[Federal Register Volume 61, Number 136 (Monday, July 15, 1996)]
[Rules and Regulations]
[Pages 36974-36987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17886]
[[Page 36973]]
_______________________________________________________________________
Part III
Department of Energy
_______________________________________________________________________
Office of Energy Efficiency and Renewable Energy
_______________________________________________________________________
10 CFR Part 430
Procedures for Consideration of New or Revised Energy Conservation
Standards for Consumer Products; Final Rule
Federal Register / Vol. 61, No. 136 / Monday, July 15, 1996 / Rules
and Regulations
[[Page 36974]]
DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 430
RIN [1904-AA83]
Energy Conservation Program for Consumer Products: Procedures for
Consideration of New or Revised Energy Conservation Standards for
Consumer Products
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy (DOE).
ACTION: Notice of final rulemaking.
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SUMMARY: The Department of Energy (DOE or Department) today promulgates
a rule to elaborate on the procedures, interpretations and policies
that will guide the Department in establishing new or revised energy
efficiency standards for consumer products. The process described in
this rule provides for greatly enhanced opportunities for public input,
improved analytical approaches, and encouragement of consensus-based
standards. This enhanced approach was developed by the Department on
the basis of extensive consultations with many stakeholders.
EFFECTIVE DATE: The procedures, interpretations and policies
established in this rule take effect on August 14, 1996.
ADDRESSES: A copy of the report entitled ``Results of the Appliance
Rulemaking Process Improvement Effort,'' from which much of the
enhanced process described in this rule is derived, may be obtained
from: U.S. Department of Energy, Office of Energy Efficiency and
Renewable Energy, Forrestal Building, EE-43, 1000 Independence Avenue,
SW, Washington, DC 20585, (202) 586-7574. This report may be read at
the DOE Freedom of Information Reading Room, U.S. DOE, Forrestal
Building, Room 1E-190, 1000 Independence Avenue, SW, Washington, DC
20585, (202) 586-6020, between the hours of 9 a.m. and 4 p.m., Monday
through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT:
Michael J. McCabe, Office of Energy Efficiency and Renewable Energy,
U.S. Department of Energy, Mail Station EE-43, 1000 Independence
Avenue, SW, Washington, DC 20585-0121, (202) 586-0371
Douglas W. Smith, Office of General Counsel, U.S. Department of Energy,
Mail Station GC-70, 1000 Independence Avenue, SW, Washington, DC 20585-
0103, (202) 586-3410
Deborah E. Miller, Office of Energy Efficiency and Renewable Energy,
U.S. Department of Energy, Mail Station EE-1, 1000 Independence Avenue,
SW, Washington, DC 20585-0121, (202) 586-8888.
SUPPLEMENTARY INFORMATION:
I. Background on Appliance Standards Program
II. Process Leading to Development of this Rule
III. Description of Rule
1. Objectives
2. Scope
3. Setting Priorities for Rulemaking Activity
4. Process for Developing Efficiency Standards and Factors to be
Considered
5. Policies on Selection of Standards
6. Effective Date of a Standard
7. Test Procedures
8. Joint Stakeholder Recommendations
9. Principles for the Conduct of Engineering Analysis
10. Principles for the Analysis of Impacts on Manufacturers
11. Principles for the Analysis of Impacts on Consumers
12. Consideration of Non-Regulatory Approaches
13. Crosscutting Analytical Assumptions
14. Deviations, Revisions, and Judicial Review
IV. Related DOE Actions to Implement Process Improvements
1. Finalized process improvement report
2. Process to develop rulemaking priorities
3. Review of manufacturer impact analysis
4. Review of non-regulatory approaches
5. Creation of an advisory committee
V. Status of Ongoing Rulemakings
VI. Administrative Procedure
VII. Administrative Reviews
I. Background on Appliance Standards Program
The Department of Energy's appliance standards program is conducted
pursuant to Title III, Part B of the Energy Policy and Conservation Act
(EPCA). 42 U.S.C. 6291-6309. In 1987, EPCA was amended to establish by
law national efficiency standards for certain appliances and a schedule
for DOE to conduct rulemakings to periodically review and update these
standards. National Appliance Energy Conservation Act, Pub. L. 100-12
(1987). The products covered by these standards included refrigerators
and freezers, room air conditioners, central air conditioners and heat
pumps, water heaters, furnaces, dishwashers, clothes washers and
dryers, direct heating equipment, ranges and ovens, pool heaters, and
fluorescent lamp ballasts. In conducting the rulemakings to update the
standards, the Secretary of Energy is to set standards at levels that
achieve the maximum improvement in energy efficiency that is
technologically feasible and economically justified.
The Energy Policy Act of 1992 (EPACT) further amended EPCA to
expand the coverage of the standards program to include certain
commercial and industrial equipment, including commercial heating and
air-conditioning equipment, water heaters, certain incandescent and
fluorescent lamps, distribution transformers, and electric motors.
Energy Policy Act of 1992, Pub. L. 102-486 (1992). EPACT also
established maximum water flow-rate requirements for certain plumbing
products and provided for voluntary testing and consumer information
programs for office equipment, luminaires, and windows.
EPCA also provides for DOE to establish test procedures to be used
in evaluating compliance with efficiency standards. These test
procedures are revised periodically to reflect new product designs or
technologies.
As prescribed by EPCA, energy efficiency standards are established
by a three-phase public process: Advance Notice of Proposed Rulemaking
(ANOPR); Notice of Proposed Rulemaking (NOPR); and Final Rule. The
process to develop test procedures is similar, except that an Advance
Notice is not required.
In updating standards as required by EPCA, DOE revised standards
for refrigerators and freezers in November 1989, with those standards
becoming effective in January 1993. 54 FR 47916 (Nov. 17, 1989). These
standards resulted in an approximately 25 percent reduction in
refrigerator energy use. In May 1991, DOE issued revised energy
conservation standards for clothes washers, clothes dryers, and
dishwashers which became effective on May 14, 1994. 56 FR 22250 (May
14, 1991).
DOE has published notices of proposed rulemaking on revised
standards for a number of covered products. A NOPR for energy
conservation standards for eight products (water heaters, room air-
conditioners, mobile-home furnaces, direct-heating equipment, pool
heaters, kitchen ranges and ovens, fluorescent lamp ballasts, and
televisions) was published in March 1994. 59 FR 10464 (March 4, 1994).
DOE has since withdrawn the proposal to establish standards for
television sets. 60 FR 32627 (June 23, 1995). With regard to ballasts
and electric water heaters, DOE is gathering further inputs and
conducting further analysis. 60 FR 5880 (Jan. 31, 1995). In July 1995,
the Department issued a NOPR for energy conservation standards for
refrigerator
[[Page 36975]]
products which was based largely on a proposal made by a coalition of
refrigerator manufacturers, electric utilities, states and energy
conservation advocates. 60 FR 37388 (July 20, 1995).
The Department of the Interior and Related Agencies Appropriations
Act for Fiscal Year 1996 included a moratorium on proposing or issuing
energy conservation appliance standards for the remainder of Fiscal
Year 1996. See Pub. L. 104-134. The Department is continuing to work on
the analyses underlying proposed standards and on test procedure
revisions during this fiscal year.
The appliance standards program supports key objectives of the
Administration's Sustainable Energy Strategy, which include: Increasing
the efficiency of energy use in order to strengthen our economy and
improve living standards; reducing the adverse environmental impacts
associated with energy production, delivery and use; and keeping
America secure by reducing our vulnerability to global energy market
shocks. Although the Department recognizes that policies that rely on
market forces or market-based incentives are preferable in many
circumstances, appropriate regulatory intervention can achieve
efficiency gains that will benefit consumers, businesses, and the
Nation. Existing appliance standards are projected to save 23
quadrillion BTUs of energy from 1993 to 2015, resulting in estimated
consumer savings of $1.7 billion per year in 2000 and estimated annual
emission reductions of 107 million tons of carbon dioxide and 280
thousand tons on nitrogen oxides by 2000. An aggressive program for
promoting the efficient use of energy resources, including appliance
efficiency standards that are technically feasible and economically
justified, is a critical element of the Sustainable Energy Strategy.
II. Process Leading to Development of This Rule
Since the National Performance Review's recommendations on
Regulatory Reform were issued over two years ago, the U.S. DOE has
forged new ways of carrying out its appliance standards rulemaking
responsibilities. To supplement the traditional rulemaking process
established by law, the Department has encouraged consensus-based
alternatives and invited interest group participation in the early
stages of standards development with mechanisms such as technical
sessions and workshops.
In September 1995, the Department announced a formal effort to
consider further improvements to the process used to develop appliance
efficiency standards, calling on energy efficiency groups,
manufacturers, trade associations, state agencies, utilities, and other
interested parties to provide input to guide the Department's work. To
date, the Department's process improvement effort has consisted of
several elements:
--A series of preliminary meetings were held with interested parties to
identify opportunities for improvement in the rulemaking process,
standards priority setting, analysis methods and Department decision-
making;
--Interviews were conducted with thirty organizations that have
participated in past appliance rulemakings to solicit information
regarding the perceived strengths and weaknesses of the process;
--A preliminary draft ``Process Improvement Plan'' was developed from
these initial meetings and interviews;
--A public workshop was held to obtain broad-based input on the
Department's draft ``Process Improvement Plan'' and other elements of
the Department's proposed new approach;
--A draft report entitled ``Results of the Appliance Rulemaking Process
Improvement Effort'' was prepared and distributed for comment to the
workshop participants;
--Follow-up meetings were held with interested parties on the issues
raised in the draft report; and
--Several drafts of today's rule were shared with stakeholders, and the
Department addressed numerous comments made by interested parties in
written submissions and during two well-attended stakeholder workshops.
The publication of this rule is an important step in
institutionalizing the procedural improvements identified in this
process. It is not, however, the only step. Other actions in the
Department's process improvement effort include: A review of the
manufacturing impact analysis model and methodologies; a review of non-
regulatory approaches; the prioritization of future rules; and the
creation of an advisory committee consisting of a representative group
of interested parties, to oversee the implementation of these
commitments. (See section IV of the Supplementary Information.) The
objective is to act quickly to implement this enhanced standards
development process, and to continue to invite extensive stakeholder
consultation in the implementation phase.
