Court Opinion

ID: 6104167
Source: CourtListenerOpinion
Date Created: 2022-01-18 16:01:04.478115+00
Date Added: 2024-06-11T08:53:42.561470
License: Public Domain

United States Court of Appeals
          FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 9, 2021             Decided January 18, 2022

                         No. 20-1068

            AMERICAN PUBLIC GAS ASSOCIATION,
                      PETITIONER

                               v.

          UNITED STATES DEPARTMENT OF ENERGY,
                      RESPONDENT

            AMERICAN GAS ASSOCIATION, ET AL.,
                     INTERVENORS

             Consolidated with 20-1072, 20-1100

           On Petitions for Review of a Final Rule
             of the U.S. Department of Energy

     Barton Day argued the cause for petitioners Spire, Inc. and
Spire Missouri, Inc. Stephanie Weiner argued the cause for
petitioner Air-Conditioning, Heating, and Refrigeration
Institute. With them on the joint briefs were John P. Gregg,
William C. Simmerson, Scott Blake Harris, Jason Neal, and
Daniel P. Tingley. Matthew J. Agen and Michael L. Murray
entered appearances.
                                2

    Jack Starcher, Attorney, U.S. Department of Justice,
argued the cause for respondent. With him on the briefs were
Brian M. Boynton, Acting Assistant Attorney General, and
Michael S. Raab, Attorney.

     Michelle Wu argued the cause for respondent - intervenors.
With her on the brief were Aaron Colangelo, Ian Fein, Letitia
James, Attorney General, Office of the Attorney General for
the State of New York, Patrick Woods, Assistant Solicitor
General, Lisa S. Kwong, Assistant Attorney General, Matthew
Rodriquez, Acting Attorney General, Office of the Attorney
General for the State of California, David Zonana, Acting
Senior Assistant Attorney General, Kwame Raoul, Attorney
General, Office of the Attorney General for the State of Illinois,
Daniel I. Rottenberg, Assistant Attorney General, Aaron M.
Frey, Attorney General, Office of the Attorney General for the
State of Maine, Katherine E. Tierney, Assistant Attorney
General, Timothy D. Ballo, Brian Frosh, Attorney General,
Office of the Attorney General for the State of Maryland, John
B. Howard, Jr., Special Assistant Attorney General, Maura
Healey, Attorney General, Office of the Attorney General for
the Commonwealth of Massachusetts, Christophe Courchesne,
Deputy Chief, Keith Ellison, Attorney General, Office of the
Attorney General for the State of Minnesota, Peter Surdo,
Special Assistant Attorney General, Aaron D. Ford, Attorney
General, Office of the Attorney General for the State of
Nevada, Heidi Parry Stern, Solicitor General, Gurbir S.
Grewal, Attorney General, Office of the Attorney General for
the State of New Jersey, Paul Youchak, Deputy Attorney
General, Ellen F. Rosenblum, Attorney General, Office of the
Attorney General for the State of Oregon, Steve Novick, Special
Assistant Attorney General, Thomas J. Donovan, Jr., Attorney
General, Office of the Attorney General for the State of
Vermont, Nicholas Persampieri, Assistant Attorney General,
                               3
Karl A. Racine, Attorney General, Office of the Attorney
General for the District of Columbia, and Loren L. AliKhan,
Solicitor General. Gerald Karr, Assistant Attorney General,
Office of the Attorney General for the State of Illinois, entered
an appearance.

    Before: SRINIVASAN, Chief Judge, JACKSON, Circuit
Judge, and GINSBURG, Senior Circuit Judge.

    Opinion for the Court filed by Senior Circuit Judge
GINSBURG.

    GINSBURG, Senior Circuit Judge: The Energy Policy and
Conservation Act authorizes the Secretary of Energy to set
energy efficiency standards for certain commercial and
industrial equipment. The Secretary may not, however,
establish a standard more stringent than that promulgated by
the American Society of Heating, Refrigerating and Air-
Conditioning Engineers (ASHRAE) unless she has clear and
convincing evidence the more stringent standard is
economically justified, technically feasible, and will lead to
significant conservation of energy.

