, hard-easy, right**  **14 to left non-effective to effective. And we**  **15 can start plotting these and we are going to**  **16 have a lot of opinions as to where upon that**  **17 chart it might fall.**  **18 But if a lot of things end up**  **19 bundled in the easy-effective quadrant, that**  **20 might package into a nice -- and then we can**  **21 see what we are missing is that the -- I'll**  **22 stop.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. HURST: And this is John Hurst**  **2 with Lennox. Building on what Harvey said and**  **3 what Elizabeth said, you could actually take**  **4 that diagram and if it is effective and easy,**  **5 there is no need to do hard and effective.**  **6 Or, if it is easy and ineffective, over time,**  **7 you could come back and there is nothing I**  **8 would rather do than to be here with Harvey.**  **9 But you could come back and the**  **10 burden of the various options that we have,**  **11 the burden increases if it is ineffective.**  **12 And I would be willing to sign up for that**  **13 because I don't want ineffective but I do want**  **14 easy or great gaining sales meaning.**  **15 MR. EISNER: Let's have some comment**  **16 on the suggestion and see if we want to**  **17 proceed that way.**  **18 MR. DORIA: Well if I could just ask**  **19 a question. So what would need to be done by**  **20 the Department in order to provide for some**  **21 sort of look back? Would a new rulemaking**  **22 have to commence?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: Well, probably it is**  **2 required by law to do that periodically.**  **3 (Simultaneous speaking.)**  **4 MS. NOLL: Could we add it to the**  **5 list of things if a look back is -- it is**  **6 there. Thank you.**  **7 MR. DORIA: Well, I guess what I am**  **8 just asking for a little bit of guidance on,**  **9 I could imagine we could all, in theory, agree**  **10 to get back together to talk but if we want to**  **11 make some actual changes to the CFR, if that**  **12 were to be the outcome, then I don't know how**  **13 you could do the absentee formal rulemaking.**  **14 I guess that is my question.**  **15 MR. SACHS: Could I just ask a**  **16 follow-up to Jordan's? Could we, as part of**  **17 our term sheet, include that and ask for a**  **18 review?**  **19 MR. ROCKY: So, I am going to jump**  **20 in.**  **21 MR. SACHS: Please.**  **22 MR. ROCKY: So, I think we have a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 point in time defined that will already allow**  **2 for a review. And that is the end of the**  **3 inventory sell-through period July 25th, 2016.**  **4 But we are giving up, in essence, two**  **5 procedures for units today installed that was**  **6 built before January 1 and a procedure for**  **7 units built after January 1. And then at one**  **8 point in time, 18 months from now, we are**  **9 going to have one procedure. That is the way**  **10 the negotiated agreement comes out.**  **11 So, I think by definition we have a**  **12 point for a review of the effectiveness of the**  **13 two-pronged approach.**  **14 MR. BALLO: That would also allow**  **15 FTC time to make any regulatory changes they**  **16 would need to make to the label, which they**  **17 might not be able to do by next summer.**  **18 MR. EISNER: Again, the date was**  **19 2015 did you say?**  **20 MR. ROCKY: July of 2016.**  **21 MR. EISNER: Sixteen. Thank you.**  **22 MR. RAWALD: This is Doug from DOE.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, Johanna and I will go back and consult**  **2 with the lawyers that are the lawyers on**  **3 administrative matters and make sure that they**  **4 would be okay with including in a rulemaking**  **5 a reply and a look back at something.**  **6 And we will also have to check with**  **7 the policymakers because there is an expense**  **8 in time and energy and money for rulemaking as**  **9 an activity. So see if they would be willing**  **10 to engage. But that wanted to be a term that**  **11 we were coming out with, they both should go**  **12 on a term sheet and go from there.**  **13 But what I have to make clear is**  **14 that from the Department's point of view, my**  **15 mandate coming into this is I can't leave**  **16 without some sort of tools for what we are**  **17 going to do when the violations get reported.**  **18 So, I can't leave that on the table for a year**  **19 and a half from now. I need to have some sort**  **20 of tools on the table.**  **21 MR. EISNER: Well, Doug, what I was**  **22 hearing is there are tools that are going to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 be on the table to use. They will increase if**  **2 the program is not being effective.**  **3 Because we are first agreeing we**  **4 think this will be effective but if it is not**  **5 in 2016, we will have enough data to determine**  **6 that and we will decide whether to tighten the**  **7 screws.**  **8 MR. ROCKY: So, this is Bryan. Just**  **9 to clarify, I am not proposing we don't do**  **10 anything until July of 2016. I think it is a**  **11 point in time that the Department can gauge**  **12 the impact because of the way that the**  **13 negotiated settlement and the inventory sales**  **14 for a period comes through.**  **15 I absolutely agree with what**  **16 Elizabeth and John were talking about as far**  **17 as ranking methods and coming up with more**  **18 ideas. We have to give you an idea of an**  **19 enforcement policy for July 1, 2015 for units**  **20 produced on July 2, 2015.**  **21 MR. RAWALD: I knew what your**  **22 positions were. What I am concerned about is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I don't want there to be a coalescing about an**  **2 idea. If a package can be a 1-800 number of**  **3 public outreach and the label, and then we are**  **4 good, DOE would not be able to vote yea to**  **5 that.**  **6 MR. EISNER: And what I am hearing**  **7 is a suggestion that we rate them in terms of**  **8 ease of implementation and effectiveness and**  **9 look at what it tells us and then make some**  **10 decisions.**  **11 MS. SHEPHERD: This is Amy Shepherd**  **12 from AHRI. I mean that is basically what you**  **13 have to do in a company when you have a new**  **14 rule. You have to say okay, here is what we**  **15 do now. Here is the new rule. Lay them on**  **16 top of each other and see where are the gaps.**  **17 So, I think that in terms of ranking**  **18 these, in terms of ease, we could do that and**  **19 then we can see where we are and identify**  **20 where that gap is that DOE needs in terms of**  **21 those additional tools.**  **22 We do have to do that. And a look** 