The Department's many stakeholders have contributed tremendously to
this effort to review the Department's procedures. The Department
appreciates that sustained contribution, and is committed to implement
a process that is more responsive to stakeholder concerns.
III. Description of Rule
1. Objectives
Section 1 of the rule articulates the Department's major objectives
for the enhanced process to be employed for considering new or revised
appliance efficiency standards. The Department's objectives are to:
(a) Provide for early input from stakeholders
(b) Increase predictability of the rulemaking timetable
(c) Increase use of outside technical expertise
(d) Eliminate problematic design options early in the process
(e) Fully consider non-regulatory approaches
(f) Conduct thorough analysis of impacts
(g) Use transparent and robust analytical methods
(h) Articulate policies to guide selection of standards
(i) Support efforts to build consensus on standards
(j) Reduce time and cost of developing standards
2. Scope
Section 2 describes the applicability of the enhanced process
contained in the rule. The Department has adopted a common sense
approach to the transition to this enhanced process.
DOE will use the new approach for all new rulemakings. With regard
to rulemakings that are already underway, DOE and interested parties
have invested substantial effort and resources. In balancing whether
the benefits of using this enhanced process justify the delay of
starting these rulemakings anew, DOE has concluded that the new process
will be used, from the start, with respect to rulemakings in which a
NOPR has not yet been published. To the extent analytical work has
already been done or public comment on an ANOPR has already been
provided, such analysis and comment will be considered, as appropriate,
in proceeding under the new process. A case-by-case review is needed to
determine how to proceed (i.e., whether some or all of the analytical
or procedural steps should be repeated) with respect to products for
which a NOPR has been issued and the
[[Page 36976]]
analysis is nearly complete. DOE's intentions concerning how to proceed
with those rulemakings that are beyond the NOPR stage are discussed in
some detail in section V below. Note that the rulemakings beyond the
NOPR stage include one rule based on a consensus stakeholder
recommendation and others for which there has been shared analysis and
public workshops consistent with the direction of this rule.
3. Setting Priorities for Rulemaking Activity
Section 3 describes the process that will be used in developing
rulemaking priorities, including factors to be considered. The annual
process invites public input on the program's rulemaking agenda for the
coming year, establishes factors to be considered in establishing
priorities, and provides, in conjunction with the Department's
Regulatory Agenda, a clear set of expectations about the scheduled
rulemaking activities.
4. Process for Developing Efficiency Standards and Factors To Be
Considered
Section 4 establishes the process for developing efficiency
standards. This process is designed to provide for greater, and more
productive, interaction between the Department and interested parties
throughout the process. It is also designed so that key analyses are
performed earlier in the process, with early opportunities for public
input to and comment on the analyses. The process is consistent with
the procedural requirements of law, but adds some important steps to
enhance the process.
Building upon the National Performance Review's regulatory reform
initiative, an effort has been underway at the Department to increase
consultation with interested parties at every stage of the rulemaking
process. In addition to holding the formal public hearings and
soliciting written comments, the Department has increased its use of
public workshops and other less formal tools to develop more effective
standards. The Department has received broad support for its recent
efforts to open the standards development process and its commitment to
obtain input from interested parties early--well in advance of the
ANOPR--and often in the rulemaking process.
Section 4 also articulates factors that DOE will take into account
in screening design options, selecting candidate standard levels, and
selecting proposed and final standard levels.
(a) Pre-ANOPR Screening and Analysis of Design Options
As described in section 4(a), the first step in a rulemaking will
be a screening analysis that will identify the product categories and
technologically feasible design options and then narrow the range of
design options being considered for the development of candidate
standard levels. This screening analysis, along with the engineering
analysis and the selection of candidate standard levels, will occur
before DOE publishes an ANOPR.
Some manufacturers have expressed concern that the Department may
devote too much attention to consideration of design options that: Are
not practical to mass manufacture, install or service; have substantial
impacts on consumer utility; or raise significant safety concerns. The
screening step is designed to address these concerns. The Department
will develop, with input from interested parties, a list of design
options for further consideration. The Department will eliminate from
further consideration a design option that: Is not technologically
feasible; is not practicable to manufacture, install and service; has
significant adverse impact on the utility of the product to consumers;
or adversely affects health or safety. Consistent with Natural
Resources Defense Council v. Herrington, 768 F.2d 1355 (D.C. Cir.
1985), the Department will evaluate design options for technological
feasibility on the basis of whether the options are in use by industry
or research has progressed to the development of a prototype. However,
consideration of practicability to manufacture, impacts on consumer
utility and health and safety effects at this stage is designed to
ensure that commercially impractical designs, even if technologically
feasible, are screened out on the basis of other statutory criteria
early in the process. This early screening approach should reduce
uncertainty as to the direction of standards development.
The Department will seek expert input to conduct the necessary
analyses. The Department, with input from interested parties, will
identify issues that will be examined in the engineering analysis and
the types of specialized expertise that may be required. With these
specifications, DOE will select appropriate contractors,
subcontractors, and as necessary, expert consultants to perform the
engineering analysis and the impact analysis. DOE, in consultation with
interested parties, also will identify technology/industry experts who
can provide independent, expert review of the results of the
engineering analysis and the subsequent impact analysis. The Department
will consider in the analyses, wherever feasible, data, information and
analyses received from stakeholders.
After the screening of design options, the DOE contractor will
perform engineering and initial economic analysis of the design
options. The results of this analysis will be distributed for review by
experts and interested parties. If appropriate, a public workshop will
be conducted to review these results.
The process does not contemplate that the early screening process
will be the final opportunity to gather and consider input on whether a
design option is technologically feasible; is practicable to
manufacture, install and service; has significant adverse impact on
utility of the product to consumers; or adversely affects health or
safety. Any new information on these issues that is provided in later
stages of the rulemaking will be considered, as provided in sections
4(b)(4) and 4(d)(7)(ix), and a preliminary determination to include or
exclude consideration of a design option based on the screening
analysis may be revised if supported by a reexamination of these
factors based on new information.
This emphasis on the early stages of the process is designed to
enable interested parties and DOE to engage in a more productive,
informative interaction on standards issues prior to the publication of
the ANOPR, so that the standards development process starts with the
best possible foundation of common understanding.
(b) Factors in Selection of Proposed Standard
Section 4(c) provides that following review of comments on the
ANOPR, DOE's contractor will conduct specified impact analyses to be
used by DOE in selecting proposed standards. The factors to be
considered by DOE in selection of proposed standard levels include:
(i) Consensus stakeholder recommendations
(ii) Impacts on manufacturers
(iii) Impacts on consumers
(iv) Impacts on competition
(v) Impacts on utilities
(vi) National energy, economic and employment impacts
(vii) Impacts on the environment and energy security
(viii) Impacts of non-regulatory approaches
(ix) New information relating to factors use for screening design
options.
[[Page 36977]]
The Department's approach to analysis and consideration of several
of these key factors is discussed in sections 10, 11, and 12 of the
rule.
(c) Enhanced Opportunities for the Public to Receive Information and
Provide Input
Throughout the process, the Department will provide interested
parties with opportunities to provide data, recommendations and other
comments. DOE will share with the public both analyses and preliminary
decisions to inform interested parties as to the progress of standards
development. This information from the Department will enable the
public to provide informed input to DOE at each step of the process.
With the goal of better informing stakeholders about DOE rulemaking
activities, the Department will use various methods, in addition to
Federal Register notices, to notify interested parties of upcoming
meeting and rulemaking notices, such as industry publications, Inside
Energy, Air Conditioning News, Appliance Magazine, Product Safety
Letter, and the Energy Efficiency and Renewable Energy Network (EREN)
located on the Internet at http://www.eren.doe.gov.
(d) Timely Completion of Rulemakings
The Department's intent is to use a process that will produce
standards that have sound analytical grounding and have been subject to
thorough review and comment without making the process unduly time-
consuming. The entire process provided for in section 4, from the date
of issuance of the listing of priorities indicating that work is about
to begin on the development of a new standard, to issuance of the final
rule, should take no more than three years. The time required from
issuance of an ANOPR to issuance of a final rule should be no more than
18 months.
Timely completion of rulemakings is essential. If experience
demonstrates rulemakings are not being completed within a 3-year
timeframe using this new process, DOE will reconsider this process to
explore how changes can be made to expedite the process.
5. Policies on Selection of Standards
Section 5 describes Department policies concerning the selection of
new or revised standards, and decisions preliminary thereto. These
policies are intended to provide guidance for making the determinations
required by section 325 of the EPCA, 42 U.S.C. 6295.
Section 5(b) states policy guidance for screening design options.
In particular, it states that a design option will not be considered
further if it is determined that the technology: is not incorporated in
a commercial product or a working prototype; will not be capable of
being mass produced and installed and serviced by persons serving the
relevant market at the time a standard would take effect; will have
significant adverse impact on the utility of the product to consumers,
or result in the unavailability of any product type generally available
in the U.S. market; or will have significant adverse impacts on health
or safety.
Section 5(c) and (d) describe the policies pertaining to the
selection of candidate standard levels.
Sections 5(e) and (f) describe Department policies guiding
selection of proposed and final standard levels. Section 325(o)(2)(A)
of EPCA provides that any new or revised standard must be designed to
achieve the maximum improvement in energy efficiency that is determined
to be technologically feasible and economically justified. A candidate
standard level will not be proposed or promulgated if the Department
determines that it is not technologically feasible and economically
justified. See EPCA section 325(o)(3)(B). A standard level is
economically justified if the benefits exceed the burdens. See EPCA
section 325(o)(2)(B)(i).
The Department encourages efforts to develop consensus among
interested parties on proposals for new or revised standards as an
effective mechanism for balancing the economic, energy, and
environmental interests affected by standards. Thus, notwithstanding
any other policy on selection of proposed standards, a consensus
recommendation on an updated efficiency level submitted by a group that
represents all interested parties will be proposed by the Department if
it is determined to meet the statutory criteria.
Section 5(e) articulates a number of policies to guide the
application of EPCA's economic justification criterion in selecting a
proposed standard. Although many factors are pertinent to the ultimate
judgment about whether the benefits of a standard level exceed the
burdens, these policies reflect special concern about particular types
of significant adverse impacts on consumers and manufacturers in
reaching that judgment.