     In January 2020, the Department of Energy published a
Final Rule that set more stringent efficiency standards than
those of the ASHRAE for “commercial packaged boilers,”
large boilers commonly used to heat commercial and
multifamily residential buildings.      Energy Conservation
Program: Energy Conservation Standards for Commercial
Packaged Boilers, 85 Fed. Reg. 1592. In these consolidated
cases, the American Public Gas Association, the Air-
Conditioning, Heating, and Refrigeration Institute, Spire Inc.,
and Spire Missouri Inc. petition for review of the Final Rule,
alleging numerous deficiencies with the rule. Because we are
not persuaded it was reasonable for the Secretary to conclude
                               4
the Final Rule was supported by clear and convincing evidence,
we remand the rule to the DOE to address several points raised
by the petitioners within a limited time.

                     I.      Background

      The Energy Policy and Conservation Act, as amended in
1992, prescribes energy efficiency standards for certain
commercial and industrial equipment. See 42 U.S.C. § 6313.
It also authorizes the Secretary of Energy to amend a standard
if certain conditions are met. See id. § 6313(a)(6). The
Congress tethered the Secretary’s amendment of a standard for
equipment covered by Section 6313 to the internationally
recognized standards promulgated by the ASHRAE, known as
ASHRAE/IES Standard 90.1. Id. Specifically, if the ASHRAE
amends Standard 90.1 for equipment covered by Section 6313,
then the Secretary must at the least amend her standard
correspondingly. Id. § 6313(a)(6)(A)(ii)(I). The Secretary
may, however, instead adopt a more stringent standard if she
determines by clear and convincing evidence that doing so (a)
“would result in significant additional conservation of energy,”
(b) is “technologically feasible” for the industry, and (c) is
“economically justified,” id. § 6313(a)(6)(A)(ii)(II), in which
case she must issue a rule establishing the more stringent
standard within 30 months of ASHRAE’s publication of its
amendment to Standard 90.1, id. § 6313(a)(6)(B)(i).

      In determining whether a more stringent standard is
“economically justified,” the Secretary is required to consider
“to the maximum extent practicable” (1) “the economic impact
of the standard on the manufacturers and on the consumers of
the products subject to the standard”; (2) “the savings in
operating costs throughout the estimated average life of the
product in the type (or class) compared to any increase in the
price of, or in the initial charges for, or maintenance expenses
                                5
of, the products that are likely to result from the imposition of
the standard” or, in other words, the difference in the life-cycle
cost (LCC) of equipment with and without a more stringent
standard; (3) “the total projected quantity of energy savings
likely to result directly from the imposition of the standard”;
and other factors not relevant here. Id. § 6313(a)(6)(B)(ii).

     As originally enacted, the statute authorized the Secretary
to amend an energy efficiency standard for equipment covered
by Section 6313 only in response to a corresponding
amendment of Standard 90.1 by the ASHRAE. In 2007,
however, the Congress added a “lookback” provision,
providing that if the ASHRAE has not amended Standard 90.1
for six years for a category of covered equipment, then the
Secretary must evaluate whether a more stringent standard is
necessary for that category of equipment.                Energy
Independence and Security Act of 2007, Pub. L. 110-140,
§ 305(b), 121 Stat. 1554 (codified at 42 U.S.C.
§ 6313(a)(6)(C)(i)). As all parties agree, however, even under
the “lookback” provision, the Secretary may establish a more
stringent standard only if she determines by clear and
convincing evidence that the standard will result in significant
conservation of energy, is technologically feasible, and is
economically justified.       See id. § 6313(a)(6)(C)(i)(II)
(seemingly incorporating by reference the clear and convincing
standard of § 6313(a)(6)(A)); see also Energy Conservation
Program for Appliance Standards: Procedures for Use in New
or Revised Energy Conservation Standards and Test
Procedures for Consumer Products and Commercial/Industrial
Equipment, 85 Fed. Reg. 8626, 8643 (2020) (noting that the
plain language of the statute indicates the clear and convincing
standard applies to the “lookback” provision).

    Commercial packaged boilers are covered by Section
6313. 42 U.S.C. § 6311(1)(J). A commercial packaged boiler
                                 6
is one that, among other things, has a rated input of at least 300
kBtu/h and is used “for space conditioning and/or service water
heating in buildings.” 10 C.F.R. § 431.82(1)-(2). The DOE
categorizes packaged boilers based upon their size (small,
large, and very large), the type of fuel they use (gas-fired or oil-
fired), and their heating medium (hot water or steam). Thus,
there are 12 categories of packaged boilers. 85 Fed. Reg. at
1594.