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### 1 back could be part of that. **2 MR. PORTER: Well, this is Steve 3 Porter, Johnstone Supply. So I believe that**  **4 that wouldn't be enough because one of the 5 things we also do in business is look, when I**  **6 got to get inventory and I have got to get a 7 bill rate of 99 percent to get 100 costs me**  **8 this to do it, it is not worth it. 9 You know if we are looking to get to**  **10 100 percent here, that is going to be tough. 11 And I don't see any of those as what we just,**  **12 what I just discussed earlier is not getting 13 us pretty close to 99.**  **14 I think the label gets us a long way 15 there. That was clean and it communicates**  **16 clearly. An 800 number and self-policing and 17 those things, I see that as a big tool to me.**  **18 It doesn't sound like you think that is a big 19 tool.**  **20 MR. RAWALD: And Steve, so I do 21 think those are all valuable tools. I**  **22 absolutely agree. What I am worried about is**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 once the phone call is made, what do I do?**  **2 MR. PORTER: Yes, well that is --**  **3 yes.**  **4 MR. RAWALD: And I think that we**  **5 need to make that clear out of fairness to all**  **6 the participants in the industry or else I am**  **7 going to be left filling the gap, which nobody**  **8 would want.**  **9 MR. PORTER: Okay, that is fair. I**  **10 agree with that.**  **11 MR. RAWALD: Okay. And I think that**  **12 it would have to at least get there.**  **13 MR. PORTER: Okay, that's fair**  **14 enough.**  **15 MS. SHEPHERD: Well similarly, I**  **16 mean what do you do now? Because you**  **17 mentioned that is a part of your enforcement**  **18 program. Right?**  **19 MR. RAWALD: Right, so I have**  **20 definitely been trying to bring things up that**  **21 we do now so that you can understand what we**  **22 are doing.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, what we do when we get a report**  **2 violation now is that we typically subpoena**  **3 records from both manufacturer and**  **4 distributors who want to kind of see what is**  **5 going on out there. We ask for information**  **6 from manufacturers about test data. We want**  **7 to know whether the product was tested. And**  **8 we purchase product or we require a**  **9 manufacturer to buy this product and we test**  **10 it ourselves. So, the area and the things**  **11 that we need to investigate and we have the**  **12 authority to depose witnesses and ask**  **13 questions of the witnesses if we want to about**  **14 the product.**  **15 So, we could do all those things and**  **16 to build a case -- well, first of all decide**  **17 whether or not there actually was a problem or**  **18 not. And if there is a problem, to then build**  **19 a sufficient case that we could then bring an**  **20 action against the company both finding them**  **21 not complaint, that is the first step we would**  **22 take, finding them noncompliant, and then** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 assessing a civil penalty as appropriate for**  **2 the noncompliance.**  **3 So those are kind of the steps that**  **4 we go through from an enforcement point of**  **5 view. So, I think that we need some sort of**  **6 translatable steps here in this process to at**  **7 least lay out what the playing field is going**  **8 to be.**  **9 MR. PORTER: So, Doug, Steve Porter,**  **10 Johnstone Supply.**  **11 So, we also talked about within that**  **12 enforcement or however DOE plans to do that,**  **13 the methodology to enforce, I saw in notes, I**  **14 think, that you guys discuss routinely**  **15 violates and that type of thing.**  **16 So, is there going to be -- do we**  **17 have to also have consideration for the**  **18 uninformed? I didn't know. I had one**  **19 technician. I've got ten guys running and one**  **20 guy who did it by mistake and we pulled the**  **21 wrong product, we shipped the wrong product.**  **22 You know, are we going to define that piece as** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 well?**  **2 MR. RAWALD: Right, and this is**  **3 Doug. And that was the concept that we left**  **4 off on yesterday and that we have to circle**  **5 back on, I think, to complete what we are**  **6 doing here. Because there is a statutory**  **7 prohibited act that Congress has given me to**  **8 assess civil penalties against manufacturers**  **9 who knowingly sell to distributors, dealers,**  **10 and contractors who routinely violate the law.**  **11 So, the question was, well what**  **12 would that process be of kind of fulfilling**  **13 that statutory prohibited act? And if you**  **14 folks will give me a solution that I am going**  **15 to go out and do with, which may not be what**  **16 everyone wants.**  **17 And so I think that I want to tell**  **18 you folks need to coalesce around something.**  **19 MR. PORTER: That is another that I**  **20 think is almost as contractors looking to**  **21 self-police as manufacturers are not going to**  **22 want to continually sell to a distributor and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 then we are not going to have the relationship**  **2 if there is a continued violator, I would**  **3 imagine.**  **4 MR. RAWALD: Well, I think that is**  **5 essentially what we all came to yesterday that**  **6 nobody wants to play with someone that is**  **7 going to get their hands dirty.**  **8 MR. PORTER: Right.**  **9 MR. RAWALD: So, I think we all**  **10 agree on that. So the question is what do we**  **11 even do to make sure that we have these steps**  **12 in place so people that the process if fair or**  **13 that it is executed equitably across the**  **14 industry so everyone knows what they are**  **15 dealing with.**  **16 I mean we have also bantered about a**  **17 couple times of assessing fines against**  **18 individuals who are not manufacturers or**  **19 private labelers because the specified**  **20 prohibited acts are not for manufacturer and**  **21 private labelers. And the question to me**  **22 comes back to one of could the effective** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 public shaming and business expense of being**  **2 found to be a routine violator outweighing**  **3 sort of actual need to develop a prohibited**  **4 act for charging money to the individual**  **5 contractor. So, that is me balancing it and**  **6 I think it is worthy of discussion as well.**  **7 So, these are the things I was**  **8 thinking about yesterday after we left.**  **9 MR. DORIA: So, if I could just**  **10 reiterate and then try to put it in context.**  **11 Jordan Doria from Ingersoll Rand.**  **12 You said that the three steps today,**  **13 as I understand it subpoena records from both**  **14 manufacturer and distributors, ask for test**  **15 data, request for or in some way obtain a**  **16 product for testing. And that, as I**  **17 understood it, upon completion of those steps,**  **18 there would be a determination of compliance**  **19 or noncompliance. Right?**  **20 MR. RAWALD: And Jordan, yes, that**  **21 is correct. We don't have to do all of those**  **22 things in every case.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, there are some cases where, and**  **2 I will give a very common example, DOE will go**  **3 out and buy a product. We typically try to**  **4 target products that we think will be on the**  **5 borderline because those are the ones that are**  **6 more likely to have problems, so you look at**  **7 things and you try to be judicious about how**  **8 get the money, so you look at the parts.**  **9 Okay, this one, we think it has some sort of**  **10 reason why it is going to fail. We are going**  **11 to buy it. So you do an audit products as**  **12 well, as we discussed.**  **13 And then you then test that product.**  **14 If that product fails, I then go to the**  **15 manufacturer and say hey, I tested one unit.**  **16 That is not enough to know that your whole**  **17 pipeline is the problem but you need to**  **18 provide me with three more.**  **19 And now if I test all four of them**  **20 and they all fail, I know with statistical**  **21 certainty that this product is not a compliant**  **22 product. And then I will make a finding of** 

