Energy Efficiency: Long-standing Problems with DOE's Program for Setting Efficiency Standards Continue to Result in Forgone Energy Savings
Published: 2007-01-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Energy (DOE) sets energy efficiency standards through the rulemaking process for certain consumer product categories, such as kitchen ranges, and industrial equipment, such as distribution transformers. Congress reported in 2005 that DOE was late in setting standards and required DOE to report every 6 months on the status of the backlog. GAO examined (1) the extent to which DOE has met its obligations to issue rules on minimum energy efficiency standards for consumer products and industrial equipment and (2) whether DOE's plan for clearing the backlog will be effective or can be improved. Among other things, GAO convened an expert panel on energy efficiency standards to identify causes and effects of delays and assess DOE's plans.
section_title: What GAO Found
paragraphs: DOE has missed all 34 congressional deadlines for setting energy efficiency standards for the 20 product categories with statutory deadlines that have passed. DOE's delays ranged from less than a year to 15 years. Rulemakings have been completed for only (1) refrigerators, refrigerator-freezers, and freezers; (2) small furnaces; and (3) clothes washers. DOE has yet to finish 17 categories of such consumer products as kitchen ranges and ovens, dishwashers, and water heaters, and such industrial equipment as distribution transformers. Lawrence Berkeley National Laboratory estimates that delays in setting standards for the four consumer product categories that consume the most energy--refrigerators and freezers, central air conditioners and heat pumps, water heaters, and clothes washers--will cost at least $28 billion in forgone energy savings by 2030. DOE's January 2006 report to Congress attributes delays to several causes, including an overly ambitious statutory rulemaking schedule and a lengthy internal review process. In interviews, however, DOE officials could not agree on the causes of delays. GAO's panel of widely recognized, knowledgeable stakeholders said, among other things, that the General Counsel review process was too lengthy and that DOE did not allot sufficient resources or make the standards a priority. However, GAO could not more conclusively determine the root causes of delay because DOE lacks the program management data needed to identify bottlenecks in the rulemaking process. In January 2006, DOE presented to Congress its plan to bring the standards up to date by 2011. It is unclear whether this plan will effectively clear DOE's backlog because DOE does not have the necessary program management data to be certain the plan addresses the root causes. The plan also lacks critical elements of an effective project management plan, such as a way to ensure management accountability for meeting the deadlines. Finally, the plan calls for a sixfold increase in workload with only a small increase in resources. DOE plans to manage the workload through improved productivity.

section_title: Letter
paragraphs: Recent energy cost increases and concerns about global warming are  leading to a new national focus on reducing U.S. energy consumption.  Household and commercial products that are regulated by the U.S.  Department of Energy (DOE) will account for about 30 percent of  estimated total U.S. energy consumed in 2006, according to DOE’s  Lawrence Berkeley National Laboratory. Increasing the energy efficiency  of these kinds of products could produce significant energy savings. Not  surprisingly, therefore, Congress has long been interested in improving  energy efficiency. In 1975, under the Energy Policy and Conservation Act  (EPCA), Congress required DOE to set target minimum energy efficiency  standards for manufacturers of specified categories of consumer products  such as refrigerators, dishwashers, furnaces, and hot water heaters.  Congress has amended the statute to include additional consumer product  categories such as fluorescent lamps and plumbing products, as well as  industrial equipment categories such as steam boilers and electric motors.  Minimum efficiency standards for consumer product and industrial  equipment categories are designed to eliminate the least efficient products  from the market.
EPCA, as amended, also reflects manufacturers’ and states’ interest in  having uniform federal standards for energy-efficient products, rather than  a patchwork of state standards. It prohibits states and localities from  setting more stringent standards than the federal standards for covered  products unless the states obtain waivers from DOE. When the act was  passed, several states were setting their own energy efficiency standards,  and stakeholders, including states and manufacturers, generally believed  that uniform federal standards would result in lower costs for  manufacturing and, hence, lower prices for consumers, as well as saving  energy overall.
Under EPCA amendments, Congress mandated deadlines for DOE to issue  rules that set minimum energy efficiency standards for most consumer  product categories. Congress also made manufacturers’ compliance with  the standards mandatory. The statute also requires DOE to set and revise  standards through the federal rulemaking process. This process calls for  analyzing the technical and economic issues associated with setting  energy efficiency standards for each category, proposing a standard  through public notification, soliciting comments on the standard, revising  the rule, and issuing the final rule. DOE program staff in Washington  develop these rules, using analysis by experts—such as staff at Lawrence  Berkeley National Laboratory (LBNL) and other contractors––on the  technical and economic aspects. The rules undergo legal and policy  reviews within the department before they are issued.
Most of the categories with deadlines require at least two rules—either to  set an initial standard and later update it or to update a congressionally set  standard and then update it again about 5 years after the first deadline. For  categories without deadlines, DOE must first review revisions that  nongovernmental standard-setting entities make to their model standards  and, generally, issue a rule announcing whether it will adopt these revised  model standards or reject them and issue its own standards.
In 1993, we reported that while DOE had issued rules for some of the  product categories with passed deadlines, these had always been issued  late, and the others had not been issued yet. We cited inadequate  resources as a major reason for delays. Congressional action in 2005  reflected continuing concerns about DOE’s ability to issue rules for  energy-efficient consumer products and industrial equipment. The Energy  Policy Act of 2005 (EPAct 2005) required DOE to report to Congress by  February 8, 2006, and again every 6 months following the submission of  that report, on its plans to clear its backlog of standards that need to be set  or considered for revision. In its first report, submitted in January 2006,  DOE reported a backlog of required rulemakings for many consumer  product and industrial equipment categories but made a commitment,  from the Secretary on down, to take a number of steps to clear the backlog  by 2011. Twenty of these consumer product and industrial equipment  categories have statutory deadlines that have passed and involve 34  different product rules.