    In July 2009, the DOE promulgated a Final Rule for
commercial packaged boilers, adopting the ASHRAE’s 2007
amendment to Standard 90.1. Energy Conservation Program
for Certain Industrial Equipment: Energy Conservation
Standards and Test Procedures for Commercial Heating, Air-
Conditioning, and Water-Heating Equipment, 74 Fed. Reg.
36312. Since then, Standard 90.1 has been updated several
times but never with respect to the efficiency standards for
commercial packaged boilers.

     In 2016, the DOE, pursuant to the “lookback” provision,
proposed new, more stringent energy efficiency standards for
eight of the twelve categories of commercial packaged boilers.
Energy Conservation Program: Energy Conservation
Standards for Commercial Packaged Boilers (Proposed Rule),
81 Fed. Reg. 15836. Based upon data it had gathered and
analyzed, the DOE “tentatively concluded that there is,” as
required, “clear and convincing evidence to support more
stringent standards” for most types of commercial packaged
boilers. Id. at 15838.

     In order to satisfy its statutory mandate to consider “the
economic impact of the [proposed] standard … on the
consumers of the products subject to the standard” and the
difference in LCC savings the standard would bring about, 42
U.S.C. § 6313(a)(6)(B)(ii)(I)-(II), the DOE set out to compare
                               7
the LCC of equipment with and without an amended standard.
The LCC of any piece of equipment is the sum of (a) the
purchase price (including installation cost and sales tax) and
(b) the lifetime cost of operating it (fuel, maintenance, and
repair), discounted to present value.

    Conceptual simplicity belies operational complexity. The
DOE had to construct a no-new-standards, or base, case and a
new-standards case and compare the two. Construction of each
case required the DOE to compile a representative sample of
commercial and residential buildings, for which it used the
Energy Information Administration’s 2012 Commercial
Buildings Energy Consumption Survey (CBECS) and 2009
Residential Energy Consumption Survey (RECS).

     Next, for both the base case and the new-standards case,
the DOE had to assign boilers with specific efficiency levels to
buildings. Assigning boilers in the base case is particularly
tricky, as it involves predicting how the world would look
without new standards. Historical shipping data provides the
most accurate picture of the mix of boilers in a world without
new standards, but the DOE had historical shipping data for
only two of the eight relevant categories of boilers, so it
assumed the distribution of efficiency levels in shipped
equipment was the same as the distribution of efficiency levels
among models listed in the database maintained by the AHRI.
After accounting for the mix of efficiency levels in shipped
boilers, the DOE assigned boilers to buildings randomly: An
efficiency level associated with 30 per cent of the models listed
in the AHRI data base had a 30 per cent chance of being
selected for any given boiler/building combination.

    For both the base case and the new-standards case, the
DOE also had to calculate the burner operating hours and the
energy use of a given boiler in any boiler/building combination.
                               8
To this end, the DOE had to make assumptions about the heat
load (the amount of heat energy per unit of time that is needed
to maintain a certain temperature in a defined space) of the
sample buildings, namely that for every square foot of heated
area, a building uses an average of 30 Btu/h, and about the
number and size of the boilers in those buildings. 85 Fed. Reg.
at 1624.

    Finally, in order to estimate the operating cost associated
with energy use for any given boiler/building combination, the
DOE had to predict the cost of energy over the lifetime of the
equipment, which the DOE assumed was 24.8 years. Id. at
1594. For this, the DOE turned to the energy prices forecasted
in the Energy Information Administration’s 2016 Annual
Energy Outlook.

    During the period for comment on the proposed standards,
many parties raised concerns regarding the DOE’s data and
conclusions. Those relevant to the petitions for review are
discussed in Part II below.