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### 1 noncompliance. **2 Now, I haven't subpoenaed any of 3 your records. I haven't done any sort of**  **4 actual discussion with anybody at the company 5 short of deposing them. But I have made a**  **6 finding based upon what I think are pretty 7 telling pieces of information, scientific**  **8 data. So, that is how we will do it in a 9 typical case.**  **10 Other cases, I may get data from the 11 company. And the company has reams of data**  **12 showing the product is not compliant but they 13 are still selling it. Well, I will make a**  **14 finding based upon that data. I will say oh, 15 look at this. There is enough data here to**  **16 support the fact that this is not compliant. 17 And you totally knew it and you ignored it.**  **18 You sold the product. 19 So, I will make a finding of**  **20 noncompliance and we will assess civil 21 penalties against the individual. So, they**  **22 are different methodologies.**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. DORIA: Right. So, I guess**  **2 where I was trying to go with that is that**  **3 what we have here in some ways, we have**  **4 actually a good degree of clarity on what is**  **5 in fact the violation. The violation is the**  **6 installation of the noncompliant product.**  **7 What we need to then do is back up**  **8 through those other steps you have outlined**  **9 and determine what you need to get there to**  **10 create some kind of analogous process and give**  **11 you investigative tools necessary to sync up**  **12 with what is the clearly prohibited act.**  **13 Right? So, that is the practice.**  **14 So then we could start by looking at**  **15 this and trying to couple that together,**  **16 understanding what you currently do.**  **17 MR. EISNER: Yes?**  **18 MR. McCRUDDEN: Charlie McCrudden**  **19 with ACCA. On periodic review of enforcement**  **20 program and like John, I like being with all**  **21 of you today and the last few days and the**  **22 next two weeks, one thing I am concerned about** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 is creating just another rulemaking, which**  **2 creates more uncertainty for the future**  **3 because we don't know what this new rulemaking**  **4 will do. I mean we are all here because we**  **5 wanted to see what happens but we are all**  **6 because there is so much uncertainty.**  **7 I got an email today -- somebody**  **8 made a comment about you don't know what is**  **9 going on with regional standards and you have**  **10 been living under a rock. I got an email this**  **11 morning from a contractor saying can you**  **12 explain to me what is going on with regional**  **13 standards.**  **14 So, I just don't want to create a**  **15 situation -- I guess one way to do it is**  **16 periodic review without mandating any changes**  **17 in the same way that right now under what is**  **18 it six or seven years you look at efficiency**  **19 standards and you can move them up or leave**  **20 them the same. You can't backslide.**  **21 So, maybe there is no, something**  **22 implies that maybe it is great and we need the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 same to sort of build in that certainty**  **2 because oh, boy, 18 months from January first**  **3 we all think oh, something new is coming down**  **4 the pike, we are all going to tense up again.**  **5 MR. EISNER: If I could, again, you,**  **6 this group has the ability to decide whatever**  **7 you want the review to be. The normal process**  **8 is you regularly review a rule to see if it is**  **9 doing what it doing what it is supposed to be**  **10 doing. That includes looking at whether it**  **11 costs more than you thought it was going to**  **12 cost or cost less; whether it is more**  **13 effective or less effective. Then, you decide**  **14 whether you need to do another rulemaking.**  **15 If you were to ask for a review,**  **16 that doesn't mean you have to write a new**  **17 rule. It means you look at whether the rule**  **18 is working and needs to be modified.**  **19 You could write a rule here today**  **20 that would not require a new rulemaking by**  **21 simply saying if we are not being effective,**  **22 if this number doesn't exceed this number,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 then on this date, the next set will take**  **2 effect in the rule.**  **3 Or you could say you go through a**  **4 rulemaking to implement the next step.**  **5 Whatever you want.**  **6 MR. McCRUDDEN: If we said nothing**  **7 about periodic review, would the periodic**  **8 review still occur under your rules?**  **9 MR. EISNER: There are statutory**  **10 requirements. There are executive order**  **11 requirements for agencies to review rules.**  **12 They are generally implemented the way they**  **13 are supposed to be.**  **14 So, you have no certainty the review**  **15 will be done but there are reviews that are**  **16 done, in some agencies more often than others.**  **17 But you could say that the earliest a review**  **18 would be required to do would be ten years'**  **19 after the rule went into effect. If you want**  **20 something to happen in two years or three**  **21 years, you just say that. We think that the**  **22 rules should be reviewed in three years to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 determine whether it is being effective as**  **2 defined by the following or just leaving**  **3 general authority to do it.**  **4 There is a lot of flexibility. You**  **5 could go to the extreme that some agencies**  **6 would have trouble with. That is why I think**  **7 Doug doesn't want to make a commitment here.**  **8 Agencies will write rules that say**  **9 this rule will go out of effect in five years**  **10 or three years, unless I do a study to**  **11 determine that it should stay in effect or**  **12 should be improved or whatever. And I have to**  **13 do that before the rule goes out of effect.**  **14 And then agencies are falling all**  **15 over themselves because they have got to go**  **16 through rulemakings to extend the effective**  **17 date because you wrote in an earlier rule it**  **18 goes out of effect in three years unless I do**  **19 something.**  **20 So again, you can do anything. The**  **21 more you put in the latter kind of**  **22 requirements, the more likely it is you are** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 going to have a problem because you might not**  **2 be able to bring the review in effect.**  **3 MR. RAWALD: And this is Doug. So,**  **4 the current, the statute that we currently**  **5 have that requires to additional rulemaking**  **6 does not have a provision requiring looking**  **7 back on the effectiveness of it over time,**  **8 unlike in EPCA where there are places for test**  **9 procedures and standards where we are all**  **10 required to look back over a certain period of**  **11 time.**  **12 So, this particular statute does not**  **13 have a requirement.**  **14 MR. LATTANZI: I just have a**  **15 question for Doug. This is Matt with NORDYNE.**  **16 I just want to make sure I heard something**  **17 correctly that you said a moment ago and I**  **18 understand it. Does this group, and I think**  **19 I know the answer, have the ability to**  **20 recommend and put forth an additional**  **21 prohibitive act? I think you said that we do.**  **22 MR. RAWALD: Right. So, our** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 position coming into the negotiations is that**  **2 DOE has the authority to interpret our**  **3 regulations such that can create a prohibited**  **4 act, if necessary.**  **5 MR. LATTANZI: Okay, thank you. So,**  **6 we can recommend an additional prohibited act,**  **7 yes.**  **8 MR. RAWALD: And it will be, of**  **9 course, subject to a legal analysis. But I**  **10 think that we could definitely, that that is**  **11 our authority coming in here.**  **12 MR. EISNER: All right, then I**  **13 assume that means you could also require**  **14 something. You could prohibit something and**  **15 you could require something, such as**  **16 collecting a piece of data.**  **17 MR. RAWALD: The webinar has turned**  **18 off. So, if we could just go off the record**  **19 for a few minutes.**  **20 (Whereupon, the above-entitled**  **21 matter went off the record at 3:44**  **22 p.m. and resumed at 3:45 p.m.)** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. SACHS: This is Harvey and just**  **2 with respect to the very legitimate uncertain**  **3 concern of the review, one of the gratifying**  **4 things we saw last year with the commercial**  **5 products was once we turned in the term sheet,**  **6 DOE real quick like turned that into proposed**  **7 regulations, used the minimum public comment**  **8 periods, and I think that it was within 90**  **9 days that we had those rules finalized.**  **10 So, it was not -- to me, one of the**  **11 benefits of the negotiated rulemakings is that**  **12 the rules got --**  **13 MR. McCRUDDEN: Well, my concern is**  **14 not the outcome and the speed at which this**  **15 working group product comes out. It is if we**  **16 are baking into this a review with another**  **17 potential change, because that is what none of**  **18 us like is potential change.**  **19 MR. RAWALD: No, I hear it -- this**  **20 is Doug. I hear that there is a lack of**  **21 finality when you know it is going to be**  **22 reviewed very soon. So, at least the standard** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 for test review, okay we have five or seven**  **2 years to live with this. But with one and a**  **3 half years you will be saying well how long**  **4 before I have to be uncertain again. So, do**  **5 we want to feel that way?**  **6 MR. SACHS: I understand that but I**  **7 think all of us have a strong interest in some**  **8 sort of review to assure that it is working**  **9 for good contractors and everyone else.**  **10 If there is a better way to get**  **11 that, I would love for that to turn out to be**  **12 a one-morning meeting at which we sing**  **13 Kumbaya, it is working.**  **14 MR. RAWALD: Well, this is Doug.**  **15 So, I have put to you that under the statute**  **16 what is allowed. Anyone can petition the**  **17 Department for a rulemaking at any time. So,**  **18 if anyone were to feel, hey, we have seen it**  **19 in action for a year and we want there to be**  **20 a look back to see if it is effective, they**  **21 could ask the Department and we could consider**  **22 it. It is just a question whether we want to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 mandate such a look back over such a short**  **2 period of time or whether we want to at least**  **3 in the preamble possibly insert language**  **4 saying hey folks, if you feel there is a**  **5 problem with the effectiveness of this, please**  **6 feel free to come up and bring the answer to**  **7 that question.**  **8 MR. SACHS: My response to that on a**  **9 process level is wanting to have that left**  **10 where there is awareness in the ASRAC process**  **11 not to call for a formal rulemaking. And I am**  **12 not sure if I am able to do that. But I think**  **13 the potential was processed if we make that a**  **14 lower threshold and more likely beneficial.**  **15 MR. EISNER: Other comments or**  **16 general thoughts?**  **17 MS. SHEPHERD: This is Amy Shepherd**  **18 with AHRI. I think we should proceed as if we**  **19 are burning our bridge right here. And let us**  **20 try to make the movie and then we can decide**  **21 whether we want to review it.**  **22 I am really concerned that if we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 start assuming that there is this built-in**  **2 safety net to this, that we are going to defer**  **3 some hard decisions. We are not going to have**  **4 the conversations. I think we should try and**  **5 make this beautiful so we don't have to come**  **6 back here.**  **7 But we can still have that**  **8 conversation once we have this firmed up a**  **9 little bit as to whether okay, here is a more**  **10 final package. Do we think we need to have**  **11 this review? Should we have it?**  **12 So, I would just think that maybe we**  **13 table this and defer, you know, keep it on the**  **14 list but just put it on the bottom and then we**  **15 --**  **16 MR. PORTER: Steve Porter with**  **17 Johnstone Supply. I agree with Amy only**  **18 because I think we are making a mountain out**  **19 of a molehill here anyway and that we are**  **20 going to find out that we are going to get --**  **21 MR. EISNER: Okay, does anybody**  **22 object, then, with our proceeding?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 (No audible response.)**  **2 Then I suggest we do two things. We**  **3 may have to discuss these things. People may**  **4 say well, what does this mean but we shouldn't**  **5 spend too much time on each one of them.**  **6 We are basically looking at a rough**  **7 estimate of where we would put them on a**  **8 chart. I would suggest something simple, a**  **9 scale of one to ten, one being the most**  **10 difficult versus ten being the easiest.**  **11 And then another scale from one to**  **12 ten for effectiveness, one being the weakest,**  **13 ten being the most effective. In other words,**  **14 ten is a high score or one is a low score for**  **15 both of those categories.**  **16 And then we will try to put them on**  **17 a chart overnight, having our trusty**  **18 contractor work at home tonight all night,**  **19 figuring how to do this.**  **20 Everybody okay with that?**  **21 MR. PORTER: Steve Porter Johnstone**  **22 Supply.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Would it be better to take that away**  **2 and do that and then bring it and throw it up**  **3 tomorrow or are we going to rank them right**  **4 now?**  **5 MR. EISNER: Well, we want to get a**  **6 consensus of the group. You want to take them**  **7 home at night and put numbers on them and then**  **8 come back tomorrow?**  **9 MR. PORTER: Go ahead, Karen.**  **10 MS. MEYERS: So, this is Karen with**  **11 Rheem.**  **12 I don't think if we could take those**  **13 things and number them instead of having the**  **14 hash mark, then we have got what? The FTC**  **15 label, whistleblower. I mean it is not going**  **16 to take long for me. I could write these in**  **17 two minutes, from my perspective.**  **18 MR. EISNER: So you are saying do it**  **19 now?**  **20 MS. MEYERS: Isn't that what we are**  **21 here to do?**  **22 MR. EISNER: Yes.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. PORTER: I could do mine now.**  **2 (Simultaneous speaking.)**  **3 MR. EISNER: Well, the problem is**  **4 going to be doing the that because everybody**  **5 will be choosing numbers from one to ten. But**  **6 we can get a rough idea of what we are talking**  **7 about and see whether we agree. But I suspect**  **8 there will be some people who will want a**  **9 little explanation.**  **10 Let's start. We will put two**  **11 numbers down, so we get them in order. One or**  **12 the first number will be ease. The second**  **13 number will be effectiveness.**  **14 MS. NOLL: So, I do think, though,**  **15 there might be a little bit of value of kind**  **16 of the quartile and maybe in rough. But I**  **17 think because then you really are getting the**  **18 sense of full effective and hard together, as**  **19 opposed to ten over her and one over here.**  **20 MR. PORTER: You can visually see**  **21 it.**  **22 MS. NOLL: Visually see it. So, I** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 am going to draw on the board.**  **2 MS. DEGITZ: If you can give me a**  **3 minute, I can do this on a chart. I just need**  **4 a minute to organize this in Excel.**  **5 MS. NOLL: We can just number.**  **6 MR. PORTER: Put the numbers on the**  **7 big chart.**  **8 (Simultaneous speaking.)**  **9 MR. EISNER: Doug, we are having**  **10 conversations right now. Let's go off the**  **11 record.**  **12 (Whereupon, the above-entitled**  **13 matter went off the record at 3:52**  **14 p.m. and resumed at 3:52 p.m.**  **15 MR. SACHS: I believe if this is the**  **16 list. We can just number those --**  **17 MS. NOLL: Right. So, --**  **18 MR. SACHS: -- and vote on them**  **19 where people put each of those.**  **20 MR. EISNER: Yes, it is just**  **21 assigning whether we would vote to put them in**  **22 the upper left or the lower left.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. SACHS: I think it is the sense**  **2 of people, if I am not hijacking.**  **3 MS. MEYERS: So, for instance, I**  **4 would put -- this is Karen with Rheem. I**  **5 would put FTC label under easy effective.**  **6 MR. PORTER: Are we going to vote on**  **7 these all at one time?**  **8 MR. McCRUDDEN: I mean just as an**  **9 example of what we are trying to do here.**  **10 MR. SACHS: How many people would**  **11 vote for FTC label that is easy and effective?**  **12 MR. PORTER: This doesn't include**  **13 the luminescent stuff.**  **14 (Simultaneous speaking.)**  **15 MR. EISNER: Well, we can make these**  **16 two different things. So, I certainly there**  **17 is an FTC label, it is easy and effective.**  **18 One area, the FTC label, everybody**  **19 seems to agree, easy and effective.**  **20 MS. MEYERS: Yes.**  **21 MR. EISNER: FTC label, increased**  **22 visibility and luminescence.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. SACHS: So, what happens if we**  **2 just go down the major numbers?**  **3 MR. EISNER: Well because they are**  **4 saying they don't know if they want to vote on**  **5 this. So, I am saying let's just give this a**  **6 separate number and see what happens with the**  **7 others.**  **8 So, increased visibility. Nobody**  **9 agrees it is easy and effective?**  **10 MR. WHITE: I think it is effective.**  **11 It is not -- it's hard. There is no B. So,**  **12 if we are calling it A --**  **13 MR. PORTER: So, is that 1A? Okay.**  **14 MR. EISNER: No, this should be, we**  **15 will call it 1A and the other one is 1.**  **16 MR. PORTER: So 1A is hard and --**  **17 MR. EISNER: This is 1A we are**  **18 voting on right now.**  **19 MR. PORTER: Okay.**  **20 MR. EISNER: So, it is suggested**  **21 that we are hearing are hard and effective.**  **22 Lower left, upper right. Anybody disagree?** 