The policies articulated in section 5(e)(3)(i) are stated as
rebuttable presumptions. Although these presumptions reflect the great
significance DOE attaches to these factors, DOE will consider evidence
that rebuts an applicable presumption that a standard level is not
economically justified. Any applicable presumption will be rebutted if
the Department determines that specifically identified expected
benefits of the standard would outweigh the expected adverse effects.
6. Effective Date of a Standard
Section 6 provides that the lead time between the publication of a
final rule in the Federal Register and the effective date of the new or
revised standard will be at least the period contemplated by the
rulemaking schedules contained in EPCA. The Department will consider,
on a case-by-case basis, further extending this lead time if the
circumstances warrant. For instance, the lead time might be extended to
mitigate the cumulative burden of implementing multiple product
regulations or to permit time for market acceptance of new products.
This section also provides that the period between the effective date
of one standard and the effective date of any revision to that standard
will be at least the period contemplated by the rulemaking schedules
contained in EPCA. These policies will ensure that the time available
for manufacturers to prepare for implementation of a new or revised
standard and the time available for the amortization of any fixed costs
associated with compliance will be no less than anticipated in the
statute.
7. Test Procedures
Section 7 states the Department's commitment to ensure that
revisions to test procedure rules necessary to evaluate revisions to
standards are developed and finalized in a timely fashion.
Any necessary modifications in test procedures will be proposed
before issuance of an ANOPR on revised standards and will be finalized
prior to the issuance of a NOPR on revised standards. Where significant
test procedure changes are needed, DOE will attempt to finalize test
procedure revisions before the issuance of an ANOPR on revised
standards.
8. Joint Stakeholder Recommendations
Section 8 states that the Department supports efforts by groups of
interested parties to develop and present consensus recommendations on
standards to DOE. Throughout the standards development process, and
especially following the issuance of the ANOPR, interested parties are
welcome to develop common recommendations to the Department on product
categories and standard levels as well as on more specific analytical
issues. The
[[Page 36978]]
Department will seek to support these efforts in whatever way possible.
9. Principles for the Conduct of Engineering Analysis
Section 9 states the Department's commitment to solicit input from
interested parties and experts in conducting the engineering analysis.
The Department will use this input to develop the design options to be
considered in the subsequent analyses, identify any engineering models
necessary, and estimate the likely cost and performance improvement
potential of design options. The Department will use analytical methods
that explicitly account for uncertainty.
10. Principles for the Analysis of Impacts on Manufacturers
Section 10 describes the approach DOE will use in the analysis and
consideration of impacts on manufacturers. The process addresses a
number of concerns raised in the process improvement effort. First, the
process provides opportunities for comments in the pre-ANOPR screening
process and at the beginning of the impact assessment process. This
will focus attention on items of specific concern to each individual
regulatory proceeding. Discussions on what data are critical as well as
the specific approaches for generating those data will be conducted in
open proceedings. Second, the Department will utilize an annual cash
flow approach to determine quantitative impacts on manufacturers
including a short term assessment based on the cost and capital
requirements during the period between the announcement of a regulation
and the time when the regulation comes into effect. Third, with input
from manufacturers and other interested parties, the Department will
develop estimates of the critical variables affecting manufacturers
(such as expected changes in product prices, sales, and possible fuel
switching) drawing on multiple sources of data both quantitative and
qualitative. Fourth, the Department will analyze the impacts of a
standard on different types of manufacturers, with particular attention
to impacts on small manufacturers. This will be done with scenario
analysis or other appropriate methods. Fifth, the Department will use
models that: are clear and understandable; feature accessible
calculations; and recognize and report the range of uncertainty.
Finally, the Department will assess and describe the effects on
manufacturers of other significant product-specific regulations that
will take effect within three years of the effective date of the
standard under consideration and will affect significantly the same
manufacturers. This assessment is intended to capture the impacts of
different DOE standards affecting multiple products made by the same
manufacturing division.
With respect to overlapping efficiency standards on a product and
components of the product, the Department will pay special attention to
the cumulative regulatory burden being borne by the manufacturer of
finished products containing that component. In such cases, the
Department will specifically address the cost of potential component
standards plus the overlapping costs of existing parallel standards on
both the component and the system in which the component is installed.
11. Principles for the Analysis of Impacts on Consumers
Section 11 describes the Department's approach to consideration of
consumer impacts. First, in the very early stages of standard
development, DOE will consider adverse impacts of design options on
consumer utility and will identify other possible impacts on consumers
of updated efficiency standards which may warrant closer examination
during the standards development process. Second, DOE will determine,
on the basis of any information submitted during the standard
development process, whether a proposed standard is likely to result in
the unavailability of any covered product type with performance
characteristics, features, sizes, capacities, and volumes that are
substantially the same as products generally available in the U.S. at
the time. Consistent with EPCA, DOE will not promulgate a standard at a
level where it concludes that it would result in such unavailability.
Third, the Department will consider the views of the Department of
Justice on any impacts of a proposed standard on competition, and will
not issue a standard determined to have significant anticompetitive
impacts. Fourth, the Department will use regional analysis and
sensitivity analysis tools, as appropriate, to evaluate the potential
distribution of impacts of candidate standards levels on consumers. The
Department will consider impacts on significant segments of society in
determining standards levels. Where significant subgroups would be
expected to bear significant adverse impacts, DOE will place increased
emphasis on voluntary programs to bring about additional potential
energy savings.
The Department will be sensitive to first cost increases and make
greater use of sensitivity analysis and scenario analysis in reporting
consumer Life-Cycle Cost, Payback Period and Cost of Conserved Energy.
The Department expects that the use of these methods will result in
more economically efficient standards than reliance on pay-back period
alone, while achieving the similar result of avoiding negative impacts
to identifiable population groups.
Substantial increases in product prices may adversely affect low-
income households or cause shifts in product purchasing patterns. Thus,
if a candidate standard level would cause a substantial increase in the
product first costs to consumers or would not pay back such additional
first costs through energy cost savings in less than three years,
Department will specifically assess the likely impacts of such a
standard on low-income households, product sales and fuel switching.
The results of this assessment will be considered in the evaluation of
consumer and manufacturer impacts.
As noted during the process improvement effort, consumers have
rarely participated directly in standards development. In order to
address concerns about the lack of such direct participation, DOE will
seek to strengthen its efforts to inform and involve consumers and
consumer representatives in the process of developing standards. This
will include expanded notification of consumer representatives during
the process of developing updated efficiency standards and, where
appropriate, DOE may seek the direct input of consumers.
The Department is committed to improving the analysis of
engineering issues and consumer and manufacturer impacts. The
Department also is cognizant that using ever more elaborate
quantitative approaches carries the risk of unacceptable delays and
incomprehensible analysis and results. For these reasons, the
Department will seek to balance appropriately the use of quantitative
and qualitative approaches, with the goal of providing the most useful
information upon which to make the required judgments.
12. Consideration of Non-Regulatory Approaches
Section 12 states the Department's commitment to consider fully the
likely effects of market forces and any non-regulatory initiatives in
assessing the incremental benefits of efficiency standards. DOE
considers voluntary ``market pull'' programs to be an
[[Page 36979]]
important complement to its standards program.
13. Crosscutting Analytical Assumptions
Section 13 describes the principles the Department intends to
follow in selecting the key assumptions which are critical to the
quantitative analysis of the impacts of candidate standard levels,
including rates of economic growth, energy price and demand trends,
product specific energy efficiency trends, real discount rates and
emission rates. These cross-cutting analytical assumptions will
continue to be specifically identified in all notices of proposed
rulemaking and will continue to be subject to public comment and review
as part of each such rulemaking.
Certain crosscutting analytical assumptions will change regularly
as forecasts of economic growth, energy price, demand, efficiency and
other trends are modified. In other cases, such as the real discount
rates used to assess the present value of future costs or savings for
consumers, commercial businesses, manufacturers or the Nation, the
Department hopes that the crosscutting analytical assumptions will
remain relatively stable. For residential consumers, the Department
currently uses real discount rates of 2, 6 and 15% in the analysis of
likely impacts of appliance standards. For commercial users, the
Department currently uses 4, 8 and 12%. For manufacturers, the
Department currently uses 12%, but is likely to develop a range of
values for future use. For National benefits, the Department currently
uses 7%.
With respect to the consideration of the impacts of candidate
standards on the environment and energy security, the Department can
find no sound analytical method for accurately estimating the monetary
value of such environmental or energy security benefits (or costs).
Therefore, the Department will not attempt to incorporate the estimated
monetary value of such externalities into its estimates of the national
net present values of candidate standard levels. However, as required
by the National Environmental Policy Act, the Department will continue
to consider the likely effects of candidate standard levels on the
environment and energy security in reaching a decision as to whether
the benefits of the such standard levels exceed their burdens.
EPCA provides that energy conservation standards prescribed under
EPCA are to be based on energy consumption at the point of use (i.e.,
site energy). See EPCA sections 321 (4), (5) and (6). For purposes of
estimating energy savings in evaluating the benefits of a proposed
standard, DOE considers the energy savings associated with the
production of the fuel used by the appliance covered by the standard
(i.e., source energy).
14. Deviations, Revisions and Judicial Review
The Department has crafted this rule to include procedures,
interpretations and policies that it believes will be appropriate for
general use in the future conduct of the appliance standards program.
However, given the possibility of unanticipated circumstances affecting
either particular rulemakings or the program generally, the rule
includes provision for case-specific deviations and modifications of
the generally applicable rule. If the Department concludes that
elements of this rule are not appropriate in a particular standards
rulemaking, DOE will provide interested parties with notice of the
deviation and an explanation of why such a deviation was deemed
appropriate. If the Department concludes, based on experience with this
approach, that changes in this Appendix are appropriate, DOE will
provide notice of such modifications to the rule with an accompanying
explanation. DOE will consult with interested parties, probably through
the advisory committee (described in section IV.5 of this Supplementary
Information), prior to any such modification to the rule. The
procedures, interpretations, and policies stated in this Appendix are
not intended to establish any new cause of action or right to judicial
review. Judicial review of final rules is provided for in section 336
of EPCA.