     In January 2020 the DOE published its Final Rule, which
was, as relevant here, substantively equivalent to its Proposed
Rule.      The DOE did, however, somewhat update its
justification for the amended standards. Whereas the preamble
to the Proposed Rule simply said the “lookback” provision
demands clear and convincing evidence and the proposed
standards satisfy that requirement, see 81 Fed. Reg. at 15837,
the preamble to the Final Rule initially responded to comments
questioning whether the heightened standard was satisfied by
disputing their premise, claiming the “lookback” provision
does not demand clear and convincing evidence. 85 Fed. Reg.
at 1607. The preamble went on, however, to say “assuming
that clear and convincing evidence is required here, DOE
believes its findings fully satisfy that threshold.” Id. 1607-08.
                               9

     The American Public Gas Association (APGA), the
members of which are publicly owned gas distribution systems,
petitioned for review of the Final Rule. That petition was
consolidated with the petitions of the Air-Conditioning,
Heating & Refrigeration Institute (AHRI), a trade association
representing manufacturers of covered equipment, and of Spire
Inc., an owner and operator of natural gas utilities, and its
subsidiary Spire Missouri Inc., a natural gas utility. The
American Gas Association, representing more than 200 local
energy companies, intervened in support of the petitioners.

     The DOE agrees with the petitioners that the Final Rule is
invalid but solely on the ground that the DOE failed to apply
the clear and convincing standard required by statute; it urges
the court not to reach the merits of the petitioners’ more
specific challenges to the analysis supporting the rule, which it
unhelpfully failed to address in its brief. Because the DOE
refused to defend the legality of the Rule, 11 states, two
municipalities, and four non-profit organizations intervened to
do so. Furthermore, in contrast to the petitioners, who have
consistently asked us to vacate the Final Rule, the DOE has
revised its initial position and now seeks a remand without
vacatur.

                       II.     Analysis

     We have jurisdiction over these petitions for review
pursuant to 42 U.S.C. §§ 6306(b)(1), 6316(a)(1). Under the
Administrative Procedure Act, we must “hold unlawful and set
aside agency action, findings, and conclusions found to be
arbitrary, capricious … or otherwise not in accordance with
law.” 5 U.S.C. § 706(2)(A). Agency action is arbitrary and
capricious if a reviewing court cannot discern from the record
that the agency action was the product of reasoned decision
                              10
making. Van Hollen, Jr. v. Fed. Election Comm’n, 811 F.3d
486, 495 (D.C. Cir. 2016). An agency has not engaged in
reasoned decision making if it “entirely failed to consider an
important aspect of the problem,” Motor Vehicle Mfrs. Ass’n of
U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983), or if it did not “engag[e] the arguments raised before
it,” NorAm Gas Transmission Co. v. F.E.R.C., 148 F.3d 1158,
1165 (D.C. Cir. 1998).

A. Clear and Convincing Evidence Standard

     There is a further wrinkle to rulemaking under the
“lookback” provision. All parties now agree the Secretary is
not authorized to establish a more stringent efficiency standard
for commercial packaged boilers under the “lookback”
provision unless there is clear and convincing evidence that the
standard would result in significant additional conservation of
energy, would be technologically feasible, and is economically
justified. See § 6313(a)(6)(C)(i)(I)-(II) (incorporating the
criteria set forth in § 6313(a)(6)(A)-(B) for the Secretary’s
review occasioned by an amendment by the ASHRAE to
Standard 90.1).

     The requirement of “clear and convincing evidence” as a
prerequisite to informal rulemaking is unusual, perhaps unique;
we are aware of no other authorization for rulemaking subject
to this heightened evidentiary standard. The standard is
familiar, however, from other areas of the law: clear and
convincing evidence requires a factfinder (in this case the
Secretary) to have an “abiding conviction” that her findings (in
this case that a more stringent standard would result in
significant additional conservation of energy, would be
technologically feasible, and is economically justified) are
“highly probable” to be true. Colorado v. New Mexico, 467
U.S. 310, 316 (1984).
                               11

     This unusual framework creates an unusually strong bias
in favor of the status quo: The DOE may not establish a more
stringent standard unless it clears the heightened evidentiary
hurdle established by the Congress. The statute, it is true,
requires the Secretary to consider a list of factors only “to the
maximum extent practicable” when determining whether a
more stringent standard is “economically justified,” 42 U.S.C.
§ 6313(a)(6)(B)(i), but the phrase “to the maximum extent
practicable” does not modify the clear and convincing evidence
requirement; it modifies only the requirement to consider
specific factors. What it means, therefore, is that if it is
impracticable for the DOE to consider further one or more of
the enumerated factors, but there is clear and convincing
evidence based upon the other factors, then the Secretary may
promulgate a more stringent standard.

