Not Only Are Energy Standards Changing, So Is the Process the Government Uses to Set Them

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Over the next 15 months, the HVACR industry expects to see new rules drafted on the energy conservation standards and test procedures for 19 heating, cooling, and hot water products. The Department of Energy (DOE) has started, or is about to start, rulemakings on such common products as central air conditioners, residential non-weatherized natural gas furnaces, residential boilers, direct heating equipment, and many others.

While these new rules will increase the energy efficiency of the basic models available to consumers, they are also likely to increase the costs of those products.

The process of setting new standards and test procedures must prove that any increase is technologically feasible and economically justified, but also result in significant energy savings. The process should also be transparent and conducted in a way so stakeholders can participate and provide comments.

The definition of technologically feasible and economically justified can be somewhat subjective. For example, DOE’s analysis of the proposed 92% AFUE standard for residential non-weatherized natural gas furnaces will result in net costs for 31% of consumers in the South over the lifetime of a new furnace. With so many consumers facing potential harm, this suggests that “economically justified” is open to interpretation.

In the last year, a number of new standards have gone through an alternative process where stakeholders and DOE officials met multiple times over several months to collectively negotiate a new standard. These “negotiated rulemakings” provide an alternative to the typical notice and comment rulemaking process, which has become contentious and often resulted in legal challenges.

Over the last four years, several standards have been challenged in court. ACCA was involved in the lawsuit against the 2011 Direct Final Rule, setting regional standards for residential non-weatherized natural gas furnaces and central air conditioners. That case was resolved through a 2014 settlement requiring the DOE to withdraw and redo the standards for natural gas furnaces. ACCA has also been involved in a lawsuit challenging a 2014 Final Rule, setting energy conservation standards for Walk-in Coolers and Freezers.

By convening all relevant stakeholders, including DOE officials and their consultants from the national energy labs, the negotiators can accelerate a process that usually takes years, and is conducted behind closed doors. Negotiated rulemakings also allow stakeholders to look outside the scope of the standard, and find creative options to meet the goals of saving energy without negatively impacting industry.

You are likely to hear the word “ASRAC,” the acronym for the DOE’s Appliance Standards and Rulemaking Federal Advisory Committee a lot more. ASRAC is the formal committee established by the DOE in 2010 to deal with a backlog of unfinished rules and to deter backlash from industry and energy efficiency advocates when setting new energy use standards or test procedures. So far, ASRAC working groups have been used to set new standards or develop rules for commercial and industrial pumps, manufactured housing, regional standards enforcement, commercial HVAC, water heating, refrigeration certification, and residential central air conditioners and heat pumps. Rules drafted by negotiation may be more pragmatic and implemented at earlier dates than under a more traditional rulemaking process.

I predict that more regulations will be set using the ASRAC negotiated rulemaking process than the current “normal” rulemaking process over the next few years.

ASRAC working groups can be used to set standards, test procedures, or other regulatory needs. Last year I served on the working group convened to set the regional standards enforcement plan for split system and single package central air conditioners. We met for three months working to develop a consensus plan that is fair to contractors, and protects the interests of saving energy. This spring I served on the working group that negotiated new energy conservation standards for Commercial Warm Air Furnaces and Commercial Unitary Air Conditioners and Heat Pumps. These two working groups had very different charges. There’s a big difference between an enforcement plan and an energy conservation standard, but in both cases we were able to come to a consensus and report a recommendation to DOE for implementation that had contractor interests in mind.

Because the rules are developed in a deliberative method, all stakeholders have to familiarize themselves with aspects of the economic, technological, and regulatory analysis. The working group members are usually a good mix of individuals who can speak to the engineering, policy, or marketing impacts of new rules. Each stakeholder has a vote and the working group strives to achieve consensus on every item discussed.  This alternative process has been successful so far, this is only the beginning.

With an extensive list of rulemakings on the horizon, this industry has to be prepared for a mad dash to January 2017. When the Obama Administration lost control of the Senate last year, it no longer had Congress to implement its energy and environmental agenda. Since Congress isn’t likely to pass an energy bill or any climate change legislation, the President has turned to the regulatory agencies to enact his agenda through regulation.

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Posted In: ACCA Now, Government