The requirement for reports to Congress every 6 months highlights the  importance Congress places on setting energy efficiency standards for  specific consumer products and industrial equipment. The missed  deadlines have meant missed opportunities to reduce (1) consumers’  energy costs, (2) the need for new power facilities, and (3) the level of  polluting emissions such as carbon dioxide, among other things. While  some consumers may choose to buy products that are more efficient  without waiting for federal standards, others may not do so for a number  of reasons––because the more efficient products may cost more at the  time of purchase, for example. If, however, all models in a category have  to meet certain minimum energy efficiency standards, then the potential  for savings over the life of the product, due to lower energy bills, can be  significant. For example, by 2030, for the minimum energy efficiency  standards for consumer products that DOE has set thus far, DOE projects  that consumers will save nearly $125 billion. Enough energy would be  saved to operate all U.S. homes for over 2 years, based on 2006 estimated  energy consumption.
As requested, this report examines (1) the extent to which DOE has met its  statutory obligations to issue rules on minimum energy efficiency  standards for consumer products and industrial equipment and (2)  whether DOE’s plans are likely to clear the backlog of required  rulemakings and whether these plans could be improved. In addition, you  asked us to assess whether DOE has met statutory deadlines for building  code determinations (see app. I). In future work, GAO plans to evaluate  federal agencies’ efforts to provide household consumers with information  about energy savings opportunities for purchases of appliances, lighting,  and other energy consuming products.
We reviewed statutes and regulations regarding the requirements and  deadlines for minimum energy efficiency standards for consumer products  and industrial equipment. We interviewed relevant officials from, and  analyzed documentation provided by, DOE, a DOE contractor, energy  organizations, and nongovernmental standard-setting entities; an expert on  regulatory efficiency; and government officials from Canada and  California––governments that are known for their exemplary standards- setting programs. In addition, we convened a Web-based panel of 33  energy efficiency standards stakeholders from federal and state  governments, industry, nonprofit organizations, and utilities who are both  widely recognized as knowledgeable about key aspects of energy  efficiency standards and are involved with DOE’s standards rulemaking  process. We obtained panel members’ views using a modified, Web-based  version of the Delphi method, a systematic process for obtaining  individuals’ views and obtaining group members’ consensus, if possible, on  a problem of interest. A more detailed description of our objectives, scope,  and method is presented in appendix II. We did not examine the merits of  the standards DOE has set. Although DOE is required to issue rules  regarding standards for plumbing products, we excluded them from this  report because they primarily involve conserving water, rather than  energy. In addition, we did not consider deadlines for the purposes of this  report set in EPAct 2005; nor did we examine DOE’s activities undertaken  since EPAct 2005 that did not result in a completed standard.  We  conducted our review from June 2005 through January 2007 in accordance  with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: Under EPCA, as amended, covered product and equipment categories may  need one or two rulemakings for the following reasons:    Most often, if Congress established a standard in the law, DOE must  publish a rule revising the standard or explaining why a revision is not  justified. Generally, such statutes require two rulemakings: an initial  revision and then a second revision, usually 5 years later. This type of  rulemaking is associated with most categories.
For several consumer products for which Congress did not set a standard  in law, DOE must issue two rules—one rule to create a standard and a  later rule to update the standard.
For several industrial equipment categories for which Congress  established a standard in law, DOE must review amendments to model  standards set by a specified nongovernmental standard-setting entity.  Based on DOE’s review, it must either publish a rule updating the statutory  standards to reflect the amended model standards, or publish a rule  demonstrating that a more stringent standard is justified. The statute  specifically requires DOE to consider the standards set by the American  Society of Heating, Refrigerating and Air-Conditioning Engineers  (ASHRAE).
For three other industrial equipment categories, DOE must first publish a  determination of whether a standard is needed. If DOE determines the  need for a standard, it must then publish a rule setting such a standard 18  months after publishing the determination. However, DOE does not have a  deadline for making a determination.
Overall, DOE is required to determine that revisions to standards achieve  the maximum improvement in energy efficiency that is “technologically  feasible and economically justified.” In determining whether a standard is  economically justified, DOE must consider the economic impacts of the  revision on manufacturers and consumers, the savings in operating costs  throughout the life of the product, the total projected amount of energy  savings likely to result from the standard, and whether the standard would  result in a product that is less useful or does not perform as well. Table 1  shows the number of deadlines and types of actions required for consumer  product and industrial equipment categories with deadlines that have  passed. In addition, DOE is obligated to issue rules adopting revised  standards for another six industrial equipment categories: packaged  terminal air conditioners and packaged terminal heat pumps; warm air  furnaces; packaged boilers; storage water heaters; instantaneous water  heaters; unfired water storage tanks. DOE has no mandated deadlines for  issuing these rules.
section_title: DOE Has Missed All Rulemaking Deadlines at a Cost of Billions in Forgone Energy Savings
paragraphs: DOE has missed all 34 of the rulemaking deadlines that have come due for  the 20 product categories with deadlines, completing 11 of these rules late  and not yet completing the remaining 23. DOE has also not revised  standards for one of the six industrial equipment categories that require  updates but have no deadlines. LBNL estimates that delays in setting  minimum energy efficiency standards for four categories of consumer  products that DOE believes use the most energy will cost the nation at  least $28 billion in forgone energy savings by 2030. Our panel members  identified two additional significant effects of the delays: states attempting  to set their own standards and businesses and utilities having difficulty in  making business decisions and planning for the future.
subsections: section_title: DOE Has Not Met Any of Its Rulemaking Obligations on Time
paragraphs: As table 2 shows, none of the 34 rules with passed deadlines was  completed on time. For rules that have been completed, delays ranged  from less than 1 year to about 10 years; and incomplete rules are as much  as 15 years late.