     The Respondent-Intervenors argue instead that “the
agency is required to … conclude whether the standards are
economically justified by clear and convincing evidence but
only to the maximum extent practicable.” Oral Argument at
1:09:01. This conflates the nonnegotiable evidentiary standard
with the specific factors DOE must consider in determining
whether that standard has been met. Difficulty in satisfying the
clear and convincing standard is not a justification for ignoring
it.

     Even where clear and convincing evidence is required
before an agency can act, however, judicial review of agency
action remains deferential. The court asks itself only whether
it was reasonable for the agency to determine it met the
standard. Sea Island Broad. Corp. of S.C. v. F.C.C., 627 F.2d,
240, 244 (D.C. Cir. 1980); Mo. Pub. Serv. Comm’n v. Fed.
Energy Regul. Comm’n, 864 F.3d 589, 590 n.1 (Millett, J.,
concurring).
                              12

B. Challenges to the Final Rule

     The petitioners’ most meritorious challenges to the Final
Rule target the assumptions and data the DOE used to conclude
that more stringent efficiency standards were economically
justified by clear and convincing evidence. Before turning to
those challenges, however, we pause briefly to dispose of two
other intertwined challenges: (1) that the DOE — in
contravention of its statutory mandate — did not in fact apply
the clear and convincing evidentiary standard; and (2) that the
DOE did not provide proper notice and explanation, as required
by the Administrative Procedure Act, see Envtl. Integrity
Project v. E.P.A., 425 F.3d 992, 998 (D.C. Cir. 2005) (notice)
and Physicians for Soc. Responsibility v. Wheeler, 956 F.3d
634, 644 (D.C. Cir. 2020) (explanation), when it departed from
agency precedent by holding the “lookback” provision does not
demand clear and convincing evidence.

    1. Whether the DOE applied the clear and convincing
       standard

     The petitioners and the DOE itself argue the rulemaking is
fatally flawed because the DOE did not apply the clear and
convincing evidence standard required by statute. They point
to the DOE’s initial response to questions about its claim to
have clear and convincing evidence, when it said the
“lookback” provision is not subject to the clear and convincing
standard. Any mentions in the preamble to the Final Rule of
the clear and convincing standard should be disregarded, the
petitioners’ argument goes, as not embodying the agency’s
“express and considered conclusion.”

    We reject this argument summarily. In promulgating the
Final Rule, the DOE expressly said satisfaction of the clear and
                               13
convincing standard, if applicable, was an alternative ground
supporting the Rule. See 85 Fed. Reg. at 1607-08 (“assuming
that clear and convincing evidence is required here, DOE
believes its findings fully satisfy that threshold”). The DOE
then continued with a lengthy analysis of what the clear and
convincing standard requires. Id. at 1608; see also id. at 1606,
1674 (stating the clear and convincing standard had been met).
Thus, the preamble to the Final Rule provides ample evidence
that this alternative ground embodied the agency’s “express
and considered conclusion.” In any event, judicial review does
not authorize the court to rewrite the decision being challenged,
nor to disregard what the agency clearly said.

     Relatedly, the petitioners argue the Final Rule is unlawful
because (a) the DOE departed without acknowledging or
distinguishing its precedent and practice of interpreting the
statute as requiring clear and convincing evidence for
rulemaking under the “lookback” provision; and (b) the DOE
failed to provide notice of its plan to abandon this long-held
position. Because we have just rejected the premise of this
argument, nothing more need be said about it.

    2. Challenges to the DOE’s Conclusion that More
       Stringent Standards are Economically Justified

     The remaining challenges to the Final Rule focus upon
various aspects of the DOE’s determination that more stringent
efficiency standards are economically justified.

         a. Random assignment of boilers to buildings

     As described above, in conducting the LCC analysis, the
DOE had to and did describe the world as it would be if the
agency issued no new standards and then compared that world
to a world with new standards. In constructing the no-new-
                               14
standards case, the DOE assumed the distribution of
efficiencies among shipped boilers is the same as the
distribution of efficiencies across the models listed in the AHRI
data base. As a result, when the DOE ran trials randomly
assigning boilers to buildings in the no-new-standards case, the
chance a boiler with a certain efficiency level would be
assigned to a building in the sample was equal to the percentage
of boilers in the AHRI database with that efficiency level,
without regard to the characteristics of the building to which
the boiler was assigned.

