Opinion ID: 456159
Heading Depth: 2
Heading Rank: 3

Heading: DOE's Compliance with EPCA

Text: 153 Petitioners attack DOE's treatment of maximum technological feasibility on three related grounds. First, they argue that DOE never adopted any determinations of maximum technologically feasible levels, as EPCA required it to do. Second, they argue that DOE's decision to consider only certain commercially available design options as the basis for standards violated DOE's statutory duty to evaluate standards at the maximum technologically feasible levels. Third, they argue that DOE's decision to prescribe rules in 1982 and 1983 founded on information about appliances sold in 1980 unreasonably rejected more current information. We examine these challenges in turn. 154
155 As we have observed, EPCA requires DOE to determine maximum technologically feasible levels for all product types and classes. See EPCA Sec. 325(i)(3). If a standard is not prescribed at that level, DOE must specifically explain the reasons for its decision. See id. Under the statute, only two basic reasons are acceptable: DOE must find either that a standard at the maximum technologically feasible level would not be economically justified, under the detailed definition of that term in EPCA, or that such a standard would not conserve significant energy. See id. Sec. 325(c), (i)(3). 156 DOE's June 1980 proposed rulemaking did set forth maximum technologically feasible levels for comment. The 1980 notice did not satisfy the statutory requirement that DOE determine those levels, however, since DOE could only make such a determination after providing interested outsiders with the opportunity to comment. As it turned out, the proposed levels simply never resurfaced during the rulemaking, and consequently DOE never made the required determinations. DOE contends that it did ultimately adopt the maximum technologically feasible levels proposed in the June 1980 notice, see DOE Br. at 37-38, but DOE's citations do not support its claim. DOE first directs us to its April 1982 notice of proposed rulemaking, which under the heading Technological Feasibility notes that [f]or all products and classes of products, DOE believes the efficiency levels analyzed are technologically feasible. 47 Fed.Reg. 14,424, 14,426 (1982). This passage simply notes that the standard levels analyzed--levels based on analysis excluding technologically feasible prototype designs--were technologically feasible. See supra note 39. The passage does not determine that standards higher than those analyzed would not also be technologically feasible, and it certainly cannot be read as endorsing the June 1980 determinations. 157 Next DOE points to a technical support document prepared by one of its contractors. See U.S. Department of Energy, Consumer Products Efficiency Standards: Engineering Analysis Document A-2, E1-1 to E9-5 (1982) [hereinafter cited as 1982 Engineering Analysis Document], J.A. at 1568, 1804-42. Normally, we would expect to find determinations that Congress expressly ordered DOE to make in the Federal Register, not in a technical support document such as the one DOE cites. In any event, the cited passages in the document do not in fact approve the June 1980 determinations. The very page cited by DOE disclaims any intention to comment on the maximum technologically feasible levels: 158 The previous [draft of the] Engineering Analysis contained discussions of the maximum technological feasible efficiency level[s].... Discussion regarding standards levels have [sic] been removed at DOE's request. All of these discussions have been omitted from this T.S.D. [technical support document] as they were inconsistent with the intent of this document which is to present the engineering basis to the cost efficiency data. 159 Id. at A-2, J.A. at 1568 (emphasis added). 160 DOE also attempts to explain its failure to determine the maximum technologically feasible levels in a different way. DOE announced in its June 1980 rulemaking that in light of the time required for product development cycle of engineering, prototype fabrication, laboratory testing, field testing, production engineering and production facility modification, 45 Fed.Reg. 43,976, 43,984 (1980), manufacturers could not reasonably be expected to incorporate prototype designs into entire product lines within the 5-year phase-in period for standards. In effect, DOE declared that a standard based on prototypes would not be economically justified because such a standard would require manufacturers to do what could not reasonably be done in the time available. It thus would be pointless to determine maximum technologically feasible levels based on prototypes and analyze standards at those levels, since DOE already knew that no such standard could pass the statutory criterion of economic justification. On this theory, DOE says it reasonably confined its analysis to efficiency levels that might actually be prescribed as standards. 161 Moreover, DOE has suggested that the further analysis petitioners demand would be not only superfluous, but impossible. DOE claimed that it needed a detailed breakdown of manufacturing costs for a design option to determine whether a standard based on that option would be economically justified. According to DOE, this information was simply unavailable for prototypes, as well as for design options included on appliances sold only in foreign markets. Thus, even assuming manufacturers could change their product lines within 5 years to meet standards based on prototypes, DOE could not determine whether such standards met the statutory criteria. DOE met this problem by resolving the uncertainty against standards; it elected not to prescribe standards based on prototypes because in its view it could not ascertain whether such standards would be economically justified. 162 There are serious objections to DOE's arguments. They do not establish that DOE complied with the statute, which on its face requires actual determinations of maximum technologically feasible levels and specific explanations if standards are not set at those levels. Instead, DOE seeks to show that its transgression did not affect the final rules, because DOE could never have prescribed standards at maximum technologically feasible levels anyway. However, an agency may not ignore the decisionmaking procedure Congress specifically mandated because the agency thinks it can design a better procedure. Nor is it clear that DOE's adoption or modification of the June 1980 proposed determinations would have had no value. If DOE had followed the statute, it would have been able to calculate how much energy standards set at the maximum technologically feasible levels as finally determined would have saved. That information, in turn, would show the potential energy conservation DOE sacrificed when it refused to estimate whether standards based on prototypes would be economically justified. If the conservation sacrificed were large, DOE might have been moved to change its procedures; at the very least, DOE and commenters would have seen what potential gains in efficiency and what potential energy savings were lost by DOE's approach. 38 163 But even if one ignores these defects in DOE's defense of its rulemaking, its arguments remain vulnerable on two scores. First, the argument conclusively assumes that manufacturers cannot incorporate any prototypes for any product type or class into all appliances of that type or class within the 5-year period. Second, it assumes that DOE could not reasonably decide whether standards based on prototypes were economically justified; and that consequently DOE could refuse to consider any standard based on prototypes at all. If these central assumptions fall, then DOE's argument collapses. 164 Deciding whether these assumptions are accurate requires us to pass beyond the formal attack on DOE's failure to determine maximum technologically feasible levels and to confront directly the petitioners' second challenge on the issue of technological feasibility. Accordingly, we turn to that challenge. 165
