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

Heading: DOE's Rationale for Its Definition

Text: 65 DOE claimed that the definition of significance announced in its December 1982 notice was based on congressional intent, although it had previously made the same argument for the radically different definition of significance advanced in June of 1980. In support of its first two tests, DOE cited the general findings in NECPA that stressed the importance of reducing national dependence on oil imports. See NECPA Sec. 102(a), Pub.L. No. 95-619, 92 Stat. 3206, 3208 (1978); 47 Fed.Reg. 57,198, 57,205 (1982); 47 Fed.Reg. 14,424, 14,429 (1982). These broadly stated findings, however, describe overall goals for the national energy program from all sectors of our Nation's economy, NECPA Sec. 102(a)(3), 92 Stat. at 3209, to be approached progressively in a step-by-step pattern to produce savings of a significant proportion. National Energy Act, Part I: Hearings Before the Subcommittee on Energy and Power of the House Committee on Interstate and Foreign Commerce, 95th Cong., 1st Sess. 2 (1977) (statement of Rep. Dingell). DOE could reasonably decide that a standard must make some progress towards the goals of the Act to be considered significant, but those general goals furnish little support for the specific tests DOE has adopted. Moreover, the appliance program is, of course, merely one program in a vast plan encompassing five statutes and scores of initiatives. Yet DOE steadfastly refused to consider that fact in deciding how great a contribution each standard must make to national conservation efforts in order to be deemed significant. Commenters echoed the view of Representative Dingell, Chairman of the House Sub-Committee on Energy and Power and a member of both of the House Ad Hoc Committee on Energy and the NECPA Conference Committee, that conservation must be approached on a nickel and dime basis and that the cumulative impact of a series of conservation initiatives, which in themselves might appear insignificant, could be enormous, id., but DOE was unmoved. It merely replied that the statute makes clear that the determination of whether a standard will save significant energy is to be made on an individual product type basis, not on the basis that standards for all products together would save significant energy. 47 Fed.Reg. 57,198, 57,203 (1982). 66 DOE is right to think that under section 325, standards for each product type must result in significant conservation. But DOE is plainly wrong to think that the overall conservation possible under the appliance program, and indeed under other aspects of the 1978 national energy program, has no relevance at all to what qualifies as a reasonable definition of significant conservation. DOE itself relied heavily on the ultimate end Congress declared for its program: a gradual end to massive dependence on foreign sources of energy. But DOE cannot isolate that end from the means Congress selected--namely, a massive plan involving numerous programs. No single program was expected to be decisive in achieving Congress' ultimate goal, let alone a single standard within the appliance program. In this sense, the cumulative savings possible from the appliance program as a whole is certainly relevant to whether the conservation that standards for a particular product type might achieve should be deemed significant. By rejecting that linkage, DOE has plucked the general goals Congress set for NECPA from their place in the statutory scheme, and failed to consider important evidence of how far standards for one product type should be expected to go towards achieving those goals. 67 DOE also relied on 1979 decisions by two congressional committees rejecting a contingency plan for restricting the use of lighting for advertising during energy shortages. See 47 Fed.Reg. 14,424, 14,429 (1982). The committees found that the plan would save only 4,400 barrels of oil per day, which they regarded as inadequate to justify enactment of the program. See S.Rep. No. 98, 96th Cong., 1st Sess. 10-11 (1979); H.R.Rep. No. 122, 96th Cong., 1st Sess. 4 (1979). An unfavorable recommendation by two congressional committees on a substantially different proposal after passage of the legislation at issue is weak support indeed for DOE's test. Congress might well have thought that a single nation-wide emergency program should produce higher savings than the savings demanded for a standard governing any one of thirteen covered products, particularly since the appliance program was itself only part of the large-scale national conservation program embodied in the 1978 energy acts. Moreover, DOE set its first test at 10,000 barrels of oil per day, or more than double the 4,400 barrels of oil per day that the rejected program would