      Therefore, although the assignment of boilers to a
building was not completely random, as it accounted for the
relative prevalence of efficiency levels among boilers, it did not
account for the type of building to which boilers were assigned.
This means, the petitioners point out, the DOE failed to
recognize that a purchaser of commercial packaged boilers
would rationally consider the costs and benefits of its
investment and is likely to buy the boiler that produces the best
economic performance for its building. Indeed, it is difficult to
believe purchasers of commercial packaged boilers, which are
often large, sophisticated businesses, do not account for life-
cycle costs when making a purchase. Random assignment, the
petitioners contend, elides this reality. If a purchaser selects
the most efficient unit for its building, then the DOE’s model
will assign the benefits of that choice to its rule, rather than
attributing it, correctly, to the purchaser’s rational decision
making. As a result, the petitioners argue, the DOE inflated the
economic value of a more stringent standard by attributing to a
new regulation economic benefits that would be realized even
without a new regulation.

     Responding in the Final Rule to comments raising this
concern, the DOE rather dismissively noted that “development
of a complete consumer choice model, to support an alternative
                               15
to random assignment in the no-new-standards case, for boiler
efficiency would require data that are not currently available,
as well as recognition of the various factors that impact the
purchasing decision.” 85 Fed. Reg. at 1638. In a later section
meant to justify the rule under Executive Orders 12866 and
13563, the DOE lists several possible market failures as
“problems that this standards [sic] address, id. at 1676, but the
DOE provided not actual evidence that these market failures
affect the market for commercial packaged boilers and thus
justify the assumptions that underly its analysis.

     The assignment of efficiencies to the buildings in the
sample was a crucial part of the analysis supporting the DOE’s
conclusion that a more stringent standard was warranted. The
significant concerns the petitioners raised about this
assignment therefore demand a more complete response.
Instead of producing evidence of some market failure in this
specific market, the DOE essentially said it did the best it could
with the data it had. This is not enough to justify assuming a
purchaser’s decisions will not align with its economic interests
in purchasing a boiler. Indeed, the DOE’s lackadaisical
response would have been inadequate even if the rulemaking
were not governed by a heightened evidentiary standard, for
the DOE’s failure to “engage the arguments raised before it,”
Del. Dep’t of Natural Res. & Envtl. Control v. EPA, 785 F.3d
1, 11, 13-14 (D.C. Cir. 2015), bespeaks a failure to consider an
“important aspect of the problem,” State Farm, 463 U.S. at 43.
At any rate, the DOE’s response certainly is problematic under
the heightened standard requiring clear and convincing
evidence. Without a cogent and reasoned response to the
substantial concerns the petitioners raised about this crucial
part of its analysis, we cannot say it was reasonable for the
DOE to conclude that clear and convincing evidence supports
the adoption of a more stringent standard.
                               16

         b. Fuel prices

     The petitioners also challenge the DOE’s LCC analysis
insofar as it involves predicting energy prices. Accurate energy
prices are indispensable to the LCC analysis because fuel costs
are a large part of the life-cycle cost of a boiler.

     In order to estimate future energy prices, the DOE began
with historical price data from the Energy Information
Administration for various geographic areas, which it then
multiplied by forecasted fuel price indices derived from the
Energy Information Administration’s Annual Energy Outlook
2016. For electricity and natural gas prices, the DOE then
applied “seasonal marginal price factors” to obtain marginal
fuel prices, which it said better represent the cost to the
consumer of changes in energy consumption. For oil, however,
the DOE used the average prices, because it did not have
sufficient data to convert average prices into marginal prices.

     According to the petitioners, the average prices the DOE
used do not reflect the marginal prices paid by purchasers of
commercial packaged boilers.             Because operators of
commercial packaged boilers are among the largest purchasers
of fuel from energy utilities, they receive volume discounts and
enter into hedging contracts, and therefore pay significantly
less. Consequently, by using predicted average energy prices
to compare the LCC of boilers with and without a heightened
efficiency standard, the DOE significantly overstated the
savings associated with promulgation of a stricter standard.