166 Petitioners claim that DOE refused to analyze standards based on all technologically feasible design options without any adequate determination that standards based on those options would not be economically justified. In particular, petitioners note that DOE did not assess standards based on certain categories of design options, although those categories qualify as technologically feasible under DOE's own definition of the term. Those categories are (a) prototypes, (b) design options included only on appliances not sold in the United States, (c) design options with a payback period of 5 years or more, (d) certain design options that would require a significant increase in the engineering staff of appliance manufacturers or that had long lead times, and (e) certain design options specifically identified by commenters that DOE rejected as a basis for standards on grounds petitioners deem inadequate. We address each of these categories separately. 167 a. Prototypes. As we have stated, DOE's rationale for rejecting prototypes depended on two factual assumptions. The first of these is that no design option available only as a prototype in 1980 could reasonably be included on all appliances sold in 1986 within any product type or class. EPCA requires that in determining whether a standard is economically justified, DOE consider, among other factors, the economic impact of the standard on the manufacturers. EPCA Sec. 325(d)(1). If no standard could have been based on prototypes without requiring manufacturers to accomplish the impossible, we agree that DOE could reasonably deem all such standards economically unjustified without trudging through the remaining statutory factors. 39 168 In our view, DOE's finding that manufacturers could not meet any standard based on prototype technologies for any product type or class is not supported by substantial evidence. Congress broadly defined technological feasibility to mean improvements in efficiency capable of being carried out, see supra at 1391-92--an inclusive definition motivated by Congress' concern over the rather low efficiencies of current consumer products. S.Rep. No. 409, 95th Cong., 1st Sess. 36 (1977). DOE's 1980 decision that prototypes were technologically feasible thus rests on solid ground. 40 But DOE's exclusion of all prototypes from consideration for standards took away with one hand what the other had given. That decision guaranteed that standards could do no more than require all products to be as efficient as the most efficient design options already in the market made possible, even though enactment of the appliance program rested on the view that the market had failed to promote efficient appliances. 169 In these circumstances, DOE cannot prevail merely by asserting that many or even most prototypes could not workably have been included within 5 years in all products of a particular type or class. Even assuming that this is true, a minority of prototypes would remain as technologically feasible and, for all DOE knew, economically justified design options that were not considered in the agency's deliberations. EPCA does not permit DOE to ignore design options meeting those two criteria. DOE must therefore show that substantial evidence supports its implicit determination that all or virtually all prototypes would have taken more than 5 years to introduce throughout a product type or class. 170 We do not think that DOE has succeeded in that task. DOE's announcement of its position in the June 1980 notice contains no discussion of any evidence or citation to DOE studies. DOE's 1980 Economic Analysis Document recites essentially the same assumption about the lead time for prototypes as DOE stated in its notice, but the document discloses no serious effort to confirm that assumption through empirical study. 41 Moreover, DOE's assumption is in tension with the congressional finding that appliances already available in an unregulated market were simply not efficient enough to satisfy national policy goals. Congress designed the 5-year phase-in period precisely so that manufacturers could introduce new technologies required by standards. 42 In light of the potentially large number of technologically feasible design options that this single assumption excluded from consideration, we think that DOE was required to make a more thorough effort to confirm its abstract theory. 171 Numerous commenters in the rulemaking challenged DOE's exclusion of prototypes from consideration and in some instances offered specific prototypes for evaluation. In responding, DOE made little effort to argue that manufacturers could not modify particular product lines to incorporate a specific prototype within 5 years. Instead, DOE typically argued either that it lacked economic information about the prototype or that the use of the prototype on all appliances within a product type or class might compromise product performance or consumer acceptance. See, e.g., 48 Fed.Reg. 39,376, 39,395 (1983) (rejecting prototype gas water heaters); 47 Fed.Reg. 57,198, 57,211 (1982) (rejecting bi-radiant ovens). Without something more than DOE's general and unelaborated concerns, we cannot uphold the crucial assumption that absolutely no prototypes could be made standard items for any product type or class within 5 years, when DOE did not show that this all-encompassing view was true even for the specific prototypes suggested to it. 172 Finally, it is not at all intuitively clear that DOE's assumption is likely to prove true. DOE was willing to consider standards based on design options included on a single appliance produced by a single company for sale in the United States before November 14, 1980. By including such design options in its deliberations, DOE acknowledged that other manufacturers might be able to comply with a standard based on design options that were not included on any appliances produced by those manufacturers in 1980. In other words, DOE thought that 5 years would sometimes