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### 1 MS. MEYERS: So this is Karen with **2 Rheem again. I want to just stop. I think 3 what we need to do is kind of get the**  **4 structure. 5 Once we figure out what we think**  **6 needs to be make up the major components of a 7 program, then we can come back and add the**  **8 details of what that means. 9 So, if we say, for instance, that**  **10 FTC label 1-800 number public outreach and we 11 say one other thing, four things and it is**  **12 going to be our straw man approach, there is 13 a lot of details that are still going to have**  **14 to go under that. 15 And I think then, if FTC ever makes**  **16 a list, we decide okay, what are we going to 17 do with FTC? We want to petition them for a**  **18 new rulemaking. We want to change the color. 19 I mean there is always other discussions that**  **20 we can have about that component of the 21 enforcement program because --**  **22 MR. PORTER: So we can make it hard**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 later.**  **2 MS. MEYERS: So, yes. I mean we**  **3 have got lots more discussion, once we figure**  **4 out what the straw man approach is to the**  **5 enforcement program.**  **6 There is still lots of discussions**  **7 because, for instance, if the 1-800 number**  **8 makes it up there, then what does Doug do with**  **9 that, with the information he gathers on the**  **10 1-800 number?**  **11 MS. NOLL: And this is Elizabeth**  **12 Noll. See, I also don't think that it is all**  **13 going to be easy and effective. It is going**  **14 to be efficient but that is going to give us**  **15 a really good starting point. Right?**  **16 MR. EISNER: Well, what we are**  **17 saying is in order to decide, we can go back**  **18 up to the one. And if this is easy and**  **19 effective, you can't ignore what is in A. So**  **20 these A, and B, and Cs down here.**  **21 If you are just looking at the FTC**  **22 label, without deciding all the details, it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 should be easy and effective.**  **2 Again, Steve is going to include the**  **3 luminescence.**  **4 MR. ROCKY: So, Neil, at this point**  **5 -- Bryan Rocky.**  **6 So, I think Doug has already given**  **7 us the topics, the areas to consider that each**  **8 of these has different things. So one is**  **9 something on the labeling of the products, as**  **10 Karen just said. The second topic is the**  **11 outreach or communication through the**  **12 distribution chain to the end customer. Some**  **13 of these will fall into that. The third is**  **14 reporting violations discussion and a process**  **15 for that. Fourth is investigation process.**  **16 And the fifth is assessment of penalties.**  **17 You have got five topics that some**  **18 of these do not apply at all to those topics**  **19 but FTC label might be the absolute best for**  **20 labeling product by manufacturers through to**  **21 the customer. And then the 800 number might**  **22 be the best way.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And manufacturers, we going to all**  **2 communicate the hell to the distribution chain**  **3 on this discussion. The distribution chain is**  **4 going to go to contractors. Ideas of tear-off**  **5 labels talks about that outreach and that**  **6 communication.**  **7 I think we have got the five big**  **8 topics and we put it in the buckets and then**  **9 we can assign these into those bucket and then**  **10 discuss does it apply in that area.**  **11 MS. MEYERS: That's a different**  **12 approach.**  **13 MR. EISNER: Thoughts on this?**  **14 MR. SACHS: Bryan, will you please**  **15 repeat the five buckets?**  **16 MR. ROCKY: Now, let's go again with**  **17 what Doug said before. We have the discussion**  **18 on how are we going to label the products.**  **19 And that is from -- sort of goes from the**  **20 manufacturer to distribution channels to**  **21 contractors to homeowners. Two is how are we**  **22 going to communicate or have the outreach** 

