The Department of Energy (DOE) has quietly issued a proposal that could seriously undermine US energy efficiency standards for many appliances and products — everything from air conditioners and refrigerators to light bulbs and electric motors. Last month, it proposed a rule that would allow individual manufacturers to secretly opt out of testing requirements.
Who would lose out? Competitors who play by the rules and the consumers and businesses unknowingly saddled with purchases that fail to meet minimum standards, wasting energy and money.
The proposal, which would change how manufacturers can be exempted from federal test procedure requirements, caught energy efficiency supporters and manufacturers alike by surprise. In response, ASAP and nine other organizations that participate in DOE’s regulatory processes requested a public meeting for DOE to better explain the proposal and receive input.
DOE had always allowed for public meetings on proposed test procedure changes for specific products in the past. Surely, a proposal that would affect every product’s test procedure and compliance would merit the enhanced scrutiny of a public meeting. To our shock, DOE staff refused. Twice.
Today, we renewed our request in a letter to Assistant Secretary Daniel Simmons and DOE General Counsel Bill Cooper, urging them to reverse course and hold a public meeting on the proposed rule. The details of this proposal are way too important to shortchange the public review process.
A back door for opting out of compliance
All products subject to federal efficiency standards must be certified as meeting the applicable standard based on a uniform test procedure. These test procedures are at the heart of a fair and reliable national appliance standards program. They provide the rules of the road, assuring a level playing field for competitors and giving consumers and businesses confidence that products meet standards and attain the efficiency performance advertised.
Because it is not possible to predict all the future designs and product features that manufacturers may introduce, some new products either cannot be tested with the existing procedure or the existing test does not adequately represent the product’s energy consumption. Therefore, DOE regulations allow manufacturers to apply for waivers to test their products using an alternate procedure that accounts for the specific new features.
These waivers ensure that innovation is not inhibited, while at the same time protecting the integrity of the appliance standards program. A manufacturer can request an interim waiver to use during the time that DOE is evaluating and making a final determination on the waiver application. DOE has approved most recent waiver applications after review. The current system seems, with a couple of exceptions, to have encouraged well-thought-out applications.
Under the proposed rule, an interim test procedure waiver would be deemed granted if DOE does not act on a manufacturer’s request within 30 days. Because the recent history of waiver applications indicates that it is difficult for DOE to respond to such requests within 30 days, interim waivers would in many, if not most cases be automatically granted under DOE’s proposal.
The proposal does not require that applications be complete, that the proposed alternate test be fair, or that a manufacturer even propose an alternate test. A manufacturer could just stop testing altogether. A skewed test or failure to test at all is a back door for opting out of compliance with national standards.
No one would even know. Because a waiver would be deemed granted, the proposal requires no affirmative notice to competitors or the public that the manufacturer is no longer playing by the same rules as everyone else.
Even if DOE determines later that a manufacturer’s application should be rejected, under the proposed rule, that manufacturer would be given a 180-day grace period before being required to use the uniform DOE test procedure. In other words, it would receive six more months to continue selling non-compliant products that unfairly undercut the competition and potentially harm buyers. During that time, the manufacturer could submit a new application, perhaps simply changing model numbers, and would receive a new waiver if DOE fails to deny the application quickly.
Why is this such a big deal?
A manufacturer or importer that can dictate its own test procedure — or simply not test — can cheat with impunity. While most manufacturers play by the rules, cheating happens. In just the past year, DOE levied fines against eight companies for non-compliance. In an older case, a manufacturer designed its refrigerators to recognize test conditions and shut down some energy-using features during efficiency tests. It got caught and paid fines. In vehicle emissions, Volkswagen famously circumvented that test and paid billions in fines.
By making waivers automatic and keeping them secret, DOE’s proposal invites abuse. All a manufacturer or importer would need do is put a skewed alternate test in an application, or propose no test procedure, and wait 30 days to start selling. And unlike the cases of the refrigerator manufacturer and VW, the cheating would be perfectly legal.
Either DOE has not thought through its proposal very carefully or its commitment to a fair and consistent application of existing national energy conservation standards has faltered. In either case, given the sweep of its potential impact, this proposed rule should get the full scrutiny of a public meeting.
UPDATE (June 26): After receiving our renewed public hearing request and similar requests from a number of manufacturers and AHRI, an industry trade group, DOE decided to hold a 2-hour public webinar on Thursday, July 11th from 9 to 11 eastern time. Comments are due two business days after the public hearing, on Monday July 15th. Details here.