Table 3 shows the status of rules completed for consumer product and  industrial equipment categories with deadlines that have passed. As the  table shows, only three product or equipment categories—clothes  washers; refrigerators, refrigerator-freezers, and freezers; and small  furnaces—have had all their rules completed. As the table also shows,  some categories have had one of two required rules completed, and others  have had no rules completed.
Appendix III provides additional information on the deadlines for these  product and equipment categories.
Furthermore, for the six industrial equipment categories that do not have  deadlines, DOE has completed rules for five and has begun, but not  completed, the rulemaking process for the remaining category, as table 4  shows.
section_title: Delays Resulted in Forgone Energy Savings of at Least $28 Billion and Create Problems in Other Areas
paragraphs: DOE does not have estimates of the energy savings lost because of delays  in completing rules. However, LBNL staff provided us with estimates of  delays for the four categories of consumer products that DOE believes use  the most energy—refrigerators and freezers, central air conditioners and  heat pumps, water heaters, and clothes washers. According to these  estimates, the nation would have saved at least $28 billion in energy costs,  even after paying higher equipment costs, by 2030 if these standards had  been put in place when required—that is, 2.1 quadrillion British thermal  units (Btu) of natural gas and 1.4 quadrillion Btus of electricity.  Historically, LBNL, under contract to DOE, has performed most of the  technical and economic analyses for proposed standards rulemakings. To  estimate the cost of delays, LBNL staff used the estimates of savings they  developed to support proposed standards for the four consumer products.  According to our analysis, LBNL took steps to ensure the estimates were  reasonably accurate by considering such factors as whether the  technologies used for the analysis would have been available at the time of  the deadlines for setting standards. The total forgone energy savings is  equal to the annual primary energy consumption of approximately 20  million U.S. households. In addition, the delays will also result in 53  million tons of carbon dioxide emissions, an amount equivalent to about 1  percent of total estimated U.S. carbon dioxide emissions in 2004. Our  panelists noted that they consider increased energy consumption to be  one of the two most significant effects of DOE’s delays in revising  efficiency standards.
Similarly, delays for one type of industrial equipment, electric distribution  transformers, have resulted in significant forgone energy savings.
Distribution transformers reduce the voltage of an electric utility’s power  distribution line to the lower voltages suitable for most equipment,  lighting, and appliances. Nine years ago, DOE determined that standards  for distribution transformers were warranted as technologically feasible  and economically justified and were likely to result in significant savings.  However, DOE did not publish proposed standards for distribution  transformers in the Federal Register until August 2006. According to DOE,  the energy savings from the proposed distribution transformer standards  would eliminate the need for approximately 11 new 400-megawatt power  plants by 2038, enough to provide a sufficient flow of electricity to about 3  million homes.
These estimates account for only a portion of the forgone savings from the  lack of timely rules for consumer products and industrial equipment;  however, no estimates of the forgone savings are available for the  remaining product and equipment categories. Equally important, because  many energy-using products and equipment have long service lives, delays  in setting standards lead to years of using the products and equipment that  are less energy efficient than they could be, compounding the loss of the  energy efficiency. For example, electric distribution transformers have a  typical service life of about 30 years. With about 50 million transformers in  the United States, each year of delay until a rule setting standard is  completed means that more of these transformers will be replaced at the  present energy efficiencies, rather than the proposed level, leading to  many additional years of forgone savings.
Other, nonquantifiable effects have also resulted, or can result, from  delays in issuing energy efficiency rules. Our panel members noted the  possibility that states would attempt to set their own appliance efficiency  standards as the other most significant effect of delays. Indeed, states are  dissatisfied with DOE’s delays. In 2005, 15 states and New York City sued  DOE for “foot-dragging  results in greater —–and avoidable—energy  use.” The states cited, among other effects, high energy costs, increased  environmental harm, and burdens on the electricity grid from DOE’s  delays as justification for their actions. The suit was settled recently, with  DOE agreeing to eliminate its backlog by 2011, the same date set in its  report to Congress. According to officials from the California Energy  Commission, California has begun to press Congress to lift the preemption  that prevents the states from readily setting their own standards. While  states had expressed dissatisfaction with the pace of rulemaking and  before 1987 had petitioned DOE for waivers, the 1987 amendment to EPCA  made it considerably more difficult to obtain a waiver, according to DOE  officials. Since then, DOE has received only one petition for a waiver.  Panel members commented that if states obtain waivers and pass  individual standards, the result could be a patchwork of state standards,  preventing economies of scale in manufacturing and raising costs for both  consumers and manufacturers.
Panel members also pointed out that delays make business planning  difficult for manufacturers and utilities, which could also increase their  costs and, therefore, costs to consumers. As one panel member noted,  “Product manufacturers don’t know when new standards will take effect  in advance, making it difficult to plan product redesigns and thereby  increasing cost of compliance.” According to another panelist, “An  uncertain future regulatory environment makes it very difficult for  appliance and equipment manufacturers to make investment decisions.”  For example, a manufacturer may be reluctant to invest large sums in a  new technology if the new technology may be made obsolete by new  federal efficiency standards or if new standards might not allow the  manufacturer to gain a hoped-for competitive advantage via new  technology. To minimize such uncertainty and its attendant risks,  manufacturers want DOE to make regulatory decisions on time.”
section_title: Effectiveness of DOE’s Catch-Up Plan Is Uncertain
paragraphs: DOE has developed a catch-up plan to resolve the backlog of delayed  energy efficiency standards. However, since DOE has not completely  identified the root causes for the delays and because the plan lacks critical  elements of an effective management approach, the likelihood of success  is not clear.
