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. 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. 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. 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.” 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.