be long enough for a manufacturer to redesign an entire product line and retool its manufacturing processes to incorporate a design option previously used only by one of its competitors. Nonetheless, DOE conclusively presumed that 5 years was not long enough to redesign and retool in order to incorporate any design option available only as a technologically feasible prototype, without regard to the characteristics of any particular prototype. We understand, of course, that the chance to observe a competitor's experience with a design option could easily shorten a manufacturer's design and development time. Nonetheless, the exact length of that design and development time will logically depend on the particular prototype at issue. In the absence of careful analytic study of lead times for design changes in particular products, we cannot uphold DOE's blanket announcement that manufacturers would not have enough lead time to comply with any standard for any covered product based on any prototype at all. 173 We must therefore examine the alternative factual assumption on which DOE founded its exclusion of prototypes. This assumption was that for all prototypes, DOE could not obtain the information about manufacturing costs and consumer acceptance it needed to decide whether a standard based on that prototype design was economically justified. 174 We return once again to the statute for guidance. Although EPCA generally requires DOE to prescribe the highest standard that is technologically feasible and economically justified, the Act also states that DOE may not prescribe a standard covered product if a test procedure has not been prescribed ... with respect to that type (or class) of products. EPCA Sec. 325(b)(1). Section 323 of EPCA requires DOE to prescribe test procedures for all covered products, which must be reasonably designed to produce test results which reflect energy efficiency, energy use, or estimated annual operating cost of a covered product during a representative average use cycle. EPCA Sec. 323(b)(1). Similarly, the legislative history for EPCA as originally passed notes that DOE could decline to prescribe a labeling rule if no test procedure which is an adequate approximation of energy use or relative energy efficiency can be devised. H.R.Rep. No. 340, 94th Cong., 1st Sess. 97 (1975), U.S.Code Cong. & Admin.News 1975, p. 1859. EPCA thus expressly recognizes that DOE may delay the issuance of a standard based on a particular design option if DOE is unable to measure the efficiency of an appliance incorporating that design option. 175 However, the text of the Act includes no parallel provisions allowing DOE to reject standards because it cannot precisely quantify costs relevant to DOE's assessment of economic justification. Instead, EPCA lists the following general considerations as relevant to DOE's assessment of a proposed standard: 176 (A) whether the standard to be prescribed is economically justified (taking into account those factors which the Secretary must consider under subsection (d) of this section), 177 (B) whether the standard will achieve the maximum improvement in energy efficiency which is technologically feasible, 178 (C) if the standard will not achieve such improvement, whether the reasons for not achieving such improvement are adequate, and 179 (D) whether such rule should prescribe a level of energy efficiency which is higher or lower than that which would otherwise apply in the case of any group of products within the type (or class) to be subject to such standard. 180 EPCA Sec. 325(i)(3). EPCA further requires DOE to weigh the following factors in deciding whether a standard is economically justified: 181 (1) the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard, 182 (2) the savings in operating costs throughout the estimated average life of the covered products in the type (or class), compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are likely to result from the imposition of the standard, 183 (3) the total projected amount of energy savings likely to result directly from the imposition of the standard, 184 (4) any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard, 185 (5) the impact of any lessening of competition determined in writing by the Attorney General that is likely to result from the imposition of the standard, 186 (6) the need of the Nation to conserve energy, and 187 (7) any other factors the Secretary considers relevant. 188 EPCA Sec. 325(d). DOE's claim is that it could not weigh these statutory factors for any prototype technologies. 189 The structure of the Act strongly suggests a congressional expectation that DOE ordinarily could and would estimate the economic justification for all technologically feasible design options. EPCA does not merely authorize DOE to decide, if the agency so chooses, whether technologically feasible standards would be economically justified: it instructs DOE to reach a decision on that question as the next step in the statutory decisionmaking procedure. DOE was required to design its methodology to fit the Act, rather than lopping off statutory provisions that did not fit the economic models it chose. Accordingly, we examine with particular thoroughness DOE's unorthodox excuse that it could not reasonably follow the text of the Act. 190 The NECPA legislative history shows that Congress was aware of the role projections and estimates were likely to play in the development of standards. For example, the conference report commented that: 191 The conferees recognize that some of the factors [the Secretary must weigh in assessing economic justification] cannot be quantified, such as the need of the Nation to conserve energy. However, where quantification is possible, it is expected that the Secretary will perform such quantification of individual factors to the greatest extent practicable. The conferees do not intend that quantification of a factor inherently enhances its weight as against nonquantifiable factors. Because the conference substitute requires the Secretary to weigh the factors, and because the increase in initial charges and any change in maintenance costs and energy savings will be quantified and compared, the House criterion [proposing a more specific test for economic justification] has been deleted. 192 S.Rep. No. 1294, 95th Cong., 2d Sess. 116 (1978) (emphasis added). Congress thus mandated quantitative analysis of the factors relevant to economic justification to the greatest extent practicable. Congress did not, however, inflexibly require that DOE's forecasts be based on precisely and minutely verifiable details. Even more importantly, Congress flatly announced that DOE must first consider both the quantifiable and nonquantifiable statutory factors and must weigh those benefits and burdens against each other. Congress did not suggest that if DOE thinks it cannot quantify the factors precisely enough, it may refuse to make reasonable estimates of those factors, and on that ground refuse to perform the statutorily prescribed weighing. 