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### 1 through the whole chain on what this process **2 is. Three is the discussion of how does 3 anyone report a violation to the appropriate**  **4 authority, which is DOE. The fourth is the 5 DOE investigation process, which may or may**  **6 not need further definition. And then the 7 fifth is the definition of the process for**  **8 assessing penalties. 9 MR. RAWALD: This is Doug. And I**  **10 like Bryan's list except for I would broaden 11 the last one to consequences, not just**  **12 penalties. 13 MR. ROCKY: Consequences, yes.**  **14 MR. RAWALD: Yes, consequences are 15 better.**  **16 MR. ROCKY: Yes, that is a better 17 word.**  **18 MR. DORIA: I think there is another 19 step there, which is determination that**  **20 violations occur. Maybe that is a potential 21 --**  **22 MR. RAWALD: I would put that with**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 investigation. I think the investigations,**  **2 you know we do that. So, I would ask that we**  **3 handle that as part of that discussion.**  **4 So, the other thing is somewhere in**  **5 here we did discuss yesterday the possibility**  **6 of a good boy, a good guy, a good person list,**  **7 hey you are doing the right thing, kind of**  **8 contractor list. So, I think that would have**  **9 to go in somewhere under there as well in**  **10 discussion of that item.**  **11 MR. WHITE: So is that part of**  **12 communications and outreach?**  **13 MR. RAWALD: I think that might be**  **14 the right place to put that.**  **15 MS. NOLL: And my number three --**  **16 this is Elizabeth -- how violations are**  **17 reported. It sounds like to me that people**  **18 are assuming that that is the 1-800 number.**  **19 But what about data or tracking or maybe a**  **20 little bit more than just violations?**  **21 That is under the assumption of the**  **22 government path.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. FENSTROM: This is Gary for the**  **2 California IOUs. So, we have used the term**  **3 how are violations or information reported.**  **4 I suggest maybe we ought to say determined.**  **5 Because that presumes that somehow reports are**  **6 going to be coming back from the field that**  **7 there is a violation here. And I want DOE to**  **8 have the capacity to identify violations, not**  **9 just respond to potential reports of**  **10 violations.**  **11 MR. DORIA: I would agree but I just**  **12 -- this is Jordan with Ingersoll Rand. One**  **13 thing I want to make clear from my**  **14 perspective, even if we, as a manufacturer,**  **15 got a letter, affirmative, the most clear**  **16 evidence ever that a violation has occurred,**  **17 we are still not the arbiters of a violation**  **18 under the law. It is still up to the**  **19 Department to make that determination, no**  **20 matter how sure we are.**  **21 It is like if somebody got a signed**  **22 confession from someone else that they** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 committed a crime today, it is still not up to**  **2 me. It is still under the criminal justice**  **3 system. I don't think this is any different.**  **4 So, no matter how true the evidence**  **5 is that we get, DOE has to make the**  **6 determination that a violation has occurred.**  **7 MR. RAWALD: This is Doug. I guess**  **8 what I am hearing Gary saying is he wants us**  **9 to both discuss a system by which complaints**  **10 are reported but also that DOE has a sort of**  **11 auditing or sort of mechanism that we are**  **12 going out and observing violations on our own,**  **13 proactively rather than reactively. Is that**  **14 right Gary?**  **15 MR. FENSTROM: This is Gary. Thank**  **16 you, yes, that is correct.**  **17 Because DOE currently has the**  **18 capacity to go out and identify violations by**  **19 simply going to the store or the manufacturer**  **20 to see whether or not compliant products are**  **21 being produced.**  **22 MR. MELCHI: Doug, this is Jon from** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 HARDI. So, we have talked a lot about how**  **2 industry may report a violation. Do you**  **3 envision collaborating with other agencies in**  **4 the government, such as the FTC or EPA to help**  **5 determine if there is a violation? As I think**  **6 about consequences, if a contractor installs**  **7 a 13 SEER air condition system in Virginia,**  **8 yes, they would be violating DOE's regional**  **9 standard but they would also be violating the**  **10 FTC requirements and committing consumer fraud**  **11 because they are required to provide, to**  **12 verify that what they are installing is a**  **13 legal product that meets the federal**  **14 requirements.**  **15 Do you envision the agencies**  **16 interacting on these or should we assume that**  **17 if a contractor violates the law, and this is**  **18 just a question for DOE, do we need to set the**  **19 consequences as if DOE was going to be the**  **20 only actor or do we take into consideration**  **21 that FTC may also be taking action on this as**  **22 well?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: Right. So, I guess**  **2 what I am hearing your question is if we just**  **3 come along a violation that may be within**  **4 someone else's orbit, should we talk about**  **5 that? As a government agent, as a government**  **6 official, I am required to tell that other**  **7 agency about that activity.**  **8 So, I think that we can assume it is**  **9 a baseline and not regulated activity because**  **10 it has to happen or else I am not happy then,**  **11 so I have a concern there.**  **12 MR. MELCHI: So, that leads to my**  **13 follow-up question. Am I correct, and I guess**  **14 I will ask Charlie and Chuck to assume that**  **15 the violation of an illegal installation**  **16 clearly is against the law. That is why we**  **17 are here. But each of those violations would**  **18 also be guilty of violation FTC. Correct?**  **19 FTC law or standards?**  **20 MR. RAWALD: So, --**  **21 MR. MELCHI: If the requirement on**  **22 January 1 is the contractor requirement to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 communicate, they are required to communicate**  **2 to the homeowner the efficiency of the**  **3 standard. And if they install the product**  **4 that was not compliant, they would, therefore,**  **5 be misrepresenting that energy guide label.**  **6 Correct?**  **7 MR. McCRUDDEN: So, I don't know.**  **8 Are those requirements -- I'm a contractor so**  **9 I don't know the penalties, the penalty of a**  **10 crime.**  **11 MR. MELCHI: Okay and I guess that**  **12 was my question. Is there a penalty for**  **13 failure to comply with that?**  **14 I'm just trying to get my head**  **15 wrapped around if somebody, if you found a**  **16 habitual violator, would they be subject to**  **17 multiple agencies and multiple actions?**  **18 MR. RAWALD: I guess the answer is**  **19 it depends, which is a very common answer in**  **20 this room, unfortunately.**  **21 So, if I don't know an FTC rule but**  **22 what I would say is that we shouldn't regulate** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 around any -- so, we should focus in on the**  **2 things that DOE has jurisdiction over, which**  **3 is the installation of a noncompliant product**  **4 and focus the violation around how we deal**  **5 with those, in my opinion.**  **6 MR. DORIA: This is Jordan with**  **7 Ingersoll Rand. I would like to propose just**  **8 a slight edit to number three. I think it**  **9 should be suspected violations, at that stage.**  **10 MR. RAWALD: So, this is kind of a**  **11 laundry list, at this point, of how we want to**  **12 tackle these issues. We want to move through**  **13 it logically, the logical way that Bryan**  **14 presented was very helpful.**  **15 MR. EISNER: And we started out to**  **16 evaluate whether all these ideas were worth**  **17 considering under the to be discussed. Now**  **18 are we just to divide them up into these**  **19 categories? Is that going to be difficult and**  **20 easy and effective to ineffective?**  **21 I am not sure what the group wants**  **22 to do with this list now.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. ROCKY: Bryan Rocky. So, just**  **2 thinking of this process and how I like to do**  **3 it, we have five buckets. And so we assigned,**  **4 we just go down without debating the merits of**  **5 each, deciding which bucket each of the**  **6 numbered items below fits into. FTC label to**  **7 me is obviously number one.**  **8 So, you could say for ease of**  **9 recording, we agree that FTC label is under**  **10 bucket one. So, you can color code it, you**  **11 can make it easy, or we can put a one in front**  **12 of it or something. Or you can move it, as I**  **13 think that is what she is doing right now.**  **14 But that is what happens automatically.**  **15 So, I just actually like the idea of**  **16 color coding, leaving in the data there where**  **17 you have it and you just change the color**  **18 code.**  **19 MR. EISNER: This down here is not**  **20 in any special order.**  **21 MR. ROCKY: Right, I understand.**  **22 MS. NOLL: So, anything that is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 labeled --**  **2 (Simultaneous speaking.)**  **3 MR. ROCKY: All right. So, make it**  **4 easy. So, labeling is green. So FTC label,**  **5 I think is obviously that pertains to**  **6 labeling. So, just highlight that.**  **7 And we just go down the list. So,**  **8 you are processing this we go through the**  **9 items and just say number two is not labeling.**  **10 Number three is not labeling and because she**  **11 is highlighting, she is wanting to do all of**  **12 the green items first.**  **13 MR. EISNER: I understand that.**  **14 What I am getting at is then do you want to go**  **15 through and evaluate these things or do**  **16 something else with them?**  **17 MR. ROCKY: Well yes, we sort them**  **18 first and then we come back and discuss and**  **19 evaluate or add to the lit.**  **20 MS. MEYERS: This is Karen with**  **21 Rheem. Let's get them all color coded first.**  **22 Is that what you are saying, Bryan?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. ROCKY: Yes.**  **2 MS. MEYERS: Yes, so let's color**  **3 code every tool discussed to date.**  **4 MR. ROCKY: So, identify the ones**  **5 that apply to Lakeland.**  **6 (Simultaneous speaking.)**  **7 MR. EISNER: All right, now number**  **8 four --**  **9 MR. ROCKY: All right, sir, I'm**  **10 sorry. Consecutively, does anybody think**  **11 number two applies to labeling?**  **12 MS. MEYERS: No.**  **13 MR. ROCKY: Does anybody think that**  **14 number three applies specifically to labeling,**  **15 as we talked about the buckets above?**  **16 MS. MEYERS: No.**  **17 MR. ROCKY: Number four, a view of**  **18 enforcement is not about labeling to me.**  **19 MR. EISNER: It is not about**  **20 labeling but it is about whether your label is**  **21 effective or it needs to be changed.**  **22 MR. ROCKY: I think --** 