     The DOE responded that the data sets it used “are the best
aggregate sources for energy prices currently available” and it
“incorporate[d] many adjustment factors to the average price
data and the price trend data to account for the price differences
                               17
due to variations in locations, seasons, and market sectors and
to ensure that the energy prices are properly accounted for in
the economic analysis.” 85 Fed. Reg. at 1632.

     This response is conclusory, not explanatory. The DOE
never explained how its “adjustment factors” address the
specific concerns raised by the petitioners, which are not about
“locations, seasons, [or] market sectors.” The DOE points us
to the Technical Support Document, which lays out the DOE’s
methodology for calculating energy prices. That document
correctly states: “Because marginal prices reflect a change in a
consumer’s bill associated with a change in energy consumed,
such prices are appropriate for determining energy cost savings
associated with possible changes to efficiency standards.” In
keeping with that insight, we are told “[m]onthly electricity and
natural gas prices were adjusted using seasonal marginal price
factors to determine monthly marginal electricity and natural
gas prices.” None of this addresses the lower prices for fuel
allegedly paid by those who operate commercial packaged
boilers. Perhaps the DOE could provide a cogent response to
the concerns raised by the petitioners, but we cannot discern it
in the administrative record. Therefore, we cannot say the
Secretary reasonably concluded she had clear and convincing
evidence a more stringent efficiency standard is economically
justified.

         c.   Burner operating hours

    The petitioners also challenge the DOE’s estimates for
burner operating hours. Burner operating hours are crucial for
the LCC analysis because the operating cost of a boiler
depends, in large part, upon the number of hours its burner
operates. The DOE did not have direct data about burner
operating hours for its no-new-standard case, so it estimated
them based upon building data from CBECS and RECS and
                               18
assumptions about heat load, including the adoption of a rule
of thumb that for every square foot of heated area, a building
uses 30 Btu/h.

     Once again, the Technical Support Document provides a
lengthy description of the method by which the DOE estimated
burner operating hours, and once again, questions went
unanswered. During the comment period, a consultant for
AHRI pointed to several purported anomalies in the DOE’s
estimates. Specifically, he said “[c]ommercial buildings are
generally cooling load dominated so it would be highly unusual
to have one thousand system operating hours per year,” yet
according to DOE’s estimates, the median burner operating
hours for six of eight categories of burners was more than 1000
hours, the 90th percentile of two of the eight categories was
more than 2000 operating hours, and the maximum burner
operating hours in all categories was well over 2000 hours.
Further, DOE “surprisingly,” he said, estimated that the
median, 90th percentile, and maximum burner hours for large
boilers are lower than the median, 90th percentile, and
maximum burner hours for small boilers of the same type.
These results, the consultant argued, should have alerted the
DOE to the possibility that either its assumption about heat load
or the data from CBECS were faulty.

     The DOE twice acknowledged these comments in the
Final Rule document but did not respond to them. Rather, the
DOE reiterated that it “has high confidence that its building
load estimation is representative of the building loads in the
field,” though it gave no reason for that confidence. 85 Fed.
Reg. at 1624. Perhaps more telling, it explained that “DOE has
not identified a source of comprehensive burner operating hour
data for commercial boilers that could be used for such an
analysis nor was such identified to DOE by stakeholders.” Id.
at 1637. Using data ill-suited to the task is not excused by
                               19
failure — even good faith failure — to locate suitable data,
particularly considering that the Congress here required clear
and convincing evidence before the Secretary can disturb the
regulatory status quo.

     By no stretch was this an exemplar of reasoned decision
making. A commenter pointed to seeming anomalies in the
DOE’s data and the agency ignored them. We need not decide
whether this omission would, on its own, be sufficient to say
the Secretary could not reasonably conclude she had clear and
convincing evidence to support a new standard. Because the
Final Rule has other deficiencies, however, we expect on
remand a reasoned response to these concerns as well.

         d. Proxy for shipment data

     The last challenge to the Final Rule relates to the DOE’s
proxy for shipment data. All agree direct shipment data are
optimal. In the absence of such data for six of the eight
categories of commercial packaged boilers, however, the DOE
turned to publicly available model listings as a proxy for
shipments. If 30 per cent of model listings had a certain energy
efficiency, then the DOE assumed that the same percent of
shipments had that efficiency.