193 All of this does not mean that if the statute requires DOE to consider projections that cannot reasonably be made, DOE must pretend that it has accomplished the unachievable. But it does strongly suggest that DOE's effort to follow these congressional directions was too perfunctory. DOE has told us that it needs manufacturer's assembly line costs for a design option to analyze the economic impact of a standard based on that design option. But we know nothing of any serious effort to determine whether these costs could be estimated for the full-scale working prototype models DOE refused to consider. 194 Moreover, DOE's explanation of its method for estimating the costs of commercially available technologies leaves it far from clear why that technique could not reasonably be adapted to any prototype models. DOE's basic approach was first to identify a baseline unit for each product type or class, which it defined as the unit with an efficiency, output, and size approximately equal to that of the most commonly produced unit for the baseline year. 1982 Engineering Analysis at C-3, J.A. at 1575. 43 DOE then determined what design options were eligible for consideration as a basis for standards. Next, using engineering analysis and computer simulations as appropriate, the efficiency improvements which would result from implementing various design options were estimated. Id. at C-4, J.A. at 1576; cf. 48 Fed.Reg. 39,376, 39,397-98 (1983) (discussing computer simulation predictions of efficiency levels likely to be achieved by particular design changes). Finally, DOE applied a combination of manufacturing information and general rules to arrive at a cost breakdown: 195 Four basic cost elements (investment, materials, purchased components, and labor) were considered. Investment included capital equipment, plant, tooling, and an allowance for costs related to inventory, spare parts, line engineering, service training, and reissuing product literature. Per unit costs were estimated by amortizing these investment costs using the yearly production volume and depreciation periods of 30 years for plant, 10 years for capital equipment, 3 years for tooling and miscellaneous costs. Materials costs/unit were estimated by multiplying the estimated weight changes in materials identified in the design option analysis by the materials cost/pound. Costs/unit of purchased component[s] were based on quotes from suppliers. Although some larger manufacturers might make components such as compressors or vent dampers, these items were costed as purchased parts unless the majority of manufacturers made them in-house. Labor costs were obtained by estimating the change in labor in minutes for each design option and using a labor rate of $21.85/hour (direct cost plus burden). These four cost elements were summed to estimate the added factory cost. 196 1982 Engineering Analysis Document at C-4 to C-5, J.A. at 1576-77. 197 Several aspects of this discussion are relevant to the problem under examination. First, DOE does not report that it attempted to run its cost analysis on any particular prototype models and discovered that the effort required too much speculation. DOE excluded prototypes from its cost analysis as a threshold, preliminary step; it did not describe any actual experience in applying the analysis to prototypes. One might have expected that the difficulty of estimating manufacturing costs for a prototype could vary considerably depending on the design in question. For example, a prototype design utilizing a new combination of components already on the market could obviously be analyzed more easily than one requiring the manufacture of previously unproduced parts. This sort of specific analysis, however, is not reflected in the record. 198 Second, DOE evidently did not have precise, empirically derived manufacturing costs for the appliances it did consider as the basis for standards. DOE's method required it to identify energy-saving design options available on separately manufactured appliances within the same product type or class. DOE then hypothesized a baseline appliance to which the design options selected for consideration had been added, and calculated the benefits and burdens of the resulting composite model. That composite, however, might well include a combination of design options that did not appear on any commercially available appliance; in fact, the composite model might not exist in reality at all. The record suggests that DOE relied in considerable part on computer simulations to predict the benefits and burdens of these imaginary appliances. 199 Essentially, DOE figured the manufacturing costs for its composite appliances by looking at manufacturing costs for different products that included the selected design options, estimating what part of the manufacturing costs were attributable to the design options under study, and then including those estimates as part of the data used to generate total manufacturing costs for the hypothesized composite. If DOE could accomplish that task, it is unclear why DOE could not estimate the manufacturing costs for any full-scale, working prototypes at all. If, for example, a prototype consisted mainly of parts that were already manufactured for industrial use, DOE might have been able to estimate the assembly-line costs of the prototype using an additive approach similar to the one it adopted to estimate the cost of commercially available design options. 200 We acknowledged that with each step away from real-life information about benefits and costs, DOE's estimates would necessarily become less reliable. But on this record, we cannot tell whether cost estimates for full-scale, working prototypes would require more or less speculation than cost estimates for hypothesized appliances combining design options that are commercially available only on separate appliances produced by different manufacturers. In our view, the record does not disclose a fair investigation of whether DOE's methods, or reasonably practical methods of comparable reliability, could be adapted to measure the manufacturing costs of prototypes. 201 Third, DOE did not make individual cost determinations for important cost items in the manufacture of commercially available design options; instead, DOE applied general rules that might have been adapted to prototypes. For example, DOE used a standard labor rate, rather than investigating the particular cost of the labor required to effect specific manufacturing tasks. See supra at 1401. Thus, it is not clear exactly how far DOE carried its investigation of the costs particular manufacturers experienced in incorporating commercially available technologies into their products. 