have saved. If stronger support for DOE's definition cannot be found in congressional intent, this isolated, unrelated, and post-enactment example of legislative inaction cannot rescue it. 68 In addition, more direct evidence of congressional intent casts further doubt on the relevance of these committee decisions. The report on NECPA by the House Ad Hoc Committee on Energy predicted that the Act would result in the following savings: 69 Table 2 Estimate of oil import savings achieved by H.R. 8444 Thousands of barrels Initiative: per day, in 1985 -------------------- Transportation 360 Buildings 420 Appliance Program 50 Industry/utility conservation 170 Increased residential/comercial gas availability 120 Oil and natural gas pricing 260 Synthetic use 420 Coal conversion 820 to 1,150 Total Savings 2,620 to 2,950 70 H.R.Rep. No. 543, 95th Cong., 1st Sess. 80 (1977) (footnotes omitted). The House Report commented that the NECPA conservation programs, considered as a bundle, would provide[ ] a solid start toward reducing oil imports and chang[ing] the way we use energy. Id. Of those programs, Congress expected the lowest immediate return from appliance regulation, which was expected to save 50,000 barrels per day of imported oil in 1985--less than one-half the benefit projected from the program with the next smallest return and less than 2 percent of the total oil import savings projected from NECPA during that year. 25 Similarly, the minority members of the House Committee on Interstate and Foreign Commerce commented that appliances consume only 2.7 percent of the energy consumed annually in the United States. H.R.Rep. No. 496, Pt. 4, 95th Cong., 1st Sess. 291 (1977) (minority views), U.S.Code Cong. & Admin.News 1977, p. 8679. 26 Yet those members supported the program. See id. Congress, in short, had a realistic notion of the relatively small energy savings to be expected from the appliance program, but nonetheless decided to regulate appliance efficiency as part of a national assault on unnecessary energy use. 71 DOE's first test for significance, in contrast, requires that standards for each of the eight covered products considered in the rulemaking save 10,000 barrels of oil a day or an equivalent amount of natural gas, even though Congress projected a 1985 saving from standards for all thirteen appliances of only 50,000 barrels a day. That congressional estimate, moreover, describes the saving Congress thought probable, and not the smallest saving that justified detailed evaluation of proposed standards. In light of these statistics, we think DOE's reliance on the obscure fate of quite a different program in committees of a later Congress is misplaced. 72 DOE justified its second test for significance on the ground that a national savings of electricity would at least have to exceed 1 percent of national usage over the period of analysis in order to have an effect on the need for new generating capacity. 47 Fed.Reg. 14,424, 14,430 (1982). DOE followed its statement of this test with the following table: 73 Table 3 1980 Electricity Usage Electric usage Percent of total Appliance in quads electric usage --------------------------------------------------------- Central space heater 0.96 3.8 Room space heater 0.62 2.5 Air conditioner room 0.38 1.5 Air conditioner central 1.47 5.9 Water heater 1.35 5.4 Refrigerator 1.17 4.7 Freezer 0.44 1.8 Range 0.54 2.1 Clothes dryer 0.45 1.8 74 Id. (citing as source ORNL Residential Energy End Use Model) (footnotes omitted). 75 According to this table, each of the eight covered products identified in the table accounts for small percentages of national electricity consumption. Only a very dramatic drop in electricity consumption by a product would enable even the high-consumption covered products to meet DOE's test, and evidently some of the low-consumption appliances could not meet the test at all. 27 We view as suspect a test that demands a fixed amount of energy savings greater than the savings that low-consumption covered products could ever possibly achieve. By including low-consumption appliances in the mandatory standards program, Congress showed that it believed improved efficiency for those products could result in significant conservation. A test for significance that demands far higher savings than standards for low-consumption covered products could realistically ever produce is thus out of scale with the congressional view that these products should be included in the Act. 76 Moreover, our dubiousness about this test is heightened by DOE's equivocal response to comments submitted during the rulemaking. DOE summarized those comments by noting that: 77 [S]everal commenters attempted to translate the aggregate electricity savings for all products using electricity, if standards were adopted for all those products, into additional new capacity that could be avoided. These estimates ranged from 16.8 GWe [gigawatts] ... to 17.6 ... GWe in the year 2005. Each of these commenters also reflected these estimated avoided capacities in terms of powerplant equivalents, which ranged from 17 1000 MW [megawatt] plants to 22 800 MW plants. 