subsections: section_title: DOE’s Plan Lays Out an Approach to Clearing the Backlog, but It Is Unclear Whether the Plan Is Addressing Root Causes of Delays
paragraphs: According to DOE’s January 2006 report to Congress, the department has  identified four causes of delays in its efficiency standards rulemaking: (1)  an overly ambitious schedule set in statute; (2) the sequential nature of the  rulemaking process; (3) the consequences of the Process Rule, which the  report states that DOE adopted in 1996 to address concerns about its  analyses and stakeholder involvement; and (4) DOE’s internal document  review and clearance process. Specifically:    An ambitious statutory schedule. According to the report, Congress’s  rulemaking schedule was “rigorous.” As a result, the program staff were  unable to meet the deadlines from the beginning. These delays were  exacerbated when Congress increased the number of products that  required rulemakings. In 1994, DOE attempted to address the backlog by  proposing standards for eight products in one rulemaking. However,  according to DOE, this rulemaking effort met with strong opposition from  industry, drawing over 5,000 responses during the comment period, and  DOE withdrew the proposal. Following this experience, Congress imposed  a 1-year moratorium on new or amended standards. The moratorium  further exacerbated the backlog, according to DOE.
Sequential nature of the rulemaking process. The elements of a  rulemaking must occur sequentially, and, according to DOE, “this  sequence-dependent nature of the analyses makes it vulnerable to un- recoverable delays.” The standards rulemaking process includes many  overlapping requirements from EPCA, as amended; Executive Orders; and  the Process Rule, which create a complex analytical and procedural  challenge, according to the report. The standards rulemaking process  typically consists of three stages––an advance notice of proposed  rulemaking, a notice of proposed rulemaking, and a final rule––and each of  these stages includes internal and external review and comment periods,  as well as technical analyses that build on previous analyses. Most of these  tasks cannot be done concurrently, so when delays occur, often the time  lost cannot be made up because of these rigid requirements.
Consequences of the Process Rule. Under DOE’s 1996 “Process Rule,” the  potential energy savings, rather than statutory deadlines, determine which  standards should be set first. Consequently, DOE reported to Congress, it  analyzed the likely impacts of all pending energy efficiency rulemakings  and used this analysis to categorize each rulemaking as high-, medium-, or  low-priority, depending on energy-savings potential. Regardless of  deadlines, high-priority rules received the bulk of the resources, medium- priority rules received some resources, and low-priority rules were not  addressed at all. The Process Rule also called for increased stakeholder  input and expert review, which added time to the rulemaking, according to  DOE’s report. Finally, according to DOE’s 2006 report, the Process Rule  increased the complexity of the technical analysis required, adding more  time.
Internal document review and clearance process. The quality of draft  rulemaking documents was inconsistent, according to DOE’s 2006 report,  which made the internal review process time consuming. In addition,  reviews by the Office of General Counsel, Office of Policy and  International Affairs, and other internal reviewers were not always  managed effectively, according to the report. Consequently, issues were  not identified and resolved early in the process, and draft rules often did  not receive the timely reviews needed to approve them for issuance.
While DOE identified these causes for rulemaking delays in its January  2006 report, DOE staff we spoke with did not agree on the causes.   Program staff told us General Counsel’s legal reviews were excessively  long, while General Counsel officials attributed their lengthy review to the  poor quality of documents, which required extensive non-legal editing.   DOE lacks program management data that would enable it to identify with  specificity where in the agency’s internal review process delays are  occurring. In addition, LBNL staff disagreed with the report’s contention  that the Process Rule required more time for technical analysis. Rather,  they said, the Process Rule’s requirement for more complex analysis and  for more systematic stakeholder involvement addressed those parts of the  rulemaking process earlier than before but took about the same amount of  time.
Our panel members, based on their past involvement or familiarity with  standards rulemaking, agreed that the internal review process was  problematic.  Specifically, the most frequently cited cause for delays in  developing energy efficiency standards were delays in the General Counsel  review process. One panel member stated that the General Counsel review  process was “one of the lengthiest and most opaque elements of the  standards process.”  In addition, about half of our panelists said the low  priority historically given to the program, not only by DOE but by the  Administration and Congress as well, was a great cause of delay in issuing  the standards.  Finally, panel members identified two additional major  causes of delay that DOE did not, namely inadequate budget and  insufficient technical staff.
While some of these identified causes are beyond DOE’s control, such as  the statutory deadlines, DOE reported that it could take actions to clear  the backlog by 2011. DOE plans to do the following to ensure that  rulemakings are more timely:    Make the rulemaking process more efficient. DOE plans to stagger the  start of rulemakings in order to make the best use of staff time and  resources. In the past, DOE staff worked on one rule at a time. Under  DOE’s plan, staff will work on several rules simultaneously, which should  enable the staff to make better use of their time when drafts are out for  review. In addition, DOE plans to combine several products with related  technical and policy characteristics—such as water heaters, pool heaters,  and direct heating equipment—into a single rulemaking, which should  expedite the rulemaking process.
Adhere to the deadline for closing public comments. DOE reported that it  will only consider comments received before their deadlines in its current  analysis. In the past, DOE continued to consider comments after the  closing date stated in the Federal Register and responded to those  comments with additional analysis, which delayed the issuance of the final  rulemaking.
Simplify the analysis for each rulemaking. Senior management officials  are expected to approve the staff’s analytical approach and scope of effort  earlier in the rulemaking process. In the past, rulemaking staff conducted  their analysis for a product category without ensuring that senior  management approved of their approach. As a result, according to the  plan, management often called for a different approach when reviewing a  draft analysis, which required significantly more time. In addition, DOE  plans to conduct less exhaustive analysis for some rules, rather than  conducting the same level of analysis for all rules. If all the stakeholders  agree that a product category does not require DOE’s usual complex  analysis, which would be the case when the key issues are clearly  understood, DOE will perform less extensive analysis. DOE expects this  change to shorten rulemaking times.