202 For these reasons, we conclude that nothing on the face of DOE's method for estimating manufacturing costs explains why those costs could not reasonably be estimated for prototypes. We do not, of course, presume to decide that whether DOE's method or reasonable alternatives to it in fact would have produced satisfactory results for some or all prototypes. All we decide is that the record does not show that DOE adequately investigated these questions and explained its results. Nor can we extrapolate from DOE's description of its analytic method any reason why that method is entirely ill-suited to the assessment of prototypes. DOE has thus failed to provide any explicit or reasonably inferred rationale for its assumption that it could not, as the statute required, evaluate all technologically feasible design options to determine which of those options could be used as the basis for economically justified standards. And, as we have stated, we are not here considering an incidental weakness in factfinding on the periphery of this rulemaking; we are considering a crucial determination at odds with the text and purposes of the statute. Viewing DOE's sweeping assumption in that light, we hold that it is not supported by substantial evidence. 203 DOE's last line of defense for its refusal to consider prototypes centers on the agency's speculation that existing test procedures might be inadequate to measure the efficiency of prototypes. But DOE never actually determined that the test procedures were inadequate for all or any of the prototypes suggested to it. DOE cannot simply guess that test procedures might be inadequate for some prototypes and for that reason refuses to evaluate all prototypes. The terms of the Act allow DOE to reject technologically feasible design options for consideration only if test procedures are in fact inadequate; and if test procedures are inadequate, DOE must attempt to devise new procedures. Because DOE never found that prototype design options were as a class untestable, we must reject this branch of DOE's rationale as inadequately supported by DOE's own conclusions from the record. 44 204 In summary, DOE's assumption that manufacturers could not within 5 years change all appliances within a product type or class to meet a standard based on prototype technologies is not, in our view, supported by substantial evidence. We also find that DOE has not identified substantial evidence supporting its view that no prototype could be analyzed to determine whether a standard based on it would be economically justified. Finally, we find that inadequate test procedures provide a basis for rejecting consideration of a design option only if, at a minimum, DOE actually finds that the test procedure cannot adequately measure the characteristics of the design option in question. DOE has not made this finding for any prototype, and thus DOE cannot on this record exclude all prototypes by reason of conjectured defects in the test procedures. 205 Two holdings follow from this reasoning. First, DOE's theory that its failure to determine maximum technologically feasible levels was in effect harmless error cannot be sustained, because DOE has not even produced substantial evidence for the two factual assumptions necessary to make a harmless error theory plausible. On remand, DOE must therefore finally determine maximum technologically feasible levels in accordance with the statute. Second, DOE may not rely on the very general arguments it offered in the rulemaking under review in support of its refusal to consider technologically feasible prototypes as a class in formulating standards. 206 For these reasons, we cannot accept the arguments DOE advanced for excluding prototypes as a class. We do not, of course, hold that any specific prototype could workably be the foundation for a standard. Nor do we hold that EPCA prevents DOE from determining that particular classes of prototypes cannot qualify as technologically feasible. If DOE does exclude such classes of prototypes from consideration, however, that exclusion must rest on a stronger factual foundation than DOE supplied in this rulemaking. EPCA assigns DOE the job of gathering information relevant to these questions and making decisions. We hold only that DOE must do that job. DOE may not take a shortcut by discarding the entire class of prototypes in advance, despite its finding that prototypes qualify as technologically feasible, through very abstract, unelaborated, and unsupported assumptions about prototypes. 207 b. Foreign Market Design Options. DOE's 1980 rulemaking stated that it would consider standards based on all technologies that were commercially available in 1980. However, DOE ultimately refused to analyze design options available only in foreign markets as a basis for standards. 208 [DOE] did not have detailed data for foreign designs not incorporated in domestic appliances and, therefore, could not analyze properly the impacts of standards based on foreign designs. Although some commenters criticized DOE for not analyzing standards using these technologies, DOE received little information on these designs. An additional problem with assessing foreign products was evident from the comments--disagreement and uncertainty as to the facts concerning the product. For example, NRDC and Whirlpool Corporation disagreed fundamentally over the capabilities of a particular Japanese refrigerator. 209 48 Fed.Reg. 39,376, 39,379-80 (1983). 210 DOE apparently wanted more specific information concerning both the manufacturing costs and performance characteristics of foreign-market appliances. What we have already said for prototypes also applies to foreign-market design options: the statute clearly instructs DOE to consider standards based on technologically feasible design options, and DOE has not shown that it could not reasonably follow that requirement for foreign-market options. Concededly, the added assembly-line costs to domestic manufacturers that standards based on a particular design option would impose can be estimated most accurately if DOE can examine the actual cost of production for the design option to at least one domestic manufacturer. However, Congress knew that EPCA required DOE to make projections and estimates, and indeed DOE's final rules rely very heavily on highly controversial predictions about changing patterns of consumer behavior between 1980 and 2005. We do not think that the difficulties DOE anticipated in estimating production costs for foreign-market options justify rejecting those options as a class from consideration. 211 DOE also noted that commenters disagreed over the performance characteristics of foreign-market design options. However, it is unclear that these disagreements differed in principle from similar controversies over the performance and efficiency of domestically available design options. Congress required DOE to develop test procedures for covered products so that, when necessary, DOE could make factual findings for itself about the performance of appliances under conditions simulating actual use. DOE does not argue that it could not obtain models of foreign-market appliances or that these appliances were unsuited to DOE's test procedures and methods of analysis. 