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### 1 MS. MEYERS: No. **2 MR. EISNER: Okay, you're the group. 3 MS. MEYERS: Five no.**  **4 MR. ROCKY: Five, no. Six, is not 5 about product labeling. Seven is not about**  **6 product labeling. Eight, definitely is. We 7 are talking about a tear-off label.**  **8 MR. DORIA: I'm sorry. Could I just 9 say on seven I think when we talk about the**  **10 labeling chains that we have so often have, 11 aren't we saying that number seven would be**  **12 significantly enabled by the label as we have 13 now got it constructed, that it would be**  **14 easier to make that finding? 15 MR. RAWALD: This is Doug. So, I**  **16 want to get this in the consequences here. I 17 could actually live with that because we are**  **18 going to have a lot of discussion about that 19 topic from what we already have so far.**  **20 MS. NOLL: Well, I think, Jordan, 21 maybe we still need to have --**  **22 MS. SHEPHERD: This is Amy Shepherd**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 from AHRI. Just one comment on A. I think**  **2 that, I know it says label in it but really**  **3 that issue is the collection of information to**  **4 DOE and that is the obligation of it. So,**  **5 just query whether that is more the labeling**  **6 issue or whether that really is information**  **7 collection.**  **8 MR. SACHS: I'm comfortable with it**  **9 either way. This is Harvey. Either in bucket**  **10 one or bucket three.**  **11 MR. EISNER: Anybody have an**  **12 objection to putting green on it?**  **13 MR. MELCHI: This is Jon with HARDI.**  **14 I agree with Amy. I would put it -- place it**  **15 in bucket three.**  **16 MR. EISNER: Anybody object to not**  **17 placing it in labeling?**  **18 MS. NOLL: This is Elizabeth. I**  **19 think it is both. It is going to require a**  **20 label, which is a -- you could even almost say**  **21 that is also a consumer -- that's not**  **22 outreach. Never mind.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAWALD: This is Doug. And so**  **2 the point of this activity is not really one**  **3 of any sort of substance specifically to**  **4 organize how we are going to approach things.**  **5 So, we want to put things that are of like**  **6 mind together so that you talk about them**  **7 together. So it is more of alike things, so**  **8 stick it with things that are alike, so we can**  **9 talk about things in context with one another.**  **10 I think that is what we are going to do here.**  **11 MS. NOLL: So, this is Elizabeth**  **12 again. I think that it kind of goes back to**  **13 where we were instead of color coding it, we**  **14 were putting numbers next to it. So, this is**  **15 a one and a three.**  **16 So, when we go back and evaluate**  **17 well, we need something in all the buckets to**  **18 kind of have an effective rulemaking, this one**  **19 captures effectively one and three but fails**  **20 on --**  **21 MR. ROCKY: So, from a process**  **22 standpoint duplicate it. Add a new number** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 nine that is identical to eight and put one in**  **2 labeling and one in the other. Again, it is**  **3 just a matter of moving forward so you can**  **4 change the color in number nine and report it**  **5 elsewhere, whatever that other color is going**  **6 to be.**  **7 MR. EISNER: Okay, number ten.**  **8 MR. ROCKY: No, not for labeling.**  **9 MR. EISNER: Okay, 12, 13?**  **10 MR. ROCKY: None of the rest look to**  **11 me like labels.**  **12 MR. EISNER: Number 15?**  **13 MR. ROCKY: So, I'm kind of agreeing**  **14 with Steve, going back to 14. I think 14 is**  **15 a labeling method, not one we prefer but I**  **16 think that is for discussion. It is**  **17 appropriate.**  **18 MR. EISNER: Number 15, 16, 17, 18.**  **19 Okay, how about for communication?**  **20 MR. DORIA: This is Jordan. For**  **21 clarity, communication to whom?**  **22 MR. ROCKY: So this is communication** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 through the entire chain. So, for**  **2 manufacturers, distributors, contractors,**  **3 dealers, and consumers and covers, again,**  **4 there is going to be a lot of discussion but**  **5 it is however we are going to get this message**  **6 out through the multiple different ways we are**  **7 going to have to do this.**  **8 MR. SACHS: I can see some PSAs.**  **9 MR. ROCKY: Yes, all sorts of**  **10 things.**  **11 MS. MEYERS: That was Harvey.**  **12 COURT REPORTER: That was Harvey?**  **13 Thank you. If people could say their name,**  **14 that is a big help for me, just because the**  **15 table is so wide. Thank you.**  **16 MR. SACHS: I'm sorry.**  **17 MR. EISNER: Okay, let's go down**  **18 here, number two?**  **19 MR. SACHS: No.**  **20 MR. EISNER: Number three?**  **21 MR. SACHS: Yes.**  **22 MR. EISNER: Number four?** 

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### 1 

### MR. SACHS: No. **2** 

### MR. EISNER: Number five? **3** 

### MR. SACHS: No. **4** 

### MR. EISNER: Six? **5** 

### MR. SACHS: Yes. **6** 

### MR. EISNER: Seven? Six yes? **7** 

### MR. SACHS: Yes. **8** 

### MR. EISNER: Seven? **9** 

### MR. SACHS: No. **10** 

### MR. EISNER: Nine? **11** 

### MR. SACHS: Although seven leads to **12** 

### some communication. Eight and nine are **13** 

### assigned. **14** 

### MS. SHEPHERD: I know, we are going **15** 

### to put it in different colors. **16** 

### MR. EISNER: Yes, we are going to **17** 

### put them in two different buckets. Ten? **18** 

### Now, if you disagree, say so when we **19** 

### go up the chain. Number 11? **20** 

### MS. SHEPHERD: No. **21** 

### MR. EISNER: Twelve? **22** 

### MR. PORTER: Sorry, this is Steve

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Porter.**  **2 MR. EISNER: Thirteen?**  **3 MR. PORTER: Was she supposed to add**  **4 nine to communication or not? No?**  **5 MR. RAWALD: That was going to be**  **6 part of --**  **7 MS. SHEPHERD: The information**  **8 collection. This is the stuff going out. Amy**  **9 Shepherd. Sorry.**  **10 MR. EISNER: Thirteen? Fifteen?**  **11 Sixteen?**  **12 MS. NOLL: This is Elizabeth.**  **13 Twelve and thirteen, are we conceptualizing**  **14 that, use of -- is the certificate, right?**  **15 That to me, I thought was more on information**  **16 to the consumer. Is that not true?**  **17 MR. PORTER: Twelve?**  **18 MS. NOLL: Twelve and thirteen, I**  **19 think they are.**  **20 MR. DORIA: This is Jordan with**  **21 Ingersoll Rand. I mean I think they probably**  **22 belong there. I mean ultimately, I think they** 