Better ensure the quality of the proposed rulemaking and accountability  of all staff and reviewers. DOE plans to take four actions toward this goal:  (1) train staff in how to meet all regulatory procedural requirements and  provide readily available comprehensive guidance in order to avoid  procedural mistakes that lead to delays, (2) contract with a national  laboratory to maintain a data management system for tracking rulemaking  progress and use the resulting data to identify problems for quicker  resolution, (3) match skill levels with tasks so that resources are used  most efficiently, and (4) encourage stakeholders to negotiate a proposed  standard in return for an expedited rulemaking process.
Improve the document review and clearance process. DOE plans to  emphasize better document quality so that reviewers can focus their  efforts on legal and policy issues rather than on basic editorial issues. In  the past, formats, styles, and approaches of documents were not  consistent, which slowed down the review process. DOE has issued a style  guide and a template for documents to better ensure consistency. In  addition, DOE plans to have different reviewers examine the proposed  rulemaking concurrently, rather than sequentially, throughout the  rulemaking process.
Adhere to a 36-month timetable for completing a rule. DOE will allocate  approximately 16 months for analysis, 6 months for public review and  comment, 8 months for its internal review, and 6 months for review by the  Office of Management and Budget. In the past, while DOE had a 3-year  limit for rulemaking, it virtually never issued rules within that period.
Most panelists rated the components of DOE’s catch-up plan highly and  expect that, if followed, it will likely help DOE meet its schedule for  completing rules. The panelists particularly favored the parts of DOE’s  catch-up plan to reform its internal review process, use an expedited  process when stakeholders recommend standards on which they have  reached consensus, and stagger rulemakings. They also emphasized the  importance of having the Secretary of Energy and the administration  provide more management attention and priority to the program. Finally,  most agreed that certain aspects of DOE’s current rulemaking process  should not be changed. Specifically, DOE should continue to perform  complete technical and economic analyses and explain its justification for  the standards it selects, include the public and stakeholders throughout  the rulemaking process, and ensure that the process and analyses are  transparent.
Despite these favorable views, some panelists expressed concern that  DOE might not have addressed what they consider the most relevant  causes of delay. For example, according to one panelist’s observations,  “the delays are an internal management problem at DOE, and the  department’s internal procedures are a black box. It is hard to know with  any assurance what the real problem is and whether the issue is budget or  staffing or bureaucratic procedures.” According to another panelist’s  review of DOE’s plan, the plan “focused too much on reducing analytical  complexity and controlling stakeholder participation––neither of which  were major contributors to delays––and too little on internal process  improvements, without which delays will continue.”
Although many of DOE’s actions appear reasonable, we agree that DOE  may not have identified the root causes of its rulemaking delays.  Consequently, DOE risks expending resources on the wrong factors or  emphasizing minor or irrelevant causes. DOE has not developed the  program management data it needs to identify bottlenecks in the  rulemaking process. Even though DOE has work logs that compile limited  data on some parts of the rulemaking process, such as the amount of time  taken for internal reviews, the data are not detailed enough to identify the  source of delays.  Furthermore, DOE does not have data on the length of  all stages of its rulemaking process.  Because DOE managers lacked data  to determine causes, they said they compiled information about possible  causes during discussions with staff. Despite the problems with their data,  managers told us that they believe that they have identified the root causes  of delay.
section_title: DOE’s Plan Lacks Critical Elements of Effective Project Management
paragraphs: According to our work on leading performance management practices and  the work of a government regulatory process expert, management plans  should contain specific strategies to resolve problems and help  congressional decision makers understand how the agency plans to  improve its performance. Such plans also provide a basis for  accountability. While DOE’s plan includes elements intended to make the  rulemaking process more efficient, it lacks two critical elements to help  ensure success of the plan—assurance of accountability and  management’s allocation of adequate resources. Specifically:    Assurance of accountability. While DOE has laid out a schedule for  clearing its rulemaking backlog for standards, its past poor performance  calls into question whether it is likely to be accountable to the schedule in  the catch-up plan. According to an Assistant General Counsel who  manages and tracks the regulatory process for the Department of  Transportation (DOT), an agency with very extensive and effective  electronic regulatory management, a successful rulemaking process holds  its management and staff accountable to interim and final deadlines. For  example, DOT publishes its deadlines on its Web site, making the agency’s  actions to meet the deadlines transparent to all stakeholders. While DOT’s  deadlines are target dates only, this transparency puts pressure on each  participant to carry out his or her responsibilities on time or to provide  legitimate reasons for any delays. DOE publishes a schedule of deadlines  for some standard-setting rulemaking, including the interim deadlines, in  its Semiannual Regulatory Agenda. However, when DOE misses these  deadlines, it generally does not explain why, or how it plans to make up  the lost time when it publishes revised deadlines. The catch-up plan does  not ensure that the pattern of missing deadlines will be broken.
Adequate resources. As far back as 1993 we reported that insufficient  resources were a primary cause of DOE’s delays in updating energy  efficiency standards. This may still be the case. While the DOE plan calls  for a sixfold increase in workload, it does not increase program staffing  and contractor budgets in the same proportion. Program managers told us  they generally have had 7 to 14 staff working on energy efficiency rules,  with 7 on the job as of fiscal year 2006. They plan to add 2 full-time staff  and 1 from the Presidential Management Fellows (PMF) program, a  nonpermanent position, for an increase to 10 staff in fiscal year 2007.  Similarly, from fiscal years 2000 through 2006, DOE’s budget for  contractor staff has averaged about $10 million per year. For fiscal year  2007, DOE requested $12 million for contractors, a 20 percent resource  increase. DOE expects these limited resource increases to cover a 600  percent increase in workload. In the absence of further increasing  resources, DOE said in its January 2006 report it plans to meet the  increased workload by improving productivity.
section_title: Conclusions
paragraphs: DOE’s program for energy efficiency standards has been plagued by delays  for decades. Although many steps in DOE’s most recent January 2006 plan  to address these delays appear to be reasonable, DOE does not definitively  know whether the plan will address root causes and clear the backlog.