78 47 Fed.Reg. 57,198, 57,207 (1982) (citations and footnote omitted). DOE first complained that the commenters had impermissibly aggregated total savings from standards covering all covered products. When these aggregations were broken down into the savings attributable to standards for each product type, DOE maintained that: 79 Under even [the] methodology [of commenter American Council for an Energy-Efficient Economy (ACEEE),] the largest reduction in need for new, incremental capacity attributable to one standard (electric water heaters) would be only 36 percent of the aggregate figure presented [for total electricity saved as a result of standards]. Under DOE's base case projection, the largest reduction would be only 17 percent of the aggregate figure presented, or approximately 3 GWe or three 1000 MW powerplant equivalents nationwide. As discussed earlier, Section 325(b) requires DOE to make a determination of significant savings on an individual product type basis, not on the basis of the aggregate savings if standards were imposed on all products. 80 Id. 28 As we have explained, we agree that savings for standards must be evaluated separately by product type, but DOE may not therefore close its eyes to the cumulative effect of imposing standards. We thus cannot agree that DOE's first reason supports its rejection of the comments submitted. DOE also argued that: 81 [I]t is not at all clear that even a 17 to 18 GWe theoretical reduction of additional new capacity is significant in terms of actually affecting potential new, incremental capacity. The 17 to 18 GWe capacity savings projected by the commenters would be less than 2 percent of the approximate forecast capacity for the year 2005, and these savings would for the most part be spread over large parts, if not all, of the Nation. The reuslt of this is that in some utility services areas, the level at which decisions are made as to the need for new, incremental capacity, these marginal savings could be so small compared to other factors, e.g., demographic changes, that they would have no impact on actual construction decisions. Thus, one cannot reliably assume that whatever number of gigawatts one may mathematically back out as a result of reduced kilowatt hours attributable to a standard represents the actual gigawatts of capacity construction foregone. 82 Id. (footnote omitted). Part of this passage relies on the demographic uncertainty that is inevitably involved in projecting electricity use long into the future. However, that uncertainty results mostly from the lengthy period for analysis DOE itself chose, and characterizes many of DOE's own predictions. 83 The quoted passage also argues that the savings in question would be spread out over the entire nation, and consequently those savings might not affect the need for additional generating capacity in any area. Petitioners maintain that the market in electricity is essentially a national one, and that incremental savings achieved across the nation really do diminish the need for new generating facilities. See Oral Comments of Angelo F. Orazio at 9 (May 20, 1982), J.A. at 3116. DOE did not details its reasons for rejecting that argument, and we therefore have some difficulty in assessing the reasonableness of the opposing views in this subsidiary controversy. However, we are not now considering whether DOE's general doubts about the effect of savings on the need for new generating facilities would, if DOE's basic approach to significance were sound, support the particular quantities of energy DOE specified in its test. As we have discussed, DOE's definition of significant savings produces incongruous results in light of other EPCA provisions, and we are now searching for an agency explanation that might prop up this faltering definition. DOE's argument does not persuade us that DOE has, after all, acted within the discretion Congress allowed it. 84 Finally, DOE argued that its third test is grounded in former section 325 of EPCA. That section required the Federal Energy Administrator to set target figures for appliance efficiency improvement so that the ten priority appliances named in the Act would register an aggregate efficiency improvement of 20 percent between 1972 and 1980. Thus, unlike DOE's third test, section 325 established a target, not a threshold figure below which regulation would be abandoned as not worth the trouble. That target required an aggregate improvement for all ten appliances of 20 percent, thus recognizing that standards for some covered products might fall short of that level. In addition, the 20 percent target was based on a comparison of 1972 efficiency to 1980 efficiency and so is quite unlike DOE's comparison of its standards case with a projected no-standards base case. Given these major differences, we are unconvinced by DOE's argument. 