212 Again, we do not hold that DOE must consider any particular foreign-market design options. All we hold is that DOE has not identified adequate support in the record for its class-wide exclusion of these design options. DOE must therefore either offer a much more thorough explanation based on record evidence why it cannot consider foreign-market design options, or make more particularized determinations about its ability to test and analyze specific foreign-market options. 213 c. The Five-Year Payback Period. In 1980, DOE decided that it would evaluate all design options with a payback period shorter than the average life of the appliance. See 45 Fed.Reg. 43,976, 43,983 (1980). 45 Thus, a design option with a payback period shorter than the average life of an appliance is cost-effective for most consumers, since the appliance will probably last long enough for the consumer to recover the cost of the design option. 214 DOE repudiated that decision in 1982 and announced that it would generally evaluate only design options with a payback period shorter than 5 years. See 1982 Economic Analysis Sec. 2.2.1 at 8, J.A. at 945. DOE informs us that for clothes dryers and kitchen ranges and ovens, DOE evaluated some design options with 9 year payback periods. See DOE Br. at 43, n.  The table below lists the average lifetime of the product types involved in this rulemaking, as determined by DOE in 1982. As the table shows, all of the products have an average life of substantially more than 5 or even 9 years. DOE's 1982 rule thus creates a serious threat that DOE will summarily reject design options with payback periods short enough so that the option is easily cost-effective for the average consumer, even though those payback periods may be longer than the maximum figures DOE set. 215 Table 5 Appliance Lifetimes Lifetime in Years (1982) Product Type Analysis ----------------------------------- Refrigerator-Freezers 19 Freezers 21 Water Heaters 13 Furnaces 23  Clothes Dryers 18.5 Ranges and Ovens 18 Central Air Conditioners 12 Room Air Conditioners 15 ----------------------------------  22 years for gas boilers. 216 1982 Economic Analysis Sec. 2.3.2 at 34 (citation omitted) (table reprinted only in part), J.A. at 971. 217 Petitioners cite the text of the statute, its legislative history, and the purposes of the Act in support of their attack on the 5-year limitation. Specifically, petitioners note that before deciding whether a proposed standard is economically justified, DOE is statutorily required to weigh, among other factors, 218 the savings in operating costs throughout the estimated average life of the covered products in the type (or class), compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are likely to result from the imposition of the standard. 219 EPCA Sec. 325(d)(2) (emphasis added). This provision explicitly requires DOE to compare the lifetime benefits of technologically feasible design options against their lifetime burdens in deciding whether standards based on particular options would be economically justified. 220 DOE's cutoff, however, conclusively assumes that design options with a payback period of five years or more (nine years or more for the two product types mentioned above) could not possibly be economically justified, regardless of their continued benefits over longer periods. DOE did not individually consider whether such design options might be economically justified according to the statutory criteria; the whole thrust of DOE's general rule was to exclude these design options as a class. Nor did DOE even determine whether that class of design options in the aggregate, or some substantial part of it, might include economically justified design options. In other words, the statutory criteria for economic justification were not even explicitly considered in DOE's rejection of the class as a whole, let alone in any consideration of particular class members. 221 This disregard for the statutory decisionmaking procedure is especially worrisome in light of the NECPA legislative history, which shows that Congress was concerned over the tendency of consumers to reject efficiency-improving appliances with long payback periods. As Representative Stockman explained, Congress viewed this consumer behavior as a kind of market failure: 222 There is some reason to doubt that market forces alone will bring about the needed shift to more efficient appliances. Numerous witnesses appearing before the subcommittee testified that the average consumer looks for a payback from higher purchase prices within 3 years. In the case of an appliance with a useful life of 10 years, this short payback horizon severely limits the amount of higher purchase price the consumer will accept in choosing a more efficient product over a cheaper, less efficient product. 223 H.R.Rep. No. 496, Pt. 4, 95th Cong., 1st Sess. 360 (1977), U.S.Code Cong. & Admin.News 1978, p. 8744 (additional views of Rep. Stockman). Since the average life of most covered products involved in this rulemaking is much longer than 10 years, the potential market failure caused by demanding a very short payback period is even greater than Representative Stockman suggested. 224 Moreover, DOE's general rule is apparently inconsistent with the explanation DOE offered for departing from it. DOE did, in fact, evaluate an insulation design option for clothes dryers, despite the long payback period for the option. In the December 1982 rulemaking, DOE noted that: 225 Two ... commenters, Webster City Products (Webster City) and Whirlpool Corporation (Whirlpool), suggested that the extended payback period of this design option should disqualify it from consideration. Webster City remarked that its laboratory test investigation showed a 15 to 20 year payback period, while Whirlpool used cost figures from DOE's Engineering Analysis to compute a 22.3 year payback period. 226 DOE agrees that the payback for this design option is not attractive, but this fact, given the purpose for which the design options in the Engineering Analysis are used, does not compel its elimination. The design options are used to assess the relationship between increases in the efficiency of a product and increases in the cost of that product. This relationship is then used in other analyses to project the effects that would be attributable to standards set at different levels. Design options with a range of payback periods may be useful in the derivation of the relationship between increases in efficiency and increases in cost. Of course, a standard that would require use of such a design option may not be economically justified. 227 47 Fed.Reg. 57,198, 57,209 (1982). This passage summarizes the fundamental problem with DOE's 5-year and 9-year rules: those rules drop design options out of the analysis at a preliminary stage, before their benefits and burdens are fully assessed. As we have stressed, EPCA allows DOE to reject consideration of technologically feasible design options as a basis for standards only if standards based on those design options could not be economically justified. Yet in the passage quoted above, DOE itself effectively rejected the idea that all design options with long payback periods are, by virtue of that fact alone, economically unjustified. DOE sensibly decided that it must look at the cost-benefit relationship of those design options before it discarded them. By refusing even to analyze most design options with longer payback periods, DOE deprived itself of exactly the information it needed to decide whether standards based on such design options would be economically justified. 