Furthermore, DOE’s plan lacks important elements of effective  management practices that would help assure success. Consequently, it is  unclear whether DOE can carry out the ambitious schedule it has set for  itself to update energy efficiency standards. If DOE does not succeed in  clearing its backlog, the nation and consumers will continue to forgo the  benefits of more energy-efficient consumer products and industrial  equipment. The loss of such benefits will make the nation depend even  more on imported energy. The continuing commitment of DOE’s top  management to make standards rulemaking a top organizational priority is  essential to DOE’s success in completing all energy efficiency rules.
section_title: Recommendations for Executive Action
paragraphs: To increase the likelihood that DOE’s plan for updating minimum energy  efficiency standards is successfully implemented, we recommend that the  Secretary of Energy take the following actions:    Employ the elements of leading management practices, including    expediting the efforts DOE has begun to establish a tracking system to  gather data that may be used to identify and address causes of delays  to more effectively manage the rulemaking process;    ensuring that the interim goals and time frames are transparent to all  stakeholders, and that all internal stakeholders, including reviewers  and program staff, are held accountable to the time frames; and    allocating adequate resources within DOE’s appropriation.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the Department of Energy with a draft of this report for  review and comment. Although DOE did not provide views on our  recommendations, it expressed concerns in two areas.  First, regarding  our discussion of the causes of delays in setting standards, DOE stated  that it is incorrect to assign blame for delays to any one office, official,  decision, or process—and specifically to the Office of the General  Counsel. DOE stated that doing so reflects a simplistic and largely  incorrect understanding of the program’s complexity. DOE noted that the  delays in setting standards have spanned administrations of both parties,  several Secretaries of Energy, and various DOE offices and personnel;  also, although DOE work logs may indicate that a specific office has a  document for a certain period of time, during that time multiple  individuals from different offices may have been working together on the  document.  We disagree with DOE’s characterization of our analysis. In  establishing the context for our findings, we pointed out that the energy  efficiency standards-setting process was complex and that there were  multiple reasons for delays.  To provide more definitive information on the  root causes of the extensive delays that have been experienced, we sought  data from DOE and the opinions of cognizant DOE staff.  However,  because DOE management could not provide data to conclusively  document the reasons for the substantial delays, or the data provided by  DOE as contained in internal work logs were inadequate to determine  causality, and because representatives of the various DOE offices could  not agree on the root causes, we turned to a well-recognized process for  identifying causes in complex situations—a Delphi panel. Panel members  were carefully, objectively selected individuals who have been closely  involved in DOE’s rulemaking process for setting standards over an  extensive period of time. They most frequently cited delays in the General  Counsel review process as cause for delays in developing energy  efficiency standards. We believe that our use of this method provided a  clearer understanding of the causes of delays than DOE has been able to  provide. As we noted earlier, in DOE’s January 2006 report to Congress  and in our interviews with representatives of the offices involved in the  standard-setting process, those associated with the program generally  acknowledged that they could have done more but pointed to others as the  cause of the delays and therefore have not fully accepted responsibility for  the program’s failures. Second, DOE stated that our report did not capture  many of the recent standards-setting activities undertaken since  enactment of EPAct 2005. We agree that there has been a flurry of  standards-related activity, as expressed by DOE in its letter commenting  on our report, and we have noted this in our report.  Although we  recognize that DOE has taken a number of steps that should move the  program forward, it has not yet published any additional final standards  for the product and equipment categories included in the scope of our  work and our report’s findings have not changed. DOE’s letter  commenting on our report is presented in appendix V.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the Secretary  of Energy and other interested parties. We will also make copies available  to others upon request. In addition, the report will be available at no  charge on the GAO Web site at http://www.gao.gov.
If you or members of your staff have questions about this report, please  contact me at (202) 512-3841 or wellsj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report. Key contributors to this report are listed in  appendix VI.
section_title: Appendix I: Status of the Department of Energy’s Model Building Code Determinations
paragraphs: States and their subdivisions, such as counties and cities, adopt building  codes that establish minimum requirements for energy-efficient design and  construction of commercial and residential buildings. The building codes  regulate components that affect the amount of energy that a building will  use, such as the building envelope, electrical power, and lighting. These  codes vary from one state to another and sometimes within a state. They  may be mandatory or voluntary codes, either requiring builder compliance  or serving as guidelines. States and local jurisdictions may adopt model  building codes developed by nonprofit organizations, such as the  American Society of Heating, Refrigerating and Air-Conditioning  Engineers’ (ASHRAE) Standard 90.1 and the International Code Council’s  (ICC) International Energy Conservation Code (IECC). Both ASHRAE and  ICC publish codes for commercial and residential buildings.
ASHRAE uses a consensus and public hearing process to develop its  model building codes. It involves the design community, including  architects and lighting and mechanical designers; the code enforcement  community, including building code officials and state regulatory agencies;  building owners and operators; manufacturers and utility companies; and  representatives from the Department of Energy (DOE), energy  organizations, and the academic community. ICC uses a different process  to develop its model building codes. Under its process, anyone can  propose a code, and the IECC code development committee, which  includes mostly building code officials, votes on the proposals. According  to staff at the Pacific Northwest National Laboratory (PNNL), which  monitors state building codes for DOE, although ASHRAE and ICC use  different processes to develop their model building codes, the two  organizations incorporate each other’s codes into their own when they  revise them. As a result, ASHRAE and ICC codes that are revised at about  the same time generally have similar energy efficiency provisions.