IV. Related DOE Actions To Implement Process Improvements
In addition to promulgation of this rule, DOE employed other
activities to address some of the concerns raised by stakeholders
during the process improvement. These activities are described below.
1. Finalized Process Improvement Report
The Department will issue the final report on ``Results of the
Appliance Rulemaking Process Improvement Effort'' in August 1996.
2. Process To Develop Rulemaking Priorities
On June 14, 1996, the Department held a public workshop on
priority-setting and DOE will make available a draft priority listing
based on the results of our priority-setting analysis in late July. The
draft rulemaking priority listing and the accompanying analysis will:
Indicate for which covered products DOE is proposing to initiate or
continue, during the next two years, the development of updated
standards; document the priority-setting analysis which DOE used to
develop the draft priority listing; indicate the next steps for all
currently active rulemakings; describe any variations from the enhanced
process that will be followed for specific products; and provide a
schedule for completion of each rulemaking identified.
The final list of rulemaking priorities will be available at the
time that the Regulatory Agenda is published in the Federal Register in
the fall of 1996. During the summer, the Department will obtain public
comments on the draft listing of rulemaking priorities.
3. Review of Manufacturer Impact Analysis
In order to initiate the process of developing new and
substantially improved methods for assessing the impacts of standards
on manufacturers, DOE will review in detail the existing analyses
methodologies, develop a draft work plan for the development of new
methods for assessing manufacturer impact, and invite comments and
suggestions from interested parties.
4. Review of Non-Regulatory Approaches
DOE has initiated a process for developing methods for comparing
the likely benefits and costs of updated efficiency standards to
various non-regulatory alternatives. For instance, DOE held a public
workshop on June 20, 1996 which examined, among other issues,
alternatives and complements to standards for fluorescent lamp
ballasts. DOE expects to hold one or more similar workshops to examine
these issues with regard to other products.
5. Creation of an Advisory Committee
DOE is establishing an Advisory Committee on Appliance Energy
Efficiency Standards. The Committee will provide an official, organized
forum for interested parties to provide the Department with advice,
information, and recommendations on the Appliance Efficiency Standards
rulemaking process. Committee members will be chosen to ensure an
appropriately balanced representation of various points of view and
functions of interested parties and experts, such as manufacturer trade
associations, manufacturers, energy efficiency groups, consumers,
utilities, retailers, and state energy offices. The Assistant Secretary
[[Page 36980]]
for Energy Efficiency and Renewable Energy will chair the Committee.
It is anticipated that this advisory committee will be a useful
forum for obtaining advice on the desirability of making changes to the
procedures, interpretations and policies set out in this rule, and on
cross cutting analytical issues affecting all product standards. The
Advisory Committee may recommend that DOE undertake generic proceedings
relating to crosscutting analytical issues.
V. Status of Ongoing Rulemakings
As stated in section 2 of the rule, the Department will apply the
new process described in section 4 of the rule to all rulemakings for
which a NOPR has not yet been published. To the extent analytical work
has already been done, and public comment on an ANOPR already has been
provided, such analysis and comment will be considered, as appropriate,
in proceeding with the new process.
The Department is precluded through September 1996 from using funds
appropriated under the Fiscal Year 1996 Interior Appropriations Act to
propose or promulgate new or revised efficiency standards. With respect
to rulemakings for which a NOPR has already been published, DOE
currently intends to proceed as follows:
Refrigerators. The analysis of comments on the NOPR is complete. At
this time, DOE believes that no major changes to the underlying
analysis of the proposed refrigerator standards is necessary. However,
the Department expects to consult further with interested parties to
determine whether it is appropriate to make alterations to the proposed
standards to take into account the interaction between the revised
efficiency standards and Clean Air Act and Montreal Protocol on
Substances that Deplete the Ozone Layer regulations relating to
manufacture of HCFCs, which take effect in 2003, as suggested by some
stakeholders. The Department expects that any further consideration of
this issue would be consistent with the approach taken in today's rule
on pertinent topics such as cumulative regulatory burden.
Ballasts. The analysis underlying the previously proposed standards
has been substantially revised and has been circulated for technical
review by manufacturers and other interested parties. A public workshop
to review this revised analysis was held on June 20, 1996.
Cooking Products and Room Air Conditioners. The analyses underlying
the proposed standards for these two product categories have been
substantially revised and are now being circulated for technical review
by manufacturers and other interested parties. On the basis of these
analyses and any comments received on these analyses, the Department
expects to proceed to issue a final rule after the current fiscal year
1996 moratorium expires.
Water Heaters. The analyses for gas, oil and electric water heaters
are being revised and will be completed and made available for review
depending on the priority given this product. A revised NOPR would be
issued following the new procedure.
Mobile Home Furnaces, Direct Heating Equipment and Pool Heaters.
The analyses for these products have been revised and will be made
available for review depending on the priority given them. Revised
NOPRs would be issued following the new procedure.
In the near term, DOE will consider these rulemakings among others
in the upcoming priority setting effort, and will solicit and consider
public comment on how to proceed with these rules in that process.
VI. Administrative Procedure
The rule published today describes procedures, interpretations, and
policies DOE will follow in conducting rulemakings on appliance
standards. DOE is not required to provide for prior notice and
opportunity for comment on today's final regulations because they fall
within the Administrative Procedure Act's exception for
``interpretative rules, general statements of policy, or rules of
agency organization, procedure, or practice.'' 5 U.S.C. 553(b)(A).
Moreover, these procedures, interpretations and policies were developed
with extensive consultation with representatives of all of the
interests that typically participate in standards rulemakings. The
consultations to date are described in detail in section II of this
Supplementary Information.
VII. Administrative Reviews
A. Review Under Executive Order 12866
This regulatory action is not a significant regulatory action under
Executive Order 12866, ``Regulatory Planning and Review,'' October 4,
1993. Accordingly, this action was not subject to review under the
Executive Order by the Office of Information and Regulatory Affairs.
B. Review Under Executive Order 12612
Executive Order 12612 requires that regulations, rules,
legislation, and any other policy actions be reviewed for any
substantial direct effect on states, on the relationship between the
National Government and states, or in the distribution of power and
responsibilities among various levels of government. If there are
substantial effects, then the Executive Order requires preparation of a
federalism assessment to be used in all decisions involved in
promulgating and implementing a policy action.
The final rules published today do not regulate the states. They
primarily will affect the manner in which DOE develops proposed rules
to revise consumer product energy efficiency standards. Section 327 of
the EPCA provides for preemption of state regulation in this area. The
final rules published today do not alter the distribution of authority
and responsibility to regulate in this area. Accordingly, DOE has
determined that preparation of a federalism assessment is unnecessary.
C. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of the Executive Order
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of the Executive Order requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. DOE reviewed today's final
regulations under the standards of section 3 of the Executive Order and
determined that, to the extent permitted
[[Page 36981]]
by law, they meet the requirements of those standards.
D. Regulatory Flexibility Act
If an agency is required by law to issue a general NOPR, and if a
rule has, or is likely to have, a significant negative economic impact
on a substantial number of small entities, then the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq., requires preparation of an
initial and final regulatory flexibility analysis to accompany proposed
and final rulemakings, respectively. Because the rule published today
is exempt from notice and comment rulemaking under the Administrative
Procedure Act, there is no requirement to prepare a regulatory
flexibility analysis.
E. Review Under the National Environmental Policy Act
The Department has concluded that this rule falls into a class of
actions that are categorically excluded from review under the National
Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321, 4331-35, 4341-
47, because they would not individually or cumulatively have a
significant impact on the human environment as determined by DOE's
regulations. 10 CFR part 1021, subpart D. Therefore this rule does not
require preparation of an environmental impact statement or
environmental assessment pursuant to NEPA.
F. Review Under Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995, Pub.L. 104-4,
requires each Federal agency to assess the possible effects of Federal
regulatory action on state, local, and tribal governments, and the
private sector of Federal mandates. If a Federal mandate is expected to
have an impact of $100 million or more in any year, then the mandate is
significant and the issuing agency is obliged to undertake a detailed
assessment of costs and benefits. If the Federal mandate is a
significant intergovernmental mandate, then the issuing agency is
obliged to provide a meaningful and timely opportunity for affected
governments to participate in the development of the rule. The final
regulations in this notice apply only to the conduct of DOE officials
and do not place regulatory obligations on anyone outside of DOE.
Accordingly, there are no legal requirements under the Unfunded
Mandates Reform Act of 1995 that apply to this rulemaking.
G. Review Under Small Business Regulatory Enforcement Fairness Act of
1996
Consistent with the Small Business Regulatory Enforcement Fairness
Act of 1996, DOE will submit to Congress a report regarding the
issuance of today's final rule prior to the effective date set forth at
the outset of this notice. The report will note the Office of
Management and Budget's determination that this rule does not
constitute a ``major rule'' under that Act. 5 U.S.C. 801, 804.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Energy conservation,
Household appliances.
Issued in Washington, DC, on July 9, 1996.
Christine A. Ervin,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble, Part 430 of Chapter II
of Title 10, Code of Federal Regulations, is amended as set forth
below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
1. The authority cite continues to read as follows:
Authority: 42 U.S.C. 6291-6309.
2. Appendix A to Subpart C of Part 430--Procedures, Interpretations
and Policies for Consideration of New or Revised Energy Conservation
Standards for Consumer Products--is added as set forth below:
Appendix A to Subpart C of Part 430--Procedures, Interpretations and
Policies for Consideration of New or Revised Energy Conservation
Standards for Consumer Products
1. Objectives
2. Scope
3. Setting Priorities for Rulemaking Activity
4. Process for Developing Efficiency Standards and Factors to be
Considered
5. Policies on Selection of Standards
6. Effective Date of a Standard
7. Test Procedures
8. Joint Stakeholder Recommendations
9. Principles for the Conduct of Engineering Analysis
10. Principles for the Analysis of Impacts on Manufacturers
11. Principles for the Analysis of Impacts on Consumers
12. Consideration of Non-Regulatory Approaches
13. Crosscutting Analytical Assumptions
14. Deviations, Revisions, and Judicial Review
1. Objectives
This Appendix establishes procedures, interpretations and
policies to guide the DOE in the consideration and promulgation of
new or revised appliance efficiency standards under the Energy
Policy and Conservation Act (EPCA). The Department's objectives in
establishing these guidelines include:
(a) Provide for early input from stakeholders. The Department
seeks to provide opportunities for public input early in the
rulemaking process so that the initiation and direction of
rulemakings is informed by comment from interested parties. Under
the guidelines established by this Appendix, DOE will seek early
input from interested parties in setting rulemaking priorities and
structuring the analyses for particular products. Interested parties
will be invited to provide input for the selection of design options
and will help DOE identify analysis, data, and modeling needs. DOE
will gather input from interested parties through a variety of
mechanisms, including public workshops.