228 In short, DOE has justified making an exception to its general rule on grounds that entirely discredit the rule itself. DOE's reply to Webster City and Whirlpool does not purport to explain why the particular design option in question should be considered, even though other design options with similarly long payback periods were not. Instead, DOE explained why, in general, design options with long payback periods should be considered in the engineering analysis. Having set forth these views, DOE may not rely on the inconsistent general proposition that no design option with a payback period longer than DOE's maximum figures could be economically justified. 229 Finally, our difficulty in understanding DOE's position is heightened by the lack of rationale in DOE's announcement of its 5-year rule. The rule is stated in the assumptions section of the 1982 Economic Analysis, and is thus a predicate for rather than a conclusion from DOE's technical analysis. Moreover, the only explanation for selection of 5 years rather than some other period as the cutoff is that payback periods shorter than 5 years are considered to be acceptable to consumers. 1982 Economic Analysis Document Sec. 2.2.1 at 8, J.A. at 945. But as we have discussed, the fact that consumers demand short payback periods was itself a major cause of the market failure that Congress hoped to correct. DOE cannot logically reject design options because consumers would not in the absence of standards buy appliances including those design options, when the entire point of a mandatory program was to change consumer behavior. 230 DOE's refusal to consider design options with payback periods longer than 5 or 9 years, like its exclusion of prototypes, runs counter to the statutory text and legislative history of NECPA on a point with major consequences for the result of this rulemaking. Yet instead of trying to reconcile its anomalous practice with the statute, DOE first offered an explanation inconsistent with the purposes of the statute and later supported an exception to the rule with arguments that undermine the entire rule. Accordingly, we hold that this restriction on the design options DOE was willing to analyze is unsupported by substantial evidence. 231 d. Lead Times. Next, petitioners complain that DOE excluded design options that might entail a 'significant increase in [the manufacturers'] engineering staff,' and selected only those with 'the shortest lead time.'  NRDC Br. at 40 (footnotes omitted). DOE described its method of minimizing the cost of increased engineering staff in the following terms: 232 Lead times available for implementing design changes required to meet the efficiency levels analyzed are long enough so that no significant increase in engineering staff will be required. 233 1982 Engineering Analysis Document at C-1, J.A. at 1573. We read this sentence as describing a general approach to fixing appropriate lead times-- i.e., periods it would take a manufacturer to introduce particular design options on all appliances covered by a standard. DOE could have assumed that standards would force manufacturers into expensive, crash development and retooling programs. This approach would obviously achieve energy savings more quickly, but it would also impose much greater costs on manufacturers. Or alternatively, DOE could assume, as it did, that lead times should be calculated based on more moderately paced programs to achieve compliance with standards. Under the latter view, the benefits of standards would be slower in coming, but the burdens on manufacturers would be much lighter. DOE plainly needed some method of estimating lead times, and we cannot say that the method on which it settled was unreasonable. 234 Petitioners also attack DOE's method of selecting the combination of design options that would best achieve particular levels of efficiency. The basic problem DOE had to solve was that different combinations of design options, with varying lead times and costs to manufacturers, could lead to comparable gains in efficiency. Thus, in assessing the benefits and burdens of standards at a specific level of efficiency, DOE needed some theory to identify what combination of design options that achieved that level of efficiency should be used as the basis for analysis. DOE settled on the following principles: 235 1) Improvements must have a reasonable initial cost to the consumer. 236 2) Only the lowest lead time and most cost effective improvements were considered. 237 Other paths (series of design improvements resulting from application of other philosophies) to higher efficiency can be envisioned. For instance, the lowest cost to the consumer to achieve each level could have been assessed. This could lead to a rearrangement of the grouping of design improvements to achieve each level. Minimizing lead time ... was felt, however, to be the most effective and likely scenario for introducing energy savings at the earliest date. 238 1982 Engineering Analysis Document at C-3, J.A. at 1575; see also 45 Fed.Reg. 43,976, 43,983-84 (1980). 239 This passage does not describe a path of analysis that arbitrarily excluded design options from consideration. Rather, we see the passage as describing a reasonable method of ordering and structuring agency deliberations, and we accordingly uphold that method against challenge. 240 e. Specific Design Options. During the rulemaking, petitioners and other commenters identified numerous energy-saving design options that, in the view of the commenters, should have been considered as the basis for standards. DOE rejected many of these suggestions for a variety of different reasons, and petitioners now challenge the legality of these decisions. 241 Under our view of the case, we need not resolve these disputes. As we have explained, we believe that DOE fundamentally misunderstood the statutory requirement that it first determine maximum technologically feasible improvements in efficiency, and then decide whether standards at that level or at some lower level would be economically justified. As we discuss in Part IV.C.3 below, DOE must approach that task anew. Because DOE must conduct a new rulemaking based on current technology, we need not pass on whether DOE's determinations that particular design options, as described in the information then before the agency, were or were not reasonable. The rulemaking on remand will be based on very different information, and consequently our view of DOE's decisions on specific design options could not provide useful guidance for the agency.