1995, the ICC succeeded CABO and, as such, the IECC replaced the MEC.  Each time the ICC revises the IECC, DOE has 12 months to determine  whether the revision will improve energy efficiency in residential buildings  and publish a notice of that determination in the Federal Register. The Act  does not specify what type of revision triggers the start of the 12-month  period for either commercial or residential determinations; but, according  to DOE officials, the 12-month period is triggered by ASHRAE’s and ICC’s  publication of revised codes.
The Act provides that if the Secretary determines that a revision to  ASHRAE’s or ICC’s model building code will improve energy efficiency–– called a positive determination––states “shall” review their building codes.  For commercial model building codes, each state has 2 years after DOE  publishes a positive determination on a revised ASHRAE model building  code to certify to DOE that it has reviewed and updated the provisions of  its commercial building code in accordance with the revised code. For  residential model building codes, each state also has 2 years after a  positive determination for certification, but it must certify to DOE that it  has reviewed the provisions of its residential building code and  determined whether it is appropriate to update them to meet or exceed the  revised code. Subsequent to enactment of these provisions, the Supreme  Court ruled that the constitution does not allow Congress to require states  to regulate a matter. DOE program managers told us that DOE does not  require states to review their codes following a positive determination.  Instead, the managers told us, DOE facilitates states’ efforts to adopt  revised codes. PNNL officials told us they assist DOE on all aspects of the  building code determinations and provide training and technical  assistance to state and local officials responsible for building codes.
As of August 2006, ASHRAE and ICC have published a combined total of  nine revisions to their model building codes for DOE to evaluate. ASHRAE  revised Standard 90.1 three times, and CABO revised the MEC twice  before it was incorporated into ICC in 1995. The ICC issued its first version  of the IECC in 1998 and has since revised it three times. Deadlines for  DOE’s determinations have come due on all these revisions, except the  2006 IECC revision, which will be due in January 2007.
We were asked to report on (1) whether DOE has met its statutory  deadlines for determining if states should adopt revised commercial model  building codes, (2) whether DOE has met its statutory deadlines for  determining if states should consider adopting revisions to the residential  model building code, and (3) whether and, if so, to what extent DOE  tracks states’ building codes. This appendix contains information about  these objectives.
To address the commercial and residential building code determinations  DOE has completed, we reviewed the requirements and deadlines for  building code determinations contained in statute and DOE  determinations published in the Federal Register. We also interviewed and  obtained documents from officials at DOE, PNNL, ASHRAE, ICC, and the  American Council for an Energy Efficient Economy. Since DOE program  officials use ASHRAE’s and ICC’s revision publication dates as the trigger  date for DOE’s deadlines for making determinations, we used these dates  for our analysis. We did not attempt to determine why DOE might miss  deadlines for determinations or why individual states adopt building  codes.
subsections: section_title: DOE Has Completed One of Three Commercial Building Code Determinations
paragraphs: DOE has completed only one of three commercial model building code  determinations that have come due. DOE issued a positive determination  for the first of three revisions to ASHRAE’s Standard 90.1 about 17 months  after the deadline. As of December 2006, DOE had not completed  determinations for either of the remaining revisions and has decided to  combine them. Table 5 provides details about the revisions’ publication  dates, the deadlines for the determinations, and the status of DOE’s  reviews.
section_title: DOE Has Completed Four of Five Residential Building Code Determinations
paragraphs: DOE has completed four of five residential building code determinations  that have come due. DOE issued determinations for all of these four  CABO/ICC revisions to the MEC/IECC and said the revisions would  improve energy efficiency. DOE completed its first determination on time  and completed the next three from 1 month to over 1 year late. As of  December 2006, DOE had not yet completed the determination for the fifth  IECC revision. Table 6 provides details about the revisions’ publication  dates, the due dates for the determinations, and the status of DOE’s  reviews.
section_title: DOE Tracks States’ Building Codes
paragraphs: DOE and PNNL staff track states’ commercial and residential building  codes and publish information about them on DOE’s Web site. PNNL staff  told us they e-mail state officials twice a year to confirm that DOE has the  most current information about the states’ commercial and residential  building codes and to obtain any updated information. Additionally, they  are in frequent contact with the states and continually update their  information on states’ building codes. DOE’s Web site reports the type of  code adopted by each state and whether builder compliance with the code  is voluntary or mandatory, and provides limited information about the  stringency of the code, which PNNL staff determines by analyzing the  state-provided information. For example, DOE’s Web site reports that  Florida has adopted mandatory codes for both commercial and residential  buildings and that the commercial building code is more stringent than the  ASHRAE 90.1 2001, and the residential building code is more stringent  than the 2000 IECC. The complete list of state commercial and residential  building codes for energy efficiency is available at  http://www.energycodes.gov/implement/state_codes/state_status_full.php.