(b) Increase predictability of the rulemaking timetable. The
Department seeks to make informed, strategic decisions about how to
deploy its resources on the range of possible standards development
activities, and to announce these prioritization decisions so that
all interested parties have a common expectation about the timing of
different rulemaking activities. The guidelines in this Appendix
provide for setting priorities and timetables for standards
development and test procedure modification and reflect these
priorities in the Regulatory Agenda.
(c) Increase use of outside technical expertise. The Department
seeks to expand its use of outside technical experts in evaluating
product-specific engineering issues to ensure that decisions on
technical issues are fully informed. The guidelines in this Appendix
provide for increased use of outside technical experts in
developing, performing and reviewing the analyses. Draft analytical
results will be distributed for peer and stakeholder review.
(d) Eliminate problematic design options early in the process.
The Department seeks to eliminate from consideration, early in the
process, any design options that present unacceptable problems with
respect to manufacturability, consumer utility, or safety, so that
the detailed analysis can focus only on viable design options. Under
the guidelines in this Appendix, DOE will eliminate from
consideration design options if it concludes that manufacture,
installation or service of the design will be impractical, or that
the design option will adversely affect the utility of the product,
or if the design has adverse safety or health impacts. This
screening will be done at the outset of a rulemaking.
(e) Fully consider non-regulatory approaches. The Department
seeks to understand the effects of market forces and voluntary
programs on encouraging the purchase of energy efficient products so
that the incremental impacts of a new or revised standard can be
accurately assessed and the Department can make informed decisions
about where standards and voluntary ``market pull'' programs can be
used most effectively. Under the guidelines in this
[[Page 36982]]
Appendix, DOE will solicit information on the effectiveness of
market forces and non-regulatory approaches for encouraging the
purchase of energy efficient products, and will carefully consider
this information in assessing the benefits of standards. In
addition, DOE will continue to support voluntary efforts by
manufacturers, retailers, utilities and others to increase product
efficiency.
(f) Conduct thorough analysis of impacts. In addition to
understanding the aggregate costs and benefits of standards, the
Department seeks to understand the distribution of those costs and
benefits among consumers, manufacturers and others, and the
uncertainty associated with these analyses of costs and benefits, so
that any adverse impacts on significant subgroups and uncertainty
concerning any adverse impacts can be fully considered in selecting
a standard. Under the guidelines in this Appendix, the analyses will
consider the variability of impacts on significant groups of
manufacturers and consumers in addition to aggregate costs and
benefits, report the range of uncertainty associated with these
impacts, and take into account cumulative impacts of regulation on
manufacturers.
(g) Use transparent and robust analytical methods. The
Department seeks to use qualitative and quantitative analytical
methods that are fully documented for the public and that produce
results that can be explained and reproduced, so that the analytical
underpinnings for policy decisions on standards are as sound and
well-accepted as possible. Under the guidelines in this Appendix,
DOE will solicit input from interested parties in identifying
analysis, data, and modeling needs with respect to measurement of
impacts on manufacturers and consumers.
(h) Articulate policies to guide selection of standards. The
Department seeks to adopt policies elaborating on the statutory
criteria for selecting standards, so that interested parties are
aware of the policies that will guide these decisions. Under the
guidelines in this Appendix, policies for screening design options,
selecting candidate standard levels, selecting a proposed standard
level, and establishing the final standard are established.
(i) Support efforts to build consensus on standards. The
Department seeks to encourage development of consensus proposals for
new or revised standards because standards with such broad-based
support are likely to balance effectively the economic, energy, and
environmental interests affected by standards. Under the guidelines
in this Appendix, DOE will support the development and submission of
consensus recommendations for standards by representative groups of
interested parties to the fullest extent possible.
(j) Reduce time and cost of developing standards. The Department
seeks to establish a clear protocol for initiating and conducting
standards rulemakings in order to eliminate time-consuming and
costly missteps. Under the guidelines in this Appendix, increased
and earlier involvement by interested parties and increased use of
technical experts should minimize the need for re-analysis. This
process should reduce the period between the publication of an
Advance Notice of Proposed Rulemaking (ANOPR) and the publication of
a final rule to not more than 18 months, and should decrease the
government and private sector resources required to complete the
standard development process.
2. Scope
(a) The procedures, interpretations and policies described in
this Appendix will be fully applicable to:
(1) Rulemakings concerning new or revised Federal energy
conservation standards for consumer products initiated after August
14, 1996, and
(2) Rulemakings concerning new or revised Federal energy
conservation standards for consumer products that have been
initiated but for which a Notice of Proposed Rulemaking (NOPR) has
not been published as of August 14, 1996.
(b) For rulemakings described in paragraph (a)(2) of this
section, to the extent analytical work has already been done or
public comment on an ANOPR has already been provided, such analyses
and comment will be considered, as appropriate, in proceeding under
the new process.
(c) With respect to incomplete rulemakings concerning new or
revised Federal energy conservation standards for consumer products
for which a NOPR was published prior to August 14, 1996, the
Department will conduct a case-by-case review to decide whether any
of the analytical or procedural steps already completed should be
repeated. In any case, the approach described in this Appendix will
be used to the extent possible to conduct any analytical or
procedural steps that have not been completed.
3. Setting Priorities for Rulemaking Activity
(a) Priority-setting analysis and development of list of
priorities. At least once a year, the Department will prepare an
analysis of each of the factors identified in paragraph (d) of this
section based on existing literature, direct communications with
interested parties and other experts, and other available
information. The results of this analysis will be used to develop
rulemaking priorities and proposed schedules for the development and
issuance of all rulemakings. The DOE analysis, priorities and
proposed rulemaking schedules will be documented and distributed for
review and comment.
(b) Public review and comment. Each year, DOE will invite public
input to review and comment on the priority analysis.
(c) Issuance of final listing of rulemaking priorities. Each
fall, the Department will issue, simultaneously with the issuance of
the Administration's Regulatory Agenda, a final set of rulemaking
priorities, the accompanying analysis, and the schedules for all
priority rulemakings that it anticipates within the next two years.
(d) Factors for priority-setting. The factors to be considered
by DOE in developing priorities and establishing schedules for
conducting rulemakings will include:
(1) Potential energy savings.
(2) Potential economic benefits.
(3) Potential environmental or energy security benefits.
(4) Applicable deadlines for rulemakings.
(5) Incremental DOE resources required to complete rulemaking
process.
(6) Other relevant regulatory actions affecting products.
(7) Stakeholder recommendations.
(8) Evidence of energy efficiency gains in the market absent new
or revised standards.
(9) Status of required changes to test procedures.
(10) Other relevant factors.
4. Process for Developing Efficiency Standards and Factors to be
Considered
This section describes the process to be used in developing
efficiency standards and the factors to be considered in the
process. The policies of the Department to guide the selection of
standards and the decisions preliminary thereto are described in
section 5.
(a) Identifying and screening design options. Once the
Department has initiated a rulemaking for a specific product but
before publishing an ANOPR, DOE will identify the product categories
and design options to be analyzed in detail, and identify those
design options eliminated from further consideration. Interested
parties will be consulted to identify key issues, develop a list of
design options, and to help the Department identify the expertise
necessary to conduct the analysis.
(1) Identification of issues for analysis. The Department, in
consultation with interested parties, will identify issues that will
be examined in the standards development process.
(2) Identification of experts and other interested parties for
peer review. DOE, in consultation with interested parties, will
identify a group of independent experts and other interested parties
who can provide expert review of the results of the engineering
analysis and the subsequent impact analysis.
(3) Identification and screening of design options. In
consultation with interested parties, the Department will develop a
list of design options for consideration. Initially, the candidate
design options will encompass all those technologies considered to
be technologically feasible. Following the development of this
initial list of design options, DOE will review each design option
based on the factors described in paragraph (a)(4) of this section
and the policies stated in section 5(b). The reasons for eliminating
any design option at this stage of the process will be fully
documented and published as part of the ANOPR. The technologically
feasible design options that are not eliminated in this screening
will be considered further in the Engineering Analysis described in
paragraph (b) of this section.
(4) Factors for screening of design options. The factors for
screening design options include:
(i) Technological feasibility. Technologies incorporated in
commercial products or in working prototypes will be considered
technologically feasible.
(ii) Practicability to manufacture, install and service. If mass
production of a
[[Page 36983]]
technology in commercial products and reliable installation and
servicing of the technology could be achieved on the scale necessary
to serve the relevant market at the time of the effective date of
the standard, then that technology will be considered practicable to
manufacture, install and service.
(iii) Adverse Impacts on Product Utility or Product
Availability.
(iv) Adverse Impacts on Health or Safety.
(5) Selection of contractors. Using the specifications of
necessary contractor expertise developed in consultation with
interested parties, DOE will select appropriate contractors,
subcontractors, and as necessary, expert consultants to perform the
engineering analysis and the impact analysis.
(b) Engineering analysis of design options and selection of
candidate standard levels. After design options are identified and
screened, DOE will perform the engineering analysis and the benefit/
cost analysis and select the candidate standard levels based on
these analyses. The results of the analyses will be published in a
Technical Support Document (TSD) to accompany the ANOPR.
(1) Identification of engineering analytical methods and tools.
DOE, in consultation with outside experts, will select the specific
engineering analysis tools (or multiple tools, if necessary to
address uncertainty) to be used in the analysis of the design
options identified as a result of the screening analysis.
(2) Engineering and life-cycle cost analysis of design options.
The DOE and its contractor will perform engineering and life-cycle
cost analyses of the design options.
(3) Review by expert group and stakeholders. The results of the
engineering and life-cycle cost analyses will be distributed for
review by experts and interested parties. If appropriate, a public
workshop will be conducted to review these results. The analyses
will be revised as appropriate on the basis of this input.