85 We think DOE's argument is also at odds with other signs of legislative intent. The Senate Report on NECPA, for example, set forth the following table: 86 Table 4 Estimated Improvements in Average Appliance Efficiency Over 1972 Levels (Percent) Expected Expected Improvements Improvements From From EPCA Appliance President's Program Initiative ---------------------------- Refrigerators 27 47 Freezers 17 30 Clothes Dryers 5 ele(c)., 8 elec., 10 gas 18 gas Water Heaters 10 elec., 18 elec., 14 gas 25 gas 13 oil 23 oil Room Air Conditioners 15 54 Clothes Washers 15 20 Furnaces 5 23 87 S.Rep. No. 409, 95th Cong., 1st Sess. 147 (1977). The first column of the table indicates the improvement in efficiency the administration expected between 1972 and 1985 under EPCA as originally enacted. Id. The second column indicates the improvement in efficiency the administration expected during the same period under its proposal for mandatory standards, which in somewhat modified form became NECPA. 88 These projections were submitted to Congress by the Deputy Administrator of the Federal Energy Administration. He commented that under the administration proposal, 89 [m]inimum efficiency standards shall be prescribed as soon as possible for refrigerators/refrigerator-freezers, freezers, water heaters, room air-conditioners, kitchen ranges and ovens, central air-conditioners, and furnaces. These products account for about 80 percent of the energy used in American households. Standards for these products would be required because significant improvements in the energy efficiency of each is [sic] possible and a substantial national savings would result. 90 Id. at 132 (statement of David J. Bardin) (emphasis added). 91 Because the table shows energy efficiency improvements as a comparison between 1972 statistics and 1985 projections, the figures it states are not directly comparable to those DOE used in calculating its 16.67 percent test. Nonetheless, the range in the table is instructive. For example, the table predicts that with standards, clothes washers would be 20 percent more efficient in 1985 than in 1972; without standards, the difference would be 15 percent. For electric clothes dryers, the figures are 8 and 5 percent; for gas clothes dryers, 18 and 20 percent. As these numbers show, Congress knew that standards for some covered products would produce quite modest incremental gains in efficiency and consequently in energy conserved. Congress was also authoritatively informed by the Federal Energy Administration--the predecessor agency to DOE in administering the appliance program--that the savings revealed by the table for each of the covered products were significant. On that understanding, Congress enacted the program. 92 We emphasize once again that we do not view the table we have reprinted above or any of the other legislative history we have discussed as absolutely binding DOE to any particular definition of significance. [A]n agency to which Congress has delegated policy-making responsibilities may, within the limits of that delegation, properly rely on the incumbent administration's views of wise policy to inform its judgments. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., --- U.S. ----, 104 S.Ct. 2778, 2793, 81 L.Ed.2d 694 (1984). Nonetheless, when an agency does not reasonably accommodate the policies of a statute or reaches a decision that is not one that Congress would have sanctioned, id. 104 S.Ct. at 2783 (quoting United States v. Shimer, 367 U.S. 374, 383, 81 S.Ct. 1554, 1560, 6 L.Ed.2d 908 (1961)), a reviewing court must intervene to enforce the policy decisions made by Congress. [A] new administration may not choose not to enforce laws of which it does not approve, or to ignore statutory standards in carrying out its regulatory functions. Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 103 S.Ct. 2856, 2875 n. , 77 L.Ed.2d 443 (1983) (Rehnquist, J., concurring in part and dissenting in part). 93 We have acknowledged that Congress granted DOE considerable discretion to define significant conservation. This case does not require us to define the precise limits of that discretion: all we must decide is whether DOE has reasonably enforced the decisions Congress made when it enacted NECPA. For the reasons stated above, we believe DOE has failed to do so, and we accordingly hold that its definition of significance is inconsistent with the Act. 94