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### 1 there is probably more consequence honestly. **2 But it seems to me they would fit into some 3 kind of communications approach.**  **4 MS. SHEPHERD: Okay. 5 MR. EISNER: Fifteen? Sixteen?**  **6 Seventeen? Eighteen? 7 Okay, next color. Collection of**  **8 information. Hurray. Number two. 9 MS. MEYERS: This is Karen, yes.**  **10 MR. EISNER: Number four, number 11 five.**  **12 MR. ROCKY: Yes. 13 MR. EISNER: Number seven?**  **14 MS. NOLL: This is Elizabeth. I was 15 thinking more along the lines of**  **16 investigation. 17 MR. ROCKY: Yes.**  **18 MR. EISNER: Does anybody disagree 19 with that?**  **20 MR. ROCKY: Yes. 21 MS. NOLL: Do you disagree with it?**  **22 MR. ROCKY: It should not be green.**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. EISNER: Okay, number seven.**  **2 Number nine.**  **3 MS. MEYERS: This is Karen with**  **4 Rheem. Number seven is --**  **5 MR. RAWALD: This is Doug and it is**  **6 a consequence for sure but it could be another**  **7 bucket, if folks feel it necessary.**  **8 MS. MEYERS: This is Karen. I'm**  **9 okay. I am looking at these buckets. I think**  **10 you are right. It is a consequence.**  **11 MR. EISNER: Okay, number nine.**  **12 MR. RAWALD: All right, number nine**  **13 we just said wouldn't be in this group. It is**  **14 already created in the first place.**  **15 MR. EISNER: Number 11?**  **16 MR. SACHS: Yes.**  **17 MR. EISNER: Number 15?**  **18 MS. DEGITZ: I'm sorry, did I hear**  **19 yes on number 11?**  **20 MR. SACHS: Yes.**  **21 MS. NOLL: This is Elizabeth.**  **22 Records retention would be for communication** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 purposes, average.**  **2 MR. SACHS: This is for collection.**  **3 MR. EISNER: We are in collection.**  **4 MS. NOLL: I'm sorry.**  **5 MR. RAWALD: It's been a long day.**  **6 MR. EISNER: Fifteen? Sixteen?**  **7 Seventeen?**  **8 MR. GIBBONS: Wait, can you go back**  **9 to fifteen? This is John, sorry.**  **10 So, restrictions on manufacturers,**  **11 is that a dealer comes to me and says hey, we**  **12 found a 13 SEER units in Alabama, did you ship**  **13 those to Alabama?**  **14 MS. NOLL: So, this is Elizabeth. I**  **15 think this one was more, as a group, we**  **16 decided that manufacturers are restricted from**  **17 selling 13 SEER in Texas. Shipping to -- I**  **18 apologize. Shipping to Texas. Is that a**  **19 restriction that we want to put on**  **20 manufacturers?**  **21 MS. MEYERS: So this is Karen with**  **22 Rheem. I think with the DOE guidance, how we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 are to rate our products, that this one should**  **2 probably have been removed from the list**  **3 because it is not really part of an**  **4 enforcement plan. It is more about how we**  **5 rate our products.**  **6 MR. WHITE: It is unlawful to deal**  **7 with someone who knowingly routinely violates.**  **8 So, they are going to restrict you to ship to**  **9 distributors who knowingly violate. I think**  **10 it is a consequence.**  **11 MR. EISNER: Is this part of adding**  **12 a rulemaking requirement, imposing a**  **13 restriction?**  **14 MR. ROCKY: I think 15 and 16 fall**  **15 under consequences versus any other.**  **16 MR. EISNER: Consequences can only**  **17 be imposed if there is a rule restricting it.**  **18 Is there already a rule making these**  **19 restrictions?**  **20 So, are we talking about ratings as**  **21 part of the enforcement program, two new**  **22 requirements?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. DORIA: I mean I think that is**  **2 the same as all these -- Jordan with Ingersoll**  **3 Rand. That is the same as all these others.**  **4 So, I don't see why. Your point is**  **5 well taken but ultimately all of this needs to**  **6 be created.**  **7 MR. PORTER: Steve Porter, Johnstone**  **8 Supply. I agree with the consequences piece**  **9 that Chuck brought up. I mean we have people**  **10 at our border states that are going to have**  **11 product that resides in the states that ship**  **12 across the borders and distribution centers**  **13 all across America, where we are going to ship**  **14 to all three regions. So, I mean this should**  **15 be a consequence, I guess.**  **16 MS. MEYERS: So, this is Karen with**  **17 Rheem. I might have misunderstood this. So,**  **18 does this say that restrictions to**  **19 manufacturers to ship some products to**  **20 distributors who have been found to knowingly,**  **21 routinely violate? Is that what this says?**  **22 MS. NOLL: This is Elizabeth. I** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 think that it doesn't say anything and says**  **2 everything. We can create, if our enforcement**  **3 plan is such that we say it is unlawful to**  **4 sell -- I shouldn't say sell -- to ship a**  **5 noncompliant product to Texas and we believe**  **6 that that would have a significant impact on**  **7 our ability to enforce this rule, then that**  **8 should be part of our role.**  **9 If we think it is a consequence of**  **10 bad acting, then that is another way of**  **11 interpreting it or should be a new number.**  **12 And again, these are ideas and then**  **13 we need to evaluate whether they are**  **14 actionable.**  **15 MR. GIBBONS: This is John again. I**  **16 just think it is important we clarify 15 and**  **17 15 because of that very reason. I am from**  **18 Texas. To Steve's point, there is going to be**  **19 stuff in west Texas that is not compliant in**  **20 those four southwestern states that could**  **21 creep over the border.**  **22 But if we find those guys to, you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 know they are not being good players, we may**  **2 choose -- I say that kind of reluctantly. My**  **3 boss is gone, I will say it -- you may choose**  **4 not to ship. You know, just base 14 product**  **5 there. You may say too much is going over the**  **6 border, we are going to ship you 14 -- you**  **7 know, the southwest, any kind of southwestern**  **8 compliant product.**  **9 MS. NOLL: So if I may, really**  **10 quickly. The word choose I think is striking.**  **11 You make a decision, as opposed to us writing**  **12 a rule that requires you to do one action or**  **13 another. And that is what we are here to**  **14 decide.**  **15 MR. WHITE: This is Chuck White. My**  **16 lens on those two items is the rule that we**  **17 had up yesterday that is unlawful for**  **18 manufacturers to deal with knowing violators.**  **19 So, it is not illegal for you to ship a**  **20 product to someone in Texas and put it in a**  **21 warehouse. It is illegal for someone to**  **22 install it in Texas but it is not illegal for** 

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### 1 you to ship it there and store it there. **2 So, the restriction you would have 3 would be if you know a distribution center or**  **4 a distributor that is colluding with a 5 contractor and doing all of this, then you**  **6 would be restricted from dealing with them 7 because it is unlawful. Otherwise, it is not**  **8 unlawful to put it in a warehouse in Texas. 9 MS. MEYERS: So, this is Karen with**  **10 Rheem. Isn't that already covered under the 11 prohibited acts? So, I am trying to**  **12 understand why we are making it part of an 13 enforcement plan when it is already covered.**  **14 MR. WHITE: Because it is part of 15 the enforcement.**  **16 MR. PORTER: So, what did it mean 17 though, Elizabeth, in your mind? Because you**  **18 are the one that put those up there. 19 MS. NOLL: So, that was Steve.**  **20 MR. PORTER: This is Steve Porter, 21 Johnstone Supply.**  **22 MS. NOLL: So, I think it was part**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of our discussion yesterday. I put it up**  **2 there they as a means of conversation. Does**  **3 it increase effectiveness by restricting**  **4 shipments to states that you knowingly cannot**  **5 install there?**  **6 I mean there are also states where,**  **7 as I learned yesterday, are for sales to other**  **8 countries. So, it may not even be a useful**  **9 tool.**  **10 MR. PORTER: So, Steve Porter,**  **11 Johnstone Supply. Neither one of these would**  **12 fit under the collection of the data or**  **13 information. Correct?**  **14 MR. EISNER: The question is whether**  **15 it fits under --**  **16 MR. PORTER: Neither one of these,**  **17 15 or 16 would fit under what we are trying to**  **18 work our way through. Because I don't want to**  **19 start a whole new process. I would like to**  **20 finish this one.**  **21 Do those two meet what we are trying**  **22 to classify among the three and whatever color** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that it is?**  **2 MR. RAWALD: And I would say no.**  **3 MR. PORTER: No. I say no as well.**  **4 MR. EISNER: Okay. Bryan was on 18.**  **5 MR. PORTER: Well, right.**  **6 MR. RAWALD: And this is Doug. What**  **7 is the consequence of that? I think we will**  **8 come back around to it.**  **9 MR. EISNER: Okay. So, we are up to**  **10 DOE investigation.**  **11 MR. PORTER: Investigation process.**  **12 (Simultaneous speaking.)**  **13 MR. RAWALD: Consequences can be**  **14 both positive and negative, just as a point of**  **15 information.**  **16 MR. EISNER: Four, five.**  **17 MS. NOLL: I'm sorry. Four was a**  **18 yes?**  **19 MR. PORTER: No.**  **20 MR. RAWALD: No, five yes.**  **21 MR. EISNER: Seven.**  **22 MR. RAWALD: Still in the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 consequence bucket for that one.**  **2 MR. DORIA: I'm sorry. This is**  **3 Jordan. I thought we had said before that the**  **4 investigative bucket included determination of**  **5 a violation.**  **6 MR. RAWALD: No, I --**  **7 MR. DORIA: No?**  **8 MR. PORTER: That is not how the**  **9 violation is determined.**  **10 MR. RAWALD: So, the method of**  **11 determination should be a part of the**  **12 investigation. The actual notice, if there is**  **13 going to be one, will be a consequence. So,**  **14 this is two pieces of that. So, we can talk**  **15 about it in both places.**  **16 MR. DORIA: No, no, that's fine.**  **17 MR. EISNER: So we are up to --**  **18 MS. SHEPHERD: Oh, look where we**  **19 are!**  **20 MR. PORTER: Fifteen and Sixteen.**  **21 No.**  **22 MR. SACHS: It would be a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 consequence to the context we have been**  **2 talking about, I think. This is Harvey.**  **3 MR. PORTER: Well we are not**  **4 consequences. Let's talk about investigation.**  **5 MR. EISNER: The last thing is**  **6 consequences, then?**  **7 MR. RAWALD: Well let me -- this is**  **8 Doug Rawald. Let me throw out there that so**  **9 we put the record retention piece in this**  **10 earlier bucket but the production of such**  **11 records would be part of the investigation.**  **12 So, either we should create another talking**  **13 point that is production of records that have**  **14 been retained or we should acknowledge that**  **15 that can actually be part of both pieces.**  **16 Because the cost of producing records to me**  **17 that I have asked you to retain would be part**  **18 of my investigation.**  **19 MR. WHITE: So, just a sort of point**  **20 of order question. When this gets written,**  **21 will this be written in chunks where we talk**  **22 about putting these pieces or will it be** 