(4) New information relating to the factors used for screening
design options. If further information or analysis leads to a
determination that a design option, or a combination of design
options, has unacceptable impacts based on the policies stated in
section 5(b), that design option or combination of design options
will not be included in a candidate standard level.
(5) Selection of candidate standard levels. Based on the results
of the engineering and life-cycle cost analysis of design options
and the policies stated in section 5(c), DOE will select the
candidate standard levels for further analysis.
(c) Advance Notice of Proposed Rulemaking.
(1) Documentation of decisions on candidate standard selection.
(i) If the screening analysis indicates that continued development
of a standard is appropriate, the Department will publish an ANOPR
in the Federal Register and will distribute a draft TSD containing
the analyses performed to this point. The ANOPR will specify
candidate standard levels but will not propose a particular
standard. The ANOPR will also include the preliminary analysis of
consumer life-cycle costs, national net present value, and energy
impacts for the candidate standard levels based on the engineering
analysis.
(ii) If the preliminary analysis indicates that no candidate
standard level is likely to meet the criteria specified in law, that
conclusion will be announced. In such cases, the Department may
decide to proceed with a rulemaking that proposes not to adopt new
or amended standards, or it may suspend the rulemaking and conclude
that further action on such standards should be assigned a low
priority under section 3.
(2) Public comment and hearing. There will be 75 days for public
comment on the ANOPR with at least one public hearing or workshop.
(3) Revisions based on comments. Based on consideration of the
comments received, any necessary changes to the engineering analysis
or the candidate standard levels will be made.
If major changes are required at this stage, interested parties
and experts will be given an opportunity to review the revised
analysis.
(d) Analysis of impacts and selection of proposed standard
level. After the ANOPR, economic analyses of the impacts of the
candidate standard levels will be conducted. The Department will
propose updated standards based on the results of the impact
analysis.
(1) Identification of issues for analysis. The Department, in
consultation with interested parties, will identify issues that will
be examined in the impacts analysis.
(2) Identification of analytical methods and tools. DOE, in
consultation with outside experts, will select the specific economic
analysis tools (or multiple tools if necessary to address
uncertainty) to be used in the analysis of the candidate standard
levels.
(3) Analysis of impacts. DOE will conduct the analysis of the
impacts of candidate standard levels including analysis of the
factors described in paragraphs (d)(7)(ii)-(viii) of this section.
(4) Review by expert group and stakeholders. The results of the
analysis of impacts will be distributed for review by experts and
interested parties. If appropriate, a public workshop will be
conducted to review these results. The analysis will be revised as
appropriate on the basis of this input.
(5) Efforts to develop consensus among stakeholders. If a
representative group of interested parties undertakes to develop
joint recommendations to the Department on standards, DOE will
consider deferring its impact analysis until these discussions are
completed or until participants in the efforts indicate that they
are unable to reach a timely agreement.
(6) Selection of proposed standard level based on analysis of
impacts. On the basis of the analysis of the factors described in
paragraph (d)(7) of this section and the policies stated in section
5(e), DOE will select a proposed standard level.
(7) Factors to be considered in selecting a proposed standard.
The factors to be considered in selection of a proposed standard
include:
(i) Consensus stakeholder recommendations.
(ii) Impacts on manufacturers. The analysis of manufacturer
impacts will include: Estimated impacts on cash flow; assessment of
impacts on manufacturers of specific categories of products and
small manufacturers; assessment of impacts on manufacturers of
multiple product-specific Federal regulatory requirements, including
efficiency standards for other products and regulations of other
agencies; and impact on manufacturing capacity, plant closures, and
loss of capital investment.
(iii) Impacts on consumers. The analysis of consumer impacts
will include: Estimated impacts on consumers based on national
average energy prices and energy usage; assessments of impacts on
subgroups of consumers based on major regional differences in usage
or energy prices and significant variations in installation costs or
performance; sensitivity analyses using high and low discount rates
and high and low energy price forecasts; consideration of changes to
product utility and other impacts of likely concern to all or some
consumers, based to the extent practicable on direct input from
consumers; estimated life-cycle cost with sensitivity analysis; and
consideration of the increased first cost to consumers and the time
required for energy cost savings to pay back these first costs.
(iv) Impacts on competition.
(v) Impacts on utilities. The analysis of utility impacts will
include estimated marginal impacts on electric and gas utility costs
and revenues.
(vi) National energy, economic and employment impacts. The
analysis of national energy, economic and employment impacts will
include: Estimated energy savings by fuel type; estimated net
present value of benefits to all consumers; and estimates of the
direct and indirect impacts on employment by appliance
manufacturers, relevant service industries, energy suppliers and the
economy in general.
(vii) Impacts on the environment and energy security. The
analysis of environmental and energy security impacts will include
estimated impacts on emissions of carbon and relevant criteria
pollutants, impacts on pollution control costs, and impacts on oil
use.
(viii) Impacts of non-regulatory approaches. The analysis of
energy savings and consumer impacts will incorporate an assessment
of the impacts of market forces and existing voluntary programs in
promoting product efficiency, usage and related characteristics in
the absence of updated efficiency standards.
(ix) New information relating to the factors used for screening
design options.
(e) Notice of Proposed Rulemaking.
(1) Documentation of decisions on proposed standard selection.
The Department will publish a NOPR in the Federal Register that
proposes standard levels and explains the basis for the selection of
those proposed levels, and will distribute a draft TSD documenting
the analysis of impacts. As required by Sec. 325(p)(2) of EPCA, the
NOPR also will describe the maximum improvement in energy efficiency
or
[[Page 36984]]
maximum reduction in energy use that is technologically feasible
and, if the proposed standards would not achieve these levels, the
reasons for proposing different standards.
(2) Public comment and hearing. There will be 75 days for public
comment on the NOPR, with at least one public hearing or workshop.
(3) Revisions to impact analyses and selection of final
standard. Based on the public comments received and the policies
stated in section 5(f), DOE will review the proposed standard and
impact analyses, and make modifications as necessary. If major
changes to the analyses are required at this stage, interested
parties and experts will be given an opportunity to review the
revised analyses.
(f) Notice of Final Rulemaking. The Department will publish a
Notice of Final Rulemaking in the Federal Register that promulgates
standard levels and explains the basis for the selection of those
standards, accompanied by a final TSD.
5. Policies on Selection of Standards.
(a) Purpose. (1) Section 4 describes the process that will be
used to consider new or revised energy efficiency standards and
lists a number of factors and analyses that will be considered at
specified points in the process. Department policies concerning the
selection of new or revised standards, and decisions preliminary
thereto, are described in this section.
These policies are intended to elaborate on the statutory
criteria provided in section 325 of the EPCA, 42 U.S.C. 6295.
(2) The policies described below are intended to provide
guidance for making the determinations required by EPCA. This
statement of policy is not intended to preclude consideration of any
information pertinent to the statutory criteria. The Department will
consider all pertinent information in determining whether a new or
revised standard is consistent with the statutory criteria.
Moreover, the Department will not be guided by a policy in this
section if, in the particular circumstances presented, such a policy
would lead to a result inconsistent with the criteria in section 325
of EPCA.
(b) Screening design options. Section 4(a)(4) lists factors to
be considered in screening design options. These factors will be
considered as follows in determining whether a design option will
receive any further consideration:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will
not be considered further.
(2) Practicability to manufacture, install and service. If it is
determined that mass production of a technology in commercial
products and reliable installation and servicing of the technology
could not be achieved on the scale necessary to serve the relevant
market at the time of the effective date of the standard, then that
technology will not be considered further.
(3) Impacts on product utility to consumers. If a technology is
determined to have significant adverse impact on the utility of the
product to significant subgroups of consumers, or result in the
unavailability of any covered product type with performance
characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the U.S. at the time, it will not be
considered further.
(4) Safety of technologies. If it is determined that a
technology will have significant adverse impacts on health or
safety, it will not be considered further.
(c) Identification of candidate standard levels. Based on the
results of the engineering and cost and benefit analyses of design
options, DOE will identify the candidate standard levels for further
analysis. Candidate standard levels will be selected as follows:
(1) Costs and savings of design options. Design options which
have payback periods that exceed the average life of the product or
which cause life-cycle cost increases relative to the base case,
using typical fuel costs, usage and discount rates, will not be used
as the basis for candidate standard levels.
(2) Further information on factors used for screening design
options. If further information or analysis leads to a determination
that a design option, or a combination of design options, has
unacceptable impacts under the policies stated in paragraph (b) of
this section, that design option or combination of design options
will not be included in a candidate standard level.
(3) Selection of candidate standard levels. Candidate standard
levels, which will be identified in the ANOPR and on which impact
analyses will be conducted, will be based on the remaining design
options.
(i) The range of candidate standard levels will typically
include:
(A) The most energy efficient combination of design options;
(B) The combination of design options with the lowest life-cycle
cost; and
(C) A combination of design options with a payback period of not
more than three years.
(ii) Candidate standard levels that incorporate noteworthy
technologies or fill in large gaps between efficiency levels of
other candidate standard levels also may be selected.
(d) Advance notice of proposed rulemaking. New information
provided in public comments on the ANOPR will be considered to
determine whether any changes to the candidate standard levels are
needed before proceeding to the analysis of impacts. This review,
and any appropriate adjustments, will be based on the policies in
paragraph (c) of this section.
(e) Selection of proposed standard. Based on the results of the
analysis of impacts, DOE will select a standard level to be proposed
for public comment in the NOPR. Section 4(d)(7) lists the factors to
be considered in selecting a proposed standard level. Section
325(o)(2)(A) of EPCA provides that any new or revised standard must
be designed to achieve the maximum improvement in energy efficiency
that is determined to be technologically feasible and economically
justified.
(1) Statutory policies. The fundamental policies concerning
selection of standards are established in the EPCA, including the
following:
(i) A candidate standard level will not be proposed or
promulgated if the Department determines that it is not
technologically feasible and economically justified. See EPCA
section 325(o)(3)(B). A standard level is economically justified if
the benefits exceed the burdens. See EPCA section 325(o)(2)(B)(i). A
standard level is rebuttably presumed to be economically justified
if the payback period is three years or less. See EPCA section
325(o)(2)(B)(iii).