Although the information published on DOE’s Web site compares the  stringency of state codes with ASHRAE’s and ICC’s model building codes,  PNNL staff told us the information should not be used to judge the  stringency of state codes relative to the ASHRAE’s and ICC codes for  which DOE has made a determination. The staff explained that while more  recent state codes are generally more energy efficient than older state  codes, there are other factors that affect their stringency. For example,  states may adopt DOE’s latest determination on ASHRAE’s and ICC’s  codes as their state building codes, but may amend them to be weaker or  stronger. For example, according to PNNL staff, Georgia adopted the  latest DOE residential determination but amended to it to be more similar  to prior DOE determinations. In other cases, the changes to a revised code  may not affect all states equally; therefore, while a state may not have  adopted the most recent revision, the changes in that revision may not  have applied to that state anyway. For example, PNNL staff told us that,  although Massachusetts did not adopt the 2000 IECC, the differences  between the 2000 IECC and the 1995 MEC, which Massachusetts did  adopt, did not apply to that state. Therefore, PNNL staff consider  Massachusetts’s code to be as stringent as the 2000 IECC. Furthermore,  PNNL staff told us that, while some states have adopted model building  codes that are more recent than those for which DOE has issued a  determination, these codes should not be assumed to be more stringent  than those for which DOE has made a determination until PNNL makes a  comparable technical analysis. PNNL staff told us that they have the  information and technical capability to compare the stringency of all the  state codes with those for which DOE has made a determination.  However, they said they typically analyze building codes on a state-by- state basis only at DOE’s request and that they do not currently have a  comprehensive analysis of how all states’ codes compare to DOE’s latest  determinations. As of September 2006, DOE had not directed PNNL to  complete a comprehensive analysis. DOE officials told us that DOE  focuses on facilitating states’ efforts to adopt building codes rather than  penalizing them for not meeting DOE building code determinations and, as  such, they do not believe a comprehensive analysis of which states’  building codes are as stringent as those for which DOE has made a  positive determination justifies the resources it would require.
section_title: Appendix II: Objectives, Scope, and Method
paragraphs: Our objectives were to examine (1) the extent to which DOE has met its  statutory obligations to issue rules on minimum energy efficiency  standards for consumer products and industrial equipment and (2)  whether DOE’s plans are likely to clear the backlog of required  rulemakings and whether these plans could be improved.
To address these objectives, we reviewed the statutory requirements and  deadlines for developing energy efficiency standards for consumer  products and industrial equipment, program information available on  DOE’s Web site, information provided by program staff, and DOE’s  January 2006 and August 2006 reports to Congress. For the purposes of  our review, we did not include the 17 additional product categories that  the Energy Policy Act of 2005 added to DOE’s responsibilities, including  the one that came due in August 2006. Although DOE is also required to  issue rules regarding standards for plumbing products, we excluded them  from this report because they primarily involve conserving water, rather  than energy. Furthermore, we did not evaluate the merit of the standards  DOE has issued.
We conducted interviews with DOE program officials; officials of the  Office of General Counsel; officials at Lawrence Berkeley National  Laboratory, the National Energy Technology Laboratory, and the National  Institute of Standards and Technology; and a regulatory process expert at  the Department of Transportation. We also interviewed officials at the  American Council for an Energy Efficient Economy; the Appliance  Standards Awareness Project; the American Society of Heating,  Refrigerating and Air-Conditioning Engineers; the California Energy  Commission; Pacific Gas and Electric Company; and Natural Resources  Canada; and obtained documentation as needed. We analyzed data on  DOE’s rulemaking process, estimates of national energy savings from  energy efficiency standards, and program resources.
In addition, we used a Web-based, modified Delphi method to obtain views  from a panel of 33 stakeholders on the causes and effects of delays in  setting standards and on proposed solutions to these delays. The Delphi  method is a systematic process for obtaining individuals’ views on a  question or problem of interest and, if possible, obtaining consensus. Our  modified Delphi method had two phases. Phase 1 consisted of a series of  open-ended questions concerning DOE’s delays. In Phase 2, panel  members rated the significance or priority of the causes of delays, effects  of delays, and solutions to delays that they had identified in phase 1.
We selected the panel members from a group of stakeholders who were  both widely recognized as knowledgeable about one or more key aspects  of energy efficiency standards, and who were involved or familiar with  DOE’s rulemaking process.  The group included officials from federal and  state agencies, manufacturers, trade associations, energy efficiency  advocacy groups, consumer interest groups, utilities, and utility  associations, some of whom were previously employed by DOE as  participants in the rulemaking process. We used a variety of methods to  determine that the panelists we selected had the expertise necessary to  participate in the panel. A list of the 33 panel members is included in  appendix IV. To report panel results, when two-thirds or more of the panel  agreed, we use the term “most.” When one-half of more of the panel  agreed, we use the term “the majority.”
We conducted our review from June 2005 through January 2007 in  accordance with generally accepted government auditing standards.
section_title: Appendix III: Rulemakings and Delays for Consumer Products and Industrial Equipment with Deadlines That Have Passed
subsections: section_title: Due date
paragraphs: Included in “Furnaces”   deadlineIncluded in general  service fluorescent lamps  and incandescent reflector  lamps deadlineCalculations for years delayed for overdue rules are as of December 31, 2006.
Subsequent updates to standards for the category called Furnaces are intended to cover updates for  mobile home furnaces and small furnaces and are included in the Furnaces deadlines.
Subsequent updates to standards for the category called “General service fluorescent lamps and  incandescent reflector lamps” are intended to cover updates for “Additional general service  fluorescent lamps and incandescent reflector lamps” and are included in the Furnaces deadlines.
section_title: Appendix IV: Participants in Energy Efficiency Standards Delphi Panel
paragraphs: Earl Jones  GE Consumer & Industrial  Joseph Mattingly  Association of Appliance & Equipment Manufacturers  James McMahon  Lawrence Berkeley National Laboratory  Harry Misuriello  Alliance to Save Energy  Jim Mullen  Lennox International Inc.
Steven Nadel  American Council for an Energy-Efficient Economy  Kyle Pitsor  National Electrical Manufacturers Association  James Ranfone  American Gas Association  Priscilla Richards  New York State Energy Research and Development Authority  Michael Rivest  Navigant Consulting, Inc.
section_title: Appendix V: Comments from the Department of Energy
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Karla Springer, Assistant  Director; Tim Bober; Kevin Bray; Valerie Colaiaco; Janelle Knox; Megan  McNeely; Lynn Musser; Alison O’Neill; Don Pless; Bill Roach; Frank Rusco;  Ilga Semeiks; and Carol Herrnstadt Shulman made key contributions to  this report.