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### 1 written all one thing, so that all these **2 things will eventually be discussed? Or will 3 they be discussed in terms of here is a**  **4 consequences section and it belongs there? I 5 just don't know how it is going to be written**  **6 eventually. 7 MR. RAWALD: Right, Chuck. This is**  **8 Doug. So, we will try to take the most 9 logical, clear approach to fashion this rule**  **10 so that it can be clear. Because there is 11 nothing that has been more clear to me over**  **12 the course of the last four days that we want 13 clarity and simplicity.**  **14 So, while I think these buckets will 15 work for our sessions here, I am not going to**  **16 say that the frame of the rule will be 17 written. We will try to make the most**  **18 logical, clearly written rule possible. And 19 I am sure by the end of this, we will have an**  **20 idea of how that should be. 21 MR. WHITE: So, as long as it is**  **22 involved in the discussion, it will end up**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 somewhere.**  **2 MR. RAWALD: It is going to end up**  **3 somewhere. Or we might dispense with it. We**  **4 might put it on the cutting room floor here in**  **5 the room but this is a way of us trying to**  **6 manage what is now a brainstorm of ideas.**  **7 MR. EISNER: Okay, so are we going**  **8 to the last category?**  **9 MS. NOLL: I'm sorry, this is**  **10 Elizabeth. Are we duplicating eleven for**  **11 Doug's purposes like we did eight and nine?**  **12 MR. EISNER: Do we want to create**  **13 another 12, duplicating number, and put that**  **14 in --**  **15 MR. RAWALD: I think it is -- I'm in**  **16 favor of some different category called record**  **17 production. I think that is what we are**  **18 asking to do.**  **19 MR. PORTER: So, you are asking for**  **20 a sixth bucket?**  **21 MR. RAWALD: No, no. This is part**  **22 of the investigative process.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. PORTER: Investigative, okay.**  **2 MR. RAWALD: Yes, it would be this**  **3 records production.**  **4 MR. EISNER: Okay, consequences,**  **5 four. What do you want to do with four?**  **6 MR. RAWALD: Okay, so four is kind**  **7 of a last down the road thing, after we have**  **8 discussed everything else. So, let's not**  **9 categorize it.**  **10 MR. EISNER: Seven? Four and I**  **11 guess five. Seven.**  **12 MR. RAWALD: I mean I absolutely**  **13 would pick consequence.**  **14 MR. EISNER: Sixteen. All right,**  **15 are you imposing a consequence to certain**  **16 contractors or to contractors in certain**  **17 states? I thought it was certain contractors.**  **18 MS. MEYERS: This is Karen with**  **19 Rheem. I just want to repeat that I think**  **20 sixteen is already covered by the Prohibited**  **21 Acts Rule. Seventeen is not because**  **22 Prohibited Acts Rule only -- already covers** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufacturers.**  **2 So, I still think that sixteen**  **3 should be removed from the list.**  **4 MR. RAWALD: When we go back around**  **5 the merits, Karen, this is Doug, we will slice**  **6 it up.**  **7 MR. EISNER: So again, this is**  **8 certain states or is it certain distributors?**  **9 MR. RAWALD: And I think -- this is**  **10 Doug. I think we can ferret that out more**  **11 when we discuss them at this point. So, if we**  **12 can just put it in the bucket for the moment**  **13 and feel like we have accomplished that.**  **14 MR. PORTER: The restrictions on the**  **15 manufacturers would certainly take care of the**  **16 distributor.**  **17 MR. EISNER: So, I am not sure we**  **18 are agreeing on seventeen.**  **19 MR. ROCKY: So, I think seventeen is**  **20 right prior to the consequences and we can**  **21 discuss what that means later on. And I think**  **22 eighteen, or nineteen and twenty --** 

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### 1 MR. RAWALD: Those are both **2 consequences to me. And then the thing that 3 we have talked about and kind of put on the**  **4 list is a new prohibited act, especially in 5 civil penalties against non-manufacturers.**  **6 So, that should be a consequence that we put 7 on the table as well, for what it is worth.**  **8 Everyone looks really tired. We 9 were all so happy.**  **10 MR. EISNER: Do we want to go to the 11 next step on this?**  **12 MR. GIBBONS: Question. 13 MR. PORTER: No.**  **14 MR. GIBBONS: Something didn't get 15 highlighted.**  **16 MR. RAWALD: Yes, that is the look 17 back provision. And we feel that that isn't**  **18 in the five categories and probably should be 19 something that we deal with at the end of all**  **20 this because of the concern that it would 21 create an artificial safety blanket and we**  **22 want to burn our bridges, as Amy said.**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. BALLO: This is Tim. I have a**  **2 question about the FTC label. I am not sure**  **3 what level of detail we really want to get**  **4 into in terms of making changes on that. My**  **5 sense is that FTC would value us handing them**  **6 a label that we all agree to that this is what**  **7 the label should look like. If others agree,**  **8 that would be valuable, I am wondering if we**  **9 want a subgroup to go through and Photoshop or**  **10 Illustrator or some other software program to**  **11 come up with what we would want the label to**  **12 look like and then bring that to the whole**  **13 group.**  **14 MR. GIBBONS: I nominate Karim.**  **15 MR. LECHTER: This is Jordan with**  **16 Ingersoll Rand. I am not against that. I**  **17 guess I am not sure that it even with what we**  **18 now know, I am not sure that it is as high a**  **19 priority item anymore. I'm not foreclosing it**  **20 by any means.**  **21 MR. RAWALD: Right. So this is**  **22 Doug. So, I guess my position would be that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the label, as it is, we can live with in the**  **2 short term. So, I would rather not spend a**  **3 lot of this group's time on discussing how to**  **4 make the label better, if we can better spend**  **5 it on things that are more important to me, I**  **6 would appreciate that. But I don't want to**  **7 put my priorities before the group.**  **8 MR. PORTER: This is Steve Porter,**  **9 Johnstone Supply. Since ACEEE is obviously**  **10 saving energy by shutting off the air**  **11 conditioning in this room, I vote we end this**  **12 meeting.**  **13 MR. LATTANZI: Second.**  **14 MS. SHEPHERD: This is Amy from**  **15 AHRI. Can I just ask if it would be helpful,**  **16 because it would be for me, so instead -- now,**  **17 I love that we have the colors. It is very**  **18 beautiful. But can we now go and do what I**  **19 think we wanted to do in the beginning, we**  **20 will still have labeling, and have everything**  **21 -- so overnight and have everything under**  **22 labeling kind of under labeling?** 

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### 1 MR. RAWALD: This is Doug. Can I **2 suggest that Laura and I do that after 3 everyone departs?**  **4 MS. SHEPHERD: Yes, that is what I 5 am suggesting.**  **6 MR. RAWALD: Yes, so you guys could 7 go ahead and go and then we will do the**  **8 administrative stuff, make it nice, and then 9 we can pick up the discussion tomorrow.**  **10 MS. SHEPHERD: Yes. 11 MR. WHITE: I vote we keep Doug on**  **12 the committee one more day. 13 MR. RAWALD: Like the Ultimate**  **14 Survivor. 15 (Simultaneous speaking.)**  **16 MR. SACHS: I have a sense about the 17 air conditioning. It was very cold in the**  **18 office suite yesterday. So, they called the 19 engineers and had the thermostat reset, not**  **20 knowing that we had a large group coming in 21 today. So, you can blame me. The air**  **22 conditioning usually works.**

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### 1 MR. RAWALD: Well, I just want to **2 say from the Department's point of view, a 3 thank you to Harvey for coming up with a room**  **4 for us, volunteering a room when we had no 5 room or space because we would have been out**  **6 in the hot sun before that. So, that was 7 really appreciated.**  **8 Tomorrow, we will be back in 9 Forrestal, where there will be a hum but at**  **10 least we will have air conditioning. 11 So anything that went wrong today**  **12 was clearly the Department's fault, not 13 Harvey's, because we are responsible for**  **14 making sure that this runs smoothly and well 15 for all you folks. And I am sorry for any**  **16 inconveniences there were for those folks on 17 the webinar but we will do better.**  **18 (Whereupon, the above-entitled 19 matter went off the record at 4:33**  **20 p.m.) 21**  **22**202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **Page 343** A $18 174:16 $200 255:6 $50 164:21 a.m 1:12 4:2 69:13

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

This is to certify that the foregoing transcript

In the matter of: Public Meeting

Before: 

## us DOE

Date: August 27, 2014

Place: Washington, D.C.

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

(202)234'""33 Court Reporter

NEAL R. GROSS COURT**REPOmRS~TRANSmBERS** 1323RHODEISLANDAVC.., N.W. WASHINGTON,D.C. 20005-3701