(ii) If the Department determines that a standard level is
likely to result in the unavailability of any covered product type
with performance characteristics (including reliability), features,
sizes, capacities, and volumes that are substantially the same as
products generally available in the U.S. at the time, that standard
level will not be proposed. See EPCA section 325(o)(4).
(iii) If the Department determines that a standard level would
not result in significant conservation of energy, that standard
level will not be proposed. See EPCA section 325(o)(3)(B).
(2) Selection of proposed standard on the basis of consensus
stakeholder recommendations. Development of consensus proposals for
new or revised standards is an effective mechanism for balancing the
economic, energy, and environmental interests affected by standards.
Thus, notwithstanding any other policy on selection of proposed
standards, a consensus recommendation on an updated efficiency level
submitted by a group that represents all interested parties will be
proposed by the Department if it is determined to meet the statutory
criteria.
(3) Considerations in assessing economic justification.
(i) The following policies will guide the application of the
economic justification criterion in selecting a proposed standard:
(A) If the Department determines that a candidate standard level
would result in a negative return on investment for the industry,
would significantly reduce the value of the industry, or would cause
significant adverse impacts to a significant subgroup of
manufacturers (including small manufacturing businesses), that
standard level will be presumed not to be economically justified
unless the Department determines that specifically identified
expected benefits of the standard would outweigh this and any other
expected adverse effects.
(B) If the Department determines that a candidate standard level
would be the direct cause of plant closures, significant losses in
domestic manufacturer employment, or significant losses of capital
investment by domestic manufacturers, that standard level will be
presumed not to be economically justified unless the Department
determines that specifically identified expected benefits of the
standard would outweigh this and any other expected adverse effects.
(C) If the Department determines that a candidate standard level
would have a significant adverse impact on the environment or energy
security, that standard level will be presumed not to be
[[Page 36985]]
economically justified unless the Department determines that
specifically identified expected benefits of the standard would
outweigh this and any other expected adverse effects.
(D) If the Department determines that a candidate standard level
would not result in significant energy conservation relative to non-
regulatory approaches, that standard level will be presumed not to
be economically justified unless the Department determines that
other specifically identified expected benefits of the standard
would outweigh the expected adverse effects.
(E) If the Department determines that a candidate standard level
is not consistent with the policies relating to practicability to
manufacture, consumer utility, or safety in paragraphs (b) (2), (3)
and (4) of this section, that standard level will be presumed not to
be economically justified unless the Department determines that
specifically identified expected benefits of the standard would
outweigh this and any other expected adverse effects.
(F) If the Department determines that a candidate standard level
is not consistent with the policies relating to consumer costs in
paragraph (c)(1) of this section, that standard level will be
presumed not to be economically justified unless the Department
determines that specifically identified expected benefits of the
standard would outweigh this and any other expected adverse effects.
(G) If the Department determines that a candidate standard level
will have significant adverse impacts on a significant subgroup of
consumers (including low-income consumers), that standard level will
be presumed not to be economically justified unless the Department
determines that specifically identified expected benefits of the
standard would outweigh this and any other expected adverse effects.
(H) If the Department or the Department of Justice determines
that a candidate standard level would have significant
anticompetitive effects, that standard level will be presumed not to
be economically justified unless the Department determines that
specifically identified expected benefits of the standard would
outweigh this and any other expected adverse effects.
(ii) The basis for a determination that triggers any presumption
in paragraph (e)(3)(i) of this section and the basis for a
determination that an applicable presumption has been rebutted will
be supported by substantial evidence in the record and the evidence
and rationale for making these determinations will be explained in
the NOPR.
(iii) If none of the policies in paragraph (e)(3)(i) of this
section is found to be dispositive, the Department will determine
whether the benefits of a candidate standard level exceed the
burdens considering all the pertinent information in the record.
(f) Selection of a final standard. New information provided in
the public comments on the NOPR and any analysis by the Department
of Justice concerning impacts on competition of the proposed
standard will be considered to determine whether any change to the
proposed standard level is needed before proceeding to the final
rule. The same policies used to select the proposed standard level,
as described in section 5(e) above, will be used to guide the
selection of the final standard level.
6. Effective Date of a Standard
The effective date for new or revised standards will be
established so that the period between the publication of the final
rule and the effective date is not less than any period between the
dates for publication and effective date provided for in EPCA. The
effective date of any revised standard will be established so that
the period between the effective date of the prior standard and the
effective date of such revised standard is not less than period
between the two effective dates provided for in EPCA.
7. Test Procedures
(a) Identifying the need to modify test procedures. DOE, in
consultation with interested parties, experts, and the National
Institute of Standards and Technology, will attempt to identify any
necessary modifications to established test procedures when
initiating the standards development process.
(b) Developing and proposing revised test procedures. Needed
modifications to test procedures will be identified in consultation
with experts and interested parties early in the screening stage of
the standards development process. Any necessary modifications will
be proposed before issuance of an ANOPR in the standards development
process.
(c) Issuing final test procedure modification. Final, modified
test procedures will be issued prior to the NOPR on proposed
standards.
(d) Effective date of modified test procedures. If required only
for the evaluation and issuance of updated efficiency standards,
modified test procedures typically will not go into effect until the
effective date of updated standards.
8. Joint Stakeholder Recommendations
(a) Joint recommendations. Consensus recommendations, and
supporting analyses, submitted by a representative group of
interested parties will be given substantial weight by DOE in the
development of a proposed rule. See section 5(e)(2). If the
supporting analyses provided by the group addresses all of the
statutory criteria and uses valid economic assumptions and
analytical methods, DOE expects to use this supporting analyses as
the basis of a proposed rule. The proposed rule will explain any
deviations from the consensus recommendations from interested
parties.
(b) Breadth of participation. Joint recommendations will be of
most value to the Department if the participants are reasonably
representative of those interested in the outcome of the standards
development process, including manufacturers, consumers, utilities,
states and representatives of environmental or energy efficiency
interest groups.
(c) DOE support of consensus development, including impact
analyses. In order to facilitate such consensus development, DOE
will make available, upon request, appropriate technical and legal
support to the group and will provide copies of all relevant public
documents and analyses. The Department also will consider any
requests for its active participation in such discussions,
recognizing that the procedural requirements of the Federal Advisory
Committee Act may apply to such participation.
9. Principles for the Conduct of Engineering Analysis
(a) The purpose of the engineering analysis is to develop the
relationship between efficiency and cost of the subject product. The
Department will use the most appropriate means available to
determine the efficiency/cost relationship, including an overall
system approach or engineering modeling to predict the improvement
in efficiency that can be expected from individual design options as
discussed in the paragraphs below. From this efficiency/cost
relationship, measures such as payback, life cycle cost, and energy
savings can be developed. The Department, in consultation with
interested parties, will identify issues that will be examined in
the engineering analysis and the types of specialized expertise that
may be required. With these specifications, DOE will select
appropriate contractors, subcontractors, and expert consultants, as
necessary, to perform the engineering analysis and the impact
analysis. Also, the Department will consider data, information and
analyses received from interested parties for use in the analysis
wherever feasible.
(b) The engineering analysis begins with the list of design
options developed in consultation with the interested parties as a
result of the screening process. In consultation with the
technology/industry expert peer review group, the Department will
establish the likely cost and performance improvement of each design
option. Ranges and uncertainties of cost and performance will be
established, although efforts will be made to minimize uncertainties
by using measures such as test data or component or material
supplier information where available. Estimated uncertainties will
be carried forward in subsequent analyses. The use of quantitative
models will be supplemented by qualitative assessments as
appropriate.
(c) The next step includes identifying, modifying or developing
any engineering models necessary to predict the efficiency impact of
any one or combination of design options on the product. A base case
configuration or starting point will be established as well as the
order and combination/blending of the design options to be
evaluated. The DOE, utilizing expert consultants, will then perform
the engineering analysis and develop the cost efficiency curve for
the product. The cost efficiency curve and any necessary models will
be subject to peer review before being issued with the ANOPR.
10. Principles for the Analysis of Impacts on Manufacturers
(a) Purpose. The purpose of the manufacturer analysis is to
identify the likely
[[Page 36986]]
impacts of efficiency standards on manufacturers. The Department
will analyze the impact of standards on manufacturers with
substantial input from manufacturers and other interested parties.
The use of quantitative models will be supplemented by qualitative
assessments by industry experts. This section describes the
principles that will be used in conducting future manufacturing
impact analysis.
(b) Issue identification. In the impact analysis stage (section
4(d)), the Department, in consultation with interested parties, will
identify issues that will require greater consideration in the
detailed manufacturer impact analysis. Possible issues may include
identification of specific types or groups of manufacturers and
concerns over access to technology. Specialized contractor
expertise, empirical data requirements, and analytical tools
required to perform the manufacturer impact analysis also would be
identified at this stage.
(c) Industry characterization. Prior to initiating detailed
impact studies, the Department will seek input on the present and
past industry structure and market characteristics. Input on the
following issues will be sought:
(1) Manufacturers and their relative market shares;
(2) Manufacturer characteristics, such as whether manufacturers
make a full line of models or serve a niche market;
(3) Trends in the number of manufacturers;
(4) Financial situation of manufacturers;
(5) Trends in product characteristics and retail markets; and
(6) Identification of other relevant regulatory actions and a
description of the nature and timing of any likely impacts.
(d) Cost impacts on manufacturers. The costs of labor, material,
engineering, tooling, and capital are difficult to estimate,
manufacturer-specific, and usually proprietary. The Department will
seek input from interested parties on the treatment of cost issues.
Manufacturers will be encouraged to offer suggestions as to possible
sources of data and appropriate data collection methodologies.
Costing issues to be addressed include:
(1) Estimates of total cost impacts, including product-specific
costs (based on cost impacts estimated for the engineering analysis)
and front-end investment/conversion costs for the full range of
product models.
(2) Range of uncertainties in estimates of average cost,
considering alternative designs and technologies which may vary cost
impacts and changes in costs of material, labor and other inputs
which may vary costs.
(3) Variable cost impacts on particular types of manufacturers,
considering factors such as atypical sunk costs or characteristics
of specific models which may increase or decrease costs.
