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

Heading: Forgone Investment and Reductions in Product Performance or Utility

Text: 315 Petitioners claim that DOE incorrectly gave weight to two unquantifiable burdens of standards. First, DOE believed that standards might force manufacturers to spend money on energy efficiency improvements and thereby deprive manufacturers of capital needed for more appropriate investments. See 48 Fed.Reg. 37,376, 39,386 (1983). DOE noted that the forgone investments could include investments in increased productivity, increased energy efficiency in the manufacturing sector, or new utility or performance features. Id.; see also 47 Fed.Reg. 14,424, 14,431-32 (1982). Manufacturers also indicated concern over this possible burden of standards. See Comment No. 2075 at 7-1 (June 16, 1982) (General Electric Co.), J.A. at 4661; Comment No. 2178 at 18-19 (August 2, 1982) (Whirlpool Corp.), J.A. at 5551-52. 316 We do not think that DOE erred in giving this burden some weight. While an agency may not rely on unsupported conjecture to explain its decisions, cf. Pillai v. Civil Aeronautics Bd., 485 F.2d 1018, 1023 (D.C.Cir.1973), neither is an agency forced to document copiously every collateral inference it draws from its experience with a regulated industry and its general economic views. Cf. Center for Auto Safety v. Peck, 751 F.2d 1336, 1367 (D.C.Cir.1985) (agency may rely on general view that reduced governmental regulation would produce innovation to achieve [other] values). Manufacturers obviously have limited funds, and money a manufacturer must spend on one project is money that the manufacturer cannot spend on other projects. DOE properly recognized that this burden was one that any scheme of mandatory standards would impose, and therefore declined to give it great weight. See 48 Fed.Reg. 39,376, 39,386 (1983). But we cannot fault DOE's decision to consider the burden at all. 317 Similarly, petitioners criticize DOE's determination that mandatory standards might in the future diminish product utility or performance. DOE first noted that it had attempted to design product classes so that the standards analyzed, if adopted, would not compromise product utility or performance. 67 See 47 Fed.Reg. 14,424, 14,433 (1982). For example, automatic defrost refrigerators-freezers consume more energy than manual defrost refrigerators-freezers. See 45 Fed.Reg. 43,976, 43,987 (1980). If all refrigerator-freezers had been grouped in a single class and an efficiency standard has been based on the most efficient model in that class, the standard might have prevented the sale of any automatic defrost products at all. DOE avoided that result by placing automatic defrost refrigerators-freezers in a separate class, and considering standards based only on the most efficient model within that class. Id. Through its general practice of creating distinct classes for appliance models with energy-consuming features of value to consumers, DOE tried to avoid forcing appliances with such features out of the market. 318 DOE concluded that it had successfully defined classes that would avoid any loss of product utility or performance from mandatory standards. See 48 Fed.Reg. 39,376, 39,393, 39,395, 39,397, 39,405 (1983). However, DOE was concerned that after standards were prescribed, manufacturers might develop new performance-improving appliance features that increased energy consumption. If an appliance with a new feature could not meet the relevant standard, the standard would ban appliances including that feature from the market. DOE might eventually amend its rules to create a new class for appliance models with the feature and prescribe a new standard, if appropriate, for that class. However, at best the availability of improved appliances might be delayed; and at worst, DOE feared, the uncertainty surrounding efforts to amend rules might create a disincentive to the development of improved appliances. See 47 Fed.Reg. 14,424, 14,433 (1982). 319 DOE concluded that these possibilities were a burden entitled to some weight. This burden, like that imposed by forgone investment, would be created to some extent by standards at any level. It therefore could not be given dispositive weight without rendering superfluous all other statutory factors bearing on economic justification. However, DOE could reasonably predict that the appliance industry will continue to develop new performance-improving features, some of which may increase energy consumption. It could also reasonably judge that standards might interfere with these developments. Petitioners jump from DOE's finding that standards would not immediately degrade appliance performance to the conclusion that standards would not have this effect in the future. But that argument assumes that the industry will not eventually develop any currently unforeseen appliance features, and DOE was clearly not required to act on that assumption. 320 We must also reject the claim that DOE's reliance on an unprovable forecast about future improvements in appliance design violates the substantial evidence requirement. Any prediction about the future impact of standards, and particularly about the possible tendency of standards to inhibit innovation, necessarily involves an informed attempt to resolve uncertainties. DOE acknowledged the uncertainties, made a rational prediction in light of the very limited evidence available, and from all that appears did not give more weight to its prediction than was reasonably warranted. We therefore uphold DOE's decision to consider the potential loss of performance and utility as a burden of standards. 321