242 Much of the information underlying DOE's final rules was gathered in 1980 and never significantly updated, although the final rules were not issued until 1982 and 1983. Petitioners challenge DOE's reliance on data of this vintage as unreasonable; DOE replies that any effort to collect and analyze more recent information would have delayed the rulemaking even longer. See 48 Fed.Reg. 39,376, 39,379 (1983). However, we need not resolve this dispute either. We have already decided that (1) DOE must determine maximum technologically feasible levels and (2) DOE must reexamine its refusal to consider prototype and foreign-made design options as the basis for standards, and must look carefully and thoroughly at the specific characteristics of those design options in determining whether they could reasonably be evaluated under the statutory criteria. Both of these inquiries will require detailed review of the characteristics of technologically feasible design options that are not commercially available within the meaning DOE assigned to that term in this rulemaking--that is, design options that were not available on commercially manufactured appliances sold in the United States in 1980. 243 Whether or not DOE acted reasonably in issuing rules in 1982 and 1983 based on 1980 information, we think it would be patently unreasonable for DOE to begin further proceedings in the last half of 1985 based on data half a decade old. As DOE itself acknowledges, the efficiency of many products involved in this rulemaking has changed dramatically since 1980. It would be wholly futile for us to require DOE to conform its decisionmaking procedures to the statute, but permit it to trudge through the correct procedure based on information that is now incontestably antique. Such a pointless exercise would make a mockery of the clear statutory emphasis on a realistically administered appliance program based on current technology. 244 Moreover, we believe that the text and legislative history of NECPA show that Congress would not have approved reliance on such outdated data. As we have discussed, the slow pace of agency proceedings under EPCA as originally enacted was a major reason for the enactment of the NECPA amendments. Congress wanted to avoid the delays involved in monitoring industry compliance with voluntary targets, and in part for that reason it eliminated the target approach. See H.R.Rep. No. 496, Pt. 4, 95th Cong., 2d Sess. 43-45 (1977). More importantly, Congress established a strict schedule in NECPA itself that specifically keyed the dates by which final rules were due to the dates on which DOE published an advance notice of proposed rulemaking and a notice of proposed rulemaking. See supra note 11. Those notices, in turn, determine the period for notice and comment and thus the period during which major parts of the record for the rulemaking would be created. 245 Congress, then, passed provisions intended to set a specific outer limit on the time that could elapse between the closing of the record and the promulgation of final rules. Thus, when Congress defined technologically feasible as capable of being carried out, see supra at 1392, it believed that only a relatively short period would pass between DOE's evaluation of available technology and its promulgation of final rules. As Congress knew that the state of technology changes rapidly, it had good reasons for this insistence on prompt action. We believe Congress thought that technologically feasible meant technologically feasible based on information that is reasonably current at the time the final rules are validly adopted, not technologically feasible based on information that was reasonably current at the time DOE first attempts to promulgate final rules, 46 even if it turns out that some years intervene between initial promulgation and the adoption of final valid rules. Indeed, DOE has emphasized that it continuously attempted to use the most recent, reliable data, where to do so would not inordinately delay the rulemaking. 48 Fed.Reg. 39,376, 39,379 (1983). We think that policy can be reasonably effected only if DOE gathers current information in its new proceeding, including current information about design options examined in the record that closed during 1980 and new information about design options that have become technologically feasible since 1980. 246 Our decision to require a new process of data-collection is also reinforced by section 325(h) of the Act, which requires that DOE reevaluate its standards after issuance and that [n]ot later than 5 years after prescribing an energy efficiency standard, DOE make and publish its determination as to whether any standard should be amended. DOE published its final rules in December of 1982 and August of 1983, so its determinations as to amendments are due in December of 1987 and August of 1988. We note that the present rulemaking commenced in earnest with the June 1980 notice, and that DOE's reassessment of its data began in February of 1981. DOE thus took from February of 1981 to August of 1983, or some thirty months, to analyze data already collected, receive and consider comments, and publish final rules. If the process of preparing the determinations due at the five-year mark took the same time, DOE would need to begin analyzing data in February of 1986. 47 It would thus hardly be sensible for us to require DOE to redo its 1982 and 1983 rules based on 1980 information, when in a short time DOE would in any event be required to gather new data to see if its rules based on earlier data remained appropriate. Our decision, then, contemplates that DOE will investigate current design options to remedy the shortcomings we have already identified. 48 We thus do not consider whether DOE's reliance on arguably obsolete information, were it the only potential difficulty in this rulemaking, would justify overturning the rules under review.