(e) Impacts on product sales, features, prices and cost
recovery. In order to make manufacturer cash flow calculations, it
is necessary to predict the number of products sold and their sale
price. This requires an assessment of the likely impacts of price
changes on the number of products sold and on typical features of
models sold. Past analyses have relied on price and shipment data
generated by economic models. The Department will develop additional
estimates of prices and shipments by drawing on multiple sources of
data and experience including: actual shipment and pricing
experience, data from manufacturers, retailers and other market
experts, financial models, and sensitivity analyses. The possible
impacts of candidate standard levels on consumer choices among
competing fuels will be explicitly considered where relevant.
(f) Measures of impact. The manufacturer impact analysis will
estimate the impacts of candidate standard levels on the net cash
flow of manufacturers. Computations will be performed for the
industry as a whole and for typical and atypical manufacturers. The
exact nature and the process by which the analysis will be conducted
will be determined by DOE, in conjunction with interested parties.
Impacts to be analyzed include:
(1) Industry net present value, with sensitivity analyses based
on uncertainty of costs, sales prices and sales volumes;
(2) Cash flows, by year;
(3) Other measures of impact, such as revenue, net income and
return on equity, as appropriate;
The characteristics of atypical manufacturers worthy of special
consideration will be determined in consultation with manufacturers
and other interested parties and may include: manufacturers
incurring higher or lower than average costs; and manufacturers
experiencing greater or fewer adverse impacts on sales. Alternative
scenarios based on other methods of estimating cost or sales impacts
also will be performed, as needed.
(g) Cumulative impacts of other Federal regulatory actions. (1)
The Department will recognize and seek to mitigate the overlapping
effects on manufacturers of new or revised DOE standards and other
regulatory actions affecting the same products. DOE will analyze and
consider the impact on manufacturers of multiple product-specific
regulatory actions. These factors will be considered in setting
rulemaking priorities, assessing manufacturer impacts of a
particular standard, and establishing the effective date for a new
or revised standard. In particular, DOE will seek to propose
effective dates for new or revised standards that are appropriately
coordinated with other regulatory actions to mitigate any cumulative
burden.
(2) If the Department determines that a proposed standard would
impose a significant impact on product manufacturers within three
years of the effective date of another DOE standard that imposes
significant impacts on the same manufacturers (or divisions thereof,
as appropriate), the Department will, in addition to evaluating the
impact on manufacturers of the proposed standard, assess the joint
impacts of both standards on manufacturers.
(3) If the Department is directed to establish or revise
standards for products that are components of other products subject
to standards, the Department will consider the interaction between
such standards in setting rulemaking priorities and assessing
manufacturer impacts of a particular standard. The Department will
assess, as part of the engineering and impact analyses, the cost of
components subject to efficiency standards.
(h) Summary of quantitative and qualitative assessments. The
summary of quantitative and qualitative assessments will contain a
description and discussion of uncertainties. Alternative estimates
of impacts, resulting from the different potential scenarios
developed throughout the analysis, will be explicitly presented in
the final analysis results.
(i) Key modeling and analytical tools. In its assessment of the
likely impacts of standards on manufacturers, the Department will
use models which are clear and understandable, feature accessible
calculations, and have assumptions that are clearly explained. As a
starting point, the Department will use the Government Regulatory
Impact Model (GRIM). The Department will consider any enhancements
to the GRIM that are suggested by interested parties. If changes are
made to the GRIM methodology, DOE will provide notice and seek
public input. The Department will also support the development of
economic models for price and volume forecasting. Research required
to update key economic data will be considered.
11. Principles for the Analysis of Impacts on Consumers
(a) Early consideration of impacts on consumer utility. The
Department will consider at the earliest stages of the development
of a standard whether particular design options will lessen the
utility of the covered products to the consumer. See section 4(a).
(b) Impacts on product availability. The Department will
determine, based on consideration of information submitted during
the standard development process, whether a proposed standard is
likely to result in the unavailability of any covered product type
with performance characteristics (including reliability), features,
sizes, capacities, and volumes that are substantially the same as
products generally available in the U.S. at the time. DOE will not
promulgate a standard if it concludes that it would result in such
unavailability.
(c) Department of justice review. As required by law, the
Department will solicit the views of the Justice Department on any
lessening of competition that is likely to result from the
imposition of a proposed standard and will give the views provided
full consideration in assessing economic justification of a proposed
standard. In addition, DOE may consult with the Department of
Justice at earlier stages in the standards development process to
seek to obtain preliminary views on competitive impacts.
(d) Variation in consumer impacts. The Department will use
regional analysis and sensitivity analysis tools, as appropriate, to
evaluate the potential distribution of impacts of candidate
standards levels among different subgroups of consumers. The
Department will consider impacts on significant segments
[[Page 36987]]
of consumers in determining standards levels. Where there are
significant negative impacts on identifiable subgroups, DOE will
consider the efficacy of voluntary approaches as a means to achieve
potential energy savings.
(e) Payback period and first cost. (1) In the assessment of
consumer impacts of standards, the Department will consider Life-
Cycle Cost, Payback Period and Cost of Conserved Energy to evaluate
the savings in operating expenses relative to increases in purchase
price. The Department intends to increase the level of sensitivity
analysis and scenario analysis for future rulemakings. The results
of these analyses will be carried throughout the analysis and the
ensuing uncertainty described.
(2) If, in the analysis of consumer impacts, the Department
determines that a candidate standard level would result in a
substantial increase in the product first costs to consumers or
would not pay back such additional first costs through energy cost
savings in less than three years, Department will specifically
assess the likely impacts of such a standard on low-income
households, product sales and fuel switching.
12. Consideration of Non-Regulatory Approaches
(a) The Department recognizes that voluntary or other non-
regulatory efforts by manufacturers, utilities and other interested
parties can result in substantial efficiency improvements. The
Department intends to consider fully the likely effects of non-
regulatory initiatives on product energy use, consumer utility and
life cycle costs, manufacturers, competition, utilities and the
environment, as well as the distribution of these impacts among
different regions, consumers, manufacturers and utilities. DOE will
attempt to base its assessment on the actual impacts of such
initiatives to date, but also will consider information presented
regarding the impacts that any existing initiative might have in the
future. Such information is likely to include a demonstration of the
strong commitment of manufacturers, distribution channels, utilities
or others to such voluntary efficiency improvements. This
information will be used in assessing the likely incremental impacts
of establishing or revising standards, in assessing appropriate
effective dates for new or revised standards and in considering DOE
support of non-regulatory initiatives.
(b) DOE believes that non-regulatory approaches are valuable
complements to the standards program. In particular, DOE will
consider pursuing voluntary programs where it appears that highly
efficient products can obtain a significant market share but less
efficient products cannot be eliminated altogether because, for
instance, of unacceptable adverse impacts on a significant subgroup
of consumers. In making this assessment, the Department will
consider the success more efficient designs have had in the market,
their acceptance to date, and their potential market penetration.
13. Crosscutting Analytical Assumptions
In selecting values for certain crosscutting analytical
assumptions, DOE expects to continue relying upon the following
sources and general principles:
(a) Underlying economic assumptions. The appliance standards
analyses will generally use the same economic growth and development
assumptions that underlie the most current Annual Energy Outlook
(AEO) published by the Energy Information Administration (EIA).
(b) Energy price and demand trends. Analyses of the likely
impact of appliance standards on typical users will generally adopt
the mid-range energy price and demand scenario of the EIA's most
current AEO. The sensitivity of such estimated impacts to possible
variations in future energy prices are likely to be examined using
the EIA's high and low energy price scenarios.
(c) Product-specific energy-efficiency trends, without updated
standards. Product specific energy-efficiency trends will be based
on a combination of the efficiency trends forecast by the EIA's
residential and commercial demand model of the National Energy
Modeling System (NEMS) and product-specific assessments by DOE and
its contractors with input from interested parties.
(d) Discount rates. For residential and commercial consumers,
ranges of three different real discount rates will be used. For
residential consumers, the mid-range discount rate will represent
DOE's approximation of the average financing cost (or opportunity
costs of reduced savings) experienced by typical consumers.
Sensitivity analyses will be performed using discount rates
reflecting the costs more likely to be experienced by residential
consumers with little or no savings and credit card financing and
consumers with substantial savings. For commercial users, a mid-
range discount rate reflecting the DOE's approximation of the
average real rate of return on commercial investment will be used,
with sensitivity analyses being performed using values indicative of
the range of real rates of return likely to be experienced by
typical commercial businesses. For national net present value
calculations, DOE would use the Administration's approximation of
the average real rate of return on private investment in the U.S.
economy. For manufacturer impacts, DOE plans to use a range of real
discount rates which are representative of the real rates of return
experienced by typical U.S. manufacturers affected by the program.
(e) Environmental impacts. The emission rates of carbon, sulfur
oxides and nitrogen oxides used by DOE to calculate the physical
quantities of emissions likely to be avoided by candidate standard
levels will be based on the current average carbon emissions of the
U.S. electric utilities and on the projected rates of emissions of
sulfur and nitrogen oxides. Projected rates of emissions, if
available, will be used for the estimation of any other
environmental impacts. The Department will consider the effects of
the proposed standards on these emissions in reaching a decision
about whether the benefits of the proposed standards exceed their
burdens but will not determine the monetary value of these
environmental externalities.
14. Deviations, Revisions, and Judicial Review
(a) Deviations. This Appendix specifies procedures,
interpretations and policies for the development of new or revised
energy efficiency standards in considerable detail. As the approach
described in this Appendix is applied to the development of
particular standards, the Department may find it necessary or
appropriate to deviate from these procedures, interpretations or
policies. If the Department concludes that such deviations are
necessary or appropriate in a particular situation, DOE will provide
interested parties with notice of the deviation and an explanation.
(b) Revisions. If the Department concludes that changes to the
procedures, interpretations or policies in this Appendix are
necessary or appropriate, DOE will provide notice in the Federal
Register of modifications to this Appendix with an accompanying
explanation. DOE expects to consult with interested parties prior to
any such modification.
(c) Judicial review. The procedures, interpretations, and
policies stated in this Appendix are not intended to establish any
new cause of action or right to judicial review.
[FR Doc. 96-17886 Filed 7-12-96; 8:45 am]
BILLING CODE 6450-01-P
