Regional Standards Enforcement Rulemaking Will Change Industry
As everyone in the industry is aware, two federal agencies have begun rulemakings on the enforcement of the pending energy conservation standards that include regional standards. The new standards and the subsequent enforcement rules will have lasting effects on manufacturers, distributors, contractors, and consumers.
These new rules will expand the legal responsibilities beyond manufacturing or importing HVAC equipment to meet a minimum AFUE or SEER rating to making it illegal to install equipment if it does not meet the minimum standards for its region.
Over the next year, the rulemaking to develop an enforcement scheme that is unprecedented in its scope will likely prove to be extraordinarily confusing for those who do not pay close attention.
The primary goal for ACCA and its members is to minimize the regulatory burdens on contractors, while protecting them from the opportunists who will try to unscrupulously violate the rules.
Last October, the Department of Energy (DOE) finalized new minimum energy conservation standards for residential gas furnaces that take effect on May 1, 2013, and split system central air conditioners and heat pumps that take effect on January 1, 2015.
When you look at the new standards by region, the impacts on the stakeholders are not equal.
In the Northern Region, the minimum standard for split system central air conditioners remains at 13 SEER, but the new elevated standard of 90% AFUE will require more expensive and sometimes more technically challenging condensing furnaces.
The Southeastern and Southwestern regions will see a small uptick from the current furnace minimum of 78% AFUE to 80% AFUE, but the changes to the split system central air conditioner minimum SEER value to 14 (along with the added EER measure in the Southwestern region) will have a more dramatic impact on replacement versus repair decisions.
The rulemaking under consideration from the DOE and the Federal Trade Commission (FTC) would create an enforcement scheme for these new regional standards and make changes to the way residential HVAC appliances are labeled to increase compliance with the new enforcement rules.
The DOE rulemaking on enforcement will result in a complex set of rules that are bound to create new paperwork and record keeping requirements for distributors and contractors. The DOE has proposed three different enforcement approaches to choose from with increasing levels of compliance through record keeping and/or the reporting of installation location information.
In the first Approach, contractors would be required to install HVAC equipment in the appropriate region.
Under Approach 2, contractors would be required to install HVAC equipment in the appropriate region, and maintain records and paperwork about each installation.
Under Approach 3, contractors would be required to install HVAC equipment in the appropriate region, maintain records and paperwork about each installation, and be required to provide their distributors with serial numbers and installation address for each installation.
Most significantly, the new rules will change the focus of DOE’s enforcement activities from only manufacturers and importers to distributors and contractors. In the past, when changes to efficiency standards went into effect, the rules allowed for a “sell through” period of old stock that met the previous standard.
The implementation of regional standards changes the structure of the rules from a manufacturing ban to an installation ban, and that could result in the end of the sell through exemption for new old stock HVAC equipment.
Why? Because the new rules would ban the installation of appliances after the enforcement date and that means that any stockpiled gas furnaces with an AFUE of less than 90% cannot be installed in the Northern Region and must be shipped south in order to be a legal product. The same would be true for 13 SEER split system central air conditioners in the Southern and Southeastern regions.
Meanwhile the FTC rulemaking on new energy labeling requirements for residential furnaces, central air conditioners, and heat pumps, is designed to help consumers and businesses install equipment appropriate for their location under the new regional efficiency standards. The FTC’s Appliance Labeling Rule currently requires yellow EnergyGuide labels for heating and cooling equipment that disclose the product’s efficiency rating and a comparison of the highest and lowest ratings for all similar models.
ACCA submitted comments on the proposed DOE and FTC rules in February. Both agencies are expected to release Notices of Proposed Rulemakings and take further comments on these proposed rules. Congress has mandated that these concurrent rulemakings must conclude by mid-January 2013.
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