     During the comment period, manufacturers argued that the
distribution of efficiencies in model listings is not an adequate
proxy for the distribution of efficiencies in sales. Responding
in the preamble to the Final Rule, the DOE defended its proxy
in two ways. First it said model listings likely approximate
shipments because “[i]n general, manufacturers are likely to
offer models with rated inputs and efficiencies where demand
is highest.” 85 Fed. Reg. at 1635. Second, the DOE noted that
AHRI had provided historical shipment information for two
categories of boilers, and the differences between the proxy
                              20
data and the shipment information for these two categories
turned out to be minimal. Id.

     Although the rationale of the DOE’s first point is not
entirely clear, its second point vindicates its position and is
powerful enough to carry the day. Even when clear and
convincing evidence is required, there is no bar to relying upon
a hypothesis that has been empirically validated, here by the
comparison between the proxy data and the shipment data
AHRI had provided for two of the eight types of boilers.
Especially considering the conclusory nature of the petitioners’
challenge to the proxy data — they provided no evidence of the
degree to which any inaccuracy might affect the DOE’s
calculations and conclusions — the DOE’s response was
adequate. The reasonableness of the DOE’s reliance upon the
proxy data is magnified when one considers that the AHRI has
historical shipment data for all relevant categories of packaged
boilers but refused to share them with the agency, a point made
by the Respondent-Intervenors that the petitioners did not
dispute in their Reply Brief. The upshot is that we cannot say
the use of the proxy data, on its own, made it unreasonable for
the Secretary to conclude a more stringent standard was
supported by clear and convincing evidence.

                      III. The Remedy

     What remains is the matter of a proper remedy. Although
“vacatur is the normal remedy” when a rule is found unlawful,
Allina Health Servs. v. Sebelius, 746 F.3d 1102, 1110 (D.C.
Cir. 2014), we have long recognized that remand without
vacatur is a useful arrow in a court’s remedial quiver. See
Checkosky v. S.E.C., 23 F.3d 452, 462-65 (D.C. Cir. 1994). In
Allied-Signal, Inc. v. Nuclear Regulatory Commission, we said
“the decision whether to vacate depends on the seriousness of
the order’s deficiencies (and thus the extent of doubt whether
                               21
the agency chose correctly) and the disruptive consequences of
an interim change that may itself be changed.” 988 F.2d 146,
150-51 (1993) (internal quotations omitted).

     The pragmatic benefits of remand without vacatur,
properly deployed, are undeniable. An open-ended remand
without vacatur, however, can create a new problem: The
agency may have little or no incentive to fix the deficient rule.
Both common sense and the empirical literature confirm this.
See Kristina Daugirdas, Note, Evaluating Remand Without
Vacatur: A New Judicial Remedy for Defective Agency
Rulemakings, 80 N.Y.U. L. Rev. 278, 301-05 (2005)
(cataloguing extreme examples of agency inaction following
remand without vacatur). Therefore, it may sometimes be
prudent to require an agency to fix a deficient rule by a time
certain, at which the rule will automatically be vacated. See In
re Core Commc’ns, Inc., 531 F.3d 849, 862 (Griffith, J.,
concurring) (D.C. Cir. 2008) (urging future panels to consider
alternatives to open-ended remand without vacatur); A.L.
Pharma, Inc. v. Shalala, 62 F.3d 1484, 1492 (D.C. Cir. 1995)
(ordering automatic vacatur if agency does not provide
adequate justification within 90 days).

     We think remanding the Final Rule to the DOE to
reevaluate it within a limited time is the proper remedy here.
The deficiencies of the rule may fairly be characterized as
failures to explain, the type of deficiency most readily
remedied on remand. In its supplemental brief, the DOE
represents that it “expects on remand that it will be able to
provide a full and sound explanation why the Rule’s standards”
— which are slated to go into effect in January 2023 — “satisfy
the clear and convincing evidence standard.” Under these
circumstances, we think it should be afforded a limited
opportunity to do so.
                              22
     Therefore, we shall remand the Final Rule to the DOE for
the agency to take appropriate remedial action within 90 days.
If the DOE fails to do so, the Final Rule will automatically be
vacated unless the agency demonstrates within ten days of the
issuance of this decision the need for additional time.

                     IV.     Conclusion

    For the foregoing reasons, the Final Rule is remanded to
the DOE, as explained above.